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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NUMBER 1-5794
MASCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 38-1794485
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
5 1/4% CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2012 NEW YORK STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS
FOR THE PAST 90 DAYS. YES No / /INDICATE BY CHECK MARK IF DISCLOSURE OF
DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED
HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN
DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III
OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K.
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 15, 1994 (BASED ON THE CLOSING SALE
PRICE OF $34 1/2 OF THE REGISTRANT'S COMMON STOCK, AS REPORTED ON THE NEW YORK
STOCK EXCHANGE COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $5,200,000,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 15, 1994:
156,550,774 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1994
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS REPORT.
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TABLE OF CONTENTS
<TABLE>
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ITEM PAGE
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PART I
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1. Business........................................................................ 2
2. Properties...................................................................... 7
3. Legal Proceedings............................................................... 9
4. Submission of Matters to a Vote of Security Holders............................. 10
Supplementary Item. Executive Officers of Registrant............................ 10
<CAPTION>
PART II
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5. Market for Registrant's Common Equity and Related Stockholder Matters........... 11
6. Selected Financial Data......................................................... 11
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................... 12
8. Financial Statements and Supplementary Data..................................... 16
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.................................................................... 35
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PART III
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10. Directors and Executive Officers of the Registrant.............................. 35
11. Executive Compensation.......................................................... 35
12. Security Ownership of Certain Beneficial Owners and Management.................. 35
13. Certain Relationships and Related Transactions.................................. 35
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................ 36
Signatures...................................................................... 40
<CAPTION>
FINANCIAL STATEMENT SCHEDULES
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Masco Corporation Financial Statement Schedules................................. F-1
MascoTech, Inc. and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedules........................................................... F-9
</TABLE>
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PART I
ITEM 1. BUSINESS.
Masco manufactures building, home improvement and home furnishings products
for the home and family. Masco believes that it is the largest domestic
manufacturer of faucets, plumbing supplies, kitchen and bath cabinets and
furniture, and that it is a leading domestic producer of a number of other
building, home improvement and home furnishings products. Masco was incorporated
under the laws of Michigan in 1929 and in 1968 was reincorporated under the laws
of Delaware.
Except as the context otherwise indicates, the terms "Masco" and the
"Company" refer to Masco Corporation and its consolidated subsidiaries.
INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1993,
the contribution of the Company's industry segments to net sales and operating
profit:
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES
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1993 1992 1991
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<S> <C> <C> <C>
Building and Home Improvement Products............ $2,188,000 $1,991,000 $1,711,000
Home Furnishings Products......................... 1,698,000 1,534,000 1,430,000
---------- ---------- ----------
$3,886,000 $3,525,000 $3,141,000
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---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT(1)
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1993 1992 1991
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Building and Home Improvement Products............ $ 412,000 $ 368,000 $ 273,000
Home Furnishings Products......................... 69,000 60,000 38,000
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$ 481,000 $ 428,000 $ 311,000
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</TABLE>
(1) Amounts are before general corporate expense.
Additional financial information concerning the Company's operations by
industry segment as of and for each of the three years ended December 31, 1993,
is set forth in Item 8 of this Report in the Note to the Company's Consolidated
Financial Statements captioned "Segment Information."
BUILDING AND HOME IMPROVEMENT PRODUCTS
The Company is among the country's largest manufacturers of brand-name
consumer products designed for the building and improvement of the home,
including faucets, kitchen and bath cabinets, kitchen appliances, bath and
shower enclosure units, spas, shower and plumbing specialties, door locks and
other builders' hardware, air treatment products, venting and ventilating
equipment and water pumps. These products are sold for the home improvement
market to consumers who purchase materials for "do-it-yourself " installation or
installation by contractors or professional tradespeople as well as for the new
home construction market.
The Company manufactures a variety of single and double handle faucets.
DELTA(R) and PEERLESS(R) single and double handle faucets are used on kitchen,
lavatory and other sinks and in bath and shower installations. DELTA faucets are
sold through manufacturers' representatives to distributors who sell the faucets
to plumbers, building contractors, remodelers, retailers and others. PEERLESS
faucets are sold primarily through manufacturers' representatives directly to
retail outlets such as mass merchandisers, home centers and hardware stores and
are also sold under private label. The Company's EPIC(R), ARTISTIC BRASS(R) and
SHERLE WAGNER(TM) faucets and accessories
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produced for the decorator markets and are sold through wholesalers, distributor
showrooms and other outlets. In addition to its domestic manufacturing, the
Company manufactures faucets in Denmark, Italy and Canada.
Sales of faucets approximated $608 million in 1993, $528 million in 1992
and $457 million in 1991. The percentage of operating profit on faucets is
somewhat higher than that on products within the Building and Home Improvement
Products Segment as a whole. The Company believes that the simplicity, quality
and reliability of its faucet mechanisms, its marketing and merchandising
activities, and the development of a broad line of products have accounted for
the continued strength of its faucet sales.
The Company manufactures stock, semi-custom and custom kitchen and bath
cabinetry in a variety of styles and in various price ranges. The Company sells
under a number of trademarks, including MERILLAT(R), KRAFTMAID(R), STARMARK(R)
and FIELDSTONE(R), with sales in both the home improvement and new home
construction markets. Sales of kitchen and bath cabinets were approximately $570
million in 1993, $515 million in 1992 and $425 million in 1991.
The Company's brass and copper plumbing system components and other
plumbing specialties are sold to plumbing, heating and hardware wholesalers and
to home centers, hardware stores, building supply outlets and other mass
merchandisers. These products are marketed for the wholesale trade under the
BRASS-CRAFT(R) trademark and for the "do-it-yourself " market under the PLUMB
SHOP(R) and HOME PLUMBER(R) trademarks and are also sold under private label.
In February, 1994 the Company acquired two leading manufacturers of bath
accessories and other products. Zenith Products Corporation manufactures bath
medicine cabinets, shower curtain rods and rings and other bath storage products
for the home. Zenith's medicine cabinets are sold primarily to "do-it-yourself "
retailers, while its other products are marketed to discount retailers and other
mass merchandise stores. Melard Manufacturing Corporation manufactures bath
hardware, accessories, plumbing specialty products, and other products. Melard's
products are primarily sold for the "do-it-yourself " and residential remodeling
markets, through mass merchandise stores, hardware stores, home centers and
other retail outlets.
Other specialty kitchen and bath consumer products include THERMADOR(R)
cooktops, ovens, ranges and related cooking equipment, which are marketed
through appliance distributors and dealers. The Company's acrylic and gelcoat
bath and shower units and whirlpools are sold under the AQUA GLASS(R) trademark
primarily to wholesale plumbing distributors for use in the home improvement and
new home construction markets. Luxury bath and shower enclosures are
manufactured and sold by the Company under the HUPPE(R) trademark. The Company's
spas are sold under the HOT SPRING SPA(R) and other trademarks directly to
retailers for sale to residential customers.
Premium quality brass rim and mortise locks, knobs and trim and other
builders' hardware are manufactured and sold under the BALDWIN(R) trademark for
the home improvement and new home construction markets. WEISER(R) door locks and
related hardware are sold through contractor supply outlets, hardware
distributors and home center retailers. SAFLOK(TM) electronic locks and
WINFIELD(TM) mechanical locks are sold primarily to the hospitality market.
HOME FURNISHINGS PRODUCTS
The Company has become the leading domestic manufacturer of brand-name
consumer products for the furnishing of the home, including furniture,
upholstery and other fabrics, mirrors, lamps and other decorative accessories.
The Company manufactures a broad array of home furnishings products and
utilizes a variety of distribution channels to market its products. A complete
line of traditional, transitional and contemporary wood and upholstered
furniture is sold under the HENREDON(R) trademark through Henredon galleries
located in furniture stores, designer showrooms, furniture outlets and
department stores. DREXEL(R) and HERITAGE(R) wood and upholstered furniture and
home furnishings accessories are
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marketed through Drexel Heritage galleries located in furniture stores, through
showcase stores which primarily feature Drexel Heritage furniture and also
through independent furniture outlets. The Lexington Furniture Industries group
produces youth-correlated furniture, moderately-priced bedroom and dining room
groups, occasional and upholstered furniture and woven wicker and rattan
products, which are sold through national and regional chains and independent
furniture dealers, department stores and interior designers. Universal Furniture
Limited manufactures dining room, bedroom, occasional wood and upholstered
furniture, which is sold primarily through furniture retailers and department
stores under UNIVERSAL(R), BENCHCRAFT(R) and other trademarks. The Company
believes that Universal is the largest supplier in the United States of wood
dining room furniture, much of which is shipped in unassembled form from the Far
East to assembly and distribution centers in the United States. The Company's
LINEAGE(R) line of wood and upholstered furniture and home furnishings
accessories are sold through exclusive Lineage Pavilions located in retail
furniture stores which also feature furniture accessories manufactured by other
Company operations. The Company also manufactures and sells designer upholstered
products and upholstered furniture under private label to furniture stores and
other retailers. In addition, certain of the Company's furniture is sold to
contract accounts primarily for use in the hospitality market and in commercial
and government buildings. Sales of the Company's furniture products approximated
$1.34 billion in 1993, $1.19 billion in 1992 and $1.13 billion in 1991.
The Company's textile group includes Robert Allen Fabrics, Inc., Ametex
Fabrics, Inc., Sunbury Textile Mills, Inc. and Ramm, Son & Crocker Limited.
Robert Allen markets fabrics, which are used primarily for residential
furnishings, through independent sales representatives to designers and
retailers. Company-operated and independent showrooms have also been established
to sell fabrics and display and sell many of the Company's other home
furnishings products. Ametex designs and converts moderately-priced fabrics for
use in commercial and residential furnishings, which are sold through
independent sales representatives to furniture and other furnishings
manufacturers, fabric jobbers and the hospitality market. Sunbury manufactures
high-quality Jacquard woven fabrics which are sold through sales representatives
primarily to furniture manufacturers and decorative jobbers for furniture and
other decorative applications. Ramm, Son & Crocker is a United Kingdom supplier
of high-quality printed fabrics to the furniture and decorative fabric markets.
GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
No material portion of the Company's business is seasonal or has special
working capital requirements although the Company maintains a higher investment
in inventories for certain of its businesses than the average manufacturing
company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Receivables and Inventories," included in Item 7 of
this Report. The Company does not consider backlog orders to be a material
factor in its industry segments, and no material portion of its business is
dependent upon any one customer or subject to renegotiation of profits or
termination of contracts at the election of the federal government. Compliance
with federal, state and local regulations relating to the discharge of materials
into the environment, or otherwise relating to the protection of the
environment, is not expected to result in material capital expenditures by the
Company or to have a material effect on the Company's earnings or competitive
position. In general, raw materials required by the Company are obtainable from
various sources and in the quantities desired.
INTERNATIONAL OPERATIONS
The Company, through its subsidiaries, has manufacturing plants in Belgium,
Canada, the People's Republic of China, Denmark, France, Germany, Hong Kong,
Italy, Malaysia, Mexico, the Philippines, Singapore, Sweden, Taiwan and the
United Kingdom. Products manufactured by the Company outside of the United
States include faucets and accessory products, bath and shower enclosures,
furniture, decorative accessories, door locks and related hardware, ventilating
fans and equipment and submersible water pumps.
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The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
Financial information concerning the Company's foreign and domestic
operations, including the amounts of net sales, operating profit and assets
employed which are attributable to the Company's operations in the United States
and in foreign countries, as of and for the three years ended December 31, 1993,
is set forth in Item 8 of this Report in the Note to the Company's Consolidated
Financial Statements captioned "Segment Information." From 1991 through 1993,
the Company's annual net export sales from the United States to other countries,
as a percentage of consolidated annual net sales, approximated three percent.
EQUITY INVESTMENTS
In 1984, Masco transferred its industrial businesses to a newly-formed
subsidiary, MascoTech, Inc. (formerly Masco Industries, Inc.), which became a
separate public company in July, 1984 when Masco distributed to its stockholders
shares of MascoTech common stock as a special dividend. Masco currently owns
approximately 42 percent of the outstanding common stock of MascoTech.
MascoTech is a diversified manufacturer of original equipment and
aftermarket parts for the transportation industry and also manufactures
commercial, institutional and residential building products for the construction
industry as well as other diversified products principally for the defense
industry. In 1993, MascoTech had sales from continuing operations of $1.58
billion.
MascoTech manufactures a broad range of semi-finished components,
sub-assemblies and assemblies for the transportation industry.
Transportation-related products represented 76 percent of MascoTech's 1993 sales
from continuing operations and primarily consist of original equipment products
for the automotive and truck industries. Over half of MascoTech's products are
used for engine and drivetrain applications (such as semi-finished transmission
shafts, drive gears, engine connecting rods, wheel spindles and front wheel
drive and exhaust system components) and for chassis and suspension functions
(including electromechanical solenoids and relays and suspension components).
Products manufactured for exterior body trim applications include automotive
trim, luggage racks and accessories, and metal stampings. Aftermarket products
include fuel and emission systems components, windshield wiper blades,
constant-velocity joints, brake hardware repair kits, and luggage racks and
accessories. In addition to its manufacturing activities, MascoTech provides
engineering services primarily for the automotive and heavy-duty truck
industries, and is engaged in specialty vehicle development and conversion
programs. Products are manufactured using various metalworking technologies,
including cold, warm and hot forming, powdered metal forming and stamping.
During 1993, sales to various divisions and subsidiaries of Ford Motor Company,
General Motors Corporation and Chrysler Corporation accounted for approximately
20 percent, 14 percent and 12 percent, respectively, of MascoTech's net sales
from continuing operations.
Specialty products manufactured by MascoTech include a variety of
architectural products for commercial, institutional and residential markets.
Products include steel doors and frames; stainable and low maintenance steel
doors; wood windows and aluminum-clad wood windows; leaded, etched and beveled
glass for decorative windows and entryways; residential entry systems; garage
doors; sectional and rolling doors; security grilles; and modular metal
partitions. MascoTech's sales of architectural products in 1993 were $289
million. MascoTech's other specialty products consist primarily of defense
products, including large diameter cold formed cartridge cases, projectiles and
casings for rocket motors and missiles for the United States government and its
suppliers. MascoTech also markets waste-water treatment services to other
industrial companies principally in southern California. MascoTech's sales in
1993 of these other specialty products were $99 million.
MascoTech has undertaken the planned disposition of its energy-related
business segment, which consisted of seven business units, as part of its
long-term strategic plan to de-leverage its balance sheet and increase the focus
on its core operating capabilities. As a result, MascoTech's financial
statements have been reclassified to present such businesses as discontinued
operations. These businesses
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manufactured specialized tools, equipment and other products for energy-related
industries. Two of the businesses were sold in late 1993, including one business
to TriMas Corporation, and MascoTech expects to divest the remaining businesses
in 1994. MascoTech financial information contained in this Report has been
reclassified for these discontinued operations.
MascoTech currently owns approximately 43 percent of the outstanding common
stock of TriMas Corporation, and the Company currently owns approximately 5
percent of the outstanding common stock of TriMas. TriMas is a diversified
proprietary products company with leadership positions in commercial, industrial
and consumer niche markets including industrial container closures, pressurized
gas cylinders, towing systems products, specialty fasteners, specialty products
for fiberglass insulation, specialty tapes, specialty industrial gaskets and
precision cutting tools.
PATENTS AND TRADEMARKS
The Company holds a number of United States and foreign patents covering
various design features and valve constructions used in certain of its faucets,
and also holds a number of other patents and patent applications, licenses,
trademarks and trade names. As a manufacturer of brand-name consumer products,
the Company views its trademarks as important, but does not believe that there
is any reasonable likelihood of a loss of such rights which would have a
material adverse effect on the Company's industry segments or its present
business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products in its
industry segments are highly competitive. Competition is based primarily on
performance, quality, style, service and price, with the relative importance of
such factors varying among products. A number of companies of varying size
compete with one or more of the Company's product lines.
EMPLOYEES
At December 31, 1993, the Company employed approximately 45,000 people.
Satisfactory relations have generally prevailed between the Company and its
employees.
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ITEM 2. PROPERTIES.
The following list includes the Company's principal manufacturing
facilities by location and the industry segments utilizing such facilities:
<TABLE>
<CAPTION>
<S> <C>
Arizona.................. Tucson (1)
California............... Carlsbad (1), City of Industry (2), Compton (2)(2), Corona (1),
Costa Mesa (1), Los Angeles (1)(1), Pico Rivera (1), Pomona (1),
Rosemead (2), South Gate (1), Vista (1) and Whittier (2)
Georgia.................. Atlanta (2)
Illinois................. Alsip (2) and Chicago (2)
Indiana.................. Cumberland (1), Greensburg (1) and Kendallville (1)
Iowa..................... Northwood (1)
Kentucky................. Henderson (1 and 2) and Morgantown (1)
Massachusetts............ Framingham (2)
Michigan................. Adrian (1), Hillsdale (1), Holland (2), Lapeer (1), Madison
Heights (1) and Riverview (1)
Minnesota................ Lakeville (1)
Mississippi.............. Blue Mountain (2), New Albany (2), Olive Branch (1) and
Ripley (2)(2)(2)
Nevada................... Las Vegas (1)
New Jersey............... Passaic (1)
North Carolina........... Black Mountain (2), Drexel (2), Goldsboro (2), Hickory (2)(2),
High Point (2)(2)(2), Hildebran (2)(2), Lexington
(2)(2)(2)(2)(2), Linwood (2), Longview (2), Marion (2)(2),
Mocksville (2), Morganton (2)(2)(2)(2)(2), Mt. Airy (2), Shelby
(2), Spruce Pine (2), Thomasville (1) and Whittier (2)
Ohio..................... Jackson (1), Loudonville (1) and Middlefield (1)(1)
Oklahoma................. Chickasha (1)
Oregon................... Klamath Falls (1)
Pennsylvania............. Aston (1), Hazelton (1), Reading (1 and 2) and Sunbury (2)
South Carolina........... Kingstree (2)
South Dakota............. Rapid City (1) and Sioux Falls (1)
Tennessee................ Adamsville (1)(1), LaFollette (1) and Morristown (2)(2)
Texas.................... Lancaster (1)
Virginia................. Atkins (1)(1), Culpeper (1), Lynchburg (1), Mt. Jackson (1) and
Portsmouth (2)
Belgium.................. Brussels (1)
Canada................... Burnaby (1), British Columbia; Brantford (2), Cambridge (1),
London (1),
Mississauga (2) and St. Thomas (1), Ontario; Montreal (1),
Quebec
China (P.R.C.)........... Guangzhou (2) and Tianjin (2)(2)(2)
Denmark.................. Odense (1)
France................... Seyres (1)
Germany.................. Bad Zwischenahn (1), Iserlohn (1), Steinhagen (1) Tangermunde (2)
and Waldenburg (1)
Hong Kong................ (2)(2)
</TABLE>
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<TABLE>
<CAPTION>
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Italy.................... Zingonia (1)
Malaysia................. Johor (2) and Kedah (2)(2)
Mexico................... Mexicali (1)
Philippines.............. Cebu (2)(2)
Singapore................ Kranji (2)(2)
Sweden................... Gotegborg (2)
Taiwan................... Kaohshiung (2), Tao Yuan (2) and Tung Kang (2)
United Kingdom........... Silsden (2) and Warminster (2), England; Aberdare (2) and Merthyr
Tydfil (2), Wales
</TABLE>
Note: Multiple footnotes within the same parenthesis indicate the
facility is engaged in activities relating to both segments. Multiple
footnotes to the same municipality denote separate facilities in that
location. Industry segments in the preceding table are identified as
follows: (1) Building and Home Improvement Products Segment, and (2) Home
Furnishings Products Segment.
The home furnishings products manufacturing facilities are located
primarily in North Carolina, with principal facilities ranging in size from
700,000 to 1,074,000 square feet. The two principal faucet manufacturing plants
are located in Greensburg, Indiana and Chickasha, Oklahoma. The faucet
manufacturing plants and the majority of the Company's other facilities range
from approximately 20,000 to 700,000 square feet. The Company owns most of its
manufacturing facilities and none of the properties is subject to significant
encumbrances. The Company also maintains approximately 1.5 million square feet
of designer and trade showroom space at various locations throughout the United
States where it coordinates the display and sale of its home furnishings
products and owns 725,000 square feet of showroom space in High Point, North
Carolina utilized for furniture industry trade shows. The Company's corporate
headquarters are located in Taylor, Michigan and are owned by the Company. An
additional building near its corporate headquarters is used by the Company's
corporate research and development department.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
The following list identifies the location of the principal manufacturing
facilities of MascoTech and the industry segments utilizing such facilities:
Arizona.................Chandler (2)
California..............Santa Fe Springs (4), Vernon (3) and Yuba City (1)
Florida.................Auburndale (2), Deerfield Beach (1) and Orlando (2)
Georgia.................Adel (1), Lawrenceville (1) and Valdosta (1)
Indiana.................Kendallville (1)
Iowa....................Dubuque (2)
Kentucky................Nicholasville (1)
Michigan................Auburn Hills (1)(1), Brighton (1), Burton (1),
Coopersville (1), Detroit (1)(1)(1), Farmington Hills
(1), Fraser (1), Green Oak Township (1 and 3),
Hamburg (1 and 3), Holland (1), Livonia (1), Mesick
(1), Mt. Clemens (1), Oxford (1)(1)(1), Port Huron
(1), Redford (1), Roseville (1), Royal Oak (1),
Shelby Township (1), St. Clair (1), St. Clair Shores
(1), Sterling Heights (1), Traverse City
(1)(1)(1)(1)(1), Troy (1)(1), Warren (1)(1), West
Branch (2) and Ypsilanti (1)
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Mississippi.............Nesbit (2)
New York................Brooklyn (2) and Maspeth (2)
Ohio....................Blue Ash (2), Bluffton (1), Canal Fulton (1), Columbus
(2), Lima (1), Minerva (1), Perrysburg (2), Port
Clinton (1) and Upper Sandusky (1)
Oklahoma................Tulsa (4)
Pennsylvania............Ridgway (1)
Texas...................Bryan (4), Dallas (4), Greenville (4) and Houston
(4)(4)(4)
Virginia................Duffield (1)
Germany.................Riedstadt (2) and Zell am Harmersbach(1 and 3)
Italy...................Poggio Rusco (1)
United Kingdom..........Wednesfield, England (1)
Note: Multiple footnotes within the same parenthesis indicate the
facility is engaged in significant activities relating to more than one
segment. Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table are
identified as follows: (1) transportation-related products; (2) specialty
products -- architectural; (3) specialty products -- other; and (4)
discontinued operations.
MascoTech's largest manufacturing facility is located in Vernon, California
and is a multi-plant facility of approximately 920,000 square feet. MascoTech
owns the largest plant, comprising approximately 540,000 square feet, and
operates the remaining portions of this facility under leases, the earliest of
which expires at the end of 1994. Except for the foregoing facility and an
additional manufacturing facility covering approximately 605,000 square feet,
MascoTech's manufacturing facilities range in size from approximately 25,000 to
325,000 square feet, are owned by MascoTech or leased and are not subject to
significant encumbrances. MascoTech's executive offices are located in Taylor,
Michigan, and are provided by the Company to MascoTech under a corporate
services agreement.
MascoTech's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
ITEM 3. LEGAL PROCEEDINGS.
Between 1982 and 1989, subsidiaries of the Company sold plastic plumbing
fittings used to connect plastic pipes for water supply systems in residential
construction. A small percentage of these fittings have experienced leaks which
the Company believes are caused by deficiencies in the resin supplied to its
subsidiaries by E.I. du Pont de Nemours and Company. The Company's policy has
been to repair any leaks which have been reported and, as a result, the Company
has not experienced litigation of any consequence arising from this situation.
Based on the terms of a recent settlement of litigation previously instituted by
the Company against du Pont, the Company does not believe that these matters
will result in any future material adverse effect on the Company's financial
position.
Civil suits were filed in December 1992 in a California state court by the
California Attorney General, the Natural Resources Defense Counsel and the
Environmental Law Foundation against a subsidiary of the Company and
approximately 15 other manufacturers or distributors of faucets sold in that
state. The suits principally allege that brass faucets unlawfully leach lead
into tap water and that the defendants have failed to provide clear and
reasonable warnings in violation of California law. The plaintiffs have
requested, among other things, that the defendants be enjoined from selling
products in California that leach lead into tap water, be ordered to offer
restitution to California purchasers of defendants' products, and pay
unspecified compensatory and punitive damages. Based upon the Company's present
knowledge and subject to future legal and factual developments, the Company
9
<PAGE> 11
does not believe that these suits will result in any material adverse effect on
the Company's financial position.
The Company is subject to other claims and litigation in the ordinary
course of business, but does not believe that any such claim or litigation will
have a material adverse effect on its consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATIONS S-K).
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
- ------------------------------- ---------------------------------------------- ---- -------
<S> <C> <C> <C>
Alex Manoogian................. Chairman Emeritus 92 1929
Richard A. Manoogian........... Chairman of the Board and Chief Executive 57 1962
Officer
Wayne B. Lyon.................. President and Chief Operating Officer 61 1972
Gerald Bright.................. Vice President and Assistant Secretary 71 1970
David A. Doran................. Vice President -- Taxes 52 1984
Eugene A. Gargaro, Jr.......... Vice President and Secretary 51 1993
Ronald L. Jones................ President -- Home Furnishings Products 51 1989
Raymond F. Kennedy............. President -- Building Products 51 1989
John R. Leekley................ Vice President and General Counsel 50 1979
Richard G. Mosteller........... Senior Vice President -- Finance 61 1962
John C. Nicholls, Jr........... Treasurer 60 1967
Robert B. Rosowski............. Vice President -- Controller 53 1973
Samuel Valenti, III............ Vice President -- Investments 48 1971
David G. Wesenberg............. Vice President -- Human Resources 63 1980
</TABLE>
Executive officers who are elected by the Board of Directors serve for a
term of one year or less. Each executive officer has been employed in a
managerial capacity with the Company for over five years except for Mr. Gargaro.
Richard A. Manoogian, the Chairman of the Board and Chief Executive Officer of
the Company, is the son of its Chairman Emeritus, Alex Manoogian.
Mr. Gargaro joined the Company as its Vice President and Secretary on
October 1, 1993. Prior to joining the Company, Mr. Gargaro was a partner at the
Detroit law firm of Dykema Gossett PLLC. Mr. Gargaro has served as a director
and Secretary of MascoTech, Inc., since 1984 and a director and Secretary of
TriMas Corporation since 1989.
10
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The New York Stock Exchange is the principal market on which the Company's
Common Stock is traded. The following table indicates the high and low sales
prices of the Company's Common Stock as reported on the New York Stock Exchange
Composite Tape and the cash dividends declared per share for the periods
indicated:
<TABLE>
<CAPTION>
MARKET PRICE
------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
------------------------------------------------- ---- ---- ---------
<S> <C> <C> <C>
1992
First.......................................... $28 7/8 $22 7/8 $ .15
Second......................................... 29 7/8 24 1/8 .15
Third.......................................... 27 5/8 24 3/8 .16
Fourth......................................... 30 22 .16
---------
Total....................................... $ .62
---------
---------
1993
First.......................................... $35 1/4 $ 29 $ .16
Second......................................... 34 3/4 28 5/8 .16
Third.......................................... 32 1/4 25 1/2 .17
Fourth......................................... 38 7/8 28 3/4 .17
---------
Total....................................... $ .66
---------
---------
</TABLE>
On March 15, 1994, there were approximately 8,200 holders of record of the
Company's Common Stock.
The Company expects that its practice of paying quarterly dividends on its
Common Stock will continue, although future dividends will continue to depend
upon the Company's earnings, capital requirements, financial condition and other
factors.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $3,886,000 $3,525,000 $3,141,000 $3,209,000 $3,150,500
Net income......................... $ 221,100 $ 183,100 $ 44,900 $ 138,800 $ 220,900
Per share of common stock:
Net income....................... $1.45 $1.21 $.30 $.91 $1.42
Dividends declared............... $.66 $.62 $.58 $.55 $.51
Dividends paid................... $.65 $.61 $.57 $.54 $.50
As at December 31:
Total assets..................... $4,021,060 $3,986,560 $3,785,810 $3,760,740 $3,640,780
Long-term debt................... $1,418,290 $1,487,090 $1,369,290 $1,334,300 $1,153,190
</TABLE>
11
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CORPORATE DEVELOPMENT
While no major acquisitions occurred in 1993, acquisitions have
historically contributed significantly to Masco's long-term growth, even though
generally the initial impact on earnings is minimal after deducting
acquisition-related costs such as interest and added depreciation and
amortization. The important earnings benefit to Masco arises from subsequent
growth of acquired companies, since incremental sales are not handicapped by
these expenses.
PROFIT MARGINS
After-tax profit margins as a percent of net sales were 5.7 percent, 5.2
percent and 1.4 percent in 1993, 1992 and 1991, respectively. After-tax profit
return on shareholders' equity was 11.7 percent, 10.2 percent and 2.5 percent in
1993, 1992 and 1991, respectively.
The increased profit margins for 1993, compared with the previous two
years, were primarily the result of increased product sales resulting from
improved market shares and the modest economic recovery, as well as increased
income related to the Company's equity investments in MascoTech, Inc.
LIQUIDITY AND CAPITAL RESOURCES
At year-end 1993, current assets were approximately 3.4 times current
liabilities.
Over the years, the Company has funded its growth through a combination of
cash provided by operations and long-term bank and other borrowings.
During 1993, cash was provided by $261 million from operating activities,
$88 million from the sale of affiliate investments to MascoTech, $100 million
from the redemption of the MascoTech 10% exchangeable preferred stock and $23
million from other net cash inflows; cash decreased by $167 million for the
purchase of property and equipment, $131 million for a net decrease in debt and
$99 million for cash dividends paid. The aggregate of the preceding items
represents a net cash inflow of $75 million in 1993. Cash provided by operating
activities totalled $261 million, $204 million and $244 million in 1993, 1992
and 1991, respectively; the Company has generally reinvested a majority of these
funds in its operations.
During 1993, the Company issued $400 million of fixed rate debt securities,
with the proceeds being used to eliminate floating-rate borrowings under its
bank revolving-credit agreement.
The Company's anticipated internal cash flow is expected to provide
sufficient liquidity to fund its near-term working capital and other investment
needs. The Company believes that its longer-term working capital and other
general corporate requirements will be satisfied through its internal cash flow
and to the extent necessary in the financial markets.
RECEIVABLES AND INVENTORIES
During 1993, the Company's receivables increased by $43 million. This
increase is primarily the result of increased sales in the fourth quarter of
1993 compared with the same period in 1992.
During 1993, the Company's inventories increased by $39 million. As
compared with the average manufacturing company, the Company maintains a higher
investment in inventories, which relates to the Company's business strategies of
providing better customer service, establishing efficient production scheduling
and benefitting from larger, more cost-effective purchasing.
CAPITAL EXPENDITURES
Capital expenditures totalled $167 million in 1993, compared with $118
million in 1992. These amounts primarily pertain to expenditures for additional
facilities related to increased demand as well as for new Masco products.
12
<PAGE> 14
The Company continues to invest in automating its manufacturing operations
and increasing its productivity, in order to be a more efficient producer and
improve customer service and response time.
Depreciation expense and amortization expense were $82.1 million and $33.9
million, respectively, in 1993, compared with $79.4 million and $35.1 million,
respectively, in 1992. This continued high level is primarily the result of
acquisitions and the Company's capital expenditures programs. The major portion
of amortization expense from the excess of cost over net assets acquired,
relates to companies acquired in 1986 and 1987. These companies have been
successful for many years in established markets not subject to rapid
technological changes. At each balance sheet date management assesses whether
there has been an impairment in the carrying value of excess of cost over net
assets of acquired companies by primarily comparing current and projected sales,
operating income and annual cash flows with the related annual amortization
expense.
EQUITY AND OTHER INVESTMENTS IN AFFILIATES
Equity earnings from affiliates were $18.7 million in 1993 compared with
equity earnings of $17.3 million in 1992 and equity loss of $12.6 million in
1991.
In March 1993, the Company and MascoTech, Inc., partially restructured
their affiliate relationships through transactions that reduced the Company's
common equity interest in MascoTech from 47 percent to approximately 35 percent
and resulted in MascoTech's acquisition of the Company's investments in Emco
Limited. The Company received $87.5 million in cash, $100 million of 10%
exchangeable preferred stock and seven-year warrants to purchase 10 million
common shares of MascoTech at $13 per share. MascoTech received 10 million of
its common shares, $77.5 million of its 12% exchangeable preferred stock, the
Company's investments in Emco Limited and a modified option expiring in 1997 to
require the Company to purchase up to $200 million aggregate amount of debt
securities of MascoTech.
In November 1993, MascoTech redeemed for cash its $100 million of 10%
exchangeable preferred stock issued in March 1993. As a result of this
redemption, the Company realized a $28.3 million pre-tax gain.
In December 1993, following MascoTech's call for redemption, the Company
converted the 6% debentures due 2011 into MascoTech common stock, thereby
increasing the Company's common equity interest in MascoTech from approximately
35 percent to 42 percent.
CASH DIVIDENDS
During 1993, the Company increased its dividend rate seven percent to $.17
per share quarterly. This marks the 35th consecutive year in which dividends
have been increased. Dividend payments over the last five years have increased
at an eight percent average annual rate. Although the Company is aware of the
greater interest in yield by many investors and has maintained an increased
dividend payout in recent years, the Company continues to believe that its
shareholders' long-term interests are best served by investing a significant
portion of its earnings in the future growth of the Company.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 112, Employers' Accounting
for Postemployment Benefits, became effective in January 1994. This Standard
specifies that the estimated cost of benefits provided by an employer to former
or inactive employees after employment but before retirement be accounted for on
an accrual basis. This Standard will not have a material impact on the Company's
financial statements.
Statement of Financial Accounting Standards No. 114, Accounting by
Creditors for Impairment of a Loan, becomes effective in January 1995. This
Standard addresses the accounting for impairment of a loan by specifying how
allowances for credit losses should be determined. This Standard will not have a
material impact on the Company's financial statements.
13
<PAGE> 15
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities, became effective in January 1994.
This Standard defines the accounting and reporting for all investments in debt
securities and for investments in equity securities that have readily
determinable fair values. This Standard will not have a material impact on the
Company's financial statements.
GENERAL FINANCIAL ANALYSIS
1993 VERSUS 1992
Net sales in 1993 increased 10 percent to $3,886 million. The sales
increase was primarily due to increased shipments of kitchen, bath and home
furnishings products. Cost of sales as a percentage of sales was 67.5 percent in
both 1993 and 1992. Selling, general and administrative expenses as a percentage
of sales decreased modestly to 22.1 percent in 1993 from 22.3 percent in 1992.
Operating profit increased 13 percent in 1993 from 1992.
The Company's Building and Home Improvement Products sales in 1993
increased 10 percent to $2,188 million while operating profit increased 12
percent to $412 million.
Sales in 1993 of the Company's Home Furnishings Products increased 11
percent to $1,698 million and operating profit increased 15 percent to $69
million.
Included in other income and expense for 1993 are equity earnings from
MascoTech, Inc. of $23.2 million, prior to an approximate $10 million after-tax
fourth quarter charge which reflects the Company's equity share of MascoTech's
loss provision for the disposition of its energy-related businesses and
extraordinary loss on the early extinguishment of debt, as compared with $12.6
million of equity earnings in 1992. MascoTech reported income from continuing
operations of $70.9 million and $39 million in 1993 and 1992, respectively, and
net income, after preferred stock dividends, of $32.7 million for 1993 and $29.1
million for 1992. The results of MascoTech were favorably impacted by internal
cost reductions and from increased demand in its transportation industries,
which more than offset its 1993 fourth quarter special charges of $26 million
after-tax.
Included in the fourth quarter of 1993 is a $28.3 million pre-tax gain
(approximately $18 million after-tax) on the redemption of MascoTech's 10%
exchangeable preferred stock. This gain was principally offset by the Company's
approximate $10 million after-tax equity share of MascoTech's above-mentioned
fourth quarter special charges, as well as by charges related to certain
restructurings of Company operations which should result in future cost savings.
The Company reported increases in net income and earnings per share of 21
percent and 20 percent, respectively, in 1993 as compared with 1992.
1992 VERSUS 1991
Net sales in 1992 increased 12 percent to $3,525 million. Cost of sales as
a percentage of sales decreased to 67.5 percent in 1992 from 70.2 percent in
1991. Selling, general and administrative expenses as a percentage of sales
increased to 22.3 percent in 1992 from 21.8 percent in 1991. The sales increase
was primarily due to increased shipments of kitchen, bath and home furnishings
products. The decrease in cost of sales as a percentage of sales resulted
primarily from profit improvement programs implemented in prior years having a
favorable impact on current earnings. The increase in selling, general and
administrative expenses as a percentage of sales was primarily due to increased
promotional and advertising costs. Operating profit increased 44 percent.
The Company's Building and Home Improvement Products sales in 1992
increased 16 percent while operating profit increased 35 percent.
Sales and operating profit in 1992 of the Company's Home Furnishings
Products increased 7 percent and 58 percent, respectively.
14
<PAGE> 16
Included in other income and expense for 1992 are equity earnings from
MascoTech, Inc. of $12.6 million as compared with $9.2 million of equity loss in
1991. MascoTech reported net income, after preferred stock dividends, of $29.1
million for 1992, as compared with net loss, after preferred stock dividends, of
$18.6 million in 1991. The results of MascoTech were favorably impacted by
internal cost reduction and restructuring initiatives and from modest
improvement in the economy. Also, lower interest rates contributed to reduced
interest expense for 1992.
Included in other income and expense for 1991 is approximately $32 million
pre-tax of non-operating charges attributable to write-downs of the Company's
carrying value of investments in certain affiliated companies and other
long-term investments.
The Company reported increases in net income and earnings per share of 308
percent and 303 percent, respectively, in 1992 as compared with 1991.
15
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of Masco Corporation:
We have audited the accompanying consolidated balance sheet of Masco
Corporation and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended December 31, 1993, and the financial statement schedules as
listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Masco
Corporation and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND
Detroit, Michigan
February 24, 1994
16
<PAGE> 18
MASCO CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
ASSETS 1993 1992
-------------- --------------
<S> <C> <C>
Current Assets:
Cash and cash investments................................... $ 119,980,000 $ 45,350,000
Marketable securities....................................... 4,890,000 8,970,000
Receivables................................................. 610,120,000 547,840,000
Inventories................................................. 824,130,000 781,700,000
Prepaid expenses............................................ 84,700,000 81,680,000
-------------- --------------
Total current assets................................... 1,643,820,000 1,465,540,000
Equity investments in MascoTech, Inc.......................... 294,700,000 246,940,000
Other investment in MascoTech, Inc............................ -- 130,000,000
Equity investments in other affiliates........................ 54,630,000 85,740,000
Property and equipment........................................ 1,095,170,000 1,030,530,000
Excess of cost over acquired net assets....................... 605,170,000 627,300,000
Other assets.................................................. 327,570,000 400,510,000
-------------- --------------
Total assets........................................... $4,021,060,000 $3,986,560,000
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable............................................... $ 33,160,000 $ 94,810,000
Accounts payable............................................ 161,220,000 133,210,000
Accrued liabilities......................................... 296,060,000 263,490,000
-------------- --------------
Total current liabilities.............................. 490,440,000 491,510,000
Long-term debt................................................ 1,418,290,000 1,487,090,000
Deferred income taxes and other............................... 113,900,000 121,080,000
-------------- --------------
Total liabilities...................................... 2,022,630,000 2,099,680,000
-------------- --------------
Shareholders' Equity:
Common shares authorized: 400,000,000;
issued: 1993 -- 152,850,000; 1992 -- 152,470,000......... 152,850,000 152,470,000
Preferred shares authorized: 1,000,000...................... -- --
Paid-in capital............................................. 69,880,000 61,370,000
Retained earnings........................................... 1,805,170,000 1,685,010,000
Cumulative translation adjustments.......................... (29,470,000) (11,970,000)
-------------- --------------
Total shareholders' equity............................. 1,998,430,000 1,886,880,000
-------------- --------------
Total liabilities and shareholders' equity............. $4,021,060,000 $3,986,560,000
-------------- --------------
-------------- --------------
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 19
MASCO CORPORATION
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales...................................... $3,886,000,000 $3,525,000,000 $3,141,000,000
Cost of sales.................................. 2,621,630,000 2,381,040,000 2,206,460,000
-------------- -------------- --------------
Gross profit............................ 1,264,370,000 1,143,960,000 934,540,000
Selling, general and administrative expenses... 860,540,000 785,420,000 686,210,000
-------------- -------------- --------------
Operating profit........................ 403,830,000 358,540,000 248,330,000
-------------- -------------- --------------
Other income (expense), net:
Re: MascoTech, Inc.:
Equity earnings (loss).................... 13,160,000 12,570,000 (9,170,000)
Interest and dividend income.............. 16,220,000 17,100,000 17,100,000
Gain from redemption of preferred stock... 28,300,000 -- --
Equity earnings (loss), other affiliates..... 5,580,000 4,720,000 (3,470,000)
Other, net................................... 1,330,000 12,510,000 (28,610,000)
Interest expense............................. (105,820,000) (100,640,000) (126,580,000)
-------------- -------------- --------------
(41,230,000) (53,740,000) (150,730,000)
-------------- -------------- --------------
Income before income taxes.............. 362,600,000 304,800,000 97,600,000
Income taxes................................... 141,500,000 121,700,000 52,700,000
-------------- -------------- --------------
Net income.............................. $ 221,100,000 $ 183,100,000 $ 44,900,000
-------------- -------------- --------------
-------------- -------------- --------------
Earnings per share............................. $1.45 $1.21 $.30
----- ----- ----
----- ----- ----
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 20
MASCO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM (FOR):
Operating Activities:
Net income.................................... $ 221,100,000 $ 183,100,000 $ 44,900,000
Depreciation and amortization................. 115,990,000 114,450,000 102,690,000
Equity (earnings) loss, net................... (13,800,000) (13,190,000) 38,090,000
Write-downs of long-term investments.......... -- -- 31,800,000
Deferred income taxes and other............... (8,500,000) 11,620,000 (3,550,000)
Gain from redemption of MascoTech preferred
stock, net of tax.......................... (17,550,000) -- --
------------- ------------- -------------
Total from earnings...................... 297,240,000 295,980,000 213,930,000
(Increase) in receivables..................... (42,520,000) (52,450,000) (13,180,000)
(Increase) decrease in inventories............ (38,840,000) (35,100,000) 17,560,000
Increase (decrease) in accounts payable and
accrued liabilities, net................... 45,050,000 (4,800,000) 25,310,000
------------- ------------- -------------
Net cash from operating activities....... 260,930,000 203,630,000 243,620,000
------------- ------------- -------------
Investing Activities:
Capital expenditures.......................... (166,540,000) (117,690,000) (112,990,000)
Currency translation adjustments.............. (17,500,000) (27,090,000) (15,820,000)
Sale of affiliate investments to MascoTech.... 87,500,000 -- --
Proceeds from redemption of MascoTech
preferred stock............................ 100,000,000 -- --
Acquisition of Masco Capital Corp............. -- -- (49,450,000)
Other, net.................................... 40,700,000 (63,380,000) (2,850,000)
------------- ------------- -------------
Net cash from (for) investing
activities............................ 44,160,000 (208,160,000) (181,110,000)
------------- ------------- -------------
Financing Activities:
Issuance of notes............................. 400,000,000 400,000,000 --
Retirement of notes........................... (200,000,000) (300,000,000) --
Issuance of Company common stock.............. -- -- 63,600,000
Increase in other debt........................ 290,770,000 460,470,000 449,690,000
Payment of other debt......................... (622,230,000) (480,000,000) (479,660,000)
Cash dividends paid........................... (99,000,000) (92,690,000) (85,150,000)
------------- ------------- -------------
Net cash (for) financing activities...... (230,460,000) (12,220,000) (51,520,000)
------------- ------------- -------------
Cash and Cash Investments:
Increase (decrease) for the year.............. 74,630,000 (16,750,000) 10,990,000
At January 1.................................. 45,350,000 62,100,000 51,110,000
------------- ------------- -------------
At December 31................................ $ 119,980,000 $ 45,350,000 $ 62,100,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 21
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of Masco Corporation and all majority-owned subsidiaries. All
significant intercompany transactions have been eliminated.
Average Shares Outstanding. The average number of common shares outstanding
in 1993, 1992 and 1991 approximated 152.7 million, 151.7 million and 149.9
million, respectively.
Cash and Cash Investments. The Company considers all highly liquid
investments with a maturity of three months or less to be cash and cash
investments.
Receivables. Accounts and notes receivable are presented net of allowances
for doubtful accounts of $19.1 million at December 31, 1993 and $16.3 million at
December 31, 1992.
Property and Equipment. Property and equipment, including significant
betterments to existing facilities, are recorded at cost. Upon retirement or
disposal, the cost and accumulated depreciation are removed from the accounts
and any gain or loss is included in income. Maintenance and repair costs are
charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 to 10
percent, and machinery and equipment, 5 to 33 percent. Depreciation was $82.1
million, $79.4 million and $70.2 million in 1993, 1992 and 1991, respectively.
The excess of cost over net assets of acquired companies is being amortized
using the straight-line method over periods not exceeding 40 years; at December
31, 1993 and 1992, such accumulated amortization totalled $127.2 million and
$107.3 million, respectively. At each balance sheet date management assesses
whether there has been an impairment in the carrying value of excess of cost
over net assets of acquired companies primarily by comparing current and
projected sales, operating income and annual cash flows with the related annual
amortization expense. Purchase costs of patents are being amortized using the
straight-line method over their remaining lives. Amortization of intangible
assets was $33.9 million, $35.1 million and $32.5 million in 1993, 1992 and
1991, respectively.
Fair Value of Financial Instruments. The carrying value of financial
instruments reported in the balance sheet for current assets and current
liabilities approximates fair value. The fair value of financial instruments
that are carried as long-term investments (other than those accounted for by the
equity method) was based principally on quoted market prices for those or
similar investments or by discounting future cash flows using a discount rate
that approximates the risk of the investments. The fair value of the Company's
long-term debt instruments was based principally on quoted market prices for the
same or similar issues or the current rates offered to the Company for debt with
similar terms and remaining maturities. The aggregate market value of the
Company's long-term investments and long-term debt at December 31, 1993 was
approximately $230 million and $1,471 million, as compared with the Company's
carrying value of $200 million and $1,418 million, respectively. The aggregate
market value of the Company's long-term investments and long-term debt at
December 31, 1992 was approximately $530 million and $1,508 million, as compared
with the Company's carrying value of $537 million and $1,487 million,
respectively.
Recently Issued Professional Accounting Standards. Statement of Financial
Accounting Standards (SFAS) No. 112, Employers' Accounting for Postemployment
Benefits, SFAS No. 114, Accounting by Creditors for Impairment of a Loan and
SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities,
which become effective in 1994 and 1995, will not have a material impact on the
Company's financial statements.
20
<PAGE> 22
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Finished goods........................................... $312,470 $300,820
Raw material............................................. 280,450 243,510
Work in process.......................................... 231,210 237,370
-------- --------
$824,130 $781,700
-------- --------
-------- --------
</TABLE>
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
EQUITY INVESTMENTS IN AFFILIATES:
Equity investments in affiliates consist primarily of the following equity
and partnership interests:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
MascoTech, Inc.............................................. 42% 47% 47%
Hans Grohe, a German partnership............................ 27% 27% 27%
TriMas Corporation.......................................... 5% 7% 8%
Emco Limited, a Canadian company............................ -- 44% 44%
Mechanical Technology Inc................................... -- -- 49%
</TABLE>
Excluding the partnership interest in Hans Grohe, for which there is no
quoted market value, the aggregate market value of the Company's equity
investments at December 31, 1993 (which may differ from the amounts that could
then have been realized upon disposition), based upon quoted market prices at
that date, was $889 million, as compared with the Company's related aggregate
carrying value of $315 million.
The Company's carrying value in the common stock of MascoTech, Inc.
(formerly Masco Industries, Inc.) exceeds its equity in the underlying net book
value by approximately $63 million at December 31, 1993. This excess,
substantially all of which resulted from repurchases by MascoTech of its common
stock, is being amortized over a period not to exceed 40 years. The Company's
carrying value in the common stock of TriMas Corporation exceeds its equity in
the underlying net book value by approximately $8 million at December 31, 1993.
The Company's carrying value of its investment in Hans Grohe at December 31,
1993 approximates the Company's equity in the underlying net book value in this
affiliate.
In March 1993, the Company and MascoTech partially restructured their
affiliate relationships through transactions that reduced the Company's common
equity interest in MascoTech from 47 percent to approximately 35 percent and
resulted in MascoTech's acquisition of the Company's investments in Emco
Limited. The Company received $87.5 million in cash, $100 million of 10%
exchangeable preferred stock and seven-year warrants to purchase 10 million
common shares of MascoTech at $13 per share. MascoTech received 10 million of
its common shares, $77.5 million of its 12% exchangeable preferred stock, the
Company's investments in Emco Limited and a modified option expiring in 1997 to
require the Company to purchase up to $200 million aggregate amount of debt
securities in MascoTech.
In November 1993, MascoTech redeemed for cash its $100 million of 10%
exchangeable preferred stock issued in March 1993. As a result of this
redemption, the Company realized a $28.3 million pre-tax gain.
21
<PAGE> 23
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EQUITY INVESTMENTS IN AFFILIATES (CONTINUED):
In December 1993, following MascoTech's call for redemption, the Company
converted the 6% debentures due 2011 into MascoTech common stock, thereby
increasing the Company's common equity interest in MascoTech from approximately
35 percent to 42 percent.
As part of the Company's efforts to de-emphasize equity investments, in
addition to its disposition of its investments in Emco Limited, in July 1992 the
Company sold its 49 percent equity interest in Mechanical Technology Inc. at
approximate carrying value.
Approximate combined condensed financial data of the above companies,
excluding data subsequent to 1991 of Emco Limited and Mechanical Technology Inc.
as to which the equity method was discontinued as of January 1, 1992, are
summarized in U.S. dollars as follows, in thousands:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
At December 31:
Current assets........................ $ 846,780 $ 881,200 $ 1,190,160
Current liabilities................... (300,650) (371,350) (509,770)
----------- ----------- -----------
Working capital....................... 546,130 509,850 680,390
Property and equipment................ 720,290 755,290 882,530
Other assets.......................... 882,550 737,660 816,340
Long-term liabilities................. (1,213,940) (1,400,950) (1,810,060)
----------- ----------- -----------
Shareholders' equity.................. $ 935,030 $ 601,850 $ 569,200
----------- ----------- -----------
----------- ----------- -----------
Net sales............................... $ 2,230,330 $ 2,051,730 $ 2,706,880
----------- ----------- -----------
----------- ----------- -----------
Income (loss) from continuing
operations............................ $ 119,380 $ 56,690 $ (940)
----------- ----------- -----------
----------- ----------- -----------
Net income (loss) attributable to common
shareholders.......................... $ 96,090 $ 50,340 $ (2,070)
----------- ----------- -----------
----------- ----------- -----------
The Company's net equity in above income
(loss)................................ $ 18,740 $ 17,290 $ (12,640)
----------- ----------- -----------
----------- ----------- -----------
Cash dividends received by the Company
from affiliates....................... $ 4,940 $ 4,100 $ 25,450
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Certain amounts for 1992 and 1991 have been restated to reflect MascoTech's
formal plan to divest its energy-related business segment.
Equity in undistributed earnings of affiliates of $132 million at December
31, 1993, $118 million at December 31, 1992 and $105 million at December 31,
1991 are included in consolidated retained earnings.
OTHER INVESTMENT IN MASCOTECH, INC.:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Convertible debentures, 6%, due 2011..................... -- $130,000
-------- --------
-------- --------
</TABLE>
In December 1993, following MascoTech's call for redemption, the Company
converted the 6% debentures into MascoTech common stock at $18 per share.
22
<PAGE> 24
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1993 1992
---------- ----------
<S> <C> <C>
Land and improvements................................. $ 78,670 $ 77,080
Buildings............................................. 595,630 574,960
Machinery and equipment............................... 1,009,060 901,960
---------- ----------
1,683,360 1,554,000
Less accumulated depreciation......................... 588,190 523,470
---------- ----------
$1,095,170 $1,030,530
---------- ----------
---------- ----------
</TABLE>
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-----------------------
1993 1992
-------- --------
<S> <C> <C>
Salaries, wages and commissions....................... $ 60,910 $ 61,520
Insurance............................................. 35,180 31,010
Advertising and sales promotion....................... 32,370 26,260
Dividends payable..................................... 26,260 24,330
Income taxes.......................................... 26,110 17,820
Interest.............................................. 26,070 24,480
Employee retirement plans and other................... 89,160 78,070
-------- --------
$296,060 $263,490
-------- --------
-------- --------
</TABLE>
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1993 1992
---------- ----------
<S> <C> <C>
Notes, 6.25%, due 1995............................... $ 200,000 $ 200,000
Notes, 8.75%, due 1996............................... -- 200,000
Notes, 9%, due 1996............................... 250,000 250,000
Notes, 6.625%, due 1999............................... 200,000 200,000
Notes, 9%, due 2001............................... 175,000 175,000
Notes, 6.125%, due 2003............................... 200,000 --
Notes, 7.125%, due 2013............................... 200,000 --
Notes payable to banks................................ -- 260,000
Convertible subordinated debentures, 5.25%, due
2012................................................ 177,930 177,930
Other................................................. 23,980 28,750
---------- ----------
1,426,910 1,491,680
Less current portion.................................. 8,620 4,590
---------- ----------
$1,418,290 $1,487,090
---------- ----------
---------- ----------
</TABLE>
At December 31, 1993, all of the outstanding notes above are nonredeemable.
In March 1993, the $200 million of 8.75% notes due 1996 were redeemed at
par with borrowings under the Company's bank revolving-credit agreement.
23
<PAGE> 25
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT (CONTINUED):
In August 1993, the Company issued $200 million of 7.125% notes due August
15, 2013. In September 1993, the Company issued $200 million of 6.125% notes due
September 15, 2003. The proceeds from these financings were used to eliminate
floating-rate borrowings under the Company's bank revolving-credit agreement.
In June 1992, the Company issued $200 million of 6.25% notes due June 15,
1995. In September 1992, the Company issued $200 million of 6.625% notes due
September 15, 1999. The proceeds from these financings were used to reduce
outstanding bank indebtedness.
The 5.25% subordinated debentures due February 15, 2012 are convertible
into common stock at $42.28 per share.
The notes payable to banks at December 31, 1992 relate to a $750 million
revolving-credit agreement, with any outstanding balance due and payable in
November 1995. Interest is payable on borrowings under this agreement based upon
various floating rates as selected by the Company.
Certain debt agreements contain limitations on additional borrowings and
restrictions on cash dividend payments and common share repurchases. At December
31, 1993, the amount of retained earnings available for cash dividends and
common share repurchases approximated $242 million under the most restrictive of
these provisions.
At December 31, 1993, the maturities of long-term debt during the next five
years were approximately as follows: 1994-$8.6 million; 1995-$204.1 million;
1996-$256.9 million; 1997-$1.1 million; and 1998-$1.0 million.
At December 31, 1993, the Company had shelf registration statements on file
with the Securities and Exchange Commission for up to $200 million of debt
securities as well as up to 9.6 million shares of its common stock.
Interest paid was approximately $104 million, $121 million and $127 million
in 1993, 1992 and 1991, respectively.
24
<PAGE> 26
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Common Shares, $1 Par Value
Balance, January 1....................... $ 152,470 $ 153,210 $ 149,960
Shares issued............................ 380 1,470 3,250
Shares retired........................... -- (2,210) --
---------- ---------- ----------
Balance, December 31..................... 152,850 152,470 153,210
---------- ---------- ----------
Paid-In Capital
Balance, January 1....................... 61,370 64,950 --
Common shares issued..................... 8,510 25,050 64,950
Common shares retired.................... -- (28,630) --
---------- ---------- ----------
Balance, December 31..................... 69,880 61,370 64,950
---------- ---------- ----------
Retained Earnings
Balance, January 1....................... 1,685,010 1,596,180 1,638,390
Net income............................... 221,100 183,100 44,900
Cash dividends declared.................. (100,940) (94,270) (87,110)
---------- ---------- ----------
Balance, December 31..................... 1,805,170 1,685,010 1,596,180
---------- ---------- ----------
Cumulative Translation Adjustments
Balance, December 31..................... (29,470) (11,970) 15,120
---------- ---------- ----------
Treasury Shares Related to Merger
Balance, January 1....................... -- (30,550) (30,550)
Shares repurchased....................... -- (290) --
Shares retired........................... -- 30,840 --
---------- ---------- ----------
Balance, December 31..................... -- -- (30,550)
---------- ---------- ----------
Shareholders' Equity
Balance, December 31..................... $1,998,430 $1,886,880 $1,798,910
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
In April 1991, the Company issued 3 million shares of its common stock for
approximately $64 million. The proceeds from this offering were used to reduce
outstanding bank indebtedness.
On the basis of amounts paid (declared), cash dividends per share were $.65
($.66) in 1993, $.61 ($.62) in 1992 and $.57 ($.58) in 1991.
25
<PAGE> 27
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK OPTIONS AND AWARDS:
For the three years ended December 31, 1993, stock option data pertaining
to stock option plans for key employees of the Company and affiliated companies
are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Option shares outstanding, January 1.......... 6,742,000 7,390,000 3,817,000
Option shares granted......................... 298,000 1,212,000 3,735,000
Option price................................ $27-$37 $25-$30 $21
Option shares exercised....................... 1,210,000 1,860,000 142,000
Option price................................ $2-$30 $2-$21 $2-$18
Option shares cancelled....................... 144,000 -- 20,000
Option price................................ $2-$21 -- $17-$21
Option shares outstanding, December 31........ 5,686,000 6,742,000 7,390,000
Option price................................ $10-$37 $2-$30 $2-$25
Option shares exercisable, December 31........ 1,457,000 1,326,000 2,076,000
</TABLE>
Pursuant to restricted stock incentive plans, the Company granted long-term
incentive awards, net, for 100,000, 267,000 and 36,000 shares of common stock
during 1993, 1992 and 1991, respectively, to key employees of the Company and
affiliated companies. The unamortized costs of unvested awards under these
plans, aggregating approximately $47 million at December 31, 1993, are being
amortized over the ten-year vesting periods.
At December 31, 1993, a combined total of 10,595,000 shares of common stock
was available for the granting of stock options and incentive awards under the
above plans.
Pursuant to the 1984 Restricted Stock (MascoTech) Incentive Plan, the
Company may award to key employees of the Company and affiliated companies,
shares of common stock of MascoTech, Inc. held by the Company. No such awards
were granted in 1993, 1992 or 1991. At December 31, 1993, there were 4,694,000
of such shares available for granting future awards under this plan.
26
<PAGE> 28
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EMPLOYEE RETIREMENT PLANS:
The Company sponsors defined-benefit pension plans for most of its
employees. In addition, substantially all salaried employees participate in
noncontributory profit-sharing plans, to which payments are determined annually
by the Directors. Aggregate charges to income under the pension and
profit-sharing plans were $19.2 million in 1993, $16.9 million in 1992 and $15.9
million in 1991. At December 31, 1993, the combined assets of the Company's
defined-benefit pension plans exceed the combined accumulated benefit
obligation.
Net periodic pension cost for the Company's pension plans includes the
following components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Service cost -- benefits earned during the $ 11,800 $ 10,850 $ 10,590
year..........................................
Interest cost on projected benefit obligation... 17,240 15,280 14,820
Actual return on assets......................... (28,940) (12,190) (25,470)
Net amortization and deferral................... 6,100 (9,810) 6,080
-------- -------- --------
Net periodic pension cost....................... $ 6,200 $ 4,130 $ 6,020
-------- -------- --------
-------- -------- --------
</TABLE>
Major assumptions used in accounting for the Company's pension plans are as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ ----- ------
<S> <C> <C> <C>
Discount rate for obligations........................ 7.25% 8.0% 8.25%
Rate of increase in compensation levels.............. 5.0 % 6.0% 5.75%
Expected long-term rate of return on plan assets..... 13.0 % 13.0% 12.75%
</TABLE>
The funded status of the Company's pension plans at December 31, is
summarized as follows, in thousands:
<TABLE>
<CAPTION>
1993 1992
-------------------------- --------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit
obligation............. $ 135,800 $ 54,130 $ 115,900 $33,890
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Accumulated benefit
obligation............. $ 142,110 $ 62,660 $ 122,500 $38,450
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Projected benefit
obligation............. $ 181,850 $ 68,420 $ 160,040 $41,960
Assets at fair value.......... 158,630 47,790 150,650 32,190
----------- ----------- ----------- -----------
Projected benefit obligation
in excess of plan
assets................... (23,220) (20,630) (9,390) (9,770)
Reconciling items:
Unrecognized net loss....... 22,780 13,720 10,070 2,420
Unrecognized prior service
cost..................... 8,680 1,240 11,870 2,600
Unrecognized net (asset)
obligation at
transition............... (12,800) 1,400 (14,890) 2,300
Requirement to recognize
minimum liability........ -- (11,170) -- (5,060)
----------- ----------- ----------- -----------
Accrued pension cost........ $ (4,560) $ (15,440) $ (2,340) $(7,510)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
In January 1993, Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, became
effective. The Company sponsors certain postretirement benefit plans that
provide medical, dental and life insurance coverage for eligible retirees and
dependents in the United States based on age and length of service. At December
31, 1993, the aggregate present value of the accumulated postretirement benefit
obligation approximated $10 million pre-tax and is being amortized over 20
years.
27
<PAGE> 29
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEGMENT INFORMATION:
The Company's operations in the industry segments detailed below consisted
of the manufacture and sale principally of the following products:
Building and home improvement -- faucets; plumbing fittings; kitchen and
bath cabinets; showertubs, whirlpools and spas; kitchen appliances;
builders' hardware; venting and ventilating equipment; and water pumps.
Home furnishings products -- quality furniture, fabrics and other home
furnishings products.
Corporate assets consisted primarily of cash, real property and other
investments.
Pursuant to a corporate services agreement to provide MascoTech, Inc. with
certain corporate staff and administrative services, the Company charges a fee
approximating .8 percent of MascoTech net sales. This fee approximated $11
million in each of 1993, 1992 and 1991 and is included as a reduction of general
corporate expense.
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES OPERATING PROFIT ASSETS AT DECEMBER 31
------------------------------------ ------------------------------- ------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
---------- ---------- ---------- -------- -------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company's
operations by
segment were:
Building and
home
improvement... $2,188,000 $1,991,000 $1,711,000 $412,000 $368,000 $ 273,000 $1,297,000 $1,262,000 $1,171,000
Home
furnishings
products.... 1,698,000 1,534,000 1,430,000 69,000 60,000 38,000 1,886,000 1,778,000 1,661,000
---------- ---------- ---------- -------- -------- --------- ---------- ---------- ----------
Total..... $3,886,000 $3,525,000 $3,141,000 $481,000 $428,000 $ 311,000 $3,183,000 $3,040,000 $2,832,000
---------- ---------- ---------- -------- -------- --------- ---------- ---------- ----------
---------- ---------- ---------- -------- -------- --------- ---------- ---------- ----------
The Company's
operations by
geographic area
were:
United
States...... $3,194,000 $2,895,000 $2,610,000 $387,000 $334,000 $ 232,000 $2,638,000 $2,522,000 $2,363,000
European
Community... 375,000 378,000 327,000 60,000 64,000 48,000 240,000 245,000 242,000
Other foreign
countries... 317,000 252,000 204,000 34,000 30,000 31,000 305,000 273,000 227,000
---------- ---------- ---------- -------- -------- --------- ---------- ---------- ----------
Total, as
above... $3,886,000 $3,525,000 $3,141,000 481,000 428,000 311,000 3,183,000 3,040,000 2,832,000
---------- ---------- ----------
---------- ---------- ----------
Other expense,
net............. (41,000) (54,000) (151,000)
General corporate
expense, net.... (77,000) (69,000) (62,000)
-------- -------- ---------
Income before
income
taxes(1)........ $363,000 $305,000 $ 98,000
-------- -------- ---------
-------- -------- ---------
Equity and other
investments
in affiliates... 349,000 463,000 448,000
Corporate
assets.......... 489,000 484,000 506,000
---------- ---------- ----------
Total
assets... $4,021,000 $3,987,000 $3,786,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS AMORTIZATION
------------------------------------ -------------------------------
1993 1992 1991 1993 1992 1991
---------- ---------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
The Company's
operations by
segment were:
Building and
home
improvement... $ 80,000 $ 80,000 $ 62,000 $ 48,000 $ 48,000 $ 42,000
Home
furnishings
products.... 71,000 35,000 38,000 46,000 45,000 43,000
---------- ---------- ---------- -------- -------- ---------
Total..... $ 151,000 $ 115,000 $ 100,000 $ 94,000 $ 93,000 $ 85,000
---------- ---------- ---------- -------- -------- ---------
---------- ---------- ---------- -------- -------- ---------
</TABLE>
(1) Income before income taxes and net income from foreign operations
for 1993, 1992 and 1991 were $92 million and $55 million, $88
million and $54 million, and $72 million and $43 million,
respectively.
28
<PAGE> 30
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Re: MascoTech, Inc.:
Equity earnings (loss)..................... $ 13,160 $ 12,570 $ (9,170)
--------- --------- ---------
Interest and dividend income............... 16,220 17,100 17,100
--------- --------- ---------
Gain from redemption of preferred stock.... 28,300 -- --
--------- --------- ---------
Equity earnings (loss), other affiliates..... 5,580 4,720 (3,470)
--------- --------- ---------
Other, net:
Income from cash and marketable
securities.............................. 3,250 4,330 4,100
Other interest income...................... 9,800 11,640 14,390
Other items................................ (11,720) (3,460) (47,100)
--------- --------- ---------
1,330 12,510 (28,610)
--------- --------- ---------
Interest expense............................. (105,820) (100,640) (126,580)
--------- --------- ---------
$ (41,230) $ (53,740) $(150,730)
--------- --------- ---------
--------- --------- ---------
</TABLE>
Other items in 1991 include write-downs aggregating approximately $32
million pre-tax in the Company's long-term investments.
29
<PAGE> 31
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Income before income taxes:
Domestic...................................... $270,930 $216,460 $ 25,910
Foreign....................................... 91,670 88,340 71,690
-------- -------- --------
$362,600 $304,800 $ 97,600
-------- -------- --------
-------- -------- --------
Provision for income taxes:
Currently payable:
Federal.................................... $ 96,830 $ 62,360 $ 25,690
State and local............................ 13,530 12,500 8,660
Foreign.................................... 39,640 35,220 25,800
Deferred:
Federal, net............................... (5,570) 12,090 (10,740)
Foreign.................................... (2,930) (470) 3,290
-------- -------- --------
$141,500 $121,700 $ 52,700
-------- -------- --------
-------- -------- --------
Deferred tax assets at December 31:
Inventories................................... $ 12,080
Earlier recognition of expenses for financial
reporting purposes......................... 44,570
Other......................................... 1,550
--------
58,200
--------
Deferred tax liabilities at December 31:
Property and equipment........................ 145,880
Other......................................... 9,240
--------
155,120
--------
Net deferred tax liability at December
31....................................... $ 96,920
--------
--------
Provision for deferred income taxes for
temporary differences:
Accelerated tax deductions, including
depreciation............................... $ 900 $ 3,990 $ 8,760
Earlier recognition of gains and losses, net
for financial reporting purposes........... (9,400) 7,630 (16,210)
-------- -------- --------
$ (8,500) $ 11,620 $ (7,450)
-------- -------- --------
-------- -------- --------
</TABLE>
The effective tax rate differs from the United States federal statutory
rate principally due to: equity earnings (1 percent in 1992 and -7 percent in
1991), higher tax rate applicable to foreign earnings (-1 percent in 1993, -2
percent in 1992 and -5 percent in 1991), amortization in excess of tax, net (-1
percent in 1993, -2 percent in 1992 and -6 percent in 1991), dividends-received
deduction (1 percent in 1993 and 1992 and 2 percent in 1991), state income tax
and other (-2 percent in 1993 and -4 percent in 1992 and 1991), and -1 percent
in 1993 to record the effect on deferred tax liabilities caused by the increase
in the tax rate from 34 percent to 35 percent.
Income taxes paid were approximately $135 million, $97 million and $54
million in 1993, 1992 and 1991, respectively.
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, which requires the use of an asset and liability method of accounting for
income taxes, became effective in January 1993. Deferred income taxes result
from temporary differences between the tax basis of assets
30
<PAGE> 32
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES (CONTINUED):
and liabilities and the related basis as reported in the consolidated financial
statements. Prior to 1993, the Company followed the requirements of Statement of
Financial Accounting Standards No. 96, Accounting for Income Taxes.
COMBINED FINANCIAL STATEMENTS (UNAUDITED):
The following presents the combined financial statements of the Company,
MascoTech, Inc. (formerly Masco Industries, Inc.), and TriMas Corporation as one
entity, with Masco Corporation as the parent company. Certain amounts for 1992
and 1991 have been restated to reflect MascoTech's formal plan to divest its
energy-related business segment. Intercompany transactions have been eliminated.
Amounts, except earnings per share, are in thousands.
<TABLE>
<CAPTION>
AT DECEMBER 31
------------------------
1993 1992
---------- ----------
<S> <C> <C>
COMBINED BALANCE SHEET
Assets
Current assets:
Cash and cash investments........................... $ 272,950 $ 186,120
Marketable securities............................... 32,680 42,190
Receivables......................................... 906,500 857,550
Prepaid expenses.................................... 118,700 104,720
Deferred income taxes............................... 41,780 13,990
Inventories:
Finished goods................................... 393,820 414,270
Raw material..................................... 365,370 351,570
Work in process.................................. 281,680 298,940
---------- ----------
1,040,870 1,064,780
---------- ----------
Total current assets........................... 2,413,480 2,269,350
Equity investments in affiliates...................... 163,970 124,570
Property and equipment................................ 1,747,590 1,712,840
Excess of cost over acquired net assets............... 1,114,740 1,217,010
Net assets of discontinued operations................. 67,510 --
Other assets.......................................... 428,390 537,420
---------- ----------
Total assets................................... $5,935,680 $5,861,190
---------- ----------
---------- ----------
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable....................................... $ 36,310 $ 159,350
Accounts payable.................................... 277,070 253,680
Accrued liabilities................................. 428,720 403,510
---------- ----------
Total current liabilities...................... 742,100 816,540
Long-term debt........................................ 2,445,540 2,600,970
Deferred income taxes and other....................... 275,400 315,300
Other interests in combined affiliates................ 474,210 241,500
---------- ----------
Total liabilities.............................. 3,937,250 3,974,310
Equity of shareholders of Masco Corporation........... 1,998,430 1,886,880
---------- ----------
Total liabilities and shareholders' equity..... $5,935,680 $5,861,190
---------- ----------
---------- ----------
</TABLE>
31
<PAGE> 33
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
COMBINED STATEMENT OF INCOME
Net sales............................... $ 5,901,060 $ 5,360,330 $ 4,741,240
Cost of sales........................... (4,169,190) (3,797,980) (3,486,760)
Selling, general and administrative
expenses.............................. (1,112,300) (1,033,350) (916,670)
----------- ----------- -----------
Operating profit................. 619,570 529,000 337,810
----------- ----------- -----------
Other income (expense), net:
Interest expense...................... (189,610) (188,230) (259,520)
Other, net............................ 45,360 45,040 31,150
----------- ----------- -----------
(144,250) (143,190) (228,370)
----------- ----------- -----------
Income before income taxes and
other interests............... 475,320 385,810 109,440
Income taxes............................ 208,930 172,610 68,870
Other interests in combined
affiliates............................ 45,290 30,100 (4,330)
----------- ----------- -----------
Net income....................... $ 221,100 $ 183,100 $ 44,900
----------- ----------- -----------
----------- ----------- -----------
Earnings per share...................... $1.45 $1.21 $.30
----- ----- ----
----- ----- ----
</TABLE>
32
<PAGE> 34
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------
1993 1992 1991
----------- --------- ---------
<S> <C> <C> <C>
COMBINED STATEMENT OF CASH FLOWS
Cash Flows From (For) Operating Activities:
Net income............................... $ 221,100 $ 183,100 $ 44,900
Depreciation and amortization............ 194,270 191,290 175,740
Equity (earnings) loss, net of
dividends............................. (4,840) (1,140) 18,530
Gain from change in investment........... (9,490) (16,700) --
Write-downs of long-term investments..... -- -- 31,800
Deferred income taxes and other.......... 7,590 15,860 1,980
Gain on sales of assets, net............. -- -- (21,500)
Other interests in net income (loss) of
combined affiliates, net.............. 45,290 30,100 (4,330)
----------- --------- ---------
Total from earnings................. 453,920 402,510 247,120
(Increase) in receivables................ (52,670) (75,340) (5,330)
(Increase) decrease in inventories....... (49,950) (36,550) 44,780
Increase (decrease) in accounts payable
and accrued liabilities, net.......... 37,230 (9,690) 31,330
Discontinued operations, net............. 16,700 830 (3,340)
----------- --------- ---------
Net cash from operating
activities....................... 405,230 281,760 314,560
----------- --------- ---------
Cash Flows From (For) Investing Activities:
Capital expenditures..................... (252,360) (198,170) (176,950)
Currency translation adjustments......... (17,500) (27,090) (15,820)
Acquisitions............................. -- -- (50,190)
Proceeds from sale of subsidiaries....... 33,170 -- 52,110
Other, net............................... 39,730 (45,810) 40,750
----------- --------- ---------
Net cash (for) investing
activities....................... (196,960) (271,070) (150,100)
----------- --------- ---------
Cash Flows From (For) Financing Activities:
Increase in debt......................... 862,800 872,140 514,410
Payment of debt.......................... (1,087,400) (915,630) (602,250)
Issuance of common shares................ -- 85,150 63,600
Issuance of preferred stock.............. 209,520 -- --
Cash dividends paid...................... (106,360) (93,410) (85,150)
----------- --------- ---------
Net cash (for) financing
activities....................... (121,440) (51,750) (109,390)
----------- --------- ---------
Cash and Cash Investments:
Increase (decrease) for the year......... 86,830 (41,060) 55,070
At January 1............................. 186,120 227,180 172,110
----------- --------- ---------
At December 31........................... $ 272,950 $ 186,120 $ 227,180
----------- --------- ---------
----------- --------- ---------
</TABLE>
33
<PAGE> 35
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
INTERIM FINANCIAL INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUARTERS NET GROSS NET EARNINGS
ENDED SALES PROFIT INCOME PER SHARE
----------------------------------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
1993
December 31........................ $1,010,000 $ 322,070 $ 57,600 $ .38
September 30....................... 982,000 319,900 55,700 .36
June 30............................ 948,000 309,500 53,300 .35
March 31........................... 946,000 312,900 54,500 .36
---------- ---------- -------- ---------
$3,886,000 $1,264,370 $221,100 $1.45
---------- ---------- -------- ---------
---------- ---------- -------- ---------
1992
December 31........................ $ 908,000 $ 291,360 $ 43,000 $ .29
September 30....................... 899,000 293,500 50,800 .33
June 30............................ 867,000 285,300 48,500 .32
March 31........................... 851,000 273,800 40,800 .27
---------- ---------- -------- ---------
$3,525,000 $1,143,960 $183,100 $1.21
---------- ---------- -------- ---------
---------- ---------- -------- ---------
</TABLE>
34
<PAGE> 36
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1994 Annual
Meeting of Stockholders, to be filed on or before April 30, 1994, and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders, to be
filed on or before April 30, 1994, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders, to be
filed on or before April 30, 1994, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders, to be
filed on or before April 30, 1994, and such information is incorporated herein
by reference.
35
<PAGE> 37
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31,
1993 and 1992, and for the years ended December 31, 1993, 1992 and
1991, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedules of the Company appended hereto, as
required at December 31, 1993, and for the years ended December
31, 1993, 1992 and 1991, consist of the following:
I. Marketable Securities -- Other Investments
II. Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other than
Related Parties
V. Property, Plant and Equipment
VI. Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment
VIII. Valuation and Qualifying Accounts
IX. Short-Term Borrowings
X. Supplementary Income Statement Information
(ii) (A) MascoTech, Inc. and Subsidiaries Consolidated Financial
Statements appended hereto, as required at December 31, 1993
and 1992, and for the years ended December 31, 1993, 1992
and 1991, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(ii) (B) MascoTech, Inc. and Subsidiaries Financial Statement
Schedules appended hereto, as required for the years ended
December 31, 1993, 1992 and 1991, consist of the following:
II. Amount Receivable from Related Parties and
Underwriters, Promoters, and Employees Other than
Related Parties
V. Property, Plant and Equipment
VI. Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment
VIII. Valuation and Qualifying Accounts
X. Supplementary Income Statement Information
36
<PAGE> 38
(3) Exhibits.
<TABLE>
<CAPTION>
<S> <C>
3.i Restated Certificate of Incorporation of Masco Corporation and
amendments thereto.(2)
3.ii Bylaws of Masco Corporation, as amended.
4.a Indenture dated as of December 1, 1982 between Masco Corporation and
Morgan Guaranty Trust Company of New York, as Trustee(2), and
Directors' resolutions establishing Masco Corporation's: (i) 9% Notes
Due April 15, 1996,(3), (ii) 9% Notes Due October 1, 2001,(2), (iii)
6 1/4% Notes Due June 15, 1995,(2) (iv) 6 5/8% Notes Due September 15,
1999,(2) 6 1/8% Notes Due September 15, 2003(1), and (vi) 7 1/8%
Debentures Due August 15, 2013(1).
4.b Indenture dated as of December 1, 1982 between Masco Corporation and
Citibank, N.A., as Trustee, and Directors' resolutions establishing
Masco Corporation's 5 1/4% Convertible Subordinated Debentures Due
2012, including form of Debenture.(3)
4.c $750,000,000 Credit Agreement dated as of November 7, 1991 among Masco
Corporation, the banks signatory thereto and Morgan Guaranty Trust
Company of New York, as agent(3), and Amendment No. 1 thereto dated
March 18, 1992.(2)
4.d Indenture dated as of November 1, 1986 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and Morgan Guaranty Trust Company of
New York, as Trustee, and Directors' resolutions establishing Masco
Industries, Inc.'s 4 1/2% Convertible Subordinated Debentures Due
2003.
4.e Indenture dated as of February 1, 1987 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and Chemical Bank (successor by merger
to Manufacturers Hanover Trust Company), as Trustee, and Directors'
resolutions establishing Masco Industries, Inc.'s 10% Senior
Subordinated Notes Due 1995.(2)
4.f Credit Agreement dated as of September 2, 1993 by and among MascoTech,
Inc., the banks party thereto, and NBD Bank, N.A., as Agent, and
Comerica Bank, The Bank of New York, The First National Bank of
Chicago, Morgan Guaranty Trust Company of New York and NationsBank of
North Carolina, N.A., as Co-Agents.
Note: Other instruments, notes or extracts from agreements defining the
rights of holders of long-term debt of Masco Corporation or its
subsidiaries have not been filed since (i) in each case the total
amount of long-term debt permitted thereunder does not exceed 10
percent of Masco Corporation's consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by Masco Corporation
to the Securities and Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.)(4)
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco
Corporation and Masco Industries, Inc. (now known as MascoTech,
Inc.)(2)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between
Masco Corporation and Masco Industries, Inc. (now known as MascoTech,
Inc.)(4)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco
Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.)
and related forfeiture letter dated September 20, 1985, Amendment to
Stock Repurchase Agreement dated as of December 20, 1990(3) and
Agreement
</TABLE>
37
<PAGE> 39
<TABLE>
<S> <C>
dated as of November 23, 1993 including an amendment to Stock
Repurchase Agreement.
Note: Exhibits 10.e through 10.p constitute the management contracts and
executive compensatory plans or arrangements in which certain of the
Directors and executive officers of the company participate.
10.e Masco Corporation 1991 Long-Term Stock Incentive Plan.(3)
10.f Masco Corporation 1988 Restricted Stock Incentive Plan (Restated
September 11, 1990).(4)
10.g Masco Corporation 1988 Stock Option Plan (Restated September 11,
1990).(4)
10.h Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan
(Restated September 11, 1990).(4)
10.i Masco Corporation 1984 Stock Option Plan (Restated September 11,
1990).(4)
10.j Masco Corporation Restricted Stock Incentive Plan (Restated September
11, 1990).(4)
10.k Masco Corporation Non-Qualified Stock Option Plan 1975 (Restated
September 11, 1990).(4)
10.l MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated
September 14, 1993).
10.m MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated
September 14, 1993).
10.n MascoTech, Inc. 1984 Stock Option Plan (Restated September 14, 1993).
10.o Masco Corporation Supplemental Executive Retirement and Disability
Plan.
10.p Form of Agreement dated June 29, 1989 between Masco Corporation and
certain of its officers.
10.q Amended and Restated Securities Purchase Agreement dated as of
November 23, 1993 between Masco Corporation and MascoTech, Inc.,
including form of Note.
10.r Registration Agreement dated as of March 31, 1993 between Masco
Corporation and Masco Industries, Inc. (now known as MascoTech, Inc.)
10.s Stock Purchase Agreement between Masco Corporation and Masco
Industries, Inc. (now known as MascoTech, Inc.) dated as of December
23, 1991 (regarding Masco Capital Corporation).(3)
11 Computation of Primary and Fully Diluted Per Share Earnings.
12 Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand relating to Masco Corporation's Financial
Statements and Financial Statement Schedules.
23.b Consent of Coopers & Lybrand relating to MascoTech, Inc.'s Financial
Statements and Financial Statement Schedules.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with Masco
Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.
(2) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December
31, 1992.
38
<PAGE> 40
(3) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December
31, 1991.
(4) Incorporated by reference to the Exhibits filed with Masco
Corporation's Annual Report on Form 10-K for the year ended December
31, 1990.
(B) REPORTS ON FORM 8-K.
The following Current Report on Form 8-K was filed by Masco Corporation in
the calendar quarter ended March 31, 1994:
Report on Form 8-K dated March 2, 1994 reporting under Item 5, "Other
Events," the 1993 year end financial results of the Company. The following
financial statements were filed with such Report:
(1) Audited consolidated balance sheet of Masco Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income and cash flows for each of the three
years in the period ended December 31, 1993; and
(2) Audited consolidated balance sheet of MascoTech, Inc. and subsidiaries
as of December 31, 1993 and 1992, and the related consolidated
statements of income and cash flows for each of the three years in the
period ended December 31, 1993.
39
<PAGE> 41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MASCO CORPORATION
By RICHARD G. MOSTELLER
RICHARD G. MOSTELLER
Senior Vice President -- Finance
March 24, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
RICHARD A. MANOOGIAN Chairman of the Board
RICHARD A. MANOOGIAN and Chief Executive Officer
PRINCIPAL FINANCIAL OFFICER:
RICHARD G. MOSTELLER Senior Vice President -- Finance
RICHARD G. MOSTELLER
PRINCIPAL ACCOUNTING OFFICER:
ROBERT B. ROSOWSKI Vice President -- Controller
ROBERT B. ROSOWSKI
WAYNE B. LYON President and Director
WAYNE B. LYON
March 24, 1994
LILLIAN BAUDER Director
LILLIAN BAUDER
ERWIN L. KONING Director
ERWIN L. KONING
JOHN A. MORGAN Director
JOHN A. MORGAN
ARMAN SIMONE Director
ARMAN SIMONE
PETER W. STROH Director
PETER W. STROH
</TABLE>
40
<PAGE> 42
MASCO CORPORATION
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Schedules, as required, at December 31, 1993 and 1992 and for the years
ended December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
I. Marketable Securities -- Other Investments...................................... F-2
II. Amounts Receivable from Related Parties and Underwriters, Promoters,
and Employees Other than Related Parties...................................... F-3
V. Property, Plant and Equipment................................................... F-4
VI. Accumulated Depreciation, Depletion and Amortization of Property, Plant and
Equipment..................................................................... F-5
VIII. Valuation and Qualifying Accounts............................................... F-6
IX. Short-Term Borrowings........................................................... F-7
X. Supplementary Income Statement Information...................................... F-8
MascoTech, Inc. and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedules................................................................... F-9
</TABLE>
F-1
<PAGE> 43
MASCO CORPORATION
SCHEDULE I. MARKETABLE SECURITIES -- OTHER INVESTMENTS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------- ----------------- ------------ -------------- -------------
NUMBER OF
SHARES OR MARKET VALUE AMOUNT AT
UNITS -- OF EACH WHICH EACH
PRINCIPAL ISSUE AT ISSUE CARRIED
NAME OF ISSUER AND TITLE AMOUNT OF COST OF BALANCE IN THE
OF EACH ISSUE BONDS & NOTES EACH ISSUE SHEET DATE BALANCE SHEET
- -------------------------------- ----------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
MARKETABLE SECURITIES
Current Assets:
Common Stocks.............. -- $ 4,890,000 $ 5,560,000 $ 4,890,000
------------ -------------- -------------
------------ -------------- -------------
Long-Term Assets:
Common Stocks:
Home Furnishings......... -- $ 6,830,000 $ 12,520,000 $ 6,830,000
Other Consumer
Products.............. -- 2,120,000 1,500,000 2,120,000
------------ -------------- -------------
Total Common Stocks... -- $ 8,950,000 $ 14,020,000 $ 8,950,000
------------ -------------- -------------
------------ -------------- -------------
OTHER INVESTMENTS
Equity Investments in
MascoTech, Inc............. 25,170,000 $294,700,000 $ 842,310,000 $ 294,700,000
Investments, Other............ -- 181,710,000 232,420,000 181,710,000
------------ -------------- -------------
$476,410,000 $1,074,730,000 $ 476,410,000
------------ -------------- -------------
------------ -------------- -------------
</TABLE>
F-2
<PAGE> 44
MASCO CORPORATION
SCHEDULE II. AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- --------------------------- ----------- ---------- ------------------------- --------------------------
DEDUCTIONS BALANCE AT
BALANCE AT ------------------------- DECEMBER 31, 1993
JANUARY 1, AMOUNTS AMOUNTS --------------------------
NAME OF DEBTOR 1993 ADDITIONS COLLECTED WRITTEN OFF CURRENT NON CURRENT
- -------------------------- ----------- ---------- ---------- ------------ ----------- ------------
(A) (A)
<S> <C> <C> <C> <C> <C> <C>
Gerald Bright.............. $ 225,000 $ 225,000 --
David A. Doran............. 1,350,000 381,000 $ 969,000
Ronald L. Jones............ 900,000 -- 900,000
Raymond F. Kennedy......... 1,350,000 -- 1,350,000
John R. Leekley............ 1,350,000 1,350,000 --
Wayne B. Lyon.............. 2,250,000 -- 2,250,000
Richard A. Manoogian....... 7,200,000 -- 7,200,000
Richard G. Mosteller....... 2,250,000 1,595,000 655,000
John C. Nicholls, Jr. ..... 900,000 -- 900,000
Peter J. Pirsch............ 450,000 -- 450,000
Robert B. Rosowski......... 450,000 -- 450,000
John F. Ullrich............ 900,000 262,000 638,000
Samuel Valenti, III........ 2,250,000 -- 2,250,000
David G. Wesenberg......... 225,000 225,000 --
----------- ---------- ---------- ------------ ----------- ------------
22,050,000 -- 4,038,000 -- 18,012,000 --
Accrued Interest on Notes
Receivable............... 5,402,000 $1,428,000 1,156,000 -- 5,674,000 --
Discount on Notes
Receivable(B)............ (1,409,000) 977,000 -- -- (432,000) --
----------- ---------- ---------- ------------ ----------- ------------
$26,043,000 $2,405,000 $5,194,000 -- $23,254,000 --
----------- ---------- ---------- ------------ ----------- ------------
----------- ---------- ---------- ------------ ----------- ------------
</TABLE>
All amounts receivable are related to an incentive program of the Company
that has been disclosed in previous proxy statements of the Company and that
will be described in the Company's definitive Proxy Statement for its 1994
Annual Meeting of Stockholders to be filed on or before April 30, 1994.
Notes:
(A) Amounts receivable from employees are due June 30, 1994. The stated rate
of interest is 7%.
(B) Represents the discount pertaining to the difference between the stated
rate of interest of 7% and the effective rate of interest of approximately
9%.
Activity for 1992 includes interest income of $1,555,000, discount
amortization of $681,000 and, in consideration for return to the Company of
assets of approximate equal value, cancellation of the receivable balances of
$1,592,000 for two former employees.
Activity for 1991 includes interest income of $1,733,000 and discount
amortization of $545,000.
F-3
<PAGE> 45
MASCO CORPORATION
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
----------- -------------- ------------ ------------ ------------ --------------
OTHER
BALANCE AT CHANGES
BEGINNING ADDITIONS ADD BALANCE AT
DESCRIPTION OF PERIOD AT COST RETIREMENTS (DEDUCT) END OF PERIOD
----------- -------------- ------------ ------------ ------------ --------------
(A) (B)
<S> <C> <C> <C> <C> <C>
1993:
Land and land improvements............. $ 77,080,000 $ 3,580,000 $ 1,580,000 $ (410,000) $ 78,670,000
Buildings.............................. 574,960,000 22,000,000 7,180,000 5,850,000 595,630,000
Machinery and equipment................ 692,490,000 45,180,000 15,110,000 21,280,000 743,840,000
Office, delivery and other equipment... 178,920,000 24,110,000 10,400,000 4,110,000 196,740,000
Construction in progress............... 30,550,000 71,670,000 1,930,000 (31,810,000) 68,480,000
-------------- ------------ ------------ ------------ --------------
$1,554,000,000 $166,540,000 $ 36,200,000 $ (980,000) $1,683,360,000
-------------- ------------ ------------ ------------ --------------
-------------- ------------ ------------ ------------ --------------
1992:
Land and land improvements............. $ 75,420,000 $ 1,560,000 $ 680,000 $ 780,000 $ 77,080,000
Buildings.............................. 556,520,000 19,540,000 4,460,000 3,360,000 574,960,000
Machinery and equipment................ 634,310,000 47,300,000 6,020,000 16,900,000 692,490,000
Office, delivery and other equipment... 166,450,000 18,990,000 9,350,000 2,830,000 178,920,000
Construction in progress............... 27,460,000 35,780,000 2,050,000 (30,640,000) 30,550,000
-------------- ------------ ------------ ------------ --------------
$1,460,160,000 $123,170,000 $ 22,560,000 $ (6,770,000) $1,554,000,000
-------------- ------------ ------------ ------------ --------------
-------------- ------------ ------------ ------------ --------------
1991:
Land and land improvements............. $ 73,460,000 $ 2,780,000 $ 980,000 $ 160,000 $ 75,420,000
Buildings.............................. 476,570,000 18,740,000 3,880,000 65,090,000 556,520,000
Machinery and equipment................ 581,910,000 46,140,000 16,720,000 22,980,000 634,310,000
Office, delivery and other equipment... 150,900,000 18,500,000 6,270,000 3,320,000 166,450,000
Construction in progress............... 92,150,000 32,350,000 280,000 (96,760,000) 27,460,000
-------------- ------------ ------------ ------------ --------------
$1,374,990,000 $118,510,000 $ 28,130,000 $ (5,210,000) $1,460,160,000
-------------- ------------ ------------ ------------ --------------
-------------- ------------ ------------ ------------ --------------
</TABLE>
Notes:
(A) Including fixed asset additions of $5,480,000 in 1992 and $5,520,000 in
1991 obtained through the purchase of companies.
(B) Adjustments and reclassifications between noncurrent asset accounts and
the effect of foreign currency translation.
F-4
<PAGE> 46
MASCO CORPORATION
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
----------- ------------ ----------- ----------- ----------- ------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES BALANCE AT
BEGINNING COSTS AND ADD END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) PERIOD
----------- ------------ ----------- ----------- ----------- ------------
(A)
<S> <C> <C> <C> <C> <C>
1993:
Land improvements.......................... $ 7,350,000 $ 890,000 -- $ (90,000) $ 8,150,000
Buildings.................................. 121,130,000 17,310,000 $4,430,000 (1,640,000) 132,370,000
Machinery and equipment.................... 297,350,000 43,690,000 8,300,000 2,920,000 335,660,000
Office, delivery and other equipment....... 97,640,000 20,210,000 8,100,000 2,260,000 112,010,000
------------ ----------- ----------- ----------- ------------
$523,470,000 $82,100,000 $20,830,000 $ 3,450,000 $588,190,000
------------ ----------- ----------- ----------- ------------
------------ ----------- ----------- ----------- ------------
1992:
Land improvements.......................... $ 6,360,000 $ 880,000 $ 30,000 $ 140,000 $ 7,350,000
Buildings.................................. 105,020,000 17,160,000 1,560,000 510,000 121,130,000
Machinery and equipment.................... 267,480,000 41,960,000 4,250,000 (7,840,000) 297,350,000
Office, delivery and other equipment....... 81,230,000 19,350,000 7,000,000 4,060,000 97,640,000
------------ ----------- ----------- ----------- ------------
$460,090,000 $79,350,000 $12,840,000 $(3,130,000) $523,470,000
------------ ----------- ----------- ----------- ------------
------------ ----------- ----------- ----------- ------------
1991:
Land improvements.......................... $ 5,380,000 $ 1,020,000 $ 130,000 $ 90,000 $ 6,360,000
Buildings.................................. 90,110,000 14,630,000 900,000 1,180,000 105,020,000
Machinery and equipment.................... 238,050,000 37,610,000 6,840,000 (1,340,000) 267,480,000
Office, delivery and other equipment....... 71,310,000 16,930,000 4,300,000 (2,710,000) 81,230,000
------------ ----------- ----------- ----------- ------------
$404,850,000 $70,190,000 $12,170,000 $(2,780,000) $460,090,000
------------ ----------- ----------- ----------- ------------
------------ ----------- ----------- ----------- ------------
</TABLE>
NOTE:
(A) Adjustments and reclassifications between noncurrent asset accounts and
the effect of foreign currency translation.
F-5
<PAGE> 47
MASCO CORPORATION
SCHEDULE VIII. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
----------- ----------- ------------------------- ----------- -------------
ADDITIONS
-------------------------
BALANCE AT CHARGED CHARGED
BEGINNING TO COSTS TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
----------- ----------- ------------ --------- ----------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts receivable in
the balance sheet:
1993................................ $16,340,000 $12,900,000 $(130,000) $10,040,000 $19,070,000
----------- ------------ --------- ----------- -------------
----------- ------------ --------- ----------- -------------
1992................................ $13,680,000 $15,460,000 -- $12,800,000 $16,340,000
----------- ------------ --------- ----------- -------------
----------- ------------ --------- ----------- -------------
1991................................ $13,010,000 $14,300,000 -- $13,630,000 $13,680,000
----------- ------------ --------- ----------- -------------
----------- ------------ --------- ----------- -------------
</TABLE>
Notes:
(A) Allowance of companies acquired and companies disposed of, net.
(B) Deductions, representing uncollectible accounts written off, less
recoveries of accounts written off in prior years.
F-6
<PAGE> 48
MASCO CORPORATION
SCHEDULE IX. SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ------------------------------ ------------ -------- ------------ ------------ -------------
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE END OF INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWING PERIOD RATE PERIOD PERIOD PERIOD
- ------------------------------ ------------ -------- ------------ ------------ -------------
(A) (A)
<S> <C> <C> <C> <C> <C>
1993:
Payable to banks (various
due dates)............... $ 30,300,000 5.5% $126,640,000 $ 95,050,000 4.4%
Other (various due dates)... 2,860,000 8.3% 2,860,000 2,340,000 8.9%
------------
$ 33,160,000
------------
------------
1992:
Payable to banks (various
due dates)............... $ 93,040,000 5.5% $148,090,000 $122,600,000 6.1%
Other (various due dates)... 1,770,000 9.8% 7,970,000 3,520,000 8.4%
------------
$ 94,810,000
------------
------------
1991:
Payable to banks (various
due dates)............... $127,990,000 8.3% $186,030,000 $163,400,000 8.3%
Other (various due dates)... 4,060,000 6.9% 13,750,000 10,360,000 7.3%
------------
$132,050,000
------------
------------
</TABLE>
Note:
(A) Computed primarily using the average daily balances or interest rates.
F-7
<PAGE> 49
MASCO CORPORATION
SCHEDULE X. SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B
----------- --------
CHARGED TO COSTS AND EXPENSES
-------------------------------------------
ITEM DESCRIPTION 1993 1992 1991
- ---- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1. Maintenance and repairs........................ $ 67,470,000 $ 63,660,000 $ 58,190,000
------------- ------------- -------------
------------- ------------- -------------
5. Advertising costs.............................. $ 166,770,000 $ 143,750,000 $ 127,500,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
Other captions provided for under this schedule are excluded as the amounts
related to such captions are not material.
F-8
<PAGE> 50
MASCOTECH, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of MascoTech, Inc.:
We have audited the accompanying consolidated balance sheet of MascoTech,
Inc. and subsidiaries (formerly Masco Industries, Inc.) as of December 31, 1993
and 1992, and the related consolidated statements of income and cash flows for
each of the three years in the period ended December 31, 1993, and the financial
statement schedules as listed in Item 14(a)(2)(ii) of this Form 10-K. These
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MascoTech, Inc.
and subsidiaries as of December 31, 1993 and 1992, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND
Detroit, Michigan
February 24, 1994
F-9
<PAGE> 51
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash investments................................... $ 83,200,000 $ 76,000,000
Receivables................................................. 238,820,000 272,920,000
Inventories................................................. 140,040,000 222,280,000
Deferred and refundable income taxes........................ 41,780,000 13,990,000
Prepaid expenses and other assets........................... 52,000,000 47,250,000
-------------- --------------
Total current assets................................... 555,840,000 632,440,000
Equity and other investments in affiliates.................... 170,510,000 81,460,000
Property and equipment, net................................... 490,190,000 537,420,000
Excess of cost over net assets of acquired companies.......... 439,760,000 479,400,000
Notes receivable and other assets............................. 66,100,000 76,590,000
Net assets of discontinued operations......................... 67,510,000 --
-------------- --------------
Total assets........................................... $1,789,910,000 $1,807,310,000
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 95,520,000 $ 103,620,000
Accrued liabilities......................................... 103,260,000 117,430,000
Current portion of long-term debt........................... 2,830,000 64,430,000
-------------- --------------
Total current liabilities.............................. 201,610,000 285,480,000
Long-term debt................................................ 788,360,000 1,065,390,000
Deferred income taxes and other long-term liabilities......... 132,310,000 103,040,000
-------------- --------------
Total liabilities...................................... 1,122,280,000 1,453,910,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par: Authorized: 25,000,000;
Outstanding: 10.8 million in 1993 (liquidation value-$216
million) and .8 million in 1992 (liquidation value-$77.5
million)................................................. 10,800,000 780,000
Common stock, $1 par: Authorized: 250,000,000; Outstanding:
60,510,000 and 59,520,000................................ 60,510,000 59,520,000
Paid-in capital............................................. 367,290,000 84,390,000
Retained earnings........................................... 232,120,000 202,660,000
Cumulative translation adjustments.......................... (3,090,000) 6,050,000
-------------- --------------
Total shareholders' equity............................. 667,630,000 353,400,000
-------------- --------------
Total liabilities and shareholders' equity............. $1,789,910,000 $1,807,310,000
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-10
<PAGE> 52
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales................................... $ 1,582,880,000 $ 1,455,320,000 $ 1,266,210,000
Cost of sales............................... (1,257,480,000) (1,159,050,000) (1,054,520,000)
--------------- --------------- ---------------
Gross profit......................... 325,400,000 296,270,000 211,690,000
Selling, general and administrative
expenses.................................. (179,680,000) (184,430,000) (168,100,000)
--------------- --------------- ---------------
Operating profit..................... 145,720,000 111,840,000 43,590,000
--------------- --------------- ---------------
Other income (expense), net:
Interest expense, Masco Corporation....... (6,990,000) (7,800,000) (7,800,000)
Other interest expense.................... (74,370,000) (78,190,000) (104,680,000)
Equity and interest income from
affiliates............................. 21,000,000 15,750,000 29,390,000
Gain from change in investment of equity
affiliates............................. 9,490,000 16,700,000 --
Gain from disposition of operations....... -- -- 21,500,000
Other, net................................ 26,330,000 9,950,000 5,530,000
--------------- --------------- ---------------
(24,540,000) (43,590,000) (56,060,000)
--------------- --------------- ---------------
Income (loss) from continuing operations
before income taxes (credit) and
extraordinary loss........................ 121,180,000 68,250,000 (12,470,000)
Income taxes (credit)....................... 50,290,000 29,210,000 (2,120,000)
--------------- --------------- ---------------
Income (loss) from continuing operations
before extraordinary loss................. 70,890,000 39,040,000 (10,350,000)
Discontinued operations (net of income
taxes):
Income (loss) from operations of
discontinued segment.............. 2,630,000 (610,000) 1,380,000
Loss on disposition.................. (22,270,000) -- --
--------------- --------------- ---------------
Income (loss) before extraordinary loss..... 51,250,000 38,430,000 (8,970,000)
Extraordinary loss (net of income taxes).... (3,650,000) -- --
--------------- --------------- ---------------
Net income (loss).................... $ 47,600,000 $ 38,430,000 $ (8,970,000)
--------------- --------------- ---------------
--------------- --------------- ---------------
Preferred stock dividends................... $ 14,930,000 $ 9,300,000 $ 9,600,000
--------------- --------------- ---------------
--------------- --------------- ---------------
Earnings (loss) attributable to
common stock...................... $ 32,670,000 $ 29,130,000 $ (18,570,000)
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
1993
-------------------
ASSUMING
FULL 1992 1991
PRIMARY DILUTION PRIMARY PRIMARY
------- -------- ------- -------
<S> <C> <C> <C> <C>
Earnings (loss) per common and common equivalent share:
Continuing operations................................... $ .97 $.91 $ .49 $(.33)
Discontinued operations:
Income (loss) from operations of discontinued
segment............................................ .05 .04 (.01) .02
Loss on disposition.................................. (.39) * -- --
------- -------- ------- -------
Income (loss) before extraordinary loss................. .63 .63 .48 (.31)
Extraordinary loss...................................... (.06) * -- --
------- -------- ------- -------
Earnings (loss) attributable to common stock............ $ .57 $.57 $ .48 $(.31)
------- -------- ------- -------
------- -------- ------- -------
</TABLE>
- -------------------------
* Anti-dilutive
The accompanying notes are an integral part of the consolidated financial
statements.
F-11
<PAGE> 53
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
------------- ------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income (loss)............................... $ 47,600,000 $ 38,430,000 $ (8,970,000)
Gain, sale of assets............................ -- -- (21,500,000)
Gain from change in investment.................. (9,490,000) (16,700,000) --
Depreciation and amortization................... 59,810,000 59,920,000 59,040,000
Equity earnings, net of dividends............... (12,000,000) (5,250,000) (4,460,000)
Deferred taxes.................................. 15,590,000 3,130,000 3,270,000
(Decrease) in valuation allowance for marketable
securities.................................... -- -- (13,730,000)
(Increase) decrease in receivables.............. (5,900,000) (23,930,000) 9,780,000
(Increase) decrease in inventories.............. (2,990,000) (2,920,000) 25,120,000
(Increase) decrease in prepaid expenses......... (11,650,000) 4,010,000 (4,470,000)
Decrease in accounts payable and accrued
liabilities................................... (5,900,000) (12,930,000) (530,000)
Other, net, including extraordinary loss........ 8,180,000 13,540,000 2,950,000
Discontinued operations, net.................... 16,700,000 830,000 (3,340,000)
------------- ------------- -------------
Net cash from operating activities............ 99,950,000 58,130,000 43,160,000
------------- ------------- -------------
FINANCING:
Increase in debt................................ -- 11,670,000 14,720,000
Payment or repurchase of debt................... (150,020,000) (135,490,000) (122,430,000)
Issuance of preferred stock..................... 209,520,000 -- --
Retirement of preferred stock................... (100,000,000) -- --
Payment of dividends............................ (16,020,000) (9,300,000) (7,280,000)
Other, net...................................... 3,770,000 (2,240,000) --
------------- ------------- -------------
Net cash used for financing activities........ (52,750,000) (135,360,000) (114,990,000)
------------- ------------- -------------
INVESTMENTS:
Cash received from redemption of TriMas
subordinated debentures....................... -- 88,000,000 40,000,000
Cash paid Masco Corporation..................... (87,500,000) -- --
Cash received from dispositions:
Energy-related segment........................ 93,450,000 -- --
Masco Capital................................. -- -- 49,450,000
Other operations.............................. -- -- 52,110,000
Masco Capital distributions, net................ -- -- 21,220,000
Capital expenditures............................ (59,540,000) (60,000,000) (48,630,000)
Decrease in marketable securities, net.......... 2,980,000 3,150,000 26,190,000
Other, net...................................... 10,610,000 4,130,000 7,050,000
------------- ------------- -------------
Net cash (used for) from investing
activities................................. (40,000,000) 35,280,000 147,390,000
------------- ------------- -------------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year................... 7,200,000 (41,950,000) 75,560,000
At January 1....................................... 76,000,000 117,950,000 42,390,000
------------- ------------- -------------
At December 31................................ $ 83,200,000 $ 76,000,000 $ 117,950,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-12
<PAGE> 54
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting. Capital
transactions by equity affiliates at amounts differing from the Company's
carrying amount are reflected in other income or expense and the investment in
affiliates account.
Certain amounts for the years ended December 31, 1992 and 1991 have been
reclassified to conform to the presentation adopted in 1993. The statements of
income and cash flows for 1993, 1992 and 1991 and related notes have been
reclassified to present the Energy-related segment as discontinued operations.
In addition, the balance sheet as of December 31, 1993 reflects the
Energy-related segment as discontinued operations (see "Discontinued Operations"
note). The balance sheet as of December 31, 1992 has not been reclassified for
discontinued operations. Effective June 23, 1993 the Company changed its name to
MascoTech, Inc. from Masco Industries, Inc.
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1993 owned approximately 42 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees, which are determined
principally as a percentage of net sales, including net sales related to
discontinued operations, aggregated approximately $11 million in each of 1993,
1992 and 1991.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments. The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value. At December 31, 1993, the Company has $33
million on deposit with a German bank that is subject to currency exchange rate
fluctuations.
Receivables. Receivables are presented net of allowances for doubtful
accounts of $5.1 million and $7.2 million at December 31, 1993 and 1992,
respectively.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10
percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred
financing costs are amortized over the lives of the related debt securities. The
excess of cost over net assets of acquired companies is amortized using the
straight-line method over the period estimated to be benefitted, not exceeding
40 years. At each balance sheet date management assesses whether there has been
a permanent impairment of the excess of cost over net assets of acquired
companies by comparing anticipated undiscounted future cash flows from operating
activities with the carrying amount of the excess of cost over net assets of
acquired companies. The factors considered by management in performing this
assessment include current operating results, business prospects, market trends,
potential product obsolescence, competitive activities and other economic
factors. Based on this assessment there was no permanent impairment related to
excess of cost over net assets of acquired companies at December 31, 1993.
F-13
<PAGE> 55
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1993 and 1992, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $98.4 million and
$105.1 million, respectively. Amortization expense was $22.2 million, $22.8
million and $21.2 million in 1993, 1992 and 1991, respectively, including
amortization expense of approximately $1.6 million in each year related to
discontinued operations.
Income Taxes. In January, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income Taxes."
SFAS No. 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, SFAS No. 109 generally allows
consideration of all expected future events other than enactments of changes in
the tax law or tax rates. Previously, the Company used the SFAS No. 96 asset and
liability approach that gave no recognition to future events other than the
recovery of assets and settlement of liabilities at their carrying amounts.
There was no income statement impact from the adoption of SFAS No. 109 and the
required balance sheet reclassification was immaterial. Provision is made for
U.S. income taxes on the undistributed earnings of foreign subsidiaries unless
such earnings are considered permanently reinvested.
Earnings (Loss) Per Common Share. Primary earnings (loss) per common share
are based on the weighted average number of shares of common stock and common
stock equivalents outstanding (including the dilutive effect of options and
warrants, utilizing the treasury stock method) of 57.4 million, 60.9 million and
59.7 million in 1993, 1992 and 1991, respectively, and earnings (loss) after
deducting preferred stock dividends of $14.9 million, $9.3 million and $9.6
million in 1993, 1992 and 1991, respectively.
Fully diluted earnings (loss) per common share are only presented when the
assumed conversion of convertible debentures is dilutive. Fully diluted earnings
per share in 1993 were calculated based on 68.8 million weighted average common
shares outstanding. Convertible securities did not have a dilutive effect on
earnings (loss) in 1992 or 1991. The shares of Dividend Enhanced Convertible
Stock DECSSM (the "DECS") issued in 1993 (see "Shareholders' Equity" note) are
common stock equivalents, but are not included in the calculation of primary or
fully diluted shares outstanding as such inclusion would be anti-dilutive.
In late 1993, approximately 10.4 million shares were issued as a result of
the conversion of the 6% Convertible Subordinated Debentures (see "Shareholders'
Equity" note). If such conversion had taken place at the beginning of 1993, the
primary earnings per common and common equivalent share amounts would have
approximated the amounts presented for earnings per common and common equivalent
share, assuming full dilution, for the year ended December 31, 1993.
Adoption of Statements of Financial Accounting Standards. The Company
expects that the adoption of Statements of Financial Accounting Standards
("SFAS") No. 112 "Employers' Accounting for Postemployment Benefits", SFAS No.
114 "Accounting by Creditors for Impairment of a Loan" and SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities" will not have
a material impact on the financial position or the results of operations of the
Company when adopted in 1994 and 1995.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1993: in addition to
the payment by the Company of $87.5 million, the non-cash portion of the
issuance of Company Preferred Stock and warrants in exchange for Company Common
Stock, Company Preferred Stock and Masco Corporation's holdings of Emco Limited
common stock and convertible debentures (see "Shareholders' Equity" note);
conversion of $187 million of convertible debentures into Company Common Stock
F-14
<PAGE> 56
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(see "Shareholders' Equity" note); and conversion of the Company's TriMas
Corporation ("TriMas") convertible preferred stock holdings into TriMas common
stock (see "Equity and Other Investments in Affiliates" note); and in 1991: an
exchange of certain operating assets (see "Dispositions of Other Operations"
note); and the assumption of liabilities of $18 million in partial exchange for
the acquisition of Creative Industries Group (see "Equity and Other Investments
in Affiliates" note).
Income taxes paid were $32 million in 1993 and $23 million in 1992. Income
tax refunds of $8 million were received in 1991. Interest paid was $82 million,
$91 million and $115 million in 1993, 1992 and 1991, respectively.
DISCONTINUED OPERATIONS:
In late November, 1993, the Company adopted a formal plan to divest its
Energy-related business segment, which consisted of seven business units.
Accordingly, the consolidated statements of income and cash flows and related
notes have been reclassified to present such Energy-related segment as
discontinued operations. During 1993, two such business units were sold for
approximately $93 million, including the sale of one business unit to the
Company's equity affiliate, TriMas for $60 million cash. The expected loss from
the planned disposition of the Company's Energy-related segment resulted in a
fourth quarter 1993 pre-tax charge of approximately $41 million (approximately
$22 million after-tax), including a provision for the businesses not yet sold
and the deferral of a portion of the gain (approximately $6 million after-tax)
related to the sale of the business to TriMas. The Company expects to sell the
remaining business units in privately negotiated transactions in 1994.
Selected financial information for discontinued operations is as follows as
at December 31, 1993 and for the period up to the decision to discontinue in
1993 and for the years ended December 31, 1992 and 1991:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------------ -------- --------
<S> <C> <C> <C>
Net sales.................................... $191,930 $201,520 $200,780
------------ -------- --------
------------ -------- --------
Operating income............................. $ 5,540 $ 3,050 $ 1,070
Other income (expense)....................... (480) (960) 910
------------ -------- --------
Pre-tax income............................... 5,060 2,090 1,980
Income taxes................................. 2,430 2,700 600
------------ -------- --------
Income (loss) from discontinued operations... $ 2,630 $ (610) $ 1,380
------------ -------- --------
------------ -------- --------
</TABLE>
<TABLE>
<CAPTION>
AT
DECEMBER 31,
1993
------------
<S> <C>
Receivables.................................. $ 34,890
Inventories.................................. 39,320
Non-current assets........................... 40,690
Current liabilities.......................... (14,550)
Other, principally provision for disposition
costs...................................... (32,840)
------------
Net assets of discontinued operations........ $ 67,510
------------
------------
</TABLE>
The unusual relationship of income taxes to pre-tax income in 1992 results
principally from foreign losses for which no tax benefit was recorded. Operating
and pre-tax income include charges of $6 million in 1991, principally related to
the discontinuance of product lines and the cost of restructuring several
businesses.
F-15
<PAGE> 57
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DISPOSITIONS OF OTHER OPERATIONS:
In separate transactions from late 1989 to early 1991, the Company divested
itself of three subsidiaries and received consideration of approximately $160
million, of which $108 million was received in 1990. The remaining $52 million
was received in 1991. In addition, in 1991 the Company disposed of certain
equity affiliates, and exchanged operating assets aggregating approximately $27
million.
These transactions, including the disposition of Masco Capital Corporation
(see "Equity and Other Investments in Affiliates" note), resulted in an
approximate $22 million pre-tax gain in 1991.
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Finished goods........................................... $ 39,400 $ 80,220
Work in process.......................................... 38,240 49,970
Raw material............................................. 62,400 92,090
-------- --------
$140,040 $222,280
-------- --------
-------- --------
</TABLE>
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist primarily of the
following common stock interests in publicly traded affiliates:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation.......................................... 43% 28% 41%
Emco Limited................................................ 43% -- --
Titan Wheel International, Inc. ............................ 21% 47% 20%
</TABLE>
F-16
<PAGE> 58
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The carrying amount of investments in affiliates at December 31, 1993 and
1992 and quoted market values at December 31, 1993 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
QUOTED 1993 1992
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
<S> <C> <C> <C>
Common stock:
TriMas Corporation.............................. $387,830 $ 40,550 $ 42,630
Emco Limited.................................... 65,190 50,470 --
Titan Wheel International, Inc. ................ 37,580 15,500 4,130
-------- -------- --------
Common stock holdings............................. 490,600 106,520 46,760
-------- -------- --------
Convertible debt:
Emco Limited.................................... 33,520 30,700 --
-------- -------- --------
Convertible debt holdings......................... 33,520 30,700 --
-------- -------- --------
Investments in publicly traded affiliates......... $524,120 137,220 46,760
--------
--------
Other non public affiliates....................... 33,290 34,700
-------- --------
Total...................................... $170,510 $ 81,460
-------- --------
-------- --------
</TABLE>
In 1988, the Company transferred several businesses to TriMas, a publicly
traded, diversified manufacturer of commercial, industrial and consumer
products. In exchange, the Company received $128 million principal amount of 14%
Subordinated Debentures (which were subsequently redeemed resulting in
prepayment premium income to the Company of $9 million in 1992 and $4 million in
1991), $70 million (liquidation value) of 10% Convertible Participating
Preferred Stock and 9.3 million shares of TriMas common stock.
During the second quarter of 1992, TriMas sold 9.2 million shares of newly
issued common stock at $9.75 per share in a public offering, which reduced the
Company's common equity ownership interest in TriMas to 28 percent from 41
percent. As a result, the Company recognized a pre-tax gain of $16.7 million
from the change in the Company's common equity ownership interest in TriMas. In
late 1993, the TriMas 10% Convertible Participating Preferred Stock held by the
Company was converted at a conversion price of $9 per share into 7.8 million
shares of TriMas common stock, increasing the Company's common equity ownership
interest in TriMas to 43 percent.
In 1993, the Company sold a business unit to TriMas for $60 million cash
(see "Discontinued Operations" note).
Included in notes receivable are approximately $10.7 million of notes which
resulted from the sale by the Company of one million shares of its TriMas common
stock holdings to members of the Company's executive management group in
mid-1989. The notes have an effective interest rate of nine percent, payable at
maturity in mid-1994. Ownership and resale of certain of such shares is
restricted and subject to the continuing employment of these executives.
TriMas' Board of Directors declared a 100 percent stock distribution (one
additional share for every share held) to its shareholders effective July 19,
1993. TriMas share amounts and per share prices have been restated to reflect
this distribution.
The Company's holdings in Emco Limited ("Emco") were acquired from Masco
Corporation in 1993 (see "Shareholders' Equity" note). Emco is a major, publicly
traded, Canadian based
F-17
<PAGE> 59
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
manufacturer and distributor of building and other industrial products with
annual sales of approximately $800 million.
At December 31, 1992, the Company had an approximate 47 percent common
equity ownership interest in Titan Wheel International, Inc. ("Titan"), a
manufacturer of wheels and other products for agricultural, construction and
other off-highway equipment markets. In May, 1993, Titan completed an initial
public offering of three million shares of common stock at $15 per share
(including 292,000 shares held by the Company), reducing the Company's common
equity ownership interest in Titan to 24 percent. The Company's ownership
interest was further reduced in late 1993 to 21 percent as a result of the
issuance of additional common shares by Titan in connection with an acquisition
by Titan. These transactions resulted in 1993 gains aggregating approximately
$12.8 million pre-tax (principally in the second quarter) as a result of the
sale of shares held by the Company and from the change in the Company's common
equity ownership interest in Titan.
During the second quarter of 1991, the Company acquired the remaining 50
percent equity ownership interest of Creative Industries Group, which had sales
in 1990 of approximately $150 million.
In 1991, Masco Capital Corporation ("Masco Capital") sold its principal
asset and used the proceeds to repay its outstanding bank borrowings and to make
loan repayments and distributions to its shareholders, whereby the Company
received approximately $65 million (including repayment of $44 million advanced
during 1991). In addition, the Company subsequently sold its 50 percent equity
ownership interest in Masco Capital to the other shareholder, Masco Corporation,
for approximately $50 million (which resulted in a pre-tax gain of approximately
$5 million) and contingent amounts based on the future value of certain assets
held by Masco Capital.
In addition to its equity and other investments in publicly traded
affiliates, the Company retains interests in privately held manufacturers of
automotive components, including the Company's 50 percent common equity
ownership interests in Autostyle, Inc., a manufacturer of reaction injection
molded automotive components, and Elbi-Hi Ram, Inc., a manufacturer of
electrical and electronic automotive components.
Approximate combined condensed financial data of the Company's equity
affiliates (including Emco after date of investment, Creative Industries Group
through date of acquisition (second quarter 1991) and Masco Capital through date
of disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1993 1992
--------- ---------
<S> <C> <C>
Current assets......................................... $ 657,680 $ 261,730
Current liabilities.................................... (222,580) (128,300)
--------- ---------
Working capital........................................ 435,100 133,430
Property and equipment, net............................ 349,740 214,760
Excess of cost over net assets of acquired companies... 170,760 113,660
Other assets........................................... 69,540 33,210
Long-term debt......................................... (628,520) (271,220)
Deferred income taxes and other long-term
liabilities.......................................... (34,950) (24,900)
--------- ---------
Shareholders' equity................................... $ 361,670 $ 198,940
--------- ---------
--------- ---------
</TABLE>
F-18
<PAGE> 60
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1993 1992 1991
---------- -------- --------
<S> <C> <C> <C>
Net sales..................................... $1,412,620 $655,120 $684,990
---------- -------- --------
---------- -------- --------
Operating profit.............................. $ 119,780 $ 77,860 $ 82,000
---------- -------- --------
---------- -------- --------
Net income before preferred stock dividends... $ 57,280 $ 30,200 $ 24,300
---------- -------- --------
---------- -------- --------
</TABLE>
Equity and interest income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1993 1992 1991
---------- -------- --------
<S> <C> <C> <C>
The Company's equity in affiliates' earnings
available for common shareholders........... $ 12,890 $ 5,250 $ 4,470
Dividends on TriMas preferred stock........... 5,250 7,000 7,000
Interest income............................... 2,860 3,500 17,920
---------- -------- --------
Equity and interest income from affiliates.... $ 21,000 $ 15,750 $ 29,390
---------- -------- --------
---------- -------- --------
</TABLE>
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................. $ 33,720 $ 39,740
Buildings.............................................. 158,750 182,460
Machinery and equipment................................ 605,600 669,800
-------- --------
798,070 892,000
Less accumulated depreciation............................ 307,880 354,580
-------- --------
$490,190 $537,420
-------- --------
-------- --------
</TABLE>
Depreciation expense totalled $48 million, $46 million and $47 million in
1993, 1992 and 1991, respectively. These amounts include depreciation expense of
approximately $8 million in each year related to discontinued operations.
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Salaries, wages and commissions.......................... $ 22,970 $ 23,800
Income taxes............................................. 5,930 5,370
Interest................................................. 20,420 20,760
Insurance................................................ 11,010 12,150
Property, payroll and other taxes........................ 9,360 10,340
Other.................................................... 33,570 45,010
-------- --------
$103,260 $117,430
-------- --------
-------- --------
</TABLE>
F-19
<PAGE> 61
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1993 1992
-------- ----------
<S> <C> <C>
Held by Masco Corporation:
6% Convertible Subordinated Debentures, due 2011...... -- $ 130,000
Held by Banks and Others:
Bank revolving credit agreement, due 1997............. $295,000 410,000
10% Senior Subordinated Notes, due
March, 1995 (noncallable).......................... 233,150 233,150
10 1/4% Senior Subordinated Notes, due 1997........... 250,000 250,000
6% Convertible Subordinated Debentures, due 2011...... -- 56,890
Bank term loan, due 1996.............................. -- 31,090
Other................................................. 13,040 18,690
-------- ----------
791,190 1,129,820
Less current portion of long-term debt.................. 2,830 64,430
-------- ----------
Long-term debt.......................................... $788,360 $1,065,390
-------- ----------
-------- ----------
</TABLE>
In 1993, the Company entered into a new $675 million revolving credit
agreement with a group of banks, replacing its prior bank credit agreement
(which had consisted of a revolving credit facility and a bank term loan at
December 31, 1992). Amounts outstanding under the revolving credit agreement are
due in January, 1997; however, under certain circumstances, the due date may be
extended to July, 1998. The interest rates applicable to the revolving credit
agreement are principally at alternative floating rates provided for in the
agreement (approximately four percent at December 31, 1993).
The revolving credit agreement requires the maintenance of a specified
level of shareholders' equity, with limitations on the ratio of senior debt to
earnings, long-term debt (at December 31, 1993 additional borrowing capacity of
approximately $380 million was available under this agreement), intangible
assets and the acquisition of Company Capital Stock. Under the most restrictive
of these provisions, $120 million of retained earnings was available at December
31, 1993 for the payment of cash dividends and the acquisition of Company
Capital Stock.
The 6% Convertible Subordinated Debentures were converted into Company
Common Stock in late 1993 (see "Shareholders' Equity" note).
The senior subordinated notes contain limitations on the payment of cash
dividends and the acquisition of Company Capital Stock. In late 1993, the
Company called for redemption, on February 1, 1994, the $250 million of 10 1/4%
Senior Subordinated Notes. During 1992, the Company repurchased, in open-market
transactions, approximately $67 million of its 10% Senior Subordinated Notes at
prices approximating face value.
In early 1994, the Company issued, in a public offering, $345 million of
4 1/2% Convertible Subordinated Debentures due December 15, 2003. These
debentures are convertible into Company Common Stock at $31 per share. The net
proceeds were used to redeem the $250 million of 10 1/4% Subordinated Notes
(called in late 1993 for redemption on February 1, 1994) and to reduce other
indebtedness. In the fourth quarter of 1993, the Company recognized a $5.8
million pre-tax extraordinary charge ($3.7 million after-tax) related to the
call premium (1.25%) and unamortized prepaid debenture expense associated with
the call for early extinguishment of the $250 million of 10 1/4% Subordinated
Notes. The 10 1/4% Subordinated Notes are classified as non-current as the
Company had the intent and the ability to maintain these borrowings on a
long-term basis (due to the issuance of the
F-20
<PAGE> 62
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4 1/2% Convertible Subordinated Debentures). The maturities of long-term debt
during the next five years are as follows (in millions): 1994 -- $3;
1995 -- $234; 1996 -- $1; 1997 -- $303; and 1998 -- $0.
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
PREFERRED COMMON PAID-IN RETAINED TRANSLATION SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS EQUITY
--------- -------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991...... $ 780 $ 59,450 $ 83,800 $192,100 $19,880 $ 356,010
Net (loss).................. -- -- -- (8,970) -- (8,970)
Preferred stock dividends... -- -- -- (9,600) -- (9,600)
Adjustment related to sale
of foreign operations.... -- -- -- -- (5,130) (5,130)
Translation adjustments,
net...................... -- -- -- -- (5,620) (5,620)
--------- -------- -------- -------- ----------- ------------
Balance, December 31, 1991.... 780 59,450 83,800 173,530 9,130 326,690
Net income.................. -- -- -- 38,430 -- 38,430
Preferred stock dividends... -- -- -- (9,300) -- (9,300)
Translation adjustments,
net...................... -- -- -- -- (3,080) (3,080)
Exercise of stock options... -- 70 590 -- -- 660
--------- -------- -------- -------- ----------- ------------
Balance, December 31, 1992.... 780 59,520 84,390 202,660 6,050 353,400
Net income.................. -- -- -- 47,600 -- 47,600
Preferred stock dividends... -- -- -- (14,930) -- (14,930)
Common stock dividends...... -- -- -- (3,210) -- (3,210)
Retirement of 12%
Preferred................ (780) -- (76,720) -- -- (77,500)
Issuance of 10% Preferred... 1,000 -- 99,000 -- -- 100,000
Issuance of warrants........ -- -- 70,800 -- -- 70,800
Issuance of DECS............ 10,800 -- 198,720 -- -- 209,520
Retirement of common
stock.................... -- (10,000) (90,000) -- -- (100,000)
Retirement of 10%
Preferred................ (1,000) -- (99,000) -- -- (100,000)
Conversion of convertible
debentures............... -- 10,370 174,120 -- -- 184,490
Translation adjustments,
net...................... -- -- -- -- (9,140) (9,140)
Exercise of stock options... -- 620 5,980 -- -- 6,600
--------- -------- -------- -------- ----------- ------------
Balance, December 31, 1993.... $10,800 $ 60,510 $367,290 $232,120 $(3,090) $ 667,630
--------- -------- -------- -------- ----------- ------------
--------- -------- -------- -------- ----------- ------------
</TABLE>
On March 31, 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, recorded at $100 million, $77.5 million of the
Company's previously outstanding 12% Exchangeable Preferred Stock, and Masco
Corporation's holdings of Emco Limited common stock and convertible debentures,
recorded at $80.8 million. In exchange, Masco Corporation received $100 million
(liquidation value) of the Company's 10% Exchangeable Preferred Stock,
seven-year warrants to purchase 10 million shares of Company Common Stock at $13
per share, recorded at $70.8 million, and $87.5 million in cash. The
transferable warrants are not exercisable by Masco Corporation if an exercise
would increase Masco Corporation's common equity ownership interest in the
Company above 35 percent. The cash portion of this transaction is included in
the accompanying statement of cash flows as cash used for investing activities
of $87.5 million. As part of this transaction, as modified in late 1993, Masco
Corporation agreed to purchase from the Company, at the Company's option
F-21
<PAGE> 63
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
through March, 1997, up to $200 million of subordinated debentures. In late
1993, the Company redeemed the 10% Exchangeable Preferred Stock for its $100
million liquidation value.
In July, 1993, the Company issued 10.8 million shares of 6% Dividend
Enhanced Convertible Stock (DECS) at $20 per share ($216 million aggregate
liquidation amount) in a public offering (classified as Convertible Preferred
Stock). The net proceeds from this issuance were used to reduce the Company's
indebtedness. On July 1, 1997, each of the then outstanding shares of the DECS
will convert into one share of Company Common Stock, if not previously redeemed
by the Company or converted at the option of the holder, in both cases for
Company Common Stock.
Each share of the DECS is convertible at the option of the holder anytime
prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent
to a conversion price of $24.81 per share of Company Common Stock. Dividends are
cumulative and each share of the DECS has 4/5 of a vote, voting together as one
class with holders of Company Common Stock.
Beginning July 1, 1996, the Company, at its option, may redeem the DECS at
a call price payable in shares of Company Common Stock principally determined by
a formula based on the then current market price of Company Common Stock.
Redemption by the Company, as a practical matter, will generally not result in a
call price that exceeds one share of Company Common Stock or is less than .806
of a share of Company Common Stock (resulting from the holder's conversion
option).
The Company's 6% Convertible Subordinated Debentures were called for
redemption in late 1993. Substantially all holders, including Masco Corporation,
exercised their right to convert these debentures into Company Common Stock (at
a conversion price of $18 per share), resulting in the issuance of approximately
10.4 million shares of Company Common Stock.
The Company's consideration for a 1987 acquisition included two million
shares of Company Common Stock which were subject to a stock value guarantee
agreement. During the second quarter of 1993, the Company's stock value
guarantee obligation was settled, resulting in no material financial impact to
the Company.
The Company commenced paying cash dividends on its Common Stock in August,
1993 and declared three and paid two quarterly dividends in 1993, each in the
amount of $.02 per common share.
STOCK OPTIONS AND AWARDS:
For the three years ended December 31, 1993, stock option data pertaining
to stock option plans for key employees of the Company and affiliated companies
are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1993 1992 1991
------ ------- ------
<S> <C> <C> <C>
Options outstanding, January 1................................. 4,540 3,770 2,220
Options granted................................................ 30 900 1,730
Option price per share.................................... $13-26 $6 1/8-10 3/4 $4 1/2
Options cancelled.............................................. -- 60 180
Option price per share.................................... -- $4 1/2 $4 1/2-9 1/8
Options exercised.............................................. 760 70 --
Option price per share.................................... $4 1/2-9 1/8 $9 1/8 --
------------ ------------- ------------
Options outstanding, December 31............................... 3,810 4,540 3,770
------------ ------------- ------------
------------ ------------- ------------
Options exercisable, December 31............................... 680 880 740
------------ ------------- ------------
------------ ------------- ------------
</TABLE>
F-22
<PAGE> 64
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of December 31, 1993, options have been granted and are outstanding with
exercise prices ranging from $4 1/2 to $26 per share, the fair market value at
the dates of grant.
Pursuant to restricted stock incentive plans, the Company granted long-term
incentive awards, net, for 202,000, 251,000 and 675,000 shares of Company Common
Stock during 1993, 1992 and 1991, respectively, to key employees of the Company
and affiliated companies. The unamortized costs of incentive awards, aggregating
approximately $20 million at December 31, 1993, are being amortized over the
ten-year vesting periods.
At December 31, 1993 and 1992, a combined total of 5,631,000 and 5,759,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Directors. Aggregate charges to income under these
plans were $10.9 million in 1993, $10.3 million in 1992 and $8.3 million in
1991, including approximately $.9 million in each year related to discontinued
operations.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 4,110 $ 4,150 $ 4,140
Interest cost on projected benefit obligations..... 5,540 5,090 4,590
Actual return on assets............................ (7,730) (3,820) (5,450)
Net amortization and deferral...................... 1,600 (1,800) 430
------- ------- -------
Net periodic pension cost.......................... $ 3,520 $ 3,620 $ 3,710
------- ------- -------
------- ------- -------
</TABLE>
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----- ------ ------
<S> <C> <C> <C>
Discount rate for obligations........................ 7.0% 8.25% 8.25%
Rate of increase in compensation levels.............. 5.0% 6.0 % 6.0 %
Expected long-term rate of return on plan assets..... 13.0% 13.0 % 13.0 %
</TABLE>
F-23
<PAGE> 65
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the Company's defined-benefit pension plans at
December 31, 1993 and 1992 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992
-------------------------- --------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
RECONCILIATION OF FUNDED STATUS BENEFITS ASSETS BENEFITS ASSETS
- -------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation.............. $23,040 $ 34,280 $20,780 $24,160
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Accumulated benefit obligation......... $24,450 $ 38,650 $22,120 $31,200
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Projected benefit obligation........... $35,270 $ 39,920 $32,020 $33,030
Assets at fair value........................ 29,550 26,560 27,530 23,570
----------- ----------- ----------- -----------
Projected benefit obligation in excess
of plan assets....................... (5,720) (13,360) (4,490) (9,460)
Reconciling items:
Unrecognized net loss.................. 7,140 8,810 5,920 5,140
Unrecognized prior service cost........ 460 3,250 1,240 3,400
Unrecognized net (asset) obligation at
transition........................... (1,340) (160) (1,940) 70
Adjustment required to recognize
minimum liability.................... -- (10,840) -- (6,900)
----------- ----------- ----------- -----------
(Accrued) prepaid pension cost......... $ 540 $ (12,300) $ 730 $(7,750)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("SFAS 106") for its postretirement benefit plans. This
statement requires the accrual method of accounting for postretirement health
care and life insurance based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of employees
who are expected to qualify for such benefits. In conjunction with the adoption
of SFAS 106, the Company elected to recognize the transition obligation on a
prospective basis and accordingly, the net transition obligation is being
amortized over 20 years. Net periodic postretirement benefit cost includes the
following components for the year ended December 31, 1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
-------
<S> <C>
Service cost.......................................................... $ 300
Interest cost......................................................... 1,900
Net amortization...................................................... 1,200
-------
Net periodic postretirement benefit cost.............................. $3,400
-------
-------
</TABLE>
The incremental cost in 1993 of accounting for postretirement health care
and life insurance benefits under SFAS 106 amounted to approximately $1.7
million.
F-24
<PAGE> 66
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit obligations, none of which are funded, are
summarized as follows for the year ended December 31:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
------------
<S> <C>
Accumulated postretirement benefit obligations:
Retirees.............................................................. $ 19,400
Fully eligible active plan participants............................... 1,400
Other active participants............................................. 6,400
------------
Total accumulated postretirement benefit obligation..................... 27,200
Unrecognized net loss................................................. (2,900)
Unamortized transition obligation..................................... (22,500)
------------
Accrued postretirement benefits......................................... $ 1,800
------------
------------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was seven percent. The assumed health care cost trend rate in
1993 was 12 percent, decreasing to an ultimate rate in the year 2000 of seven
percent. If the assumed medical cost trend rates were increased by one percent,
the accumulated postretirement benefit obligation would increase by $2.6 million
and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost would increase by $.2 million.
SEGMENT INFORMATION:
The Company's business segments involve the production and sale of the
following:
Transportation-Related Products:
Precision products, generally produced using advanced
metalworking technologies with significant proprietary content,
and aftermarket products for the transportation industry.
Specialty Products:
Architectural -- Doors, windows, security grilles and office
panels and partitions for commercial and
residential markets.
Other -- Products manufactured principally for the defense
industry.
Amounts related to the Company's Energy-related segment have been presented
as discontinued operations.
Corporate assets consist primarily of cash and cash investments, equity and
other investments in affiliates and notes receivable.
F-25
<PAGE> 67
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
ASSETS EMPLOYED
NET SALES OPERATING PROFIT (B) AT DECEMBER 31
---------------------------------- ---------------------------- ----------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company's operations
by industry segment are:
Transportation-Related
Products (A)............ $1,195,000 $1,058,000 $ 874,000 $160,000 $124,000 $ 74,000 $ 883,000 $ 851,000 $ 808,000
Specialty Products:
Architectural........... 289,000 291,000 273,000 (4,000) 2,000 (16,000) 313,000 321,000 322,000
Other................... 99,000 106,000 119,000 5,000 3,000 1,000 104,000 109,000 114,000
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Total............. $1,583,000 $1,455,000 $1,266,000 161,000 129,000 59,000 1,300,000 1,281,000 1,244,000
---------- ---------- ----------
---------- ---------- ----------
Other expense, net........ (25,000) (44,000) (56,000)
General corporate
expense................. (15,000) (17,000) (15,000)
-------- -------- --------
Income (loss) from
continuing operations
before income taxes
(credit) and
extraordinary loss...... $121,000 $ 68,000 $(12,000)
-------- -------- --------
-------- -------- --------
Corporate assets.......... 422,000 318,000 449,000
Discontinued operations... 68,000 208,000 210,000
---------- ---------- ----------
Total assets...... $1,790,000 $1,807,000 $1,903,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
PROPERTY ADDITIONS DEPRECIATION AND AMORTIZATION
---------------------------- ----------------------------------
1993 1992 1991 1993 1992 1991
-------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by industry segment are:
Transportation-Related Products.......................... $52,000 $47,000 $37,000 $42,000 $42,000 $41,000
Specialty Products:
Architectural.......................................... 5,000 8,000 8,000 12,000 13,000 12,000
Other.................................................. 3,000 5,000 4,000 6,000 5,000 6,000
Total............................................ $60,000 $60,000 $49,000 $60,000 $60,000 $59,000
</TABLE>
- ---------------
(A) Included within this segment are sales to one customer of $324 million, $268
million and $217 million in 1993, 1992 and 1991, respectively; sales to
another customer of $222 million, $216 million and $201 million in 1993,
1992 and 1991, respectively; and sales to a third customer of $186 million,
$184 million and $126 million in 1993, 1992 and 1991, respectively.
(B) Included in 1991 operating profit (principally Transportation-Related
Products and Architectural Products) are charges of $27 million to reflect
the expenses related to the discontinuance of product lines, and the costs
of restructuring several businesses. Other expense, net in 1992 and 1991,
includes approximately $15 million and $14 million, respectively, to reflect
disposition costs related to idle facilities and other long-term assets.
F-26
<PAGE> 68
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------- ------- --------
<S> <C> <C> <C>
Other, net:
Gains from sales of marketable securities
(including the effect of valuation
allowances).................................. $11,550 $ 4,020 $ 12,010
Interest income................................. 9,570 9,260 7,890
Dividend income................................. 3,150 1,750 1,910
Other, net...................................... 2,060 (5,080) (16,280)
------- ------- --------
$26,330 $ 9,950 $ 5,530
------- ------- --------
------- ------- --------
</TABLE>
Gains realized from sales of marketable securities are determined on a
specific identification basis at the time of sale.
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Income (loss) from continuing operations before
income taxes (credit) and extraordinary loss:
Domestic...................................... $105,470 $ 57,880 $(34,780)
Foreign....................................... 15,710 10,370 22,310
-------- -------- --------
$121,180 $ 68,250 $(12,470)
-------- -------- --------
-------- -------- --------
Provision for income taxes:
Federal, current.............................. $ 17,940 $ 12,750 $(19,410)
State and local............................... 8,350 5,170 4,560
Foreign....................................... 8,410 8,160 9,460
Deferred, principally federal................. 15,590 3,130 3,270
-------- -------- --------
Income taxes (credit) on income (loss) from
continuing operations before income taxes
(credit) and extraordinary loss............ $ 50,290 $ 29,210 $ (2,120)
-------- -------- --------
-------- -------- --------
</TABLE>
F-27
<PAGE> 69
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the net deferred taxes as at December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
--------
<S> <C>
Deferred tax assets:
Charges for restructuring and other costs, net................... $ 7,450
Inventory........................................................ 8,430
Other, principally deductions reported in different periods for
financial reporting and tax purposes.......................... 18,330
--------
34,210
--------
Deferred tax liabilities:
Depreciation and amortization.................................... 90,350
Other, principally equity in undistributed earnings of
affiliates.................................................... 18,450
--------
108,800
--------
Net deferred tax liability....................................... $ 74,590
--------
--------
</TABLE>
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes (credit) allocated to income
(loss) from continuing operations before income taxes (credit) and extraordinary
loss:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
U.S. federal statutory rate........................ 35% 34% 34%
Tax (credit) at U.S. federal statutory rate........ $42,410 $23,210 $(4,240)
State and local taxes, net of federal tax
benefit.......................................... 5,430 3,390 3,030
Higher effective foreign tax rate.................. 2,910 4,670 1,870
U.S. tax benefit relating to foreign operations.... (90) (190) (2,000)
Dividends-received deduction....................... (2,290) (2,320) (2,360)
Amortization in excess of tax, net................. 3,820 4,780 4,210
Other, net......................................... (1,900) (4,330) (2,630)
------- ------- -------
Income taxes (credit) on income (loss) from
continuing operations before income taxes
(credit) and extraordinary loss............... $50,290 $29,210 $(2,120)
------- ------- -------
------- ------- -------
</TABLE>
Provisions for deferred income taxes by temporary difference components for
the years ended December 31, 1992 and 1991 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1992 1991
------- -------
<S> <C> <C>
Accelerated depreciation and amortization.................. $ 4,060 $ 550
Marketable securities valuation............................ (970) 4,660
Charges for restructuring and other costs, net............. (2,350) (1,300)
Deductions reported in different periods for financial
reporting and tax purposes............................... 60 (5,770)
Alternative minimum tax.................................... 680 5,180
Other, net................................................. 1,650 (50)
------- -------
$ 3,130 $ 3,270
------- -------
------- -------
</TABLE>
F-28
<PAGE> 70
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
Notes Receivable and Other Assets. Fair values of financial instruments
included in notes receivable and other assets were estimated using various
methods including quoted market prices and discounted future cash flows based on
the incremental borrowing rates for similar types of investments. In addition,
for variable-rate notes receivable that fluctuate with the prime rate, the
carrying amounts approximate fair value.
Long-Term Debt. The carrying amount of bank debt and certain other
long-term debt instruments approximate fair value as the floating rates inherent
in this debt reflect changes in overall market interest rates. The fair values
of the Company's subordinated debt instruments are based on quoted market
prices. The fair values of certain other debt instruments are estimated by
discounting future cash flows based on the Company's incremental borrowing rate
for similar types of debt instruments.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash investments............. $ 83,200 $ 83,200 $ 76,000 $ 76,000
Notes receivable and other assets..... $ 72,650 $ 80,220 $ 60,150 $ 68,050
Long-term debt:
Bank debt........................... $295,000 $295,000 $441,090 $441,090
6% Convertible Subordinated -- -- $186,890 $160,730
Debentures.......................
10% Senior Subordinated Notes....... $233,150 $243,640 $233,150 $237,230
10 1/4% Senior Subordinated Notes... $250,000 $254,380 $250,000 $251,880
Other long-term debt................ $ 9,120 $ 9,150 $ 10,780 $ 10,780
</TABLE>
F-29
<PAGE> 71
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
----------------------------------------------------------
DECEMBER 31ST SEPTEMBER 30TH JUNE 30TH MARCH 31ST
------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
1993:
----
Net sales..................... $ 392,600 $373,680 $ 412,530 $404,070
Gross profit.................. $ 76,440 $ 78,600 $ 85,610 $ 84,750
Income from continuing
operations before
extraordinary loss:
Income...................... $ 18,510 $ 15,000 $ 21,310 $ 16,070
Per common and common
equivalent share:
Primary.................. $.23 $.17 $.34 $.22
Assuming full dilution... $.22 $.17 $.31 $.22
Net income (loss):
Income (loss)............... $ (6,980) $ 15,320 $ 21,740 $ 17,520
Income (loss) attributable
to common stock.......... $ (11,660) $ 9,900 $ 19,240 $ 15,190
Per common and common
equivalent share:
Primary.................. $(.20) $.18 $.35 $.25
Assuming full dilution... $(.15) $.18 $.32 $.24
Market price per common share:
High........................ $28 1/8 $22 5/8 $21 $17 1/4
Low......................... $18 3/4 $19 1/2 $15 3/4 $11 3/8
1992:
----
Net sales..................... $ 377,790 $358,240 $ 381,470 $337,820
Gross profit.................. $ 70,560 $ 76,320 $ 79,340 $ 70,050
Income from continuing
operations:
Income...................... $ 7,190 $ 10,300 $ 13,510 $ 8,040
Per common and common
equivalent share......... $.08 $.13 $.18 $.10
Net income:
Income...................... $ 8,480 $ 9,640 $ 12,020 $ 8,290
Income attributable to
common stock............. $ 6,160 $ 7,310 $ 9,700 $ 5,960
Per common and common
equivalent share......... $.10 $.12 $.16 $.10
Market price per common share:
High........................ $12 1/8 $13 5/8 $13 7/8 $11
Low......................... $8 3/8 $10 3/8 $8 5/8 $4 3/4
</TABLE>
F-30
<PAGE> 72
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Certain amounts presented above have been reclassified to present a segment
of the Company's business as discontinued operations (see "Discontinued
Operations" note).
Results for the second quarters of 1993 and 1992 include pre-tax income of
approximately $9 million and $25 million, respectively, as a result of gains
associated with the sale of common stock through public offerings by equity
affiliates and, in 1992, a prepayment premium related to the redemption of
debentures held by the Company. This income was largely offset by costs and
expenses related to cost reduction initiatives, the restructuring of certain
operations and product lines, adjustments to the carrying value of certain
long-term assets, and other costs and expenses.
Results for the third quarter of 1993 were reduced by a charge of
approximately $.04 per common share reflecting the recently increased 1993
federal corporate income tax rate.
The fourth quarter of 1993 net loss includes the effect of a $5.8 million
pre-tax extraordinary charge ($3.7 million after-tax or $.06 per common share)
related to the early extinguishment of subordinated debt (see "Long-Term Debt"
note). The fourth quarter of 1993 net loss also includes an after-tax charge of
approximately $22 million ($.38 per common share) related to the disposition of
a segment of the Company's business (see "Discontinued Operations" note).
The 1993 results include the benefit of approximately $11.5 million pre-tax
income ($6.7 million after-tax or $.12 per common share), primarily in the third
and fourth quarters, resulting from net gains from sales of marketable
securities.
The 1992 results include the benefit of approximately $4 million pre-tax
income ($2 million after-tax or $.04 per common share), primarily in the fourth
quarter, resulting from net gains from sales of marketable securities.
The 1993 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the changes in the number of common shares
outstanding during the year and the dilutive effect of first, second and third
quarter 1993 results.
The calculation of earnings per common and common equivalent share for the
fourth quarter of 1993 results in dilution for income from continuing
operations, assuming full dilution. Therefore, the fully diluted earnings per
share computation is used for all computations, even though the result is
anti-dilutive for one of the per share amounts.
F-31
<PAGE> 73
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
The following supplemental unaudited financial data combine the Company
with Masco Capital Corporation (through date of disposition) and TriMas and have
been presented for analytical purposes. The Company had a common equity
ownership interest in TriMas of approximately 43 percent at December 31, 1993
and 28 percent at December 31, 1992. The interests of the other common
shareholders are reflected below as "Equity of other shareholders of TriMas."
All significant intercompany transactions have been eliminated.
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------------
1993 1992
----------- -----------
<S> <C> <C>
Current assets...................................... $ 770,810 $ 813,570
Current liabilities................................. (252,810) (334,790)
----------- -----------
Working capital..................................... 518,000 478,780
Property and equipment, net......................... 652,420 682,310
Excess of cost over net assets of acquired
companies......................................... 526,260 591,330
Other assets........................................ 298,290 145,710
Bank and other debt................................. (1,027,250) (1,243,880)
Deferred income taxes and other long-term
liabilities....................................... (161,500) (196,420)
Equity of other shareholders of TriMas.............. (138,590) (104,430)
----------- -----------
Equity of shareholders of MascoTech................. $ 667,630 $ 353,400
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------------
1993 1992 1991
---------- ----------- -----------
<S> <C> <C> <C>
Net sales................................ $2,022,240 $ 1,841,570 $ 1,604,180
---------- ----------- -----------
---------- ----------- -----------
Operating profit......................... $ 215,740 $ 170,460 $ 86,260
---------- ----------- -----------
---------- ----------- -----------
Income (loss) from continuing operations
before extraordinary loss.............. $ 70,890 $ 39,040 $ (10,350)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
F-32
<PAGE> 74
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1993
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
Schedules, as required for the years ended December 31, 1993, 1992 and 1991:
<TABLE>
<S> <C> <C>
II. Amounts Receivable From Related Parties and Underwriters, Promoters, and
Employees Other than Related Parties............................................ F-34
V. Property, Plant and Equipment................................................... F-35
VI. Accumulated Depreciation, Depletion and Amortization of Property, Plant and
Equipment..................................................................... F-36
VIII. Valuation and Qualifying Accounts............................................... F-37
X. Supplementary Income Statement Information...................................... F-38
</TABLE>
F-33
<PAGE> 75
MASCOTECH, INC.
SCHEDULE II. AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------- ------------ ---------- ------------------------- -------------------------
DEDUCTIONS BALANCE AT END OF PERIOD
------------------------- -------------------------
BALANCE AT
BEGINNING OF AMOUNTS AMOUNTS
NAME OF DEBTOR PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT NOT CURRENT
- ----------------------- ------------ ---------- ---------- ----------- ----------- -----------
(A) (B)
<S> <C> <C> <C> <C> <C> <C>
Erwin H. Billig........ $ 2,800,000 $ 160,000 $ 900,000 -- $ 2,060,000 --
------------ ---------- ---------- ----------- ----------- -----------
Lee M. Gardner......... 840,000 50,000 890,000 -- -- --
------------ ---------- ---------- ----------- ----------- -----------
James W. Hook.......... 280,000 20,000 -- -- 300,000 --
------------ ---------- ---------- ----------- ----------- -----------
Richard A. Manoogian... 11,210,000 630,000 -- -- 11,840,000 --
------------ ---------- ---------- ----------- ----------- -----------
Timothy Wadhams........ 1,680,000 90,000 1,770,000 -- -- --
------------ ---------- ---------- ----------- ----------- -----------
16,810,000 950,000 3,560,000 -- 14,200,000 --
------------ ---------- ---------- ----------- ----------- -----------
Discount on Notes
Receivable(C)........ (890,000) 750,000 -- -- (140,000) --
------------ ---------- ---------- ----------- ----------- -----------
$ 15,920,000 $1,700,000 $3,560,000 -- $14,060,000 --
------------ ---------- ---------- ----------- ----------- -----------
------------ ---------- ---------- ----------- ----------- -----------
</TABLE>
All amounts receivable are related to an incentive program of the Company
that has been disclosed in previous proxy statements of the Company and that
will be described in the Company's definitive Proxy Statement for its 1994
Annual Meeting of Stockholders to be filed on or before April 30, 1994.
NOTES:
(A) Represents accrual of interest.
(B) Amounts receivable (including interest of $3,400,000) from employees are due
June 30, 1994. The stated rate of interest is 7%.
(C) Represents the discount pertaining to the difference between the stated rate
of interest of 7% and the effective rate of interest of approximately 9%.
Activity in 1992 includes discount amortization of $550,000 interest of
$710,000 and the cancellation of the receivable balance of $1,350,000 for
an exempt employee.
Activity in 1991 includes discount amortization of $340,000 and interest of
$1,040,000.
F-34
<PAGE> 76
MASCOTECH, INC.
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------- ------------ ----------- ----------- ------------ ----------
BALANCE AT OTHER BALANCE
BEGINNING ADDITIONS CHARGES AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD (DEDUCT) OF PERIOD
- ---------------------------------- ------------ ----------- ----------- ------------ ---------
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
1993:
Land and land improvements...... $ 39,740,000 $ 250,000 $ 1,830,000 $ (4,440,000) $ 33,720,000
Buildings....................... 182,460,000 4,690,000 4,170,000 (24,220,000) 158,760,000
Machinery and equipment......... 580,030,000 12,460,000 13,590,000 (67,800,000) 511,100,000
Office, delivery and other
equipment.................... 57,200,000 2,890,000 2,650,000 (12,390,000) 45,050,000
Construction in progress........ 32,570,000 39,250,000 420,000 (21,960,000) 49,440,000
------------ ----------- ------------ ------------- ------------
$892,000,000 $59,540,000 $ 22,660,000 $(130,810,000) $798,070,000
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
1992:
Land and land improvements...... $ 39,470,000 $ 250,000 $ 80,000 $ 100,000 $ 39,740,000
Buildings....................... 180,580,000 3,170,000 1,380,000 90,000 182,460,000
Machinery and equipment......... 557,620,000 26,140,000 17,610,000 13,880,000 580,030,000
Office, delivery and other
equipment.................... 54,160,000 5,150,000 4,700,000 2,590,000 57,200,000
Construction in progress........ 21,170,000 33,750,000 600,000 (21,750,000) 32,570,000
------------ ----------- ------------ ------------- ------------
$853,000,000 $68,460,000 $ 24,370,000 $ (5,090,000) $892,000,000
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
1991:
Land and land improvements...... $ 41,190,000 $ 460,000 $ 5,470,000 $ 3,290,000 $ 39,470,000
Buildings....................... 189,250,000 11,140,000 25,360,000 5,550,000 180,580,000
Machinery and equipment......... 560,550,000 46,360,000 69,770,000 20,480,000 557,620,000
Office, delivery and other
equipment.................... 55,860,000 7,310,000 8,920,000 (90,000) 54,160,000
Construction in progress........ 24,560,000 19,370,000 1,540,000 (21,220,000) 21,170,000
------------ ----------- ------------ ------------- ------------
$871,410,000 $84,640,000 $111,060,000 $ 8,010,000 $853,000,000
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
</TABLE>
NOTES:
(A) Includes property, plant and equipment additions of $20 million in 1991
obtained through the acquisition of companies.
(B) Includes property, plant and equipment from the disposition of certain
operations in 1991.
(C) Adjustments and reclassifications to present the Energy-related segment as
discontinued operations in 1993, and the effect of foreign currency
translation.
F-35
<PAGE> 77
MASCOTECH, INC.
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------------- ------------ ----------- ----------- ------------ ------------
ADDITIONS
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COSTS AND CHANGES AT END
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS ADD (DEDUCT) OF PERIOD
-------------- ------------ ----------- ----------- ------------ ------------
(A) (B)
<S> <C> <C> <C> <C> <C>
1993:
Land improvements........... $ 2,520,000 $ 250,000 $ 10,000 $ (200,000) $ 2,560,000
Buildings................... 43,970,000 4,620,000 940,000 (9,230,000) 38,420,000
Machinery and equipment..... 275,960,000 29,450,000 8,440,000 (56,500,000) 240,470,000
Office, delivery and other
equipment................ 32,130,000 4,990,000 2,140,000 (8,550,000) 26,430,000
------------ ----------- ----------- ------------ ------------
$354,580,000 $39,310,000 $11,530,000 $(74,480,000) $307,880,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
1992:
Land improvements........... $ 2,310,000 $ 250,000 $ 20,000 $ (20,000) $ 2,520,000
Buildings................... 39,280,000 5,490,000 150,000 (650,000) 43,970,000
Machinery and equipment..... 255,500,000 34,810,000 11,100,000 (3,250,000) 275,960,000
Office, delivery and other
equipment................ 29,680,000 5,770,000 4,170,000 850,000 32,130,000
------------ ----------- ----------- ------------ ------------
$326,770,000 $46,320,000 $15,440,000 $ (3,070,000) $354,580,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
1991:
Land improvements........... $ 2,430,000 $ 280,000 $ 350,000 $ (50,000) $ 2,310,000
Buildings................... 38,410,000 4,890,000 6,910,000 2,890,000 39,280,000
Machinery and equipment..... 246,200,000 35,090,000 32,350,000 6,560,000 255,500,000
Office, delivery and other
equipment................ 28,370,000 7,210,000 6,170,000 270,000 29,680,000
------------ ----------- ----------- ------------ ------------
$315,410,000 $47,470,000 $45,780,000 $ 9,670,000 $326,770,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
Notes:
(A) Includes accumulated depreciation of property, plant and equipment from
the disposition of operations in 1991.
(B) Adjustments and reclassifications to present the Energy-related segment as
discontinued operations in 1993, and the effect of foreign currency
translation.
F-36
<PAGE> 78
MASCOTECH, INC.
SCHEDULE VIII. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------- ---------- --------------------------- ---------- -------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED TO (CREDITED)
BEGINNING COSTS AND TO OTHER BALANCE AT
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- -------------------------------- ---------- ------------ ---------- ---------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1993.......................... $7,190,000 $2,470,000 $(1,820,000) $2,710,000 $ 5,130,000
---------- ------------ ----------- ---------- -------------
---------- ------------ ----------- ---------- -------------
1992.......................... $7,810,000 $3,040,000 -- $3,660,000 $ 7,190,000
---------- ------------ ----------- ---------- -------------
---------- ------------ ----------- ---------- -------------
1991.......................... $8,220,000 $7,730,000 $(2,800,000) $5,340,000 $ 7,810,000
---------- ------------ ----------- ---------- -------------
---------- ------------ ----------- ---------- -------------
</TABLE>
Notes:
(A) Allowance of companies reclassified for discontinuance of Energy-related
segment in 1993, and other adjustments, net in 1991.
(B) Deductions, representing uncollectible accounts written off, less
recoveries of accounts written off in prior years.
F-37
<PAGE> 79
MASCOTECH, INC.
SCHEDULE X. SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B
- ------------------------------------------------------ -----------------------------------------
CHARGED TO COSTS AND EXPENSES
-----------------------------------------
ITEM 1993 1992 1991
- ------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs............................... $46,070,000 $44,000,000 $41,100,000
----------- ----------- -----------
----------- ----------- -----------
Depreciation and amortization of intangible assets,
preoperating costs and similar deferrals:
Amortization of patents............................. $ 180,000 $ 180,000 $ 260,000
----------- ----------- -----------
----------- ----------- -----------
Amortization of deferred charges.................... $ 5,880,000 $ 6,730,000 $ 4,880,000
----------- ----------- -----------
----------- ----------- -----------
Amortization of excess of cost over net assets of
acquired companies............................... $14,540,000 $14,260,000 $14,500,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Notes:
Other captions provided for under this schedule are excluded, as the
amounts related to such captions are not material.
Amounts reflect the reclassification of the Company's Energy-related
segment as discontinued operations.
F-38
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -----------------------------------------------------------------------------------
<S> <C>
3.ii Bylaws of Masco Corporation, as amended.
4.d Indenture dated as of November 1, 1986 between Masco Industries, Inc. (now known as
MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing Masco Industries, Inc.'s 4 1/2% Convertible
Subordinated Debentures Due 2003.
4.f Credit Agreement dated as of September 2, 1993 by and among MascoTech, Inc., the
banks party thereto, and NBD Bank, N.A., as Agent, and Comerica Bank, The Bank of
New York, The First National Bank of Chicago, Morgan Guaranty Trust Company of New
York and NationsBank of North Carolina, N.A., as Co-Agents.
Note: Other instruments, notes or extracts from agreements defining the rights of holders
of long-term debt of Masco Corporation or its subsidiaries have not been filed
since (i) in each case the total amount of long-term debt permitted thereunder does
not exceed 10 percent of Masco Corporation's consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by Masco Corporation to the
Securities and Exchange Commission upon request.
10.d Agreement between Masco Corporation and MascoTech, Inc. dated as of November 23,
1993 including an amendment to Stock Repurchase Agreement.
10.l MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated September 14, 1993).
10.m MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated September 14, 1993).
10.n MascoTech, Inc. 1984 Stock Option Plan (Restated September 14, 1993).
10.o Masco Corporation Supplemental Executive Retirement and Disability Plan.
10.p Form of Agreement dated June 29, 1989 between Masco Corporation and certain of its
officers.
10.q Amended and Restated Securities Purchase Agreement dated as of November 23, 1993
between Masco Corporation and MascoTech, Inc., including form of Note.
10.r Registration Agreement dated as of March 31, 1993 between Masco Corporation and
Masco Industries, Inc. (now known as MascoTech, Inc.)
11 Computation of Primary and Fully Diluted Per Share Earnings.
12 Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand relating to Masco Corporation's Financial Statements
and Financial Statement Schedules.
23.b Consent of Coopers & Lybrand relating to MascoTech, Inc.'s Financial Statements and
Financial Statement Schedules.
</TABLE>
Exhibit 3.ii
BYLAWS
OF
MASCO CORPORATION
(a Delaware corporation)
(As Amended May 19, 1993)
ARTICLE I
Meetings of Stockholders
Section 1.01. Annual Meetings. The annual meeting of stockholders for
the election of Directors and for the transaction of such other proper business,
notice of which was given in the notice of the meeting, shall be held on a date
(other than a legal holiday) in May or June of each year which shall be
designated by the Board of Directors, or on such other date to which a meeting
may be adjourned or re-scheduled, at such time and place within or without the
State of Delaware as shall be designated in the notice of such meeting.
Section 1.02. Special Meetings. Except as otherwise required by law,
special meetings of stockholders of the Corporation may be called only by the
Chairman of the Board, the President or a majority of the Board of Directors,
subject to the rights of holders of any one or more classes or series of
preferred stock or any other class of stock issued by the Corporation which
shall have the right, voting separately by class or series, to elect Directors.
Special meetings shall be held at such place within or without the State of
Delaware and at such hour as may be designated in the notice of such meeting and
the business transacted shall be confined to the object stated in the notice of
the meeting.
Section 1.03. Re-scheduling and Adjournment of Meetings.
Notwithstanding Sections 1.01 and 1.02 of this Article, the Board of Directors
may postpone and re-schedule any previously scheduled annual or special meeting
of stockholders. The person presiding at any meeting is empowered to adjourn
the meeting at any time after it has been convened.
Section 1.04. Notice of Stockholders' Meetings. The notice of all
meetings of stockholders shall be in writing and shall state the place, date and
hour of the meeting. The notice of an annual meeting shall state that the
meeting is called for the election of the Directors to be elected at such
meeting and for the transaction of such other business as is stated in the
notice of the meeting. The notice of a special meeting shall state the purpose
or purposes for which the meeting is called and shall also indicate that it is
being issued by or at the direction of the person or persons calling the
meeting. If, at any meeting, action is proposed to be taken which would, if
taken, entitle stockholders fulfilling the requirements of the General
Corporation Law to receive payment for
<PAGE>
<PAGE>
their shares, the notice of such meeting shall include a statement to that
effect.
A copy of the notice of each meeting of stockholders shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, to each stockholder entitled to vote at such meeting at
his record address or at such other address as he may have furnished by request
in writing to the Secretary of the Corporation. If a meeting is adjourned to
another time or place, and, if any announcement of the adjourned time or place
is made at the meeting, it shall not be necessary to give notice of the
adjourned meeting unless the adjournment is for more than thirty days or the
Directors, after adjournment, fix a new record date for the adjourned meeting.
Notice of a meeting need not be given to any stockholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of a stockholder at a meeting, in person or by proxy,
without protesting prior to the meeting the lack of notice of such meeting shall
constitute a waiver of notice of the meeting.
Section 1.05. Business to be Considered. Only those matters stated to
be considered in the notice of the meeting, or of which written notice has been
given to the Corporation either by personal delivery to the Chairman of the
Board or the Secretary or by U.S. mail, postage prepaid, of a stockholder's
intent to bring the matter before the meeting, may be considered at the Annual
Meeting of Stockholders. Such notice shall be received no later than 120 days
in advance of the date on which the Corporation's proxy statement was released
to stockholders in connection with the previous year's Annual Meeting.
Only that business brought before a special meeting pursuant to the notice
of the meeting may be conducted or considered at such meeting.
Only such business brought before an annual or special meeting of
stockholders pursuant to these bylaws shall be eligible to be conducted or
considered at such meetings.
Section 1.06. Quorum. Except as otherwise required by law, by the
Certificate of Incorporation or by these bylaws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the Corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock
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<PAGE>
<PAGE>
entitled to vote shall be represented, any business may be transacted which
might have been transacted at the meeting as originally noticed; but only those
stockholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.
Directors shall be elected by a plurality of the votes cast at a meeting
of stockholders by the holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election of Directors, is to be
taken by vote of the stockholders, except as otherwise required by the General
Corporation Law, the Certificate of Incorporation or these bylaws, it shall be
authorized by a majority of the votes cast on the proposal by the holders of
shares entitled to vote thereon at a meeting of stockholders.
Section 1.07. Inspectors at Stockholders' Meetings. The Board of
Directors, in advance of any stockholders' meeting, shall appoint one or more
inspectors to act at the meeting or any adjournment thereof and to make a
written report thereof. In case any inspector or alternate appointed is unable
to act, the person presiding at the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, and shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote the fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by them
and execute a certificate of any fact found by them. Any report or certificate
made by them shall be prima facie evidence of the facts stated and of the vote
as certified by them.
Section 1.08. Presiding Officer at Stockholders' Meetings. The Chairman,
or the President, shall preside at Stockholders' Meetings as more particularly
provided in Article III hereof. In the event that both the Chairman and the
President shall be absent or otherwise unable to preside, then a majority of the
Directors present at the meeting shall appoint one of the Directors or some
other appropriate person to preside.
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<PAGE>
<PAGE>
ARTICLE II
Directors
Section 2.01. Qualifications and Number; Term; Vacancies. A Director
need not be a stockholder, a citizen of the United States, or a resident of the
State of Delaware. The number of Directors constituting the entire Board shall
be not less than five nor more than twelve, the exact number of Directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The Directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. Directors shall be
nominated and serve for such terms, and vacancies shall be filled, as provided
in the Certificate of Incorporation. Directors may be removed only for cause.
Section 2.02. Place and Time of Meetings of the Board. Regular and
special meetings of the Board shall be held at such places (within or without
the State of Delaware) and at such times as may be fixed by the Board or upon
call of the Chairman of the Board or of the executive committee or of any two
Directors, provided that the Board of Directors shall hold at least four
meetings a year.
Section 2.03. Quorum and Manner of Acting. A majority of the entire
Board of Directors shall constitute a quorum for the transaction of business,
but if there shall be less than a quorum at any meeting of the Board, a majority
of those present (or if only one be present, then that one) may adjourn the
meeting from time to time and the meeting may be held as adjourned without
further notice. Except as provided to the contrary by the General Corporation
Law, by the Certificate of Incorporation or by these bylaws, at all meetings of
Directors, a quorum being present, all matters shall be decided by the vote of
a majority of the Directors present at the time of the vote.
Section 2.04. Remuneration of Directors. In addition to reimbursement
for his reasonable expenses incurred in attending meetings or otherwise in
connection with his attention to the affairs of the Corporation, each Director
as such, and as a member of any committee of the Board, shall be entitled to
receive such remuneration as may be fixed from time to time by the Board.
Section 2.05. Notice of Meetings of the Board. Regular meetings of the
Board may be held without notice if the time and place of such meetings are
fixed by the Board. All regular meetings of the Board, the time and place of
which have not been fixed by the Board, and all special meetings of the Board
shall be held upon twenty-four hours' notice to the Directors given by
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<PAGE>
<PAGE>
letter or telegraph. No notice need specify the purpose of the meeting. Any
requirement of notice shall be effectively waived by any Director who signs a
waiver of notice before or after the meeting or who attends the meeting without
protesting (prior thereto or at its commencement) the lack of notice to him;
provided, however, that a regular meeting of the Board may be held without
notice immediately following the annual meeting of the stockholders at the same
place as such meeting was held, for the purpose of electing officers and a
Chairman of the Board for the ensuing year.
Section 2.06. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an Executive Committee and other committees to
serve at the pleasure of the Board. Each Committee shall consist of such number
of Directors as shall be specified by the Board in the resolution designating
the Committee. Except as set forth below, the Executive Committee shall have
all of the authority of the Board of Directors. Each other committee shall be
empowered to perform such functions, as may, by resolution, be delegated to it
by the Board.
The Board of Directors may designate one or more Directors as alternate
members of any such committee, who may replace any absent member or members at
any meetings of such committee. Vacancies in any committee, whether caused by
resignation or by increase in the number of members constituting said committee,
shall be filled by a majority of the entire Board of Directors. The Executive
Committee may fix its own quorum and elect its own Chairman. In the absence or
disqualification of any member of any such committee, the member or members
thereof present at any meeting and not disqualified from voting whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in place of any such absent or
disqualified member.
Section 2.07. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board, or of such committee as
the case may be, and such written consent if filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
Officers
Section 3.01. Officers. The Board of Directors, at its first meeting
held after the annual meeting of stockholders in each year shall elect a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary, a
Treasurer and a Controller, and may, in
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<PAGE>
<PAGE>
its discretion, also appoint from time to time, such other officers or agents as
it may deem proper. The Chairman shall be elected from among the members of the
Board of Directors.
Any two or more offices may be held by the same person.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor has
been elected and qualified; provided, however, that the Board of Directors may
remove any officer for cause or without cause at any time.
Section 3.02. Chairman of the Board. The Chairman shall preside, unless
he designates another to act in his stead, at all meetings of the Stockholders,
the Board of Directors, and the Executive Committee and shall be a member ex
officio of all committees appointed by the Board of Directors, except that the
Board may, at his request, excuse him from membership on a committee. The
Chairman shall be the chief executive officer of the Corporation and shall have
the power on behalf of the Corporation to enter into, execute and deliver all
contracts, instruments, conveyances or documents and to affix the corporate seal
thereto. The Chairman shall do and perform all acts and duties herein specified
or which may be assigned to him from time to time by the Board of Directors.
Section 3.03. Chairman Emeritus. If the Board shall elect a Chairman
Emeritus, he or she shall, at the request of the Chairman of the Board or in his
absence or inability to act if the Board shall not designate another member,
preside at the meetings of the Board. The Chairman Emeritus shall also perform
such duties which may be assigned to him by the Chairman of the Board.
Section 3.04. President. At the request of the Chairman of the Board or
in his absence or inability to act, the President shall preside at meetings of
the Stockholders. The President shall be the chief operating officer of the
Corporation and as such, subject to the direction of the Chairman of the Board,
be responsible for the operations of the Corporation and shall also perform such
other duties as may be prescribed by the Board of Directors or the Executive
Committee or the Chairman of the Board. The President shall have the power on
behalf of the Corporation to enter into, execute, or deliver all contracts,
instruments, conveyances or documents and to affix the corporate seal thereto.
Section 3.05. Secretary. The Secretary shall keep minutes of the
proceedings taken and the resolutions adopted at all meetings of the
stockholders, the Board of Directors and the Executive Committee, and shall give
due notice of the meetings of the stockholders, the Board of Directors and the
Executive Committee. He shall have charge of the seal and all books and papers
of the
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<PAGE>
<PAGE>
corporation, and shall perform all duties incident to his office. In case of
the absence or disability of the Secretary, his duties and powers may be ex-
ercised by such person as may be appointed by the Board of Directors or the
Executive Committee.
Section 3.06. Treasurer. The Treasurer shall receive all the monies
belonging to the Corporation, and shall forthwith deposit the same to the credit
of the Corporation in such financial institution as may be selected by the Board
of Directors or the Executive Committee. He shall keep books of account and
vouchers for all monies disbursed. He shall also perform such other duties as
may be prescribed by the Board of Directors or Executive Committee or the
President and in case of the absence or disability of the Treasurer, his duties
and powers may be exercised by such person as may be appointed by the Board of
Directors or Executive Committee.
Section 3.07. Controller. The Controller shall have custody of the
financial records of the Corporation and shall keep full and accurate books and
records of the financial transactions of the Corporation. He shall determine
the methods of accounting and reporting for all entities comprising the
Corporation and shall be responsible for assuring adequate systems of internal
control.
The Controller shall render to the Chairman of the Board of Directors, the
President, and the Board of Directors, whenever they may request it, a report on
the financial condition of the Corporation and on the results of its operations.
ARTICLE IV
Capital Stock
Section 4.01. Share Certificates. Each certificate representing shares
of the Corporation shall be in such form as may be approved by the Board of
Directors, and, when issued, shall contain upon the face or back thereof the
statements prescribed by the General Corporation Law and by any other applicable
provision of law. Each such certificate shall be signed by the Chairman of the
Board or the President or a Vice President and by the Secretary or Treasurer or
an Assistant Secretary or Assistant Treasurer. The signatures of said officers
upon a certificate may be facsimile if the certificate is countersigned by a
transfer agent or registered by a registrar other than the Corporation itself or
its employee. In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
Section 4.02. Lost, Destroyed or Stolen Certificates. No certificate
representing shares shall be issued in place of any
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<PAGE>
<PAGE>
certificate alleged to have been lost, destroyed or stolen, except on production
of evidence of such loss, destruction or theft and on delivery to the
Corporation, if the Board of Directors shall so require, of a bond of indemnity
in such amount, upon such terms and secured by such surety as the Board of
Directors may in its discretion require.
Section 4.03. Transfer of Shares. The shares of stock of the Corporation
shall be transferable or assignable on the books of the Corporation only by the
person to whom they have been issued or his legal representative, in person or
by attorney, and only upon surrender of the certificate or certificates
representing such shares properly assigned. The person in whose name shares of
stock shall stand on the record of stockholders of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation.
Section 4.04. Record Dates. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other action, the Board may fix, in advance, a date as the record date of any
such determination of stockholders. Such date shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.
ARTICLE V
Miscellaneous
Section 5.01. Signing of Instruments. All checks, drafts, notes,
acceptances, bills of exchange, and orders for the payment of money shall be
signed in such manner as may be provided and by such person or persons as may be
authorized from time to time by resolution of the Board of Directors or the
Executive Committee or these bylaws.
Section 5.02. Corporate Seal. The seal of the Corporation shall consist
of a metal disc having engraved thereon the words "Masco Corporation, Delaware."
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January of each year and shall end on the thirty-first
day of December following.
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<PAGE>
<PAGE>
ARTICLE VI
Amendments of Bylaws
Section 6.01. Amendments. Except as provided to the contrary by the
General Corporation Law, by the Certificate of Incorporation or by these bylaws,
these bylaws may be amended or repealed at a meeting, (1) by vote of a majority
of the whole Board of Directors, provided that notices of the proposed
amendments shall have been sent to all the Directors not less than three days
before the meeting at which they are to be acted upon, or at any regular meeting
of the Directors by the unanimous vote of all the Directors present, or (2) by
the affirmative vote of the holders of at least 80% of the stock of the
Corporation generally entitled to vote, voting together as a single class.
- 9 -
<PAGE>
<PAGE>
Exhibit 4.d
[CONFORMED COPY]
MASCO INDUSTRIES, INC.
AND
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
TRUSTEE
___________________
INDENTURE
Dated as of November 1, 1986
____________________
<PAGE>
<PAGE>
TABLE OF CONTENTS*
________________
Page
Parties 1
Recitals 1
Authorization of Indenture 1
Compliance with Legal Requirements 1
ARTICLE ONE.
Definitions.
SECTION 1.01. Definitions 1
Authenticating Agent 2
Board of Directors 2
Common Stock 2
Company 2
Consolidated Net Earnings 2
Convertible Security or
Convertible Securities 3
Event of Default 3
Indenture 3
Officers' Certificate 3
Opinion of Counsel 4
Original Issue Date 4
Person 4
Principal Office of the Trustee 4
Responsible Officer 4
Security or Securities; Outstanding 4
Securityholder 5
Senior Indebtedness 5
Subsidiary 6
Trustee 7
Trust Indenture Act of 1939 7
_________________
*This table of contents shall not, for any purpose, be deemed to be part
of the Indenture.
<PAGE>
<PAGE>
TIE-SHEET*
of provisions of Trust Indenture Act of 1939 with Indenture dated as of November
1, 1986 between Masco Industries, Inc. and Morgan Guaranty Trust Company of New
York, Trustee:
Section of Act Section of Indenture
310(a)(1) and (2) 8.09
310(a)(3) and (4) Not applicable
310(b) 8.08 and 8.10 (a)(b)
and (d)
310(c) Not applicable
311(a) and (b) 8.13
311(c) Not applicable
312(a) 6.01 and 6.02(a)
312(b) and (c) 6.02(b) and (c)
313(a) 6.04(a)
313(b)(1) Not applicable
313(b)(2) 6.04(b)
313(c) 6.04(c)
313(d) 6.04(d)
314(a) 6.03
314(b) Not applicable
314(c)(1) and (2) 15.05
314(c)(3) Not applicable
314(d) Not applicable
314(e) 15.05
314(f) Not applicable
315(a)(c) and (d) 8.01
315(b) 7.08
315(e) 7.09
316(a)(1) 7.01 and 7.07
316(a)(2) Omitted
316(a) last sentence 9.04
316(b) 7.04
317(a) 7.02
317(b) 5.04(a)
318(a) 15.07
___________________
*This tie-sheet is not part of the Indenture as executed.
<PAGE>
<PAGE>
ii
ARTICLE TWO.
SECURITIES.
Page
SECTION 2.01. Forms Generally 7
SECTION 2.02. Form of Trustee's Certificate
of Authentication 7
SECTION 2.03. Amount Unlimited; Issuable in Series 8
SECTION 2.04. Authentication and Delivery 9
SECTION 2.05. Date and Denomination of Securities 11
SECTION 2.06. Execution of Securities 12
SECTION 2.07. Exchange and Registration of Transfer
of Securities 12
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Securities 13
SECTION 2.09. Temporary Securities 15
SECTION 2.10. Cancellation of Securities Paid, etc. 15
ARTICLE THREE.
CONVERSION OF SECURITIES.
SECTION 3.01. Conversion Privilege 16
SECTION 3.02. Manner of Exercise of Conversion Privilege 16
SECTION 3.03. Fractional Shares 17
SECTION 3.04. Conversion Price 18
SECTION 3.05. Adjustment of Conversion Price 18
SECTION 3.06. Merger, Consolidation, etc. 22
SECTION 3.07. Notices 22
SECTION 3.08. Taxes on Conversions 23
SECTION 3.09. Company to Provide Stock 24
SECTION 3.10. Disclaimer of Responsibility for Certain
Matters 24
SECTION 3.11. Return of Funds Deposited for Redemption of
Converted Securities 25
SECTION 3.12. Disposition of Converted Securities 25
ARTICLE FOUR.
SUBORDINATION OF SECURITIES.
SECTION 4.01. Agreement to Subordinate 25
SECTION 4.02. No Payment on Securities if Senior
Indebtedness in Default 26
SECTION 4.03. Priority of Senior Indebtedness 26
SECTION 4.04. Company to Give Notice of Certain Events;
Reliance by Trustee 28
<PAGE>
<PAGE>
iii
Page
SECTION 4.05. Subrogation of Securities 29
SECTION 4.06. Company Obligation to Pay Unconditional 29
SECTION 4.07. Authorization of Holders of Securities to
Trustee to Effect Subordination 30
SECTION 4.08. Notice to Trustee of Facts Prohibiting
Payments 30
SECTION 4.09. Trustee May Hold Senior Indebtedness 30
SECTION 4.10. All Indenture Provisions Subject to this
Article 30
ARTICLE FIVE.
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.01. Payment of Principal, Premium and Interest 31
SECTION 5.02. Offices for Notices and Payments, etc. 31
SECTION 5.03. Appointments to Fill Vacancies in Trustee's
Office 32
SECTION 5.04. Provision as to Paying Agent 32
SECTION 5.05. Certificate to Trustee 33
ARTICLE SIX.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
THE TRUSTEE.
SECTION 6.01. Securityholders' Lists 33
SECTION 6.02. Preservation and Disclosure of Lists 34
SECTION 6.03. Reports by Company 35
SECTION 6.04. Reports by Trustee 36
ARTICLE SEVEN.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT.
SECTION 7.01. Events of Default 38
SECTION 7.02. Payment of Securities on Default;
Suit Therefor 41
SECTION 7.03. Application of Moneys Collected by Trustee 43
SECTION 7.04. Proceedings by Securityholders 44
SECTION 7.05. Proceedings by Trustee 45
SECTION 7.06. Remedies Cumulative and Continuing 45
SECTION 7.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders 46
SECTION 7.08. Notice of Defaults 47
SECTION 7.09. Undertaking to Pay Costs 47
<PAGE>
<PAGE>
iv
ARTICLE EIGHT.
CONCERNING THE TRUSTEE.
Page
SECTION 8.01. Duties and Responsibilities of Trustee 48
SECTION 8.02. Reliance on Documents, Opinions, etc. 49
SECTION 8.03. No Responsibility for Recitals, etc. 50
SECTION 8.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents, Conversion Agents or
Registrar May Own Securities 51
SECTION 8.05. Moneys to Be Held in Trust 51
SECTION 8.06. Compensation and Expenses of Trustee 51
SECTION 8.07. Officers' Certificate as Evidence 52
SECTION 8.08. Conflicting Interest of Trustee 52
SECTION 8.09. Eligibility of Trustee 59
SECTION 8.10. Resignation or Removal of Trustee 59
SECTION 8.11. Acceptance by Successor Trustee 61
SECTION 8.12. Succession by Merger, etc. 62
SECTION 8.13. Limitation on Rights of Trustee as a Creditor 63
SECTION 8.14. Authenticating Agents 67
ARTICLE NINE.
CONCERNING THE SECURITYHOLDERS.
SECTION 9.01. Action by Securityholders 70
SECTION 9.02. Proof of Execution by Securityholders 70
SECTION 9.03. Who Are Deemed Absolute Owners 70
SECTION 9.04. Securities Owned by Company Deemed
Not Outstanding 71
SECTION 9.05 Revocation of Consents; Future Holders Bound 71
ARTICLE TEN.
SECURITYHOLDERS' MEETING.
SECTION 10.01. Purposes of Meetings 72
SECTION 10.02. Call of Meetings by Trustee 72
SECTION 10.03. Call of Meetings by Company or
Securityholders 73
SECTION 10.04. Qualifications for Voting 73
SECTION 10.05. Regulations 73
SECTION 10.06. Voting 74
<PAGE>
<PAGE>
v
ARTICLE ELEVEN.
SUPPLEMENTAL INDENTURE.
Page
SECTION 11.01. Supplemental Indentures without Consent of
Securityholders 75
SECTION 11.02. Supplemental Indentures with Consent of
Securityholders 77
SECTION 11.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures 78
SECTION 11.04. Notation on Securities 78
SECTION 11.05. Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee 79
SECTION 11.06. Effect on Senior Indebtedness 79
ARTICLE TWELVE.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 12.01. Consolidation, Merger or Sale of Assets
Permitted 79
SECTION 12.02. Successor Corporation to be Substituted
for Company 80
SECTION 12.03. Evidence to be Furnished Trustee 80
ARTICLE THIRTEEN.
SATISFACTION AND DISCHARGE OF INDENTURE.
SECTION 13.01. Discharge of Indenture 81
SECTION 13.02. Deposited Moneys to Be Held in Trust
by Trustee 82
SECTION 13.03. Paying Agent to Repay Moneys Held 83
SECTION 13.04. Return of Unclaimed Moneys 83
ARTICLE FOURTEEN.
IMMUNITY OF INCORPORATION, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 14.01. Indenture and Securities Solely Corporate
Obligations 83
ARTICLE FIFTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 15.01. Successor 84
SECTION 15.02. Official Acts by Successor Corporation 84
SECTION 15.03. Addresses for Notices, Inc. 84
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Page
SECTION 15.04. New York Contract 84
SECTION 15.05. Evidence of Compliance with Conditions
Precedent 85
SECTION 15.06 Legal Holidays 85
SECTION 15.07. Trust Indenture Act to Control 85
SECTION 15.08. Table of Contents, Headings, etc. 85
SECTION 15.09. Execution in Counterparts 86
SECTION 15.10. No Security Interest Created 86
ARTICLE SIXTEEN.
REDEMPTION OF SECURITIES - MANDATORY AND
OPTIONAL SINKING FUND.
SECTION 16.01. Applicability of Article 86
SECTION 16.02. Notice of Redemption; Selection of Securities 86
SECTION 16.03. Payment of Securities Called for Redemption 87
SECTION 16.04. Mandatory and Optional Sinking Fund 88
TESTIMONIUM 91
SIGNATURES 91
ACKNOWLEDGEMENTS 92
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THIS INDENTURE, dated as of November 1, 1986, between MASCO INDUSTRIES,
INC., a Delaware corporation (hereinafter sometimes called the "Company"), and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, trustee (hereinafter sometimes called
the "Trustee").
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue from time to time of its convertible and non-convertible
subordinated debentures, notes or other evidence of indebtedness to be issued in
one or more series (the "Securities") up to such principal amount or amounts as
may from time to time be authorized in accordance with the terms of this
Indenture and, to provide the terms and conditions upon which the Securities are
to be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In consideration of the premises, and the purchase of the Securities by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Securities or of a series thereof, as follows:
ARTICLE ONE.
DEFINITIONS.
SECTION 1.01 Definitions. The terms defined in this Section 1.01 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective means specified in this Section 1.01. all others
terms used in this Indenture which are defined in the Trust Indenture Act of
1939, as amended, or which are by reference therein defined in the Securities
Act of 1933, as amended, shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture as originally executed. All accounting terms used herein and
not expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles and the term "generally
accepted accounting principles" means such accounting principles as are
generally accepted at the time of any computation. The words "herein", "hereof"
and "hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
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2
Authenticating Agent:
The term "Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
8.14.
Board of Directors:
The term "Board of Directors" shall mean the Board of Directors of the
Company or any committee of such Board duly authorized to act for it hereunder.
Common Stock:
The term "Common Stock" shall mean the Common Stock of the Company, $1 par
value, at the date of this Indenture, as such Common Stock may be changed or
reclassified from time to time.
Company:
The term "Company" shall mean Masco Industries, Inc., a Delaware
corporation, and, subject to the provisions of Article Twelve, shall include its
successors and assigns.
Consolidated Net Earnings:
The term "Consolidated Net Earnings" shall mean the consolidate net
earnings (or loss) of the Company and its consolidated Subsidiaries determined
on a consolidated basis in accordance with generally accepted accounting
principles, after deduction of all charges, including, without limitation,
operating expenses, interest amortization of deferred charges, depreciation and
taxes (including income and other profits taxes).
Convertible Security or Convertible Securities:
The terms "Convertible Security" or "Convertible Securities" shall mean
any series of Securities designated convertible by the resolutions or
supplemental indentures referred to in Section 2.03.
Event of Default:
The term "Event of Default" shall mean any event specified in Section
7.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
Indenture:
The term "Indenture" shall mean this instrument as originally executed or,
if amended or supplemented as herein provided, as so amended or supplemented, or
both, and shall include the form and
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3
terms of particular series of Securities established as contemplated hereunder;
provided, however, that if at any time more than one Person is acting as Trustee
under this instrument, "Indenture" shall mean with respect to any one or more
series of Securities for which such Person is Trustee, this instrument as
originally executed or as it may from time to time be supplemented or amended by
one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of particular series of
Securities for which such Person is Trustee established as contemplated by
Section 2.03, exclusive, however, of any provisions or terms which relate solely
to other series of Securities for which such Person is not Trustee, regardless
of when such terms or provisions were adopted, and exclusive any provisions or
terms adopted by means of one or more indentures supplemental hereto executed
and delivered after such Person had become such Trustee but to which such
Person, as such Trustee, was not a party.
Officers' Certificate:
The term "Officers' Certificate" shall mean a certificate signed by the
Chairman of the Board, the President or any Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary of an Assistant Secretary of
the Company and delivered to the Trustee. Each such certificate shall include
the statements provided for in Section 15.05 if and to the extent required by
the provisions of such Section.
Opinion of Counsel:
The term "Opinion of Counsel" shall mean an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company, or may be
other counsel acceptable to the Trustee. Each such opinion shall include the
statements provided for in Section 15.05 if an to the extent required by the
provisions of such Section.
Original Issue Date:
The term "Original Issue Date" or "original issue date" of any Security
(or any portion thereof) shall mean the earlier of (a) the date of such Security
or (b) the date of any Security (or portion thereof) for which such Security was
issued (directly or indirectly) on registration of transfer, exchange or
substitution.
Person:
The term "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
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4
Principal Office of the Trustee:
The term "principal office of the Trustee", or other similar term, shall
mean the principal office of the Trustee at which at any particular time its
corporate trust business shall principally be administered, which office may be
in more than one location within the same city.
Responsible Officer:
The term "Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee authorized to administer its corporate trust
matters.
Security or Securities; Outstanding:
The terms "Security" or "Securities" shall have the meaning stated in the
first recital of this Indenture and more particularly means any security or
securities, as the case may be, authenticated and delivered under this
Indenture, whether reconvertible or non-convertible into shares of Common Stock;
provided, however, that if at any time there is more than one Person acting as
Trustee under this instrument, "Security" or "Securities" with respect to the
Indenture as to which such Person is Trustee shall have the meaning stated in
the first recital of this instrument and shall more particularly mean any
securities, as the case may be, authenticated and delivered under this
instrument, whether convertible or non-convertible into shares of Common Stock,
exclusive, however, of securities of any series as to which such Person is not
Trustee.
The term "outstanding" (except as otherwise provided in Section 8.08),
when used with reference to Securities, shall, subject to the provisions of
Section 9.04, mean, as of any particular time, all Securities authenticated and
delivered by the Trustee or the authenticating Agent under this Indenture,
except
(a) Securities theretofore cancelled by the Trustee or the Authenticating
Agent or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of
which moneys is in the necessary amount shall have been deposited in trust with
the Trustee or with any paying agent (other than the Company) or shall have been
set aside and segregated in trust by the Company (if the Company shall act as
its own paying agent); provided that, if such Securities, or portions thereof,
are to be redeemed prior to maturity thereof, notice of such redemption shall
have been given as in Article Sixteen provided or provisions satisfactory to the
Trustee shall have been made for giving such notice; and
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5
(c) Securities paid or in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to the terms of
Section 2.08 unless proof satisfactory to the Company and the Trustee is
presented that any such Securities are held by bona fide holders in due course.
Securityholder:
The terms "Securityholder", "holder of Securities" or "Holder", or other
similar terms, shall mean any person in whose name at the time a particular
Security is registered on the register kept by the Company or the Trustee for
that purpose in accordance with the terms hereof.
Senior Indebtedness:
The term "Senior Indebtedness" shall mean (a) all indebtedness of the
Company for money borrowed (including without limitation obligations of the
Company in respect of overdrafts, foreign exchange contracts, letters of credit,
bankers' acceptance, or any loan or advance from a bank whether or not evidenced
by promissory notes or other instruments) or incurred in connection with the
acquisition of property, whether outstanding on the date of execution of this
Indenture or thereafter created, assumed or incurred, except such indebtedness
as is by its terms expressly stated to be not superior in right of payment to
the Securities or to rank pari passu with the Securities and (b) any deferrals,
renewals or extensions of any such Senior Indebtedness, or debentures, notes or
other evidences of indebtedness issued in exchange for such Senior Indebtedness.
The term "indebtedness of the Company for money borrowed" as used in the
foregoing sentence shall mean any obligation of the Company (and any guaranty,
endorsement or other contingent obligation of the Company in respect of, or to
purchase or otherwise acquire, any obligation of another) for borrowed money
evidenced by notes or other written obligations, and any indebtedness of the
Company evidenced by bonds, notes or debentures or other similar instruments.
The term "indebtedness of the Company incurred in connection with the
acquisition of property" as used in the first sentence of this definition shall
mean any purchase money obligation (whether or not secured by any lien or other
security interest) created or assumed as all or part of the consideration for
the acquisition of property whether by purchase, merger, consolidation or
otherwise (but not including any account payable or any other obligation created
or assumed by the Company in the ordinary course of business in connection with
the obtaining materials or services).
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6
Subsidiary:
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(excluding in the computation of such percentage stock of any class or classes
of such corporation which has or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Company, or by one or more Subsidiaries, or by the Company and
one or more Subsidiaries.
Trustee:
The term "Trustee" shall mean the Person identified as "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
Trust Indenture Act of 1939:
The term "Trust Indenture Act of 1939" shall mean the Trust Indenture of
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Sections 2.03 and 11.03.
ARTICLE TWO.
SECURITIES.
SECTION 2.01. Forms Generally. The Securities of each series shall be in
substantially the form as shall be established by or pursuant to a resolution of
the Board of Directors or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rules made pursuant thereto or with any rules of any securities exchange or
all as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
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7
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 2.02 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Trustee
By
Authorized Officer
SECTION 2.03. Amount Unlimited; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities shall rank equally and pari passu and may be issued in one
or more series. There shall be established in or pursuant to a resolution of
the Board of Directors or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Section 2.07, 2.08, 2.09, 11.04 or 16.03);
(3) the date or dates on which the principal of an premium, if any, on
the Securities of the series is payable;
(4) the rate or rates at which the Securities of the series shall bear
interest, or the method by which such interest may be determined, the date or
dates from which such interest shall accrue, the interest payment dates on which
such interest shall be payable and the record dates for the determination of
holders to whom interest is payable;
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8
(5) the place or places where the principal of, and premium, if any, and
interest on Securities of the series shall be payable;
(6) the price or prices at which, the period or periods within which and
the terms and conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company, pursuant to any Sinking Fund or
otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Securityholder thereof and the price or prices at which and
the period or periods within which and the terms and conditions upon which
Securities of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(8) the right, if any, of the Company to discharge the Indenture as to
the Securities of the series pursuant to Section 13.01(c) or to limit the
Indenture as to the Securities of the series pursuant to the last sentence of
Section 13.01 (and if any sinking fund is applicable to such series, the
obligations of such sinking fund shall survive and be provided for upon the
discharge of the Indenture pursuant to Section 13.01(c) or the limitation of the
Indenture pursuant to the last sentence of Section 13.01);
(9) if other than denominations of $1,000 and any multiple thereof, the
denominations in which Securities of the series shall be issuable;
(10) any Events of Default with respect to the Securities of a particular
series, in addition to or in lieu of those set forth herein;
(11) any trustees, authenticating or paying agents, warrant agents,
transfer agents, conversion agents (if such Securities are Convertible
Securities) or registrar with respect to the Securities of such series;
(12) the applicable initial conversion price if such Securities are
Convertible Securities, the dates on or subsequent to which such Securities are
convertible and the date such Securities cease to be convertible; and
(13) any other terms of the series (which terms shall conform to the
requirements of the Trust Indenture Act of 1939 as then in effect, shall not
adversely affect the rights of the Securityholders of any other Securities then
outstanding and shall not be inconsistent with the provisions of this
Indenture).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be
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9
provided in or pursuant to such resolution of the Board of Directors or in any
such indenture supplemental hereto.
SECTION 2.04. Authentication and Delivery. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Securities to or upon the written order of the Company, signed by its Chairman
of the Board of Directors, President, any Vice President, its Treasurer or
Assistant Treasurer or its Secretary or an Assistant Secretary without any
further action by the Company hereunder. In authenticating such Securities, the
Trustee shall be entitled to receive, and (subject to Sections 8.01 and 8.02)
shall be fully protected in relying upon:
(1) a copy of any resolution or resolutions of the Board of Directors
relating thereto and, if applicable, an appropriate record of any action taken
pursuant to such resolution, in each case certified by the Secretary or an
Assistant Secretary of the Company;
(2) an executed supplemental indenture, if any;
(3) an Officers' Certificate prepared in accordance with Section 15.05
setting forth the form and terms of the Securities as required pursuant to
Sections 2.01 and 2.03, respectively; and
(4) an Opinion of Counsel prepared in accordance with Section 15.05 which
shall also state
(a) that the form of such Securities has been established by or
pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.01 in conformity
with the provisions of this Indenture;
(b) that the terms of such Securities have been established by or
pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.03 in conformity
with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute
valid and legally binding obligations of the Company;
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10
(d) that all laws and requirements in respect of the execution and
delivery by the Company of the Securities have been complied with
and that authentication and delivery of the Securities by the
Trustee will not violate the terms of this Indenture; and
(e) such other matters as the Trustee may reasonably request.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith by its board of directors or trustees, executive committee, or a trust
committee of directors or trustees and/or vice presidents shall determine that
such action would expose the Trustee to personal liability to existing holders.
SECTION 2.05. Date and Denomination of Securities. The Securities shall
be issuable as registered Securities without coupons and in such denominations
as shall be specified as contemplated by Section 2.03. In the absence of any
such specification with respect to the Securities of any series, the Securities
of such series shall be issuable in the denominations of $1,000 and any multiple
thereof. The Securities shall be numbered, lettered, or otherwise distinguished
in such manner or in accordance with such plans as the officers of the Company
executing the same may determine with the approval of the Trustee as evidenced
by the execution and authentication thereof.
Every Security shall be dated the date of its authentication, shall bear
interest from such date and shall be payable on such dates, in each case, as
contemplated by Section 2.03.
The person in whose name any Security of any series is registered at the
close of business on any record date (as hereinafter defined) with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date notwithstanding the cancellation of such Security
upon any transfer, exchange or conversion subsequent to the record date and
prior to such interest payment date; provided, however, that if and to the
extent the Company shall default in the payment of the interest due on such
interest payment date, such defaulted interest shall be paid to the persons in
whose names outstanding Securities are registered on a subsequent record date
established by notice given by mail by or on behalf of the Company to the
holders of Securities and the Trustee not less than 15 days preceding such
subsequent record date, such subsequent record date to be not less than ten days
preceding the date of payment of such defaulted interest. The term "record
date" as used in this Section with respect to any interest payment date shall
mean if such interest payment date is the first day of a calendar month, the
fifteenth day of the next preceding calendar month and shall mean, if such
interest payment date is the fifteenth
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11
day of a calendar month, the first day of such calendar month, whether or not
such record date is a business day.
SECTION 2.06. Execution of Securities. The Securities shall be signed in
the name and on behalf of the Company by the facsimile signature of its Chairman
of the Board or its President and imprinted with a facsimile of its corporate
seal, and attested by the facsimile signature of its Secretary or an Assistant
Secretary. Each such signature upon the Securities may be in the form of a
facsimile signature of any such officer and may be imprinted or otherwise
reproduced on the Securities and for that purpose the Company may adopt and use
the facsimile signature of any person who has been or is such officer, and in
case any such officer of the Company signing any of the Securities shall cease
to be such officer before the Securities so signed shall have been authenticated
and delivered by the Trustee, or disposed of by the Company, such securities
nevertheless may be authenticated and delivered or disposed of as though such
person had not ceased to be such officer of the Company. Only such Securities
as shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee or the Authenticating Agent, shall
be entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee or the Authenticating Agent upon any
Security executed by the Company shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the holder is entitled to the benefits of this Indenture.
SECTION 2.07. Exchange and Registration of Transfer of Securities.
Securities of any series may be exchanged for a like aggregate principal amount
of Securities of the same series of other authorized denominations. Securities
to be exchanged may be surrendered at the principal office of the Trustee or at
any office or agency to be maintained by the Company for such purpose as
provided in Section 5.02, and the Company or the Trustee shall execute and
register and the Trustee or the Authenticating Agent shall authenticate and
deliver in exchange therefor the Security or Securities which the Securityholder
making the exchange shall be entitled to receive. Upon due presentment for
registration of transfer of any Security of any series at the principal office
of the Trustee or at any office or agency of the Company maintained for such
purpose as provided in Section 5.02, the Company or the Trustee shall execute
and register and the Trustee or the Authenticating Agent shall authenticate and
deliver in the name of the transferee or transferees a new Security or
Securities of the same series for a like aggregate principal amount.
Registration or registration of transfer of any Security by the Trustee or by
any agent of the Company appointed pursuant to Section 5.02, and delivery of
such Security, shall be deemed to complete the registration or registration of
transfer of such Security.
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12
The Company or the Trustee shall keep, at the principal office of the
Trustee, a register for each series of Securities issued hereunder in which,
subject to such reasonable regulations as it may prescribe, the Company or the
Trustee shall register all Securities and shall register the transfer of all
Securities as in this Article Two provided. Such register shall be in written
form or in any other form capable of being converted into written form within a
reasonable time.
All Securities presented for registration of transfer or for exchange or
payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Securities, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
The Company or the Trustee shall not be required to exchange or register a
transfer of (a) any Security of a series for a period of 15 days next preceding
the date of selection of Securities of such series for redemption, or (b) any
Securities of any series selected, called or being called for redemption in
whole or in part, except, in the case of any Securities of any series to be
redeemed in part, the portion thereof not so to be redeemed.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities. In case
any temporary or definitive Security shall become mutilated or be destroyed,
lost or stolen, the Company in the case of a mutilated Security shall, and in
the case of a lost, stolen or destroyed Security may in its discretion, execute,
and upon its request the Trustee shall authenticate and deliver, a new Security
of the same series bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen. In every case the
applicant for a substituted Security shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company and the Trustee evidence to their satisfaction
of the destruction, loss or theft of such Security and of the ownership thereof.
The Trustee may authenticate any such substituted Security and deliver the
same upon the written request or authorization of any officer of the Company.
Upon the issuance of any substituted Security, the Company may require the
payment of a sum sufficient
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13
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith an in additional further sum
not exceeding two dollars for each Security so issued in substitution. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Security, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Security) if the applicant for such payment shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless and, in case of destruction, loss or theft, evidence satisfactory
to the Company and to the Trustee of the destruction, loss or theft of such
Security and of the ownership thereof.
Every substituted Security of any series issued pursuant to the provisions
of this Section 2.08 by virtue of the fact that any such Security is destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be found at
any time, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of the same series duly
issued hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.09. Temporary Securities. Pending the preparation of
definitive Securities of any series the Company may execute and the Trustee
shall authenticate and deliver temporary Securities (printed or lithographed).
Temporary Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company. Every such temporary Security shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Securities. Without unreasonable delay the Company will execute
and deliver to the Trustee or the Authenticating Agent definitive Securities and
thereupon any or all temporary Securities of such series may be surrendered in
exchange therefor, at the principal office of the Trustee or at any office or
agency maintained by the Company for such purpose as provided in Section 5.02,
and the Trustee or the Authenticating Agent shall authenticate and deliver in
exchange for such temporary Securities a like aggregate principal amount of such
definitive Securities. Such exchange shall be made by the Company
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14
at its own expense and without any charge therefor except that in case of any
such exchange involving a registration of transfer the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series authenticated
and delivered hereunder.
Section 2.10. Cancellation of Securities Paid, etc. All Securities
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be
surrendered to the Trustee and promptly cancelled by it, or, if surrendered to
the Trustee or any Authenticating Agent, shall be promptly cancelled by it, and
no Securities shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. All Securities cancelled by any
Authenticating Agent shall be delivered to the Trustee. The Trustee shall
destroy cancelled Securities and shall deliver a certificate of such destruction
to the Company. If the Company shall acquire any of the Securities, however,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation.
ARTICLE THREE.
Conversion of Securities.
SECTION 3.01. Conversion Privilege. Subject to and upon compliance with
the provisions of this Article Three, the holder of any Convertible Security
shall have the right, at his option, at any date on or subsequent to which such
Convertible Security is convertible up to the date on which such Convertible
Security ceases to be convertible (or if such Convertible Security is called for
redemption prior to such date such Convertible Security ceases to be convertible
then, in respect of such Convertible Security, to and including but not after
the close of business on the last business day preceding the date fixed for such
redemption, unless the Company shall default in the payment due upon redemption
thereof) as set forth in the resolutions or supplemental indenture relating to
such series of Convertible Securities referred to in Section 2.03 to convert the
principal amount of such Convertible Security into the whole number of fully
paid and non-assessable shares of Common Stock obtained by dividing the
principal amount of the Convertible Security to be converted by the Conversion
Price for such series.
SECTION 3.02. Manner of Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the holder of any Convertible Security to be
converted shall surrender such Convertible Security at the office or agency to
be maintained by
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15
the Company pursuant to Section 5.02 for the conversion of Convertible
Securities, and shall give written notice to the Company in the form provided on
the Security at such office or agency that the holder elects to convert such
Convertible Security and, if so required by the Company, accompanied by
instruments of transfer, in form satisfactory to the Company and to the Trustee,
duly executed by the Holder or his duly authorized attorney in writing.
Convertible Securities, of any series, surrendered for conversion during the
period from the close of business on any record date (as defined in Section
2.05) for the payment of interest on such series of Convertible Securities to
the opening of business on the interest payment date (as defined in Section
2.05) of such series for such interest shall (except in the case of Convertible
Securities which have been called for redemption on a redemption date within
such period) be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount equal to the interest payable on
such interest payment date on the principal amount of Convertible Securities
being surrendered for conversion. Said notice shall state the name or names
(with addresses) in which the certificate or certificates for shares of Common
Stock which shall be issuable on such conversion shall be issued. As promptly
as practicable after the surrender of such Convertible Security and the receipt
of such notice, as aforesaid, the Company shall, subject to the provisions of
Section 3.08, issue and deliver at such office or agency to such holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable on such conversion of Convertible Securities in
accordance with the provisions of this Article and cash, as provided in Section
3.03, in respect of any fraction of a share of Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date (herein called the "Date
of Conversion") on which such notice shall have been received by the Company and
such Convertible Security shall have been surrendered as aforesaid, and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on the Date of Conversion the holder or holders of record of the
shares represented thereby; provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
constitute the person or persons in whose name or names the certificate or
certificates for such shares are to be issued as the record holder or holders
thereof for all purposes at the opening of business on the next succeeding day
on which such stock transfer books are open but such conversion shall
nevertheless be at the conversion price in effect at the close of business on
the date when such Convertible Security shall have been so surrendered with the
conversion notice, and such Convertible Security shall cease to bear interest on
such date. Subject to the foregoing and to the last paragraph of Section 2.05,
no payment or adjustment shall be made upon conversion on account of any
interest accrued on any
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16
Convertible Security converted or for dividends or distributions on any shares
of Common Stock issued upon conversion of any Convertible Security.
SECTION 3.03. Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversions of Convertible Securities. If more than one
Convertible Security shall be surrendered for conversion at one time by the same
holder, the number of full shares which shall be issuable upon conversion shall
be computed on the basis of the aggregate principal amount of the Convertible
Securities so surrendered. Instead of any fractional interest in a share of
Common Stock which would otherwise be issuable upon conversion of any
Convertible Security or Convertible Securities, the Company shall pay a cash
adjustment in respect of such fractional interest to the nearest one-hundredth
of a share in an amount equal to the market value of such fractional interest on
the Date of Conversion. In such event, the market value of a share of Common
Stock shall be (i) if the Common Stock is listed or admitted to trading on a
national securities exchange, the closing price on the NYSE-Consolidated Tape
(or any successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not report
transactions in the Common Stock, the last reported sales price regular way on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading (which shall be the national securities exchange on which
the greatest number of shares of the Common Stock has been traded during the
preceding 30 consecutive trading days), or, if there is no transaction on any
such day in any such situation, the mean of the bid and asked prices on such day
or (ii), if the Common Stock is not listed or admitted to trading on any such
exchange, the last reported sale price, if reported, or, if no sale occurs on
such date or the last reported sale price is not available, the average of the
closing bid and asked prices as reported by the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or a similar source
selected from time to time by the Company for the purpose.
SECTION 3.04. Conversion Price. The Conversion Price for such series
of Convertible Securities shall be as specified in the resolution or
supplemental indenture or indentures pursuant to which such series is created
referred to in Section 2.03, subject to adjustment as provided in this Article
Three.
SECTION 3.05. Adjustment of Conversion Price. The Conversion Price for
each series shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the Convertible
Securities are outstanding, (i) pay a dividend or make a distribution with
respect to its Common Stock in shares of its capital stock (whether shares
of Common Stock or of capital stock of any other class), (ii) subdivide
its
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17
outstanding shares of Common Stock, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock
of the Company, the conversion privilege and the Conversion Price for each
series of Convertible Securities in effect immediately prior to such
action shall be adjusted so that the holder of any Convertible Security
thereafter surrendered for conversion shall be entitled to receive the
number of shares of capital stock of the Company which he would have owned
immediately following such action had such Convertible Security been
converted immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately after
the record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision,
combination or reclassification. If, as a result of an adjustment made
pursuant to this subsection (a), the holder of any Convertible Security
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board
of Directors (whose determination shall be conclusive and shall be
described in a resolution filed with the Trustee) shall determine the
allocation of the adjusted Conversion Price for each series of Convertible
Securities between or among shares of such classes of capital stock.
(b) In case the Company shall, while any of the Convertible
Securities are outstanding, issue rights or warrants to all holders of
its Common Stock entitling them (for a period expiring within forty-five
days after the record date mentioned below) to subscribe for or purchase
shares of Common Stock at a price per share less than the current market
price per share (as determined pursuant to subsection (d) below) on the
record date mentioned below, the Conversion Price for each series of
Convertible Securities of the Common Stock shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion Price
for such series in effect immediately prior to the date of issuance of
such rights or warrants by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase at
such current market price, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase. Such adjustment shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants.
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18
(c) In case the Company shall, while any of the Convertible
Securities are outstanding, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (excluding any cash dividends) or
rights to subscribe or warrants (excluding those referred to in subsection
(b) above), then in each such case the Conversion Price for each series of
Convertible Securities of the Common Stock shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion Price
for such series in effect immediately prior to the date of such
distribution by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (d) below) of
the Common Stock on he record date mentioned below less the then fair
market value (as determined by the Board of Directors of the Company,
whose determination shall be conclusive, and described in a resolution
filed with the Trustee) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights or warrants
applicable to one share of Common Stock, and the denominator shall be such
current market price per share of the Common Stock. Such adjustment shall
become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution.
(d) For the purpose of any computation under Subdivisions (b) and
(c) above, the current market price per share of Common Stock at any date
shall be deemed to be the average of the daily closing prices for the
thirty consecutive trading days commencing forty-five trading days before
the date in question. The closing price for each day shall be (i) if the
Common Stock is listed or admitted to trading on a national securities
exchange, the closing price on the NYSE-Consolidated Tape (or any
successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not
report transactions in the Common Stock, the last reported sales price
regular way on the principal national securities exchange on which the
Common Stock is listed or admitted to trading (which shall be the national
securities exchange on which the greatest number of shares of the Common
Stock has been traded during such 30 consecutive trading days), or, if
there is no transaction on any such day in any such situation, the mean of
the bid and asked prices on such day or (ii) if the Common Stock is not
listed or admitted to trading on any such exchange, the last reported sale
price, if reported, or, if no sale occurs on such date or the last
reported sale price is not available, the average of the closing bid and
asked prices as reported by the National Association of Securities Dealers
Automated Quotation System (NASDAQ) or a similar source selected from time
to time by the Company for the purpose.
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19
(e) In any case in which this Section 3.05 shall require that an
adjustment be made immediately following a record date, the Company may
elect to defer (but only until five business days following the filing by
the Company with the Trustee of the Officer's Certificate described in
subsection (g) below) issuing to the holder of any Convertible Security
converted after such record date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above
the shares of Common Stock and other capital stock of the Company issuable
upon such conversion only on the basis of the Conversion Price for the
series of Convertible Securities which such Convertible Security is a part
prior to such adjustment; and, in lieu of the shares the issuance of which
is so deferred, the Company shall issue or cause its transfer agents to
issue due bills or other appropriate evidence of the right to receive such
shares.
(f) No adjustment in the Conversion Price for any series of
Convertible Securities shall be required unless such adjustment would
require in increase or decrease of at least 1% in such price; provided,
however, that any adjustments which be reason of this subsection (f) are
not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 3.05 shall
be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(g) Whenever the Conversion Price for any series of Convertible
Securities is adjusted as herein provided, the Company shall promptly file
with the Trustee and each conversion agent an Officers' Certificate
setting forth the Conversion Price for such series after such adjustment
and setting forth a brief statement of the facts and calculation requiring
such adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment and cause a notice stating that such
adjustment has been effected and the adjusted Conversion Price to be
mailed to the holders of Convertible Securities of such series at their
last addresses as they shall appear on the Securities register.
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by this Section 3.05, as it considers to be
advisable in order to avoid or diminish any income tax to any holder of
its Common Stock resulting from any dividend distribution of stock or
issuance or rights or warrants to purchase or subscribe for stock or from
any event treated as such for income tax purposes or for any other
reasons.
(i) In the event that at any time as a result of an adjustment made
pursuant to subsection (a) above, the holder of any Convertible Security
thereafter surrendered
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20
for conversion shall become entitled to receive any shares of capital
stock of the Company other than shares of its Common Stock, thereafter the
Conversion Price for such series of such other shares so receivable upon
conversion of any convertible Securities shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subsections (a) through (h) above, and the provisions of Sections 3.01
through 3.04 and of Sections 3.06 through 3.10 with respect to the Common
Stock shall apply on like terms to any such other shares.
SECTION 3.06. Merger, Consolidation, etc. If either of the following
shall occur, namely: (a) any consolidation or merger to which the Company is a
party, other than a consolidation or a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in par value or from par value to no par value or
from no par value to par value, or as a result of a subdivision or combination)
in, outstanding shares of the Common Stock, or (b) any sale or conveyance to
another corporation of the assets of the Company as an entirety or substantially
as an entirety, then the Company, or such successor or purchasing corporation,
as the case may be, shall execute and deliver to the Trustee a supplemental
indenture providing that the holder of each Convertible Security then
outstanding shall have the right to convert such Convertible Security into the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon such reclassification, change, consolidation, merger, sale
or conveyance by a holder of the number of shares of Common Stock issuable upon
conversion of such Convertible Security immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article. The provisions of this Section 3.06 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
SECTION 3.07. Notices. In case, at any time while any of the Convertible
Securities are outstanding,
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock, excluding any cash dividends; or
(b) the Company shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase shares of
its Common Stock or of any other subscription rights or warrants; or
(c) of any reclassification of Common Stock of the Company (other
than a subdivision or combination thereof) or
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21
of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required (except for
a merger of the Company into one of its Subsidiaries solely for the
purpose of changing the corporate domicile of the Company to another state
of the United States and in connection with which there is no substantive
change in the rights or privileges of any securities of the Company other
than changes resulting from differences in the corporate statutes of the
then existing and the new state of domicile), or of the sale or transfer
of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Convertible Securities pursuant to Section
5.02, and shall cause to be mailed to the holders of Convertible Securities at
their last addresses as they shall appear on the Securities register, at least
10 days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating (i) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined, or (ii)
the date on which any such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property (including cash), if any, deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
The failure to give or receive the notice required by this Section 3.07 or any
defect therein shall not affect the legality or validity of any such dividend,
distribution, right or warrant or other action.
SECTION 3.08. Taxes on Conversions. The Company will pay any and all
documentary, stamp or similar taxes payable to the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
the issue or delivery of shares of Common Stock on conversion of Convertible
Securities pursuant hereto; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock in a name other than that of
the holder of the Convertible Securities to be converted and no such issue or
delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Company the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been paid.
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SECTION 3.09. Company to Provide Stock. The Company covenants that there
shall be reserved, free from pre-emptive rights, out of authorized but unissued
shares of Common Stock, sufficient shares to provide for the conversion of the
Convertible Securities from time to time as such Convertible Securities are
presented for conversion.
If any shares of Common Stock to be reserved for the purpose of conversion
of Convertible Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be.
Before any action which would cause an adjustment reducing the Conversion
Price for any series of Convertible Securities below the then par value, if any,
of the Common Stock, the Company covenants that there will be taken all
corporate action which may, in the opinion of its counsel, be necessary in order
that there may be validly and legally issued fully paid and non-assessable
shares of such Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Convertible Securities will upon issue be validly issued,
fully paid and non-assessable and free from all liens and charges with respect
to the issue or delivery thereof.
SECTION 3.10. Disclaimer of Responsibility for Certain Matters. Neither
the Trustee nor any conversion agent shall at any time be under any duty or
responsibility to any holder of Convertible Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price for any
series of Convertible Securities, or with respect to the Officer's Certificate
referred to in Section 3.05(g), or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any conversion agent shall be accountable with respect
to the registration, validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Convertible Security; and neither the
Trustee nor any conversion agent makes any representation with respect thereto.
Neither the Trustee nor any conversion agent shall be responsible for any
failure of the Company to issue or deliver any shares of Common Stock or stock
certificates or other securities, cash or property upon the surrender of any
Convertible Security for the purpose of conversion, or, subject to Section 8.01,
to comply with any of the covenants of the Company contained in this Article
Three.
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SECTION 3.11. Return of Funds Deposited for Redemption of Converted
Securities. Any funds which at any time shall have been deposited by the
Company or on its behalf with the Trustee or any other paying agent for the
purpose of paying the principal of, premium, if any, and interest on any of the
Convertible Securities and which shall not be required for such purposes because
of the conversion of such Convertible Securities, as provided in this Article
Three, shall forthwith after such conversion be repaid to the Company by the
Trustee or such other paying agent.
SECTION 3.12. Disposition of Converted Securities. All Convertible
Securities delivered to the Company or any conversion agent upon conversion
pursuant to this Article Three shall be delivered to the Trustee for
cancellation.
ARTICLE FOUR.
Subordination of Securities.
SECTION 4.01. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Securities issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Securities issued hereunder shall be
issued subject to the provisions of this Article; and each person holding any
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The provisions of this
Article are made for the benefit of the holders of Senior Indebtedness, and such
holders shall, at any time, be entitled to enforce such provisions against the
Company or any Securityholders.
All Securities issued hereafter shall, to the extent and in the manner
hereinafter in this Article set forth, be subordinate and junior in the right of
payment to the prior payment in full of all Senior Indebtedness.
SECTION 4.02. No Payment on Securities if Senior Indebtedness in
Default. No payment on account of principal, premium, if any, sinking funds or
interest on the Securities shall be made unless full payment of amounts then due
for principal, premium, if any, sinking funds and interest on all Senior
Indebtedness has been made or duly provided for. No payment (including the
making of any deposit in trust with the Trustee in accordance with Section
13.01) on account of principal, premium, if any, sinking funds or interest on
the Securities shall be made if, at the time of such payment or immediately
after giving effect thereto, (i) there shall exist a default in the payment of
principal, premium, if any, sinking funds or interest with respect to any Senior
Indebtedness, or (ii) there shall have occurred an event of default (other than
a default in the payment of principal, premium, if any, sinking funds or
interest) with respect to any Senior Indebtedness, as defined therein or in the
instrument under which the same is outstanding, permitting the holders thereof
to accelerate the maturity thereof,
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24
and such event of default shall not have been cured or waived or shall not have
ceased to exist. The foregoing provision shall not prevent the Trustee from
making payments on the Securities from monies or securities deposited with the
Trustee pursuant to the terms of Section 13.01 if at the time such deposit was
made or immediately after giving effect thereto the conditions in (i) or (ii) of
this Section did not exist.
SECTION 4.03. Priority of Senior Indebtedness. In the event of any
insolvency or bankruptcy proceedings, and any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or state law, or other similar proceedings in connection therewith,
relative to the Company or to its creditors, as such, or to its property, and in
the event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company or assignment for the benefit of creditors or any
other marshalling of assets of the Company, whether or not involving insolvency
or bankruptcy, then the holders of Senior Indebtedness shall be entitled to
receive payment in full of all principal of and premium, if any, and interest on
all Senior Indebtedness including interest on such Senior Indebtedness after the
date of filing of a petition or other action commencing such proceeding before
the holders of the Securities are entitled to receive any payment on account of
the principal of or premium, if any, or interest on the Securities (except that
holders of Securities shall be entitled to receive such payments from monies or
securities deposited with the Trustee pursuant to the terms of Section 13.01 if
at the time such deposit was made or immediately after giving effect thereto the
conditions in (i) or (ii) of Section 4.02 did not exist), and any payment or
distribution of any kind or character which may be payable or deliverable in any
such proceedings in respect of the Securities, except securities which are
subordinate and junior in right of payment to the payment of all Senior
Indebtedness then outstanding, shall be paid by the person making such payment
or distribution directly to the holders of Senior Indebtedness to the extent
necessary to make payment in full of all Senior Indebtedness, after giving
effect to any concurrent payment or distribution to the holders of Senior
Indebtedness. In the event that any payment or distribution of cash, property
or securities shall be received by the Trustee or the holders of the Securities
in contravention of this Section before all Senior Indebtedness is paid in full,
or provision made for the payment thereof, such payment or distribution shall be
held in trust for the benefit of and shall be paid over to the holders of such
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture under which any instrument evidencing
any of such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay in full all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
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25
In the event that any Security is declared due and payable before its
expressed maturity because of the occurrence of an Event of Default (under
circumstances when the provisions of the first paragraph of this Section shall
not be applicable), the holders of the Senior Indebtedness outstanding at the
time the Securities of such series so become due and payable because of such
occurrence of such an Event of Default shall be entitled to receive payment in
full of all principal of and premium, if any, interest on all Senior
Indebtedness before the holders of the Securities of such series are entitled to
receive any payment on account of the principal of or premium, if any, or
interest on the Securities of such series except that holders of Securities of
such series shall be entitled to receive payments from monies or securities
deposited with the Trustee pursuant to the terms of Section 13.01, if at the
time of such deposit no Security of such series had been declared due and
payable before its expressed maturity because of the occurrence of an Event of
Default.
Nothing in this Section shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.06.
SECTION 4.04. Company to Give Notice of Certain Events; Reliance by
Trustee. The Company shall give prompt written notice to the Trustee of any
insolvency or bankruptcy proceedings, any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or state law, or similar proceedings and any proceedings for voluntary
liquidation, dissolution or winding up of the Company within the meaning of this
Article. The Trustee shall be entitled to assume that no such event has
occurred unless the Company or any one or more holders of Senior Indebtedness or
any trustee therefor has given such notice together with proof satisfactory to
the Trustee of such holding of Senior Indebtedness or the authority of such
Trustee. Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, in the absence of its negligence or bad faith and
any holder of a Security shall be entitled to rely upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the holders
of Securities, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article. In the event that the Trustee determines, in good
faith, that further evidence is required with respect to the right of any person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such person, as to the extent to which such person
is entitled to participate in such payment or distribution and as to
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26
other facts pertinent to the rights of such person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such covenants and obligations as are specifically
set forth in this Indenture and no implied covenants or obligations with respect
to holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.
Nothing in this Section shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.06.
SECTION 4.05. Subrogation of Securities. Subject to the payment in full
of all Senior Indebtedness, the holders of the Securities shall be subrogate to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company made on the Senior Indebtedness until the
principal of and premium, if any, and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no payments or distributions
to the holders of Senior Indebtedness of any cash, property or securities to
which the holders of the Securities or the Trustee would be entitled except for
the provisions of this Article, an no payment over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by holders of the Securities
or by the Trustee, shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holders of Securities, be deemed to be a
payment by the Company to or on account of Senior Indebtedness, and no payments
or distributions to the Trustee or the holders of the Securities of cash,
property or securities payable or distributable to the holders of the Senior
Indebtedness to which the Trustee or the holders of the Securities shall become
entitled pursuant to the provisions of this Section, shall, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
holders of the Securities, be deemed to be a payment by the Company to the
holders of or on account of the Securities.
SECTION 4.06. Company Obligation to Pay Unconditional. The provisions of
this Article are solely for the purpose of defining the relative rights of the
holders of Senior Indebtedness on the one hand, and the holders of the
Securities on the other hand, and nothing herein shall impair, as between the
Company and the holders of the Securities, the obligation of the Company, which
is unconditional and absolute, to pay to the holders thereof the principal
thereof and premium, if any, and interest thereon in accordance with the terms
of the Securities and this Indenture nor shall anything herein prevent the
holders of the Securities or the Trustee from exercising all remedies otherwise
permitted by applicable law or under the Securities and this Indenture upon
default under the Securities and this Indenture, subject to the
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rights of holders of Senior Indebtedness under the provisions of this Article to
receive cash, property or securities otherwise payable or deliverable to the
holders of the Securities.
SECTION 4.07. Authorization of Holders of Securities to Trustee to Effect
Subordination. Each holder of Securities by his acceptance thereof authorizes
the Trustee in his behalf to take such action as may be necessary to appropriate
to effectuate the subordination as provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 4.08. Notice to Trustee of Facts Prohibiting Payments.
Notwithstanding any of the provisions of this Article or any other provision of
this Indenture, the Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
moneys to or by the Trustee, unless and until the Principal Corporate Trust
Office of the Trustee shall have received written notice thereof from the
Company or from one or more holders of Senior Indebtedness or from any trustee
therefor, together with proof satisfactory to the Trustee of such holding of
Senior Indebtedness or the authority of such Trustee, and, prior to the receipt
of any such written notice, the Trustee, subject to the provisions of Section
8.01, shall be entitled in all respects to assume that no such facts exist;
provided, that, if prior to the second business day preceding the date upon
which by the terms hereof any such moneys may become payable for any purpose
(including, without limitation, the payment of the principal of or premium, if
an, or interest on any Security), the Trustee shall have not received with
respect to such moneys the notice provided for in this Section, then, anything
herein contained to the contrary notwithstanding, the Trustee and any paying
agent shall have full power and authority to receive such moneys and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such day,
and provided, further, that nothing contained herein shall prevent conversions
of the Securities in accordance with the provisions of this Indenture.
SECTION 4.09. Trustee May Hold Senior Indebtedness. The Trustee, shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness at the time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder.
SECTION 4.10. All Indenture Provisions Subject to this Article.
Notwithstanding anything herein contained to the contrary, all the provisions of
this Indenture shall be subject to the provisions of this Article, so far as the
same may be applicable thereto.
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28
ARTICLE FIVE.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 5.01. Payment of Principal, Premium and Interest. The Company
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of an premium, if any,
and interest on each of the Securities of that series at the place, at the
respective times and in the manner provided in such Securities. Each instalment
of interest on the Securities of any series may be paid by mailing checks for
such interest payable to the order of the holders of Securities entitled thereto
as they appear on the registry books of the Company.
SECTION 5.02. Offices for Notices and Payments, etc. So long as any of
the Securities remains outstanding, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Securities of
each series may be presented for payment, an office or agency where the
Securities of that series may be presented for registration of transfer and for
exchange as in this Indenture provided, an office or agency where the Securities
of that series, if convertible, may be presented for conversion and an office or
agency where notices and demands to or upon the Company in respect of the
Securities of that series or of this Indenture may be served. The Company will
give to the Trustee written notice of the location of any such office or agency
and of any change of location thereof. The Company hereby initially appoints
the corporate trust office of MORGAN GUARANTY TRUST COMPANY OF NEW YORK in the
Borough of Manhattan, The City of New York as the Company's conversion agent.
Until otherwise designated from time to time by the Company in a notice to the
Trustee, or specified as contemplated by Section 2.03, such office or agency for
all of the above purposes shall be the principal office of the Trustee. In case
the Company shall fail to maintain any such office or agency in the Borough of
Manhattan, The City of New York, or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the principal office of the Trustee.
In addition to such office or agency, the Company may from time to time
designate one or more offices or agencies outside the Borough of Manhattan, The
City of New York, where the Securities may be presented for registration of
transfer and for exchange in manner provided in this Indenture, and the Company
may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such designation rescission
shall in any manner relieve the Company of its obligation to maintain such
office or agency in the Borough of Manhattan, The City of New York, for the
purposes above mentioned. The Company will give to the Trustee prompt written
notice of any such designation or rescission thereof.
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29
SECTION 5.03. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 5.04. Provision as to Paying Agent. (a) If the Company shall
appoint a paying agent or conversion agent other than the Trustee with respect
to the Securities of any series, it will cause such paying agent or conversion
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 5.04:
(1) that it will hold all sums held by it as such agent for the payment
of the principal of and premium, if any, or interest on the Securities of such
series (whether such sums have been paid to it by the Company or by any other
obligor on the Securities of such series) in trust for the benefit of the
holders of the Securities of such series;
(2) that it will give the Trustee notice of any failure by the Company
(or by any other obligor on the Securities of such series) to make any payment
of the principal of and premium, if any, or interest on the Securities of such
series when the same shall be due and payable; and
(b) If the Company shall act as its own paying agent, it will, on or not
more than seven days before each due date of the principal of and premium, if
any, or interest on the Securities of any series, set aside, segregate and hold
in trust for the benefit of the holders of the Securities of such series a sum
sufficient to pay such principal, premium or interest so becoming due and will
notify the Trustee of any failure to take such action and of any failure by the
Company (or by any other obligor under the Securities of such series) to make
any payment of the principal of and premium, if any, or interest on the
Securities of such series when the same shall become due and payable.
(c) Anything in this Section 5.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining satisfaction and
discharge with respect to one or more or all series of Securities hereunder, or
for any other reason, pay or cause to be paid to the Trustee all sums held in
trust for any such series by the Trustee or any paying agent hereunder, as
required by this Section 5.04, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 5.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.04 is subject to
Sections 13.03 and 13.04.
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30
SECTION 5.05. Certificate to Trustee. The Company will deliver to the
Trustee on or before April 1 in each year (beginning with April 1, 1987), so
long as Securities of any series are outstanding hereunder, an Officers'
Certificate stating that in the course of the performance by the signers of
their duties as officers of the Company they would normally have knowledge of
any default by the Company in the performance of any covenants contained in
Article Three and Section 12.01, stating whether or not they have knowledge of
any such default and, if so, specifying each such default of which the signers
have knowledge and the nature thereof.
ARTICLE SIX.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE.
SECTION 6.01. Securityholders' Lists. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each record date for each
series of Securities, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Securityholders of such series of
Securities as of such record date; and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company, of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, except that no such lists need be furnished so long as the Trustee
is in possession thereof by reason of its acting as Securities registrar for
such series.
SECTION 6.02. Preservation and Disclosure of Lists. (a) The Trustee
shall preserve, in as current as form as is reasonably practicable, all
information as to the names and addresses of the holders of each series of
Securities (1) contained in the most recent list furnished to it as provided in
Section 6.01 or (2) received by it in the capacity of Securities registrar (if
so acting) hereunder. The Trustee may destroy any list furnished to it as
provided in Section 6.01 upon receipt of a new list so furnished.
(b) In case three or more holders of Securities of any series
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Security of such series for a period of at least six months preceding the date
of such application, and such
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31
application states that the applicants desire to communicate with other holders
of Securities of such series or with holders of all Securities with respect to
their rights under this Indenture or under such Securities and is accompanied
by a copy of the form of proxy or other communication which such applicants
propose to transmit, then the Trustee shall within five business days after the
receipt of such application, at its election, either:
(1) afford such applicants access to the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a) of this
Section 6.02, or
(2) inform such applicants as to the approximate number of holders of
such series or all Securities, as the case may be, whose names and addresses
appear in the information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 6.02, and as to the
approximate cost of mailing to such Securityholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Securityholder of such series or all Securities, as the case may
be, whose name and address appear in the information preserved at the time by
the Trustee in accordance with the provisions of subsection (a) of this Section
6.02 a copy of the form of proxy or other communication which is specified in
such request with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender, the
Trustee shall mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the holders of Securities of such series or
all Securities, as the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If said
Commission, after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, said Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
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32
(c) Each and every holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Securities in accordance with the provisions of subsection (b) of this
Section 6.02, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
SECTION 6.03. Reports by Company. (a) The Company covenants and agrees
to file with the Trustee, within 15 days after the Company is required to file
the same with the Securities and Exchange Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as said Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
said Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and said Commission, in accordance with rules and regulations prescribed
from time to time by said Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Securities and Exchange Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all holders
of Securities, as the names and addresses of such holders appear upon the
Securities register, within 30 days after the filing thereof with the Trustee,
such summaries of any information, documents and reports required to be filed by
the Company pursuant to subsections (a) and (b) of this Section 6.03 as may be
required by rules and regulations prescribed from time to time by the Securities
and Exchange Commission.
SECTION 6.04. Reports by the Trustee. (a) On or before June 15, 1987,
and on or before June 15 in every year thereafter, so long as any Securities are
outstanding for which the Trustee is appointed hereunder, the Trustee shall
transmit to the
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33
Securityholders of each series of Securities for which such Trustee is appointed
as hereinafter in this Section 6.04 provided, a brief report dated as of April
15 of the appropriate year with respect to:
(1) its eligibility under Section 8.09, and its qualification under
Section 8.08, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under such Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities, on any property or funds hold or
collected by it as Trustee, except that the Trustee shall not be required
(but may elect) to state such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of the
Securities for any series outstanding on the date of such report.
(3) the amount, interest rate, and maturity date of all other
indebtedness owing by the Company (or by any other obligator on the
Securities) to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except any indebtedness based upon a creditor
relationship arising in any manner described in paragraph (2), (3), (4) or
(6) of subsection (b) of Section 8.13;
(4) the property and funds, if any, physically in the possession of
the Trustee, as such, on the date of such report;
(5) any additional issue of Securities which the Trustee has not
previously reported; and
(6) any action taken by the Trustee in the performance of its duties
under this Indenture which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of a
default, notice of which has been or is to be withheld by it in accordance
with the provisions of Section 7.08.
(b) The Trustee shall transmit to the Securityholders for each series, as
hereinafter provided, a brief report with respect to the character and amount of
any advances (and if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as such), since the date of
the last report transmitted pursuant to the provisions of subsection (a) of this
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34
Section 6.04 (or, if no such report has yet been so transmitted, since the date
of execution of this Indenture), for the reimbursement of which it claims or may
claim a lien or charge prior to that of the Securities of such series on
property or funds held or collected by it as Trustee, and which it has not
previously reported pursuant to this subsection, except that the Trustee shall
not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
Securities for such series outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section 6.04 shall be transmitted by mail to
all holders of Securities as the names and addresses of such holders appear upon
the Securities register.
(d) A copy of each such report shall, at the time of such transmission to
Securityholders, be filed by the Trustee with each stock exchange upon which the
Securities of any applicable series are listed and also with the Securities and
Exchange Commission. The Company will notify the Trustee when and as the
Securities of any series become listed on or delisted by any stock exchange.
ARTICLE SEVEN.
Remedies of the Trustee and Securityholders
on Event of Default.
SECTION 7.01. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one of the following
events and such other events as may be established with respect to the
Securities of that series as contemplated by Section 2.03 hereof:
(a) default in the payment of interest upon any Securities of that
series when it becomes due and payable, and continuance of such default
for a period of 30 days; or
(b) default in the payment of all or any part of the principal or
(or premium, if any, on) any Securities of that series as and when the
same shall become due and payable either at maturity, upon redemption
(including redemption for the sinking fund), by declaration or otherwise;
or
(c) default in the performance, or breach, of any covenant of the
Company in this Indenture (other than a covenant a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with and other than those set forth exclusively in terms of any
particular series of Securities established as contemplated in this
Indenture), and continuance of such default or breach for a period of 90
days after there has been given, by registered or
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35
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in principal amount of the
outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or
for any substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or shall make any general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due.
If an Event of Default described in clause (a) or (b) or established
pursuant to Section 2.03 occurs and is continuing, then, and in each and every
such case, unless the principal of all of the Securities of such series shall
have already become due and payable, either the Trustee or the holders of not
less than 25% in aggregate principal amount of the Securities of such series
then outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by Securityholders), may declare the entire principal of all
the Securities of such series and the interest accrued thereon to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (c),
(d) or (e) occurs and is continuing, then and in each and every such case,
unless the principal of all the Securities shall have already become due and
payable, either the Trustee of the holders of not less than 25% in aggregate
principal amount of all the Securities then outstanding hereunder (treated as
one class), by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal of all the Securities then
outstanding and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable.
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36
The foregoing provisions, however, are subject to the condition that if,
at any time after the principal of the Securities of any series (or of all the
Securities, as the case may be) shall have been so declared due and payable, and
before any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all the Securities of any series (or all the Securities, as the
case may be) and the principal of and premium, if any, on any and all Securities
of such series (or of all the Securities, as the case may be) which shall have
become due otherwise than by acceleration (with interest upon such principal and
premium, if any, and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest at the same rate as
the rate of interest specified in the Securities of such series, or at the
respective rates of interest of the Securities, as the case may be, to the date
of such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, as provided in Section 8.06, and if
any and all Events of Default under this Indenture, other than the non-payment
of the principal of or premium, if any, on Securities which shall have become
due by acceleration, shall have been cured, waived or otherwise remedied as
provided herein--then and in every such case the holders of a majority in
aggregate principal amount of the Securities of such series (or of all the
Securities, as the case may be) then outstanding, by written notice to the
Company and to the Trustee, may waive all defaults with respect to that series
(or with respect to all Securities, as the case may be, in such case, treated as
a single class), and rescind and annul such declaration and its consequences,
but no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Trustee and the holders of the Securities shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the Trustee and the holders of the Securities shall
continue as though no such proceeding had been taken.
SECTION 7.02. Payment of Securities on Default; Suit Therefor. The
Company covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Securities of any series as and when the
same shall become due and payable, and such default shall have continued for a
period of 30 days, or (b) in case default shall be made in the payment of the
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37
principal of or premium, if any, on any of the Securities of any series as and
when the same shall have become due and payable, whether at maturity of the
Securities of that series or upon redemption or by declaration or otherwise--
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Securities of that series, the whole amount that
then shall have become due and payable on all such Securities of that series for
principal and premium, if any, or interest, or both, as the case may be, with
interest upon the overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law) upon the overdue
installments of interest at the rate of interest borne by the Securities of that
series; and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including a reasonable compensation
to the Trustee, its agents, attorneys and counsel, as provided in Section 8.06.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name as trustee of an express trust, shall be
entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on such
Securities and collect in the manner provided by law out of the property of the
Company or any other obligor on such Securities wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Securities of any
series under Title 11, United States Code, or any other applicable law, or in
case a receiver or trustee (or similar official) shall have been appointed for
the property of the Company or such other obligor, or in the case of any other
similar judicial proceedings relative to the Company or other obligor upon the
Securities of any series, or to the creditors or property of the Company or such
other obligor, the Trustee, irrespective of whether the principal of the
Securities of any series shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 7.02, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Securities of such series and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, as
provide in Section 8.06) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities of
any series, or to the creditors
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38
or property of the Company or such other obligor, unless prohibited by
applicable law and regulations, to vote on behalf of the holders of the
Securities of any series in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, as provided in Section 8.06.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof on any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable benefit of the holders of all
the Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities of the series affected thereby and it shall not be necessary
to make any such holders of the Securities parties to any such proceedings.
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Section 7.03 Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee shall be applied in the order following, at the date or
dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of any series in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection
applicable to each such series and reasonable compensation to the Trustee,
its agents, attorneys and counsel, as provided in Section 8.06;
SECOND: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and
be unpaid, to the payment of interest on the Securities of each such
series in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the respective rates
borne by the Securities of each such series, such payments to be made
ratably to the persons entitled thereto;
THIRD: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing
and unpaid upon the Securities of each such series for principal and
premium, if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been collected
by the Trustee) upon overdue installments of interest at the respective
rates specified in the Securities of each such series: and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Securities of each such series, then to the payment of
such principal and premium, if any, and interest without preference or
priority of principal and premium, if any, over interest, or of interest
over principal and premium, if any, or of any installment of interest over
any other installment of interest, or of any Security of each such series
over any other Security of each such series, ratably to the aggregate of
such principal and premium, if any, and accrued and unpaid interest.
Any surplus then remaining shall be paid to the Company or to such other
person as shall be entitled to receive it.
Section 7.04. Proceedings by Securityholders. No holder of any Security
of any series shall have any right by virtue of or by availing of any provision
of this Indenture to institute any suit,
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action or proceeding in equity or at law upon or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Securities of that series then outstanding, or, in the case of any Event of
Default described in clause (c), (d) or (e) of Section 7.01, 25% in aggregate
principal amount of all Securities then outstanding, shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonably
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action, suite or proceeding, it being understood and intended, and being
expressly covenanted by the taker and holder of every Security with every other
taker and holder and the Trustee, that no one or more holders of Securities of
any series shall have any right in any manner whatever by virtue of or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other holder of Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all holders of Securities of the applicable
series.
Notwithstanding any other provisions in this Indenture, however, the right
of any holder of any Security to receive payment of the principal of, premium,
if any, and interest on such Security, on or after the same shall have become
due and payable, or to institute suit for the enforcement of any such payment,
shall not be impaired or affected without the consent of such holder.
SECTION 7.05. Proceedings by Trustee. In case of an Event of Default
hereunder the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suite in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 7.06. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Seven to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any thereof or of any other powers and remedies available to the Trustee or the
holders of the
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41
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture, and no
delay or omission of the Trustee or of any holder of any of the Securities to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 7.04, every power and remedy given by this Article Seven
or by law to the trustee or to the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 7.07. Direction of Proceedings and Waiver of Defaults by Majority
of Securityholders. The holders of a majority in aggregate principal amount of
the Securities of any or all series at the time outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee; provided, however, that (subject to the provisions of Section 8.01)
the Trustee shall have the right to decline to follow any such direction if the
Trustee shall determine that the action so directed would be unjustly
prejudicial to the holders not taking part in such direction or if the Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith by its board of
directors or trustees, executive committee, or a trust committee of directors or
trustees and/or Responsible Officers shall determine that the action or
proceedings so directed would involve the Trustee in personal liability.
Subject to Sections 7.01 and 7.02, the holders of a majority in aggregate
principal amount of the Securities of that series at the time outstanding may on
behalf of the holders of all the Securities of such series waive any past
default or Event of Default including any default or Event of Default
established pursuant to Section 2.03 (or, in the case of an event specified in
clause (c), (d) or (e) of Section 7.01, the holders of a majority in aggregate
principal amount of all the Securities then outstanding (voting as one class))
may waive such default or Event of Default, and its consequences except a
default (a) in the payment of principal of, premium, if any, or interest on any
of the Securities or (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each Security
affected. Upon any such waiver the Company, the Trustee and the holders of the
Securities of that series (or of all Securities, as the case may be) shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon. Whenever any default or Event of
Default hereunder shall have been waived as permitted by this Section 7.07, said
default or Event of Default shall for all purposes of the Securities of that
series (or of all Securities, as the case may
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be) and this Indenture be deemed to have been cured and to be not continuing.
Section 7.08. Notice of Defaults. The Trustee shall, within 90 days
after the occurrence of a default with respect to any of the Securities of any
series mail to all Securityholders of that series, as the names and addresses of
such holders appear upon the Securities register, notice of all defaults with
respect to that series known to the Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the purpose
of this Section 7.08 being hereby defined to be the events specified in clauses
(a), (b), (c), (d) and (e) of Section 7.01, not including periods of grace, if
any, provided for therein, and irrespective of the giving of written notice
specified in clause (c) of Section 7.01); and provided that, except in the case
of default in the payment of the principal of, premium, if any, or interest on
any of the Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Securityholders of such series; and provided further, that in
the case of any default of the character specified in Section 7.01(c) no such
notice to Securityholders shall be given until at least 90 days after the
occurrence thereof but shall be given within 120 days after such occurrence.
Section 7.09. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 7.09 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders of any series, holding in the
aggregate more than 10% in principal amount of the Securities of that series (or
in the case of any suit relating to or arising under clause (c), (d) or (e) of
Section 7.01, 10% in aggregate principal amount of all Securities) outstanding,
or to any suit instituted by any Securityholder for the enforcement of the
payment of the principal of or premium, if any, or interest on any Security
against the Company on or after the same shall have become due and payable.
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ARTICLE EIGHT
Concerning the Trustee
Section 8.01. Duties and Responsibilities of Trustee. With respect to
any series of Securities issued hereunder, the Trustee, prior to the occurrence
of an Event of Default with respect to Securities of that series and after the
curing or waiving of all Events of Default which may have occurred with respect
to Securities of that series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture with respect to such
series. In case an Event of Default with respect to the Securities of a series
has occurred (which has not been cured or waived) the Trustee shall exercise
such of the rights and powers vested in it by this Indenture with respect to
such series, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
the Securities of a series and after the curing or waiving of all Events
of Default with respect to that series which may have occurred
(1) the duties and obligations of the Trustee with respect to
the Securities of a series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with
respect to such series as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the trust of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the Trustee, unless
it shall be proved that the
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Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 7.07, relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it.
Section 8.02. Reliance on Documents, Opinions, etc. Except as otherwise
provided in Section 8.01
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors may
be evidenced to the Trustee by a copy thereof certified by the Secretary
or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be
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45
authorized or within the discretion or rights or powers conferred upon it
by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, debenture, coupon or
other paper or document, unless requested in writing to do so by the
holders of not less than a majority in principal amount of the Securities
of all series affected then outstanding; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed by it with due care.
SECTION 8.03. No Responsibility for Recitals, etc. The recitals
contained herein and in the Securities (except in the certificate of
authentication of the Trustee or the Authenticating Agent) shall be taken as the
statements of the Company, and the Trustee and the Authenticating Agent assume
no responsibility for the correctness of the same. The Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Securities. The Trustee and the Authenticating
Agent shall not be accountable for the use or application by the Company of any
Securities or the proceeds of any Securities authenticated an delivered by the
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
SECTION 8.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents, Conversion Agents or Registrar May Own Securities. The Trustee or any
Authenticating Agent or any paying agent or any transfer agent or any conversion
agent or any Securities registrar, in its individual or any other capacity, may
become the owner or pledgee of Securities with the same rights it would have if
it were not Trustee, Authenticating Agent, paying agent, transfer agent,
conversion agent or Securities registrar.
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SECTION 8.05. Moneys to Be Held in Trust. Subject to the provisions of
Section 13.04, all moneys received by the trustee or any paying agent shall,
until used or applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company. So long as no Event of Default shall have occurred and
be continuing, all interest allowed, if any, on any such moneys shall be paid
from time to time upon the written order of the Company, signed by the Chairman
of the Board of Directors, the President, any Vice President, the Treasurer or
any Assistant Treasurer of the Company.
SECTION 8.06. Compensation and Expenses of Trustee. The Company
covenants and agrees to pay to the trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ and any amounts paid by the
Trustee to any Authenticating Agent pursuant to Section 8.14) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
If any property other than cash shall at any time be subject to the lien of this
Indenture, the Trustee, if and to the extent authorized by a receivership or
bankruptcy court of competent jurisdiction or by the supplemental instrument
subjecting such property to such lien, shall be entitled to make advances for
the purpose of preserving such property or of discharging tax liens or other
prior liens or encumbrances thereon. The Company also covenants to indemnify
each of the Trustee, and any predecessor Trustee for, and to hold each of them
harmless against, any loss, liability or expense arising out of or in connection
with the acceptance or administration of this trust and the performance of its
duties hereunder including the costs and expenses of defending itself against
any claim of liability in the premises, except to the extent such loss,
liability or expense results from its own negligence or bad faith. The
obligations of the Company under this Section 8.06 to compensate the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a claim prior to that of the Securities upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Securities.
SECTION 8.07 Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.01 and 8.02, whenever in the
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administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a mater be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
Certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 8.08. Conflicting Interest of Trustee. (a) If the Trustee has or
shall acquire any conflicting interest, as defined in this Section 8.08 with
respect to the Securities of any series, it shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign with respect to the Securities of that series in
the manner and with the effect specified in Section 8.10.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section 8.08 with respect to the Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit notice of such failure to all holders of Securities of
that series, as the names and addresses of such holders appear upon the
Securities register.
(c) For the purposes of this Section 8.08 the Trustee shall be deemed to
have a conflicting interest with respect to Securities of any series if
(1) the Trustee is trustee under this Indenture with respect to the
Securities of any other series or under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the Company or other
obligor on the Securities of such series (each of which is hereafter
in this Section called a "Security party") are outstanding, unless
such other indenture is a collateral trust indenture under which the
only collateral consists of Securities issued under this Indenture;
provided that there shall be excluded from the operation of this
paragraph this Indenture with respect to the Securities of any other
series and any other indenture or indentures under which other
securities, or certificates of interest or participation in other
securities, of a Security party (as defined in Section 8.13), are
outstanding if (i) this Indenture is and, if applicable, this
Indenture and such other indenture or indentures are wholly
unsecured and such other indenture or indentures are hereafter
qualified under the Trust Indenture Act of 1939, unless the
Securities and Exchange Commission shall have found
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and declared by order pursuant to subsection (b) of Section 305 or
subsection (c) of Section 307 of the Trust Indenture Act of 1939
that differences exist between the provisions of this Indenture with
respect to Securities of such series and one or more other series
or, if applicable, this Indenture and the provisions of such other
indenture or indentures which are so likely to involve a material
conflict of interest as to make it necessary in the public interest
or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture and such other indenture or
indentures, or (ii) the Company shall have sustained the burden of
proving, on application to the Securities and Exchange Commission
and after opportunity for hearing thereon, that trusteeship under
this Indenture with respect to Securities of such series and one or
more other series or, if applicable, this Indenture and such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest
or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture with respect to Securities of
such series and one or more other series or, if applicable, this
Indenture and one of such indentures;
(2) the Trustee or any of its directors or executive
officers is an obligor upon the Securities of any series issued
under this Indenture or an underwriter for a Security party;
(3) the Trustee directly or indirectly controls or is
directly or indirectly controlled by or is under direct or indirect
common Control with a Security party or an underwriter for a
Security party;
(4) the Trustee or any of its directors or executive
officers is a director, officer, partner, employee, appointee, or
representative of a Security party, or of an underwriter (other than
the Trustee itself) for a Security party who is currently engaged in
the business of underwriting, except that (A) one individual may be
a director and/or an executive officer of the Trustee and a director
and/or an executive officer of a Security party, but may not be at
the same time an executive officer of both the Trustee and a
Security party; (B) if and so long as the number of directors of the
Trustee in office is more than nine, one additional individual may
be a director and/or an executive officer of the Trustee and a
director of a Security party; and (C) the Trustee may be designated
by a Security party or by an underwriter for a Security party to act
in the capacity of transfer agent, registrar, custodian, paying
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agent, fiscal agent, escrow agent, or depositary, or in any other
similar capacity, or, subject to the provisions of paragraph (1) of
this subsection (c), to act as trustee whether under an indenture or
otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by a Security party or by any director,
partner, or executive officer thereof, or 20% or more of such voting
securities is beneficially owned, collectively, by any two or more
of such persons; or 10% or more of the voting securities of the
Trustee is beneficially owned either by an underwriter for a
Security party or by any director, partner, or executive officer
thereof, or is beneficially owned, collectively, by any two or more
such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, (A) 5% or
more of the voting securities, or 10% or more of any other class of
security, of a Security party, not including the Securities issued
under this Indenture and securities issued under any other indenture
under which the Trustee is also trustee, or (B) 10% or more of any
class of security of an underwriter for a Security party;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, 5% or
more of the voting securities of any person who, to the knowledge of
the Trustee, owns 10% or more of the voting securities of, or
controls directly or indirectly or is under direct or indirect
common control with, a Security party;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, 10% or
more of any class of security of any person who, to the knowledge of
the Trustee, owns 50% or more of the voting securities of a Security
party; or
(9) the Trustee owns on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or
of any class of security, of any person, the beneficial ownership of
a specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this subsection (c). As
to any such securities of which the Trustee acquired ownership
through becoming executor, administrator or testamentary trustee of
an estate which included them, the provisions of the preceding
sentence
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shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such
estate do not exceed 25% of such voting securities or 25% of any
such class of security. Promptly after May 15, in each calendar
year, the Trustee shall make a check of its holdings of such
securities in any of the above-mentioned capacities as of such May
15. If the Company fails to make payment in full of principal of or
interest on any of the Securities when and as the same become due
and payable, and such failure continues for 30 days thereafter, the
Trustee shall make a prompt check of its holdings of such securities
in any of the above-mentioned capacities as of the date of the
expiration of such 30-day period and, after such date,
notwithstanding the foregoing provisions of this paragraph (9), all
such securities so held by the Trustee, with sole or joint control
over such securities vested in it, shall, but only so long as such
failure shall continue, be considered as though beneficially owned
by the Trustee for the purposes of paragraphs (6), (7), and (8) of
this subsection (c).
The specifications of percentages in paragraphs (5) to (9), inclusive, of
this subsection (c) shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), and (9) of this subsection (c)
only, (A) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (B) an obligation shall be deemed to be in default
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (C) the Trustee shall not be deemed to be the
owner or holder of (i) any security which it holds as collateral security (as
trustee or otherwise) for any obligation which is not in default as defined in
clause (B) above, or (ii) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (iii) any
security which it holds as agent for collection, or as custodian, escrow agent,
or depositary, or in any similar representative capacity.
Except as provided in the next preceding paragraph hereof, the work
"security" or "securities" as used in this Indenture shall mean any note, stock,
treasury stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any
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profit-sharing agreement, collateral-trust certificate, pre-organization
certificate or subscription, transferable share, investment contract, voting-
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas or other mineral rights, or, in general, any interest or
instrument commonly known as a "security" or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase any of the foregoing.
(d) For the purposes of this Section 8.08:
(1) The term "underwriter" when used with reference to a
Security party shall mean every person who, within three years prior
to the time as of which the determination is made, has purchased
from such Security party with a view to, or has offered or sold for
such Security party in connection with, the distribution of any
security of such Security party outstanding at such time, or has
participated or has had a direct or indirect participation in any
such undertaking, or has participated or has had a participation in
the direct or indirect underwriting of any such undertaking, but
such term shall not include a person whose interest was limited to a
commission from an underwriter or dealer not in excess of the usual
and customary distributors' or sellers' commission.
(2) The term "director" shall mean any director of a
corporation or any individual performing similar functions with
respect to any organization whether incorporated or unincorporated.
(3) The term "person" shall mean an individual, a
corporation, a partnership, an association, a joint-stock company, a
trust, an unincorporated organization, or a government or political
subdivision thereof. As used in this paragraph, the term "trust"
shall include only a trust where the interest or interests of the
beneficiary or beneficiaries are evidenced by a security.
(4) The term "voting security" shall mean any security
presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any security
issued under or pursuant to any trust, agreement or arrangement
whereby a trustee or trustees or agent or agents for the owner or
holder of such security are presently entitled to vote in the
direction or management of the affairs of a person.
(5) The term "executive officer" shall mean the president,
every vice president, every trust officer, the
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cashier, the secretary, and the treasurer of a corporation, and any
individual customarily performing similar functions with respect to
any organization whether incorporated or unincorporated, but shall
not include the chairman of the board of directors.
The percentages of voting securities and other securities specified in
this Section 8.08 shall be calculated in accordance with the following
provisions:
(A) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section 8.08
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitles the holder or holders to cast such specified percentage of
the aggregate votes which the holders of all the outstanding voting
securities of such person are entitled to cast in the direction or
management of the affairs of such person.
(B) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of the
class outstanding.
(C) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the
number of shares if relating to capital shares, and the number of
units if relating to any other kind of security.
(D) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating
to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the
obligations evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal
or interest or otherwise;
(iv) securities held in escrow if placed in escrow by the
issuer thereof; provided, however, that any
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53
voting securities of an issuer shall be deemed outstanding if
any person other than the issuer is entitled to exercise the
voting rights thereof.
(E) A security shall be deemed to be of the same class as another
security if both securities confer upon the holders or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all
of which are issued under a single indenture, differences in the
interest rates or maturity dates of various series thereof shall not
be deemed sufficient to constitute such series different classes,
and provided, further, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities
of different classes, whether or not they are issued under a single
indenture.
SECTION 8.09. Eligibility of Trustee. The Trustee hereunder shall at all
times be a corporation organized and doing business under the laws of the United
States or any State or Territory thereof or of the District of Columbia
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $5,000,000, subject to supervision or
examination by Federal, State, Territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.09 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 8.09, the Trustee shall resign immediately
in the manner and with the effect specified in Section 8.10.
SECTION 8.10. Resignation or Removal of Trustee. (a) The Trustee, or
any trustee or trustees hereafter appointed, may at any time resign with respect
to one or more or all series of Securities by giving written notice of such
resignation to the Company and by mailing notice thereof to the holders of the
applicable series of Securities at their addresses as they shall appear on the
Securities register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees with respect to the
applicable series by written instrument, in duplicate, executed by order of its
Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy the successor trustee. If no successor trustee
shall have been so appointed with respect to any series of Securities and have
accepted appointment within 60 days after the mailing of such
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54
notice of resignation to the affected Securityholders, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona fide holder of a Security or
Securities of the applicable series for at least six months may, subject to the
provisions of Section 7.09, on behalf of himself and all other similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur--
(1) the Trustee shall fail to comply with the provisions of
subjection (a) of Section 8.08 after written request therefor by the
Company or by any Securityholder who has been a bona fide holder of
a Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee with respect to all
Securities and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 7.09, any Securityholder who has been a
bona fide holder of a Security or Securities of the applicable series for at
least six months may, on behalf of himself and all other similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities of one or more series (each series voting as a class) or all series
(voting as one class) at the time outstanding may at any time remove the Trustee
with respect to the applicable series of Securities or all series, as the case
may be, and nominate a successor trustee with respect to the applicable series
of Securities or all series, as the case may be, which shall be
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55
deemed appointed as successor trustee with respect to the applicable series
unless within ten days after such nomination the Company objects thereto, in
which case the Trustee so removed or any Securityholder of the applicable
series, upon the terms and conditions and otherwise as in subdivision (a) of
this Section 8.10 provided, may petition any court of competent jurisdiction for
an appointment of a successor trustee with respect to such series.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
SECTION 8.11. Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with like
effect as if originally named as trustee herein; but, nevertheless, on the
written request of the Company or of the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of Section 8.06, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to act.
Upon request of any such successor trustee, the Company shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers. Any trustee
ceasing to act shall, nevertheless, retain a claim upon all property or funds
held or collected by such trustee to secure any amounts then due it pursuant to
the provisions of Section 8.06.
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If a successor trustee is appointed with respect to the Securities of one
or more (but not all) series, the Company, the predecessor Trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities of any series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trust hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and that
each such trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such trustee.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.08 and eligible under the provisions
of Section 8.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, the Company shall mail notice of the succession of such trustee
hereunder to the holders of Securities of any applicable series at their
addresses as they shall appear on the Securities register. If the Company fails
to mail such notice within ten days after the acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.
SECTION 8.12. Succession by Merger, etc. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee, and deliver
such Securities so authenticated; and in case at that time any of the Securities
of any series shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor hereunder
or in the name of the successor trustee; and in all such cases such
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57
certificates shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities of any
series in the name of any predecessor Trustee shall apply only to its successor
or successors by merger, conversion or consolidation.
SECTION 8.13. Limitation on Rights of Trustee as a Creditor. (a) Subject
to the provisions of subsection (b) of this Section 8.13, if the Trustee shall
be or shall become a creditor, directly or indirectly, secured or unsecured, of
the Company or of any other obligor on the Securities (each of which is
hereafter in this Section 8.13 called a "Security party") within four months
prior to a default, as defined in paragraph (1) of subsection (c) of this
Section 8.13, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the holders of the
Securities, and the holders of other indenture securities (as defined in
paragraph (2) of subsection (c) of this Section 8.13):
(1) an amount equal to any and all reductions in the amount due and
owning upon any claim as such creditor in respect of principal or
interest, effected after the beginning of such four-month period and valid
as against such Security party and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this subsection, or from the exercise of any
right of set-off which the Trustee could have exercised if a petition in
bankruptcy had been filed by or against such Security party upon the date
of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of such Security
party and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of
any such claim by any person (other than such Security party) who is
liable thereon, and (ii) the proceeds of the bona fide sale of any such
claim by the Trustee to a third person, and (iii) distributions made in
case, securities, or other property in respect of claims filed
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against such Security party in bankruptcy or receivership or in
proceedings for reorganization pursuant to Title 11, United States Code or
applicable state law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
four-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
subsection (c) of this Section 8.13, would occur within four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim
as provided in such paragraph (B) or (C), as the case may be, to the
extent of the fair value of such property.
For the purposes of paragraphs (B), (C), and (D), property substituted
after the beginning of such four-month period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned between
the Trustee, the Securityholders and the holders of other indenture securities
in such manner that the Trustee, the Securityholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against such Security party in
bankruptcy or receivership or in proceedings for reorganization pursuant to
Title 11, United States Code, or applicable state law, the same percentage of
their respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from such Security party of the funds
and property in such special account and before crediting to the respective
claims of the Trustee, the Securityholders, and the holders of other indenture
securities dividends on claims filed against such Security party in bankruptcy
or receivership or in proceedings for reorganization pursuant to
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Title 11, United States Code or applicable state law, but after crediting
thereon receipts on account of the indebtedness represented by their respective
claims from all sources other than from such dividends and from the funds and
property so held in such special account. As used in this paragraph, with
respect to any claim, the term "dividends" shall include any distribution with
respect to such claim, in bankruptcy or receivership or in proceedings for
reorganization pursuant to Title 11, United States Code, or applicable state
law, whether such distribution is made in cash, securities, or other property,
but shall not include any such distribution with respect to the secured portion,
if any, of such claim. The court in which such bankruptcy, receivership, or
proceeding for reorganization is pending shall have jurisdiction (i) to
apportion among the Trustee, the Securityholders, and the holders of other
indenture securities, in accordance with the provisions of this paragraph, the
funds and property held in such special account and the proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give the provisions
of this paragraph due consideration in determining the fairness of the
distributions to be made to the Trustee, the Securityholders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such
four-month period shall be subject to the provisions of this subsection (a) as
though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such four-month period, it
shall be subject to the provisions of this subsection (a) if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim which would have
given rise to the obligation to account, if such Trustee had continued as
trustee, occurred after the beginning of such four-month period; and
(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section 8.13 a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
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(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien of
this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advance and of the circumstances
surrounding the making thereof is given to the Securityholders at the time
and in the manner provided in Section 6.04 with respect to reports
pursuant to the subsections (a) and (b) thereof, respectively;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section 8.13;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of a Security
party; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper as defined in subsection (c)
of this Section 8.13.
(c) As used in this Section 8.13:
(1) The term "default" shall mean any failure to make payment in
full of the principal of or interest upon any of the Securities or upon
the other indenture securities when and as such principal or interest
becomes due and payable;
(2) The term "other indenture securities" shall mean securities upon
which a Security party is an obligor (as defined in the Trust Indenture
Act of 1939) outstanding under any other indenture (A) under which the
Trustee is also trustee, (B) which contains provisions substantially
similar to the provisions of subsection (a) of this Section 8.13, and (C)
under which a default exists at the time of the apportionment of the funds
and property held in said special account;
(3) The term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
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(4) The term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by a Security party for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security; provided that the
security is received by the Trustee simultaneously with the creation of
the creditor relationship with such Security party arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 8.14. Authenticating Agents. There may be one or more
Authenticating Agents appointed by the Trustee upon the request of the Company
with power to act on the Trustee's behalf and subject to its direction in the
authentication and delivery of Securities of any series issued upon exchange or
transfer thereof as fully to all intents and purposes as though any such
Authenticating Agent had been expressly authorized to authenticate and deliver
Securities of such series; provided, that the Trustee shall have no liability to
the Company for any acts or omissions of the Authenticating Agent with respect
to the authentication and delivery of Securities of any series. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any State or Territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the purposes of this Section 8.14 the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 8.14, without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
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Any Authenticating Agent may at any time resign with respect to one or
more or all series of Securities by giving written notice of resignation to the
Trustee and to the Company. The Trustee may at any time terminate the agency of
any Authenticating Agent with respect to one or more or all series of Securities
by giving written notice of termination to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 8.14, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent with respect to
the applicable series eligible under this Section 8.14, shall give written
notice of such appointment to the Company and shall mail notice of such
appointment to all holders of the applicable series of Securities as the names
and addresses of such holders appear on the Securities register. Any successor
Authenticating Agent with respect to all or any series upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities with respect to such series of its predecessor hereunder, with
like effect as if originally named as Authenticating Agent herein.
The Trustee agrees to pay to any Authenticating Agent from time to time
reasonable compensation for its services, and the Trustee shall be entitled to
be reimbursed for such payments, subject to Section 8.06. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
as Trustee
By
as Authenticating Agent
for the Trustee
By
Authorized Officer
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ARTICLE NINE
Concerning the Securityholders
SECTION 9.01. Action by Securityholders. Whenever in this Indenture it
is provided that the holders of a specified percentage in aggregate principal
amount of the Securities of any or all series may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action) the fact that at the time of taking any such
action the holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by such Securityholders in person or by agent or proxy appointed in
writing, or (b) by the record of such holders of Securities voting in favor
thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article Ten, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
SECTION 9.02. Proof of Execution by Securityholders. Subject to the
provisions of Sections 8.01, 8.02 and 10.05, proof of the execution of any
instrument by a Securityholder or his agent or proxy shall be sufficient if made
in accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
ownership of Securities shall be proved by the Securities register or by a
certificate of the Securities registrar.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 10.06.
SECTION 9.03. Who Are Deemed Absolute Owners. The Company, the Trustee,
any Authenticating Agent, any paying agent, any transfer agent, any conversion
agent and any Securities registrar may deem the person in whose name such
Security shall be registered upon the Securities register to be, and may treat
him as, the absolute owner of such Security (whether or not such Security shall
be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purposes of conversion and of receiving payment of or on
account of the principal of, premium, if any, and interest on such Security and
for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
conversion agent nor any Securities registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or
upon his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Security.
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SECTION 9.04. Securities Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver, only Securities which a Responsible Officer knows are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as outstanding for the purposes of this Section 9.04 if the
pledgee shall establish to the satisfaction of the Trustee the pledgee's right
to vote such Securities and that the pledgee is not the Company or any such
other obligor or person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any such other
obligor. Upon request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of any of
the above-described person; and, subject to the provisions of Section 8.01, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are outstanding for the purpose of any such determination.
SECTION 9.05. Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action, any holder of a Security (or any Security issued in whole or
in part in exchange or substitution therefor) who consented to such action may,
by filing written notice with the Trustee at its principal office and upon proof
of holding as provided in Section 9.02, revoke such action so far as concerns
such Security (or so far as concerns the principal amount represented by any
exchanged or substituted Security). Except as aforesaid any such action taken
by the holder of any Security shall be conclusive and binding upon such holder
and upon all future holders and owners of such Security, and of any Security
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Security or any Security issued in
exchange or substitution therefor. Any action taken by the holders of the
percentage in aggregate principal amount of the Securities specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the holders of such Securities.
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ARTICLE TEN
Securityholders' Meetings
SECTION 10.01. Purposes of Meetings. A meeting of Securityholders of any
or all series may be called at any time and from time to time pursuant to the
provisions of this Article Ten for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to
be taken by Securityholders pursuant to any of the provisions of Article
Seven;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article Eight;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.02; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such
Securities under any other provisions of this Indenture or under
applicable law.
SECTION 10.02. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Securityholders of any or all series to take any action
specified in Section 10.01, to be held at such time and at such place in the
Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Securityholders of any or all series, setting
forth the record date, time and place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Securities of each series affected at their addresses as they shall appear on
the Securities register of each series affected. Such notice shall be mailed
not less than 20 nor more than 90 days prior to the date fixed for the meeting.
SECTION 10.03. Call of Meetings by Company or Securityholders. In case
at any time the Company pursuant to a resolution of the Board of Directors, or
the holders of at least 10% in aggregate principal amount of the Securities of
any or all series, as the case may be, then outstanding, shall have requested
the Trustee to call a meeting of Securityholders of any or all series, as the
case may be, by written request setting forth in reasonable detail action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such request, then the
Company or such
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Securityholders may determine the time and the place in said Borough of
Manhattan for such meeting and may call such meeting to take any action
authorized in Section 10.01, by mailing notice thereof as provided in Section
10.02.
SECTION 10.04. Qualifications for Voting. To be entitled to vote at any
meeting of Securityholders a person shall (a) be a holder of one or more
Securities with respect to which the meeting is being held or (b) a person
appointed by an instrument in writing as proxy by such a holder of one or more
such Securities. The only persons who shall be entitled to be present or to
speak at any meeting of Securityholders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
SECTION 10.05. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 10.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 9.04, at any meeting each holder of
Securities with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000 principal amount of Securities
held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Securities held
by him or instruments in writing as aforesaid duly designating him as the person
to vote on behalf of other Securityholders. At any meeting of Securityholders,
the presence of persons holding or representing Securities in an aggregate
principal amount sufficient to take action on the business for the transaction
of which such meeting was called shall constitute a quorum, but, if less than a
quorum is present, the persons holding or representing a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
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vote may adjourn such meeting with the same effect, for all intents and
purposes, as though a quorum had been present. Any meeting of Securityholders
duly called pursuant to the provisions of Section 10.02 or 10.03 may be
adjourned from time to time by a majority of those present, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
SECTION 10.06. Voting. The vote upon any resolution submitted to any
meeting of holders of Securities with respect to which such meeting is being
held shall be by written ballots on which shall be subscribed the signatures of
such holders or of their representatives by proxy and the serial number or
numbers of the Securities held or represented by them. The permanent chairman
of the meeting shall appoint two inspectors of votes who shall count all votes
cast at the meeting for or against any resolution and who shall make and file
with the secretary of the meeting their verified written reports in triplicate
of all votes cast at the meeting. A record in duplicate of the proceedings of
each meeting of Securityholders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was mailed as provided in Section
10.02. The record shall show the serial numbers of the Securities voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE ELEVEN.
Supplemental Indentures.
SECTION 11.01. Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a resolution of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to evidence the succession of another corporation to the
Company, or successive succession, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Twelve hereof;
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(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the holders of all or any
series of Securities (and if such covenants are to be for the benefit of
less than all series of Securities stating that such covenants are
expressly being included for the benefit of such series) as the Board of
Directors and the Trustee shall consider to be for the protection of the
holders of such Securities, and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, however, that in respect of any
such additional covenant, restriction or condition such supplemental
indenture may provide for a particular period of grace after default
(which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such
default;
(c) to provide for the issuance under this Indenture of Securities
in coupon form (including Securities registrable as to principal only) and
to provide for exchangeability of such Securities with the Securities
issued hereunder in fully registered form and to make all appropriate
changes for such purpose;
(d) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.03;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, pursuant
to the requirements of Section 8.11;
(f) to make provision with respect to the conversion rights of
holders of Convertible Securities pursuant to the requirements of Section
3.06; and
(g) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective
or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture; provided that any such
action shall not materially adversely affect the interests of the holders
of the Securities.
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The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Securities at the time outstanding, notwithstanding any of
the provisions of Section 11.02.
SECTION 11.02. Supplemental Indentures with Consent of Securityholders.
With the consent (evidenced as provided in Section 9.01) of the holders of not
less than 66 2/3% in aggregate principal amount of the Securities at the time
outstanding of all series affected by such supplemental indenture (voting as a
class), the Company, when authorized by a resolution of the Board of Directors,
and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
holders of the Securities of each series so affected; provided, however, that no
such supplemental indenture shall (i) extend the final maturity of any Security,
or reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or any premium thereon, or reduce any amount
payable on redemption thereof or make the principal thereof or any interest or
premium thereon payable in any coin or currency other than that provided in the
Securities, or impair the right to convert Convertible Securities into Common
Stock on the terms set forth herein, or impair or affect the right of any
Securityholder to institute suit for payment thereof or the right of repayment,
if any, at the option of the holder, or modify any of the provisions of this
Indenture relating to the subordination of the Securities in a manner adverse to
the holders thereof without the consent of the holder of each Security so
affected, or (ii) reduce the aforesaid percentage of Securities the holders of
which are required to act pursuant to Section 7.07 or to consent to any such
supplemental indenture, without the consent of the holders of each Security then
affected.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of Securityholders of such series with respect to such covenant or
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provision, shall be deemed not to affect the rights under this Indenture of the
Securityholders of any other series.
Upon the request of the Company accompanied by a copy of a resolution of
the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 11.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures. Any supplemental indenture executed pursuant to the
provisions of this Article Eleven shall comply with the Trust Indenture Act of
1939, as then in effect. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article Eleven, this Indenture shall be and
be deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Securities of each
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications an amendments and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 11.04. Notation on Securities. Securities of any series
authenticated and delivered after the execution of any supplemental indenture
affecting such series pursuant to the provisions of this Article Eleven may bear
a notation in the form approved by the trustee as to any matter provided for in
such supplemental indenture. If the Company or the Trustee shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee or the Authenticating Agent and delivered
in exchange for the Securities of any series then outstanding.
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SECTION 11.05. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.01 and
8.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Eleven.
SECTION 11.06. Effect on Senior Indebtedness. No supplemental indenture
shall adversely affect the rights of any holder of Senior Indebtedness under
Article Four without the consent of such holder.
ARTICLE TWELVE.
Consolidation, Merger and Sale by the Company.
SECTION 12.01. Consolidation, Merger and Sale of Assets Permitted. The
Company covenants and agrees that it will not consolidate with, merge into, or
sell or otherwise dispose of all or substantially all its property as an
entirety to, any person other than a corporation organized under the laws of the
United States of America or any State or Territory thereof or of the District of
Columbia, lawfully entitled to acquire the same. The Company will not so
consolidate or merge, or make any such sale or other disposition, unless, and
the Company covenants and agrees that any such consolidation, merger, sale or
other disposition shall be on the condition that, (1) the provisions of Section
3.06 are complied with and (2) such corporation shall expressly assume the due
and punctual payment of the principal of and premium, if any, and interest on
all the Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by the Company, by supplemental indenture satisfactory
to the Trustee, executed and delivered to the Trustee by such corporation. The
Company covenants and agrees that it will not so consolidate or merge or make
any such sale or other disposition, or permit any corporation to merge into the
Company, if immediately thereafter the Company or such successor corporation, as
the case may be, shall be in default in the performance or observance of any of
the covenants or conditions of this Indenture.
SECTION 12.02. Successor Corporation to Be Substituted for Company. In
case of any such merger, consolidation, sale or conveyance and upon any such
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part, and, in case of such a sale or
conveyance other than a lease, the Company thereupon shall be relieved of any
further obligation or liability hereunder or upon the Securities, and may
thereupon or at any time thereafter
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72
be dissolved, wound up or liquidated. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in the name of Masco
Industries, Inc. any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor
corporation (instead of the Company) and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Securities which previously shall have
been signed and delivered by the officers of the Company to the Trustee or the
Authenticating Agent for authentication, and any Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee or
the Authenticating Agent for that purpose. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 12.03. Evidence to Be Furnished Trustee. The Trustee, subject to
the provisions of Sections 8.01 and 8.02, may receive and rely upon an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale or conveyance, and any such assumption complies with
the provisions of this Article Twelve.
ARTICLE THIRTEEN.
Satisfaction and Discharge of Indenture.
SECTION 13.01. Discharge of Indenture. When (a) the Company shall have
paid or caused to be paid the principal of and interest on all Securities of any
series outstanding hereunder, as and when the same shall have become due and
payable, (b) the Company shall deliver to the Trustee for cancellation all
Securities of any series theretofore authenticated (other than any Securities of
such series which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.08 or converted) and not
theretofore cancelled, or (c) with respect to any series of Securities which,
under the terms specified in the resolution or supplemental indenture or
indentures referred to in Section 2.03, pursuant to which such series is
created, can be discharged prior to maturity, the Company shall deposit with the
Trustee, in trust, cash and/or a principal amount of obligations of or directly
guaranteed by the United States of America maturing or redeemable at the option
of the holder thereof not later than the
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73
date fixed for payment or redemption of all outstanding Securities of such
series which, together with the income to be earned on such obligations prior to
such date, equals the principal amount of (and any applicable premium on), all
such Securities of such series not theretofore cancelled or delivered to the
Trustee for cancellation, with interest to the date of their maturity or
redemption, as the case may be, but excluding, however, the amount of any moneys
for the payment of principal of, or premium, if any, or interest on the
Securities of such series (1) theretofore repaid to the Company in accordance
with the provisions of Section 13.04, or (2) paid to any State or to the
District of Columbia pursuant to its unclaimed property or similar laws, and if
in any such case the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then (except in the case of (c) above as to
(i) rights of registration of transfer and exchange and any right of the Company
of optional redemption and to deliver Securities of such series to the Trustee
for cancellation, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) any remaining rights of conversion of Convertible
Securities, (iv) the rights, obligations and immunities of the Trustee hereunder
and (v) the rights of the Securityholders as beneficiaries hereof with respect
to the property so deposited with the Trustee, all of which shall continue in
full force and effect) all of the Company's liability with respect to principal,
premium, if any, and interest on the Securities of such series shall be
discharged, this Indenture shall cease to be of further effect as to such
series, and the Trustee, on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture as to such series, the Company, however, hereby
agreeing to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection with this
Indenture or the Securities; provided, however, that the rights of
Securityholders to receive amounts in respect of principal of and interest on
the Securities held by them shall not be delayed longer than required by then-
applicable mandatory rules or policies of any securities exchange if the
Securities of such series continue to be listed. Notwithstanding the foregoing,
if the Company makes a deposit of cash and/or obligations described in clause
(c) above with respect to any series of Securities which, under the terms
specified in the resolution or supplemental indenture or indentures referred to
in Section 2.03, pursuant to which such series is created, is subject to the
provisions of this sentence (whether or not such resolution or supplemental
indenture provides that such series can be discharged prior to maturity under
clause (c) above), and, concurrently with such deposit, notifies the Trustee
that such series shall no longer have the benefit of all or any portion of the
provisions of Article Seven of this Indenture and such other provisions of this
Indenture or the resolution or supplemental indenture, pursuant to which such
series is created, as are specifically permitted in such resolution or
supplemental indenture
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to be made inapplicable under this sentence with respect to such series, this
Indenture and such supplemental indenture or resolution shall thereupon be
deemed amended with respect to such series solely by the deletion in their
entirety of such provisions and this Indenture and such supplemental indenture
or resolution shall in all other respects be unaffected thereby.
SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee. Subject
to the provisions of Section 13.04, all moneys and obligations deposited with
the Trustee pursuant to Section 13.01 shall be held in trust and applied by it
to the payment, either directly or through any paying agent (including the
Company if acting as its own paying agent), to the holders of the particular
Securities for the payment of which such moneys and obligations have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest; provided, however, that the Company
shall be entitled from time to time to withdraw cash and/or obligations
deposited under clause (c) or the last sentence of Section 13.01 provided that
the cash and obligations thereafter on deposit and after giving effect to such
withdrawal would, if then deposited under such clause, satisfy in all respects
the requirements of such clause or the last sentence of Section 13.01. At the
time of any such withdrawal, the Company shall deliver to the Trustee an
Officers' Certificate demonstrating compliance with the provisions of such
clause or sentence.
SECTION 13.03. Paying Agent to Repay Moneys Held. Upon the satisfaction
and discharge of this Indenture all moneys then held by any paying agent of the
Securities (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such moneys.
SECTION 13.04. Return of Unclaimed Moneys. Except as may be required
under applicable law, any moneys deposited with or paid to the Trustee or any
paying agent for payment of the principal of, and premium, if any, or interest
on Securities and not applied but remaining unclaimed by the holders of
Securities for three years after the date upon which the principal of, and
premium, if any, or interest on such Securities, as the case may be, shall have
become due and payable, shall be repaid to the Company by the Trustee or such
paying agent on written demand; and the holder of any of the Securities shall
thereafter look only to the Company for any payment which such holder may be
entitled to collect and all liability of the Trustee or such paying agent with
respect to such moneys shall thereupon cease.
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ARTICLE FOURTEEN.
Immunity of Incorporators, Stockholders, Officers and Directors.
SECTION 14.01. Indenture and Securities Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Security, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture or in any supplemental indenture, or in any Security,
or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation of the
Company, either directly or through the Company or any successor corporation of
the Company, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
ARTICLE FIFTEEN.
Miscellaneous Provisions.
SECTION 15.01. Successors. All the covenants, stipulations, promises and
agreements in this Indenture contained by the Company shall bind its successors
and assigns whether so expressed or not.
SECTION 15.02. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
SECTION 15.03. Addresses for Notices, etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Securities on the Company may be given of
served by being deposited postage prepaid by registered or certified mail in a
post office letter box addressed (until another address is filed by the Company
with the Trustee for the purpose) to Masco Industries Inc., 21001 Van Born Road,
Taylor, Michigan 48180, Attention: President. Any notice, direction, request or
demand by any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of the Trustee, 30 West Broadway, New York, New York 10015, Attention:
Corporate Trust Administration.
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SECTION 15.04. New York Contract. This Indenture and each Security shall
be deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance with the laws of
said State.
SECTION 15.05. Evidence of Compliance with Conditions Precedent. Upon
any application or demand by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that in the opinion of the signers all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture (other than the Officers' Certificate called for by
Section 5.05) shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 15.06. Legal Holidays. In any case where the date of payment of
interest on or principal of or premium, if any, on the Securities will be in The
City of New York, New York a legal holiday or a day on which banking
institutions are authorized by law to close, the payment of such interest on or
principal of or premium, if any, on the Securities need not be made on such date
but may be made on the next succeeding day not in such City a legal holiday or a
day on which banking institutions are authorized by law to close, with the same
force and effect as if made on the date of payment and no interest shall accrue
for the period from and after such date.
SECTION 15.07. Trust Indenture Act to Control. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with another
provision included in this Indenture which is required to be included in this
Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act
of 1939, such required provision shall control.
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77
SECTION 15.08. Table of Contents, Headings, etc. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall no way modify or restrict any of the terms of provisions
hereof.
SECTION 15.09. Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
SECTION 15.10. No Security Interest Created. Nothing in this Indenture
or in the Securities, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its Subsidiaries is located.
ARTICLE SIXTEEN.
Redemption of Securities--Mandatory and
Optional Sinking Fund.
SECTION 16.01. Applicability of Article. The provisions of this Article
shall be applicable to the Securities of any series which are redeemable at the
option of the Company before their maturity or to any sinking fund for the
retirement of Securities of a series except as otherwise specified as
contemplated by Section 2.03 for Securities of such series.
SECTION 16.02. Notice of Redemption; Selection of Securities. In case
the Company shall desire to exercise the right to redeem all, or, as the case
may be, any part of the Securities of any series in accordance with their terms,
it shall fix a date for redemption and shall mail a notice of such redemption at
lease 30 and not more than 60 days prior to the date fixed for redemption to the
holders of Securities of such series so to be redeemed as a whole or in part at
their last address as the same appear on the Securities register. Such mailing
shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security of a series
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security of such series.
Each such notice of redemption shall specify the date fixed for
redemption, the redemption price at which Securities of such series are to be
redeemed, the place or places of payment, that
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78
payment will be made upon presentation and surrender of such Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Securities of
such series are to be redeemed the notice of redemption shall specify the
numbers of the Securities of that series to be redeemed. In case any Security
of a series is to be redeemed in part only, the notice of redemption shall state
the portion of the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of such Security, a
new Security or Securities of that series in principal amount equal to the
unredeemed portion thereof will be issued.
Not more than seven days prior to the redemption date specified in the
notice of redemption given as provided in this Section, the Company will deposit
with the Trustee or with one or more paying agents an amount of money sufficient
to redeem on the redemption date all the Securities so called for redemption at
the appropriate redemption price, together with accrued interest to the date
fixed for redemption.
If less than all the Securities of a series are to be redeemed the Company
will give the Trustee notice not less than 60 days prior to the redemption date
as to the aggregate principal amount of Securities of that series to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Securities of that series or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in the applicable
form of Security) to be redeemed.
SECTION 16.03. Payment of Securities Called for Redemption. If notice of
redemption has been given as provided in Section 16.02 or Section 16.04, the
Securities or portions of Securities of the series with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption, and on and after said
date (unless the Company shall default in the payment of such Securities at the
redemption price, together with interest accrued to said date) interest on the
Securities or portions of Securities of any series so called for redemption
shall cease to accrue. On presentation and surrender of such Securities at a
place of payment specified in said notice, the said Securities or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with interest accrued thereon to the date fixed for
redemption.
Upon presentation of any Security of any series redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
holder thereof, at the expense of
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79
the Company, a new Security or Securities of such series of authorized
denominations, in principal amount equal to the unredeemed portion or the
Security so presented.
SECTION 16.04. Mandatory and Optional Sinking Fund. The minimum amount
of any sinking fund payment provided for by the terms of Securities of any
series determined pursuant to Section 2.03 is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". The last date on which any such payment may be
made is herein referred to as a "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company may at its
option (a) deliver to the Trustee Securities of that series (other than any
previously called for redemption) theretofore purchased or otherwise acquired by
the Company and (b) may apply as a credit Securities of that series which have
been previously delivered to the Trustee by the Company or Securities of that
series which have been converted or redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
optional sinking fund payments pursuant to the next succeeding paragraph, in
each case in satisfaction of all or any part of any mandatory sinking fund
payment, provided that such Securities have not been previously so credited.
Each such Security so delivered or applied as a credit shall be credited at the
sinking fund redemption price for such Securities and the amount of any
mandatory sinking fund shall be reduced accordingly. If the Company intends so
to deliver or credit such Securities with respect to any mandatory sinking fund
payment it shall deliver to the Trustee at least 60 days prior to the next
succeeding sinking fund payment date for such series (a) a certificate signed by
the Treasurer or an Assistant Treasurer of the Company specifying the portion of
such sinking fund payment, if any, to be satisfied by payment of cash and the
portion of such sinking fund payment, if any, which is to be satisfied by
delivering and crediting such Securities and (b) any Securities to be so
delivered, if not previously delivered. All Securities so delivered to the
Trustee shall be cancelled by the Trustee and no Securities shall be
authenticated in lieu thereof. If the Company fails to deliver such certificate
and Securities at or before the time provided above, the Company shall not be
permitted to satisfy any portion of such mandatory sinking fund payment by
delivery or credit of Securities.
At its option the Company may pay into the sinking fund for the retirement
of Securities of any particular series, on or not more than seven days before
each sinking fund payment date for such series, any additional sum in cash as
specified by the terms of such series of Securities. If the Company intends to
exercise its
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80
right to make any such optional sinking fund payment, it shall deliver to the
Trustee at least 60 days prior to the next succeeding sinking fund payment date
for such Series a certificate signed by the Treasurer or an Assistant Treasurer
of the Company stating that the Company intends to exercise such optional right
and specifying the amount which the Company intends to pay on such sinking fund
payment date. If the Company fails to deliver such certificate at or before the
time provided above, the Company shall not be permitted to make any optional
sinking fund payment with respect to such sinking fund payment date. To the
extent that such right is not exercised in any year it shall not be cumulative
or carried forward to any subsequent year.
If the sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 (or a lesser sum if the Company shall so request) with
respect to the Securities of any particular series, it shall be applied by the
Trustee or one or more paying agents on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the sinking fund
redemption price together with accrued interest to the date fixed for
redemption. The Trustee shall select, in the manner provided in Section 16.02,
for redemption on such sinking fund payment date a sufficient principal amount
of Securities of such series to absorb said cash, as nearly as may be, and the
Trustee shall, at the expense and in the name of the Company, thereupon cause
notice of redemption of Securities of such series to be given in substantially
the manner and with the effect provided in Sections 16.02 and 16.03 for the
redemption of Securities of that series in part at the option of the Company,
except that the notice of redemption shall also state that the Securities of
such series are being redeemed for the sinking fund. Any sinking fund moneys
not so applied or allocated by the Trustee or any paying agent to the redemption
of Securities of that series shall be added to the next cash sinking fund
payment received by the Trustee or such paying agent and, together with such
payment, shall be applied in accordance with the provisions of this Section
16.04. Any and all sinking fund moneys held by the Trustee or any paying agent
on the maturity date of the securities of any particular series, and not held
for the payment or redemption of particular Securities of such series, shall be
applied by the trustee or such paying agent, together with other moneys, if
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of Securities at maturity.
On or not more than seven days before each sinking fund payment date, the
Company shall pay to the Trustee or to one or more paying agents in cash sum
equal to all interest accrued to the date fixed for redemption on Securities to
be redeemed on the next following sinking fund payment date pursuant to this
Section.
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81
Neither the Trustee nor any paying agent shall redeem any Securities of a
series with sinking fund moneys, and the Trustee shall not mail any notice of
redemption of Securities of such series by operation of the sinking fund, during
the continuance of a default in payment of interest on such Securities or of any
Event of Default (other than an Event of Default occurring as a consequence of
this paragraph) with respect to such Securities, except that if the notice of
redemption of any Securities shall theretofore have been mailed in accordance
with the provisions hereof, the Trustee or any paying agent shall redeem such
Securities if cash sufficient for that purpose shall be deposited with the
Trustee or such paying agent for that purpose in accordance with the terms of
this Article Sixteen. Except as aforesaid, any moneys in the sinking fund for
such series at the time when any such default or Event of Default shall occur
and any moneys thereafter paid into the sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of all Securities of such series; provided, however, that in case such
Event of Default or default shall have been cured or waived as provided herein,
such moneys shall thereafter be applied on the next succeeding sinking fund
payment date on which such moneys may be applied pursuant to the provisions of
this Section 16.04
MORGAN GUARANTY TRUST COMPANY OF NEW YORK hereby accepts the trusts in
this Indenture declared and provided, upon the terms and conditions hereinabove
set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto duly affixed and attested, all as of
the day and year first above written.
MASCO INDUSTRIES, INC.
Company
By /s/JAMES J. SIGOUIN
Vice President
[CORPORATE SEAL]
Attest:
/s/TIMOTHY WADHAMS
Assistant Secretary
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82
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Trustee
By /s/J. N. CREAN
Trust Officer
[CORPORATE SEAL]
Attest:
/s/G. J. CASTELLANO
Assistant Trust Officer
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83
State of Michigan)
) ss.:
County of Wayne )
On the 2nd of February, 1987, before me personally came JAMES J. SIGOUIN,
to me known, who, being by me duly sworn, did depose and say that he resides at
570 Oxford, Grosse Pointe Woods, MI; that he is Vice President of MASCO
INDUSTRIES, INC., the corporation described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
/s/DIANE G. KIRKENDALL
Notary Public
DIANE G. KIRKENDALL
Notary Public, Wayne County, MI
My Commission Expires 7-15-90
[NOTARIAL SEAL]
State of New York)
) ss.:
County of Kings )
On the 4th day of February, 1987, before me personally came J. N. CREAN,
to me known, who, being by me duly sworn, did depose and say that he resides at
Allendale, N. J. 07401; that he is Trust Officer of MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
/s/WILLIAM P. MIFSUD, JR.
Notary Public
WILLIAM P. MIFSUD, JR.
Notary Public, State of New York
No. 4785483
Qualified in Kings County
Commission Expires Mar. 30, 1987
[NOTARIAL SEAL]
<PAGE>
<PAGE>
RESOLUTIONS
OF THE
PRICING COMMITTEE
OF THE
BOARD OF DIRECTORS
OF MASCOTECH, INC.
January 13, 1994
WHEREAS, the Company has filed a Registration Statement on Form S-3 (file
no. 33-59222) with the Securities and Exchange Commission, which currently
remains in effect.
WHEREAS, the Company desires to create and make provision for a series of
securities under the Indenture dated as of November 1, 1986 (the "Indenture")
with Morgan Guaranty Trust Company of New York, as trustee (the "Trustee"),
which was filed as an exhibit to the Registration Statement, providing for the
issuance from time to time of convertible or non-convertible unsecured
subordinated debentures, notes or other evidences of indebtedness of the Company
("Securities") in one or more series under such Indenture; and
WHEREAS, capitalized terms used in these resolutions and not otherwise
defined are used with the same meaning ascribed to such terms in the Indenture;
NOW, THEREFORE, BE IT RESOLVED, that there hereby is approved and
established a series of Securities under the Indenture whose terms shall be as
follows:
1. The Securities of such series shall be known and designated as
the "4-1/2% Convertible Subordinated Debentures Due 2003" of the Company.
2. The aggregate principal amount of Securities of such series
which may be authenticated and delivered under the Indenture is limited to
Three Hundred Forty-Five Million Dollars ($345,000,000), except for
Securities of such series authenticated and delivered upon registration
of, transfer of, or in exchange for, or in lieu of, other Securities of
such series pursuant to Sections 2.07, 2.08, 2.09, 11.04 or 16.03 of the
Indenture.
3. The date on which the principal of the Securities of such series
shall be payable is December 15, 2003.
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<PAGE>
4. The Securities of such series shall bear interest from January
21, 1994, at the annual rate of 4-1/2 percent, payable semi-annually on
June 15 and December 15 of each year commencing on June 15, 1994
(calculated on a standard 360 day year of 12 thirty-day months) until
the principal thereof is paid or made available for payment. The
June 1 or December 1 (whether or not a Business Day), as the case may
be, next preceding each such interest payment date shall be the "record
date" for the determination of holders to whom interest is payable.
5. The principal of, and premium, if any, and interest on the
Securities of such series shall be payable at the office or agency of the
Company maintained for such purpose under Section 5.02 of the Indenture in
the Borough of Manhattan, The City of New York, or at any other office or
agency designated by the Company for such purpose pursuant to the
Indenture; provided, however, that, at the option of the Company, payment
of interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear on the registry books of the
Company.
6. The Securities of such series shall be subject to redemption at
any time on or after December 22, 1996, in whole or in part, at the option
of the Company, at a redemption price equal to the percentage of the
principal amount set forth below if redeemed during the twelve-month
period beginning December 15 in each of the following years, in each case
together with interest accrued to the date fixed for redemption (subject
to the right, if any, of the registered holder on the record date for an
interest payment to receive such interest):
Year Percentage
1996. . . . . . . 103.00%
1997. . . . . . . 102.50%
1998. . . . . . . 102.00%
1999 . . . . . . . 101.50%
2000 . . . . . . . 101.00%
2001 . . . . . . . 100.50%
2002 . . . . . . . 100.00%
7. The Company shall have the right to discharge or limit the
Indenture as to the Securities of such series prior to maturity pursuant
to the provisions of Section 13.01 of the Indenture.
8. The Securities of such series shall be convertible at any time
on or after March 22, 1994 and prior to maturity, unless previously
redeemed, into an aggregate maximum amount
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<PAGE>
of 11,129,032 fully paid and non-assessable shares of Company Common
Stock, par value $1.00 per share, at a conversion price of $31.00 per
share, such number of shares of Common Stock and conversion price being
subject to adjustment as provided in the Indenture.
9. The Securities of such series shall be subordinated in right of
payment to the prior payment in full of Senior Indebtedness (as defined in
the Indenture) and so long as the Securities of such series are
outstanding, the Company shall not create or incur "indebtedness of the
Company for money borrowed" or "indebtedness of the Company incurred in
connection with the acquisition of property" that is subordinate and
junior in right of payment to the prior payment of Senior Indebtedness,
except such indebtedness that ranks pari passu with, or is subordinate and
junior in right of payment to, the Securities of such series.
10. The Securities of such series shall be issuable in denomina-
tions of One Thousand Dollars ($1,000) and any integral multiple thereof.
11. The Company shall receive 97.75 percent of the price of such
Securities sold to the public after discount of 2.25 percent.
FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions thereof;
FURTHER RESOLVED, that the Chairman of the Board, the President or any
Vice President and the Secretary or any Assistant Secretary is authorized in the
name and on behalf of the Company and under its corporate seal (which may be in
the form of a facsimile of the seal of the Company) to execute $345,000,000
aggregate principal amount of the Securities of such series (and in addition
Securities to replace lost, stolen, mutilated or destroyed Securities and
Securities required for exchange, substitution or transfer, all as provided in
the Indenture) in fully registered form, substantially in the form of the
subordinated debenture filed as an exhibit to the Company's Registration
Statement, with such changes and insertions therein as are appropriate to
conform such debentures to the terms set forth herein or otherwise as the
respective officers executing such Securities shall approve and as are not
inconsistent with these resolutions, such approval to be conclusively evidenced
by such officer's execution and delivery of such Securities, and to deliver such
Securities to the Trustee for authentication and delivery in accordance with the
terms of the Indenture, and the Trustee is authorized and directed thereupon to
authenticate and deliver the same to or upon the written order of the Company as
provided in the Indenture;
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<PAGE>
FURTHER RESOLVED, that the signatures of the officers of the Company so
authorized to execute the Securities of such series may be the manual or
facsimile signatures of the present or any future such authorized officers and
may be imprinted or otherwise reproduced thereon, the Company for such purpose
hereby adopting each such facsimile signature as binding upon it notwithstanding
the fact that at the time the respective Securities shall be authenticated and
delivered or disposed of, the officer so signing shall have ceased to be such
officer;
FURTHER RESOLVED, that Smith Barney Shearson Inc., PaineWebber
Incorporated, Prudential Securities Incorporated and Salomon Brothers Inc are
appointed as underwriters for the issuance and sale of the Securities of such
series, and the Chairman of the Board, the President or any Vice President of
the Company is authorized, in the name and on behalf of the Company, to execute
and deliver an Underwriting Agreement, substantially in the form heretofore
approved by the Board of Directors of the Company, with such underwriters and
with such changes and insertions therein as are appropriate to conform such
Underwriting Agreement to the terms set forth herein or otherwise as the
respective officers executing such Underwriting Agreement shall approve and as
are not inconsistent with these resolutions, such approval to be conclusively
evidenced by such officer's execution and delivery of such Underwriting
Agreement;
FURTHER RESOLVED, that Morgan Guaranty Trust Company of New York, the
Trustee under the Indenture, is appointed trustee for Securities of such series,
and as Agent of the Company for the purpose of effecting the registration,
transfer, exchange and conversion of the Securities of such series as provided
in the Indenture, and the corporate trust office of Morgan Guaranty Trust
Company of New York, in the Borough of Manhattan, The City of New York is
designated pursuant to the Indenture as the office or agency of the Company
where such Securities may be presented for registration, transfer, exchange and
conversion and where notices and demands to or upon the Company in respect of
the Securities of such series and of the Indenture may be served;
FURTHER RESOLVED, that Morgan Guaranty Trust Company of New York, is
appointed Paying Agent of the Company for the payment of principal of and
premium, if any, and interest on the Securities of such series, and the
corporate trust office of Morgan Guaranty Trust Company of New York, is
designated, pursuant to the Indenture, as the office or agency of the Company
where such Securities may be presented for payment; and
FURTHER RESOLVED, that each of the officers of the Company is authorized
and directed in the name and on behalf of the Company to do or cause to be done
all such acts and things as they or he may deem necessary or advisable, to
effect the sale and delivery of the Securities of such series pursuant to the
Underwriting Agreement
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<PAGE>
and otherwise to carry out the obligations of the Company under the Underwriting
Agreement, and to do or cause to be done all such acts and things and to execute
and deliver all such documents as they or he deem necessary or advisable in
connection with the execution and delivery of the Underwriting Agreement, the
execution, authentication and delivery of such Securities (including, without
limiting the generality of the foregoing, delivery to the Trustee of such
Securities for authentication and of requests or orders for the authentication
and delivery of Securities) and the listing of the Securities on The New York
Stock Exchange.
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<PAGE>
Exhibit 4.f
TABLE OF CONTENTS
ARTICLE I. 2
DEFINITIONS 2
1.1 Certain Definitions. . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . 21
1.3 Other Definitions; Rules of Construction . . . . . . 22
ARTICLE II. 22
PHASE-OUT OF EXISTING CREDIT AGREEMENT 22
2.1 Prepayment of Existing Loans . . . . . . . . . . . . 22
2.2 Amendment of Existing Credit Agreement . . . . . . . 23
2.3 Miscellaneous Transition Provisions. . . . . . . . . 23
ARTICLE III. 23
THE LOANS AND LETTER OF CREDIT ISSUANCES 23
3.1 Syndicated Borrowings. . . . . . . . . . . . . . . . 23
3.2 Notice of Syndicated Borrowings. . . . . . . . . . . 24
3.3 Letters of Credit. . . . . . . . . . . . . . . . . . 25
3.4 Bid-Option Borrowings. . . . . . . . . . . . . . . . 28
3.5 Notice to Banks; Funding of Loans. . . . . . . . . . 33
3.6 The Notes . . . . . . . . . . . . . . . . . . . . . 35
3.7 Certain Fees . . . . . . . . . . . . . . . . . . . . 35
3.8 Termination or Reduction of Commitments. . . . . . . 36
3.9 Mandatory Termination of Commitments . . . . . . . . 37
3.10 Extension of Scheduled Expiration Date . . . . . . . 37
ARTICLE IV. 38
PRINCIPAL PAYMENTS; INTEREST; ETC 38
4.1 Scheduled Principal Payments . . . . . . . . . . . . 38
4.2 Prepayments of Principal . . . . . . . . . . . . . . 38
4.3 Interest Payments. . . . . . . . . . . . . . . . . . 39
4.4 Payment Procedures . . . . . . . . . . . . . . . . . 40
4.5 Computation of Interest and Fees . . . . . . . . . . 42
4.6 No Setoff or Deduction . . . . . . . . . . . . . . . 42
4.7 Other Provisions Applicable to Foreign Currency
Bid-Option Loans . . . . . . . . . . . . . . . . . . 42
(i)
PAGE
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ARTICLE V. 42
CHANGE IN CIRCUMSTANCES 42
5.1 Impossibility; Interest Rate Inadequate or Unfair. . 42
5.2 Illegality . . . . . . . . . . . . . . . . . . . . . 43
5.3 Increased Cost; Yield Protection . . . . . . . . . . 44
5.4 Substitute Loans . . . . . . . . . . . . . . . . . . 47
5.5 Funding Losses . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI. 48
REPRESENTATIONS AND WARRANTIES 48
6.1 Corporate Existence and Power. . . . . . . . . . . . 48
6.2 Corporate Authority; No Violations;
Governmental Filings; Etc. . . . . . . . . . . . . . 48
6.3 Binding Effect . . . . . . . . . . . . . . . . . . . 49
6.4 Litigation . . . . . . . . . . . . . . . . . . . . . 49
6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 49
6.6 Financial Condition. . . . . . . . . . . . . . . . . 49
6.7 Compliance with ERISA. . . . . . . . . . . . . . . . 49
6.8 Environmental Matters. . . . . . . . . . . . . . . . 50
6.9 Compliance with Laws . . . . . . . . . . . . . . . . 50
ARTICLE VII. 51
COVENANTS 51
7.1 Financial Statements . . . . . . . . . . . . . . . . 51
7.2 Certificates of No Default and Compliance. . . . . . 52
7.3 Preservation of Corporate Existence, Etc.. . . . . . 53
7.4 Current Ratio. . . . . . . . . . . . . . . . . . . . 53
7.5 Total Leverage Ratio . . . . . . . . . . . . . . . . 53
7.6 Net Worth. . . . . . . . . . . . . . . . . . . . . . 53
7.7 Tangible Capital Funds . . . . . . . . . . . . . . . 54
7.8 Senior Debt Coverage . . . . . . . . . . . . . . . . 54
7.9 Subsidiary Indebtedness. . . . . . . . . . . . . . . 54
7.10 Negative Pledge . . . . . . . . . . . . . . . . . . 55
7.11 Dispositions of Assets; Mergers and Consolidations;
Restricted Transfers . . . . . . . . . . . . . . . . 56
7.12 Changes in Subordinated Debt . . . . . . . . . . . . 57
7.13 Use of Proceeds. . . . . . . . . . . . . . . . . . . 57
7.14 Fiscal Year. . . . . . . . . . . . . . . . . . . . . 57
7.15 Compliance with Laws . . . . . . . . . . . . . . . . 57
(ii)
PAGE
<PAGE>
ARTICLE VIII. 58
CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES 58
8.1 Each Borrowing and Letter of Credit Issuance . . . . 58
8.2 Initial Borrowing or Letter of Credit Issuance . . . 59
8.3 Closing. . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX. 60
EVENTS OF DEFAULT AND REMEDIES 60
9.1 Events of Default. . . . . . . . . . . . . . . . . . 60
9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . 63
9.3 Set Off. . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE X. 64
THE AGENTS AND THE BANKS 64
10.1 Appointment and Authorization. . . . . . . . . . . . 64
10.2 Agent and Affiliates . . . . . . . . . . . . . . . . 64
10.3 Scope of Agent's Duties. . . . . . . . . . . . . . . 64
10.4 Reliance by Agent. . . . . . . . . . . . . . . . . . 65
10.5 Default. . . . . . . . . . . . . . . . . . . . . . . 65
10.6 Liability of Agent . . . . . . . . . . . . . . . . . 65
10.7 Nonreliance on Agent and Other Banks . . . . . . . . 65
10.8 Indemnification. . . . . . . . . . . . . . . . . . . 66
10.9 Resignation of Agent . . . . . . . . . . . . . . . . 66
10.10 Sharing of Payments. . . . . . . . . . . . . . . . . 67
10.11 Withholding Tax Exemption. . . . . . . . . . . . . . 68
10.12 The Co-Agents. . . . . . . . . . . . . . . . . . . . 68
ARTICLE XI. 68
MISCELLANEOUS 68
11.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . 68
11.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 69
11.3 No Waiver By Conduct; Remedies Cumulative. . . . . . 70
11.4 Reliance on and Survival of Various Provisions . . . 70
11.5 Expenses and Indemnification.. . . . . . . . . . . . 70
11.6 Successors and Assigns . . . . . . . . . . . . . . . 72
11.7 Confidentiality. . . . . . . . . . . . . . . . . . . 75
11.8 Counterparts; Effectiveness of Telecopied Signatures 76
11.9 Table of Contents and Headings . . . . . . . . . . . 76
11.10 Construction of Certain Provisions . . . . . . . . . 76
11.11 Independence of Covenants. . . . . . . . . . . . . . 76
11.12 Interest Rate Limitation . . . . . . . . . . . . . . 77
11.13 Substitution of Banks. . . . . . . . . . . . . . . . 77
11.14 Collateral . . . . . . . . . . . . . . . . . . . . . 78
11.15 Governing Law. . . . . . . . . . . . . . . . . . . . 78
11.16 Integration and Severability . . . . . . . . . . . . 78
11.17 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 78
(iii)
PAGE
<PAGE>
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 - Applicable Margin Chart
Schedule 2 - Certain Industrial Revenue Bonds (see Section 9.1(e)
of the Credit Agreement)
EXHIBITS
Exhibit A - Syndicated Note
Exhibit B - Bid-Option Note
Exhibit C - Notice of Syndicated Borrowing
Exhibit D - Request for Letter of Credit Issuance
Exhibit E - Bid-Option Quote Request
Exhibit F - Invitation for Bid-Option Quotes
Exhibit G - Bid-Option Quote
Exhibit H - Notice of Disbursement of Foreign Currency Bid-Option
Loan
Exhibit I - Notice of Receipt of Foreign Currency Bid-Option Loan
Payment
Exhibit J - Securities Purchase Agreement
Exhibit K - Assignment and Acceptance
Exhibit L - Notice of Substitution of Bank(s)
Exhibit M - Opinion of Counsel for the Company
Exhibit N - Opinion of Counsel for the Agent
Exhibit O - Terms of Subordination
(iv)
<PAGE>
MASCOTECH, INC.
________________________________________________
$675,000,000
CREDIT AGREEMENT
dated as of September 2, 1993
______________________________________________
NBD BANK, N.A., as Agent
and
COMERICA BANK,
THE BANK OF NEW YORK,
THE FIRST NATIONAL BANK OF CHICAGO,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK and
NATIONSBANK OF NORTH CAROLINA, N.A.,
as Co-Agents
PAGE
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 2, 1993 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), is by
and among MASCOTECH, INC., a Delaware corporation formerly named Masco
Industries, Inc. (the "Company"), the banks party hereto from time to time
(collectively, the "Banks" and individually, a "Bank"), NBD BANK, N.A., a
national banking association formerly named National Bank of Detroit, as agent
(in such capacity, the "Agent") for the Banks, and COMERICA BANK, a Michigan
banking association, THE BANK OF NEW YORK, a New York banking corporation, THE
FIRST NATIONAL BANK OF CHICAGO, a national banking association, MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a New York banking association, and NATIONSBANK OF
NORTH CAROLINA, N.A., a national banking association, as co-agents (in such
capacity, the "Co-Agents").
RECITALS:
A. The Company, the Existing Banks (as hereinafter defined) and the
Existing Agent (as hereinafter defined) have entered into the Existing Credit
Agreement (as hereinafter defined), pursuant to which the Existing Banks
provided to the Company a revolving credit facility in the maximum aggregate
principal amount of $750,000,000, which revolving credit facility has converted
to a term credit facility as provided in the Existing Credit Agreement. The
principal sum of $711,650,000 in Existing Loans (as hereinafter defined) is
currently outstanding under the Existing Credit Agreement.
B. The Company now desires to replace the existing term credit
facility under the Existing Credit Agreement with a new revolving credit
facility in an aggregate principal amount the Dollar Equivalent (as hereinafter
defined) of which does not exceed $675,000,000, including standby letters of
credit in an aggregate amount not exceeding $20,000,000, in order to provide
funds for its general corporate purposes. The Company desires such new
facility to expire January 31, 1997, subject to a possible one-time extension
to July 31, 1998; provided that if such extension is not to occur, the maximum
aggregate principal amount of the revolving credit facility shall reduce on
January 31, 1996 to the Dollar Equivalent of $625,000,000.
C. The Banks are willing to provide such a replacement revolving
credit facility on the terms and conditions set forth in this Agreement, and
the Existing Banks that are parties hereto (such Existing Banks being more
than the "Required Banks" as such term is defined in the Existing Credit
Agreement) desire to amend the Existing Credit Agreement in connection
therewith as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises contained herein, the parties hereto agree as follows:
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ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, and in any
certificate, report, other agreement or other document made or delivered
pursuant to this Agreement, the following terms shall have the following
respective meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined unless the context otherwise
requires):
"Absolute Rate Dollar Bid-Option Loan" means a Loan which pursuant to the
applicable Notice of Borrowing is made at the Bid-Option Absolute Rate.
"Acquired Debt" means, with respect to any Person who becomes a
Subsidiary after the Closing Date, Debt of such Person which was outstanding
before such Person became a Subsidiary and which was not created in
contemplation of such Person becoming a Subsidiary.
"Additional Bank" shall have the meaning ascribed thereto in Section
11.13(b).
"Adjusted Net Worth" means, as of any date, the sum of (a) Net Worth,
plus (b) the Deferred Trimas Gain, plus (or, if the amount determined pursuant
to the following clause (c) is negative, minus the absolute amount thereof,
provided that such amount, if subtracted, shall not exceed the amount determined
pursuant to clause (b) of this definition) (c) the amount equal to 33-1/3% of
the difference of (i) the aggregate Market Value of all shares of common stock
of Trimas owned by the Company on such date, minus (ii) the aggregate value at
which such common stock is carried on the Company's books on such date.
"Affiliate", when used with respect to any Person, means any other Person
which, directly or indirectly, controls or is controlled by or is under common
control with such Person. For purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Applicable Lending Office" means, as to any Bank, its Domestic Lending
Office, Eurodollar Lending Office or any other office of such Bank or of any
Affiliate of such Bank selected and notified to the Company and the Agent as
the applicable lending office for a particular Loan or type of Loan by such
Bank; provided that the Company shall not be responsible for the increase, if
any, in costs hereunder that (a) are due to any Bank changing its Applicable
Lending Office with respect to a particular Loan or type of Loan and (b) arise
because of circumstances existing at the time of such change.
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"Applicable Margin" means, with respect to any Application Period, the
percentage found in the chart set forth on Schedule 1 attached hereto by
reading down the column of Senior Leverage Ratio ranges to the row for the
range into which the Senior Leverage Ratio as of the relevant Determination
Date falls, and then reading across that row to the Interest Coverage Ratio
column for the range into which the Interest Coverage Ratio for the
relevant Determination Period falls. By way of example, if the Senior Leverage
Ratio as of the relevant Determination Date is 0.53:1.00 and the Interest
Coverage Ratio for the relevant Determination Period is 2.75:1.00, assuming that
the relevant Determination Date is not a December 31, the Applicable Margin
during the Application Period shall be 0.625%. For purposes of this definition
of the term "Applicable Margin", (a) the term "Application Period" means a
period commencing with and including the 60th day after the end of the most
recently completed fiscal quarter of the Company to and including the 59th day
after the end of the next following fiscal quarter of the Company, (b) the term
"Determination Date" means, with respect to any Application Period, the last day
of the Determination Period for such Application Period, and (c) the term
"Determination Period" means, with respect to any Application Period, the
period of four consecutive fiscal quarters of the Company ending with the fiscal
quarter ending immediately preceding such Application Period. For purposes of
determining the Applicable Margin,
(i) if the proceeds resulting from all Stock Issuances, net of the cost
of all redemptions, purchases, retirements and other acquisitions by the
Company of any of its capital stock (other than any issuance or redemption,
purchase, retirement or other acquisition in connection with the Company's
employee stock award programs), within 45 days after a Determination Date,
exceed $10,000,000, the Senior Leverage Ratio shall be calculated on a pro
forma basis to reflect the effect of all Stock Issuances and redemptions,
purchases, retirements or other acquisitions by the Company of any of its
capital stock (other than any issuance or redemption, purchase retirement or
other acquisition in connection with the Company's employee stock award
programs) and the related application of proceeds or funding thereof within
such 45-day period; and
(ii) if the proceeds resulting from all Stock Issuances, net of the cost
of redemptions, purchases, retirements and other acquisitions by the Company of
any of its capital stock (other than any issuance or redemption, purchase,
retirement or other acquisition in connection with the Company's employee stock
awards programs), from the beginning of a Determination Period through and
including the 45th day after the end of such Determination Period exceeds
$10,000,000, the Interest Coverage Ratio for such Determination Period shall be
calculated on a pro forma basis as if each such Stock Issuance and each such
redemption, purchase, retirement or other acquisition by the Company of any of
its capital stock (other than any issuance or redemption, purchase, retirement
or other acquisition in connection with the Company's employee stock award
programs) and the related application of proceeds or funding thereof had
occurred on the first day of such Determination Period.
"Application Period" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
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"Available Masco Corporation Funding Commitment" means, as of any date,
the unused and available portion of the "Commitment" of Masco Corporation
under, and as defined in, the Securities Purchase Agreement.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA that is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by the Company or any ERISA
Affiliate of the Company.
"Bid-Option Absolute Rate" means, with respect to any Absolute Rate
Dollar Bid-Option Loan or Foreign Currency Bid-Option Loan, the Bid-Option
Absolute Rate, as defined in Section 3.4(d)(ii)(D), that is offered for such
Loan.
"Bid-Option Auction" means a solicitation of Bid-Option Quotes setting
forth Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins, as the
case may be, pursuant to Section 3.4(b).
"Bid-Option Eurodollar Rate" means the sum of (a) the Bid-Option
Eurodollar Rate Margin plus (b) the Eurodollar Base Rate.
"Bid-Option Eurodollar Rate Margin" means, with respect to any Eurodollar
Rate Bid-Option Loan, the Bid-Option Eurodollar Rate Margin, as defined in
Section 3.4(d)(ii)(E), that is offered for such Loan.
"Bid-Option Interest Period" means (a) with respect to each Eurodollar
Rate Dollar Bid-Option Borrowing, the Eurodollar Rate Interest Period
applicable thereto, and (b) with respect to each Absolute Rate Dollar
Bid-Option Borrowing and Foreign Currency Bid-Option Borrowing, the period
commencing on the date of such Borrowing and ending on the date elected by the
Company in the applicable Notice of Borrowing, which date shall be not less than
15 and not more than 360 days after the date of such Borrowing; provided that:
(i) any such Interest Period that would otherwise end on a
day that is not a Business Day shall be extended to the next
succeeding Business day; and
(ii) no such Interest Period that would end after the
Scheduled Expiration Date shall be permitted.
"Bid-Option Loan" means a Loan which is made by a Bank pursuant to a Bid-
Option Auction.
"Bid-Option Note" means a promissory note of the Company in substantially
the form of Exhibit B hereto evidencing the obligation of the Company to repay
Bid-Option Loans, as amended or modified from time to time and together with
any promissory note or notes issued in exchange or replacement therefor.
"Bid-Option Percentage" means, with respect to any Bank, the percentage
of the Dollar Equivalent of the aggregate outstanding principal amount of the
Bid-
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<PAGE>
Option Loans of all the Banks represented by the Dollar Equivalent of the
outstanding principal amount of the Bid-Option Loans of such Bank.
"Bid-Option Quote" means an offer by a Bank to make a Bid-Option Loan in
accordance with Section 3.4(d).
"Bid-Option Quote Request" shall have the meaning ascribed thereto in
Section 3.4(b).
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Company on a single date, at a single rate and for a single Interest Period. A
Borrowing may be referred to as a "Floating Rate Borrowing" if such Loans are
Floating Rate Loans, a "CD Rate Borrowing" if such Loans are CD Rate Loans, a
"Eurodollar Rate Syndicated Borrowing" if such Loans are Eurodollar Rate
Syndicated Loans, a "Dollar Bid-Option Borrowing" if such Loans are Dollar Bid-
Option Loans, a "Foreign Currency Bid-Option Borrowing" if such Loans are
Foreign Currency Bid-Option Loans, an "Absolute Rate Dollar Bid-Option
Borrowing" if such Loans are Absolute Rate Dollar Bid-Option Loans, a
"Eurodollar Rate Dollar Bid-Option Borrowing" if such Loans are Eurodollar Rate
Dollar Bid-Option Loans, or a "Eurodollar Rate Borrowing" if such Loans are
Eurodollar Rate Loans. CD Rate Borrowings and Eurodollar Rate Syndicated
Borrowings are sometimes collectively referred to as "Fixed Base Rate
Syndicated Borrowings"; Floating Rate Borrowings and Fixed Base Rate Syndicated
Borrowings are sometimes collectively referred to as "Syndicated Borrowings";
Absolute Rate Dollar Bid-Option Borrowings and Eurodollar Rate Dollar
Bid-Option Borrowings are sometimes collectively referred to as "Dollar
Bid-Option Borrowings"; Dollar Bid-Option Borrowings and Foreign Currency
Bid-Option Borrowings are sometimes collectively referred to herein as
"Bid-Option Borrowings"; and Fixed Base Rate Syndicated Borrowings and
Bid-Option Borrowings are sometimes collectively referred to as "Fixed Rate
Borrowings".
"Business Day" means any day on which commercial banks are open for
domestic and international business (including dealings in Dollar deposits) in
New York City and Detroit and, with respect to Eurodollar Rate Loans and the
related Interest Periods, in London, and with respect only to Foreign Currency
Bid-Option Loans and the related Interest Periods, on which dealings in
deposits in the relevant Foreign Currency are carried out in the relevant
interbank market and in the principal financial center of the country issuing
the relevant Foreign Currency.
"Capital Expenditures" means, for any period, the aggregate amount of
capital expenditures of the Company and its Consolidated Subsidiaries during
such period, determined on a consolidated basis in accordance with generally
accepted accounting principles.
"Capital Lease" of any Person means any lease which, in accordance with
generally accepted accounting principles, is required to be capitalized on the
books of such Person.
"Cash and Cash Equivalents" means (a) all cash of the Company and its
Consolidated Subsidiaries on hand or on deposit, plus (b) cash equivalents as
-5-
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<PAGE>
determined in accordance with generally accepted accounting principles, plus
(c) all investments of the Company and its Consolidated Subsidiaries of the
following types, whether or not such investments are cash equivalents in
accordance with generally accepted accounting principles: (i) commercial paper
of any United States issuer having the highest rating then given by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, (ii) direct
obligations of, and obligations fully guaranteed by, the United States of
America, and (iii) certificates of deposit of (A) any commercial bank which is
a member of the Federal Reserve System and which has capital, surplus and
undivided profits (as shown on its most recently published statement of
condition) aggregating not less than $100,000,000 or (B) any Bank, provided
that each of the foregoing investments has a maturity date not later than 180
days after the date of acquisition thereof by the Company or any of its
Consolidated Subsidiaries.
"CD Base Rate" applicable to any CD Rate Interest Period means the per
annum rate that is equal to the sum of:
(a) the rate per annum obtained by dividing (i) the arithmetic mean of
secondary market bid rates per annum (expressed as a percentage) quoted at
approximately 10:00 a.m. New York time (or as soon thereafter as practicable)
on the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing selected by the Agent for the purchase
from the CD Reference Banks at face value of negotiable certificates of deposit
of the CD Reference Banks with a term comparable to such Interest Period in an
aggregate amount comparable to the related CD Rate Loans to be made by such CD
Reference Banks in their capacity as Banks hereunder, by (ii) an amount equal
to one minus the stated maximum rate (expressed as a decimal) of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) under any regulations of the Board of
Governors of the Federal Reserve System (or any successor agency thereto),
applicable on the first day of the related Interest Period to a negotiable
certificate of deposit of the bank that is the Agent with a term comparable to
such Interest Period in an aggregate amount comparable to the related CD Rate
Loan to be made by such bank in its capacity as a Bank hereunder, plus
(b) the annual assessment rate (expressed as a percentage) estimated by
the Agent on the first day of the related Interest Period to be payable by the
bank that is the Agent to the Federal Deposit Insurance Corporation (or any
successor agency thereto) for such Corporation's (or such successor's) insuring
Dollar deposits of such bank in the United States during the related Interest
Period;
all as conclusively determined, absent manifest error, by the Agent, such sum
to be rounded up, if necessary, to the nearest whole multiple of one
one-hundredth of one percent (1/100 of 1%).
"CD Rate" means, with respect to any CD Rate Loan for any CD Rate
Interest Period or portion thereof, the per annum rate that is equal to the sum
of (a) the Applicable Margin, plus (b) the CD Base Rate; which CD Rate shall
change simultaneously with any change in such Applicable Margin.
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"CD Rate Interest Period" means, with respect to each CD Rate Borrowing,
the period commencing on the date of such CD Rate Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Company may elect in the applicable Notice
of Borrowing, provided that:
(a) any such Interest Period that would otherwise end on a
day that is not a Business Day shall be extended to the next
succeeding Business Day; and
(b) no such Interest Period that would end after the
Scheduled Expiration Date shall be permitted.
"CD Rate Loan" means a Loan which pursuant to the applicable Notice of
Borrowing is made at the CD Rate.
"CD Reference Bank" means each of NBD Bank, N.A. and Morgan Guaranty
Trust Company of New York, or such other CD Reference Banks as may be appointed
pursuant to Section 11.6.
"Closing Date" means the first day on which all the following shall have
occurred: (a) the Company has executed this Agreement and furnished all
documents required under Section 8.3, and all matters required under such
Section have been completed, (b) the Agent has received telexes or telecopies
affirming execution of this Agreement in counterparts by all the Banks, and (c)
the Agent has executed this Agreement. Subject to the second sentence of
Section 10.6, the Agent shall notify each party hereto of the occurrence of the
Closing Date on the date thereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations thereunder.
"Commitment" means, with respect to each Bank whose commitment has not
been terminated pursuant to Section 11.13, the commitment of such Bank to make
Syndicated Loans pursuant to Section 3.1 and to participate in the risk of
Letters of Credit pursuant to Section 3.3, in an aggregate principal amount the
Dollar Equivalent of which does not exceed (a) in the case of each Bank
originally a party hereto, the amount set forth opposite the name of such Bank
on the signature pages hereof, and (b) in the case of each Bank becoming a
party hereto in accordance with Section 11.6(d) or 11.13, the aggregate amount
assigned to it, in each case (i) less the aggregate amount, if any,
subsequently assigned by it in accordance with Section 11.6(d), (ii) plus the
aggregate amount, if any, subsequently assigned to it under Section 11.6(d) or
11.13 and (iii) subject to activation pursuant to Section 3.1, and as such
amount may be reduced from time to time pursuant to Section 3.8.
"Commitment Percentage" means, with respect to any Bank, the percent of
the aggregate amount of all the Commitments represented by the amount of such
Bank's Commitment.
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"Consolidated" or "consolidated" refers to the consolidation of the
accounts of a Person and its Subsidiaries in accordance with generally accepted
accounting principles.
"Consolidated Subsidiary" of any corporation means any Subsidiary which
would be consolidated on the consolidated balance sheet of such corporation in
accordance with generally accepted accounting principles.
"Current Assets" means, at any time, the current assets of the Company
and its Consolidated Subsidiaries, determined as to amount and classification
on a consolidated basis in accordance with generally accepted accounting
principles.
"Current Liabilities" means, at any time, the current liabilities of the
Company and its Consolidated Subsidiaries, determined as to amount and
classification on a consolidated basis in accordance with generally accepted
accounting principles; provided that Current Liabilities shall not include any
portion of Funded Debt or any of the Loans made or Letters of Credit issued at
any time hereunder.
"Current Market Price" with respect to any shares of stock, means, as of
any day, the last reported sales price or, in the event that no sale takes
place on such day, the average of the reported closing bid and asked prices, in
either case as reported on the New York Stock Exchange, on the principal
national securities exchange on which such stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, by NASDAQ National Market System or, if such stock is not quoted on
such National Market System, the average of the closing bid and asked prices on
such day in the over-the-counter market as reported by NASDAQ or, if bid and
asked prices for such stock on such day shall not have been reported through
NASDAQ, the average of the closing bid and asked prices on such day as
furnished by any New York Stock Exchange member firm regularly making a market
in such security selected by the Agent.
"Current Ratio" means, as of any date, the ratio of (a) Current Assets to
(b) Current Liabilities.
"Debt" means: (a) indebtedness for money borrowed; (b) the capitalized
portion of lease rentals under Capital Leases; (c) other indebtedness incurred
in connection with the acquisition of any real or personal property, stock,
debt or other assets (to the extent that any of the foregoing acquisition
indebtedness is represented by any notes, bonds, debentures or similar
evidences of indebtedness); and (d) obligations in respect of obligations or
indebtedness of others of the types referred to in each of the foregoing
clauses (a)-(c), for the payment of which the Company or any Consolidated
Subsidiary is directly or contingently liable, or which is secured by any
property of the Company or any Consolidated Subsidiary (whether or not the
Company or such Consolidated Subsidiary is liable therefor).
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"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Deferred Trimas Gain" means, as of any date, the remaining amount of the
liability or contra asset of the Company booked in connection with the transfer
of assets by the Company to Trimas prior to the Closing Date, which amount was
approximately $70,000,000 as of March 31, 1993 and has not been recognized as
income to the Company.
"Determination Date" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Determination Period" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Dollar Bid-Option Loan" means a Bid-Option Loan made in Dollars.
"Dollar Bid-Option Percentage" means, with respect to any Bank and any
Dollar Bid-Option Borrowing, the percentage of the aggregate outstanding
principal amount of all the Dollar Bid-Option Loans comprising such Borrowing
represented by the outstanding principal amount of the Dollar Bid-Option Loan
made by such Bank as part of such Borrowing.
"Dollar Equivalent" means, as of any date, (a) with respect to any amount
of Dollars, the amount thereof, and (b) with respect to any amount of any
Foreign Currency, the amount of Dollars that could be purchased with such
amount of such Foreign Currency at the spot rate of exchange (except as
provided in Section 3.7(a)) quoted by the Agent at approximately 10:00 a.m.
(Detroit time) on such date or such number of Business Days before such date
as may reasonably be deemed necessary by the Agent for purposes of this
Agreement.
"Dollars" and "$" shall mean the lawful money of the United States.
"Domestic Lending Office" means, as to any Bank, its office identified on
the signature pages hereof as its Domestic Lending Office or such other office
as such Bank may hereafter designate as its Domestic Lending Office.
"Domestic Subsidiary" means a Subsidiary that is incorporated under the
laws of the United States of America or any State thereof.
"EBIT" means, for any period, Net Income, exclusive of any Non-Cash
Special Items, for such period plus, to the extent deducted in determining such
Net Income, Interest Charges for such period and income and other taxes.
"EBITDA Minus Capital Expenditures" means, for any period, the amount
determined by subtracting (a) Capital Expenditures for such period, from (b)
the sum of EBIT for such period plus, to the extent deducted in determining
such EBIT, depreciation and amortization expense of the Company and its
Consolidated Subsidiaries; provided that when determining the Senior Debt
Coverage Ratio for
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purposes of Section 7.8(a), and not Section 7.8(b), in the event the Company or
any of its Consolidated Subsidiaries acquires any corporation or business,
EBITDA Minus Capital Expenditures shall be calculated on a pro forma basis
(which, to the extent deemed reasonable to the Agent, may include as pro forma
adjustments reasonable eliminations of excess compensation (including salaries)
and other adjustments that are attributable to the change in ownership or
management of the corporation or business) as if the Company or such
Consolidated Subsidiary had owned the acquired corporation or business for the
four fiscal quarters preceding its acquisition.
"Environmental Laws" means any and all applicable United States federal,
state and local statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
and other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manuf
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"ERISA Affiliate" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company, are treated as a single employer under
Section 414(b), (c) or (m), or the regulations prescribed under Section 414(o),
of the Code.
"Eurodollar Base Rate" applicable to any Eurodollar Rate Interest Period
means the per annum rate obtained by dividing (a) the per annum rate of
interest at which deposits in Dollars for such Interest Period and in an
aggregate amount comparable to (i) in the case of Eurodollar Rate Syndicated
Loans, the amount of the related Eurodollar Rate Syndicated Loans to be made by
the Eurodollar Reference Banks in their capacity as Banks hereunder, and (ii)
in the case of Eurodollar Rate Dollar Bid-Option Loans, the aggregate amount of
the Eurodollar Rate Dollar Bid-Option Borrowing set forth in the related Bid-
Option Quote Request, are offered to the Eurodollar Reference Banks by other
prime banks in the London or Nassau interbank market, selected in the
Eurodollar Reference Banks' discretion, at approximately 11:00 a.m. London or
Nassau time, as the case may be, on the second Business Day prior to the first
day of such Eurodollar Rate Interest Period, by (b) an amount equal to one
minus the stated maximum rate (expressed as a decimal) of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that is specified on the first day
of such Eurodollar Rate Interest Period by the Board of Governors of the
Federal Reserve System (or any successor agency thereto) for determining the
maximum reserve requirement with respect to
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eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System; all as
conclusively determined, absent manifest error, by the Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of one-hundredth of one
percent (1/100 of 1%).
"Eurodollar Lending Office" means, as to any Bank, its office identified
on the signature pages hereof as its Eurodollar Lending Office or such other
branch (or Affiliate) of such Bank as such Bank may hereafter designate as its
Eurodollar Lending Office.
"Eurodollar Rate Dollar Bid-Option Loan" means a Loan which pursuant to
the applicable Notice of Borrowing is made at the Bid-Option Eurodollar Rate.
"Eurodollar Rate Interest Period" means, with respect to each Eurodollar
Rate Syndicated Loan, the period commencing on the date of such Eurodollar Rate
Syndicated Loan and ending one month, two months, three months or six months
thereafter, or twelve months if such proposed twelve-month Eurodollar Rate
Interest Period is specifically agreed to by all Banks, and with respect to
each Eurodollar Rate Dollar Bid-Option Loan, the period commencing on the date
of such Eurodollar Rate Dollar Bid-Option Loan and ending on a date between
fifteen days and twelve months thereafter, as the Company may request in the
applicable Notice of Borrowing; provided that:
(a) any such Interest Period that would otherwise end on a
day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another
calendar month in which case such Interest Period shall end on the
next preceding Business Day;
(b) any such Interest Period that begins on the last
Business Day of a calendar month or on a day for which there is no
numerically corresponding day in the calendar month during which
such Eurodollar Interest Period is to end shall end on the last
Business Day of such calendar month; and
(c) no such Interest Period that would end after the
Scheduled Expiration Date shall be permitted.
"Eurodollar Rate Loan" means any Eurodollar Rate Dollar Bid-Option Loan
or Eurodollar Rate Syndicated Loan.
"Eurodollar Rate Syndicated Loan" means a Loan which pursuant to the
applicable Notice of Borrowing is made at the Syndicated Eurodollar Rate.
"Eurodollar Reference Bank" means the principal London office of each of
NBD Bank, N.A. and Morgan Guaranty Trust Company of New York, or such other
Eurodollar Reference Banks as may be appointed pursuant to Section 11.6.
"Events of Default" has the meaning ascribed thereto in Section 9.1.
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"Existing Agent" means NBD Bank, N.A., a national banking association, in
its capacity as agent for the Existing Banks.
"Existing Banks" means the banks that are parties to the Existing Credit
Agreement.
"Existing Commitment" means, with respect to each Bank, the amount, if
any, of such Bank's "Commitment" (as defined in the Existing Credit Agreement)
immediately prior to the Closing Date.
"Existing Credit Agreement" means the Credit Agreement and Amendment to
Existing Credit Agreement, dated as of September 1, 1989, among the Company,
the Existing Banks and the Existing Agent, as amended, supplemented or
otherwise modified, and as in force immediately prior to the Closing Date.
"Existing Debt" shall have the meaning ascribed thereto in the definition
of the term "Senior Debt".
"Existing Loans" means the "Term Loans" (as defined in the Existing
Credit Agreement) outstanding on the Closing Date.
"Existing Loans Prepayment Date" shall have the meaning ascribed thereto
in Section 2.1.
"Existing Notes" means the promissory notes of the Company issued under
the Existing Credit Agreement to evidence the Existing Loans.
"Federal Funds Rate" means, as of any day, the per annum rate that is
equal to the average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published by the Federal Reserve Bank of New York for such day (or, in the case
of any day on which the federal funds market is not open, for the immediately
preceding day on which it was open), or, if such rate is not so published for
any day (or, in the case of any day on which the federal funds market is not
open, for the immediately preceding day on which it was open), the average of
the quotations for such rates received by the Agent from three federal funds
brokers of recognized standing selected by the Agent in its discretion; all as
conclusively determined, absent manifest error, by the Agent, such average to
be rounded up, if necessary, to the nearest whole multiple of one-hundredth of
one percent (1/100 of 1%); which Federal Funds Rate shall change simultaneously
with any change in such published or quoted rates.
"Fixed Base Rate Syndicated Loan" means any CD Rate Loan or Eurodollar
Rate Syndicated Loan.
"Fixed Rate Loan" means any Fixed Base Rate Syndicated Loan or Bid-Option
Loan.
"Floating Rate" means, with respect to any Floating Rate Loan, the
greater of (a) the Prime Rate and (b) the per annum rate equal to the sum of
(i) one-half
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percent (1/2%) plus (ii) the Federal Funds Rate; which Floating Rate shall
change simultaneously with any change in such Prime Rate or Federal Funds Rate,
as the case may be.
"Floating Rate Interest Period" means, with respect to each Floating Rate
Borrowing, the period commencing on the date of such Floating Rate Borrowing
and ending 30 days thereafter; provided that:
(a) any such Interest Period that would otherwise end on a
day that is not a Business Day shall be extended to the next
succeeding Business Day; and
(b) no Interest Period that would end after the Scheduled
Expiration Date shall be permitted.
"Floating Rate Loan" means a Loan which pursuant to the applicable Notice
of Borrowing is made at the Floating Rate.
"Foreign Currency" means any currency (other than Dollars) freely
convertible into Dollars and freely transferable, which the Company designates
in any Bid-Option Quote Request with respect to any Foreign Currency Bid-Option
Borrowing as the currency in which the related Loans are to be made.
"Foreign Currency Bid-Option Loan" means a Bid-Option Loan made in a
Foreign Currency.
"Foreign Currency Bid-Option Percentage" means, with respect to any Bank
and any Foreign Currency Bid-Option Borrowing, the percentage of the aggregate
outstanding principal amount of all the Foreign Currency Bid-Option Loans
comprising such Borrowing represented by the outstanding principal amount of
the Foreign Currency Bid-Option Loan made by such Bank as part of such
Borrowing.
"Funded Debt" means all Debt of the Company and its Consolidated
Subsidiaries which by its terms matures more than twelve months from the date
such Debt was incurred or assumed by the Company or any such Consolidated
Subsidiary, as the case may be, or which by its terms matures less than twelve
months from such date but by its terms is renewable or extendable at the option
of the Company or any such Consolidated Subsidiary beyond twelve months from
such date, including, without limitation, all Loans under this Agreement
(including those made within twelve months of the Scheduled Expiration Date)
and all Existing Loans.
"Interest Charges" means, for any period, the sum of interest that is
expensed (or, under generally accepted accounting principles, would be
expensed) during such period by the Company and its Consolidated Subsidiaries
on Debt of the Company and its Consolidated Subsidiaries.
"Interest Coverage Ratio" means, for any Determination Period, the ratio
of (a) EBIT to (b) Interest Charges.
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"Interest Payment Date" means, with respect to each Loan, the last day of
each Interest Period with respect to such Loan and, in the case of any Interest
Period exceeding (a) with respect to Eurodollar Rate Loans, three months or (b)
with respect to CD Rate Loans and Absolute Rate Dollar Bid-Option Loans, ninety
days, those days that occur during such Interest Period at intervals of three
months and ninety days, respectively, after the first day of such Interest
Period.
"Interest Period" means any Floating Rate Interest Period, CD Rate
Interest Period, Eurodollar Rate Interest Period or Bid-Option Interest Period.
"Investment" by any Person means the purchase or other acquisition of any
capital stock of or other ownership interest in, or debt securities of or other
evidences of indebtedness of, any other Person, or the making of a loan or
advancing of any funds or property or making of any other extension of credit
to, or the making of any investment or acquiring any interest whatsoever in,
any other Person, or the satisfaction of any contingent liability, as obligor,
guarantor, surety or in any other capacity, for obligations of any other
Person; provided, however, that the term Investment shall not include any
evidence of indebtedness, any account receivable or any obligation or
indebtedness on open account which, in all of the foregoing cases, arises
directly from the sale of goods or merchandise or services for fair value in
the ordinary course of business.
"Invitation for Bid-Option Quotes" means an Invitation for Bid-Option
Quotes in the form referred to in Section 3.4(c).
"Letter of Credit" shall mean a standby letter of credit issued for the
account of the Company or any of its Consolidated Subsidiaries pursuant to this
Agreement.
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(f).
"Letter of Credit Issuance" shall mean any issuance by the Agent of a
Letter of Credit pursuant to Section 3.3.
"Letter of Credit Obligations Amount" means, as of any date, the amount
equal to the sum of (a) the maximum aggregate amount available to be drawn
under all outstanding Letters of Credit at any time on or before the stated
expiry date thereof, plus (b) the amount of any draws under all Letters of
Credit that have not been reimbursed as provided in Section 3.3(e).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
security interest or similar encumbrance in respect of such asset; provided
that a subordination agreement shall not be deemed to create a Lien. For the
purposes of this Agreement, the Company or any Consolidated Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other similar title retention agreement relating to
such asset.
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"Loan" means any Syndicated Loan or Bid-Option Loan.
"Market Value" with respect to any shares of stock, means, as of any
date, the average of the Current Market Prices of such shares for the thirty
consecutive trading days ending with such date.
"Masco Corporation" means Masco Corporation, a Delaware corporation.
"Masco Corporation Stake Reduction Anniversary" means the first Business
Day after the first anniversary of the date on which both of the following
occur: (a) Masco Corporation and its Substantially-Owned Consolidated
Subsidiaries own less than 15% of the securities of the Company having ordinary
voting power for the election of directors, and (b) the sum of (i) the
Available Masco Corporation Funding Commitment plus (ii) the aggregate amount
of the Investments in the Company held by Masco Corporation and its
Substantially-Owned Consolidated Subsidiaries for their own account (valued at
the amount at which such Investments are carried on the books of Masco
Corporation and its Substantially-Owned Consolidated Subsidiaries, provided
that such amount with respect to any securities comprising such Investments
shall be adjusted at the time any of such securities are exchanged for other
securities, such adjustment to be to the market value of the new securities
received), is less than $250,000,000.
"Maximum Allowed Senior Debt Coverage Ratio" has the meaning ascribed
thereto in Section 7.8.
"Minority Interest Cash Investments" means, as of any date, the greater
of (a) $0 or (b) the Dollar Equivalent (such Dollar Equivalent to be determined
with respect to any Investment as of the time such Investment is made) of the
aggregate amount of Cash and Cash Equivalents used by the Company after June
30, 1993 for Investments with respect to Persons in which the Company owns
less than 50% of the capital stock or other ownership interests of such
Persons, provided that such capital stock or other ownership interests are
accounted for by the Company on the equity method as of such date, and provided,
further, that such aggregate amount shall be adjusted as follows: (i) the
Dollar Equivalent of Cash and Cash Equivalents received by the Company from the
disposition of any such Investments made since June 30, 1993 shall be subtracted
from such aggregate amount, and (ii) the Dollar Equivalent of the aggregate
amount of Cash and Cash Equivalents received by the Company from the disposition
of any such Investments made on or prior to June 30, 1993 (other than any
Investments in or relating to Trimas) in excess of the book value of such
Investments shall be subtracted from such aggregate amount. For purposes of
clauses (i) and (ii) above, the Dollar Equivalent of any Cash and Cash
Equivalent shall be determined as of the time such Cash and Cash Equivalent is
received by the Company. Notwithstanding anything herein to the contrary, the
Company may exclude any Investment which would otherwise be included in this
definition of Minority Interest Cash Investments provided that the Dollar
Equivalent of the Cash and Cash Equivalents of any such single excluded
Investment is less than $250,000 and of all such excluded Investments in the
aggregate is less than $1,000,000.
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"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which the Company or any
ERISA Affiliate is then making, or, pursuant to an applicable collective
bargaining agreement, accruing an obligation to make contributions or has
within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be an ERISA Affiliate during such five-year
period.
"Net Income" means, for any period, the greater of (a) $0, and (b) the
consolidated net income of the Company and its Consolidated Subsidiaries (after
deduction for income and other taxes of the Company and its Consolidated
Subsidiaries determined by reference to income or profits of the Company and
its Consolidated Subsidiaries) for such period, all as determined in accordance
with generally accepted accounting principles.
"Net Income Minus Preferred Dividends" means, for any period, the greater
of (a) $0, and (b) the excess of (i) Net Income for such period over (ii) the
aggregate amount of all dividends in respect of any preferred stock of the
Company accrued by the Company during such period.
"Net Proceeds of New Equity" means, for any period, the greater of (a)
$0, and (b) 75% of the difference, if any, of
(i) the increase in Net Worth resulting from all Stock Issuances during
such period, minus
(ii) the sum of
(A) the decrease in Net Worth resulting from all redemptions,
purchases, retirements and other acquisitions of capital stock of the Company
within 90 days before or after (including any such days after the end of the
subject period) such Stock Issuances, plus
(B) without duplication of (A), the principal amount of Subordinated
Debt issued on exchange of the Company's 10% Exchangeable Preferred Stock or
issued on exchange of preferred stock issued by the Company pursuant to the
Securities Purchase Agreement, whether such exchange occurs before or after the
end of such period provided that it occurs after July 1, 1993.
"Net Worth" means, as of any date, (a) the amount of any capital stock
(excluding treasury stock), paid in capital and similar equity accounts plus
(or minus in the case of a deficit) the capital surplus and retained earnings
of the Company and its Consolidated Subsidiaries on such date, determined on a
consolidated basis in accordance with generally accepted accounting principles,
plus (b) the amount of the foreign currency translation adjustment account
shown on the consolidated balance sheet of the Company and its Consolidated
Subsidiaries dated December 31, 1992, which amount is $6,050,000.
"New Debt" shall have the meaning ascribed thereto in the definition of
the term "Senior Debt".
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"Non-Cash Special Items" means non-recurring or extraordinary, non-cash
gains or losses or other items affecting income, including, but without
limitation, the cumulative effect of any accounting changes.
"Note" means any Syndicated Note or Bid-Option Note.
"Notice of Bid-Option Borrowing" shall have the meaning ascribed thereto
in Section 3.4(f).
"Notice of Borrowing" means any Notice of Syndicated Borrowing or Notice
of Bid-Option Borrowing.
"Notice of Syndicated Borrowing" shall have the meaning ascribed thereto
in Section 3.2.
"Overdue Rate" means (a) in respect of the principal of any Loan, the
rate per annum that is equal to the sum of one percent (1%) per annum plus the
per annum rate otherwise applicable to such Loan until the end of the then
current Interest Period for such Loan and, thereafter, a rate per annum that is
equal to the sum of one percent (1%) per annum plus the Floating Rate; and (b)
in respect of other amounts payable by the Company hereunder (other than
interest), a per annum rate that is equal to the sum of one percent (1%) per
annum plus the Floating Rate.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, corporation, partnership, joint venture,
trust, association, or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" means at any time any employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (a) is
maintained, or contributed to, by the Company or any ERISA Affiliate for
employees of the Company or any ERISA Affiliate, or (b) has at any time within
the preceding five years been maintained, or contributed to, by the Company or
any Person which was at such time an ERISA Affiliate for employees of the
Company or any Person which was at such time an ERISA Affiliate.
"Prime Rate" means the per annum rate of interest publicly announced by
NBD Bank, N.A. at its main office in Detroit from time to time as its "prime
rate", it being understood that such announced rate may not be the lowest rate
of interest charged by NBD Bank, N.A. to any of its customers; which Prime Rate
shall change simultaneously with any change in such announced rate.
"Reference Bank" means any CD Reference Bank or Eurodollar Reference
Bank.
"Refunded" shall have the meaning ascribed thereto in the definition of
the term "Senior Debt".
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"Refunding Borrowing" means a Borrowing which, after application of the
proceeds of such Borrowing, results in no net increase in the Dollar Equivalent
of the aggregate outstanding principal amount of the Loans made by any Bank,
provided, however, that any Borrowing (other than the initial Borrowing under
this Agreement) the entire proceeds of which are used by the Company to repay
Existing Loans shall be deemed a Refunding Borrowing.
"Reimbursement Amount" shall have the meaning ascribed thereto in Section
3.3(e).
"Relevant Day" shall have the meaning ascribed thereto in the definition
of the term "Senior Debt Coverage Ratio".
"Request for Letter of Credit Issuance" shall have the meaning ascribed
thereto in Section 3.3(b).
"Required Banks" means Banks having not less than 60% of the aggregate
amount of the Commitments or, if the Commitments have terminated, Banks holding
Notes evidencing not less than 60% of the aggregate unpaid principal amount of
the Loans.
"Restricted Transfer" has the meaning ascribed thereto in Section
7.11(b).
"Scheduled Expiration Date" means January 31, 1997; provided that if, and
only if, the requirements of Section 3.10 are satisfied, the "Scheduled
Expiration Date" shall be extended to July 31, 1998.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated as of March 31, 1993 between the Company and Masco Corporation, as in
effect on the Closing Date in the form attached hereto as Exhibit J, and as
amended, supplemented or otherwise modified from time to time (a) with the
consent of the Required Banks, or (b) without the consent of any of the Banks
or the Agent if such amendment, supplement or other modification (i) does not
limit the obligations of Masco Corporation thereunder and is not otherwise
adverse to the interest of the Banks, as reasonably determined by the Agent,
or (ii) relates solely to any increase or extension of the obligations of Masco
Corporation thereunder or to a decrease in the costs of the Company thereunder.
"Senior Debt" means all Debt of the Company and its Consolidated
Subsidiaries, determined on a consolidated basis, except Subordinated Debt,
provided that, for purposes of this definition, if any Debt ("Existing Debt")
is to be Refunded (as hereinafter defined) with the proceeds of other money
borrowed ("New Debt"), the Existing Debt to be so Refunded shall be excluded
from Senior Debt when the New Debt is incurred. For purposes of this
definition, Existing Debt is to be "Refunded" by New Debt if, and to the extent
that, (i) no later than five (5) Business Days after the New Debt is incurred,
the Company delivers to the Agent written notice stating that the purpose of
such New Debt is to refund Existing Debt and specifying the Existing Debt to be
refunded, (ii) the proceeds of such New Debt are held in the form of Cash and
Cash Equivalents (free of any Lien except a Lien securing the specified Existing
Debt to be refunded and
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no other indebtedness or obligations) until such specified Existing Debt is
repaid and (iii) such specified Existing Debt is repaid within 45 (forty-five)
days after the New Debt is incurred.
"Senior Debt Coverage Ratio" means, at any time from and including the
31st day (the "Relevant Day") after the last day of any fiscal quarter of the
Company to but excluding the 31st day of the following fiscal quarter of the
Company, the ratio of (a) Senior Debt as of the end of such fiscal quarter to
(b) EBITDA Minus Capital Expenditures for the period of such fiscal quarter and
the immediately preceding three fiscal quarters.
"Senior Leverage Ratio" means, as of any Determination Date, the ratio of
(a) the difference of (i) Senior Debt minus (ii) Cash and Cash Equivalents in
excess of $50,000,000 (exclusive of any Cash and Cash Equivalents constituting
or acquired with the proceeds of New Debt to the extent the specified Existing
Debt to be Refunded with such New Debt remains outstanding), to (b) Tangible
Capital Funds.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X under the Securities
Exchange Act of 1934.
"Stock Issuance" means any issuance by the Company of, or any conversion
of Subordinated Debt or any other Debt or liability of the Company or any of its
Consolidated Subsidiaries to, common or other capital stock or other equity
securities of the Company.
"Subordinated Debt" means, without duplication, (a) all Debt now
outstanding or hereafter created, issued, guaranteed, incurred or assumed by the
Company which is subordinated to payment of principal, premium, if any, and
interest on the Notes by provisions not less favorable in any material respect
to the holders of the Notes than the provisions set forth on Exhibit O; (b) Debt
evidenced by the Company's 6% Convertible Subordinated Debentures due December
15, 2011, in the original principal amount of $330,000,000; (c) Debt evidenced
by the Company's 10-1/4% Senior Subordinated Notes due February 1, 1997, in the
original principal amount of $250,000,000; (d) Debt evidenced by the Company's
10% Senior Subordinated Notes due March 15, 1995, in the original principal
amount of $300,000,000; and (e) Debt issued on exchange of preferred stock
heretofore issued by the Company, or hereafter issued by the Company pursuant to
the Securities Purchase Agreement; provided, however, that any of such Debt
shall cease to be "Subordinated Debt" upon and to the extent of the Company's
repurchase or redemption of such Debt as permitted hereunder or the Company's
transfer, conveyance, assignment or delivery to any trustee, paying agent or
other fiduciary for the benefit of the holder(s) of such Debt of any cash,
securities or other assets of the Company in payment or on account of, or as
provision for, the principal of such Debt; and provided further, however, that
any of such Debt referred to in clauses (b), (c) and (d) of this definition
shall cease to be "Subordinated Debt" upon any amendment or other modification
to the Debentures referred to in such clause (b) or to the respective Senior
Subordinated Notes referred to in such clauses (c) and (d) evidencing such Debt,
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relating to the subordination thereof, unless, in any such case, the provisions
of such Debentures or Senior Subordinated Notes, as the case may be, after
giving effect to such amendment or modification are not less favorable in any
material respect to the holders of the Notes than the provisions set forth on
Exhibit O.
"Subsidiary" of any Person means (a) any limited partnership (whether now
existing or hereafter organized) of which such Person or another Subsidiary of
such Person is the general partner, (b) any general partnership or limited
liability company (whether now existing or hereafter organized) of which such
Person or one or more of the other Subsidiaries of such Person own at least a
majority of the ownership or membership interests and (c) any corporation
(whether now existing or hereafter organized or acquired) in which (other than
directors' qualifying shares required by law) at least a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency), at the time as of which any determination is being made, is owned,
beneficially and of record, by such Person or by one or more of the other
Subsidiaries of such Person or by any combination thereof. Unless the context
otherwise requires, references to "Subsidiary" or "Subsidiaries" herein refer to
the Company's Subsidiaries.
"Substantially-Owned Consolidated Subsidiary" of any corporation means any
Consolidated Subsidiary of such corporation 90% or more of the shares of capital
stock (or other ownership interests) of which having ordinary power to vote in
elections for the board of directors (or other persons performing similar
functions at the time) are directly or indirectly owned by such corporation.
"Substitute Loan" means any Loan made by a Bank pursuant to Section 5.4.
"Syndicated Eurodollar Rate" means, with respect to any Eurodollar Rate
Syndicated Loan for any Eurodollar Rate Interest Period or portion thereof, the
per annum rate that is equal to the sum of (a) the Applicable Margin, plus (b)
the Eurodollar Base Rate; which Syndicated Eurodollar Rate shall change
simultaneously with any change in such Applicable Margin.
"Syndicated Loan" means any Floating Rate Loan or Fixed Base Rate
Syndicated Loan.
"Syndicated Note" means a promissory note of the Company substantially in
the form of Exhibit A hereto evidencing the obligation of the Company to repay
Syndicated Loans, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"Tangible Capital Funds" means, as of any date, the sum of (a) Adjusted
Net Worth, minus (b) the net book value of goodwill (the excess of cost over net
assets of acquired companies) included in the assets of the Company and its
Consolidated Subsidiaries on a consolidated basis, plus (c) the amount of all
Subordinated Debt which by its terms matures after July 31, 1998, plus (d) the
Available Masco Corporation Funding Commitment, plus (e) an amount equal to the
lesser of (i) $150,000,000 and (ii) the outstanding principal of the Debt
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evidenced by the Company's 10-1/4% Senior Subordinated Notes due February 1,
1997, in the original principal amount of $250,000,000, minus (f) Minority
Interest Cash Investments; provided, however, that for purposes of this
definition, no Debt of the type described in clause (d) of the definition of the
term "Debt" shall be included in Subordinated Debt.
"Termination Date" means the earliest to occur of (a) the Scheduled
Expiration Date, (b) the Masco Corporation Stake Reduction Anniversary and (c)
the date on which the Commitments shall be terminated pursuant to Section 3.8 or
9.1.
"Total Borrowed Funds" means, as of any date, all indebtedness of the
Company and its Consolidated Subsidiaries for money borrowed, determined on a
consolidated basis in accordance with generally accepted accounting principles,
provided that, for purposes of this definition, if any money borrowed ("Existing
Borrowed Funds") is to be Refunded (as hereinafter defined) with the proceeds of
other money borrowed ("New Borrowed Funds"), the Existing Borrowed Funds to be
so Refunded shall be excluded from Total Borrowed Funds when the New Borrowed
Funds are incurred. For purposes of this definition, Existing Borrowed Funds
are to be "Refunded" by New Borrowed Funds if, and to the extent that, (i) no
later than 5 Business Days after the New Borrowed Funds are incurred, the
Company delivers to the Agent written notice stating that the purpose of such
New Borrowed Funds is to refund Existing Borrowed Funds and specifying the
Existing Borrowed Funds to be refunded, (ii) the proceeds of such New Borrowed
Funds are held in the form of Cash and Cash Equivalents (free of any Lien except
a Lien securing the specified Existing Borrowed Funds to be refunded and no
other indebtedness or obligations) until such specified Existing Borrowed Funds
are repaid and (iii) such specified Existing Borrowed Funds are repaid within 45
days after the New Borrowed Funds are incurred.
"Total Leverage Ratio" means the ratio of (a) Total Borrowed Funds to (b)
Adjusted Net Worth.
"Trimas" means TriMas Corporation, a Delaware corporation.
"Unconsolidated Subsidiary" means at any date any Subsidiary of the
Company that is not a Consolidated Subsidiary.
"Unfunded Benefit Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a potential
liability of the Company or any ERISA Affiliate to the PBGC or any other Person
under Title IV of ERISA.
1.2 Accounting Terms. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with generally accepted accounting principles as
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in effect from time to time, on a basis consistent, to the extent required by
such principles, with the most recent audited consolidated financial statements
of the Company and its Consolidated Subsidiaries filed with the Securities and
Exchange Commission on Form 10-K and delivered to the Banks prior to the Closing
Date; provided that, if the Company notifies the Agent that the Company wishes
to amend any covenant in Article VII to eliminate the effect of any change in
generally accepted accounting principles in the operation of such covenant (or
if the Agent notifies the Company that the Required Banks wish to amend Article
VII for such purpose), then the Company's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Banks. Without limiting the foregoing, all transfers of receivables shall be
recognized as sales, and not as Debts or Liens, if they would be recognized as
sales in accordance with generally accepted accounting principles, provided that
all probable adjustments in connection with the recourse provisions are accrued,
all as more specifically described in Statement of Financial Accounting
Standards No. 77.
1.3 Other Definitions; Rules of Construction. As used herein, the terms
"Agent", "Bank", "Banks", "Co-Agent", "Company" and "this Agreement" shall have
the respective meanings ascribed thereto in the introductory paragraph of this
Agreement. Use of the terms "herein", "hereof" and "hereunder" shall be deemed
references to this Agreement in its entirety and not solely to the Section or
clause in which such term appears. Unless otherwise specified herein,
references to "Sections" and "subsections" shall be to Sections and subsections,
respectively, of this Agreement.
ARTICLE II.
PHASE-OUT OF EXISTING CREDIT AGREEMENT
2.1 Prepayment of Existing Loans. Notwithstanding anything in the
Existing Credit Agreement or the Existing Notes, the Existing Loans shall be due
and payable and the Company shall prepay the Existing Loans such that the
aggregate principal amount of the Existing Loans is permanently reduced in
increments to not more than the respective aggregate principal amount set forth
in the following schedule for each date set forth therein (each such date an
"Existing Loans Prepayment Date"):
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Date Aggregate Existing Loans
Closing Date $435,000,000
September 7, 1993 215,000,000
September 14, 1993 140,000,000
September 21, 1993 75,000,000
September 30, 1993 $ - 0 -
2.2 Amendment of Existing Credit Agreement. Concurrently
with the effectiveness of this Agreement on the Closing Date, (a) Articles VII
and IX of the Existing Credit Agreement shall be amended to read in full as set
forth in Articles VII and IX, respectively, of this Agreement, (b) the
definitions of all capitalized terms (other than the terms "Loan" and "Note")
used but not defined in such Articles VII and IX of this Agreement (and the
definitions of all capitalized terms used in such definitions, and so on) shall
be incorporated into the Existing Credit Agreement and made a part thereof, and
(c) the definitions of any identical terms to those so incorporated presently
used in the Existing Credit Agreement shall be deleted from the Existing Credit
Agreement; provided that for purposes of such Article IX as incorporated into
the Existing Credit Agreement, the references therein to the Existing Credit
Agreement, the Existing Loans and the Existing Note shall be ignored. The
provisions of the Existing Credit Agreement which are not hereby amended shall
remain in full force and effect without modification, subject to termination in
accordance with the terms of the Existing Credit Agreement.
2.3 Miscellaneous Transition Provisions. The Existing Loans
to be prepaid on each Existing Loans Prepayment Date shall be paid with the
proceeds of a Syndicated Borrowing under Article III of this Agreement or
otherwise. On each Existing Loans Prepayment Date, the Company shall pay,
together with the principal of Existing Loans to be prepaid on such date, all
accrued and unpaid interest thereon and, promptly upon being invoiced therefor,
shall pay all amounts owing under Section 5.5 of the Existing Credit Agreement
in connection with such prepayment. Until it is paid in full, each Existing
Loan shall be governed by the provisions of the Existing Credit Agreement and
the Existing Note evidencing such Existing Loan, which will remain in effect
except as provided in Sections 2.1 and 2.2. The Existing Banks party hereto
hereby waive any notice of prepayment of the Existing Loans required under the
Existing Credit Agreement. Each Existing Bank that is a party hereto shall
cancel all Existing Notes held by it and return them to the Company promptly
after all amounts payable thereunder have been paid in full.
ARTICLE III.
THE LOANS AND LETTER OF CREDIT ISSUANCES
3.1 Syndicated Borrowings. Each Bank agrees, for itself
only, subject to the terms and conditions set forth in this Agreement, to make
Syndicated Loans to the Company from time to time from the Closing Date to but
excluding the
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Termination Date; provided that the aggregate outstanding principal amount of
such Bank's Syndicated Loans shall not at any time exceed the excess of (a) the
amount of its Commitment, over (b) the sum of (i) its Commitment Percentage of
the Letter of Credit Obligations Amount plus (ii) its Commitment Percentage of
the Dollar Equivalent of the aggregate outstanding principal amount of all Bid-
Option Loans made by the Banks; and provided, further, that such Bank's
Commitment shall be activated in the increments on the dates set forth in the
schedule below in accordance with its Commitment Percentage of the aggregate
activated Commitments for each such date:
Aggregate
Date Activated Commitments
Closing Date $240,000,000
September 7, 1993 460,000,000
September 14, 1993 535,000,000
September 21, 1993 600,000,000
September 30, 1993 $675,000,000
Each Fixed Base Rate Syndicated Borrowing shall be in an aggregate principal
amount of $10,000,000 or any larger multiple of $5,000,000 and each Floating
Rate Borrowing shall be in an aggregate principal amount of $5,000,000 or any
larger multiple of $5,000,000; provided that any such Borrowing may be in the
aggregate amount of the unused Commitments. Each Syndicated Borrowing shall be
made by the several Banks ratably in accordance with their respective Commitment
Percentages. Within the foregoing limits, the Company may borrow Loans from
each Bank under this Section 3.1, repay such Loans, prepay such Loans to the
extent permitted or required by this Agreement and reborrow under this Section
3.1. Default by any Bank with respect to its obligations hereunder shall not
excuse any non-performance by any other Bank, provided that no Bank shall be
liable for the non-performance by any other Bank of its obligations hereunder.
3.2 Notice of Syndicated Borrowings. The Company shall give
the Agent written notice in substantially the form attached hereto as Exhibit C
(a "Notice of Syndicated Borrowing") (a) not later than 9:15 a.m. (Detroit time)
on the Business Day of each Floating Rate Borrowing, and (b) not later than
11:00 a.m. (Detroit time) on (i) the second Business Day before each CD Rate
Borrowing, and (ii) the third Business Day before each Eurodollar Rate
Syndicated Borrowing, specifying:
(A) the date of such Borrowing, which
shall be a Business Day,
(B) the aggregate amount of such
Borrowing,
(C) whether the Loans comprising
such Borrowing are to be Floating Rate Loans,
CD Rate Loans or Eurodollar Rate Syndicated
Loans, and
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(D) in the case of each Fixed Base
Rate Syndicated Borrowing, the duration of
the Interest Period applicable thereto, which
shall comply with the provisions of the
definition of the applicable Interest Period.
3.3 Letters of Credit.
(a) Subject to the terms and conditions set forth in
this Agreement, the Agent agrees to issue, and each Bank further agrees for
itself only to participate in the risk of, Letters of Credit from time to time
from the Closing Date to but excluding the Termination Date; provided that the
Letter of Credit Obligations Amount shall not at any time exceed the lesser of
(i) $20,000,000 and (ii) the excess of (A) the aggregate amount of the
Commitments over (B) the aggregate outstanding principal amount of all Loans.
No Letter of Credit shall have a stated expiry date earlier than 30 days after
the date of its issuance, and no Letter of Credit shall have a stated expiry
date or, if by its terms it is periodically renewable, be subject to being
terminated by the Agent (unless renewal is permitted by the Agent in its sole
discretion, in which case the Agent will not permit renewal to a date beyond
that determined in accordance with the following portion of this sentence) later
than the earlier of (i) the one year anniversary of its issuance (or, if
renewable and renewal has been permitted, the one year anniversary of its last
renewal) and (ii) the fifth Business Day before the Scheduled Expiration Date.
Each Letter of Credit shall be in a minimum amount of $1,000,000. Subject to
the terms and conditions set forth in this Agreement, the Agent shall, on the
date any Letter of Credit is requested to be issued, issue the related Letter of
Credit for the pro rata risk of the Banks. Notwithstanding anything herein to
the contrary, the Agent may decline to issue any Letter of Credit if the
beneficiary or the conditions of drawing are reasonably unacceptable to the
Agent, or if the purpose of issuance is illegal or is in contravention of any
law, rule, regulation or public policy or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental authority.
(b) The Company shall give the Agent written notice in
substantially the form attached hereto as Exhibit D (a "Request for Letter of
Credit Issuance") not later than 10:00 a.m. (Detroit time) on the fifth Business
Day before each requested Letter of Credit Issuance or such later time as is
acceptable to the Agent.
(c) The Company agrees (i) to pay to the Agent for the
account of the Banks a fee computed at the per annum rate equal to the
Applicable Margin of the maximum amount available to be drawn from time to time
under the related Letter of Credit for the period from and including the date of
such Letter of Credit Issuance to and including the stated expiry date of such
Letter of Credit, and (ii) to pay an additional fee to the Agent for its own
account computed at the rate of one-eighth of one percent (1/8 of 1%) per annum
of such maximum amount for such period, such fees with respect to any Letter of
Credit to be paid quarterly in advance commencing with the date of its issuance,
based upon the Applicable Margin in effect at the beginning of each such
quarter. Such fees are
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nonrefundable and the Company shall not be entitled to any rebate of any
portion thereof if such Letter of Credit does not remain outstanding through
such quarter or for any other reason. The Company further agrees to pay to the
Agent, on demand, such other customary administrative fees, charges and expenses
of the Agent in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued.
(d) Nothing in this Agreement shall be construed to
require or authorize any Bank to issue any Letter of Credit, it being recognized
that the Agent has the sole obligation under this Agreement to issue Letters of
Credit for the risk of the Banks. Upon each Letter of Credit Issuance, each
Bank shall automatically acquire a pro rata risk participation interest in the
related Letter of Credit based on its respective Commitment Percentage. If the
Agent shall honor a draft or other demand for payment presented or made under
any Letter of Credit, the Agent shall provide notice thereof to each Bank on the
date such draft or demand is honored unless the Company shall have satisfied its
reimbursement obligation under subsection (e) of this Section 3.3 by payment to
the Agent on such date. Each Bank, on such date, shall make an amount equal to
its Commitment Percentage of the amount paid by the Agent available in
immediately available funds at the principal office of the Agent for the account
of the Agent. If and to the extent such Bank shall not have made such amount
available to the Agent, such Bank and the Company severally agree to pay to the
Agent forthwith on demand such amount, together with interest thereon for each
day from the date such amount was paid by the Agent until such amount is so made
available to the Agent at (i) in the case of such Bank, the Federal Funds Rate
and (ii) in the case of the Company, the per annum rate equal to the interest
rate applicable during such period to the related Borrowing deemed (or that
could have been deemed) disbursed under subsection (e) of this Section 3.3 in
respect of the reimbursement obligation of the Company. If such Bank shall pay
such amount to the Agent together with such interest, if any, accrued, such
amount so paid shall constitute a Syndicated Loan by such Bank as part of the
Borrowing disbursed in respect of the reimbursement obligation of the Company
under subsection (e) of this Section 3.3 for purposes of this Agreement. The
failure of any Bank to make an amount equal to its Commitment Percentage of any
such amount paid by the Agent available to the Agent shall not relieve any other
Bank of its obligation to make available an amount equal to such other Bank's
Commitment Percentage of such amount, but no Bank shall be responsible for
failure of any other Bank to make its share available to the Agent.
(e)(i) Whether a Letter of Credit was issued for the
account of the Company or any Consolidated Subsidiary of the Company, and
without limiting the reimbursement obligation of such Consolidated Subsidiary,
the Company agrees to pay to the Agent, not later than 3:00 p.m. (Detroit time)
on the date on which the Agent shall honor a draft or other demand for payment
presented or made under such Letter of Credit, an amount equal to the amount
paid by the Agent in respect of such draft or other demand under such Letter of
Credit and all expenses paid or incurred by the Agent relative thereto (the
"Reimbursement Amount"). The Agent shall, on the date of each demand for
payment under any Letter of Credit,
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give the Company notice thereof and of the amount of the Company's reimbursement
obligation and liability for expenses relative thereto; provided that the
failure of the Agent to give such notice shall not affect the reimbursement and
other obligations of the Company under this Section 3.3. Unless the Company
shall have made such payment to the Agent on such day, upon each such payment by
the Agent, the Company shall be deemed to have elected to satisfy its
reimbursement obligation by a Floating Rate Borrowing in an amount equal to the
amount so paid by the Agent in respect of such draft or other demand under such
Letter of Credit, and the Agent shall be deemed to have disbursed to the
Company, for the account of the Banks, the Floating Rate Loans comprising such
Floating Rate Borrowing, and each Bank shall make its share of each such
Floating Rate Borrowing available to the Agent in accordance with Section
3.5(b). Such Floating Rate Loans shall be deemed disbursed notwithstanding any
failure to satisfy any conditions for disbursement of any Loan set forth in
Article VIII and, to the extent of the Floating Rate Loans so disbursed, the
reimbursement obligation of the Company under this subsection (e)(i) shall be
deemed satisfied.
(ii) If, for any reason (including without
limitation as a result of the occurrence of an Event of Default with respect to
the Company pursuant to Section 9.1(f) or (g)), Floating Rate Loans may not be
made by the Banks as described in Section 3.3(e)(i), then (A) the Company agrees
that each Reimbursement Amount not paid pursuant to the first sentence of
Section 3.3(e)(i) shall bear interest, payable on demand by the Agent, at the
interest rate then applicable to Floating Rate Loans, and (B) effective on the
date each such Floating Rate Loan would otherwise have been made, each Bank
severally agrees that it shall unconditionally and irrevocably, without regard
to the occurrence of any Default, to the extent of such Bank's Commitment
Percentage, purchase a participating interest in each Reimbursement Amount.
Each Bank will immediately transfer to the Agent, in same day funds, the amount
of its participation. Each Bank shall share on a pro rata basis (calculated by
reference to its Commitment Percentage) in any interest which accrues thereon
and in all repayments thereof. If and to the extent that any Bank shall not
have so made the amount of such participating interest available to the Agent,
such Bank agrees to pay to the Agent forthwith on demand such amount together
with interest thereon, for each day from the date of demand by the Agent until
the date such amount is paid to the Agent, at the Federal Funds Rate.
(f) The reimbursement obligation of the Company under
this Section 3.3 with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall remain in full force and effect until
all such obligations of the Company to the Banks and the Agent with respect to
such Letter of Credit shall have been satisfied, and such obligations of the
Company shall not be affected, modified or impaired upon the happening of any
event, including without limitation, any of the following, whether or not with
notice to, or the consent of, the Company:
(i) Any lack of validity or enforceability of
any Letter of Credit or any documentation relating to any Letter of Credit or to
any transaction related in any way to such Letter of Credit (the "Letter of
Credit Documents");
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(ii) Any amendment, modification, waiver,
consent, or any substitution, exchange or release of or failure to perfect any
interest in collateral or security, with respect to any of the Letter of Credit
Documents;
(iii) The existence of any claim, setoff, defense
or other right which the Company may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the Agent or any Bank or
any other Person, whether in connection with any of the Letter of Credit
Documents, the transactions contemplated herein or therein or any unrelated
transactions;
(iv) Any draft or other statement or document
presented under any Letter Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(v) Payment by the Agent to the beneficiary
under any Letter of Credit against presentation of documents which do not comply
with the terms of the Letter of Credit, including failure of any documents to
bear any reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the
part of the Agent or any Bank or any party to any of the Letter of Credit
Documents to enforce, assert or exercise any right, power or remedy conferred
upon the Agent, any Bank or any such party; or
(vii) Any other event or circumstance that would,
in the absence of this clause, result in the release or discharge by operation
of law or otherwise of the Company from the performance or observance of any
obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Company
against the Agent or any Bank. Nothing in this Section 3.3 shall limit the
liability, if any, of the Agent to the Company pursuant to Section 11.5(c).
3.4 Bid-Option Borrowings.
(a) The Bid-Option. In addition to Syndicated Borrowings that are
made pursuant to Section 3.1, the Company may, as set forth in this Section,
from time to time from the Closing Date to but excluding the Termination Date
request the Banks to offer to make Bid-Option Loans to the Company. Each Bank
may, but shall have no obligation to, make such offers and the Company may, but
shall have no obligation to, accept any such offers, in the manner set forth in
this Section; provided that the Dollar Equivalent of the aggregate outstanding
principal amount of Bid-Option Loans shall not at any time exceed (a) the excess
of (i) the aggregate amount of the Commitments over (ii) the sum of (A) the
aggregate outstanding principal amount of Syndicated Loans plus (B) the Letter
of Credit Obligations Amount, or (b) fifty percent (50%) of the aggregate amount
of the Commitments (as the same may be reduced in accordance with the terms of
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this Agreement during any applicable Bid-Option Interest Period); and provided,
further, that the Dollar Equivalent of the aggregate outstanding principal
amount of Foreign Currency Bid-Option Loans shall not at any time exceed
$50,000,000.
(b) Bid-Option Quote Requests. When the Company wishes to request
offers to make Bid-Option Loans under this Section, it shall transmit to the
Agent by telex or telecopy a request substantially in the form attached hereto
as Exhibit E (a "Bid-Option Quote Request") so as to be received no later than
10:00 a.m. (Detroit time) on (i) the Business Day next preceding the date of the
Borrowing proposed therein, in the case of a Bid-Option Auction for Absolute
Rate Dollar Bid-Option Loans, (ii) the fifth Business Day next preceding the
date of the Borrowing in the case of a Bid-Option Auction for Eurodollar Rate
Dollar Bid-Option Loans, or (iii) the fourth Business Day prior to the date of
Borrowing proposed therein, in the case of a Bid-Option Auction for Foreign
Currency Bid-Option Loans, specifying:
(A) the proposed date of the Borrowing, which
shall be a Business Day;
(B) whether the Borrowing is to be an Absolute
Rate Dollar Bid-Option Borrowing, a
Eurodollar Rate Dollar Bid-Option Borrowing
or a Foreign Currency Bid-Option Borrowing
and, if a Foreign Currency Bid-Option, the
desired Foreign Currency;
(C) the aggregate amount of such Borrowing,
which shall be (A) $25,000,000 or a larger
multiple of $5,000,000, in the case of a
Dollar Bid-Option Borrowing, or (B) not less
than the Dollar Equivalent of $5,000,000, in
the case of a Foreign Currency Bid-Option
Borrowing; and
(D) the duration of the Interest Period
applicable thereto, subject to the
provisions of the definition of the
applicable Interest Period.
The Company may request offers to make Bid-Option Loans for more than one
Interest Period in a single Bid-Option Quote Request. The Company may not
request offers to make Bid-Option Loans in more than one currency in any Bid-
Option Quote Request and may not make more than five Bid-Option Borrowings
during any month. No Bid-Option Quote Request for offers to make Dollar Bid-
Option Loans may be made at any time when the Applicable Margin is equal to or
greater than one percent (1%).
(c) Invitation for Bid-Option Quotes. Promptly upon receipt of a
Bid-Option Quote Request, the Agent shall send to the Banks by telex or telecopy
(or telephone promptly confirmed by telex or telecopy) an Invitation for Bid-
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Option Quotes substantially in the form attached hereto as Exhibit F, which
shall constitute an invitation by the Company to each Bank to submit Bid-Option
Quotes offering to make the Bid-Option Loans to which such Bid-Option Quote
Request relates in accordance with this Section.
(d) Submission and Contents of Bid-Option Quotes. (i) Each Bank
may submit a Bid-Option Quote containing an offer or offers to make Bid-Option
Loans in response to any Invitation for Bid-Option Quotes. Each Bid-Option
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Agent by telex or telecopy (or by telephone promptly confirmed
by telex or telecopy) not later than (A) 9:00 a.m. (Detroit time) on the
proposed date of the Borrowing, in the case of a Bid-Option Auction for Absolute
Rate Dollar Bid-Option Loans, (B) 10:00 a.m. (Detroit time) on the fourth
Business Day prior to the proposed date of the Borrowing, in the case of a Bid-
Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (C) 2:00 p.m.
(Detroit time) on the third Business Day prior to the proposed date of the
Borrowing, in the case of a Bid-Option Auction for Foreign Currency Bid-Option
Loans; provided that Bid-Option Quotes submitted by the Agent (or any Affiliate
of the Agent) in its capacity as a Bank may be submitted, and may only be
submitted, if the Agent or such Affiliate notifies the Company of the terms of
the offer or offers contained therein not later than (A) 8:45 a.m. (Detroit
time) on the proposed date of the Borrowing, in the case of a Bid-Option Auction
for Absolute Rate Dollar Bid-Option Loans, (B) 9:45 a.m. (Detroit time) on the
fourth Business Day prior to the proposed date of the Borrowing, in the case of
a Bid-Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (C) 1:00
p.m. (Detroit time) on the third Business Day prior to the proposed date of the
Borrowing in the case of a Bid-Option Auction for Foreign Currency Bid-Option
Loans. Subject to Section 3.4(e), Article VIII and Article IX, any Bid-Option
Quote so made shall be irrevocable except with the written consent of the Agent
given on the instructions of the Company.
(ii) Each Bid-Option Quote shall be in substantially the form attached
hereto as Exhibit G and shall in any case specify:
(A) the proposed date of the Borrowing;
(B) whether the Bid-Option Loans for which the
offers are made are Absolute Rate Dollar
Bid-Option Loans, Eurodollar Rate Dollar
Bid-Option Loans or Foreign Currency Bid-
Option Loans, which must match the type of
Borrowing stated in the related Invitation
for Bid-Option Quotes;
(C) the principal amount of the Bid-Option Loan
for which each such offer is being made, the
Dollar Equivalent of which (1) may, together
with the Dollar Equivalent of the aggregate
outstanding principal amount of all other
Loans made by the quoting Bank,
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exceed the amount of the Commitment of the
quoting Bank, (2) must be (y) in the case of
any Dollar Bid-Option Loan, $5,000,000 or a
larger multiple thereof, or (z) in the case
of any Foreign Currency Bid-Option Loan, not
less than $1,000,000, and (3) may not exceed
the Dollar Equivalent of the aggregate
principal amount of the Bid-Option Borrowing
specified in the related Invitation for Bid-
Option Quotes;
(D) in the case of a Bid-Option Auction for
Absolute Rate Dollar Bid-Option Loans or
Foreign Currency Bid-Option Loans, the rate
of interest per annum (rounded up to the
nearest 1/10,000th of 1%) (the "Bid-Option
Absolute Rate") offered for each such Bid-
Option Loan;
(E) in the case of a Bid-Option Auction for
Eurodollar Rate Dollar Bid-Option Loans, the
applicable margin, which may be positive or
negative (the "Bid-Option Eurodollar Rate
Margin"), expressed as a percentage (rounded
to the nearest 1/10,000th of 1%), offered
for each such Bid-Option Loan;
(F) the Interest Period(s) for which each such
Bid-Option Absolute Rate or Bid-Option
Eurodollar Rate Margin, as the case may be,
is offered; and
(G) the identity of the quoting Bank.
(iii) Any Bid-Option Quote shall be disregarded if it:
(A) is not substantially in the form of Exhibit
G hereto or does not specify all of the
information required by subsection (d)(ii)
above;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation
for Bid-Option Quotes; or
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(D) arrives after the time set forth in subsection
(d)(i);
provided that a Bid-Option Quote shall not be disregarded pursuant to clause (B)
or (C) above solely because it indicates that an allocation that might otherwise
be made to it pursuant to Section 3.4(g) would be unacceptable.
(e) Notice to Company. The Agent shall promptly notify the
Company of the terms (i) of any Bid-Option Quote submitted by a Bank that is in
accordance with subsection (d) of this Section and (ii) of any Bid-Option Quote
that amends, modifies or is otherwise inconsistent with a previous Bid-Option
Quote submitted by such Bank with respect to the same Bid-Option Quote Request.
Any such subsequent Bid-Option Quote shall be disregarded by the Agent unless
such subsequent Bid-Option Quote is submitted solely to correct a manifest error
in such former Bid-Option Quote. The Agent's notice to the Company shall
specify (i) the Dollar Equivalent of the aggregate principal amount of Bid-
Option Loans for which offers have been received for each Interest Period
specified in the related Bid-Option Quote Request and (ii) the respective Dollar
Equivalent of the principal amounts and respective Bid-Option Absolute Rates or
Bid-Option Eurodollar Rate Margins, as the case may be, so offered.
(f) Acceptance and Notice by Company. Not later than 10:00 a.m.
(Detroit time) on (i) the proposed date of the Borrowing, in the case of a Bid-
Option Auction for Absolute Rate Dollar Bid-Option Loans, (ii) the third
Business Day prior to the proposed date of the Borrowing, in the case of a Bid-
Option Auction for Eurodollar Rate Dollar Bid-Option Loans, or (iii) the second
Business Day prior to the proposed date of the Borrowing, in the case of a Bid-
Option Auction for Foreign Currency Bid-Option Loans, the Company shall notify
the Agent of its acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e) of this Section 3.3. In the case of acceptance, such
notice (a "Notice of Bid-Option Borrowing") shall specify the aggregate
principal amount of accepted offers for the applicable Interest Period(s). The
Company may accept any Bid-Option Quote in whole or in part; provided that:
(A) the Dollar Equivalent of the aggregate
principal amount of each Bid-Option
Borrowing may not exceed the applicable
amount set forth in the related Bid-Option
Quote Request;
(B) the Dollar Equivalent of the aggregate
principal amount of each Bid-Option
Borrowing must be (1) in the case of Dollar
Bid-Option Borrowings, $25,000,000 or a
larger multiple of $5,000,000, unless the
aggregate amount of the related Bid-Option
Loans for which Bid-Option Quotes were
received is less than $25,000,000, in which
case the aggregate principal amount of the
Dollar Bid-Option Borrowing may be any
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amount less than $25,000,000, and (2) in the
case of Foreign Currency Bid-Option Loans,
not less than $5,000,000 (or, if less, the
aggregate amount of the related Bid-Option
Loans for which Bid-Option Quotes were
received);
(C) acceptance of offers may only be made on the
basis of ascending Bid-Option Absolute Rates
or Bid-Option Eurodollar Rate Margins, as
the case may be; and
(D) the Company may not accept any offer that is
described in clause (iii) of subsection (d)
of this Section or that otherwise fails to
comply with the requirements of this
Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks
with the same Bid-Option Absolute Rates or Bid-Option Eurodollar Rate Margins,
as the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period, the
principal amount of Bid-Option Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Banks as nearly as possible
(in such multiples, not greater than the Dollar Equivalent of $500,000, as the
Agent may deem appropriate) in proportion to the aggregate principal amount of
such offers (excluding any Bank that has indicated in its offer that an
allocation which otherwise would be made to it is unacceptable).
Determinations by the Agent of the amounts of Bid-Option Loans shall be
conclusive in the absence of manifest error.
3.5 Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of
Borrowing or Request for Letter of Credit Issuance, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share, if any, of
such Borrowing or the related Letter of Credit risk, as the case may be. A
Notice of Borrowing or Request for Letter of Credit Issuance shall be
irrevocable by the Company once the Agent begins notifying any Bank of the
contents thereof.
(b) Each Bank, not later than 11:00 a.m. (Detroit time) on the
date any Borrowing is requested to be made, other than a Foreign Currency Bid-
Option Borrowing, shall (except as provided in subsection (d) of this Section
3.5) make its share, if any, of such Borrowing available to the Agent in
immediately available funds, at the Agent's address specified in or pursuant to
Section 11.2, for disbursement to the Company. Unless the Agent determines that
any applicable condition specified in Article VIII has not been satisfied, the
Agent will make funds actually so received from the Banks available to the
Company at the Agent's aforesaid address. Unless the Agent shall have received
notice from any Bank prior to the date such Borrowing is requested to be made
that such Bank will not make available to the Agent such Bank's share of such
Borrowing, the Agent may assume that such Bank has made such share available to
the Agent on the date such
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Borrowing is requested to be made in accordance with this Section 3.5. If and
to the extent such Bank shall not have so made such share available to the
Agent, the Agent may (but shall not be obligated to) make such amount available
to the Company, and such Bank and the Company severally agree to pay to the
Agent forthwith on demand such amount, together with interest thereon for each
day from the date such amount is made available to the Company by the Agent
until the date such amount is repaid to the Agent at (i) in the case of such
Bank, the Federal Funds Rate and (ii) in the case of the Company, a rate per
annum equal to the interest rate applicable to such Borrowing during such
period. If such Bank shall pay such amount to the Agent together with interest,
such amount so paid shall constitute a Loan by such Bank as a part of the
related Borrowing for purposes of this Agreement. The failure of any Bank to
make its share of any Borrowing available to the Agent shall not relieve any
other Bank of its obligation to make available to the Agent its share, if any,
of such Borrowing on the date such Borrowing is requested to be made, but no
Bank shall be responsible for failure of any other Bank to make such share
available to the Agent on the date of such Borrowing.
(c) Each Bank, not later than 11:00 a.m. (Detroit time) on the
date any Foreign Currency Bid-Option Borrowing is requested to be made shall
(except as provided in subsection (d) of this Section 3.5) make its share, if
any, of such Borrowing available to the Company by depositing the proceeds
thereof in an account maintained and designated by the Company at an office or
branch of such Bank (or of an Affiliate of such Bank) located in the principal
financial center of the country issuing the Foreign Currency in which such
Borrowing is denominated or, if neither such Bank nor any Affiliate of such Bank
has an office or branch in such financial center, at such Bank's Eurodollar
Lending Office or Domestic Lending Office as selected by such Bank, or by such
other means requested by the Company and acceptable to such Bank. Promptly upon
any such disbursement of a Foreign Currency Bid-Option Loan, the Bank making
such Loan shall give written notice to the Agent by telex or telecopy of the
making of such Loan, which notice shall be substantially in the form attached
hereto as Exhibit H.
(d) If any Bank is to make a new Syndicated Loan or Dollar Bid-
Option Loan hereunder on a day on which the Company is to repay all or any part
of an outstanding Syndicated Loan or Dollar Bid-Option Loan from such Bank, or
if any Bank is to make a new Foreign Currency Bid-Option Loan hereunder on a day
on which the Company is to repay all or any part of an outstanding Foreign
Currency Bid-Option Loan of the same Foreign Currency from such Bank, such Bank
shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference, if any, between the amount of such new Loan and
the amount being repaid shall (i) be made available by such Bank to the Agent or
the Company, as provided in subsection (b) or (c) of this Section 3.5 or (ii) be
remitted by the Company to the Agent or such Bank as provided in Section 4.4, as
the case may be. Except as provided in the first sentence of this Section
3.5(d), no Bank shall apply the proceeds of any Loan, whether a Foreign Currency
Bid-Option Loan or other type of Loan, to repay all or any part of an
outstanding Foreign Currency Bid-Option Loan, the entire amount of which shall,
unless repaid by the application of the proceeds of a new Foreign Currency Bid-
Option Loan of
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the same Foreign Currency as permitted in the first sentence of this Section
3.5(d), be remitted in full by the Company to the Banks when due as provided in
Section 4.4.
3.6 The Notes.
(a) The Syndicated Loans of each Bank shall be evidenced by a
single Syndicated Note payable to the order of such Bank in an amount equal to
the aggregate unpaid principal amount of such Bank's Syndicated Loans.
(b) The Bid-Option Loans of each Bank shall be evidenced by a
single Bid-Option Note payable to the order of such Bank in an amount equal to
the Dollar Equivalent of the aggregate unpaid principal amount of such Bank's
Bid-Option Loans.
(c) Upon receipt of each Bank's Notes pursuant to Section 8.2, the
Agent shall forward such Notes to such Bank. Each Bank shall record on its
books and records, and prior to any transfer of its Notes shall endorse on the
schedules forming a part thereof appropriate notations to evidence, the date of
disbursement, amount and maturity of each Loan made by it, the interest rate and
Interest Period applicable thereto and the date and amount of each payment of
principal made by the Company with respect thereto. Any notations made by such
Bank shall be prima facie evidence of the matters so recorded or endorsed. Each
Bank is hereby irrevocably authorized by the Company to make such records, so to
endorse schedules to its Notes and to attach to and make a part of any Note a
continuation of any such schedule as and when required. Failure by any Bank to
make such records or so to endorse the schedules to its Notes, or any error in
recording or so endorsing any such information, shall not affect the Company's
liability hereunder or under any Note.
3.7 Certain Fees.
(a) Commitment Fees. The Company will pay to the Agent for the
account of the Banks a commitment fee, for each calendar quarter or portion
thereof from the Closing Date to but not including the Termination Date, on the
daily average amount, if any, by which the aggregate amount of the Commitments
exceeds the sum of (i) the Dollar Equivalent of the aggregate principal amount
of all Loans outstanding during such calendar quarter or portion thereof, plus
(ii) the Letter of Credit Obligations Amount during such calendar quarter or
portion thereof, at a rate equal to (y) 0.175% per annum, for each such day
during which the Applicable Margin is equal to or greater than 1%, and (z) 0.1%
per annum, for each such day during which the Applicable Margin is less than
1%. All accrued commitment fees hereunder shall be payable in arrears with
respect to each calendar quarter or portion thereof not later than the tenth
day after the end of each March, June, September and December, commencing with
the first such calendar quarter-end after the Closing Date, and on the
Termination Date. Promptly upon receipt of such commitment fees for any calendar
quarter or portion thereof, the Agent shall distribute such commitment fees to
the Banks ratably in accordance with their respective Commitment Percentages.
For purposes of calculating the Dollar Equivalent of the aggregate principal
amount of any Bank's
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Loans outstanding during any calendar quarter or portion thereof under this
Section 3.7(a), but only this Section 3.7(a), the Dollar Equivalent of each
Foreign Currency Bid-Option Loan shall be determined by the Agent with respect
to all times during such period based upon the Agent's spot rate of exchange
that the Agent reasonably determines would have been applicable at the time such
Loan was made.
(b) Facility Fee. The Company will further pay to the Agent for
the respective accounts of the Banks a facility fee, for each calendar quarter
or portion thereof from the Closing Date to but not including the Termination
Date, on the amount of each Bank's Commitment during such period, at a rate
equal to (i) 0.2% per annum, for each such day during which the Applicable
Margin is equal to or greater than 0.875%, and (ii) 0.15% per annum, for each
such day during which the Applicable Margin is less than 0.875%. All accrued
facility fees hereunder shall be payable in arrears with respect to each
calendar quarter or portion thereof not later than the tenth day after the end
of each March, June, September and December, commencing with the first such
calendar quarter-end after the Closing Date, and on the Termination Date.
Promptly upon receipt of such facility fees for any calendar quarter for portion
thereof, the Agent shall distribute such facility fees to the Banks ratably in
accordance with their respective Commitment Percentages.
(c) Closing Fee. The Company will further pay to the Agent for
the respective accounts of the Banks a closing fee equal to (i) with respect to
each Bank other than the Banks that are the Agent and the Co-Agents (A) if the
amount of the portion of the credit facility established hereunder that such
Bank agreed to provide in its commitment letter to the Agent was equal to or
greater than $40,000,000, 0.3% of the Commitment amount set forth opposite the
name of such Bank on the signature pages hereof, and (B) if such amount that
such Bank agreed to provide was less than $40,000,000, 0.25% of the Commitment
amount set forth opposite the name of such Bank on the signature pages hereof,
and (ii) with respect to each Bank that is the Agent or a Co-Agent, such amount
as may be agreed upon between the Company and each such Bank. The closing fees
shall be payable on or before the Closing Date. Promptly upon its receipt
thereof, the Agent shall distribute such fees to the Banks.
(d) Agent's Fees. The Company will further pay to the Agent fees
for its own account for its services as Agent under this Agreement in such
amounts and at such times as may from time to time be agreed upon between the
Company and the Agent.
3.8 Termination or Reduction of Commitments.
(a) Optional Termination or Reduction. Subject to Section 5.5,
the Company shall have the right at any time and from time to time, upon five
Business Days' prior written notice to the Agent, to terminate or
proportionately reduce the amount of the Commitments, provided, that (i) any
partial reduction of the amount of the Commitments shall be in the amount of
$10,000,000 or a larger multiple thereof, (ii) no such reduction shall be
permitted with respect to any portion of the Commitments not in excess of the
sum of the Dollar
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Equivalent of the aggregate outstanding principal amount of all Loans, plus the
Letter of Credit Obligations Amount, plus the Dollar Equivalent of the aggregate
amount of all Borrowings for which a Notice of Borrowing is then pending, plus
the aggregate amount of all Letters of Credit for which a Request for Letter of
Credit Issuance is then pending, (iii) the Commitments may not be terminated if
any Loans or Letters of Credit are then outstanding or any Notice of Borrowing
or Request for Letter of Credit Issuance is then pending and (iv) no such
termination or reduction shall be permitted if, after giving effect thereto, the
Dollar Equivalent of the aggregate principal amount of the outstanding Bid-
Option Loans would exceed fifty percent (50%) of the aggregate amount of the
Commitments. The Commitments or any portion thereof terminated or reduced
pursuant to this Section may not be reinstated. The accrued commitment fees and
facility fees with respect to the terminated Commitments or the amount of any
reduction therein shall be payable on the effective date of such notice. Upon
receipt of any notice from the Company pursuant to this Section, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share of
any reduction of the Commitments. Each such notice shall be irrevocable by the
Company once the Agent begins notifying any Bank of the contents thereof.
(b) Mandatory Reduction. If the Scheduled Expiration Date is not
extended to July 31, 1998 in accordance with Section 3.10, then notwithstanding
any provision of this Agreement or the Commitment amounts set forth on the
signature pages hereof, effective January 31, 1996 the aggregate amount of the
Commitments shall permanently reduce to $625,000,000, and the amount of each
Bank's Commitment shall reduce to the amount equal to its Commitment Percentage
of $625,000,000, unless the aggregate amount of the Commitments has previously
been reduced to that amount or less.
(c) Section 4.2(d) Compliance. On the effective date of any
reduction or termination of the Commitments under this Section 3.8, the Company
shall make such payments as may be required under Section 4.2(d) as a result
thereof.
3.9 Mandatory Termination of Commitments. The Commitments shall
terminate on the Termination Date.
3.10 Extension of Scheduled Expiration Date. The Company may request
that the Banks extend the Scheduled Expiration Date from January 31, 1997 to
July 31, 1998. No such request shall be effective unless it is made in writing
by the Company during the period from and including August 15, 1995 to and
including October 15, 1995. Upon receipt of any such written request, the Agent
shall promptly distribute a copy thereof to each Bank. Each Bank shall have 45
calendar days after the date such request is given to the Agent to agree or
refuse to extend the Scheduled Expiration Date, which agreement or refusal, as
the case may be, must be communicated to the Agent in writing; provided, that
(a) the failure of any Bank so to communicate its agreement so to extend the
Scheduled Expiration Date shall be deemed to be such Bank's refusal so to
extend, (b) any written communication of any Bank of its agreement so to extend
shall be irrevocable and (c) any agreement of any Bank so to extend communicated
to the Agent subject to any qualifications or conditions shall be deemed to be a
refusal
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so to extend the Scheduled Expiration Date. Notwithstanding any provision
hereof to the contrary, the Scheduled Expiration Date shall be extended only if
such extension is requested by the Company in accordance with this Section 3.10
and is agreed to in accordance with this Section 3.10 by each Bank or, in the
case of any such Bank, one or more Additional Banks for such Bank that are
designated by the Company and become parties to this Agreement (in substitution
for such Bank) in accordance with Section 11.13 on or before the 105th calendar
day after the date the Company gives the Agent a request to extend the Scheduled
Expiration Date in accordance with this Section 3.10.
ARTICLE IV.
PRINCIPAL PAYMENTS; INTEREST; ETC
4.1 Scheduled Principal Payments. Unless earlier payment is required
under this Agreement, or made pursuant to Section 4.2, the Company shall pay the
entire principal amount of each Loan on the last day of the Interest Period
applicable to such Loan.
4.2 Prepayments of Principal. The following provisions apply in respect
of prepayment of the Loans by the Company:
(a) The Company may prepay Floating Rate Loans in whole or in part on
any Business Day in amounts aggregating $5,000,000 or any larger multiple of
$5,000,000 (unless such prepayment would cause the aggregate outstanding
principal amount of Floating Rate Loans to be less than $5,000,000, in which
event prepayment may only be made in an amount equal to the entire outstanding
principal amount of Floating Rate Loans), by paying the principal amount being
prepaid together with accrued interest thereon to the date of prepayment. Each
prepayment in part of such Loans shall be applied to such Loans of the Banks
ratably in accordance with their respective shares of the aggregate outstanding
principal amount of the Floating Rate Loans.
(b) The Company may, upon at least three Business Days' notice to the
Agent, prepay any Fixed Base Rate Syndicated Borrowing in whole or in part on
any Business Day in the amount of $10,000,000 or any larger multiple of
$5,000,000 (unless such prepayment would cause the aggregate outstanding
principal amount of such Fixed Base Rate Syndicated Borrowing to be less than
$10,000,000, in which event prepayment may only be made in an amount equal to
the outstanding unpaid principal amount of such Fixed Base Rate Syndicated
Borrowing), by paying the principal amount being prepaid together with accrued
interest thereon to the date of prepayment; provided, however, that the Company
shall compensate the Banks pursuant to Section 5.5 for any losses or expenses
incurred as a result thereof. Each prepayment in part of any Fixed Base Rate
Syndicated Borrowing shall be applied to the Fixed Base Rate Syndicated Loans
comprising such Borrowing of the Banks ratably in accordance with their
respective shares of the aggregate outstanding principal amount of such Loans.
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(c) Unless otherwise required by this Agreement, the Company may not
prepay any Bid-Option Loan in whole or in part without the consent of the Bank
that made such Bid-Option Loan.
(d) Notwithstanding Section 4.2(a), (b) and (c), if on any date:
(i) the sum of (A) the Dollar Equivalent of the
aggregate outstanding principal amount of Loans plus (B)
the Letter of Credit Obligations Amount exceeds the
aggregate amount of the Commitments; or
(ii) the Dollar Equivalent of the aggregate outstanding
principal amount of Bid-Option Loans exceeds fifty
percent (50%) of the Commitments; or
(iii) the Dollar Equivalent of the aggregate outstanding
principal amount of Foreign Currency Bid-Option Loans
exceeds $50,000,000;
then the Company shall pay forthwith the principal amount of such excess,
together with accrued interest thereon to the date of payment; provided,
however, that the Company shall compensate the Banks pursuant to Section 5.5 for
any losses or expenses incurred as a result thereof; and provided further,
however, that (A) no such payment otherwise required under clause (i) of this
Section 4.2(d) solely because of currency exchange rate fluctuations affecting
the Dollar Equivalent of the aggregate outstanding principal amount of Foreign
Currency Bid-Option Loans shall be required unless such payment is due on a date
when a payment of principal of any Loan is otherwise due hereunder, and (B)
notwithstanding clause (A) of this proviso, no such payment otherwise required
under subsection (ii) or (iii) of this Section 4.2(d) shall be required if due
solely because of currency exchange rate fluctuations affecting the Dollar
Equivalent of the aggregate outstanding principal amount of Foreign Currency
Bid-Option Loans since the last date on which any of such Foreign Currency Bid-
Option Loans were made.
(e) Upon receipt of a notice of prepayment pursuant to this Section, the
Agent shall promptly notify each Bank of the contents thereof and of such Bank's
share (in accordance with Section 4.4) of such prepayment. Each such notice
shall be irrevocable by the Company once the Agent begins notifying any Bank of
the contents thereof.
4.3 Interest Payments. The Company shall pay interest to the Banks on
the unpaid principal amount of each Loan, for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum (subject, however, to the
provisions of Section 11.12):
(a) With respect to each Floating Rate Loan, at the Floating Rate.
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(b) With respect to each CD Rate Loan, at the CD Rate, provided that if
any CD Rate Loan or any portion thereof shall, as a result of clause (b) of the
definition of CD Rate Interest Period, have an Interest Period of less than
thirty (30) days, such CD Rate Loan or portion thereof shall bear interest
during such Interest Period at the Floating Rate.
(c) With respect to each Eurodollar Rate Syndicated Loan, the Syndicated
Eurodollar Rate, provided that if any Eurodollar Rate Syndicated Loan or any
portion thereof shall, as a result of clause (c) of the definition of Eurodollar
Rate Interest Period, have an Interest Period of less than one month, such Loan
or portion thereof shall bear interest during such Interest Period at the
Floating Rate.
(d) With respect to each Eurodollar Rate Dollar Bid-Option Loan, the
Bid-Option Eurodollar Rate, provided that if any Eurodollar Rate Bid-Option Loan
or any portion thereof shall, as a result of clause (c) of the definition of
Eurodollar Rate Interest Period, have an Interest Period of less than one month,
such Loan or portion thereof shall bear interest during such Interest Period at
the Floating Rate.
(e) With respect to each Absolute Rate Dollar Bid-Option Loan and
Foreign Currency Bid-Option Loan, the Bid-Option Absolute Rate quoted for such
Loan by the Bank making such Loan.
Notwithstanding the foregoing subsections (a) through (e), the Company shall
(subject to the provisions of Section 11.12) pay interest on demand at the
Overdue Rate on the outstanding principal amount of any Loan and any other
amount payable by the Company hereunder (other than interest) which is not paid
in full when due (whether at stated maturity, by acceleration or otherwise) for
the period commencing on the due date thereof until the same is paid in full.
4.4 Payment Procedures.
(a) All payments of any commitment fees, facility fees, closing
fees, Letter of Credit fees, Agent's fees, or other fees hereunder and of
principal of, and interest on, the Loans, other than Foreign Currency Bid-Option
Loans, and of reimbursement obligations in respect of Letters of Credit shall be
made in Dollars and in funds immediately available at the Agent's principal
office in Detroit, Michigan not later than 1:00 p.m. (Detroit time) on the date
on which such payment shall become due. All payments of principal of, and
interest on, the Foreign Currency Bid-Option Loans shall be made in the
currencies in which such Loans are denominated and in funds immediately
available, freely transferable and cleared at the office or branch from which
the Loan was made under Section 3.5(c) not later than 3:00 p.m. local time on
the date on which such payment shall become due. Promptly upon receipt of any
payment of principal of the Foreign Currency Bid-Option Loans the Bank receiving
such payment shall give written notice to the Agent by telex or telecopy of the
receipt of such payment, which notice shall be substantially in the form
attached hereto as Exhibit I. Whenever any payment of principal of, or interest
on, the Loans or of any fee shall be due on a day which is not a Business Day,
the date
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for payment thereof shall be extended to the next succeeding Business Day
(unless as a result thereof, in respect of Eurodollar Rate Loans, such date
would fall in the next calendar month, in which case it shall be advanced to the
next preceding Business Day) and, in the case of a payment of principal,
interest thereon shall be payable for any such extended time.
(b) Payments of principal of or interest on Existing Loans shall
be promptly distributed by the Existing Agent to each Existing Bank ratably in
proportion to each Existing Bank's Existing Commitment. Payments of principal
of Syndicated Loans that comprise a Syndicated Borrowing, including any
Substitute Loan made by a Bank as part of any Fixed Base Rate Syndicated
Borrowing, shall be promptly distributed by the Agent to the Banks that made
such Syndicated Loans ratably in proportion to their respective shares of the
outstanding principal amount of such Syndicated Borrowing. Payments of interest
on Syndicated Loans that comprise a Syndicated Borrowing, including any
Substitute Loan made by a Bank as part of any Fixed Base Rate Syndicated
Borrowing, shall be promptly distributed by the Agent to the Banks that made
such Syndicated Loans so that each such Bank receives a portion of such payment
equal to the amount of interest then owing to such Bank on such Loans multiplied
by a fraction, the denominator of which is the total amount of interest then
owing to all such Banks on such Loans and the numerator of which is the amount
of such payment. Payments of principal of or interest on any Dollar Bid-Option
Loans that comprise a Dollar Bid-Option Borrowing shall be promptly distributed
by the Agent to the Banks that made such Dollar Bid-Option Loans ratably in
accordance with their respective Dollar Bid-Option Percentages.
(c) During any period when Dollar Bid-Option Loans are
outstanding, if the Agent cannot reasonably determine whether a particular
payment received by the Agent from the Company was intended to be applied to the
principal of or interest on one or more Dollar Bid-Option Borrowings or to the
principal of or interest on Syndicated Borrowings, or if the amount of any
payment by the Company is insufficient to pay all amounts then due and payable
with respect to Dollar Bid-Option Loans and Syndicated Loans (including
Substitute Loans), the Agent shall first apportion such payment between the
Dollar Bid-Option Loans and the Syndicated Loans (including Substitute Loans)
(i) if such payment is of principal, ratably in accordance with the aggregate
principal amount of each such type of Loans on which payment is then due, and
(ii) if such payment is of interest, ratably in accordance with the aggregate
amount of interest that is then due on each such type of Loans. After such
apportionment, (i) the Agent shall distribute the portion of the payment
received and allocated to the Syndicated Loans (including Substitute Loans) to
the Banks as provided for payments of principal of or interest on, as the case
may be, Syndicated Loans under Section 4.4(b), and (ii) the portion of the
payment received and allocated to the Dollar Bid-Option Loans on which a payment
is then due shall first be allocated among the different Dollar Bid-Option
Borrowings of which such Dollar Bid-Option Loans are a part (A) if such payment
is of principal, ratably in accordance with the aggregate principal amount of
each such Dollar Bid-Option Borrowing, and (B) if such payment is of interest,
ratably in accordance with the aggregate amount of interest that is then due on
each such Dollar Bid-Option Borrowing. After such allocation, the Agent shall
distribute the amount
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allocated to each Dollar Bid-Option Borrowing to the Banks that made the Dollar
Bid-Option Loans comprising such Dollar Bid-Option Borrowing ratably in
accordance with their respective Dollar Bid-Option Percentages.
(d) Any prepayments of Bid-Option Loans made under Section 4.2(d)
may be applied to any one or more Bid-Option Borrowings as the Company may
select; provided that such payments shall be applied by the Agent, in the case
of Dollar Bid-Option Loans, or made directly by the Company, in the case of
Foreign Currency Bid-Option Loans, to the Banks participating in any such Bid-
Option Borrowing ratably in accordance with their respective Dollar Bid-Option
Percentages or Foreign Currency Bid-Option Percentages, as the case may be.
4.5 Computation of Interest and Fees. Commitment fees, facility fees,
Agent fees and Letter of Credit fees, and interest on the Floating Rate Loans
and other amounts due hereunder, other than Fixed Rate Loans, shall be computed
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. Interest on the Fixed Rate Loans shall be computed on the basis of a
year of 360 days and actual days elapsed.
4.6 No Setoff or Deduction. All payments of principal of and interest
on the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
4.7 Other Provisions Applicable to Foreign Currency Bid-Option Loans.
Foreign Currency Bid-Option Loans will be made by any Bank, if at all, in the
context of an international transaction, and the specification of payment in the
related Foreign Currency at a specific place pursuant to this Agreement is of
the essence. Such Foreign Currency shall be the currency of account and payment
of such Loans under this Agreement and the Bid-Option Notes. Notwithstanding
anything in this Agreement, the obligation of the Company in respect of such
Loans shall not be discharged by an amount paid in any other currency or at
another place, whether pursuant to a judgment or otherwise, to the extent the
amount so paid, on prompt conversion into the applicable Foreign Currency and
transfer to such Bank under normal banking procedure, does not yield the amount
of such Foreign Currency due under this Agreement and the Bid-Option Notes. In
the event that any payment, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in payment of the amount of such
Foreign Currency due under this Agreement and the Bid-Option Notes, such Bank
shall have an independent cause of action against the Company for the currency
deficit.
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ARTICLE V.
CHANGE IN CIRCUMSTANCES
5.1 Impossibility; Interest Rate Inadequate or Unfair. (a) If before
the beginning of any Eurodollar Rate Interest Period or any CD Rate Interest
Period:
(i) the Agent is advised by either Reference Bank that
deposits in Dollars (in the applicable amounts) are not
being offered to such Reference Bank in the relevant
market for such Eurodollar Rate Interest Period or CD
Rate Interest Period, as the case may be, or
(ii) the Required Banks advise the Agent that the
Eurodollar Base Rate or the CD Base Rate will not
adequately and fairly reflect the cost to such Banks of
maintaining, making or funding, for such Eurodollar Rate
Interest Period or CD Rate Interest Period, Eurodollar
Rate Loans or CD Rate Loans, as the case may be, to
which such Eurodollar Rate Interest Period or CD Rate
Interest Period applies,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, the obligations, if any, of the Banks
to make Eurodollar Rate Loans or CD Rate Loans, as the case may be, shall be
suspended. In the case of Eurodollar Rate Loans, unless the Company notifies
the Agent (i) not later than 11:00 a.m. (Detroit time) on the second Business
Day before the beginning of such Eurodollar Rate Interest Period that the
Company elects that the Borrowing shall be a CD Rate Borrowing or (ii) not later
than 3:00 p.m. (Detroit time) on the Business Day before the beginning of such
Eurodollar Rate Interest Period that the Company elects not to borrow on such
date, such Borrowing shall, subject to the provisions of Section 8.1, be a
Floating Rate Borrowing. In the case of CD Rate Loans, unless the Company
notifies the Agent not later than 3:00 p.m. (Detroit time) on the first Business
Day before the beginning of such CD Rate Interest Period that the Company
elects not to borrow on such date, such Borrowing shall, subject to the
provisions of Section 8.1, be a Floating Rate Borrowing. Promptly after the
Agent receives any such notice from the Company under this Section 5.1(a), the
Agent shall notify each Bank of the contents thereof. Any such notice from the
Company shall be irrevocable once the Agent begins notifying any Bank of the
contents thereof.
(b) If deposits in Dollars (in the applicable amounts) are not
being offered to a Reference Bank in the relevant market for any Eurodollar Rate
Interest Period or CD Rate Interest Period, by reason of circumstances affecting
such Reference Bank and not affecting the London or Nassau Interbank Market or
the United States market for certificates of deposit, as the case may be,
generally, the Agent shall, in consultation with the Company and with the
consent of the Required Banks, appoint another Bank to act as a Reference Bank
hereunder.
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5.2 Illegality. If, after the date of this Agreement, the introduction
of, or any change in, any applicable law, rule or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof or compliance by any Bank (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such authority shall make it unlawful or
impossible for such Bank (or its Applicable Lending Office) to honor its binding
legal obligations, if any, hereunder to make, maintain or fund any type of Fixed
Rate Loans, such Bank shall so notify the Agent, and the Agent shall forthwith
give notice thereof to the Company, whereupon until such Bank notifies the Agent
that the circumstances giving rise to such suspension no longer exist, the
obligation, if any, of such Bank to make such type of Fixed Rate Loans shall be
suspended. Before any Bank gives any notice of unlawfulness or impossibility to
the Agent under this Section 5.2, such Bank shall designate a different
Applicable Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. Upon receipt of such notice, the Company shall
prepay in full the then outstanding principal amount of each affected Fixed Rate
Loan of such Bank together with accrued interest thereon (a) on the last day of
the then current Interest Period applicable to such Loan if such Bank may
lawfully continue to maintain and fund such Loan to such day, or (b) immediately
if such Bank may not lawfully continue to fund and maintain such Loan to such
day. Concurrently with prepaying each such Fixed Rate Loan, the Company shall
borrow a Floating Rate Loan (or, if the Company so elects by at least three
Business Days' notice to the Agent and such Bank, a Fixed Base Rate Syndicated
Loan of an unaffected type) in an equal principal amount from such Bank, for an
Interest Period coinciding with the remaining term of the Interest Period
applicable to such Fixed Rate Loan, and such Bank shall make such a Loan,
provided that there has been no acceleration of the amounts due under the Notes
pursuant to Article IX.
5.3 Increased Cost; Yield Protection.
(a) If, after the date hereof, the introduction of, or any change
in, any applicable law, treaty, rule or regulation (whether domestic or foreign
and including, without limitation, the Federal Deposit Insurance Act, as
amended, and Regulation D of the Board of Governors of the Federal Reserve
System) or in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive of any such authority, central bank or
comparable agency (whether or not having the force of law),
(i) shall subject any Bank (or its Applicable Lending Office)
to any tax, duty or other charge with respect to its
obligation to make any Loans, its Notes, any of its Loans or
any of the Letters of Credit or shall change the basis of
taxation of payments to any Bank (or its Applicable Lending
Office) of the principal of or interest on any of its Fixed
Rate Loans or in respect of its obligation, if any, to make
any Loans or to participate in the risk of Letters of Credit
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(except for changes in the rate of tax on the overall
net income of such Bank or its Applicable Lending Office
imposed by the jurisdiction in which such Bank's
principal executive office or Applicable Lending Office
is located), or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding (A)
with respect to any CD Rate Loan any reserve requirements to
the extent included in clause (ii) of subpart (a) of the
definition of CD Base Rate when calculating the CD Base Rate
with respect to such CD Rate Loan, and (B) with respect to any
Eurodollar Rate Loan any reserve requirements to the extent
included in clause (b) of the definition of Eurodollar Base
Rate when calculating the Eurodollar Base Rate with respect to
such Eurodollar Rate Loan), special deposit or similar
requirement (including, without limitation, any deposit
insurance assessment in respect of deposits held outside the
United States, but excluding with respect to any CD Rate Loan
any assessment to the extent included in clause (b) of the
definition of CD Base Rate when calculating the CD Base Rate
with respect to such CD Rate Loan), against assets of,
deposits with or for the account of, or credit extended by,
any Bank's Applicable Lending Office, or shall impose on any
Bank (or its Applicable Lending Office or the relevant
interbank market or the United States certificate of deposit
market) any other condition affecting its obligation, if any,
to make Loans or to participate in the risk of Letters of
Credit or affecting its Loans or the Letters of Credit or
affecting the Company's obligations under the Notes in respect
of such Loans,
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining its existing or future
Fixed Rate Loans or of participating in the risk of Letters of Credit, or to
reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under the Notes (in respect
of Fixed Rate Loans or Letters of Credit) by an amount deemed by such Bank to be
material, then such Bank may notify the Company (with a copy of any such notice
to be provided to the Agent) of any such fact of which it has knowledge and
demand compensation therefor; provided that, if such Bank fails to demand such
compensation (or notify the Company that it will or may demand such
compensation) promptly upon becoming aware of the facts entitling it to do so
or, if such Bank is contesting the cause of such increased cost or reduced sum
received or receivable, promptly after the earlier of (A) the final
determination of such contest or (B) an officer of such Bank who is responsible
for the administration of the credit outstanding under this Agreement from such
Bank to the Company becoming aware of such facts, such Bank shall not be
entitled to such compensation for the period before the date on which it
actually demands (or
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notifies the Company that it will or may demand) such compensation; provided,
further, that if such Bank is contesting the cause of such increased cost or
reduced sum received or receivable, such Bank shall not in any event be entitled
to such compensation for any period prior to six months before it notifies the
Company that such Bank may or will demand such compensation. The Company agrees
to pay to such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction within 15 days after demand by such
Bank. A certificate of such Bank setting forth the basis for determining such
additional amount or amounts necessary to compensate such Bank shall be
conclusive in the absence of manifest error. Each such Bank will designate a
different Applicable Lending Office if such designation would avoid the need
for, or reduce the amount of such compensation and would not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. In the event that the
Company is required to compensate any Bank for any increased cost to such Bank
pursuant to this Section 5.3(a), the Company shall have the right, upon at least
five Business Days' prior notice to such Bank through the Agent, to prepay in
full any outstanding Fixed Rate Loans that are related to such increased cost of
such Bank, together with accrued interest thereon to the date of prepayment;
provided that prepayment of such Fixed Rate Loans shall not relieve the Company
of its obligation to compensate such Bank in accordance with this Section
5.3(a), the amount of which compensation shall be due at the time of such
prepayment, notwithstanding any other provision of this Section 5.3(a).
Concurrently with prepaying each such Fixed Rate Loan of such Bank, the Company
shall borrow a Floating Rate Loan (or, if the Company shall so elect in its
notice of prepayment, a Fixed Rate Loan of another type) in an equal principal
amount from such Bank for an Interest Period coinciding with the remaining term
of the Interest Period applicable to such Fixed Rate Loan, and such Bank shall
make such a Floating Rate Loan (or Fixed Rate Loan of the other type), provided
that there has been no acceleration of the amount due under the Notes pursuant
to Article IX. The Company shall pay compensation owing to any Bank(s) under
this Section 5.3(a) notwithstanding any subsequent replacement (pursuant to
Section 11.13) of the Bank(s) making demand for such compensation.
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank or the Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or the Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk-based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or the Agent (or any corporation controlling such Bank or the Agent)
and such Bank or the Agent, as the case may be, determines that the amount of
such capital is increased by or based upon the existence of such Bank's or the
Agent's obligations or Loans hereunder and such increase has the effect of
reducing the rate of return on such Bank's or the Agent's (or such controlling
corporation's) capital as a consequence of such obligations or Loans hereunder
to a level below that which such Bank or the Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
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by such Bank or the Agent to be material, then such Bank or the Agent may notify
the Company of any such fact of which it has knowledge and the Company shall pay
to such Bank or the Agent, as the case may be, from time to time, upon request
by such Bank (with a copy of such request to be provided to the Agent) or the
Agent, additional amounts sufficient to compensate such Bank or the Agent (or
such controlling corporation) for any increase in the amount of capital and
reduced rate of return which such Bank or the Agent reasonably determines to be
allocable to the existence of such Bank's or the Agent's obligations or Loans
hereunder; provided that, if such Bank or the Agent fails to notify the Company
of any such fact promptly upon becoming aware thereof or, if such Bank or the
Agent is contesting the cause of such increase in the amount of capital or
reduced rate of return, promptly after the earlier of (A) the final
determination of such contest or (B) an officer of such Bank who is responsible
for the administration of the credit outstanding under this Agreement from such
Bank to the Company becoming aware of any such fact, such Bank or the Agent, as
the case may be, shall not be entitled to such compensation for the period
before the date on which it actually notifies the Company of such fact;
provided, further, that if such Bank or the Agent is contesting the cause of
such increase in the amount of capital or reduced rate of return, such Bank or
the Agent, as the case may be, shall not in any event be entitled to such
compensation for any period prior to six months before it notifies the Company
that such Bank or the Agent, as the case may be, may or will demand such
compensation. A statement as to the amount of such compensation, prepared in
good faith and in reasonable detail by such Bank or the Agent, as the case may
be, and submitted by such Bank or the Agent to the Company, shall be conclusive
in the absence of manifest error in computation. The Company shall pay such
compensation for the periods covered by such notice notwithstanding any
replacement (pursuant to Section 11.13) of the Bank(s) making demand for such
compensation.
5.4 Substitute Loans. If (a) the obligation, if any, of any Bank to
make any type of Fixed Rate Loans has been suspended pursuant to Section 5.2 or
(b) any Bank has demanded compensation under Section 5.3(a) and the Company
shall, by at least five Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section 5.4 shall apply to such
Bank, then, unless and until such Bank notifies the Company that the
circumstances giving rise to such suspension or demand for compensation no
longer apply:
(i) all Loans which would otherwise be made by such Bank as the
affected type of Fixed Rate Loans shall be made instead as Floating Rate
Loans, or if the Company shall so elect in the Notice of Borrowing,
another type of Fixed Rate Loan (whichever type is not affected by such
circumstances) for an Interest Period coincident with the related Fixed
Rate Borrowing, and
(ii) after each of its affected Fixed Rate Loans has been repaid,
all payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Substitute Loans instead.
5.5 Funding Losses. If the Company makes any payment of principal with
respect to any Fixed Rate Loan on any other date than the last day of an
Interest
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Period applicable thereto (whether pursuant to Section 3.8, 4.2, 5.1, 5.2, 5.3
or 5.4, Article IX or otherwise), or if the Company fails to borrow any Fixed
Rate Loan after the related Notice of Borrowing has been given to the Agent, or
if the Company fails to make any payment of principal or interest in respect of
a Fixed Rate Loan when due, the Company shall reimburse each Bank on demand for
any resulting loss or expense incurred by such Bank, including without
limitation any loss incurred in obtaining, liquidating or employing deposits
from third parties, whether or not such Bank shall have funded or committed to
fund such Loan. A statement as to the amount of such loss or expense, prepared
in good faith and in reasonable detail by such Bank and submitted by such Bank
to the Company, shall be conclusive and binding for all purposes absent manifest
error in computation. Calculation of all amounts payable to each Bank under
this Section 5.5 shall be made as though such Bank shall have actually funded or
committed to fund the relevant Fixed Rate Loan through the purchase of an
underlying deposit in an amount equal to the amount of such Loan and having a
maturity comparable to the related Interest Period; provided, however, that such
Bank may fund any Fixed Rate Loan in any manner it sees fit and the foregoing
assumption shall be utilized only for the purpose of calculation of amounts
payable under this Section 5.5.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Agent and the Banks
that:
6.1 Corporate Existence and Power. Each of the Company and its Domestic
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of its incorporation, and is duly qualified
as a foreign corporation in each State or other jurisdiction in the United
States of America in which the conduct of its operations or the ownership of its
properties requires such qualification and failure so to qualify would
materially and adversely affect the Company and its Subsidiaries taken as a
whole. All of such corporations have all requisite corporate power to own their
properties and to carry on their businesses, considered as a whole,
substantially as now owned and as now being conducted. The Company has full
power, authority and legal right to execute and deliver this Agreement and the
Notes, to perform and observe the terms and provisions hereof and thereof, and
to borrow hereunder.
6.2 Corporate Authority; No Violations; Governmental Filings; Etc. The
execution, delivery and performance by the Company of this Agreement, the
issuance of the Notes and the borrowings hereunder have been duly authorized by
all necessary corporate action and do not and will not violate the provisions of
any applicable law or regulation or of the certificate of incorporation or by-
laws of the Company or any Subsidiary or any order of any court, regulatory body
or arbitral tribunal and do not and will not result in the breach of, or
constitute a default or require any consent under, or create any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to, any indenture or other agreement or instrument to which the Company
or any
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Subsidiary is a party or by which the Company or any Subsidiary or its property
may be bound or affected. Neither the execution, delivery and performance of
this Agreement nor the issuance of the Notes nor any borrowing hereunder
requires, for the validity thereof, nor does the enforceability of this
Agreement or any of the Notes require, any filing with, or consent,
authorization or approval of, any state or federal agency or regulatory
authority, other than filings, consents or approvals which have been made or
obtained or which, in the case of any such borrowing, will be made or obtained
prior to the due date for such filing, consent or approval.
6.3 Binding Effect. This Agreement constitutes, and the Notes when
executed and delivered by the Company for value will constitute, the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
6.4 Litigation. There are no suits, proceedings, or actions at law or
in equity or by or before any governmental commission, board, bureau, or other
administrative agency, pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or affecting the Company or any
of its Subsidiaries, which, in the reasonable opinion of the Company, either (i)
are likely to have a material adverse effect on the financial condition or
business of the Company and its Subsidiaries taken as a whole or (ii) will in
any manner affect the enforceability or validity of this Agreement or any Note.
6.5 Taxes. The Company and each Subsidiary has filed (or has obtained
extensions of the time by which it is required to file) all United States
federal income tax returns, and all other tax returns which are required to be
filed and are material to the business, operations or financial position of the
Company and its Subsidiaries taken as a whole, and has paid all taxes shown due
pursuant to such returns or pursuant to any assessment received by the Company
or any Subsidiary, except such taxes, if any, as are being contested in good
faith and as to which, in the reasonable opinion of the Company, adequate
reserves have been provided in accordance with generally accepted accounting
principles. The Company does not know of any proposed tax assessment against it
or any Subsidiary or of any basis for one, except to the extent any such
assessment has been, in the reasonable opinion of the Company, adequately
provided for in the consolidated tax reserves of the Company and its
Subsidiaries in accordance with generally accepted accounting principles.
6.6 Financial Condition. The consolidated balance sheet of the Company
and its Consolidated Subsidiaries and consolidated statements of income,
shareholders' equity and cash flows of the Company and its Consolidated
Subsidiaries for the fiscal year ended December 31, 1992, certified by Coopers &
Lybrand, independent certified public accountants, and the interim unaudited
consolidated balance sheet and interim unaudited consolidated statements of
income, shareholders' equity and cash flows of the Company and its Consolidated
Subsidiaries, as of or for the three-month period ended on March 31, 1993,
copies of which have been furnished to the Banks, fairly present the
consolidated financial position of the Company and its Consolidated Subsidiaries
as at the dates thereof, and the consolidated results of operations of the
Company and its
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Consolidated Subsidiaries for the respective periods indicated, all in
accordance with generally accepted accounting principles consistently applied
(subject, in the case of interim statements, to year-end audit adjustments).
There has been no material adverse change in the consolidated operations or
condition, financial or otherwise, of the Company and its Consolidated
Subsidiaries considered as a whole, since December 31, 1992.
6.7 Compliance with ERISA. Each of the Company and each ERISA Affiliate
of the Company (a) has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and (b) is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Code with respect to each Plan. Neither the Company nor any ERISA
Affiliate of the Company has (x) sought a waiver of the minimum funding standard
under Section 412 of the Code in respect of any Plan, (y) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code, in each case securing an
amount greater than $10,000,000, or (z) incurred any liability under Title IV of
ERISA, other than a liability to the PBGC for premiums under Section 4007 of
ERISA, which could materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Company and its
Consolidated Subsidiaries.
6.8 Environmental Matters. In the ordinary course of its business, the
Company conducts appropriate reviews of the effect of Environmental Laws on the
business, operations and properties of the Company and its Subsidiaries, in the
course of which it identifies and evaluates pertinent liabilities and costs
(including, without limitation, capital or operating expenditures required for
clean-up or closure of properties presently or previously owned or for the
lawful operation of its current facilities, required constraints or changes in
operating activities, and evaluation of liabilities to third parties, including
employees, together with pertinent costs and expenses). On the basis of this
review, the Company has reasonably concluded that Environmental Laws are not
likely to have a material adverse effect on the business, financial position or
results of operations of the Company and its Consolidated Subsidiaries,
considered as a whole.
6.9 Compliance with Laws. The Company complies, and has caused each
Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder), except where (a) the necessity of compliance therewith
is contested in good faith by appropriate proceedings and the Company has
established appropriate reserves for liability for noncompliance therewith in
accordance with generally accepted accounting principles, (b) no officer of the
Company is aware that the Company or the relevant Subsidiary has failed to
comply therewith, or (c) the Company has reasonably concluded that failure to
comply is not likely to have a material adverse effect on the business,
financial position
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or results of operations of the Company and its Consolidated Subsidiaries, taken
as a whole.
ARTICLE VII.
COVENANTS
Until all the Commitments and Letters of Credit have expired or been
terminated and all Loans, Existing Loans and reimbursement obligations of the
Company hereunder have been paid in full, the Company covenants that:
7.1 Financial Statements. The Company will deliver to each of the
Banks:
(a) as soon as practicable and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company, (i) an unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries, as at the end of each such quarter, and (ii)
unaudited consolidated statements of income and cash flows of the Company and
its Consolidated Subsidiaries, for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each of the statements required by this subsection (a), in comparative form,
corresponding figures as of the end of and for the corresponding period of the
preceding fiscal year, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief financial officer or chief accounting
officer of the Company as having been prepared in all material respects in
accordance with generally accepted accounting principles and as to fairness of
presentation;
(b) as soon as practicable and in any event within 90 days after
the end of each fiscal year of the Company, (i) a consolidated balance sheet of
the Company and its Consolidated Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, shareholders' equity, and cash flows of
the Company and its Consolidated Subsidiaries for such year, setting forth in
each of the statements required by this subsection (b), in comparative form,
corresponding figures as of the end of and for the preceding fiscal year, and
all in reasonable detail and certified without material qualifications by
Coopers & Lybrand, or by other independent certified public accountants of
recognized national standing selected by the Company and reasonably acceptable
to the Agent;
(c) as soon as practicable and in any event within 30 days after
the sending or filing thereof, copies of all such financial statements and
reports as it shall send to its security holders and of all final prospectuses
under the Securities Act of 1933 (other than form S-8), reports on forms 10-Q,
10-K and 8-K and all similar regular and periodic reports filed by it (i) with
any federal department, bureau, commission or agency from time to time having
jurisdiction with respect to the sale of securities or (ii) with any securities
exchange;
(d) if and when the Company or any ERISA Affiliate of the Company
(i) gives or is required to give notice to the PBGC of any "reportable event"
(as
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defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer, any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or contribution
to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief accounting
officer of the Company setting forth details as to such occurrence and action,
if any, which the Company or applicable ERISA Affiliate is required or proposes
to take; provided that no such certificate shall be required unless the
aggregate unpaid actual or potential liability of the Company and the ERISA
Affiliates involved in all events referred to in clauses (ii) through (vii)
above of which officers of the Company have obtained knowledge and have not
previously reported under this subparagraph (d) exceeds $15,000,000; and
(e) with reasonable promptness, such other information regarding
the financial condition of the Company or any of its Subsidiaries as any Bank
may from time to time reasonably request.
7.2 Certificates of No Default and Compliance.
(a) Concurrently with each delivery of the financial statements
pursuant to subsections (a) and (b) of Section 7.1, the Company will deliver to
each Bank a certificate, signed by the chief accounting officer or chief
financial officer of the Company (i) stating that to the best of his knowledge
after due inquiry, at the date of such financial statements no Default had
occurred and was continuing, or, if a Default had occurred and was continuing,
specifying the nature and period of existence thereof and what action the
Company has taken or proposes to take with respect thereto; and (ii) setting
forth as of the date of such financial statements, in reasonable detail, the
calculations employed to determine compliance with Sections 7.4, 7.5, 7.6, 7.7,
7.8 and 7.9 and an explanation in reasonable detail of any differences between
generally accepted accounting principles as then in effect and generally
accepted accounting principles used in making such calculations, as may be
permitted under Section 1.2.
(b) Within 60 days after the end of each fiscal quarter of each
fiscal year of the Company (including the last fiscal quarter of each such
fiscal
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year), the Company will deliver to each Bank a certificate, signed by the chief
accounting officer, chief financial officer, treasurer or assistant treasurer of
the Company, setting forth in reasonable detail the calculation of the Senior
Leverage Ratio and the Interest Coverage Ratio, as of the Determination Date and
for the Determination Period, respectively, with respect to the next forthcoming
Application Period, and identifying the Applicable Margin for such Application
Period as a result of such calculations.
(c) Within fifteen Business Days after any officer of the Company
obtains knowledge of a Default, the Company will, unless the same shall have
been cured within such fifteen Business Day period, give written notice to each
of the Banks thereof, specifying the nature thereof, the period of existence
thereof and what action the Company proposes to take with respect thereto.
7.3 Preservation of Corporate Existence, Etc. The Company will preserve
and maintain its corporate existence, and qualify and remain qualified as a
validly existing corporation in good standing in each jurisdiction in which the
conduct of its operations or the ownership of its properties requires such
qualification and failure so to qualify would materially and adversely affect
the Company and its Subsidiaries taken as a whole.
7.4 Current Ratio. The Company will not permit or suffer the Current
Ratio to be less than 2.0 to 1.0 at any time.
7.5 Total Leverage Ratio. The Company will not permit or suffer the
Total Leverage Ratio to be greater than (a) 3.25 to 1.00 as of the last day of
any fiscal quarter of the Company during the period from the Closing Date
through December 30, 1993, (b) 3.00 to 1.00 as of December 31, 1993, (c) 3.25 to
1.00 as of the last day of any fiscal quarter of the Company during the period
from January 1, 1994 through December 30, 1994, (d) 2.50 to 1.00 as of
December 31, 1994, (e) 2.75 to 1.00 as of the last day of any fiscal quarter of
the Company during the period from January 1, 1995 through December 30, 1995,
(f) 2.50 to 1.00 as of December 31, 1995, (g) 2.75 to 1.00 as of the last day of
any fiscal quarter of the Company during the period from January 1, 1996 through
December 30, 1996, (h) 2.00 to 1.00 as of December 31, 1996, (i) 2.25 to 1.00 as
of the last day of any fiscal quarter of the Company during the period from
January 1, 1997 through December 30, 1997, (j) 1.25 to 1.00 as of December 31,
1997, and (k) 1.50 to 1.00 as of the last day of any fiscal quarter of the
Company thereafter.
7.6 Net Worth. The Company will not permit or suffer Net Worth at any
time to be less than the sum of (a) $320,000,000 plus (b) the amount equal to
the greater of (i) $10,000,000 multiplied by the number of fiscal year ends of
the Company that have occurred since the Closing Date and (ii) the sum of (A)
the sum for all fiscal years of the Company during the period from and including
January 1, 1993 through the then latest fiscal year end of the Company of 50% of
Net Income Minus Preferred Dividends for each such fiscal year, plus (B) the Net
Proceeds of New Equity for the period from and including July 1, 1993 through
the then latest fiscal year end of the Company. For purposes of this Section
7.6, all cash received by the Company from Masco Corporation for the purchase of
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preferred stock pursuant to the Securities Purchase Agreement within forty-five
days after the date this covenant is to be tested shall be deemed received as of
the date this covenant is to be tested, and during such forty-five day period no
Default shall be deemed to have occurred due to noncompliance with this Section
7.6.
7.7 Tangible Capital Funds. The Company will not permit or suffer
Tangible Capital Funds to at any time be less than the sum of (a) $425,000,000
plus (b) the sum for all fiscal years of the Company during the period from
January 1, 1993 through the then latest fiscal year end of the Company of
66-2/3% of Net Income Minus Preferred Dividends for each such fiscal year;
provided that for purposes of this Section 7.7 Net Income shall exclude the
pre-tax amount attributable to recognition of the Deferred Trimas Gain or any
portion thereof as income.
7.8 Senior Debt Coverage Ratio.
(a) The Company will not permit or suffer the Senior Debt Coverage
Ratio to be greater than 5.00 to 1.00 at any time.
(b) In addition, if as of the last day of each of any two
consecutive fiscal quarters of the Company, the Total Leverage Ratio is equal to
or greater than 1.00 to 1.00, the Company will not permit or suffer the Senior
Debt Coverage Ratio to be greater than the Maximum Allowed Senior Debt Coverage
Ratio as of the Relevant Days immediately following both of such fiscal
quarters.
(c) As used in this Section 7.8, the term "Maximum Allowed Senior
Debt Coverage Ratio" means (i) 4.25 to 1.00 on the Relevant Day immediately
following the last day of any fiscal quarter of the Company ending during the
period from the Closing Date through December 30, 1993, (ii) 4.00 to 1.00 on the
Relevant Day immediately following December 31, 1993, (iii) 4.25 to 1.00 on the
Relevant Day immediately following the last day of any fiscal quarter of the
Company ending during the period from January 1, 1994 through December 30, 1994,
(iv) 3.50 to 1.00 on the Relevant Day immediately following December 31, 1994,
(v) 3.75 to 1.00 on the Relevant Day immediately following the last day of any
fiscal quarter of the Company ending during the period from January 1, 1995
through December 30, 1995, (vi) 3.50 to 1.00 on the Relevant Day immediately
following December 31, 1995, (vii) 3.75 to 1.00 on the Relevant Day immediately
following the last day of any fiscal quarter of the Company ending during the
period from January 1, 1996 through December 30, 1996, (viii) 3.25 to 1.00 on
the Relevant Day immediately following each of December 31, 1996 and December
31, 1997, and (ix) 3.50 to 1.00 on the Relevant Day immediately following the
last day of any fiscal quarter of the Company ending after January 1, 1997,
other than the fiscal quarter ending December 31, 1997. For purposes of this
Section 7.8, all Senior Debt which is repaid with cash received by the Company
from Masco Corporation for the purchase of preferred stock or subordinated debt
securities pursuant to the Securities Purchase Agreement within forty-five days
after the last day of any fiscal quarter of the Company shall be deemed repaid
as of the last day of such fiscal quarter, and during such forty-five day period
no Default shall be deemed to have occurred due to noncompliance with this
Section 7.8.
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7.9 Subsidiary Indebtedness. The Company will not permit or suffer the
aggregate amount of Debt of its Subsidiaries (other than Debt owing to the
Company or any of its Subsidiaries) at any time to be greater than 15% of the
sum of (a) Senior Debt plus (b) the unused amount of the Commitments.
7.10 Negative Pledge. Neither the Company nor any Consolidated
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $40,000,000;
(b) any Lien existing on any asset of any corporation at the time
such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset
(or acquiring a corporation or other entity which owned such asset),
provided that such Lien attaches to such asset concurrently with or within
90 days after such acquisition;
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Company or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof
by the Company or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that such Debt is not
increased and is not secured by any additional assets;
(g) any Lien in favor of the holder of Debt (or any Person acting
for or on behalf of such holder) arising pursuant to any order of attach-
ment, distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being contested in
good faith by appropriate proceedings and the Company or such Consolidated
Subsidiary, as the case may be, has established appropriate reserves
against such claims in accordance with generally accepted accounting
principles;
(h) Liens incidental to the normal conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not in
the aggregate materially detract (due to the amount of the liability
secured by such Liens or otherwise) from the value of the assets of the
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Company and the Company's Consolidated Subsidiaries taken as a whole or in
the aggregate materially impair the use thereof in the operation of the
business of the Company and the Company's Consolidated Subsidiaries taken
as a whole; and
(i) Liens not otherwise permitted by the foregoing clauses of this
Section; provided that (i) the aggregate outstanding principal amount of
Debt secured by all such Liens on current assets shall not at any time
exceed 20% of Current Assets and (ii) the aggregate outstanding principal
amount of Debt secured by all such Liens (including Liens referred to in
clause (i) of this proviso) shall not at any time exceed the sum of 5% of
Net Worth plus 20% of Current Assets, provided, further, that for purposes
of this Section 7.10(i), Current Assets shall not include any assets that
are classified as Current Assets solely because they are held for sale;
provided, however, that the restrictions set forth in this Section 7.10 shall
not apply to "margin stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), if and to the extent that the value of
the margin stock with respect to which the rights of the Company and its
Subsidiaries are restricted by this Section 7.10 would otherwise exceed 25% of
the value of all assets with respect to which the rights of the Company and its
Subsidiaries are restricted by this Section 7.10.
7.11 Dispositions of Assets; Mergers and Consolidations; Restricted
Transfers.
(a) The Company will not (i) directly or indirectly sell, lease,
transfer or otherwise dispose of all or substantially all of its assets or (ii)
merge or consolidate with any other Person unless the Company shall be the
continuing or surviving corporation of such merger or consolidation.
(b) The Company will not, and will not permit any Consolidated
Subsidiary to, directly or indirectly make a Restricted Transfer of its assets
to any Person if, immediately after giving effect thereto, the aggregate amount
of assets disposed of in all Restricted Transfers by the Company and its
Consolidated Subsidiaries in the twelve months then ended would exceed 15% of
the total assets of the Company and its Consolidated Subsidiaries as shown on
the most recent balance sheet delivered to the Banks under Section 7.1. For
purposes of this subsection (b), the term "Restricted Transfer" means a direct
or indirect sale, lease, transfer or other disposition of assets (other than
cash, margin stock, or the sale of inventory in the ordinary course of
business) to any Person (other than the Company or a Substantially-Owned
Consolidated Subsidiary) if, and to the extent that, in connection with such
transaction (and as a substantial part of the consideration incident thereto),
the Company or any Consolidated Subsidiary receives an equity ownership interest
in such Person or any right to receive payments which are specifically
contingent in amount or duration upon the earnings of such Person or any portion
of such Person's business.
(c) Notwithstanding any other provision of this Section 7.11, no
disposition of assets, merger, consolidation or Restricted Transfer referred to
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in subsection (a) or (b) of this Section shall be permitted if, immediately
after giving effect thereto, any Default would exist.
7.12 Changes in Subordinated Debt.
(a) The Company will not transfer, convey, assign or deliver to
any holder of any Subordinated Debt, or to any trustee, paying agent or other
fiduciary for the benefit of the holder of any Subordinated Debt (including any
defeasance), any cash, securities (other than securities constituting
Subordinated Debt) or other assets of the Company or any Subsidiary in payment
or on account of, or as provision for, principal, premium, if any, or interest
on any Subordinated Debt if (i) at the time of any such transfer, conveyance,
assignment or delivery there shall exist and be continuing, or if immediately
after giving effect thereto (or, with respect to Subordinated Debt of a series
that has not been registered for public sale pursuant to the Securities Act of
1933, as a reasonably foreseeable result thereof) there would exist, an Event of
Default, or (ii) unless the Agent is given at least five (5) Business Days (or
such shorter period of time acceptable to the Agent) prior notice thereof, any
such transfer, conveyance, assignment or delivery is made more than seven (7)
days in advance of a scheduled payment or prepayment on any Subordinated Debt or
in an amount in excess of the amount of such scheduled payment or prepayment.
(b) The Company will not make any transfer, conveyance, assignment
or delivery to any holder of any Subordinated Debt of a series that has not been
registered for public sale pursuant to the Securities Act of 1933, or make any
optional transfer, conveyance, assignment or delivery to any holder of
Subordinated Debt of a series that has been registered for public sale pursuant
to the Securities Act of 1933 (or enter into any amendment of any such then
outstanding Subordinated Debt of a series so registered to make any optional
transfer, conveyance, assignment or delivery mandatory), or to any trustee,
paying agent or other fiduciary for the benefit of the holder of any such
Subordinated Debt (including any defeasance), of any cash, securities (other
than securities constituting Subordinated Debt), or other assets of the Company
or any Subsidiary in payment or on account of, or as provision for principal,
premium, if any, or interest on any such Subordinated Debt, if at the time of
any such transfer, conveyance, assignment or delivery there shall exist and be
continuing, or if immediately after giving effect thereto (or with respect to
Subordinated Debt of a series that has not been so registered, as a reasonably
foreseeable result thereof) there would exist, a Default that is known to the
Company.
7.13 Use of Proceeds. None of the proceeds of the Loans made under this
Agreement will be used in violation of any applicable law or regulation
including, without limitation, Regulation U of the Board of Governors of the
Federal Reserve System.
7.14 Fiscal Year. The Company will not change its fiscal year from
beginning on January 1 of the calendar year and ending on December 31 of the
calendar year.
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7.15 Compliance with Laws. The Company will comply, and cause each
Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where (a) the necessity of compliance therewith
is contested in good faith by appropriate proceedings, (b) no officer of the
Company is aware that the Company or the relevant Subsidiary has failed to
comply therewith or (c) the Company has reasonably concluded that failure to
comply is not likely to have a material adverse effect on the business,
financial position or results of operations of the Company and its Consolidated
Subsidiaries, taken as a whole.
ARTICLE VIII.
CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES
The obligation of the Agent to issue any Letter of Credit, the obligation
of each Bank to make a Syndicated Loan on the occasion of each Syndicated
Borrowing hereunder, and the willingness of any Bank to consider, in its sole
discretion, making any Bid-Option Loan hereunder, is subject to the performance
by the Company of all its obligations under this Agreement and to the
satisfaction of the following further conditions:
8.1 Each Borrowing and Letter of Credit Issuance. In the case of each
Borrowing (other than a Floating Rate Borrowing deemed disbursed under Section
3.3(e)) and Letter of Credit Issuance hereunder:
(a) Receipt by the Agent of (i) in the case of each Borrowing, the
Notice of Borrowing from the Company containing any information required by
Section 3.2 or 3.4, as the case may be, and (ii) in the case of each Letter of
Credit Issuance, the Request for Letter of Credit Issuance from the Company as
required by Section 3.3, in each case signed by an officer or any other employee
of the Company previously designated to the Agent in writing by the Chairman,
President or any Vice President of the Company as having authority until further
notice to request a Borrowing or Letter of Credit Issuance under this Agreement,
and, in the case of each Letter of Credit Issuance, together with an application
for the related Letter of Credit and other related documentation requested by
and acceptable to the Agent appropriately completed and duly executed by such
designated officer or other employee and all fees required under Section 3.3(c);
(b) The fact that both before and at the conclusion of the
Borrowing or Letter of Credit Issuance: (i) in the case of a Refunding
Borrowing, no Event of Default shall have occurred and be continuing and (ii) in
the case of any other Borrowing or any Letter of Credit Issuance, no Default
shall have occurred and be continuing;
(c) The fact that the representations and warranties contained in
this Agreement (except, in the case of a Refunding Borrowing, the
representations and warranties set forth in Section 6.4(i), Section 6.5, the
last sentence of
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Section 6.6, clause (a) of the first sentence of Section 6.7 and Sections 6.8
and 6.9) shall be true and correct in all material respects or, with respect to
such representations and warranties that include a materiality standard, in all
respects, on and as of the date of such Borrowing or Letter of Credit Issuance
with the same force and effect as if made on and as of such date; and
(d) Receipt by the Agent of such other opinions, documents,
evidence, materials and information with respect to the matters contemplated
hereby as the Agent or the Required Banks may reasonably request.
Each Borrowing by the Company and Letter of Credit Issuance pursuant to this
Agreement, including the first such Borrowing or Letter of Credit Issuance,
shall be deemed to be a representation and warranty by the Company on the date
of such Borrowing or Letter of Credit Issuance as to the facts specified in
clauses (b) and (c) of this Section 8.1.
8.2 Initial Borrowing or Letter of Credit Issuance. In the case of the
initial Borrowing or Letter of Credit Issuance pursuant to this Agreement:
(a) Receipt by the Agent for the account of each Bank of a duly
executed Syndicated Note and a duly executed Bid-Option Note, each dated on or
before the date of such Borrowing or Letter of Credit Issuance; and
(b) Receipt by the Agent of all the items, and completion of all
the matters, required by Section 8.3.
8.3 Closing. Prior to the Closing Date, the Company shall pay to the
Existing Agent (for distribution in accordance with the Existing Credit
Agreement) all fees (including, without limitation, commitment fees), if any,
which have accrued under the Existing Credit Agreement through the Closing Date
and have not then been paid, the Company shall furnish to the Banks the
following items, and the following matters shall be completed:
(a) An opinion of counsel for the Company, substantially in the
form of Exhibit M hereto, and covering such other matters as any Bank may
reasonably request, dated the Closing Date;
(b) An opinion of Dickinson, Wright, Moon, Van Dusen & Freeman,
special counsel for the Agent, substantially in the form of Exhibit N hereto,
dated the Closing Date;
(c) Certified copies of all corporate action taken by the Company
to authorize the execution, delivery and performance of this Agreement and the
Notes, and the Borrowings and Letter of Credit Issuances hereunder, and such
other corporate documents and other papers as any Bank may reasonably request,
including, without limitation, certified copies of the Company's articles of
incorporation and by-laws;
(d) A certificate of a duly authorized officer of the Company,
dated the Closing Date, as to the incumbency, and setting forth a specimen or
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facsimile signature, of each of the persons (i) who has signed this
Agreement on behalf of the Company; (ii) who has signed the Notes on behalf of
the Company; and (iii) who will, until replaced by other persons duly authorized
for that purpose, act as the representatives of the Company for the purpose of
signing documents in connection with this Agreement and the transactions
contemplated hereby;
(e) A certificate of a senior officer of the Company to the effect
set forth in Section 8.1(b) and (c);
(f) The closing fees payable under Section 3.7, which shall be
paid to the Agent for the account of the Banks; and
(g) A certificate, signed by the chief accounting officer or chief
financial officer of the Company, setting forth in reasonable detail the
calculations of the Senior Leverage Ratio as of June 30, 1993 and the Interest
Coverage Ratio for the period of four consecutive fiscal quarters of the Company
ending June 30, 1993, and identifying the Applicable Margin for the period from
the Closing Date to the beginning of the next Application Period as a result of
such calculations.
ARTICLE IX.
EVENTS OF DEFAULT AND REMEDIES
9.1 Events of Default. If any one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) The Company shall fail to pay when due any installment of
principal of any Note or Existing Note or shall fail to pay within five
days of the due date thereof any interest on any Note or Existing Note or
any commitment fee, facility fee, closing fee, Letter of Credit fee, or
Agent's fee payable under this Agreement, or any reimbursement obligation
under Section 3.3 (unless satisfied by the deemed disbursement of Floating
Rate Loans); or
(b) The Company shall fail to observe or perform any covenant
contained in any of Sections 7.3, 7.5 to 7.12 inclusive and 7.14; or
(c) The Company shall fail to observe or perform any covenant or
agreement contained in (i) this Agreement (other than those covered by
clauses (a) and (b) above), or (ii) prior to the payment in full of
principal and interest on each Existing Note and any other amounts owing
under the Existing Credit Agreement, the Existing Credit Agreement (other
than those covered by subparagraphs (a) and (b) of Section 9.1 of the
Existing Agreement, as amended pursuant to Section 2.2), in each case, for
thirty (30) days after written notice thereof has been given to the
Company by any Bank or the Agent; or
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(d) Any representation or warranty of the Company or any officer
of the Company to the Banks contained herein (or, with respect to any
Existing Loan outstanding, if any, in the Existing Credit Agreement) or in
any certificate, statement or report furnished to the Banks hereunder
shall prove to have been incorrect or misleading in any material respect
on the date when made or deemed made, provided that, if any representation
and warranty deemed to have been made by the Company pursuant to the last
sentence of Section 8.1 as to the satisfaction of the condition of
borrowing set forth in clause (b)(i) of Section 8.1 shall have been
incorrect solely by reason of the existence of an Event of Default of
which the Company was not aware when such representation and warranty was
deemed to have been made and which was cured before or promptly after the
Company became aware thereof, then such representation and warranty shall
be deemed not to have been incorrect in any material respect; or
(e) The Company or any Significant Subsidiary shall fail to pay at
maturity, or within any applicable period of grace, any Debt (other than a
Loan or Existing Loan, and other than Acquired Debt in an aggregate
outstanding principal amount not exceeding $15,000,000) having an
aggregate principal amount in excess of $5,000,000, and such failure has
not been waived, or shall fail to observe or perform any term, covenant or
agreement (other than such a term, covenant or agreement to or for the
benefit of a Bank or Affiliate thereof restricting the sale, pledge or
other disposition by the Company or any Significant Subsidiary of "margin
stock" having a value in excess of 25% of the value of the assets referred
to in Section 221.2(g)(2)(i) of Regulation U unless the Board of Governors
of the Federal Reserve System or its staff advises the Agent in writing
that the existence of this subsection (e) without this parenthetical
exception would not in such circumstances render this Agreement "secured
directly or indirectly by margin stock" within the meaning of its
Regulation U), contained in any agreement (other than this Agreement) by
which it is bound evidencing or securing indebtedness for borrowed money
(other than Acquired Debt in an aggregate outstanding principal amount not
exceeding $15,000,000) for such period of time as would cause or permit
the holder or holders (or any Persons acting for or on behalf of such
holder or holders) thereof or of any obligations issued thereunder to
accelerate the maturity thereof or of any such obligations in an aggregate
principal amount in excess of $5,000,000, and such failure has not been
waived; provided that for purposes of this subsection (e), a failure by
the Company or any Significant Subsidiary to observe or perform any term,
covenant or agreement in respect of the industrial revenue bonds
identified on Schedule 2 attached hereto, or to pay on the due date
therefor the debt outstanding thereunder, shall not be deemed a Default or
contribute to the $5,000,000 aggregate limitation set forth above, so long
as the Company or such Significant Subsidiary satisfies all obligations to
pay premium, if any, principal of, and interest when due on such bonds
(whether or not related to an acceleration of maturity) within five days
after the due date therefor; or
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(f) The Company or any Significant Subsidiary shall (i) apply for
or consent to the appointment of a receiver, custodian, trustee,
liquidator or the like of itself or of a significant portion of its
assets; (ii) be unable or admit in writing its inability to pay its debts
as they mature; (iii) make a general assignment for the benefit of
creditors; (iv) be adjudicated a bankrupt or insolvent; or (v) file a
voluntary petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of
any insolvency law, or any answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization or insolvency
proceedings, or a resolution of either the shareholders or the Board of
Directors of such corporation shall be adopted for the purpose of
effecting any of the foregoing; or
(g) A proceeding shall be instituted without the application,
approval or consent of the Company or any Significant Subsidiary in any
court of competent jurisdiction seeking, in respect of the Company or such
Significant Subsidiary, adjudication in bankruptcy, dissolution, winding
up, reorganization, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a receiver, custodian, trustee,
liquidator or the like of the Company or such Significant Subsidiary or of
a significant portion of its assets, or other like relief in respect of
the Company or such Significant Subsidiary under any insolvency or
bankruptcy law, and the same shall continue undismissed or unstayed and in
effect for any period of sixty consecutive days; or
(h) Final judgment for the payment of money in excess of
$1,000,000 in amount shall be rendered by a court of record against the
Company or any Significant Subsidiary and the Company or such Significant
Subsidiary shall not discharge the same or provide for its discharge, or
procure a stay of execution thereof, within sixty days from the date of
entry thereof, and within said period of sixty days or such longer period
during which execution of such judgment shall have been stayed, move to
vacate said judgment or appeal therefrom and cause the execution thereof
to be stayed pending determination of such motion or during such appeal;
or
(i) The Company or any ERISA Affiliate of the Company shall fail
to pay when due an amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Benefit Liabilities in excess of $25,000,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA
by the Company or any ERISA Affiliate of the Company, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan and such
proceeding shall not have been dismissed within thirty days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
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(j) The Securities Purchase Agreement shall terminate or be
terminated, or the "Commitment" of Masco Corporation thereunder (and as
defined therein) shall otherwise expire, prior to the time set forth in
the form of Securities Purchase Agreement attached hereto as Exhibit J, or
the Securities Purchase Agreement shall be amended, supplemented or
otherwise modified without the consent of the Required Banks, except as
permitted under the definition of the term "Securities Purchase
Agreement";
then, and in each such case, the Agent may and, upon being directed to do so by
the Required Banks, shall, by written notice to the Company, (i) immediately
terminate the Commitments, (ii) declare the principal of and interest accrued on
all the Notes and Existing Notes, all unpaid reimbursement obligations in
respect of drawings under Letters of Credit, and all other amounts owing under
this Agreement to be immediately due and payable or (iii) demand immediate
delivery of cash collateral, and the Company agrees to deliver such cash
collateral upon demand, in an amount equal to the maximum amount that may be
available to be drawn at any time prior to the stated expiry of all outstanding
Letters of Credit, or any one or more of the foregoing, whereupon the
Commitments shall terminate forthwith and all such amounts, including such cash
collateral, shall become immediately due and payable without presentment or
demand for payment, notice of non-payment, protest or further notice or demand
of any kind, all of which are expressly waived by the Company; provided,
however, that in the case of the occurrence of any event described in the
foregoing clauses (f) and (g) the Commitments shall automatically terminate
forthwith and all such amounts, including such cash collateral, shall
automatically become immediately due and payable without action upon the part of
the Required Banks and without the requirement of any such notice, and without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived. Such cash collateral delivered in respect of outstanding Letters
of Credit shall be deposited in a special cash collateral account to be held by
the Agent as collateral security for the payment and performance of the
Company's obligations under this Agreement and the Notes to the Banks and the
Agent.
9.2 Remedies. The Agent may and, upon being directed to do so by the
Required Banks, shall, in addition to the remedies provided in Section 9.1,
exercise and enforce any and all other rights and remedies available to it or
the Banks, whether arising under this Agreement, the Notes or under applicable
law, in any manner deemed appropriate by the Agent, including suit in equity,
action at law, or other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or agreement
contained in this Agreement or in the Notes or in aid of the exercise of any
power granted in this Agreement or the Notes.
9.3 Set Off. Upon the failure of the Company to pay any indebtedness
under this Agreement or the Notes at its maturity (whether at stated maturity,
by acceleration or otherwise) or, in the case of such indebtedness other than
principal of the Loans, when due (after allowing for any grace period provided
with respect thereto under Section 9.1(a)), each Bank may at any time and from
time to time, without notice to the Company (any requirement for such notice
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being expressly waived by the Company) set off and apply against any and all of
the obligations of the Company now or hereafter existing under this Agreement
and the Notes, whether owing to such Bank or any other Bank or the Agent, any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Bank to or for
the credit or the account of the Company and any property of the Company from
time to time in possession of such Bank, regardless of whether or not such Bank
shall have made any demand hereunder or any indebtedness owing by such Bank may
be contingent and unmatured. The rights of the Banks under this Section 9.3 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Banks may have.
ARTICLE X.
THE AGENTS AND THE BANKS
10.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. The provisions of this Article X are solely for
the benefit of the Agent and the Banks, and the Company shall not have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
the Company.
10.2 Agent and Affiliates. The Agent in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent.
The Agent and its Affiliates may (without having to account therefor to any
Bank) accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with the Company or any
Subsidiary of the Company as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Banks.
10.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or shall otherwise exist against the Agent. As to any
matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement action under the Notes), the Agent shall
not be required to exercise any discretion or take any action, but may request
instructions from the Required Banks. The Agent shall in all cases be fully
protected from liability to the Banks in acting, or in refraining from acting,
pursuant to the written instructions of the Required Banks or, when expressly
required by this Agreement, all the Banks, which instructions and any action or
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omission pursuant thereto shall be binding upon all of the Banks; provided,
however, that the Agent shall not be required to act or omit to act if, in the
judgment of the Agent, such action or omission may expose the Agent to personal
liability or is contrary to this Agreement, any Note, or applicable law.
10.4 Reliance by Agent. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it to
be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder
thereof. The Agent may employ agents (including, without limitation, collateral
agents) and may consult with legal counsel (who may be counsel for the Company),
independent public accountants and other experts selected by it and shall not
be liable to the Banks, except as to money or property received by it or its
authorized agents, for the negligence or misconduct of any such agent selected
by it with reasonable care or for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants or
experts.
10.5 Default. The Agent shall not be deemed to have knowledge of the
occurrence of any Default, unless the Agent has received written notice from a
Bank or the Company specifying such Default and stating that such notice is a
"Notice of Default". In the event that the Agent receives such a notice, the
Agent shall give written notice thereof to the Banks.
10.6 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any action taken
or not taken by it or them in connection herewith with the consent or at the
request of the Required Banks or, when expressly required by this Agreement, all
the Banks or in the absence of its or their own gross negligence or wilful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (a) any recital, statement, warranty or representation contained in
this Agreement or any Note, or in any certificate, report, financial statement
or other document furnished in connection with this Agreement, (b) the
performance or observance of any of the covenants or agreements of the Company,
(c) the satisfaction of any condition specified in Article VIII, except as to
the delivery to the Agent of documents that appear on their face to conform to
the requirements of Article VIII (other than requirements of any Bank under
Section 8.3(c) that are not known to the Agent), or (d) the validity,
effectiveness, legal enforceability, value or genuineness of this Agreement, the
Notes, or any other instrument or document furnished in connection herewith.
10.7 Nonreliance on Agent and Other Banks. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Company and the Company's Subsidiaries and
its own decision to enter into this Agreement, and that it will, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decision in taking or not taking action under this
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Agreement. The Agent shall not be required to keep itself informed as to the
performance or observance by the Company of this Agreement, the Notes or any
other documents referred to or provided for herein or to inspect the properties
or books of the Company and, except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any information concerning the affairs, financial condition or
business of the Company or any of its Subsidiaries which may come into the
possession of the Agent or any of its Affiliates.
10.8 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Company, but without limiting any obligation of the
Company to make such reimbursement), ratably according to their respective
Commitment Percentages from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or the transactions contemplated hereby or any action taken or
omitted by the Agent under this Agreement; provided, however, that no Bank shall
be liable for any portion of such claims, damages, losses, liabilities, costs or
expenses resulting from the Agent's gross negligence or wilful misconduct.
Without limitation of the foregoing, each Bank agrees to reimburse the Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including, but not limited to, reasonable fees and expenses of counsel)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that the Agent
is not reimbursed for such expenses by the Company, but without limiting the
obligation of the Company to make such reimbursement; provided, however, that no
Bank shall be liable for any portion of such expenses incurred as a result of
the Agent's gross negligence or wilful misconduct. Each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any amounts
owing to the Agent by the Banks pursuant to this Section; provided that no Bank
shall be responsible for failure of any other Bank to make such share available
to the Agent. If the indemnity furnished to the Agent under this Section shall,
in the reasonable judgment of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity from the Banks (other than for the
Agent's gross negligence or wilful misconduct) and cease, or not commence, to
take any action until such additional indemnity is furnished.
10.9 Resignation of Agent. The Agent may resign as such at any time upon
thirty days' prior written notice to the Company and the Banks. In the event of
any such resignation, the Required Banks shall, by an instrument in writing
delivered to the Company and the Agent, appoint a successor, which shall be (a)
a Bank or (b) a commercial bank organized under the laws of the United States or
any State thereof and having a combined capital and surplus of at least
$500,000,000. If a successor is not so appointed or does not accept such
appointment before the Agent's resignation becomes effective, the resigning
Agent may appoint a temporary successor to act until such appointment by the
Required Banks is made and accepted or if no such temporary successor is
appointed as provided above by the resigning Agent, the Required Banks shall
thereafter perform all the duties of the Agent hereunder until such appointment
by the Required
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Banks is made and accepted. Any successor to the Agent shall execute and
deliver to the Company and the Banks an instrument accepting such appointment
and thereupon such successor Agent, without further act, deed, conveyance or
transfer shall become vested with all of the properties, rights, interests,
powers, authorities and obligations of its predecessor hereunder with like
effect as if originally named as Agent hereunder. Upon request of such
successor Agent, the Company and the resigning Agent shall execute and deliver
such instruments of conveyance, assignment and further assurance and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in such successor Agent all such properties, rights, interests,
powers, authorities and obligations. The provisions of this Article X shall
thereafter remain effective for such resigning Agent with respect to any
actions taken or omitted to be taken by such Agent while acting as the Agent
hereunder.
10.10 Sharing of Payments. The Banks agree among themselves that, in the
event that any Bank shall obtain payment in respect of any Loan or Letter of
Credit reimbursement obligation owing to such Bank under this Agreement through
the exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share as provided for in this Agreement, such Bank shall
promptly purchase from the other Banks participations in such Loans and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all of the Banks share such payment in
accordance with their respective ratable shares as provided for in this
Agreement. The Banks further agree among themselves that if payment to a Bank
obtained by such Bank through the exercise of a right of set-off, banker's lien,
counterclaim or otherwise as aforesaid shall be rescinded or must otherwise be
restored, each Bank which shall have shared the benefit of such payment shall,
by repurchase of participations theretofore sold, return its share of that
benefit to each Bank whose payment shall have been rescinded or otherwise
restored, together with interest thereon at the per annum rate, if any, at which
such Bank whose payment shall have been restored is liable with respect to such
restored payment. The Company agrees that any Bank so purchasing such a parti-
cipation may, to the fullest extent permitted by law, exercise all rights of
payment, including set-off, banker's lien or counterclaim, with respect to such
participation as fully as if such Bank were a holder of such Loan or other
obligation in the amount of such participation. The Banks further agree among
themselves that, in the event that amounts received by the Banks and the Agent
hereunder are insufficient to pay all such obligations when due, the fees and
other amounts owing to the Agent in such capacity shall be paid therefrom before
payment of obligations owing to the Banks under this Agreement. Except as
otherwise expressly provided in this Agreement, if any Bank or the Agent shall
fail to remit to the Agent or any other Bank an amount payable by such Bank or
the Agent to the Agent or such other Bank pursuant to this Agreement on the date
when such amount is due, such payments shall be made together with interest
thereon for each date from the date such amount is due until the date such
amount is paid to the Agent or such other Bank at a rate per annum equal to the
rate at
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which borrowings are available to the payee in its overnight federal funds
market.
10.11 Withholding Tax Exemption. Each Bank that is not organized and
incorporated under the laws of the United States or any State thereof agrees to
file with the Agent and the Company, in duplicate, (a) on or before the later of
(i) the Closing Date and (ii) the date such Bank becomes a Bank under this
Agreement and (b) thereafter, for each taxable year of such Bank (in the case of
a Form 4224) or for each third taxable year of such Bank (in the case of any
other form) during which interest or fees arising under this Agreement and the
Notes are received, unless not legally able to do so as a result of a change in
United States income tax law enacted, or treaty promulgated, after the date
specified in the preceding clause (a), on or prior to the immediately following
due date of any payment by the Company hereunder, a properly completed and
executed copy of either Internal Revenue Service Form 4224 or Internal Revenue
Service Form 1001 and Internal Revenue Service Form W-8 or Internal Revenue
Service Form W-9 and any additional form necessary for claiming complete
exemption from United States withholding taxes (or such other form as is
required to claim complete exemption from United States withholding taxes), if
and as provided by the Code or other pronouncements of the United States
Internal Revenue Service, and such Bank warrants to the Company that the form so
filed will be true and complete; provided that such Bank's failure to complete
and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as the case
may be, and any such additional form (or any successor form or forms) shall not
relieve the Company of any of its obligations under this Agreement, except as
otherwise provided in this Section 10.11
10.12 The Co-Agents. Each Co-Agent, in such capacity, shall have no
authority, duties, responsibilities, obligations, liabilities or functions under
this Agreement or the Notes.
ARTICLE XI.
MISCELLANEOUS
11.1 Amendments, Etc.
(a) No amendment, modification, termination or waiver of any
provision of this Agreement nor any consent to any departure therefrom shall be
effective unless the same shall be in writing and signed by the Company (except
with respect to waivers by the Required Banks or all the Banks) and the Required
Banks and, to the extent any rights or duties of the Agent may be affected
thereby, the Agent, provided, however, that no such amendment, modification,
termination, waiver or consent shall, without the consent of the Agent and all
of the Banks, (i) subject to Section 3.10, authorize or permit the extension of
time for, or any reduction of the amount of, any payment of the principal of, or
interest (including the Applicable Margin) on, any Loan, or any fees or other
amount payable hereunder, or (ii) except as expressly authorized hereunder,
amend, extend or terminate the respective Commitment of any Bank, or (iii)
modify
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the provisions of this Section regarding the taking of any action under this
Section, or the definition of Required Banks, or (iv) modify the several nature
of the obligations of the Banks hereunder, modify the sharing provisions among
the Banks in Section 10.10, modify the first sentence of Section 11.6 or modify
any other provision of this Agreement which by its terms requires the consent of
all the Banks.
(b) Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, no Bank that
is in default of any of its obligations, covenants or agreements under this
Agreement shall be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of this Agreement or any departure therefrom or any direction from
the Banks to the Agent, and, for purposes of determining the Required Banks at
any time when any Banks are in default under this Agreement, the Commitments and
Loans of such defaulting Banks shall be disregarded; provided that no action of
a type described in the proviso in Section 11.1(a) shall be binding on a
defaulting Bank without its written consent thereto.
11.2 Notices.
(a) Except as otherwise provided in subsection 11.2(c) hereof, all
notices and other communications to or upon the parties hereto shall be deemed
to have been duly given or served if sent in writing (including
telecommunications) to the party to which such notice or other communication is
required or permitted to be given or served under this Agreement, to the address
or telex or telecopy number set forth below the name of such party on the
signature pages hereof, or at such other address or telex or telecopy number as
the parties hereto may hereafter specify to the others in writing. If for
purposes of receiving Invitations for Bid-Option Quotes and information
regarding Notices of Bid-Option Rate Borrowings, a Bank wishes to receive such
communications at an address or telex or telecopy number different from its
address or telex or telecopy number for other purposes under this Agreement, the
Agent shall communicate with such Bank for such purposes at such different
address, telex or telecopy number following the Agent's receipt of a written
notice from such Bank requesting that the Agent do so. All mailed notices or
other communications shall be by registered or certified mail, postage prepaid,
with return receipt requested. All notices or other communications sent by
means of telecopy, telex or other wire transmission shall be made with request
for assurance of receipt in a manner typical with respect to communications of
that type. Written notices or other communications shall be deemed delivered
upon receipt if delivered by hand, 3 Business Days after mailing if mailed, or 1
Business Day after deposit with an overnight courier service if delivered by
overnight courier. Notices or other communications provided by any of the other
means referred to above shall be deemed delivered upon receipt. Notwithstanding
the foregoing, all notices to the Agent shall be effective only when actually
received by the Agent, and all notices from the Agent to any Bank regarding such
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Bank's obligation to fund Loans or to make payment under Section 3.3(d) shall be
effective only when actually received by such Bank.
(b) Notices by the Company to the Agent with respect to
terminations or reductions of the Commitments pursuant to Section 3.8, requests
for Loans and Letter of Credit Issuances pursuant to Section 3.2, 3.3 or 3.4,
and notices of prepayment pursuant to Section 4.2 shall be irrevocable and
binding on the Company.
(c) Any notice to be given by the Agent or any Bank to the Agent
or any Bank hereunder, may be given by telephone, and shall be promptly
confirmed in writing upon the request of the recipient. Any such notice so
given by telephone shall be deemed effective upon receipt thereof by the party
to whom such notice is to be given.
11.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Agent or any Bank, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder or under
any Note shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent's or such Bank's rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent or any Bank under this Agreement,
or any Note, is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted hereunder or thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Agreement or by
applicable law to the Agent or any Bank may be exercised from time to time and
as often as may be deemed expedient by the Agent or any Bank and, unless
contrary to the express provisions of this Agreement, or the Notes, irrespective
of the occurrence or continuance of any Default.
11.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, including, without limitation, under Sections 5.3, 5.5
and 11.5, representations and warranties of the Company made herein or in any
certificate, report, financial statement or other document furnished by or on
behalf of the Company pursuant to this Agreement shall be deemed to be material
and to have been relied upon by the Banks, notwithstanding any investigation
heretofore or hereafter made by any Bank or on such Bank's behalf, and shall
survive the repayment in full of the Loans and the termination of the
Commitments.
11.5 Expenses and Indemnification.
(a) The Company shall pay, or reimburse the Agent or any Bank, as
the case may be, for (i) all reasonable out-of-pocket expenses of the Agent,
including reasonable fees and disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default, (ii) all reasonable costs and
expenses of the Agent or such Bank, including reasonable fees and disbursements
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of counsel, in connection with any action or proceeding relating to a court
order, injunction or other process or decree restraining or seeking to restrain
the Agent from paying any amount under, or otherwise relating in any way to, any
Letter of Credit and any and all costs and expenses which it may incur relative
to any payment under any Letter of Credit, provided, that the Company shall not
be liable under this clause (ii) to the extent, but only to the extent, any such
costs and expenses of the Agent or any Bank are caused by the Agent's or such
Bank's breach of this Agreement or gross negligence, and (iii) if an Event of
Default occurs, all reasonable expenses incurred by the Agent or such Bank,
including reasonable fees and disbursements of counsel (including in-house
counsel), in connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. The Company shall indemnify each
Bank against any transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of this
Agreement or the Notes.
(b) The Company shall indemnify each Bank and the Agent, and their
respective officers, directors, employees and agents, and hold each Bank and the
Agent, and their respective officers, directors, employees and agents, harmless
from and against any and all liabilities, losses, damages, costs and expenses of
any kind (including, without limitation, the reasonable fees and disbursements
of counsel for any Bank or the Agent or any such Person in connection with any
investigative, administrative or judicial proceeding, whether or not such Bank,
the Agent or any such Person, as the case may be, shall be designated a party
thereto) which may be incurred by any Bank, by the Agent or by any such Person,
substantially relating to or arising out of any actual or proposed use of
proceeds of Loans or Letters of Credit for the purpose of acquiring assets or
capital stock of any other Person; provided that none of the Agent, any Bank or
any such Person shall have the right to be indemnified hereunder for its own
gross negligence or wilful misconduct as determined by a court of competent
jurisdiction.
(c) The Company hereby further indemnifies and agrees to hold the
Banks and the Agent, and their respective officers, directors, employees and
agents harmless from and against any and all claims, damages, losses,
liabilities, costs and expenses of any kind or nature whatsoever which the Banks
or the Agent or any such Person may incur or which may be claimed against any of
them by reason of or in connection with any Letter of Credit, and neither any
Bank nor the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for: (i) the use which may be made of any
Letter of Credit or for any acts or omissions of any beneficiary in connection
therewith; (ii) the validity, sufficiency or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (iii) payment by
the Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance
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whatsoever arising in connection with any Letter of Credit; provided, however,
that the Company shall not be liable hereunder to the Banks and the Agent and
such other Persons and the Agent shall be liable to the Company to the extent,
but only to the extent, of any direct, as opposed to consequential or
incidental, damages suffered by the Company which were caused by (A) the
Agent's wrongful dishonor of any Letter of Credit after the presentation to it
by the beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit, or (B) the Agent's payment under any Letter of Credit to the extent, but
only to the extent, that such payment constitutes gross negligence or wilful
misconduct of the Agent. The inclusion of any event in clauses (i) - (vii) of
Section 3.3(f) shall not by itself preclude a finding that such event
constitutes gross negligence or wilful misconduct of the Agent. It is
understood that in making any payment under a Letter of Credit the Agent will
rely on documents presented to it under such Letter of Credit as to any and all
matters set forth therein without further investigation and regardless of any
notice or information to the contrary, and such reliance and payment against
documents presented under a Letter of Credit substantially complying with the
terms thereof shall not be deemed gross negligence or wilful misconduct of the
Agent in connection with the payment.
11.6 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
the Company may not, without the prior written consent of all the Banks, assign
its rights or obligations hereunder or under the Notes, and the Banks shall not
be obligated to make any Loan hereunder to any Person other than the Company,
and the Agent shall not be obligated to issue any Letter of Credit for the
account of any Person other than the Company or any Consolidated Subsidiary of
the Company.
(b) The Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement and the
transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Agent provided under this Agreement, the Notes or otherwise. In
furtherance of such agency, the Agent may from time to time direct that the
Company provide notices, reports and other documents contemplated by this
Agreement (or duplicates thereof) to such agent. The Company hereby consents to
the appointment of such agent and agrees to provide all such notices, reports
and other documents and to otherwise deal with such agent acting on behalf of
the Agent in the same manner as would be required if dealing with the Agent
itself.
(c) Any Bank may sell a participation interest to any financial
institution(s), and such financial institution(s) may further sell a
participation interest (undivided or divided) to any financial institution(s),
in its Commitment and the Loans and risk of the Letters of Credit and such
Bank's or such participating financial institution's, as the case may be, rights
and
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benefits under this Agreement and the Notes, and to the extent of that
participation, such participant or participants shall have the same rights and
benefits against the Company under Section 9.3 as it or they would have had if
such participant or participants were the Bank making the Loans to the Company
hereunder, provided, however, that in purchasing such participation interest(s)
each such participant shall be deemed to have agreed to share with the Banks the
proceeds thereof as provided in Section 10.10 as fully as if such participant
were a Bank hereunder; and provided further, however, that (i) the obligations
under this Agreement of each Bank selling a participation interest hereunder
shall remain unmodified and fully effective and enforceable against such Bank,
(ii) such Bank shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Bank shall remain the holder of
its Notes for all purposes of this Agreement, (iv) the Company, the Agent and
the other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement, and (v)
such Bank shall not grant to its participant(s) any rights to consent or
withhold consent to any action taken by such Bank or the Agent under this
Agreement other than action requiring the consent of all of the Banks hereunder.
Each Bank shall give the Company prior written notice of each sale by such Bank
of a participation interest under this Section 11.6(c). Each participant shall
be entitled to the benefits of Sections 5.3 and 5.5 with respect to its
participation interest as if it were a Bank; provided that no participant shall
be entitled to receive any greater amount pursuant to such Sections 5.3 and 5.5
than the Bank that originally sold such participation interest would have been
entitled to receive in respect of such participation interest had no such sale
taken place.
(d) Any Bank may, with the prior written consent of the Company
and the Agent (which consent in each case will not unreasonably be withheld),
assign to one or more banks or other financial institutions all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Syndicated Loans owing to it, its share
of the risk of Letters of Credit, and the Syndicated Notes held by it);
provided, however, that (i) each such assignment shall be of a uniform, and not
a varying, percentage of all rights and obligations (other than any Bid-Option
Loan or Bid-Option Note), (ii) the amount of the Commitment of any assignee Bank
as of any date, after giving effect to each assignment to such assignee that is
effective on such date, shall in no event be less than $10,000,000, (iii) except
in the case of an assignment of all of a Bank's rights and obligations under
this Agreement, (A) the amount of the Commitment of the assigning Bank being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to each such assignment) shall in no
event be less than $5,000,000 or an integral multiple of $5,000,000, or such
lesser amount as the Company and the Agent may consent to and (B) after giving
effect to each such assignment, the amount of the Commitment of the assigning
Bank shall in no event be less than $10,000,000, (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register (as hereinafter defined), an Assignment and Acceptance
in the form of Exhibit K hereto (an "Assignment and Acceptance"), together with
the Notes subject to such assignment and a processing and recordation fee of
$3,000, and (v) any Bank may without the consent of the Company or the Agent,
and without paying any fee, assign to any Affiliate of such Bank that is a bank
or financial institution all
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of its rights and obligations under this Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (i) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder and (ii) the Bank assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an assigning
Bank's rights and obligations under this Agreement, such Bank shall cease to be
a party hereto).
(e) By executing and delivering an Assignment and Acceptance, (i)
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (A) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any instrument or other document furnished pursuant hereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any instrument or other document furnished pursuant hereto;
and (B) such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by the Company of any of its obligations under this
Agreement or any instrument or other document furnished pursuant hereto, and
(ii) the assignee thereunder confirms to the assignor thereunder and the other
parties hereto as follows: (A) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 6.6 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (B) such assignee will, independently and
without reliance upon the Agent, such assigning Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (C) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (D) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Bank and agrees that shall be bound by all the terms and provisions of
this Agreement.
(f) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Banks and the Commitment of, and principal amount
of the Loans owing to, each Bank from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
demonstrable error, and the Company, the Agent and the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
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purposes of this Agreement. The Register shall be available for inspection by
the Company or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee and, unless such assignment is of only a
portion of such assigning Bank's rights and obligations hereunder, the Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed and the Agent and the Company have given their written
consent under Section 11.6(d) (if required), (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company. Within five Business Days
after its receipt of such notice, the Company, at its own expense, shall execute
and deliver to the Agent (in exchange for the surrendered Notes unless such
assignment is of only a portion of such assigning Bank's rights and obligations
hereunder) a new Syndicated Note to the order of such assignee and a new Bid-
Option Note to the order of such assignee. Such new Syndicated Note and Bid-
Option Note shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of Exhibits A and B hereto,
respectively.
(h) If any Reference Bank makes an assignment of all of its
Commitment and Syndicated Loans to an unaffiliated institution pursuant to
subsection (d) above, or if the Fixed Rate Loans of any Reference Bank are
repaid pursuant to Section 5.2 or 5.3, the Agent shall, with the consent of the
Required Banks and the Company, appoint another Bank to act as Reference Bank
hereunder. No assignee of any Bank shall be entitled to receive any greater
payment under Section 5.3 than such Bank would have been entitled to receive
with respect to the rights assigned or otherwise transferred, unless such
assignment is made by reason of the provisions of Section 5.2 or 5.3 requiring
such Bank to designate a different lending office under certain circumstances or
at a time when the circumstances giving rise to such greater payment did not
exist.
(i) Each Bank may assign to one or more banks or other financial
institutions any Bid-Option Note held by it. Any such Bank assigning a Bid-
Option Note shall for all purposes of this Agreement be deemed to be the holder
of such Note, and no assignee under this Section 11.6(i) shall as a result of
such assignment become a "Bank" under this Agreement.
(j) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in, or assign,
all or any portion of its rights under this Agreement (including, without
limitation, the Loans owing to it and the Note or Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; provided that such creation of a
security interest or assignment shall not release such Bank from its obligations
under this Agreement.
11.7 Confidentiality. Each Bank agrees that all documentation and other
information made available by the Company to such Bank under the terms of this
Agreement shall (except (a) to the extent required by legal or governmental
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process or otherwise by law, or (b) if such documentation and other information
is publicly available or hereafter becomes publicly available other than by
action of such Bank, or was theretofore known to such Bank independent of any
disclosure thereto by the Company, or (c) to the extent of necessary disclosure
to such Bank's accountants, attorneys or regulators, or (d) in any litigation or
similar proceedings related to this Agreement, the Notes or any Letter of
Credit) be held in the strictest confidence by such Bank and disclosed only to
those officers, employees and agents of such Bank or of any Person controlling
such Bank involved in the administration of the credit from time to time
outstanding from such Bank to the Company or otherwise involved in servicing,
maintaining or further developing the relationship between such Bank and the
Company, each of which officers, employees and agents shall, except as permitted
under this Section 11.7 generally with respect to such Bank, hold such
documentation and other information in the strictest confidence; provided that
(i) such Bank may disclose such documentation and other information, and all
other information that has been delivered to such Bank by or on behalf of the
Company prior to the Closing Date in connection with such Bank's credit
evaluation of the Company and its Subsidiaries, to any other financial
institution to which such Bank sells or proposes to sell a participation or
other interest in any of its Loans hereunder (or under any other credit
agreement with the Company), if such other financial institution, prior to such
disclosure, agrees for the benefit of the Company to comply with the provisions
of this Section 11.7 (including the provisions of this Section 11.7 allowing
further disclosure to other financial institutions to whom a sale of a
participation or other interest is proposed), or to any Federal Reserve Bank and
(ii) such Bank may disclose the provisions of this Agreement and the Notes and
the amounts, maturities and interest rates of its Loans and the amounts of
Letters of Credit (and similar information relating to any other credit
agreement with the Company) to any purchaser or potential purchaser of any
interest of such Bank in any Loan to the Company.
11.8 Counterparts; Effectiveness of Telecopied Signatures. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart. Delivery of
a telecopied signature on this Agreement shall be as effective against the
signer as delivery of its original signature.
11.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
11.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any Person, or which such Person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
11.11 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
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would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or any event or condition which with notice or lapse
of time, or both, could become such a Default if such action is taken or such
condition exists.
11.12 Interest Rate Limitation. Notwithstanding any provisions of this
Agreement or the Notes, in no event shall the amount of interest paid or agreed
to be paid by the Company exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Notes at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Loans outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal and all other obligations of the Company to the Banks have
been paid in full.
11.13 Substitution of Banks.
(a) Upon five Business Days' written notice in the form of
Exhibit L delivered to the Agent and the applicable Bank, the Company may
replace any one or more of the Banks. Upon the date of its effectiveness, such
notice shall terminate the Commitment of such Bank entirely, provided that the
Company shall prepay each Loan of such Bank (if any) in full on the effective
date of such termination, together with accrued interest thereon, all amounts
due pursuant to Sections 5.3 and 5.5, all accrued commitment fees and facility
fees with respect to such Bank and all other amounts owing to such Bank
hereunder to such effective date.
(b) If the Company shall terminate the Commitment of any Bank
pursuant to the provisions of subsection (a) of this Section 11.13, the Company
shall designate another bank or other banks (which may be one of the Banks) (in
either case, an "Additional Bank") to be parties to this Agreement, provided,
that (i) without the consent of the Agent, the total number of Additional Banks
(other than those that were already Banks) may not exceed the total number of
Banks whose Commitments are terminated pursuant to Section 11.13(a) plus three,
(ii) the amount of the Commitment of any Additional Bank may not be less than
$10,000,000, and (iii) the amount of the Commitment(s) of the Additional Bank(s)
(or, if any such Additional Bank already is a Bank, the added portion of such
Bank's Commitment) shall in the aggregate equal the amount of the Commitment so
terminated. Any Additional Bank shall become a party to this Agreement and be
considered a Bank hereunder for all purposes if (i) it shall agree in writing to
be bound by all of the terms and provisions of this Agreement, such agreement to
specify the amount of the Commitment of such Additional Bank and to be
otherwise in form and substance satisfactory to the Agent, (ii) it shall make
Syndicated
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Loans to the Company in principal amounts which bear the same ratio to the
amounts of the Syndicated Loans of other Banks (including other Additional
Banks) then outstanding or to be concurrently outstanding as the amount of the
Commitment of such Additional Bank bears to the then aggregate amount of the
Commitments of such other Banks (including other Additional Banks), and (iii) a
copy of such agreement and of evidence satisfactory to the Agent of the making
of such Loans shall be furnished to the Agent.
11.14 Collateral. Each of the Banks represents to the Agent and each of
the other Banks that it, in good faith, is not relying upon any "margin stock"
(as defined in Regulation U) as collateral in the extension or maintenance of
the credit provided for in this Agreement.
11.15 Governing Law. This Agreement is a contract made under, and shall
be governed by and construed in accordance with, the law of the State of
Michigan applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
11.16 Integration and Severability. This Agreement and the Notes
(together with the Existing Credit Agreement, as amended hereby) embody the
entire agreement and understanding among the Company, the Agent, and the Banks,
and supersede all prior agreements and understandings, relating to the subject
matter hereof and thereof. In case any one or more of the obligations of the
Company under this Agreement or any Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of the Company shall not in any way be affected or
impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of the Company under this Agreement or any Note in any other
jurisdiction.
11.17 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT, THE CO-AGENTS AND THE
COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY OF THEM RELATED HERETO OR THERETO. NONE OF THE
BANKS, THE AGENT, THE CO-AGENTS OR THE COMPANY SHALL SEEK TO CONSOLIDATE, BY
COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
Closing Date, notwithstanding the date and year first above written.
"Company":
MASCOTECH, INC.
By:/S/ Timothy Wadhams
Timothy Wadhams
Its Vice President- Controller
and Treasurer
21001 Van Born Road
Taylor, Michigan 48180
Attention: Timothy Wadhams
Fax: (313) 374-6118
"Agent":
NBD BANK, N.A.
By:/S/ John H. Wert, Jr.
John H. Wert, Jr.
Its Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Telex: 230729
Fax: (313) 225-1761
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"Co-Agents":
COMERICA BANK
By:/S/ James R. Grossett
James R. Grossett
Its Vice President
THE BANK OF NEW YORK
By:/S/ Douglas A. Ober
Douglas A. Ober
Its Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By:/S/ William R. Madden
William R. Madden
Its Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/S/ Laura Reim
Laura Reim
Its Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By:/S/ William A. Bowen, Jr.
William A. Bowen, Jr.
Its Vice President
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"COMMITMENT": "Banks":
$90,000,000 NBD BANK, N.A.
By:/S/ John H. Wert, Jr.
John H. Wert, Jr.
Its Vice President
Domestic and Eurodollar
Lending Offices
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Telex: 230729
Fax: (313) 225-1761
$70,000,000 COMERICA BANK
By:/S/ James R. Grossett
James R. Grossett
Its Vice President
Domestic and Eurodollar
Lending Office:
500 Woodward Avenue
Detroit, Michigan 48226
Attention: Donna Pierzynowski
Telex: 170363
Fax: (313) 222-9514
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$60,000,000 THE BANK OF NEW YORK
By:/S/ Douglas A. Ober
Douglas A. Ober
Its Vice President
Domestic and Eurodollar
Lending Office:
One Wall Street
New York, New York 10286
Attention: Tabitha Moran
Telex: TRT177363
Fax: (212) 635-6434
$45,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By:/S/ William R. Madden
William R. Madden
Its Vice President
Domestic and Eurodollar
Lending Office:
One First National Plaza
Suite 0088
Chicago, Illinois 60670
Attention: Dennis Degan
Telex: 4330253
Fax: (312) 732-2715
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$45,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/S/ Laura Reim
Laura Reim
Its Vice President
Domestic and Eurodollar
Lending Office:
60 Wall Street
New York, New York 10260-0060
Attention: Loan Department
Telex: 177615 or 620106
Fax: (212) 648-5336
$45,000,000 NATIONSBANK OF NORTH CAROLINA, N.A.
By:/S/ William A. Bowen, Jr.
William A. Bowen, Jr.
Its Vice President
Domestic and Eurodollar
Lending Office:
NationsBank Plaza
NC1-002-17-21
Charlotte, North Carolina 28255
Attention: Cathy Pumpower
Fax: (704) 386-8694
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$40,000,000 CONTINENTAL BANK, N.A.
By:/S/ Philip C. Adams
Philip C. Adams
Its Vice President
Domestic and Eurodollar
Lending Office:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Denise Christy
Fax: (312) 987-5500 or
(312) 828-4203
$40,000,000 PNC BANK, NATIONAL ASSOCIATION
By:/S/ Jack Broeren
Jack Broeren
Its Assistant Vice President
Notices:
500 West Madison Street
Suite 3140
Chicago, Illinois 60606
Fax: (312) 906-3420
Domestic and Eurodollar
Lending Office:
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attention: National Corporate Banking
Administration
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$35,000,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:/S/ Arlene S. Pedovitch
Arlene S. Pedovitch
Its Vice President
Domestic and Eurodollar
Lending Office:
1850 Gateway Boulevard
Concord, California 94520
Attention: Heather Martinez
Telex: 67652
Fax: (510) 675-7531
$35,000,000 MICHIGAN NATIONAL BANK
By:/S/ Joseph M. Redoutey
Joseph M. Redoutey
Its Second Vice President
Domestic and Eurodollar
Lending Office:
1533 N. Woodward Avenue
Suite 200
Bloomfield Hills, Michigan 48304
Attention: Joseph M. Redoutey
Fax: (313) 433-2925
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$30,000,000 THE ROYAL BANK OF CANADA
By:/S/ Raymond Boland
Raymond Boland
Its Senior Manager
Domestic and Eurodollar
Lending Office:
Grand Cayman (North America No. 1) Branch
Royal Bank of Canada
c/o New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Attention: Manager, Loans Administration
Telex: 420464 (RBOCUI Royal Bank)
Fax: (718) 522-6292/3
with a copy to:
Royal Bank of Canada
33 North Dearborn Street, Suite 2300
Chicago, Illinois 60602
Attention: Mr. R.A.M. Boland,
Senior Manager
Fax: (312) 782-3429
$25,000,000 FIRST BANK NATIONAL ASSOCIATION
By:/S/ Robert C. Peterson
Robert C. Peterson
Its Vice President
Domestic and Eurodollar
Lending Office:
601 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Robert C. Peterson
Fax: (612) 973-0825
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$25,000,000 NATIONAL CITY BANK
By:/S/ Brian H. Bucher
Brian H. Bucher
Its Vice President
Domestic and Eurodollar
Lending Office:
1900 E. Ninth Street
Cleveland, Ohio 44114
Attention: Multinational
Telex: 212537
Fax: (216) 575-9396
$22,500,000 CIBC INC.
By:/S/ Kent Davis
Kent Davis
Its Vice President
Domestic and Eurodollar
Lending Office (Borrowing Notices):
Atlanta Agency
Two Paces Ferry West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Leonard Hilty, III
Fax: (404) 319-4950
Other Notices:
200 W. Madison - Suite 2300
Chicago, Illinois 60606
Attention: Kent Davis
Fax: (312) 726-8884
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$22,500,000 CITIBANK, N.A.
By:/S/ Barbara A. Cohen
Barbara A. Cohen
Its: Vice President
Domestic and Eurodollar
Lending Office:
200 S. Wacker Drive - 31st Floor
Chicago, Illinois 60606
Attention: Steven Niceforo
Telex: 433042
Fax: (312) 993-6706
$22,500,000 THE FUJI BANK, LIMITED
By: /S/ Peter L. Chinnici
Peter L. Chinnici
Its: Joint General Manager
Domestic and Eurodollar
Lending Office:
225 W. Wacker Drive
Chicago, Illinois 60606
Attention: Cely Tanghal
Telex: 253114
Fax: (312) 621-0539
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$22,500,000 WACHOVIA BANK OF GEORGIA, N.A.
By:/S/ Thomas E. Pruden
Thomas E. Pruden
Its: Senior Vice President
Domestic and Eurodollar
Lending Office:
191 Peachtree Street
Atlanta, Georgia 30303
Attention: R. Burton Harvey
Telex: 4611015
Fax: (404) 332-6898
WPWPS_00007_1625_AGR_AA1_20
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SCHEDULE 1
Interest Interest
Coverage Coverage
Ratio Ratio Interest
APPLICABLE Interest equal to or equal to or Coverage
Coverage greater than greater than Ratio
MARGIN Ratio 1.50:1.00 2.25:1.00 and equal to or
less than and less than and less than greater than
CHART 1.50:1.00 2.25:1.00 3.00:1.00 3.00:1.00
Senior Leverage Ratio
(a) as of any December
31, greater than
1.10:1.00, or
1.375% 1.250% 1.125% 1.000%
(b) as of any other
Determination
Date, greater than
1.15:1.00
Senior Leverage Ratio
(a) as of any December
31, equal to or less
than 1.10:1.00 and
greater than
0.85:1.00, or
1.250% 1.125% 1.000% 0.875%
(b) as of any other
Determination
Date, equal to or
less than 1.15:1.00
and greater than
0.90:1.00
Senior Leverage Ratio
(a) as of any December
31, equal to or less
than 0.85:1.00 and
greater than
0.60:1.00, or
1.125% 1.000% 0.875% 0.750%
(b) as of any other
Determination
Date, equal to or
less than 0.90:1.00
and greater than
0.65:1.00
Senior Leverage Ratio
(a) as of any December
31 equal to or less
than 0.60:1.00 and
greater than
0.50:1.00, or
1.000% 0.875% 0.750% 0.625%
(b) as of any other
Determination
Date, equal to or
less than 0.65:1.00
and greater than
0.55:1.00
Senior Leverage Ratio
(a) as of any December 31,
equal to or less than
0.50:1.00, or
0.875% 0.750% 0.625% 0.500%
(b) as of any other
Determination
Date, equal to or
less than 0.55:1.00
WPWPS_00007_1625_SCH_AA1_01
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SCHEDULE 2
City of Nicholasville Industrial Building Revenue Bonds, Series 1979 (Norris
Industries Project)
City of Nicholasville Industrial Building Revenue Bonds, Series 1979-Second
Issue (Norris Industries Project)
Newberry County, South Carolina, Industrial Development Revenue Bonds, Series
1982 (Norris-NI Industries, Inc. Project)
WPASB_00007_2421_SCH_AA0_01;3
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EXHIBIT A
SYNDICATED NOTE
September 2, 1993
Detroit, Michigan
For value received, MASCOTECH, INC., a Delaware corporation (the
"Company"), promises to pay to the order of ___________________________________
(the "Bank"), the unpaid principal amount of each Syndicated Loan made by the
Bank to the Company pursuant to the Credit Agreement referred to below, on the
last day of the Interest Period relating to such Loan. The Company further
promises to pay interest on the aggregate unpaid principal amount of such
Syndicated Loans on the dates and at the rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in Dollars
in immediately available funds at the Agent's principal office in Detroit,
Michigan.
Presentment, demand for payment, notice of non-payment, protest and further
notice or demand of any kind in connection with this Syndicated Note are hereby
expressly waived by the Company and each endorser or guarantor hereof.
This Syndicated Note evidences one or more Syndicated Loans made under the
Credit Agreement, dated as of September 2, 1993, as amended, supplemented or
otherwise modified from time to time (the "Credit Agreement"), by and among the
Company, the banks (including the Bank) party thereto, NBD Bank, N.A., as Agent,
and Comerica Bank, The Bank of New York, The First National Bank of Chicago,
Morgan Guaranty Trust Company of New York and NationsBank of North Carolina,
N.A., as Co-Agents, to which reference is hereby made for a statement of the
circumstances under which this Syndicated Note is subject to prepayment and
under which its due date may be accelerated. Capitalized terms used but not
defined in this Syndicated Note shall have the respective meanings ascribed
thereto in the Credit Agreement.
This Syndicated Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State and without giving effect to
choice of law principles of such State.
MASCOTECH, INC.
By:______________________________
Its:__________________________
WPWPS_00007_2421_EXHIBIT_A.SECOND
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<PAGE>
Schedule to Syndicated Note, dated September 2, 1993,
payable by MascoTech, Inc. to the order of __________________
Principal Principal Principal
Trans- Amount of Type of Amount Balance Notation
action Syndicated Syndicated Interest Interest Paid Or Out- Made
Date Loan Loan* Rate Period Prepaid standing By
____________________________
*CD - CD Rate
E - Eurodollar Rate
F - Floating Rate
<PAGE>
EXHIBIT B
BID-OPTION NOTE
September 2, 1993
Detroit, Michigan
For value received, MASCOTECH, INC., a Delaware corporation (the
"Company"), promises to pay to the order of ___________________________________
(the "Bank"), the unpaid principal amount of each Bid-Option Loan made by the
Bank to the Company pursuant to the Credit Agreement referred to below, on the
last day of the Interest Period relating to such Loan. The Company further
promises to pay interest on the aggregate unpaid principal amount of such Bid-
Option Loans on the dates and at the rates provided for in the Credit Agreement.
All such payments of principal and interest with respect to Dollar Bid-Option
Loans shall be made in Dollars in immediately available funds at the Agent's
principal office in Detroit, Michigan. All such payments of principal and
interest with respect to Foreign Currency Bid-Option Loans shall be made in the
currencies in which such Loans are denominated and in funds immediately
available, freely transferrable and cleared at the office or branch of the Bank
from which such Loans were made.
Presentment, demand for payment, notice of non-payment, protest and further
notice or demand of any kind in connection with this Bid-Option Note are hereby
expressly waived by the Company and each endorser or guarantor hereof.
This Bid-Option Note evidences one or more Bid-Option Loans made under the
Credit Agreement, dated as of September 2, 1993, as amended, supplemented or
otherwise modified from time to time (the "Credit Agreement"), by and among the
Company, the banks (including the Bank) party thereto, NBD Bank, N.A., as Agent,
and Comerica Bank, The Bank of New York, The First National Bank of Chicago,
Morgan Guaranty Trust Company of New York and NationsBank of North Carolina,
N.A., as Co-Agents, to which reference is hereby made for a statement of the
circumstances under which this Bid-Option Note is subject to prepayment and
under which its due date may be accelerated. Capitalized terms used but not
defined in this Bid-Option Note shall have the respective meanings ascribed
thereto in the Credit Agreement.
This Bid-Option Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State and without giving effect to
choice of law principles of such State.
MASCOTECH, INC.
By:______________________________
Its:__________________________
WPWPS_00007_2421_EXHIBIT_B.SECOND
PAGE
<PAGE>
Schedule to Bid-Option Note, dated September 2, 1993,
payable by MASCOTECH, INC. to the order of ____________________
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
Principal Currency and Principal
Trans- Amount of Type of Amount Principal Notation
action Bid-Option Bid-Option Interest Interest Paid Or Balance Made
Date Loan Loan* Rate Period Prepaid Outstanding By
_________________________________
* If Dollar Bid-Option Loan: A - Absolute Rate
E - Eurodollar Rate
</TABLE>
WPWPS_00007_2421_EXHIBIT_B.SECOND
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<PAGE>
EXHIBIT C
NOTICE OF SYNDICATED BORROWING
[Date]
To each Bank party to the
referenced Credit Agreement
c/o NBD Bank, N.A.,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a
Syndicated Borrowing pursuant to Section 3.2 of the Credit Agreement, dated as
of September 2, 1993, as amended, supplemented or otherwise modified (the
"Credit Agreement"), by and among the Company, the Banks and Co-Agents party
thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
The Syndicated Borrowing is to be made on _____________, 19__, in the
amount of $_______________. The Syndicated Loans comprisising such Borrowing
shall be made as __________________________________ [insert either CD Rate,
Eurodollar Rate or Floating Rate] Loans. [The Interest Period shall be
___________________ [insert permitted Interest Period for a CD Rate Borrowing
or Eurodollar Rate Borrowing].] Such Syndicated Borrowing shall be evidenced
by the Company's Syndicated Notes.
MASCOTECH, INC.
By:__________________________________
Its:______________________________
WPWPS_00007_2421_EXHIBIT_C.SECOND
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<PAGE>
EXHIBIT D
REQUEST FOR LETTER OF CREDIT ISSUANCE
[Date]
To each Bank party to the
referenced Credit Agreement
c/o NBD Bank, N.A.,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a
Letter of Credit Issuance pursuant to Section 3.3 of the Credit Agreement,
dated as of September 2, 1993, as amended, supplemented or otherwise modified
(the "Credit Agreement"), by and among the Company, the Banks and Co-Agents
party thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not
defined herein shall have the respective meanings ascribed thereto in the
Credit Agreement.
The Letter of Credit is to be issued on ________________, 19__,
shall be for the account of ________, shall be in the maximum amount of
$_____________, shall be to and for the benefit of __________________, shall
have a stated expiry date of _______________, 19__, and shall contain the
further terms and conditions set forth in the attached letter of credit
application of the Agent.
MASCOTECH, INC.
By:______________________________
Its:__________________________
wpwps_00007_2421_EXHIBIT_D.SECOND
*Specify the Company or identify a Consolidated Subsidiary
PAGE
<PAGE>
EXHIBIT E
BID-OPTION QUOTE REQUEST
[Date]
NBD Bank, N.A.,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests
offers to make Bid-Option Loans comprising the Bid-Option Borrowing(s) described
below pursuant to Section 3.4(b) of the Credit Agreement, dated as of September
2, 1993, as amended, supplemented or otherwise modified (the "Credit
Agreement"), by and among the Company, the Banks and Co-Agents party thereto,
and NBD Bank, N.A., as Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Date of Bid-Option Borrowing(s): ________, 19__
Type of Bid-Option Borrowing(s): [Dollar: ____________ [Absolute Rate]
[Eurodollar Rate] [Foreign Currency: _____ [desired currency]]
Aggregate Amount of each Bid-Option Borrowing: (a) ______________*
(b) ______________
(c) ______________
Interest Period: (a) ______________**
(b) ______________
(c) ______________
MASCOTECH, INC.
By:__________________________________
Its:_________________________________
*Must be (a) $25,000,000 or a larger multiple of $5,000,000, in the case of
Dollar Bid-Option Borrowings, or (b) not less than the Dollar Equivalent of
$5,000,0000, in the case of Foreign Currency Bid-Option Borrowings.
**Must comply with the definition of the term "Bid-Option Interest Period."
wpwps_00007_2421_EXHIBIT_E.SECOND
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<PAGE>
EXHIBIT F
INVITATION FOR BID-OPTION QUOTES
[Date]
To: [Name of Bank]
Attention: ____________________
Reference is made to the Credit Agreement, dated as of September 2, 1993,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 3.4(c) of the Credit Agreement, NBD Bank, N.A., as
Agent, is pleased on behalf of the Company to invite you to submit Bid-Option
Quotes to the Company for the Bid-Option Borrowing(s) described below.
Date of Bid-Option Borrowing(s): ________, 19__
Type of Bid-Option Borrowing(s): [Dollar: __________ [Absolute Rate]
[Eurodollar Rate] [Foreign Currency: _____ [desired currency]]
Aggregate Amount of Each
Bid-Option Borrowing: Interest Period:
(a) ____________________ (a) ________________
(b) ____________________ (b) ________________
(c) ____________________ (c) ________________
Please respond to this invitation by no later than [9:00 a.m.]*
[10:00 a.m.]** [2:00 p.m.]*** (Detroit time) on _________________, 19__. ****
NBD BANK, N.A., as Agent
By: ______________________________________
Its: _________________________________
* Absolute Rate Dollar Bid-Option Borrowings.
** Eurodollar Rate Dollar Bid-Option Borrowings.
*** Foreign Currency Bid-Option Borrowings.
**** The proposed date of Borrowing in the case of Absolute Rate
Dollar Bid-Option Borrowings. The fourth Business Day prior to the
proposed date of Borrowing in the case of Eurodollar Rate Dollar
Bid-Option Loans. The third Business Day prior to the proposed date of
Borrowing in the case of Foreign Currency Bid-Option Borrowings.
wpwps_00007_2421_EXHIBIT_F.SECOND
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<PAGE>
EXHIBIT G
BID-OPTION QUOTE
[Date]
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
Reference is made to the Credit Agreement, dated as of September 2, 1993,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
In response to your Invitation for Bid-Option Quotes dated _____, 19__,
_________________________ (the "Bank"), hereby makes the following offer[s] to
make [a] Bid-Option Loan[s]:
1. Quoting Bank: ____________________________
Contact Person: _________________________
2. Date of proposed Borrowing: __________, 19__*
3. Quotes:
<TABLE>
<CAPTION>
Type of Bid-Option
Loans: Absolute Rate
Dollar, Eurodollar Bid-Option Absolute
Rate Dollar or Foreign Rate or Bid-Option
Currency (also specify Principal Eurodollar Rate Interest
the foreign currency)** Amount*** Margin**** Period *****
<C> <C> <C> <C> <C>
(a) _______________________ _________ ___________________ ___________
(b) _______________________ _________ ___________________ ___________
(c) _______________________ _________ ___________________ ___________
</TABLE>
<PAGE>
The Bank acknowledges and agrees that this Bid-Option Quote (a) is
irrevocable and (b), subject to the terms and conditions of the Credit
Agreement, obligates it to make a Bid-Option Loan for which any quote is
accepted, in whole or in part.
[Name of Bank]
By: ______________________________________
Its: _________________________________
* As specified in the related Invitation for Bid-Option Quotes.
** As specified in the related Invitation for Bid-Option Quotes.
*** The Dollar Equivalent of the principal amount (a) must be (i) in the case
of Dollar Bid-Option Loans, $5,000,000 or a larger multiple thereof, or
(2) in the case of Foreign Currency Bid-Option Loans, not less than
$1,000,000, and (b) may not exceed the Dollar Equivalent of the aggregate
amount of the related Bid-Option Borrowing specified in the related
Invitation for Bid-Option Quotes.
**** Specify rate of interest per annum (rounded up to the nearest 1/10,000th
of 1%) or applicable margin, which may be positive or negative, expressed
as a percentage (rounded up to the nearest 1/10,000th of 1%), as the case
may be.
***** As specified in the related Invitation for Bid-Option Quotes.
wpwps_00007_2421_EXHIBIT_G.SECOND
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EXHIBIT H
NOTICE OF DISBURSEMENT OF
FOREIGN CURRENCY BID-OPTION LOAN
[Date]
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
Reference is made to the Credit Agreement, dated as of September 2, 1993,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 3.5(c) of the Credit Agreement, ________________ hereby
notifies you of its disbursement of a Foreign Currency Bid-Option Loan on
______________, 19___. Such Loan is denominated in __________ [specify
currency] and is in the original principal amount of ___________.* The Interest
Period applicable to such Loan is _______________.
[Name of Bank]
By: ______________________________________
Its: ________________________________
* Specify amount in the currency in which the Loan is denominated.
wpwps_00007_2421_EXHIBIT_H.SECOND
PAGE
<PAGE>
EXHIBIT I
NOTICE OF RECEIPT OF
FOREIGN CURRENCY BID-OPTION LOAN PAYMENT
[Date]
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
Reference is made to the Credit Agreement, dated as of September 2, 1993,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 4.4(a) of the Credit Agreement, _______________ hereby
notifies you of its receipt of payment in the amount of __________* of the
principal of the Foreign Currency Bid-Option Loan disbursed by it on
___________, 19__ in the original principal amount of __________*. After
application of such payment, the outstanding principal balance of such Loan is
_____________.
[Name of Bank]
By: ______________________________________
Its: _________________________________
* Specify amount in the currency in which the Loan is denominated.
wpwps_00007_2421_EXH_I.SECOND
PAGE
<PAGE>
EXHIBIT J
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of March 31, 1993 between Masco
Industries, Inc., a Delaware corporation (the "Company"), and Masco
Corporation, a Delaware corporation ("Masco").
WHEREAS, the Company desires to have the right to sell to Masco, and Masco
is willing to purchase from the Company at its request, from time to time, debt
or equity securities for an aggregate purchase price of up to $200 million upon
the terms and conditions hereinafter set forth;
WHEREAS, this Securities Purchase Agreement is the Securities Purchase
Agreement referred to in the Agreement, dated as of February 1, 1993 between
the Company and Masco (the "Master Agreement").
NOW, THEREFORE, the parties agree as follows:
1. Authorization of Issues of Securities. The Company has authorized the
issuance and delivery of separate series of (i) exchangeable preferred stock
(the "Preferred Stock"), such Preferred Stock to have substantially the same
terms and provisions as the Company's 10% Exchangeable Preferred Stock except
as provided in Exhibit A hereto, and (ii) subordinated debt securities (such
debt securities, including subordinated debentures issuable upon any redemption
and exchange of the Preferred Stock, are referred to herein as the "Subordinated
Debentures"), such Subordinated Debentures to have substantially the same terms
and provisions as the Company's subordinated debentures issuable upon redemption
and exchange of the Company's 10% Exchangeable Preferred Stock except as
provided in Exhibit B hereto. The Preferred Stock and the Subordinated
Debentures are collectively referred to herein as the "Securities".
2. Obligation to Purchase. (a) Subject to the terms and conditions set
forth herein, Masco agrees to purchase at any time or from time to time to the
second anniversary hereof, upon the Company's written notice, Securities for an
aggregate purchase price of up to $200 million, provided that not more than
$100 million of such purchase price shall be for shares of Preferred Stock.
As used herein the term "purchase price" shall refer to (i) in the case of
Subordinated Debentures, the principal amount thereof, and (ii) in the case of
Preferred Stock, the number of shares of such Preferred Stock multiplied by the
$100 per share liquidation value thereof. The Company's written notice shall
specify the type or types of Securities Masco is required to purchase, the
purchase price thereof, which for each respective issuance of Preferred Stock
or Subordinated Debentures shall be $10
PAGE
<PAGE>
million or any larger multiple of $1 million, and the dividend rate or
interest rate, as the case may be. The dividend rate or interest rate shall
be determined by the Company in accordance with the provisions of Paragraph 1
above (including Exhibits A and B hereto). Such determination shall be final
and binding in the absence of manifest error.
(b) Subject to the terms and conditions contained herein, Masco may be
required to purchase Securities having an aggregate purchase price of $200
million or such lesser amount specified by the Company (the "Commitment").
The Commitment is not revolving in nature, and any Securities repurchased,
redeemed or otherwise acquired by the Company shall not restore the
Commitment. The Company may reduce or terminate the unused portion of the
Commitment at any time by written notice to Masco. Subordinated Debentures
issued upon redemption and exchange of Preferred Stock shall not be deemed
purchased by Masco pursuant to the Commitment.
3. Closing. (a) Any closing of a sale of Securities to Masco
hereunder shall occur at the Company's offices on the tenth Business Day after
the Company gives Masco the written notice referred to in Paragraph 2. The
term "Business Day" shall mean any day, except a Saturday, Sunday or other day
on which commercial banks in New York City are authorized by law to close, on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
(b) At each closing, provided the Company has paid all commitment fees
then due and payable under Paragraph 4 and provided the Company's
representations set forth in Paragraphs 6(b) through 6(e) and 6(g) shall then
be true and correct, Masco shall deliver to the Company immediately available
funds in an amount equal to the aggregate purchase price of the Securities
being purchased.
(c) At each closing, the Company shall deliver to Masco:
(i) one or more certificates for the Securities being issued,
registered in the name of Masco (or such other person as Masco may
designate prior to the closing) with any such legend that may be
appropriate and, in the case of Subordinated Debentures, in such
denominations of $1,000 and any multiple thereof as Masco may specify
prior to the closing; and
(ii) if Preferred Stock is being issued to Masco, a copy of the
Company's Certificate of Designation relating to such series of Preferred
Stock certified by the Delaware Secretary of State.
The Company's delivery of the certificates representing the Securities being
purchased shall automatically be deemed to be a representation by the Company
that all of the representations set
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<PAGE>
forth in Paragraphs 6(b) through (e) and 6(g) hereof are true and correct as of
the date of closing and, in the case of an issuance of a series of Preferred
Stock, a representation by the Company that the Board of Directors or a
committee thereof has duly established the specific terms thereof. The accuracy
of such representations shall be a condition to Masco's obligation to purchase
such Securities.
4. Commitment Fee. (a) The Company shall pay Masco a commitment fee for
Masco's Commitment hereunder at the rate of 0.125% per annum on the daily
average amount by which the Commitment exceeds the purchase price of the
Securities purchased by Masco hereunder.
(b) The commitment fee shall accrue from and including the date hereof to
but excluding the date on which the aggregate purchase price of Securities
purchased by Masco hereunder equals the Commitment. Such fee shall be computed
for the actual number of days elapsed and shall be payable quarterly on the last
day of each calendar quarter, commencing June 30, 1993, and upon fulfillment of
the Commitment in its entirety or the earlier termination of the Commitment.
5. Representations of Masco. Masco represents and warrants to the
Company that:
(a) Masco is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is authorized by its
certificate of incorporation to carry on its business as now conducted.
(b) The execution, delivery and performance by Masco of this Agreement
and the consummation by Masco of the transactions contemplated hereby are within
the corporate powers of Masco and have been duly authorized by all necessary
corporate action on the part of Masco. This Agreement constitutes a valid and
binding agreement of Masco.
(c) As of the date of the Master Agreement, the execution, delivery and
performance of this Agreement would not have resulted in any violation by Masco
of any indenture, mortgage or other agreement or instrument by which Masco or
any of its Subsidiaries was bound.
(d) No authorization, consent or approval of, or registration or filing
with, any governmental or public body or regulatory authority is required on the
part of Masco which has not been obtained for the purchase by Masco of the
Securities contemplated by this Agreement, and such a purchase on the date
hereof would not result in any violation by Masco of any of the terms or
provisions of its certificate of incorporation or by-laws.
-3-
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<PAGE>
(e) Masco has received such information from the Company as it deems
necessary and sufficient in order to make an informed investment decision
regarding any purchase of the Securities hereunder. Masco is a sophisticated
investor, with such knowledge and experience in financial matters that it is
capable of evaluating the risks and merits of an investment in the Securities,
and is receiving such Securities for its own account for investment and
(subject, to the extent necessary, to the disposition of its property being at
all times within its control) not with a view to any distribution or other
disposition thereof, and is proceeding on the assumption that it must bear the
economic risk of the investment for an indefinite period since such Securities
may not be sold except as set forth below. If Masco decides to dispose of any
of the Securities acquired pursuant to this Agreement or any securities issued
in exchange or substitution therefor (which it does not presently contemplate),
it will not offer, sell or deliver any such securities, directly or indirectly,
except in compliance with the Securities Act of 1933.
6. Representations of the Company. The Company represents and warrants
to Masco that:
(a) (i) As of the date of the Master Agreement, the Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. The Company is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased
by it or the nature of its activities make such qualification necessary,
except for those jurisdictions where failure to be so qualified would not
have a Material Adverse Effect (as hereinafter defined).
(ii) As of the date of the Master Agreement, each of the Company's
Subsidiaries (as hereinafter defined) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and has all corporate powers and all material governmental
licenses, authorization, consents and approvals required to carry on its
business as now conducted. Each of the Company's Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased
by it or the nature of its activities make such qualification necessary,
except for those jurisdictions where failure to be so qualified would not
have a Material Adverse Effect. All of the outstanding shares of capital
stock of each such Subsidiary have been duly authorized and validly issued
and are fully paid and non-assessable and are owned directly or indirectly
by the Company (except for directors' qualifying shares of certain such
Subsidiaries
-4-
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<PAGE>
and equity interests in Subsidiaries owned by Persons (as
hereinafter defined) other than the Company which individually or in the
aggregate are not material to the Company and its Subsidiaries taken as a
whole) free and clear of all Liens (as hereinafter defined), except Liens
not material to the Company and its Subsidiaries taken as a whole.
(iii) The following terms, as used herein, have the following meanings:
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset.
"Material Adverse Effect" means a material adverse effect on the
results of operations or financial condition of the Company and its
Subsidiaries taken as a whole.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and have been duly authorized
by all necessary corporate action on the part of the Company, subject to the
establishment by the Board of Directors or a committee thereof of specific
terms for each separate series of Preferred Stock as provided herein. This
Agreement constitutes a valid and binding agreement of the Company.
(c) The Preferred Stock issuable from time to time pursuant to this
Agreement has been duly authorized by all necessary corporate action on the
part of the Company subject to the establishment by the Board of Directors or
a committee thereof of specific terms for each separate series of the Preferred
Stock as provided herein and, if and when issued and delivered to Masco pursuant
to this Agreement, will have been validly issued and will be fully paid and
nonassessable and free from any statutory or contractual shareholder preemptive
rights.
(d) The Subordinated Debentures issuable from time to time pursuant to
this Agreement and issuable from time to time upon exchange of the Preferred
Stock have been duly authorized by all
-5-
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<PAGE>
necessary corporate action on the part of the Company and, if and when such
Subordinated Debentures are issued pursuant to this Agreement or such Preferred
Stock is redeemed and exchanged for Subordinated Debentures in accordance with
the exchange provisions of the Certificate of Designation relating to the
Preferred Stock, such Subordinated Debentures will constitute valid and binding
obligations of the Company.
(e) Assuming the truth and accuracy of Masco's representations and
warranties set forth in Paragraph 5(e), no authorization, consent or approval
of, or registration or filing with, any governmental or public body or
regulatory authority is required on the part of the Company for the issuance of
the Securities pursuant to this Agreement prior to entering into this Agreement
or prior to the issuance of Securities hereunder, except for the filing of
Certificates of Designation with the Delaware Secretary of State with respect
to the issuance of a series of Preferred Stock, and such issuance does not and
will not result in any violation by the Company of any of the terms or
provisions of the certificate of incorporation or bylaws of the Company.
(f) As of the date of the Master Agreement, the execution, delivery and
performance by the Company of this Agreement and the issuance of Securities
pursuant to this Agreement would not have resulted in any violation by the
Company of any of the terms or provisions of any indenture, mortgage or other
agreement or instrument by which the Company or any of its Subsidiaries was
then bound.
(g) The Company is not and, after giving effect to any proposed sale of
Securities for which the Company has given written notice, will not be in
default with respect to any of the Securities or any other of the Company's
securities acquired from the Company by Masco or any of its Subsidiaries; and
there is no event which, with the giving of notice or passage of time, would
constitute a default with respect to any of the Securities or any other of the
Company's securities acquired from the Company by Masco or any of its
Subsidiaries.
7. Opinions of Counsel. Concurrently with the execution hereof,
(a) Masco is delivering to the Company an opinion of John R. Leekley,
counsel to Masco, dated the date hereof, to the effect specified in
Paragraphs 5(b) and (d).
(b) The Company is delivering to Masco an opinion of Dykema Gossett,
counsel to the Company, dated the date hereof, to the effect specified in
Paragraphs 6(b), (c), (d) and (e).
8. Miscellaneous. All notices, requests and other communications to
either party hereunder shall be in writing (including
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telex, telecopy or similar writing) and shall be delivered by hand and
receipted for by the party to whom such communication shall have been directed
or mailed by certified mail return receipt requested to the following address
(or to such other address as the party receiving such communication has
theretofore advised the other party in the manner provided for herein):
(a) If to Masco, to:
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6430
Attention: President
with a copy to:
John R. Leekley
Vice President and
General Counsel
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6430
except in the case of notices required under Paragraph 2, in which
case each such notice shall be deemed delivered only upon actual
receipt, directed to:
Robert B. Rosowski
Vice President - Controller
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6430
(b) If to the Company, to:
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6136
Attention: President
with a copy to:
Edward C. Hanpeter
Dykema Gossett
400 Renaissance Center
Detroit, Michigan 48243
Telecopy: (313) 568-6915
9. Amendments; No Waivers. This Agreement may not be amended or
terminated, nor any condition or term hereof be waived orally,
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PAGE
<PAGE>
but only by an instrument in writing duly executed by the parties hereto or,
in the case of a waiver, by the party otherwise entitled to performance.
No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
10. Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
11. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto, except that Masco
may transfer or assign, in whole or from time to time in part, to one or more
of its affiliates, its obligation to purchase all or a portion of the
Securities, but no such transfer or assignment will relieve Masco of its
obligations hereunder.
12. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Michigan.
13. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by the other party hereto.
14. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
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IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MASCO CORPORATION
By__________________________
MASCO INDUSTRIES, INC.
By__________________________
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Exhibit A
Term Sheet for Preferred Stock
Title: __________% Preferred Stock, Series _________
Number of Shares: Up to 1 million shares
Dividend Rate: The Preferred Stock shall be issued in separate series with the
dividend rate on each such series being a rate per annum that is
300 basis points over the Treasury Rate (as hereinafter defined)
for the week preceding the week in which the notice of purchase
is given to Masco. "Treasury Rate" means, the rate for direct
obligations of the United States ("Treasury Bonds") having a
remaining maturity of 20 years, as published in the Federal
Reserve Statistical Release H.15(519) (or any successor
publication provided by the Board of Governors of the Federal
Reserve System) under the heading "Treasury Constant
Maturities." If a rate for Treasury Bonds having a remaining
maturity of 20 years is not published or reported for the prior
week as provided above by 1:00 P.M., New York City time, on the
third business day preceding the day such notice is given to
Masco, then the Treasury Rate shall be calculated by the Company
and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately
1:30 P.M., New York City time, on the date of such notice of
redemption and exchange, of three leading primary United States
government securities dealers selected by the Company for the
purchase of Treasury Bonds with a remaining maturity of 20
years.
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<PAGE>
Exhibit B
Term Sheet for Subordinated Debentures
Title: ____________% Subordinated Debentures Due __________,
Series ___________
Principal Amount: Up to $200 million aggregate principal amount
Maturity: The earlier of 10 years from the date of issuance or March 31, 2008
Interest Rate: The Subordinated Debentures shall be issued in separate series
with the interest rate on each such series being a rate per
annum that is 400 basis points over the Treasury Rate (as here-
inafter defined) for the week preceding the week in which the
notice of purchase is given to Masco. "Treasury Rate" means,
the rate for direct obligations of the United States ("Treasury
Notes") having a remaining maturity of 10 years, as published in
the Federal Reserve Statistical Release H.15(519) (or any
successor publication provided by the Board of Governors of the
Federal Reserve System) under the heading "Treasury Constant
Maturities." If a rate for Treasury Notes having a remaining
maturity of 10 years is not published or reported for the prior
week as provided above by 1:00 P.M., New York City time, on the
third business day preceding the day such notice is given to
Masco, then the Treasury Rate shall be calculated by the
Company and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately
1:30 P.M., New York City time, on the date of such notice, of
three leading primary United States government securities
dealers selected by the Company for the purchase of Treasury
Notes with a remaining maturity of 10 years.
Subordination: All series of Subordinated Debentures shall rank pari passu
inter sese and with the subordinated debentures issuable upon
redemption and exchange of the Company's 10% Exchangeable
Preferred Stock.
Issuance in
Series: Each issuance of Subordinated Debentures shall constitute a
separate and discrete series of securities and may be redeemed
pursuant to Section 5.1 of the form of Subordinated Debenture
without regard to the redemption of Subordinated Debentures of
any other series.
PAGE
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EXHIBIT K
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of September 2, 1993
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among MASCOTECH, INC., the Banks and Co-Agents party thereto, and
NBD BANK, N.A., as agent for the Banks (in such capacity, the "Agent").
Capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns (without recourse) to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement (other than the Bid-Option Loans and Bid-Option Notes) as of the
Effective Date (as hereinafter defined) equal to the percentage interest
specified on Schedule 1 of all of the Assignor's outstanding rights and
obligations under the Credit Agreement. After giving effect to such sale and
assignment, the Assignee's Commitment and the amount of the Syndicated Loans
owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or any instrument or other document furnished pursuant thereto or
the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any instrument or other document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the performance or observance by the Company of
any of its obligations under the Credit Agreement or any instrument or other
document furnished pursuant thereto; and (iv) [attaches the Syndicated Note
held by the Assignor and] requests that the Agent arrange for the Company to
issue a new Syndicated Note and a new Bid-Option Note payable to the order
of the Assignee.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 6.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, any Co-Agent, the Assignor or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(iv) agrees that it will perform in accordance with the terms of the Credit
Agreement all of the obligations that are required to be performed by it as a
Bank; and (v) if the
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Assignee is organized under the laws of a jurisdiction outside of the United
States, attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement and the Notes
and such other documents as are necessary to indicate that all such payments
are subject to such taxes at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon consent hereto by the Company and the Agent and such acceptance
and recording by the Agent, as of the Effective Date, (i) the Assignee shall
be a party to the Credit Agreement and have the rights and obligations of a
Bank thereunder with a Commitment in the amount indicated for the Assignee on
Schedule 1 and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest, commitment fees and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement and
the Syndicated Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
Schedule 1 to this Assignment and Acceptance by telecopier shall be effective
as delivery of a manually executed counterpart of this Assignment and
Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
exhibit_k2.fourth
PAGE
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SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest of Assignor's Commitment
assigned: $__________%
Assignee's Commitment: $__________
Aggregate outstanding principal amount
of Syndicated Loans assigned: $__________
Effective Date (if other than date of
acceptance by Agent): ___________
[NAME OF ASSIGNOR], as Assignor
By ___________________________
Its:
Dated: _____________, 19__
[NAME OF ASSIGNEE], as Assignee
By ___________________________
Its:
Domestic Lending Office:
Eurodollar Lending Office:
Consented to and Consented to this ____ day
accepted this ___ day of ________________, 19__
of ____________, 19__
NBD Bank, N.A., as Agent MascoTech, Inc.
By:____________________ By: ______________________
Its: ________________ Its:___________________
exhibit_k2.fourth
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EXHIBIT L
NOTICE OF SUBSTITUTION OF BANKS
[Date]
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
[Terminated Bank]
___________________________
___________________________
Attention: ________________
Reference is made to the Credit Agreement, dated as of September 2, 1993,
as amended, supplemented or otherwise modified (the "Credit Agreement"), by and
among MASCOTECH, INC., a Delaware corporation, the Banks and Co-Agents party
thereto, and NBD Bank, N.A., as Agent. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 11.13(a) of the Credit Agreement, the Company hereby
terminates the Commitment of ___________________ (the "Terminated Bank")
effective _____________, 19__.* On such date, the Company shall prepay each
Loan of such Bank in full, together with accrued interest thereon, all amounts
due pursuant to Sections 5.3 and 5.5 of the Credit Agreement, all accrued
commitment and facility fees with respect to such Bank and all other amounts
owing to such Bank under the Credit Agreement to such date.
Pursuant to Section 11.13(b) of the Credit Agreement, the Company hereby
designates ______________ [and __________] to replace the Terminated Bank.
MASCOTECH, INC.
By:_________________________________
Its: _______________________________
* Must be not less than five Business Days after notice.
wpwps_00007_2421_EXHIBIT_L.third
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EXHIBIT M
September 2, 1993
To the Banks, Co-Agents and Agent
party to the Credit Agreement described
herein, in care of
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of September 2, 1993
(the "Credit Agreement"), by and among MASCOTECH, INC., a Delaware corporation,
the banks ("the Banks") and the co-agents (the "Co-Agents") party thereto, and
NBD Bank, N.A., as agent (in such capacity, the "Agent") for the Banks. I am
the General Counsel for the Company, and in the capacity of counsel for the
Company I have been requested by the Company to give my opinion pursuant to
Section 8.3(a) of the Credit Agreement. For purposes of this opinion, the
terms used in this opinion which are not defined herein shall have the
respective meanings set forth in the Credit Agreement.
I have examined the Credit Agreement and the Notes, the Convertible
Subordinated Debentures and Senior Subordinated Notes referred to in the
definition of the term "Subordinated Debt" in the Credit Agreement and the
indentures governing the issuance of such Convertible Subordinated
Debentures and Senior Subordinated Notes (the "Subordinated Debt Documents"),
and certified copies of the Company's certificate of incorporation, by-laws and
board of directors' resolutions authorizing the Company's participation in the
transactions contemplated by the Credit Agreement. I have also examined copies
of all such documents and records of the Company and all such other documents
and records, and have made such investigations of law, as I have deemed
necessary and relevant as a basis for my opinion.
Based upon the foregoing, it is my opinion that:
(a) The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and is duly authorized
to do business and is in good standing in the State of Michigan.
(b) The Company has all requisite corporate power and authority to
conduct its business substantially as now being conducted and to own its
properties.
(c) The Company has full power, authority and legal right to execute and
deliver the Credit Agreement and the Notes, to perform and observe the terms
and provisions thereof, and to borrow thereunder. The execution, delivery
and performance by the Company of its obligations under the Credit Agreement
and the
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To the Banks, Co-Agents and Agent
September 2, 1993
Page 2
Notes and the borrowings thereunder have been duly authorized by the proper
corporate proceedings and do not contravene any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or
any Subsidiary, or any order of any court, regulatory body or arbitral tribunal
or any judgment, order or decree, or, to my knowledge after due inquiry, any
agreement or instrument, binding on the Company or any Subsidiary, or, to my
knowledge after due inquiry, result in the creation of any lien, charge or
encumbrance upon any of their respective property or assets pursuant to any
agreement or instrument to which any of them is a party or binding upon any
of them.
(d) The Credit Agreement and the Notes constitute legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their respective terms.
(e) There are, to my knowledge after due inquiry, no suits, proceedings
or actions at law or in equity or by or before any governmental commission,
board, bureau, or other administrative agency pending or threatened against or
affecting the Company or any Subsidiary, (i) in which there is a reasonable
possibility of an adverse decision which is likely to materially and adversely
affect the financial condition or business of the Company and its Subsidiaries,
taken as a whole, or (ii) which will in any manner affect the enforceability or
validity of the Credit Agreement or any Note.
(f) No approval, consent or authorization of or filing or registration
with any state or federal agency or regulatory authority is necessary for the
execution or delivery by the Company of the Credit Agreement or the issuance of
the Notes, for the validity or enforceability of the Credit Agreement or the
Notes, or for the performance by the Company of any of the terms or conditions
thereof or for any borrowing by the Company thereunder.
(g) The Notes represent Senior Indebtedness as that term is defined in
the Subordinated Debt Documents.
The opinion expressed in paragraph (d) above is subject to the qualifica-
tions that the enforcement of the rights and remedies set forth in the Credit
Agreement and the Notes is subject to the effect of applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally, and to general principles of equity, whether applied in a
proceeding at law or in equity.
Very truly yours,
John R. Leekley
General Counsel
MascoTech, Inc.
wpwps_00007_2421_EXH_AB0_05.Exhibit_M
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EXHIBIT N
September 2, 1993
To the Banks, Co-Agents and Agent
party to the Credit Agreement described
herein, in care of
NBD Bank, N.A., as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: John H. Wert, Jr.
RE: MascoTech, Inc. Credit Agreement
dated as of September 2, 1993
Ladies and Gentlemen:
We have acted as special counsel for the Agent (as defined below) in
connection with the Credit Agreement, dated as of September 2, 1993 (the
"Credit Agreement"), by and among MascoTech, Inc. (the "Company"), the banks
(the "Banks") and co-agents (the "Co-Agents") party thereto, and NBD Bank,
N.A., as agent (in such capacity, the "Agent") for the Banks, providing, among
other things, for the extension to the Company of a bank credit in the
principal sum of the Dollar Equivalent of $675,000,0000. Capitalized terms not
otherwise defined herein are used with the respective meanings ascribed thereto
in the Credit Agreement.
In connection with this opinion we have examined: (a) a copy of the
Certificate of Incorporation of the Company certified to _______ __, 1993 by
the Secretary of State of Delaware and to ________ __, 1993 by an officer of
the Company, (b) a copy of the Bylaws of the Company certified to _______ __,
1993 by an officer of the Company, (c) copies of Certificates of Good Standing
of the Company under the laws of the States of Delaware and Michigan dated,
respectively, _________ __, 1993 and _____________ __, 1993, (d) a copy of
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of the Credit Agreement and the Notes, certified as
true and correct by an officer of the Company, (e) a certificate of incumbency
and specimen signatures of authorized officers of the Company, in the form
being delivered to the Agent pursuant to Section 8.3(d) of the Credit
Agreement, (f) a certificate of a senior officer of the Company, in the form
being delivered to the Agent pursuant to Section 8.3(e) of the Credit Agreement,
(g) a certificate of the chief ____ officer of the Company, in the form being
delivered to the Agent pursuant to Section 8.3(g) of the Credit Agreement, and
(h) the Credit Agreement and the Notes. We have also examined the opinion of
Mr. John R. Leekley, General Counsel of the Company, dated September 2, 1993,
addressed to you and delivered to the Agent pursuant to Section 8.3(a) of the
Credit Agreement. We have made no independent investigation of any of the
foregoing matters or of any other matters.
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To the Banks, Co-Agents and Agent
September 2, 1993
Page 2
Based solely on such information, it is our opinion that: (a) the
documents referred to above and delivered by the Company are substantially
responsive to the requirements of the Credit Agreement; and (b) while we have
not independently considered the matters covered by the opinion of Mr. Leekley
furnished pursuant to Section 8.3(a) of the Credit Agreement to the extent
necessary to enable us to express the conclusions stated therein, such opinion
is in substantially acceptable legal form and is substantially responsive to the
requirements of the Credit Agreement.
Very truly yours,
wpwps_00007_2421_EXH_AB0_06.Exhibit_N
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EXHIBIT O
TERMS OF SUBORDINATION
These terms of subordination refer to the Credit Agreement dated as of
September 2, 1993 by and among MascoTech, Inc., the banks party thereto, the
co-agents referred to therein and NBD Bank, N.A., as agent.
In addition to Debt of the Company which qualifies as Subordinated Debt
pursuant to clauses (b), (c), (d) and (e) of the definition of Subordinated Debt
in the Credit Agreement, Subordinated Debt under the Credit Agreement shall
also include, without duplication, all Indebtedness (as hereinafter defined)
constituting Debt now outstanding or hereafter created, issued, guaranteed,
incurred or assumed by the Company which is subordinate to the payment of
principal, premium, if any, and interest on the Notes by provisions not less
favorable in any material respect to the holders of the Notes than the
provisions (a) of the Indenture dated as of November 1, 1986, by and between the
Company and Morgan Guaranty Trust Company of New York, a copy of which has been
supplied to the Agent and in the form in which it has been supplied to the Agent
prior to the Closing Date, and any Indebtedness of the Company that may be
issued thereunder, would be to the holders of "Senior Indebtedness", as that
term is defined in such Indenture, or (b) described below:
1. Defined Terms.
All capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement. All the following terms
shall have the meanings described below:
"Article" means Sections 1 through 13, inclusive, of this Exhibit O.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Cash Equivalents" means, at any time: (i) any evidence of Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit, time deposits,
Eurodollar time deposits and bankers' acceptances with a maturity of 180 days or
less of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of 180 days or less issued
by a corporation that is not an Affiliate of the Company organized under the
laws of any state of the United States or the District of Columbia and rated at
least A-1 by S&P or at least P-1 by Moody's or at least an equivalent rating
category of another nationally recognized securities rating agency; and (iv)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the government of the
United States of America or issued by any agency thereof and backed by the full
faith
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and credit of the United States of America, in each case maturing within 180
days from the date of acquisition; provided that the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985.
"Credit Agreement" means (a) the Credit Agreement dated as of September 2,
1993, by and among the Company, the banks party thereto, the co-agents referred
to therein and NBD Bank, N.A., as agent (the "MascoTech Credit Agreement"),
together with all amendments, documents and instruments from time to time
delivered in connection with the MascoTech Credit Agreement (including, without
limitation, any guaranty agreements and security documents), and as the
MascoTech Credit Agreement and such other agreements, documents and instruments
may be amended, amended and restated, renewed, extended, restructured,
supplemented or otherwise modified from time to time, and (b) any credit
agreement, loan agreement, note purchase agreement, indenture or other
agreement, document or instrument refinancing, refunding or otherwise replacing
the MascoTech Credit Agreement or any other agreement deemed a Credit Agreement
under clause (a) or (b) hereof, whether or not with the same agent, trustee,
representative lenders or holders, and irrespective of any changes in the terms
and conditions thereof. Without limiting the generality of the foregoing, the
term "Credit Agreement" shall include any amendment, amendment and restatement,
renewal, extension, restructuring, supplement or modification to any Credit
Agreement, including any agreement (i) extending the maturity of any Indebted-
ness incurred thereunder or contemplated thereby, (ii) adding or deleting
borrowers or guarantors thereunder, so long as borrowers and issuers include
one or more of the Company and its Subsidiaries and their respective
successors and assigns or (iii) increasing the amount of Indebtedness incurred
thereunder or available to be borrowed thereunder.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit, banker's acceptance or other similar
credit transaction, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all capitalized lease obliga-
tions of such Person, (e) all Indebtedness referred to in the preceding clauses
(a) to (d) of other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligations being deemed to
be the lesser of the value of such property or asset or the amount of the
obligation so secured), (f)
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all guarantees of Indebtedness referred to in this definition by such Person,
(g) all redeemable capital stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued dividends,
(h) all obligations under or in respect of currency exchange contracts, interest
rate swaps and other interest rate protection obligations of such Person and (i)
any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (a) through (h)
above. For purposes hereof, (x) the "maximum fixed repurchase price" of any
redeemable capital stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such redeemable capital stock as if
such redeemable capital stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant hereto, and if such price is based
upon, or measured by, the fair market value of such redeemable capital stock,
such fair market value shall be determined in good faith by the board of
directors of the issuer of such redeemable capital stock, and (y) Indebtedness
is deemed to be incurred pursuant to a revolving credit facility each time an
advance is made thereunder.
"Designated Senior Indebtedness" means (a) all Senior Indebtedness under
the Credit Agreement and (b) any other Senior Indebtedness which is specifically
designated by the Company in the instrument evidencing such Senior Indebtedness
as "Designated Senior Indebtedness".
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Non-Payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more Persons to accelerate the maturity of
any Designated Senior Indebtedness.
"Payment Blockage Period" has the meaning set forth in Section 4.
"Payment Default" means any default in the payment of principal of (or
premium, if any, on) or interest on Designated Senior Indebtedness beyond any
applicable grace period with respect thereto.
"S & P" means Standard and Poor's Corporation and its successors.
"Securities" means any instrument or other document evidencing any of the
Subordinated Indebtedness at any time.
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company, whether outstanding on the date hereof or
hereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Securities. Without limiting the
generality of the foregoing, "Senior Indebtedness" shall also include all
obligations of the Company, whether outstanding on the date hereof or thereafter
created, incurred or assumed, under or in respect of the Credit Agreement,
whether for principal, interest (including, without limitation, interest
accruing after the filing of a petition initiating any proceeding under any
state or federal bankruptcy law
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whether or not such interest is an allowable claim), reimbursement of amounts
drawn under letters of credit issued or arranged for pursuant thereto,
guarantees in respect thereof, and all charges, fees, expenses (including
reasonable fees and expenses of counsel) and other amounts in respect of the
Credit Agreement incurred by or owing to the Banks, the Co-Agents or the Agent
under the Credit Agreement or their representative, agent or trustee, and all
other obligations of the Company incurred under or in respect of the Credit
Agreement, including, without limitation, any interest rate protection
obligations and in respect of premiums, indemnities or otherwise, and all
indebtedness under the Credit Agreement which is disallowed, avoided or
subordinated pursuant to Section 548 of the Federal Bankruptcy Code or any
applicable state fraudulent conveyance law. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (a) Indebtedness evidenced by the
Securities, (b) Indebtedness that is expressly subordinate or junior right of
payment to any Senior Indebtedness of the Company, (c) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Federal
Bankruptcy Code, is by its terms without recourse to the Company, (d) any
repurchase, redemption or other obligation in respect of redeemable capital
stock, (e) to the extent it might constitute Indebtedness, amounts owing for
goods, materials or services purchased in the ordinary course of business or
consisting of trade payables or other current liabilities (other than any
current liabilities owing under the Credit Agreement or the current portion of
any long-term Indebtedness which would constitute Senior Indebtedness but for
the operation of this clause (e)), (f) to the extent it might constitute
Indebtedness, amounts owed by the Company for compensation to employees or for
services rendered to the Company, (g) to the extent it might constitute
Indebtedness, any liability for federal, state, local or other taxes owed or
owing by the Company, (h) Indebtedness of the Company to a Subsidiary of the
Company or any other Affiliate of the Company or any of such Affiliate's
Subsidiaries and (i) that portion of any Indebtedness (other than owing
pursuant to the Credit Agreement), which at the time of issuance is issued in
violation of the Subordinated Indebtedness.
"Subordinated Indebtedness" means all indebtedness, obligations and
liabilities of the Company or any of its Subsidiaries to any of the holders of
the Securities issued pursuant hereto, whether now existing or hereafter
arising, including without limitation any extensions, renewals, increases or
other modifications thereof, all principal, interest and fees and costs under
or in any way arising therefrom, and all indebtedness, obligations and
liabilities of the Company or any of its Subsidiaries to any such holder under
the Federal Bankruptcy Code or under any similar state law.
"Subordinated Indenture" means the indenture pursuant to which the
Securities are issued.
"Trustee" means any Person acting as the trustee for the holders of the
Securities and any successor trustee.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which
its full faith and credit is pledged or (y) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States of
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America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of principal of or interest on the U.S. Government Obligation
evidenced by such depository receipt.
2. Subordinated Indebtedness Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each holder of any Subordinated
Indebtedness, by its acceptance thereof, likewise covenants and agrees, for the
benefit of the holders, from time to time, of Senior Indebtedness that, to the
extent and in the manner hereinafter set forth herein, the Subordinated
Indebtedness is hereby expressly made subordinate and subject in right of
payment as provided herein to the prior payment in full in cash or Cash
Equivalents of all Senior Indebtedness.
3. Payment over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or its assets, or
(b) any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all amounts due on or in respect
of all Senior Indebtedness, or provision shall be made for such payment, before
the holders of any Subordinated Indebtedness are entitled to receive any
payment or distribution of any kind or character (other than any payment or
distribution in the form of equity securities or subordinated securities of the
Company or any successor obligor with respect to the Senior Indebtedness
provided for by a plan of reorganization or readjustment that, in the case of
any such subordinated securities, are subordinated in right of payment to all
Senior Indebtedness that may at the time be outstanding to substantially the
same extent as, or to a greater extent than, the Subordinated Indebtedness is
so subordinated as provided in this Article (such equity securities or
subordinated securities hereinafter being "Permitted Junior Securities"));
and
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(2) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than a payment or
distribution in the form of Permitted Junior Securities), by set-off or
otherwise, to which the holders of the Subordinated Indebtedness or the
Trustee would be entitled but for the provisions of this Article shall be paid
by the liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full in cash or Cash Equivalents of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or any holder of any Subordinated Indebtedness shall have
received any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, in respect of the
Subordinated Indebtedness before all Senior Indebtedness is paid in full or
payment thereof provided for in cash or Cash Equivalents, then and in such event
such payment or distribution (other than a payment or distribution in the form
of Permitted Junior Securities) shall be received and held in trust for the
benefit of the holders of Senior Indebtedness and paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full
in cash or Cash Equivalents, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance, transfer or lease of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in the
Subordinated Indenture shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purpose of this
Article if the Person formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in the Subordinated Indenture under which the
Securities are issued.
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4. Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 3 shall be applicable, upon (1) the occurrence of a
Payment Default and (2) receipt by the Trustee of written notice of such
occurrence, then no payment or distribution of any assets of the Company of any
kind or character shall be made by the Company on account of the Subordinated
Indebtedness or on account of the purchase or redemption or other acquisition
of any Subordinated Indebtedness unless and until such Payment Default shall
have been cured or waived in writing or shall have ceased to exist or such
Senior Indebtedness shall have been discharged or paid in full in cash or
Cash Equivalents, after which the Company shall resume making any and all
required payments in respect of the Subordinated Indebtedness, including any
missed payments.
(b) Unless Section 3 shall be applicable, upon (1) the occurrence of a
Non-Payment Default and (2) receipt by the Company or the Trustee from the
representative of holders of such Designated Senior Indebtedness of written
notice of such occurrence, then no payment or distribution of any assets of
the Company of any kind or character shall be made by the Company on account of
any Subordinated Indebtedness or on account of the purchase or redemption or
other acquisition of any Subordinated Indebtedness for a period ("Payment
Blockage Period") commencing on the earlier of the date of receipt by the
Company or the date of receipt by the Trustee of such notice from such rep-
resentative unless and until (subject to any blockage of payments that may then
be in effect under paragraph (a) of this Section) (x) more than 179 days shall
have elapsed since receipt of such written notice by the Company or the Trustee,
whichever was earlier, (y) such Non-Payment Default shall have been cured or
waived in writing or shall have ceased to exist or such Designated Senior
Indebtedness shall have been discharged or (z) such Payment Blockage Period
shall have been terminated by written notice to the Company or the Trustee from
such representative initiating such Payment Blockage Period, after which, in
the case of clause (x), (y) or (z), the Company shall resume making any and
all required payments in respect of any Subordinated Indebtedness, including
any missed payments. Notwithstanding any other provision of this Agreement,
only one Payment Blockage Period may be commenced within any consecutive 360-
day period, and no event of default with respect to Designated Senior
Indebtedness which existed or was continuing on the date of the commencement of
any Payment Blockage Period initiated by or behalf of such Designated Senior
Indebtedness shall be, or be made, the basis for the commencement of a second
Payment Blockage Period whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived for a period of
not less than 90 consecutive days subsequent to the commencement of such initial
Payment Blockage Period (it being acknowledged that any subsequent action, or
any breach of any financial covenant for a period commencing after the date of
commencement of such Payment Blockage Period, that, in either case, would give
rise to a Non-Payment Default pursuant to any provision under which a Non-
Payment Default previously existed or was continuing shall constitute a new Non-
Payment Default for this purpose; provided that, in the case of a breach of a
particular financial covenant, the Company shall have been in compliance for at
least one full period of not less than 90 consecutive days commencing after the
date of commencement of such Payment
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Blockage Period). In no event will a Payment Blockage Period extend beyond 179
days from the date of the receipt by the Trustee of the notice and there must
be a 181-consecutive day period in any 360-day period during which no Payment
Blockage Period is in effect.
(c) In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the holder of any Subordinated Indebtedness
prohibited by the foregoing provisions of this Section, then and in such event
such payment shall be received and held in trust for the benefit of the holders
of Senior Indebtedness and paid over and delivered forthwith to the Company.
5. Payment Permitted If No Default.
Nothing contained herein or in any instrument evidencing the Subordinated
Indebtedness shall prevent the Company, at any time except during the pendency
of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 3 or under the conditions
described in Section 4, from making payments at any time of principal of
(and premium, if any, on) or interest on the Subordinated Indebtedness.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full in cash or Cash Equivalents of all Senior
Indebtedness, the holders of the Subordinated Indebtedness shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments
and distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of (and premium, if any, on) and interest on
the Subordinated Indebtedness shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the holders of the Subordinated
Indebtedness or the Trustee would be entitled except for the provisions in this
Article, shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the holders of the Subordinated Indebtedness, be deemed to be
a payment or distribution by the Company to or on account of the Senior
Indebtedness.
7. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the holders of the Subordinated Indebtedness
on the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article or elsewhere in the Subordinated Indenture or
in any Securities is intended to or shall (a) impair, as between the Company
and the holders of the Subordinated Indebtedness, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the
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Securities the principal of (and premium, if any, on) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under the Subordinated Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness.
8. Trustee to Effectuate Subordination.
Each holder of any Security by its acceptance thereof authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee its attorney-in-fact for any and all such purposes.
9. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of the
Subordinated Indenture, regardless of any knowledge thereof any such holder may
have or be otherwise charged with.
(b) Without in any way limiting the generality of paragraph (a) of this
Section 9, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the holders of the
Securities, without incurring responsibility to the holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the holders of the Subordinated Indebtedness
to the holders of Senior Indebtedness, do any one or more of the following:
(1) change the manner, place or terms of payment or extend the time or payment
of, or renew or alter, Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding; (2) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any Person liable in any
manner for the collection of Senior Indebtedness; and (4) exercise or refrain
from exercising any rights against the Company or any other Person.
10. Notice to Trustee
(a) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the
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provisions of this Article or any other provision of the Subordinated
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee
in respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee, fiduciary or agent therefor; and, prior to the receipt of any
such written notice, the Trustee shall be entitled in all respects to assume
that no such facts, subject to Sections 3.15(a) through 3.15(d) of the Trust
Indenture Act of 1939, exist; provided, however, that, if the Trustee shall not
have received the notice as provided for in this Section 10 at least three
Business Days prior to the date upon which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment of
the principal of (and premium, if any, on) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to
the purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
(b) The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing itself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article and, if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
11. Reliance on Judicial Order or Certificate of Liquidating Agent
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to Sections 3.15(a) through 3.15(d) of the
Trust Indenture Act of 1939, and the holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which any insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other Indebtedness of the Company, the amount thereof or payable thereon,
the amount
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or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
12. Rights of Trustee As a Holder of Senior Indebtedness; Preservation of
Trustee's Rights
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in the Subordinated Indenture shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article shall
apply to the fees and expenses, and other claims of and payments to, the Trustee
in its capacity as trustee under the Subordinated Indenture.
13. No Suspension of Remedies.
Nothing in this Article shall limit the right of the Trustee or the
holders of Securities to take any action to accelerate the maturity of the
Securities or to pursue any rights or remedies hereunder or under applicable
law, provided that the right to receive payment on the Subordinated
Indebtedness is subject to the provisions of Sections 3 and 4.
14. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from
cash or the proceeds of U.S. Government Obligations held in trust under the
Subordinated Indenture by the Trustee (or other qualifying trustee) and which
were deposited in accordance with the terms of the Subordinated Indenture and
not in violation of this Article for the payment of principal of (and premium,
if any, on) and interest on the Securities shall not be subordinated to the
prior payment of any Senior Indebtedness or subject to the restrictions set
forth in this Article, and none of the holders of the Subordinated Indebtedness
shall be obligated to pay over any such amount to the Company or any holder of
Senior Indebtedness or any other creditor of the Company.
WPWPS_00007_2421_EXH_AB1_06.EXHIBIT_O
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EXHIBIT 10.d
AGREEMENT
This Agreement is dated as of November 23, 1993 between MascoTech, Inc., a
Delaware corporation (the "Company"), and Masco Corporation, a Delaware
corporation ("Masco").
WHEREAS, in addition to certain shares of Company common stock, par value
$1.00 per share (the "Common Stock"), and warrants to purchase Common Stock,
Masco holds (i) $130 million (the "Masco Debentures") of the Company's 6%
Convertible Subordinated Debentures Due 2011 (the "Debentures"), which are
redeemable at any time by the Company and convertible at any time into Common
Stock at $18 per share of Common Stock, and (ii) the one million outstanding
shares of the Company's 10% Exchangeable Preferred Stock (the "Preferred
Stock").
WHEREAS, the Company has been contemplating calling for redemption all of
the Debentures (including the Masco Debentures), and Masco is willing to refrain
from selling or otherwise disposing of Common Stock or other Company securities
for a period of time in order to facilitate the call for redemption of all of
the Debentures.
WHEREAS, it is in the interest of the Company to repurchase the Preferred
Stock for cash in order to reduce its financing costs and such repurchase is not
inconsistent with Masco's previously stated intention to reduce its investment
in the Company.
WHEREAS, the Company and Masco have entered into a Securities Purchase
Agreement dated as of March 31, 1993 (the "Securities Purchase Agreement")
pursuant to which Masco has agreed to purchase from the Company at its request
on or before March 31, 1995 additional preferred stock or subordinated debt
securities for an aggregate purchase price of up to $200 million, and the
parties desire to amend and restate the Securities Purchase Agreement in certain
respects.
WHEREAS, the Company and Masco have entered into a Stock Repurchase
Agreement dated as of May 1, 1984, as amended (the "Stock Repurchase
Agreement"), pursuant to which the Company has agreed to repurchase from Masco,
until May 1, 1994, such number of shares of Common Stock as may be necessary to
prevent Masco's Common Stock ownership interest in the Company from exceeding
49%, and the parties are agreeable to extending the term thereof.
NOW, THEREFORE, the parties agree as follows:
1. Conversion of Debentures. Masco agrees that (a) on or before
December 31, 1993 it will surrender for conversion the Masco Debentures, and (b)
it will not sell or otherwise dispose of any Common Stock, warrants to purchase
Common Stock or Debentures (whether now held or acquired on conversion) on or
before December
<PAGE>
<PAGE>
31, 1993. If Masco surrenders the Masco Debentures for conversion prior to
December 15, 1993, the Company will pay Masco an amount equal to the interest
accrued on the Masco Debentures from the last regular semi-annual interest
payment date to the date of conversion.
2. Repurchase of Preferred Stock. The Company shall repurchase the
Preferred Stock for $100 per share, plus an amount equal to accrued and unpaid
dividends from October 1, 1993 to the date of repurchase, payable in cash on the
date of such repurchase. Such repurchase shall occur as soon as practicable
after the execution of this Agreement.
3. Amendment to Securities Purchase Agreement. Concurrently herewith
the parties are entering into an Amended and Restated Securities Purchase
Agreement. The parties hereby confirm that all securities issuable pursuant to
the Amended and Restated Securities Purchase Agreement will be "Registrable
Securities" under the Registration Agreement between them dated as of March 31,
1993.
4. Amendment to Stock Repurchase Agreement. The parties hereby amend
Paragraph 1 of the Stock Repurchase Agreement by deleting the date "May 1, 1994"
and substituting therefor the date "May 1, 2004". Except as otherwise
specifically set forth herein, the Stock Repurchase Agreement shall continue in
full force and effect.
5. Representations and Warranties. (a) Each party represents and
warrants to the other that the following statements are true and correct as of
the date hereof and will be true and correct at the time Masco surrenders the
Masco Debentures for conversion and at the time of the repurchase of the
Preferred Stock:
(i) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is authorized by
its certificate of incorporation to carry on its business as now
conducted.
(ii) The execution, delivery and performance of this Agreement by
such party and the consummation by such party of the transactions
contemplated hereby are within the corporate powers of such party and have
been duly authorized by all necessary corporate action on its part. This
Agreement constitutes a valid and binding agreement of such party.
(iii) No authorization, consent or approval of, or registration or
filing with, any governmental or public body or regulatory authority is
required and which has not been obtained on the part of such party for the
execution, delivery and performance of this Agreement by such party.
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(iv) The execution, delivery and performance of this Agreement by
such party do not result in any violation by it of any of the terms or
provisions of its certificate of incorporation or by-laws or of any
indenture, mortgage or other agreement or instrument by which it or any of
its Subsidiaries (as hereinafter defined) is bound.
(b) Masco represents and warrants to the Company that Masco has, and at
the time of the repurchase of the Preferred Stock will have, unencumbered title
to the Preferred Stock, free and clear of any Liens (as hereinafter defined),
and delivery by Masco of the Preferred Stock will pass unencumbered title to the
Company, free and clear of any Liens.
(c) The Company represents and warrants to Masco that the repurchase of
the Preferred Stock from Masco will be effected in compliance with the Delaware
General Corporation Law.
6. Legal Opinions. Concurrently with the execution hereof, Masco is
delivering to the Company an opinion of John R. Leekley, counsel to Masco, and
the Company is delivering to Masco an opinion of Dykema Gossett, counsel to the
Company, in each case dated the date hereof and to the effect of certain of the
matters specified in Paragraph 5 hereof.
7. Definitions. The following terms, as used herein, have the
following meanings:
(a) "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(b) "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
(c) "Subsidiary" means, with respect to any Person, any corporation
or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are
at the time directly or indirectly owned by such Person.
8. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
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WHEREFORE, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
MASCO CORPORATION
By____________________________
Its_________________________
MASCOTECH, INC.
By____________________________
Its_________________________
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Exhibit 10.l
MASCOTECH, INC.
1991 LONG TERM STOCK INCENTIVE PLAN
(Restated September 14, 1993)
Section 1. Purposes
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are
to encourage selected employees of and consultants to MascoTech, Inc. (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's future
success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest, whether
more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of not
less than two directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
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(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company
or any Affiliate designated to be granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(n) "Restricted Period" shall mean the period of time during which Awards
of Restricted Stock or Restricted Stock Units are subject to restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules and
regulations promulgated by the Securities and Exchange Commission thereunder, or
any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(b) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
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Section 3. Administration
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without limita-
tion the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and any
payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property
and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof or of the
Committee;
(vii) determine the methods or procedures for establishing the fair
market value of any property (including, without limitation, any Shares or
other securities) transferred, exchanged, given or received with respect
to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards and
any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan;
(xii) decide all questions and settle all controversies and disputes
which may arise in connection with the Plan, Award Agreements and Awards;
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(xiii) delegate to directors of the Company who need not be
"disinterested persons" within the meaning of Rule 16b-3 the authority to
designate Participants and grant Awards, provided such Participants are
not directors or officers of the Company for purposes of Section 16;
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and Awards.
All designations, determinations, interpretations and other decisions
under or with respect to the Plan, Award Agreements or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon all persons, including the Company,
Affiliates, Participants, beneficiaries of Awards and stockholders of the
Company.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Initial Authorization. There shall be 6,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above,
up to 6,000,000 Shares acquired by the Company subsequent to the
effectiveness of the Plan as full or partial payment for the exercise
price for an Option or any other stock option granted by the Company, or
acquired by the Company, in open market transactions or otherwise, in
connection with the Plan or any Award hereunder or any other employee
stock option or restricted stock issued by the Company may thereafter be
included in the Shares available for Awards. If any Shares covered by an
Award or to which an Award relates are forfeited, or if an Award expires,
terminates or is cancelled, then the Shares covered by such Award, or to
which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares available under the Plan by reason
of such Award, to the extent of any such forfeiture, expiration,
termination or cancellation, may thereafter be available for further
granting of Awards and included as acquired Shares for purposes of the
preceding sentence.
(iii) Additional Shares. Shares acquired by the Company in the
circumstances set forth in (ii) above in excess of the amount set forth
therein may thereafter be included in the Shares available for Awards to
the extent permissible for
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purposes of allowing the Plan to continue to satisfy the conditions of
Rule 16b-3.
(iv) Shares Under Prior Plans. In addition to the amount set forth
above, shares remaining available for issuance upon any termination of
authority to make further awards under both the Company's 1984 Restricted
Stock Incentive Plan and its 1984 Stock Option Plan shall thereafter be
available for issuance hereunder.
(v) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of
grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan to the extent determinable on
such date and insofar as the number of Shares is not then
determinable under procedures adopted by the Committee consistent
with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares available
for granting Awards under the Plan in such amount and at such time
as the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards or restricted stock awards or stock options granted under any other
plan of the Company may be counted or not counted under procedures adopted by
the Committee in order to avoid double counting. Any Shares that are delivered
by the Company or its Affiliates, and any Awards that are granted by, or become
obligations of, the Company, through the assumption by the Company of, or in
substitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case of
Awards granted to Participants who are directors or officers of the Company for
purposes of Section 16, be counted against the Shares available for granting
Awards under the Plan.
(vi) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized but unissued Shares or of Shares reacquired by the Company,
including but not limited to Shares purchased on the open market.
(b) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization,
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merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company or extraordinary
transaction or event which affects the Shares, then the Committee shall have the
authority to make such adjustment, if any, in such manner as it deems appropri-
ate, in (i) the number and type of Shares (or other securities or property)
which thereafter may be made the subject of Awards, (ii) outstanding Awards
including without limitation the number and type of Shares (or other securities
or property) subject thereto, and (iii) the grant, purchase or exercise price
with respect to outstanding Awards and, if deemed appropriate, make provision
for cash payments to the holders of outstanding Awards; provided, however, that
the number of Shares subject to any Award denominated in Shares shall always be
a whole number.
Section 5. Eligibility
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, but excluding a member
of the Committee, any person who serves only as a director of the Company and
any consultant to the Company or an Affiliate who is also a director of the
Company and who is not rendering services pursuant to a written agreement with
the entity in question), as may be selected from time to time by the Committee
or by the directors to whom authority may be delegated pursuant to Section 3
hereof in its or their discretion, is eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is authorized to grant Options to
Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option;
(B) the term of each Option; and
(C) the time or times at which an Option may be exercised, in
whole or in part, the method or methods by which and the form or
forms (including, without limitation, cash, Shares, other Awards or
other property, or any combination thereof, having a fair market
value on the exercise date equal to the relevant exercise price) in
which payment of the exercise price with respect thereto may be made
or deemed to have been made. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or
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any successor provision thereto, and any regulations promulgated
thereunder.
Subject to the terms of the Plan, the Committee may impose such conditions
or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the Committee,
of exercise of the Option and the number of Shares elected for
exercise, such notice to be accompanied by such instruments or
documents as may be required by the Committee, and shall tender the
purchase price of the Shares elected for exercise.
(B) At the time of exercise of an Option payment in full in
cash shall be made for all Shares then being purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
(I) if the class of Shares at the time is listed upon
any stock exchange, the Shares to be issued have been listed,
or authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(II) in the opinion of the Company's counsel there has
been compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company
may require from the Participant such investment representation or
such agreement, if any, as the Company's counsel may consider
necessary in order to comply with the Securities Act of 1933 as then
in effect, and may require that the Participant agree that any sale
of the Shares will be made only in such manner as shall be in accor-
dance with law and that the Participant will notify the Company of
any intent to make any disposition of the Shares whether by sale,
gift or otherwise. The Participant shall take any action reasonably
requested by the Company in such connection. A Participant shall
have the rights of a stockholder only as and when Shares have been
actually issued to the Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer
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an Affiliate) other than the Participant's death, the Participant
may thereafter exercise the Option as provided below, except that
the Committee may terminate the unexercised portion of the Option
concurrently with or at any time following termination of the
employment or consulting arrangement (including termination of
employment upon a change of status from employee to consultant) if
it shall determine that the Participant has engaged in any activity
detrimental to the interests of the Company or an Affiliate. If such
termination is voluntary on the part of the Participant, the option
may be exercised only within ten days after the date of termination.
If such termination is involuntary on the part of the Participant,
if an employee retires on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of
permanent and total disability, the Option may be exercised within
three months after the date of termination or retirement. For
purposes of this Paragraph (D), a Participant's employment or
consulting arrangement shall not be considered terminated (i) in the
case of approved sick leave or other bona fide leave of absence (not
to exceed one year), (ii) in the case of a transfer of employment or
the consulting arrangement among the Company and Affiliates, or
(iii) by virtue of a change of status from employee to consultant or
from consultant to employee, except as provided above.
(E) If a Participant dies at a time when entitled to exercise
an Option, then at any time or times within one year after death
such Option may be exercised, as to all or any of the Shares which
the Participant was entitled to purchase immediately prior to death.
The Company may decline to deliver Shares to a designated
beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company. Except as so exercised such
Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent such
Option was exercisable at the date of termination of employment or
the consulting arrangement, and an Option may not be exercised at a
time when the Option would not have been exercisable had the
employment or consulting arrangement continued.
(iii) Restoration Options. The Committee may grant a Participant
the right to receive a restoration Option with respect to an Option or any
other option granted by the Company. Unless the Committee shall otherwise
determine, a restoration Option shall provide that the underlying option
must be exercised while the Participant is an employee of or consultant to
the Company or an Affiliate and the number of Shares which are subject to
a
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restoration Option shall not exceed the number of whole Shares exchanged
in payment of the original option.
(b) Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the fair
market value of one Share on the date of exercise or, if the Committee shall so
determine in the case of any such right other than one related to any Incentive
Stock Option, at any time during a specified period before or after the date of
exercise over (ii) the grant price of the right as specified by the Committee.
Subject to the terms of the Plan, the Committee shall determine the grant price,
term, methods of exercise and settlement and any other terms and conditions of
any Stock Appreciation Right and may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to Participants
Awards of Restricted Stock, which shall consist of Shares, and Restricted
Stock Units which shall give the Participant the right to receive cash,
other securities, other Awards or other property, in each case subject to
the termination of the Restricted Period determined by the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of the
Plan, Awards of Restricted Stock and Restricted Stock Units shall have
such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right
to receive any dividend or other right or property), which restrictions
may lapse separately or in combination at such time or times, in
installments or otherwise. Unless the Committee shall otherwise determine,
any Shares or other securities distributed with respect to Restricted
Stock or which a Participant is otherwise entitled to receive by reason of
such Shares shall be subject to the restrictions contained in the
applicable Award Agreement. Subject to the aforementioned restrictions and
the provisions of the Plan, Participants shall have all of the rights of a
stockholder with respect to Shares of Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate, including,
without limitation, book-entry registration or issuance of stock certifi-
cates.
(iv) Forfeiture. Except as otherwise determined by the Committee:
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(A) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate), other
than the Participant's death or permanent and total disability or,
in the case of an employee, retirement on or after normal retirement
date, all Shares of Restricted Stock theretofore awarded to the
Participant which are still subject to restrictions shall upon such
termination of employment or the consulting relationship be
forfeited and transferred back to the Company. Notwithstanding the
foregoing or Paragraph (C) below, if a Participant continues to hold
an Award of Restricted Stock following termination of the employment
or consulting arrangement (including retirement and termination of
employment upon a change of status from employee to consultant), the
Shares of Restricted Stock which remain subject to restrictions
shall nonetheless be forfeited and transferred back to the Company
if the Committee at any time thereafter determines that the
Participant has engaged in any activity detrimental to the interests
of the Company or an Affiliate. For purposes of this Paragraph (A),
a Participant's employment or consulting arrangement shall not be
considered terminated (i) in the case of approved sick leave or
other bona fide leave of absence (not to exceed one year), (ii) in
the case of a transfer of employment or the consulting arrangement
among the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
(B) If a Participant ceases to be employed or retained by the
Company or an Affiliate by reason of death or permanent and total
disability or if following retirement a Participant continues to
have rights under an Award of Restricted Stock and thereafter dies,
the restrictions contained in the Award shall lapse with respect to
such Restricted Stock.
(C) If an employee ceases to be employed by the Company or an
Affiliate by reason of retirement on or after normal retirement
date, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment had
not terminated.
(D) At the expiration of the Restricted Period as to Shares
covered by an Award of Restricted Stock, the Company shall deliver
the Shares as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in
accordance with Section 6(g)(iv)(B)(2)(c), to such trust; or
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(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in form approved
by the Company, to the beneficiary so designated; or
(3) in all other cases, to the Participant or the legal
representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant Performance
Awards to Participants. Subject to the terms of the Plan, a Performance Award
granted under the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock), other securities, other
Awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee and payable to, or exercisable by, the
holder of the Performance Award, in whole or in part, upon the achievement of
such performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan, the performance goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and other terms and
conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to receive
payments equivalent to dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have such terms
and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan,
the Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof, as the Committee shall determine.
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(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for no
cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under another plan of the Company or any
Affiliate, may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, and may be
made in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures established by
the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no Award
or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A) above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the Participant
in writing on a form approved by the Committee; or
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate.
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(2) A Participant may assign or transfer rights under an
Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the Participant
in writing on a form approved by the Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate; or
(c) to a revocable grantor trust established by the
Participant for the sole benefit of the Participant
during the Participant's life, and under the terms of
which the Participant is and remains the sole trustee
until death or physical or mental incapacity. Such
assignment shall be effected by a written instrument in
form and content satisfactory to the Committee, and the
Participant shall deliver to the Committee a true copy
of the agreement or other document evidencing such
trust. If in the judgment of the Committee the trust to
which a Participant may attempt to assign rights under
such an Award does not meet the criteria of a trust to
which an assignment is permitted by the terms hereof, or
if after assignment, because of amendment, by force of
law or any other reason such trust no longer meets such
criteria, such attempted assignment shall be void and
may be disregarded by the Committee and the Company and
all rights to any such Awards shall revert to and remain
solely in the Participant. Notwithstanding a qualified
assignment, the Participant, and not the trust to which
rights under such an Award may be assigned, for the
purpose of determining compensation arising by reason of
the Award shall continue to be considered an employee or
consultant, as the case may be, of the Company or an
Affiliate, but such trust and the Participant shall be
bound by all of the terms and conditions of the Award
Agreement and this Plan. Shares issued in the name of
and delivered to such trust shall be conclusively
considered issuance and delivery to the Participant.
(3) The Committee shall not permit directors or officers
of the Company for purposes of Section 16 to transfer or
assign Awards except as permitted under Rule 16b-3.
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(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or
other instrument of transfer, copies of trust agreements and any
other documents delivered to them by or on behalf of the Participant
which they believe genuine and any action taken by them in reliance
thereon shall be conclusive and binding upon the Participant, the
personal representatives of the Participant's estate and all persons
asserting a claim based on an Award. The delivery by a Participant
of a beneficiary designation, or an assignment of rights under an
Award as permitted hereunder, shall constitute the Participant's
irrevocable undertaking to hold the Committee, the Company and its
officers, agents and employees harmless against claims, including
any cost or expense incurred in defending against claims, of any
person (including the Participant) which may be asserted or alleged
to be based on an Award subject to a beneficiary designation or an
assignment. In addition, the Company may decline to deliver Shares
to a beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company.
(v) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restric-
tions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities
are then listed and any applicable Federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(vi) Change in Control. (A) Notwithstanding any of the provisions
of this Plan or instruments evidencing Awards granted hereunder, upon a
Change in Control of the Company (as hereinafter defined) the vesting of
all rights of Participants under outstanding Awards shall be accelerated
and all restrictions thereon shall terminate in order that Participants
may fully realize the benefits thereunder. Such acceleration shall
include, without limitation, the immediate exercisability in full of all
Options and the termination of restrictions on Restricted Stock and
Restricted Stock Units. Further, in addition to the Committee's authority
set forth in Section 4(b), the Committee, as constituted before such
Change in Control, is authorized, and has sole discretion, as to any
Award, either at the time such Award is made hereunder or any time
thereafter, to take any one or more of the following actions: (i) provide
for the purchase of any such Award, upon the Participant's request, for an
amount of cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Participant's rights had such
Award been currently exercisable or payable; (ii) make such adjustment to
any such Award then outstanding as the Committee
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deems appropriate to reflect such Change in Control; and (iii) cause any
such Award then outstanding to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation after such Change in
Control.
(B) A Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, other than pursuant
to a transaction or agreement previously approved by the Board of
Directors of the Company, directly or indirectly purchases or
otherwise becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) or has the right to acquire such beneficial
ownership (whether or not such right is exercisable immediately,
with the passage of time, or subject to any condition) of voting
securities representing 25 percent or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
of Masco Corporation, a Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any new
directors whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at the
beginning of the period or whose election or nomination for election
as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
(vii) Cash Settlement. Notwithstanding any provision of this Plan
or of any Award Agreement to the contrary, any Award outstanding hereunder
may at any time be cancelled in the Committee's sole discretion upon
payment of the value of such Award to the holder thereof in cash or in
another Award hereunder, such value to be determined by the Committee in
its sole discretion.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any
outstanding Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as stockholder
approval thereof is required in order for the Plan to continue to satisfy the
conditions of Rule 16b-3, and
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(ii) without the consent of affected Participants no amendment of the Plan or of
any Award may impair the rights of Participants under outstanding Awards.
(b) Waivers. The Committee may waive any conditions or rights under any
Award theretofore granted, prospectively or retroactively, without the consent
of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits to be made available under the
Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
effectuate the Plan.
Section 8. General Provisions
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, including the grant of
options and other stock-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.
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(d) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement
or other written agreement with the Participant.
(e) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable Federal law.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any person or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, person or Award, and the remainder of the Plan and any
such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other person. To the extent that any person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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Exhibit 10.m
MASCOTECH, INC.
1984 RESTRICTED STOCK INCENTIVE PLAN
(Restated September 14, 1993)
l. Purpose of the Plan
The purpose of the 1984 Restricted Stock Incentive Plan (the "Plan") is to
aid MascoTech, Inc. (the "Company") and its subsidiaries and affiliated
companies in securing and retaining key employees and consultants of outstanding
ability and to motivate such individuals to exert their best efforts on behalf
of the Company and its subsidiaries and affiliated companies. In addition, the
Company expects that it will benefit from the added interest which such
individuals will have in its welfare as a result of their ownership or increased
ownership of the Company's Common Stock. For purposes of the Plan a
"subsidiary" is any corporation in which the Company owns, directly or
indirectly, stock possessing more than fifty percent of the total combined
voting power of all classes of stock. For purposes of Paragraph 4 of the Plan,
an "affiliated company" is any other corporation (and its subsidiaries) in which
the Company or its subsidiaries own stock possessing at least twenty percent of
the total combined voting power of all classes of stock, and for all other
purposes of the Plan, an "affiliated company" is any other corporation, at least
twenty percent of the total combined voting power of all classes of stock of
which is owned by the Company or by one or more other corporations in a chain of
corporations, at least twenty percent of the stock of each of which is held by
the Company or a subsidiary or another corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of the Company's Common Stock that may be
awarded under the Plan shall not exceed in the aggregate 8,160,000 shares;
provided, however, that such total amount shall be reduced by the aggregate
number of shares of the Company's Common Stock as to which options have been
granted under the Company's 1984 Stock Option Plan since the original adoption
thereof (other than shares which are available for further grants under Article
IV of such Plan notwithstanding the prior grant of options with respect to such
shares). Such stock may be authorized but unissued shares or shares of Common
Stock reacquired by the Company, including but not limited to shares purchased
on the open market. Shares of stock awarded under the Plan which are later
reacquired by the Company as a result of forfeiture pursuant to the Plan shall
again become available for awards under the Plan.
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3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of three or more members of the Board of Directors who
shall administer the Plan. No director shall become or remain a member of the
Committee unless at the time of his exercise of any discretionary function as a
Committee member such director is not and has not at any time within one year
prior to the exercise of such discretion been eligible for selection as a person
to whom stock may be allocated or to whom stock options or stock appreciation
rights may be granted pursuant to the Plan or any other plan of the Company or
any of its affiliates entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or any of its affiliates.
The Committee shall have the authority, consistent with the Plan, to determine
the terms and conditions of each award, to interpret the Plan and the agreements
under the Plan, to adopt, amend and rescind rules and regulations for the admin-
istration of the Plan and the awards, and generally to conduct and administer
the Plan and to make all determinations in connection therewith which may be
necessary or advisable, and all such actions of the Committee shall be binding
upon all participants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or as a non-employee officer of the Company and
any consultant to the Company or any of its subsidiaries or affiliated companies
who is also a director of the Company or who is not rendering services pursuant
to a written agreement with the corporation in question), as may be selected
from time to time by the Committee in its discretion, are eligible to receive
awards under the Plan. The Committee shall determine in its sole discretion the
number of shares to be awarded to each such participant.
5. Terms and Conditions of Awards
All shares of Common Stock awarded to participants under the Plan shall be
subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as shall be contained in each Award
Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" which shall be not less
than 90 days. Such Restricted Period may
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differ among participants and may have different expiration dates with
respect to portions of shares covered by the same award. The Committee
may also determine that the expiration of any Restricted Period shall be
subject to such additional terms and conditions as it decides in its sole
discretion and as set forth in the participant's Agreement.
(b) Shares of stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer and the restrictions applicable to non-cash dis-
tributions, the participant shall have all the rights of a stockholder
including but not limited to the right to receive all dividends paid on
such shares (subject to the provisions of Paragraph 6) and the right to
vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any reason
(including termination by reason of the fact that such corporation is no
longer a subsidiary or affiliated company) other than death, permanent and
total disability, or, in the case of an employee, retirement on or after
normal retirement date, all shares of stock theretofore awarded to the
participant which are still subject to the restrictions imposed by
Paragraph 5(b) shall upon such termination be forfeited and transferred
back to the Company, provided, however, that in the event such employment
or consulting relationship is terminated by action of the Company or any
of its subsidiaries or affiliated companies without cause or by agreement
of the Company or any of its subsidiaries or affiliated companies and the
participant, the Committee may, but need not, determine that some or all
of the shares shall be free of restrictions. For purposes of this
Paragraph 5(c), a participant's employment or consulting agreement shall
not be considered terminated (i) in the case of transfers of employment or
the consulting arrangement among the Company, its subsidiaries and af-
filiated companies, (ii) by virtue of a change of status from employee to
consultant or from consultant to employee, or (iii) in the case of
interruption in service, not exceeding one year in duration unless
otherwise approved by the Committee, for approved sick leave or other bona
fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if an employee ceases to be
employed by the Company or any of its subsidiaries or affiliated companies
by reason of retirement on or after normal retirement date, the
restrictions imposed by Paragraph 5(b) shall lapse with
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respect to the shares then subject to restrictions, except to the extent
provided to the contrary in the Agreement.
(e) Each certificate issued in respect of shares awarded under the
Plan shall be registered in the name of the participant and deposited by
the participant with the Company, together with a stock power endorsed in
blank, and shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Industries, Inc. 1984 Restricted Stock Incentive Plan and an Award
Agreement entered into between the registered owner and MascoTech, Inc.
Copies of such Plan and Award Agreement are on file in the office of the
Secretary of MascoTech, Inc., Taylor, Michigan."
(f) The participant shall enter into an Agreement with the Company
in a form specified by the Committee agreeing to the terms and conditions
of the award, the expiration of the Restricted Period as to the shares
covered by the award, and such other matters, including compliance with
applicable federal and state securities laws and methods of withholding or
providing for the payment of required taxes, as the Committee shall in its
sole discretion determine. The Committee may at any time amend the terms
of any Agreement consistent with the terms of the Plan, except that
without the participant's written consent no such amendment shall
adversely affect the rights of the participant who is a party to such
Agreement.
(g) At the expiration of the Restricted Period as to shares covered
by any award, the Company shall redeliver the stock certificates deposited
with it pursuant to Paragraph 5(e) and as to which the Restricted Period
has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
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(h) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each award theretofore
granted shall immediately become fully vested and non-forfeitable and
shall thereupon be distributed to participants as soon as practicable,
free of all restrictions. A Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
of Masco Corporation, a Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any new
directors whose election by either such Board or nomination for
election by stockholders was approved by a vote of at least two-
thirds of the members of such Board who were either directors on
such Board at the beginning of the period or whose election or
nomination for election as directors was previously so approved, for
any reason cease to constitute at least a majority of the members
thereof.
(i) Notwithstanding any other provision of the Plan, a participant
may assign all rights under any award to a revocable grantor trust
established by the participant for the sole benefit of the participant
during the life of the participant, and under the terms of which the
participant is and remains the sole trustee until death or physical or
mental incapacity. Such assignment shall be effected by a written
instrument in form and content satisfactory to the Committee and the
participant shall deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment of the Committee
the trust to which a participant may attempt to assign rights under an
award does not meet the criteria of a trust to which an assignment is
permitted by the terms of this Paragraph 5(i) or if after assignment,
because of amendment, by force of law or any other reason such trust no
longer meets such criteria, such attempted assignment shall be void and
may be disregarded by the
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Committee and the Company and all rights to any awards shall revert to and
remain solely in the participant. Notwithstanding a qualified assignment,
the participant, and not the trust to which rights under an award may be
assigned, for the purpose of determining compensation arising by reason of
the award, shall continue to be considered an employee or consultant, as
the case may be, of the Company, a subsidiary or affiliated company, but
such trust and the participant shall be bound by all of the terms and
conditions of the Agreement and the Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other instrument
of transfer, copies of trust agreements and any other documents delivered
to them by or on behalf of the participant which they believe genuine and
any action taken by them in reliance thereon shall be conclusive and
binding upon the participant, his personal representatives and all persons
asserting a claim based on an award granted pursuant to the Plan. The
delivery by a participant of a beneficiary designation, or an assignment
of rights under an award as permitted by this Paragraph 5(i), shall
constitute the participant's irrevocable undertaking to hold the Commit-
tee, the Company and its officers, agents and employees harmless against
claims, including any cost or expense incurred in defending against
claims, of any person (including the participant) which may be asserted or
alleged to be based upon an award subject to a beneficiary designation or
an assignment. In addition, the Company may decline to deliver shares to
a beneficiary until it receives indemnity against claims of third parties
satisfactory to the Company. Issuance of shares as to which restrictions
have lapsed in the name of, and delivery to, the trust to which rights may
be assigned shall be conclusively considered issuance and delivery to the
participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to
satisfy, in whole or in part, the applicable income tax withholding
obligations when the restrictions imposed by Paragraph 5(b) lapse by
having withheld from the shares as to which the Restricted Period has
expired or by delivering from shares of Common Stock of the Company owned
by the participant such number of shares having a fair market value equal
to the amount needed to satisfy such obligations.
(k) In its sole discretion the Committee may also provide the
participant with the right to receive cash payments in connection with
shares of Common Stock awarded under the Plan (including shares previously
awarded), the amount of which payments are based, in whole or only in
part,
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on the value of such Common Stock. The right to receive such payments
shall be subject to such other terms and conditions not inconsistent with
the Plan as the Committee may determine.
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by the Company for the
outstanding Common Stock of the Company, the maximum aggregate number and class
of shares as to which awards may be granted under the Plan may be appropriately
adjusted by the Committee whose determination thereof shall be conclusive.
Unless the Committee shall otherwise determine, any shares of stock or other
securities received by a participant with respect to shares still subject to the
restrictions imposed by Paragraph 5(b) will be subject to the same restrictions
and shall be deposited with the Company.
If the Company shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) will be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise at that
time.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of stockholders of the Company, no
amendment shall increase the total number of shares which may be awarded under
the Plan, extend the date for awards of shares under the Plan beyond December
31, 1999 or change the standards of eligibility to participate in the Plan. The
total number of shares which may be awarded under the Plan may, however, be
adjusted without stockholder approval, pursuant to the adjustment provisions
described in Paragraph 6.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1999.
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Exhibit 10.n
MASCOTECH, INC.
1984 STOCK OPTION PLAN
(Restated September 14, 1993)
Article I. Purpose
The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for
MascoTech, Inc. (the "Company") and its stockholders the benefits inherent in
stock ownership by selected key employees of and consultants to the Company and
its subsidiaries and affiliated companies who in the judgment of the committee
responsible for the administration of the Plan are largely responsible for the
Company's growth and success. The Plan is designed to accomplish this purpose
by offering such employees and consultants an opportunity to purchase shares of
the Common Stock of the Company. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock possessing
more than fifty percent of the total combined voting power of all classes of
stock. For purposes of Articles III and VII of the Plan, an "affiliated
company" is any other corporation (and its subsidiaries) in which the Company or
its subsidiaries own stock possessing at least twenty percent of the total
combined voting power of all classes of stock, and for all other purposes of the
Plan, an "affiliated company" is any other corporation, at least twenty percent
of the total combined voting power of all classes of stock of which is owned by
the Company or by one or more other corporations in a chain of corporations, at
least twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
Article II. Administration
The Plan shall be administered by a committee (the "Committee") consisting
of three or more of the Company's directors to be appointed by the Board of
Directors. No director shall become or remain a member of the Committee unless
at the time of his exercise of any discretionary function as a Committee member
such director is not eligible, and has not at any time within one year prior to
the exercise of such discretion been eligible for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights may
be granted pursuant to the Plan or any other plan of the Company or any of its
affiliates entitling the participants therein to acquire stock, stock options or
stock appreciation rights of the Company or any of its affiliates. The
Committee shall have authority, consistent with the Plan:
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(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be granted and
the number of shares of Common Stock to be subject to each option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments evidencing any
options granted under the Plan and of any other instruments required under
the Plan, and to change such forms from time to time;
(f) to designate options granted to key employees of the Company or
its "subsidiaries" under the Plan as "incentive stock options" ("ISOs"),
as such terms are defined under the Internal Revenue Code;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee shall
be binding on all parties concerned.
Article III. Participants
Key employees of and consultants to the Company, its subsidiaries or
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or a non-employee officer of the Company and any
consultant to the Company or any of its subsidiaries or affiliated companies who
is not rendering services pursuant to a written agreement with the corporation
in question), as may be selected from time to time by the Committee in its
discretion, are eligible to receive options under the Plan. The grant of an
option to an employee or consultant shall not entitle such individual to other
grants or options, nor shall such grant disqualify such individual from further
participation.
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Article IV. Limitations
No options shall be granted under the Plan after December 31, 1999, but
options theretofore granted may extend beyond that date. Subject to adjustment
as provided in Article IX, the number of shares of Common Stock of the Company
which may be issued under the Plan shall not exceed in the aggregate 8,160,000
shares; provided, however, that such total amount shall be reduced by the
aggregate number of shares of the Company's Common Stock awarded under the
Company's 1984 Restricted Stock Incentive Plan since the original adoption
thereof (other than shares forfeited to the Company which are thereby available
for further awards under Paragraph 2 of such Plan). To the extent that any
option granted under the Plan shall expire or terminate unexercised or for any
reason become unexercisable as to any stock subject thereto, such stock shall
thereafter be available for further grants under the Plan, within the limit
specified above. If an option granted under the Plan shall be accepted for
surrender pursuant to Article VIII, any stock covered by options so accepted
shall not thereafter be available for the granting of other options under the
Plan.
Notwithstanding any provision to the contrary in the Plan, no option may
be designated an ISO unless all of the following conditions are satisfied with
respect to such option:
(a) Such option must be granted on or prior to May 1, 1994, and such
option by its terms is not exercisable after the expiration of ten years
from the date such option is granted;
(b) Either (i) the employee to whom such option is granted does not,
determined at the time such option is granted, own capital stock
representing more than ten percent of the voting power of all classes of
stock of the Company, its parent or any of its subsidiaries, or (ii)
the option price is at least 110 percent of the fair market value,
determined at the time such option is granted, of the stock subject to
such option and such option by its terms is not exercisable more than five
years from the date it is granted;
(c) Such option by its terms is not exercisable while there is
outstanding an ISO which was granted to the same employee at an earlier
time. For purposes of this clause (c), an ISO which has not been
exercised in full shall be deemed to be outstanding, notwithstanding any
cancellation or termination thereof, until the expiration of the period
during which it could have been exercised under its original terms; and
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(d) The aggregate fair market value of the Common Stock subject to
such option plus the aggregate fair market value of Common Stock subject
to ISOs previously or concurrently granted to the same employee in the
same calendar year (all determined at the respective dates of grant of
such options) must not exceed $100,000 (the "Basic Amount") plus the sum
of the "Carry-Over Amounts" for each of the three calendar years
immediately preceding the year in which such option is granted. The
"Carry-Over Amount", as used in this clause (d) for any calendar year,
shall mean (i) fifty percent of the amount by which $100,000 exceeds the
fair market value, determined at the time of grant, of Common Stock
subject to ISOs which were granted during such calendar year to the
employee for whom the Carry-Over Amount is being determined, or (ii)
$50,000 in the case such employee has not in such calendar year been
granted any ISO. No amount shall be included in a Carry-Over Amount for
any year to the extent such amount was theretofore necessarily included as
a Carry-Over Amount to permit the qualification of an ISO under this
clause (d), and Carry-Over Amounts shall only be utilized to permit the
qualification of an ISO under this clause (d) in the order in which they
first arose and then only if the Basic Amount has not theretofore been
utilized to permit such qualification.
Article V. Stock to be Issued
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such Stock may be authorized but unissued shares or
shares of Common Stock reacquired by the Company, including but not limited to
shares purchased on the open market. The Board of Directors and the officers
of the Company shall take any appropriate action required for such issuance.
Article VI. Terms and Conditions of Options
All options granted under the Plan shall be subject to the following terms
and conditions (except as otherwise provided in Article VII) and to such other
terms and condition as the Committee shall deem appropriate.
(a) Option Price. Each option granted hereunder shall have such per
share option price as the Committee may determine, but not less than the fair
market value of Common Stock of the Company on the date the option is granted.
(b) Terms of Options. The term of an option shall not exceed eleven years
from the date of grant. The date of grant shall be the date on which the option
is awarded by the Committee.
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(c) Exercise of Options.
(i) Each option shall be made exercisable not less than six months
from the date of grant and at such time or times, whether or not in
installments, as the Committee shall prescribe at the time the option is
granted.
(ii) A person electing to exercise an option shall give written
notice to the Company, as may be specified by the Committee, of exercise
of the option and of the number of shares of stock elected for exercise,
such notice to be accompanied by such instruments or documents as may be
required by the Committee, and such person shall at the time of such
exercise tender the purchase price of the stock elected for exercise
unless otherwise directed by the Committee.
(iii) Notwithstanding any of the provisions of this Plan or
instruments evidencing options heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each Option then
outstanding shall immediately become exercisable in full. A Change in
Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
of Masco Corporation, a Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any new
directors whose election by either such Board or nomination for
election by stockholders was approved by a vote of at least two-
thirds of the members of such Board who were either directors on
such Board at the beginning of the period or whose election or
nomination for election as directors was previously so approved, for
any reason cease to constitute at least a majority of the members
thereof.
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(d) Payment for Issuance of Stock. Upon and at the time of exercise of
any option granted pursuant to the Plan, payment in full shall be made for all
such stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its then
fair market value. Notwithstanding the foregoing, the Committee may in its
discretion permit the issuance of stock upon such other plan of payment as it
deems reasonable, provided that the then unpaid portion of the purchase price
shall be evidenced by a promissory note at such rate of interest and upon such
other terms and conditions as the Committee shall deem appropriate. In all
cases where stock is issued for less than present full payment of the purchase
price, there shall be placed upon the certificate or certificates representing
such stock a legend setting forth the amount paid at issuance, and the amount
remaining unpaid thereon, and stating that the stock is subject to call for the
remainder and may not be transferred by the holder until the balance due thereon
shall be fully paid.
The Committee, in its discretion and in accordance with the procedures
established by the Committee, may permit a participant to satisfy, in whole or
in part, the applicable income tax withholding obligations in connection with
the exercise of a non-qualified stock option under the Plan by having withheld
from the shares to be issued upon the exercise of the option or by delivering
from shares of Common Stock of the Company owned by the participant such number
of shares having a fair market value equal to the amount needed to satisfy such
obligations.
(e) Conditions to Issuance. The Company shall not be obligated to issue
any stock unless and until:
(i) in the event of the Company's outstanding Common Stock is at the
time listed upon any stock exchange, the shares of stock to be issued have
been listed, or authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be in
accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or otherwise.
The participant shall take any action
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reasonably requested by the Company in such connection. A participant shall
have the rights of a stockholder only as and when shares of stock have been
actually issued to the participant pursuant to the Plan.
(f) Nontransferability of Options. No option may be transferred by the
participant other than by designation of beneficiary as provided in subsection
(j) of this Article, or by will or the laws of descent and distribution, and
during the participant's lifetime the option may be exercised only by the
participant.
(g) Consideration for Option. Each person receiving an option must agree
to remain as an employee or consultant upon the terms of employment or the
consulting arrangement then existing (unless different terms are mutually agreed
upon) for at least one year from the date of the granting of the option, subject
to the right of the Company, its subsidiary or affiliated company to terminate
the participant's employment or consulting arrangement at any time.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including termination
by reason of the fact that such corporation is no longer a subsidiary of
affiliated company) other than the participant's death or permanent and total
disability or, in the case of an employee, retirement on or after normal
retirement date, unless discharged for misconduct which in the opinion of the
Committee casts such discredit on the participant as to justify termination of
the option, the participant may thereafter exercise the option as provided
below. If such termination is voluntary on the part of the participant, the
option may be exercised only within ten days after the date of termination
unless a longer period is permitted by the Committee in its discretion. If such
termination is involuntary on the part of the participant, the option may be
exercised within three months after the day of termination. Except as expressly
provided in the Plan, in no event may a participant whose employment or
consulting agreement has been terminated voluntarily or involuntarily exercise
an option at a time when the option would not have been exercisable had the
employment or consulting arrangement continued. Notwithstanding the foregoing,
the Committee may by the express terms of the grant of the option extend the
aforesaid periods of time within which the participant may exercise an option
after the termination of employment or the consulting arrangement. For purposes
of this Article VI(h), a participant's employment or consulting arrangement
shall not be considered terminated (i) in the case of sick leave or other bona
fide leave of absence (not to exceed one year unless otherwise approved by the
Committee), (ii) in the case of a transfer of employment or the consulting
arrangement among the Company, its subsidiaries and affiliated companies, or
(iii) by virtue of a change of status from employee to consultant or from
consultant to employee. Unless otherwise expressly provided in the
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Plan or the grant of the option, an option may be exercised only to the extent
exercisable on the date of termination of employment or of the consulting
arrangement by reason of death, permanent and total disability, retirement or
otherwise.
(i) Retirement; Disability. If prior to the expiration date of an option
the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable on the
date of retirement or such termination, provided such option shall be exercised
within three months of the date of retirement or such termination. Notwith-
standing the foregoing, in its discretion the Committee may permit the exercise
of an option held by a retired or disabled option holder upon other terms and
conditions as it deems advisable under the circumstances, and if the period
within which an option may be exercised has been extended the Committee may
terminate all unexercised options if it shall determine that the participant has
engaged in any activity detrimental to the Company's interests.
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised, as to all or
any of the shares which the participant was entitled to purchase immediately
prior to death (unless the Committee shall have provided in the instrument
evidencing such option that all shares covered by the option are subject to pur-
chase upon death), by the person or persons designated in writing by the
participant in such form of beneficiary designation as may be approved by the
Company, or failing designation by the participant's personal representative,
executor or administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and distribution. The
Company may decline to deliver shares to a designated beneficiary until it
receives indemnity against claims of third parties satisfactory to the Company.
Except as so exercised such option shall expire at the end of such period.
Article VII. Replacement Options
The Committee may grant options under the Plan on terms differing from
those provided for in Article VI where such options are granted in substitution
for options held by employees of or consultants who have written agreement to
render services to other entities who concurrently become employees of or
consultants to the Company or a subsidiary or an affiliated company as the
result of a merger, consolidation or other reorganization of such other entity
with the Company or a subsidiary or an affiliated company, or the acquisition by
the Company or a subsidiary or an affiliated company of the business, property
or stock of such other entity.
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The Committee may direct that the substitute options be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
Article VIII. Surrender of Options
The Committee may, in its discretion and under such terms and conditions
as it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or shares
of the Common Stock of the Company valued at fair market value on the date of
such surrender, or partly in such stock and partly in cash, provided that the
Committee determines such settlement is consistent with the purpose of the Plan.
Article IX. Changes in Stock
The Board of Directors is authorized to make such adjustments, if any, as
it shall deem appropriate in the number and kind of shares which may be granted
under the Plan, the number and kind of shares which are subject to options then
outstanding and the purchase price of shares subject to such outstanding
options, in the event of any change in capital or shares of capital stock, any
special distribution to stockholders or any extraordinary transaction (including
a merger, consolidation or dissolution) to which the Company is a party. The
determination of the Board of Directors as to such matters shall be binding on
all persons.
Article X. Employment Rights
The adoption of the Plan does not confer upon any employee of or
consultant to the Company or a subsidiary or an affiliated company any right to
continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any way
impair the right of the Company or a subsidiary or an affiliated company to
terminate the employment of any of its employees or the consulting arrangement
with any of its consultants at any time.
Article XI. Amendments
The Committee may at any time discontinue granting options under the
Plan. The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the requirements
of any changes in applicable
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laws or regulations or for any other purpose which may at the time be permitted
by law, provided that except to the extent permitted under Article IX, without
the approval of the stockholders of the Company no such amendment shall increase
the maximum number of shares of stock available under the Plan, or alter the
class of persons eligible to receive options under the Plan, or without the
consent of the participant void or diminish options previously granted, nor
increase or accelerate the conditions and actions required for the exercise of
the same, except that nothing herein shall limit the Company's right to call
stock, issued for deferred payment which is evidenced by promissory note where
the participant is in default of the obligations on such note.
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Exhibit 10.o
MASCO CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT
AND DISABILITY PLAN
The Supplemental Executive Retirement and Disability Plan for those
Company officers and key executives designated as participants in the Plan by
the Chairman or the Compensation Committee from time to time, is effective
January 1, 1988. The terms and conditions and benefits provided are as follows:
I. Words and terms are defined as follows for the purposes of the Plan:
a. "Retirement" shall mean termination of employment with the Company,
on or after attaining age 65.
b. "Average Compensation" shall mean the aggregate of a Participant's
highest three years' total annual cash compensation, consisting of (i) base
salaries and (ii) regular year-end cash bonuses paid with respect to the years
in which such salaries are paid, divided by three.
c. "Total Compensation" shall mean a Participant's annual base salary
rate plus the last regular year-end cash bonus paid, in the year in which it is
determined that a Participant becomes disabled.
d. "Surviving Spouse" shall be the person to whom the Participant shall
be legally married (under the law of the jurisdiction of the Participant's
permanent residence) at the date of (i) Participant's Retirement for the
purposes of retirement and medical benefits, (ii) death for the purposes of
surviving spouse benefits in the event of death prior to retirement at age 65,
and (iii) Disability for the purposes of benefits to a surviving spouse of a
disabled Participant.
e. "Disability" and "Disabled" shall mean being unable to perform
duties as a Company officer or executive by reason of physical or mental
condition, prior to attaining age 65, provided that the Participant has been
employed by the Company for two consecutive Years or more.
f. "Company" shall mean Masco Corporation or any corporation in which
Masco Corporation or a subsidiary owns stock possessing at least 20% of the
total combined voting power of all classes of stock.
g. "Year" shall mean twelve full consecutive months, and "year" shall
mean a calendar year.
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II. Upon the Participant's Retirement the Company will pay annually
during the Participant's lifetime 60% of Average Compensation, less (i) a sum
equal to the annual benefit which would be payable upon Retirement if benefits
payable under the Company funded qualified pension plans were converted to a
life annuity, or if the Participant is married when retirement occurs, to a
joint and spouse survivor life annuity, and (ii) a sum equal to the annual
benefit which would be payable upon Retirement if the Participant's vested
account in the Company's Future Service Profit Sharing Trust and any similar
plan were converted to a life annuity.
III. Upon death after Retirement, the Participant's Surviving Spouse
shall receive for life 75% of the annual benefit payable prior to the
Participant's death pursuant to Section II.
IV. Upon Retirement the Company will provide or purchase for the
Participant and the Participant's spouse's benefit, or at its option reimburse
for premiums paid, during joint and several lives, such supplemental medical
insurance as advisable from time to time.
V. No retirement benefits shall be paid unless the Participant was
employed by the Company or Disabled on Retirement, and no retirement benefits
are payable if retirement commences prior to attaining age 65.
VI. If while employed by the Company the Participant dies prior to
attaining age 65 leaving a Surviving Spouse, and provided the Participant shall
have been employed by the Company for two consecutive Years or more, the
Participant's Surviving Spouse shall receive annually for life 45% of Average
Compensation, less (i) a sum equal to the annual benefit which would be payable
to the Participant's Surviving Spouse under Company funded qualified pension
plans converted to a life annuity, and (ii) a sum equal to the annual payments
which would be received by the Participant's Surviving Spouse if the
Participant's vested account in the Company's Future Service Profit Sharing
Trust and any similar plan were converted to a life annuity. No death benefits
are payable except to the Participant's Surviving Spouse.
VII. If the Participant shall have been employed by the Company for two
Years or more and while employed by the Company the Participant becomes Disabled
prior to attaining age 65, until the earlier of death, termination of Disability
or attaining age 65 the Company will pay an annual benefit equal to 60% of Total
Compensation less any benefits payable pursuant to long-term disability
insurance or other like plans the cost of which is paid by the Company. If
Disability continues until age 65, the Participant shall be considered retired
and shall receive retirement benefits pursuant to Section II, based upon Average
Compensation as of the date it is determined the Participant became Disabled.
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VIII. If the Participant dies leaving a Surviving Spouse while receiving
Disability benefits pursuant to Section VII, the Participant will be deemed to
have retired on death and the Participant's Surviving Spouse shall receive for
life 75% of the annual benefit which would have been payable to the Participant
if the Participant had retired on the date of death and the Participant's
benefit determined pursuant to Section II, based upon Average Compensation and
deductions from benefits as of becoming Disabled.
IX. The maximum annual retirement or disability benefits payable
pursuant to this Plan shall be $500,000 less those sums to be deducted from
benefits pursuant to Section II.
X. The Compensation Committee of the Board of Directors, or any other
committee however titled which shall be vested with authority with respect to
the compensation of the Company's officers and executives, shall have the
exclusive authority to make all determinations which may be necessary in
connection with this Plan including the date of and whether a Participant is
Disabled, the interpretation of any of the terms and conditions of this Plan and
agreements between the Company and Participants, and all other matters or
disputes arising under this Plan or such agreements. The determinations and
findings of any such committee shall be conclusive and binding, without appeal,
upon the Company and each person claiming benefits under the Plan or agreements
entered into pursuant thereto.
XI. Entitlement to benefits under the Plan is expressly conditioned upon
each Participant agreeing that, except as may be provided to the contrary in a
duly authorized written agreement, the Company has made no commitments of any
kind with respect to the continuation of the Participant's employment, and the
Participant or the Company shall have the unrestricted right to terminate the
Participant's employment with or without cause.
XII. At the Company's request, the Participant shall provide such
information with respect to matters which may arise in connection with this Plan
as may be deemed necessary by the Company or the Compensation or other
committee, and shall submit to such medical examinations by duly licensed
physicians as may be requested by the Company or such committee from time to
time. The Participant shall direct third parties to provide such information,
and a Surviving Spouse's cooperation in providing such information is a
condition to the receipt of survivor's benefits.
XIII. To the extent permitted by law, no interest in the Plan or benefits
payable to a Participant or to a Surviving Spouse shall be subject to
anticipation, or to pledge, assignment, sale or transfer in any manner nor shall
a Participant or a Surviving Spouse have the power in any manner to charge or
encumber such interest or benefits, nor shall such interest or benefits be
liable
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or subject in any manner for a Participant's or Surviving Spouse's debts,
contracts, torts or other engagements of any kind.
XIV. No person other than a Participant or Surviving Spouse shall have
any rights or property interest of any kind whatsoever pursuant to this Plan,
and neither a Participant nor a Surviving Spouse shall have any rights hereunder
other than those expressly provided in this Plan. Upon the death of a
Participant and a Surviving Spouse no further benefits of whatsoever kind or
nature shall accrue or be payable pursuant to this Plan.
XV. All annual benefits payable pursuant to the Plan shall be paid in
installments at such intervals as may be deemed advisable by the Company in its
discretion, upon receipt of a Participant's or Surviving Spouse's written
application, or by the applicant's personal representative in the event of
disability.
XVI. All benefits under this Plan shall be payable from the Company's
general assets, which are specifically subject to the claims of general
creditors, and such assets are not set aside for the payment of benefits
pursuant to the Plan.
XVII. This Plan shall be governed by the laws of the State of Michigan.
XVIII. It is a further condition to the entitlement to benefits under the
Plan that Participants agree that the determinations of any committee as
described in Section X shall be conclusive, but if for any reason a claim is
asserted which subverts the provisions of Section X, except for causes of action
which may be excepted in the agreements between the Company and Participants,
arbitration shall be the sole and exclusive remedy to resolve all disputes,
claims or controversies which could be the subject of litigation involving or
arising out of this Plan or the agreements entered into pursuant hereto. An
Arbitration award will be final and binding and a judgment on the award may be
entered in any court of competent jurisdiction.
The Chairman of the Board or the President is authorized to execute and
deliver on the Company's behalf agreements between the Company and Plan
Participants designated by the Chairman or the Compensation Committee providing
for benefits pursuant to the Plan and upon such other and additional terms and
conditions as may be deemed appropriate by the Chairman or President from time
to time, provided however, that participation in the Plan by Company officers
shall be contingent upon approval by the Board or the Compensation Committee.
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Exhibit 10.p
June 29, 1989
Dear :
This will confirm the previously agreed terms of your participation in the
program of Masco Corporation (the "Company") providing our executive management
with an opportunity on extended payment terms to purchase shares of Common
Stock, $.01 par value, of TriMas Corporation. As you are aware, the program has
been adopted by the Company's Board of Directors to permit our executive
management group to acquire a significant economic interest in TriMas, our new
affiliated company, and, at the same time, to encourage the continuance over a
prolonged period of the outstanding commitment which the individual members of
our executive management group have collectively shown in the past to the
Company and its interests.
Under the program the Company agrees to sell to you and you agree to
purchase from the Company shares (the "Stock") of TriMas Common Stock on
the following terms and conditions:
1. The purchase price per share for the Stock is $45.00 (the "Per Share
Price"), payable by your delivery to the Company of your promissory note in the
form of Annex 1 (the "Note"), such purchase to occur as promptly as practicable
on or after the date hereof. Promptly after the purchase, certificates for the
shares of Stock will be delivered to you.
The Note will be in a principal amount equal to the Per Share Price
multiplied by the number of shares of Stock stated above, will bear simple
interest at the rate of 7% per annum, payable at the due date of the Note, and,
except as otherwise provided herein or therein, will be due together with
accrued interest on June 30, 1994. The Note may be prepaid at any time together
with accrued interest on the principal being prepaid. Interest on the Note may
be prepaid at any time, whether or not any portion of the principal is then
being prepaid.
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If your employment by the Company is terminated for any reason, with or
without cause, at the written request of the Company, other than by reason of
your permanent and total disability, the payment of accrued interest on the Note
shall be forgiven, all interest theretofore prepaid on the Note shall be
refunded to you and you shall have no further liability with respect to such
interest.
If your employment by the Company is terminated for any reason, with or
without cause, at the written request of the Company, other than by reason of
your permanent and total disability, the payment of accrued interest on the Note
shall be forgiven, all interest theretofore prepaid on the Note shall be
refunded to you and you shall have no further liability with respect to such
interest.
If your employment by the Company is terminated for any reason, with or
without cause (other than at the written request of the Company or by reason of
your retirement on or after normal retirement age, your death or your permanent
and total disability), the then unpaid principal amount of the Note plus accrued
interest thereon (except if the option of the Company provided under Paragraph 2
is exercised), will become due and payable on the earlier of the date which is
one year after the date of such termination or June 30, 1994.
If your employment by the Company is terminated for any reason whether
with or without cause or by you or by the Company (other than following an event
which constitutes a "Change in Control" as described in Paragraph 5 or by reason
of your retirement on or after normal retirement age or your permanent and total
disability), or in the event of your death following retirement or disability,
you agree that, if requested by the Company, you or your estate, as the case may
be, will pledge to secure the Note under arrangements satisfactory to the
Company all Stock then owned by you and, with respect to Stock theretofore sold
by you, the net after-tax proceeds attributable to the sale thereof less any
prior prepayments of principal and interest on the Note. Your rights to sell
the Stock so pledged under the Registration Statement (as hereinafter defined)
shall continue thereafter in the manner provided herein provided that the net
after-tax proceeds from all such sales are held in pledge by the Company until
full payment of the principal of and, if applicable, interest on the Note is
made, and upon such payment the Stock shall be returned to you or your estate.
If you or your estate fail to make the pledge required hereunder within 30 days
after requested in writing by the Company, the principal of and accrued interest
on the Note shall become due and payable on such 30th day notwithstanding any
later maturity date otherwise provided in this letter agreement.
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2. If prior to June 30, 1994 your employment by the Company is
terminated (other than by reason of your retirement on or after normal
retirement age, your death or your permanent and total disability), the Company
shall have the option, by written notice delivered to you within one year of the
date of termination (or if such termination occurs after June 30, 1993,
delivered to you prior to June 30, 1994), to rescind your purchase of the Stock
hereunder (a) by delivering the Note and any principal and interest thereon
prepaid by you in exchange for the Stock originally purchased hereunder by you
or (b) if you have theretofore sold any of the Stock, by delivering the Note and
such prepaid principal and interest in exchange for (i) the shares of Stock not
so sold, and (ii) in lieu of shares of Stock so sold (the "Disposed Shares"),
cash in the amount of the sum of (x) the aggregate after-tax profit, if any,
attributable to the sale of the Disposed Shares, plus (y) the Per Share Price
multiplied by the number of the Disposed Shares. The closing of the transaction
under this Paragraph 2 shall occur on the date specified in the Company's notice
to you of its exercise of the foregoing option, which date shall be not more
than 30 days after the delivery of such notice.
3. Solely for purposes of the provisions of Paragraphs 1 and 2 above, a
termination of employment, other than with your written consent or by reason of
your retirement on or after normal retirement age, your death or your permanent
and total disability, shall be deemed to have occurred only if such termination
is first approved by the Compensation Committee of the Company's Board of
Directors.
4. Except for sales made under the Registration Statement, other
dispositions after June 30, 1994 which, in the opinion of counsel to the
Company, are in compliance with applicable State and Federal securities laws, or
transfers by operation of law or to an inter vivos trust under a trust
arrangement acceptable to the Board of Directors or a Committee thereof, the
Stock may not be sold, hypothecated or transferred prior to June 30, 1996. On
and after June 30, 1996, the Stock may only be sold, hypothecated or transferred
by operation of law or if the transaction, in the opinion of counsel to the
Company, is in compliance with applicable State and Federal securities laws.
The Company agrees, either separately or in conjunction with Masco
Industries, Inc., to cause TriMas to file promptly after January 1, 1992 a
registration statement (the "Registration Statement") with respect to the Stock
and, at the election of the Company, such other shares of TriMas Corporation
Common Stock as the Company may designate, and to use all reasonable efforts to
cause such Registration Statement to become effective promptly thereafter and to
remain effective until the earlier of June 30,
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1996 or such date as all of the Stock either has been sold under the
Registration Statement or may be publicly sold under Rule 144 or under a similar
exemption without regard to the Registration Statement. The costs of the
Registration Statement shall be borne by you and the other selling shareholders
named therein pro rata based on the respective proportions of shares owned by
you and such other selling shareholders which are covered by such Registration
Statement.
You agree, in connection with such Registration Statement, that you will
deliver to TriMas Corporation such indemnities, contribution agreements and
legal opinions as are then customarily given to issuers of registered public
offerings, and that you will furnish to TriMas Corporation such information
involving you and the Stock which any law, rule or regulation requires to be
disclosed in the Registration Statement.
You agree that you will not sell the shares of Stock under the
Registration Statement in amounts which would result in more than 50% of the
total shares of Stock being sold prior to January 1, 1993, or more than 75% of
the total shares of Stock being sold prior to January 1, 1994.
The Company will, promptly after the closing of the purchase and sale of
Stock hereunder, provide you with its agreement summarizing your rights
hereunder to participate in the registration rights which the Company has
separately received from TriMas Corporation with respect to the Stock being
purchased by you. You understand that you will be required to file such
agreement with TriMas Corporation, when requested by the Company, in order to be
entitled to the benefits provided under this Paragraph 4.
5. Notwithstanding the foregoing, if, prior to June 30, 1994, a "Change
in Control", as defined in Paragraph 5(h) of the Company's restricted stock
incentive plan currently in effect, shall have occurred:
(i) All rights of the Company under Paragraph 2 shall thereupon
terminate, the provisions of the next to the last paragraph of Paragraph 1
shall no longer be applicable and the pledge referred to in the last
paragraph of Paragraph 1 shall be discharged with the Stock returned to
you;
(ii) If the Registration Statement has theretofore become
effective, the provisions of the next to the last paragraph of Paragraph 4
shall no longer be applicable; and
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(iii) If the Registration Statement has not theretofore become
effective, the Company shall be obligated to cause TriMas to file and make
effective a registration statement under the Securities Act of 1933
permitting the public sale of all of the Stock not previously sold by you
within 60 days thereafter and, if such registration statement shall not
have become effective within such 60 day period, you will have the right
for a period of 90 days thereafter to require the Company to buy all of
the Stock not previously sold by you at its last publicly traded price on
the date of such Change in Control, as reported in The Wall Street Journal
or The New York Times (or if such Change in Control occurred on a date for
which there is no reported publicly traded price in either of such
publications, then on the next preceding date for which there is a
publicly reported price).
6. You agree that appropriate legends reflecting the effect of this
letter agreement may be placed on certificates for the Stock. You represent
that you are purchasing the Stock for investment and not with a view to or in
connection with the distribution thereof. In addition, you acknowledge that:
(i) You have received and reviewed copies of the following
documents: TriMas Corporation Annual Report to Stockholders for the year
ended December 31, 1988; TriMas Corporation Annual Report on Form 10-K for
the year ended December 31, 1988; TriMas Corporation Quarterly Report on
Form 10-Q for the quarter ended March 31, 1989; and Proxy Statement for
meeting of TriMas Corporation stockholders held on May 31, 1989. The
exhibits to each of the foregoing have been furnished to you to the extent
you have so requested.
(ii) You have evaluated the merits and risks of an investment in
the Stock and understand that you must bear the economic risk of such
investment for an extended period of time.
7. We represent to you that the Company, in good faith, is not relying
upon the Stock as any "indirect" collateral in the extension or maintenance of
the credit provided by the Note.
8. By agreeing to the terms of purchase, you acknowledge that all of your
rights with respect to this purchase are contained in this letter agreement,
that the letter agreement and Note are to be construed in accordance with and
governed by Michigan law, and that the Company's agreement to the terms hereof
does not affect the Company's continuing right, with or without cause (unless
otherwise specifically agreed to in writing) to terminate your employment at
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any time. All notices permitted hereunder are to be deemed given when deposited
in the mail, first class postage prepaid.
If the foregoing conforms with your understanding of the terms with
respect to the purchase and sale of the Stock, please acknowledge this binding
agreement between you and the Company by signing and returning one copy of
this letter agreement to the undersigned.
Very truly yours,
Masco Corporation
By /s/Richard Manoogian
Richard Manoogian
Chairman
The foregoing represents
my agreement with you:
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Exhibit 10.q
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT, dated as of
November 23, 1993 (hereinafter referred to as "this Agreement"), amends and
restates the Securities Purchase Agreement, dated as of March 31, 1993, between
MascoTech, Inc., a Delaware corporation (formerly known as Masco Industries,
Inc., the "Company"), and Masco Corporation, a Delaware corporation ("Masco").
WHEREAS, the Company desires to have the right to sell to Masco, and
Masco is willing to purchase from the Company at its request, from time to
time, up to $200 million principal amount of subordinated debt securities upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
1. Authorization of Issues of Securities. (a) The Company has
authorized the issuance and delivery of separate series of subordinated debt
securities ("Securities"), such Securities to have substantially the same terms
and provisions as the form of subordinated note attached hereto as Exhibit A.
(b) The Securities shall be issued in separate series with the interest
rate on each such series being a rate per annum that is 400 basis points over
the average Treasury Rate (as hereinafter defined) for the week preceding the
week in which the notice of purchase referred to in Paragraph 2 is given to
Masco. "Treasury Rate" means the rate for noncallable direct obligations of the
United States ("Treasury Notes") having a remaining maturity of five years, as
published in the Federal Reserve Statistical Release H.15(519) (or any
successor publication provided by the Board of Governors of the Federal Reserve
System) under the heading "Treasury Constant Maturities." If a rate for
Treasury Notes having a remaining maturity of five years has not been so
published or reported for the preceding week as provided above by 1:00 P.M.,
New York City time, on the day such notice is given to Masco, then the Treasury
Rate shall be calculated by the Company and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 1:30 P.M., New York City time,
on the date of such notice, of three leading primary United States government
securities dealers selected by the Company for the purchase of Treasury Notes
with a remaining maturity of five years.
(c) Each issuance of Securities shall constitute a separate and discrete
series of securities and may be redeemed pursuant to Section 5.1 of the form of
subordinated note attached hereto as Exhibit A without regard to the redemption
of any other Securities.
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(d) The parties confirm that the Securities constitute "Subordinated
Debentures" under the Registration Agreement between them dated as of March 31,
1993.
2. Obligation to Purchase. (a) Subject to the terms and conditions set
forth herein, Masco agrees to purchase, at par, at any time or from time to
time on or before March 31, 1997, upon the Company's written notice, up to $200
million aggregate principal amount of Securities (the "Commitment"). The
Company's written notice shall specify the principal amount of Securities that
Masco is required to purchase (which for each respective issuance of Securities
shall be $10 million or any larger multiple of $1 million) and the interest
rate, as determined in accordance with the provisions of Paragraph 1(b). The
interest rate set forth in such notice shall be final and binding in the
absence of manifest error.
(b) The Commitment is not revolving in nature, and any Securities
repurchased, redeemed or otherwise acquired by the Company shall not restore
the Commitment. The Company may reduce or terminate the unused portion of the
Commitment at any time by written notice to Masco.
3. Closing. (a) Any closing of a sale of Securities to Masco hereunder
shall occur at Masco's offices on the tenth Business Day (as hereinafter
defined) after the Company gives Masco the written notice referred to in
Paragraph 2. The term "Business Day" shall mean any day, except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized
by law to close, on which commercial banks are open for international business
(including dealings in dollar deposits) in London.
(b) At each closing, provided the Company has paid all commitment fees
then due and payable under Paragraph 4 and provided the Company's
representations and warranties set forth in Paragraphs 6(b) through 6(f) shall
then be true and correct, Masco shall deliver to the Company immediately
available funds in an amount equal to the aggregate principal amount of
Securities being purchased.
(c) At each closing, the Company shall deliver to Masco one or more
certificates for the Securities being issued, registered in the name of Masco
(or such other person as Masco may designate prior to the closing) with any
such legend that may be appropriate and in such denominations of $1,000 and
any multiple thereof as Masco may specify prior to the closing. The Company's
delivery of the certificates representing the Securities being purchased shall
automatically be deemed to be a representation by the Company that all of the
representations and warranties set forth in Paragraphs 6(b) through 6(f) are
true and correct as of the date of closing. The accuracy of such
representations and warranties shall be a condition to Masco's obligation to
purchase such Securities.
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4. Commitment Fee. (a) The Company shall pay Masco a commitment fee
for Masco's Commitment hereunder at the rate of 0.125% per annum on the daily
average amount by which the Commitment exceeds the principal amount of
Securities purchased by Masco hereunder (including Securities previously issued
and redeemed).
(b) The commitment fee shall continue to accrue from and including the
date hereof to but excluding the date on which the aggregate principal amount
of Securities purchased by Masco hereunder (including Securities previously
issued and redeemed) equals the Commitment (as may be reduced or terminated
by the Company pursuant to Paragraph 2(b)). Such fee shall be computed for the
actual number of days elapsed and shall be payable quarterly on the last day
of each calendar quarter, and upon fulfillment of the Commitment in its
entirety or the earlier termination of the Commitment.
5. Representations of Masco. Masco represents and warrants to the
Company that:
(a) Masco is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is authorized by its
certificate of incorporation to carry on its business as now conducted.
(b) The execution, delivery and performance by Masco of this Agreement
and the consummation by Masco of the transactions contemplated hereby are
within the corporate powers of Masco and have been duly authorized by all
necessary corporate action on the part of Masco. This Agreement constitutes
a valid and binding agreement of Masco.
(c) The execution, delivery and performance of this Agreement do not
result in any violation by Masco of any indenture, mortgage or other agreement
or instrument by which Masco or any of its Subsidiaries (as hereinafter
defined) is bound.
(d) No authorization, consent or approval of, or registration or filing
with, any governmental or public body or regulatory authority is required on
the part of Masco which has not been obtained for the purchase by Masco of the
Securities contemplated by this Agreement, and such a purchase will not result
in any violation by Masco of any of the terms or provisions of its certificate
of incorporation or by-laws.
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(e) Masco has received such information from the Company as it deems
necessary and sufficient in order to make an informed investment decision
regarding its commitment to purchase Securities hereunder. Masco is a
sophisticated investor, with such knowledge and experience in financial matters
that it is capable of evaluating the risks and merits of an investment in the
Securities, and is purchasing such Securities for its own account for
investment and (subject, to the extent necessary, to the disposition of its
property being at all times within its control) not with a view to any
distribution or other disposition thereof, and is proceeding on the
assumption that it must bear the economic risk of any such investment for an
indefinite period since such Securities may not be sold except as set forth
below. If Masco decides to dispose of any of the Securities acquired pursuant
to this Agreement or any securities issued in exchange or substitution therefor
(which it does not presently contemplate), it will not offer, sell or deliver
any such securities, directly or indirectly, except in compliance with the
Securities Act of 1933.
6. Representations of the Company. The Company represents and warrants
to Masco that:
(a) (i) As of the date hereof, the Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
(ii) As of the date hereof, (1) each of the Company's Subsidiaries
is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all corporate powers
and all material governmental licenses, authorization, consents and
approvals required to carry on its business as now conducted, and (2) all
of the outstanding shares of capital stock of each such Subsidiary have
been duly authorized and validly issued and are fully paid and non-
assessable and are owned directly or indirectly by the Company (except
for directors' qualifying shares of certain such Subsidiaries and equity
interests in Subsidiaries owned by Persons (as hereinafter defined) other
than the Company which individually or in the aggregate are not material
to the Company and its Subsidiaries taken as a whole) free and clear of
all Liens (as hereinafter defined), except Liens not material to the
Company and its Subsidiaries taken as a whole.
(iii) The following terms, as used herein, have the following
meanings:
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"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect
of such asset.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof. "Subsidiary" means, with respect to any Person, any corporation
or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement
constitutes a valid and binding agreement of the Company.
(c) The Securities issuable from time to time pursuant to this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company and, if and when such Securities are issued pursuant to this Agreement,
such Securities will constitute valid and binding obligations of the Company.
(d) Assuming the truth and accuracy of Masco's representations and
warranties set forth in Paragraph 5(e), no authorization, consent or approval
of, or registration or filing with, any governmental or public body or
regulatory authority is required on the part of the Company for the issuance
of the Securities pursuant to this Agreement prior to the issuance of
Securities hereunder, and such issuance will not result in any violation by
the Company of any of the terms or provisions of the certificate of
incorporation or bylaws of the Company.
(e) The execution, delivery and performance by the Company of this
Agreement and the issuance of Securities pursuant to this Agreement do not
result in any violation by the Company of any of the terms or provisions of
any indenture, mortgage or other agreement or instrument by which the Company
or any of its Subsidiaries is bound.
(f) The Company is not and, after giving effect to any proposed
issuance of Securities for which the Company has given written notice, will
not be in default with respect to any of the Securities or any other of the
Company's securities acquired from the Company by Masco or any of its
Subsidiaries; and there is no event which, with the giving of notice or passage
of time, would
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constitute a default with respect to any of the Securities or any other of the
Company's securities acquired from the Company by Masco or any of its
Subsidiaries.
7. Opinions of Counsel. Concurrently with the execution hereof,
(a) Masco is delivering to the Company an opinion of John R.
Leekley, counsel to Masco, dated the date hereof, to the effect specified
in Paragraphs 5(a) through 5(d).
(b) The Company is delivering to Masco an opinion of Dykema Gossett,
counsel to the Company, dated the date hereof, to the effect specified in
Paragraphs 6(a)(i) and 6(b) through 6(d).
8. Miscellaneous. All notices, requests and other communications to
either party hereunder shall be in writing (including telex, telecopy or
similar writing) and shall be delivered by hand and receipted for by the party
to whom such communication shall have been directed or mailed by certified mail
return receipt requested to the following address (or to such other address as
the party receiving such communication has theretofore advised the other party
in the manner provided for herein):
(a) If to Masco, to:
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6430
Attention: President
with a copy to:
John R. Leekley
Vice President and
General Counsel
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6430
except in the case of notices required under Paragraph 2, in which
case each such notice shall be deemed delivered only upon actual
receipt, directed to:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6135
Attention: Robert B. Rosowski
Vice President - Controller
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(b) If to the Company, to:
21001 Van Born Road
Taylor, Michigan 48180
Telecopy: (313) 374-6136
Attention: President
with a copy to:
Lloyd A. Semple
Dykema Gossett
400 Renaissance Center
Detroit, Michigan 48243
Telecopy: (313) 568-6915
9. Amendments; No Waivers. This Agreement may not be amended or
terminated, nor any condition or term hereof be waived orally, but only by an
instrument in writing duly executed by the parties hereto or, in the case of a
waiver, by the party otherwise entitled to performance. No failure or delay by
either party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
10. Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
11. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto, except that Masco
may transfer or assign, in whole or from time to time in part, to one or more
of its affiliates, its obligation to purchase all or a portion of the
Securities, but no such transfer or assignment will relieve Masco of its
obligations hereunder.
12. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Michigan.
13. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by the other party hereto.
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14. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
MASCO CORPORATION
By /s/Richard G. Mosteller
Its Senior Vice President - Finance
MASCOTECH, INC.
By Timothy Wadhams
Its Vice President - Controller
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Exhibit A
FORM OF SUBORDINATED NOTE
[insert appropriate legend]
No. [ ] $[Principal Amount]
MASCOTECH, INC.
__% Subordinated Note Due [5 years from original issue date],
Series ___
MascoTech, Inc., a Delaware corporation (together with its successors and
assigns the "Issuer"), for value received hereby promises to pay to
______________________ or registered assigns the principal sum of __________,
on the Stated Maturity Date (as hereinafter defined) or any earlier redemption
date, in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
and to pay interest, semiannually in arrears, on April 1 and October 1
(unless such day is not a Business Day (as hereinafter defined), in which event
on the next succeeding Business Day) (each an "Interest Payment Date") of each
year in which this Note remains outstanding, commencing with
___________________, 19__, on the unpaid principal sum hereof outstanding in
like coin or currency, at the rates per annum set forth below, by check mailed
to the address of the holder as such address shall appear in the Register (as
hereinafter defined), from the most recent Interest Payment Date to which
interest has been paid on this Note, or if no interest has been paid on this
Note, from ____________, 19__, until payment in full of the principal sum
hereof has been made.
The interest rate shall be a rate per annum that is specified
on the face hereof (the "Interest Rate"). Further, the Issuer shall pay
interest on overdue principal at a rate per annum 1% above the rate borne by
this Note at the time the same became overdue (the "Overdue Rate"), and
interest on overdue installments of interest, to the extent lawful, at the
Overdue Rate. Interest payments on this Note will include interest accrued
to but excluding the Interest Payment Dates or the Stated Maturity Date (or
any earlier redemption or repayment date), as the case may be. Interest on
this Note will be calculated on the basis of a 360 day year of twelve 30-day
months.
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Notwithstanding anything herein to the contrary, the interest or any
amount deemed to be interest payable by the Issuer with respect to this Note
shall not exceed the maximum amount permitted by applicable law and, to the
extent that any payments in excess of such permitted amount are received by
the holder, such excess shall be considered payments in respect of the
principal amount of this Note. All sums paid or agreed to be paid to the
holder for the use, forbearance or retention of the indebtedness of the
Issuer to the holder shall, to the extent permitted by applicable law, be
deemed to be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full of the principal so that the
interest on account of such indebtedness shall not exceed the maximum amount
permitted by applicable law.
This Note is one of a duly authorized issue of subordinated notes
designated as the ___% Subordinated Notes Due _____, Series ____ of the Issuer,
limited in aggregate principal amount to $________ (hereinafter called the
"Notes").
This Note is transferable and assignable to one or more purchasers (in any
multiple of $10,000), subject to the restrictions on transfer, if any, referred
to on the face hereof. The Issuer agrees to issue from time to time
replacement Notes in the form hereof to facilitate such transfers and
assignments. In addition, after delivery of an indemnity in form and substance
satisfactory to the Issuer, the Issuer also agrees to issue replacement Notes
for Notes which have been lost, stolen, mutilated or destroyed.
The Issuer shall keep at its principal office a register (the "Register")
in which shall be entered the names and addresses of the registered holders of
the Notes and particulars of the respective Notes held by them and of all
transfers of such Notes. The ownership of the Notes shall be proven by the
Register. For the purpose of paying interest and principal on the Notes, the
Issuer shall be entitled to rely on the names and addresses in the Register
and notwithstanding anything to the contrary contained in this Note, no Event
of Default shall occur under Section 4.l(a) or (b) if payment of interest and
principal is made in accordance with the names and addresses and particulars
contained in the Register.
SECTION 1.1. Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Note shall have the respective meanings specified
below. All accounting terms used herein and not expressly defined shall have
the meanings given to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" shall
mean such accounting principles which are generally accepted as of the time
of any such determination. The terms defined in this Section 1.1 include
the plural as well as the singular.
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"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"Event of Default" means any event or condition specified as such in
Section 4 which shall have continued for the period of time, if any, therein
designated.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Senior Indebtedness" means (a) all indebtedness of the Issuer for money
borrowed (including without limitation obligations of the Issuer in respect of
overdrafts, foreign exchange contracts, swaps, letters of credit, bankers'
acceptance, or any loan or advance from a bank whether or not evidenced by
promissory notes or other instruments) or incurred in connection with the
acquisition of property, whether outstanding on the date of execution of this
Note or thereafter created, assumed or incurred, including but not limited to,
the Issuer's 6% Convertible Subordinated Debentures due 2011, the Issuer's 10%
Senior Subordinated Notes due 1995 and the Issuer's 10-1/4% Senior Subordinated
Notes due 1997, except (i) other notes issued pursuant to the Amended and
Restated Securities Purchase Agreement between the Issuer and Masco
Corporation, a Delaware corporation ("Masco"), dated as of November 23, 1993,
all of which notes shall rank pari passu inter sese, (ii) such indebtedness
of the Issuer as is by its terms expressly stated to be not superior in right
of payment to the Notes or to rank pari passu with the Notes, and (iii)
indebtedness of the Issuer to an Affiliate of the Issuer provided that in no
event will Masco Corporation or any Affiliate of Masco Corporation (other
than the Issuer or Affiliates controlled by the Issuer) be deemed to be an
affiliate of the Issuer for purposes of this definition of Senior Indebtedness,
(b) any guaranty, endorsement or other contingent obligation of the Issuer
in respect of, or to purchase or otherwise acquire, any indebtedness of another
for money borrowed or incurred in connection with the acquisition of property,
and (c) any deferrals, renewals or extensions of any such Senior Indebtedness,
or debentures, notes or other evidences of indebtedness issued in exchange
for such Senior Indebtedness. The term "indebtedness of
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the Issuer for money borrowed" as used in the foregoing sentence shall mean any
obligation of the Issuer for borrowed money, whether or not evidenced by notes
or other written obligations, and any indebtedness of the Issuer evidenced
by bonds, notes or debentures or other similar instruments. The term
"indebtedness of the Issuer incurred in connection with the acquisition of
property" as used in the first sentence of this definition shall mean any
purchase money obligation (whether or not secured by any lien or other
security interest) created or assumed as all or part of the consideration for
the acquisition of property whether by purchase, merger, consolidation or
otherwise (but not including any account payable or any other obligation
created or assumed by the Issuer in the ordinary course of business in
connection with the obtaining of materials or services) and any indebtedness
arising under a lease of property, equipment or other assets which, pursuant
to generally accepted accounting principles then in effect, is classified as
a liability on the Issuer's balance sheet.
"Stated Maturity Date" means [the date that is five years from the date of
issuance]
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of the capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person.
SECTION 2.1. Payment of Principal and Interest. No provision of this
Note shall alter or impair the obligations of the Issuer, which are absolute
and unconditional, to pay the principal of and interest on this Note at the
place, times, and rate, and in the currency, herein prescribed.
SECTION 3. Covenants.
SECTION 3.1. Offices for Notices and Transfers, etc. So long as any of
the Notes remain outstanding, the Issuer will maintain an office or agency
where the Notes may be presented for registration of transfer and for exchange
and an office or agency where notices and demands to or upon the Issuer in
respect of the Notes may be served. The Issuer will give to the holders of
the Notes written notice of any change of location of any such office or
agency thereof.
SECTION 3.2. Provision as to Paying Agent. The Issuer shall act as its
own paying agent and will, on or not more than seven days before each due date
of the principal of or interest on the Notes, set aside, segregate and hold
in trust for the benefit of the holders of the Notes of such series a sum
sufficient to pay such principal or interest so becoming due.
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SECTION 3.3 Subordination of Subsidiary Indebtedness. The Issuer shall
obtain an agreement from each of its Subsidiaries, comparable to the letter
agreement dated January 29, 1987 between the Issuer and its subsidiaries
executed in connection with the sale of convertible subordinated debentures
and senior subordinated notes, to the effect that, so long as any Notes are
outstanding, all indebtedness of the Issuer to such Subsidiary for money
borrowed or incurred in connection with the acquisition of property shall be
subordinated and junior in right of payment to the prior payment in full of
all such Notes in the same manner and to the same extent as such Notes are
subordinated and junior in right of payment to the prior payment in full of
all Senior Indebtedness (as defined herein).
SECTION 4. Events of Default and Remedies.
SECTION 4.1. Events of Default. "Event of Default", whenever used herein
with respect to any Note means any one of the following events:
(a) default in the payment of interest upon any Note when it becomes
due and payable and continuance of such default for a period of 30 days;
or
(b) default in the payment of all or any part of the principal of
any Note as and when the same shall become due and payable either at
maturity, upon redemption, by declaration or otherwise; or
(c) default in the performance, or breach, of any covenant of the
Issuer in any Note (other than a covenant, a default in whose performance
or whose breach is elsewhere in this Section or elsewhere in the
corresponding provision in any such other Note specifically dealt with),
and continuance of such default or breach for a period of 90 days after
there has been given, by registered or certified mail, to the Issuer by
the holders of at least 25% in principal amount of the outstanding Notes,
a written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default" under
the Notes; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Issuer in an involuntary
case under any applicable bankruptcy, insolvency or other similar law
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of the Issuer
or for any substantial part of its property, or ordering the winding-up
or liquidation of its affairs and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
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(e) the Issuer shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any
substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due.
If an Event of Default described in clause (a), (b) or (c) occurs and is
continuing, then, and in each and every such case, unless the principal of all
of the Notes shall have already become due and payable, the holders of not less
than 25% in aggregate principal amount of the Notes of this Series then
outstanding, by notice in writing to the Issuer, may declare the entire
principal of all the Notes and the interest accrued thereon, if any, to be
due and payable immediately, and upon any such declaration the same shall
become immediately due and payable. If an Event of Default described in
clause (d) or (e) occurs, the principal of and accrued interest on the Notes
shall become and be immediately due and payable without any declaration or
other act on the part of any holder of Notes.
The foregoing provisions, however, are subject to the condition that if,
at any time after the principal of the Notes shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, the Issuer
shall pay or shall deposit in trust for the benefit of the holders of the Notes
a sum sufficient to pay all matured installments of interest upon all of the
Notes and the principal of the Notes (with interest upon such principal and,
to the extent that payment of such interest is enforceable under applicable
law, on overdue installments of interest to the date of such payment or
deposit) and if any and all Events of Default under this Note other than the
non-payment of the principal shall have been cured, waived or otherwise
remedied as provided herein, then and in every such case the holders of a
majority in aggregate principal amount of the Notes then outstanding, by
written notice to the Issuer, may waive all defaults with respect to the Notes
and rescind and annul such declaration and its consequences, but no such waiver
or rescission and annulment shall extend to or shall affect any subsequent
default or shall impair any right consequent thereon.
SECTION 4.2. Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. All powers and remedies given by this Section 4 to the
holders of Notes shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other powers and remedies available
to the holders of the Notes, by judicial proceedings or otherwise, to
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enforce the performance or observance of the covenants and agreements contained
in this Note and no delay or omission of any holder of any of the Notes to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and, every power and
remedy given by this Note or by law to the holders of Notes may be exercised
from time to time, and as often as shall be deemed expedient, by the holders of
Notes.
SECTION 4.3. Waiver of Past Defaults by Majority of Holders. Subject to
Section 4.1, the holders of a majority in aggregate principal amount of the
Notes at the time outstanding may on behalf of the holders of all of the Notes
waive such default or Event of Default and its consequences except a default
in the payment of principal of or interest on any of the Notes. Upon any such
waiver the Issuer and the holders of the Notes shall be restored to their
former positions and rights hereunder, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default shall have been waived as
permitted by this Section 4.3, said default or Event of Default shall for all
purposes of the Notes be deemed to have been cured and to be not continuing.
SECTION 5. Redemption.
SECTION 5.1. Optional Redemption. The Notes may be redeemed at the
option of the Issuer as a whole, or from time to time in part, at any time
prior to maturity, at a price equal to the principal amount of the Notes so
redeemed, together in each case with accrued interest to the date fixed for
redemption, upon mailing notice of such redemption not less than 30 nor more
than 60 days prior to the date fixed for redemption to the holders of Notes
at their last addresses as the same appear on the Register. Such mailing
shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the holder receives such notice. In any case, failure to give such notice
by mail or any defect in the notices to the holder of any Note designated for
redemption shall not affect the validity of the proceedings for the redemption
of any other Note.
If less than all of the Notes are to be redeemed, the Issuer will select
(a) by lot or by such other manner as may be prescribed by resolution of the
Board of Directors of the Issuer and (b) to the extent Masco, or any Subsidiary
thereof, holds Notes, the Issuer shall allow Masco to select, in its sole
discretion, the specific Notes then owned by Masco or its Subsidiaries to be
redeemed (provided that Masco informs the Issuer no later than the day prior
to the date of such redemption of the specific Notes selected for redemption),
the Notes or portions thereof (in integral multiples of $1,000) to be redeemed
in a minimum amount of
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$1,000,000 unless less than $1,000,000 of the Notes remain outstanding in which
case all of the Notes must be redeemed.
Upon presentation of any Note redeemed in part only, the Issuer shall
execute and deliver to the holder thereof, at the expense of the Issuer, a new
Note or Notes of authorized denominations, in principal amount equal to the
unredeemed portion of the Note so presented.
SECTION 5.2. Change of Control Put. (a) The holder of this Note shall
have the right, at such holder's option, upon the giving of notice of the
occurrence of any event described in clause (b) below, and subject to the terms
and provisions hereof, to tender any Note, in whole or in part, without regard
to whether the Note is then otherwise redeemable, for cash in an amount equal
to the principal amount of such Note plus accrued interest to the date fixed
for redemption. Such redemption shall occur on the sixty-fifth day after the
date of the notice provided pursuant to clause (c) below (the "Mandatory
Redemption Date"). The holder's right to tender shall continue up to the
sixtieth day after the date of such notice and shall be exercised by any
surrender of such Note to the office or agency to be maintained by the Issuer
pursuant to Section 3.1, accompanied by written notice that the holder elects
to tender such Note and (if so required by the Issuer) by a written instrument
or instruments of transfer in form satisfactory to the Issuer duly executed
by the holder or such holder's duly authorized legal representative and
transfer tax stamps or funds therefor, if required. All Notes surrendered for
redemption shall be cancelled by the Issuer.
(b) The holder's right to tender under clause (a) above shall be
triggered upon the occurrence of either of the following events:
(i) Any person or group (an "other entity"), within the meaning of
Section 13(d) (3) of the Securities Exchange Act of 1934, shall attain
beneficial ownership, within the meaning of Rule 13d-3 adopted under the
Securities Exchange Act of 1934, of at least 50% of the voting power for
election of the Directors of the Issuer, unless approved in advance by a
majority of the Issuer's Continuing Directors has hereinafter defined),
or
(ii) The Issuer, directly or indirectly, consolidates or merges
with any other entity or sells or leases its properties and assets
substantially as an entirety to any other entity, unless approved in
advance by a majority of the Issuer's Continuing Directors.
A "Continuing Director" is a Director who is a member of the Board of
Directors of the Issuer elected by stockholders prior to the time the other
entity acquires in excess of 10% of the voting
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power for the election of Directors of the Issuer or a person recommended to
succeed a Continuing Director by a majority of the Continuing Directors.
(c) The Issuer shall mail to each holder of Notes at such holder's last
address appearing on the Register, as promptly as possible but in any event not
more than ten days after learning of an occurrence specified in subclause (b)
(i) above or not more than ten days after an occurrence specified in subclause
(b) (ii) above, a notice stating that the event specified in the notice has
occurred and that each holder has the right to tender such holder's Notes for
cash pursuant to the terms hereof. Upon demand to the Issuer at any time by
any holder of Notes, such notice shall be mailed to each holder of Notes,
unless the Issuer can demonstrate to the holder's satisfaction that no event
described in clause (b) has occurred.
(d) On or before the sixty-second day after the date of the notice
provided pursuant to clause (c) above, the Issuer shall set aside, segregate
and hold in trust for the benefit of the holders of the Notes to be redeemed
an amount of money sufficient to pay the principal of, and accrued interest
on, all the Notes to be redeemed on the Mandatory Redemption Date.
(e) After giving the notice of redemption as provided above, the Notes
to be redeemed shall, on the Mandatory Redemption Date, become due and payable
at a price equal to the principal amount thereof plus accrued interest and
from and after such date (unless the Issuer shall default in the payment of
principal and accrued interest thereon) such Notes shall cease to bear
interest. Upon surrender of any such Note for redemption in accordance
herewith, such Note shall be paid on the Mandatory Redemption Date by the
Issuer at a price equal to the principal amount thereof, together with accrued
interest to the Mandatory Redemption Date.
If any Note to be redeemed shall not be so paid on the Mandatory
Redemption Date, the principal and accrued interest thereon shall, until paid,
bear interest from the Mandatory Redemption Date at the Overdue Rate.
(f) Notes may be redeemed in whole or in any integral multiple of $1,000.
Any Note which is to be redeemed only in part shall be surrendered at an office
or agency of the Issuer designated for that purpose (with, if the Issuer so
requires, due endorsement by, or a written instrument to transfer in form
satisfactory to the Issuer duly executed by, the holder thereof or such
holder's attorney duly authorized in writing), and the Issuer shall execute
and deliver to the holder of such Note without service charge, a new Note or
Notes, of any authorized denomination in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal amount.
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SECTION 6. Subordination of Notes.
SECTION 6.1. Agreement to Subordinate. The Issuer covenants and agrees,
and each holder of Notes by such holder's acceptance thereof likewise covenants
and agrees, that all Notes shall be issued subject to the provisions of this
Section; and each Person holding any Note, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions. The provisions of this Section are made for the benefit of the
holders of Senior Indebtedness, and such holders shall, at any time, be
entitled to enforce such provisions against the Issuer or any holders of Notes.
All Notes shall, to the extent and in the manner hereinafter in this
Section set forth, be subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness.
SECTION 6.2. No Payment on Notes if Senior Indebtedness in Default. No
payment on account of principal or interest on the Notes shall be made unless
full payment of amounts then due for principal, premium, if any, sinking funds
and interest on all Senior Indebtedness has been made or duly provided for. No
payment on account of principal or interest on the Notes shall be made if, at
the time of such payment or immediately after giving effect thereto, (i) there
shall exist a default in the payment of principal, premium, if any, sinking
funds or interest with respect to any Senior Indebtedness, or (ii) there shall
have occurred an event of default (other than a default in the payment of
principal, premium, if any, sinking funds or interest) with respect to any
Senior Indebtedness, as defined therein or in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the maturity
thereof, and such event of default shall not have been cured or waived or shall
not have ceased to exist.
SECTION 6.3. Priority of Senior Indebtedness. In the event of any
insolvency or bankruptcy proceedings, and any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar
applicable Federal or state law, or other similar proceedings in connection
therewith, relative to the Issuer or to its creditors, as such, or to its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Issuer or assignment for the benefit of
creditors or any other marshalling of assets of the Issuer, whether or not
involving insolvency or bankruptcy, then the holders of Senior Indebtedness
shall be entitled to receive payment in full of all principal of and premium,
if any, and interest on all Senior Indebtedness including interest on such
Senior Indebtedness after the date of filing of a petition or other action
commencing such proceeding before the holders of the Notes are entitled to
receive any payment on account of the principal of or interest on the Notes
and any payment or distribution of any kind or character which may be payable
or deliverable in any such proceedings in respect of the
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Notes, except securities which are subordinate and junior in right of payment
to the payment of all Senior Indebtedness then outstanding, shall be paid by
the person making such payment or distribution directly to the holders of
Senior Indebtedness to the extent necessary to make payment in full of all
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to the holders of Senior Indebtedness. In the event that any
payment or distribution of cash, property or securities shall be received by
the holders of the Notes in contravention of this Section before all Senior
Indebtedness is paid in full, or provision made for the payment thereof, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over to the holders of such Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any indenture under
which any instrument evidencing any of such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to
pay in full all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness.
In the event that any Note is declared due and payable before its
expressed maturity because of the occurrence of an Event of Default (under
circumstances when the provisions of the first paragraph of this Section shall
not be applicable), the holders of the Senior Indebtedness outstanding at the
time the Notes so become due and payable because of such occurrence of such an
Event of Default shall be entitled to receive payment in full of all principal
of and premium, if any, and interest on all Senior Indebtedness before the
holders of the Notes are entitled to receive any payment on account of the
principal of or interest on the Notes.
SECTION 6.4. Subrogation of Notes. Subject to the payment in full of
all Senior Indebtedness, the holders of the Notes shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Issuer made on the Senior Indebtedness until
the principal of and interest on the Notes shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders
of Senior Indebtedness of any cash, property or securities to which the holders
of the Notes would be entitled except for the provisions of this Section, and
no payment over pursuant to the provisions of this Section to the holders of
Senior Indebtedness by holders of the Notes, shall, as between the Issuer,
its creditors other than the holders of Senior Indebtedness, and the holders
of Notes, be deemed to be a payment by the Issuer to or on account of Senior
Indebtedness, and no payments or distributions to the holders of the Notes of
cash, property or securities payable or distributable to the holders of the
Senior Indebtedness to which the holders of the Notes shall become entitled
pursuant to the provisions of this Section, shall, as between the Issuer, its
creditors other than the holders of Senior Indebtedness, and the holders of
the Notes, be
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deemed to be a payment by the Issuer to the holders of or on account of the
Notes.
SECTION 6.5. Issuer Obligation to Pay Unconditional. The provisions of
this Section are solely for the purpose of defining the relative rights of the
holders of Senior Indebtedness on the one hand, and the holders of the Notes on
the other hand, and nothing herein shall impair, as between the Issuer and the
holders of the Notes, the obligation of the Issuer, which is unconditional and
absolute, to pay to the holders thereof the principal thereof and interest
thereon in accordance with the terms of the Notes nor shall anything herein
prevent the holders of the Notes from exercising all remedies otherwise
permitted by applicable law or under the Notes upon default under the Notes,
subject to the rights of holders of Senior Indebtedness under the provisions
of this Section to receive cash, property or securities otherwise payable or
deliverable to the holders of the Notes.
SECTION 7. Miscellaneous.
SECTION 7.1. Modification of Notes. The Notes may be modified without
prior notice to any holder but with the written consent of the holders of a
majority in principal amount of the Notes. Subject to Section 4.1 and Section
4.3, the holders of a majority in principal amount of the Notes may waive
compliance by the Issuer with any provision of the Notes without prior notice
to any holder. However, without the consent of each holder affected, an
amendment, supplement or waiver may not (1) reduce the amount of Notes whose
holders must consent to an amendment, supplement or waiver, (2) reduce the
rate or extend the time for payment for interest on any Notes, (3) reduce the
principal amount of or extend the fixed maturity of any Notes or alter the
redemption provisions with respect thereto or (4) make any Notes payable in
money or property other than as stated in the Notes.
The Issuer will use its best efforts to qualify an indenture with respect
to this Note at or prior to the time such qualification is required under the
Trust Indenture Act of 1939, as amended, or similar law then in effect.
SECTION 7.2. Miscellaneous. This Note shall be deemed to be a contract
under the laws of the State of Michigan and for all purposes shall be construed
in accordance with the laws of said State, except as may otherwise be required
by mandatory provisions of law. The parties hereto, including all guarantors
or endorsers, hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance
and enforcement of this Note, except as specifically provided herein, and
assent to extensions of the time of payment, or forbearance or other indulgence
without notice. The holder of this Note by acceptance of this Note agrees to
be bound by the provisions (including the subordination provisions) of this Note
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which are expressly binding on such holder. In determining whether the holders
of the requisite aggregate principal amount of Notes have concurred in any
direction, consent or waiver as provided under the Notes, Notes which are owned
by the Issuer or any Subsidiary of the Issuer shall be disregarded and deemed
not to be outstanding for the purpose of any such determination. The Section
headings herein are for convenience only and shall not affect the construction
hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated:
[Seal] MASCOTECH, INC.
By:
Name:
Title:
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Exhibit 10.r
REGISTRATION AGREEMENT
This Agreement is made as of March 31, 1993, between Masco Industries,
Inc., a Delaware corporation (the "Company") and Masco Corporation, a Delaware
corporation ("Masco").
WHEREAS, Masco currently holds certain Company securities; and
WHEREAS, Masco is acquiring certain Company securities pursuant to a
Purchase Agreement (the "Purchase Agreement") and an Exchange Agreement (the
"Exchange Agreement"), each with the Company of even date herewith, and may
acquire additional Company securities pursuant to a Securities Purchase
Agreement (the "Securities Purchase Agreement") with the Company of even date
herewith; and
WHEREAS, in connection with the Purchase Agreement, the Exchange Agreement
and the Securities Purchase Agreement, the Company has agreed to provide to
Masco certain registration rights with respect to certain Company securities as
provided herein.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
"Common Stock" means the Company's Common Stock, par value $1.00 per
share.
"Convertible Debentures" means the Company's 6% Convertible Subordinated
Debentures due 2011.
"Preferred Stock" means the Company's 10% Exchangeable Preferred Stock
issued pursuant to the Exchange Agreement and the Company's exchangeable
preferred stock that may be issued pursuant to the Securities Purchase
Agreement.
"Registrable Securities" means (i) the 17,946,498 shares of Common Stock
held by Masco as of the date hereof (after giving effect to the Company's
acquisition of 10 million shares of Common Stock pursuant to the Exchange
Agreement between the Company and Masco of even date herewith) and shares of
Common Stock that may be reacquired by Masco pursuant to the Masco Corporation
1984 Restricted Stock (Industries) Plan, (ii) $130 million principal amount of
Convertible Debentures held by Masco, (iii) Preferred Stock, (iv) Subordinated
Debentures, (v) Warrants, (vi) Common Stock issuable upon conversion of the
Convertible Debentures and upon exercise of the Warrants, and (vii) any
securities issued or issuable with respect to, or derived from, the securities
referred to in clauses (i) through (vi) by way of stock dividend, stock split or
other distribution or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
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"Subordinated Debentures" means the Company's subordinated debentures that
are issuable upon redemption and exchange of the Preferred Stock and the
Company's subordinated debentures that may be issued pursuant to the Securities
Purchase Agreement.
"Warrants" means the warrants issued by the Company to purchase 10 million
shares of Common Stock, which warrants were issued pursuant to the Purchase
Agreement.
2 (a). Registration of Registrable Securities. Whenever the Company
shall receive a written request signed by Masco requesting the Company to file a
registration statement under the Securities Act of 1933, as in effect at the
relevant time, or a comparable statement under any similar Federal statute then
in effect (a "Registration Statement"), covering any class or series of
Registrable Securities held by Masco, the Company shall promptly prepare and
file a Registration Statement covering the Registrable Securities requested to
be registered. The registration request may, at the option of Masco, require
the Registration Statement to include Registrable Securities held by persons who
acquired such Registrable Securities directly from Masco in a private placement
(hereinafter referred to, together with Masco, as a "Selling Holder"). The
Company shall use its best efforts to cause the Registration Statement to become
effective and remain effective for the period required to permit the offering
and sale of the Registrable Securities covered thereby, which may be an
indefinite period of time if the registration request shall specify a delayed or
continuous offering pursuant to Rule 415 of the Securities and Exchange
Commission or any successor or comparable provision then in effect ("Shelf
Registration").
2 (b). Limitations on Registration and Disposition. (i) The Company shall
not be obligated to (A) file a Registration Statement with respect to less than
$25 million market value of Registrable Securities (as determined in good faith
by Masco at the time of the request), except that if the Company shall have
redeemed or exchanged any class or series of Registrable Securities such that
Masco holds less than $25 million market value of such class or series, Masco
may request registration of all of any such class or series then held, or (B)
make any such filing within 6 months from the effective date of the next
preceding filing made pursuant hereto, except Masco may, within the period
commencing with the date of issuance of Preferred Stock or Subordinated
Debentures issued pursuant to the Securities Purchase Agreement or Subordinated
Debentures issued upon redemption and exchange of Preferred Stock and ending six
months from such effective date, require the filing of a Registration Statement
covering such Preferred Stock or Subordinated Debentures.
(ii) No disposition of Registrable Securities shall be made under a Shelf
Registration unless the Selling Holder of such
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securities shall give the Company five days' prior written notice of such
holder's intent to make such disposition.
(iii) The Company may elect to defer, for a period not exceeding a total
of 90 days, the preparation of any Registration Statement or the disposition of
Registrable Securities pursuant to an effective Shelf Registration if in the
Company's good faith judgment pending or prospective business developments
(including financing plans) justify a temporary delay or the prospectus
contained in an effective Shelf Registration contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made in the light of the circumstances in which they were made, not misleading.
(iv) The exercise of Warrants or conversion of Convertible Debentures
shall not constitute a disposition of Registrable Securities for purposes of
clauses (ii) and (iii) above.
2(c). Registration Procedures. (i) Whenever the Company shall file a
Registration Statement pursuant hereto, the Company shall (A) thereafter, for
such period of time as shall be required in connection with the transactions
contemplated thereby and permitted by applicable rules, regulations and
administrative practice, file all post-effective amendments and supplements
thereto or to the prospectus contained therein and all filings under the Secu-
rities Exchange Act of 1934 that are necessary or appropriate so that neither
the Registration Statement nor any related prospectus shall contain any material
misstatement or omission relative to the Company or any of its assets or its
business or affairs and so that the Registration Statement and such prospectus
will otherwise comply with all applicable legal requirements, subject to the
provisions of Paragraph 2(b) (iii) above, (B) furnish to the Selling Holders of
the registered Registrable Securities such number of copies of the Registration
Statement and any related preliminary prospectus, prospectus, post-effective
amendment or supplement as such Selling Holders reasonably may request, and (C)
take all action that may be necessary under the securities or Blue Sky laws of
any state and as reasonably may be requested to permit the public offering and
sale of the Registered Securities covered by the Registration Statement;
provided, however, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Registrable Securities, in any
jurisdiction where it is not now subject. In connection with any such Registra-
tion Statement, the Company shall deliver to such Selling Holders and any
underwriters such indemnities, contribution agreements, opinions of counsel and
letters of independent public accountants as are then customarily given to un-
derwriters of registered public offerings and selling security holders. The
underwriters and such Selling Holders shall deliver to the Company such indemni-
ties,
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contribution agreements and opinions as are then customarily given to issuers of
registered public offerings.
(ii) Anything in this Agreement to the contrary notwithstanding, the
Company shall not be obligated to file a Registration Statement unless the
Selling Holders of the Registrable Securities being registered shall have fur-
nished the Company in writing all information with respect to such Selling
Holders, the Registrable Securities held by such Selling Holders requested to be
so included, the transaction or transactions which such Selling Holders contem-
plate and each underwriter, if any, who will act for such Selling Holders in
connection therewith, that any law, rule or regulation requires to be disclosed
therein.
(iii) The Company covenants that it will file the reports required to be
filed by it under the Securities Exchange Act of 1934, as in effect from time to
time, and the rules and regulations adopted by the Securities and Exchange
Commission thereunder, and will deliver to Masco at its request a written
statement affirming that it has complied with such requirements.
(iv) Whenever a Registration Statement is requested with respect to
Subordinated Debentures, the Company will enter into an indenture on
substantially similar terms and conditions (but not materially inconsistent with
the terms of such Subordinated Debentures) as those contained in the Indenture
dated as of November 1, 1986 between the Company and Morgan Guaranty Trust
Company of New York. The trustee designated by the Company to act as trustee
under the Indenture shall be a bank or trust company or national banking
association which has a combined capital and surplus in excess of $50,000,000.
(v) The Company will, at it own expense, take whatever action is
necessary to cause all Registrable Securities registered pursuant to these
registration rights to be listed on a national securities exchange or to be
included for quotation in the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation System or similar
organization.
(vi) All expenses (other than fees (including underwriters' discounts and
commissions) and expenses of any underwriters and counsel to the Selling
Holders) in connection with registrations undertaken pursuant hereto shall be
borne by the Company, provided, however, that if Masco withdraws or abandons its
request, then Masco shall reimburse the Company for all expenses reasonably
incurred by the Company in complying with such request.
(vii) Masco shall be deemed to be the representative of all Selling Hold-
ers, with full authority to select a managing underwriter, withdraw or abandon
the Registration Statement, and
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make comparable decisions on behalf of all Selling Holders after reasonable
consultation therewith.
(viii) The Company will make available for inspection any Selling Holder,
any underwriter participating in any disposition pursuant to a Registration
Statement and any attorney, accountant or other professional retained by any
Selling Holder or any such underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any Inspectors in connection with such registration statement. Records which
the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Information obtained as a result of such inspections
shall be deemed confidential and shall not be used as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public. Each Selling Holder of such Registrable
Securities will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential.
3 (a). Amendments and Waivers. This Agreement may not be amended or
terminated, nor any condition or term hereof be waived orally, but only by an
instrument in writing duly executed by the parties hereto or, in the case of a
waiver, by the party otherwise entitled to performance.
3 (b). Benefit of Agreement. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and upon their respective successors
and assigns, provided, however, that Masco may not assign any of its rights
hereunder.
3 (c). Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Michigan.
- 5 -
<PAGE>
<PAGE>
3 (d). Paragraph and Other Headings. The paragraph and other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
MASCO CORPORATION
By_________________________________
MASCO INDUSTRIES, INC.
By_________________________________
- 6 -
<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 11
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED PER SHARE EARNINGS
(INCLUDING EFFECT OF FULL DILUTION)
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(IN THOUSANDS EXCEPT AS INDICATED)
<S> <C> <C> <C>
Shares for computation of primary and fully diluted
earnings per share:
Average number of shares outstanding.................... 152,700 151,700 149,900
Common stock equivalents:
Convertible debentures............................. 4,210 4,210 4,210
Stock options...................................... 1,520 1,210 700
-------- -------- --------
Total shares............................................ 158,430 157,120 154,810
-------- -------- --------
-------- -------- --------
Net income................................................ $221,100 $183,100 $ 44,900
Addback of debenture interest, net........................ 5,880 5,970 5,970
-------- -------- --------
Net income, as adjusted................................... $226,980 $189,070 $ 50,870
-------- -------- --------
-------- -------- --------
Primary and fully diluted earnings per share (in dollar
amounts)................................................ $ 1.45 $ 1.21 $ .30
-------- -------- --------
-------- -------- --------
</TABLE>
The above dilutive influences are less than 3%.
<PAGE> 1
EXHIBIT 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS BEFORE INCOME TAXES AND
FIXED CHARGES:
Income before income taxes........ $362,600 $304,800 $ 97,600 $235,900 $327,100
Deduct/add equity in undistributed
(earnings) loss of
fifty-percent-or-less-owned
companies...................... (18,740) (17,290) 12,640 8,760 (29,060)
Add dividends received from
fifty-percent-or-less-owned
companies...................... 4,940 4,100 25,450 1,780 1,990
Add interest on indebtedness,
net............................ 104,080 100,490 124,950 125,770 112,830
Add amortization of debt
expense........................ 2,650 2,710 1,630 1,420 1,460
Add one-third of rentals.......... 10,970 10,800 12,530 9,610 8,830
-------- -------- -------- -------- --------
Earnings before income taxes and
fixed charges.................. $466,500 $405,610 $274,800 $383,240 $423,150
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
FIXED CHARGES:
Interest on indebtedness.......... $105,420 $113,670 $128,450 $125,770 $112,830
Amortization of debt expense...... 2,650 2,710 1,630 1,420 1,460
One-third of rentals.............. 10,970 10,800 12,530 9,610 8,830
-------- -------- -------- -------- --------
$119,040 $127,180 $142,610 $136,800 $123,120
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to fixed
charges........................... 3.9 3.2 1.9 2.8 3.4
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
Exhibit 21
MASCO CORPORATION
(a Delaware Corporation)
Subsidiaries
Jurisdiction of
Incorporation
Name or Organization
Alsons Corporation Michigan
American Metal Products Company Delaware
Ameri-Tec Products Company, Inc. Delaware
A.M.P. Industrial Mexicana S.A. de C.V. Mexico
Ametex Fabrics, Inc. Delaware
Aqua Glass Corporation Tennessee
Aqua Glass West, Inc. Delaware
Tombigbee Transport Corporation Tennessee
Auto-Graph Computer Designing Systems, Inc. Kentucky
Baldwin Hardware Corporation Pennsylvania
Baldwin Hardware Service Corp. Delaware
Brass-Craft Manufacturing Company Michigan
Tempered Products, Inc. Taiwan
Plumbers Quality Tool Mfg. Co., Inc. Michigan
Brass-Craft Holding Company Michigan
Brass-Craft Canada, Ltd. Canada
Brass-Craft Western Company Texas
Thomas Mfg. Company Inc. of Thomasville North Carolina
Brush Creek Ranch II, Inc. Missouri
Marge Carson, Inc. California
Cal-Style Furniture Mfg. Co. California
Computer Design, Inc. Michigan
Composite Products Inc. Delaware
Devan Designs Inc. Delaware
Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use tradenames or other assumed names in the
conduct of their business.
<PAGE>
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Drexel Heritage Furnishings Inc. New York
D-H Retail Space, Inc. Delaware
Drexel Heritage Advertising, Inc. Delaware
Drexel Heritage Sales Inc. Delaware
Frederick Edward, Inc. North Carolina
Epic Fine Arts Company Delaware
Anderson & Co. Fine Arts Inc. Michigan
Fieldstone Cabinetry, Inc. Iowa
Fieldstone Transportation Company Iowa
Flint & Walling Industries, Inc. Delaware
Gamco Products Company Delaware
Gibraltar Lock Co. Ltd. Canada
Henredon Furniture Industries, Inc. North Carolina
Henredon Transportation Co. North Carolina
Maitland-Smith Limited Hong Kong
Maitland-Smith Philippines, Inc. Philippines
Mandaue Holdings Incorporated Philippines
Hickorycraft, Inc. North Carolina
Hickorycraft Transportation Outlet, Inc. Delaware
Interior Fabric Design, Inc. New York
Intro Europe, Inc. North Carolina
J.H. Industries, Inc. California
Fillpro Products, Inc. California
Kenco Communications, Inc. Delaware
KraftMaid Cabinetry, Inc. Ohio
KraftMaid Trucking, Inc. Ohio
La Barge Mirrors, Inc. Michigan
Landex, Inc. Michigan
Landex of Texas, Inc. Texas
Lexington Furniture Industries, Inc. North Carolina
Lineage Home Furnishings, Inc. Delaware
Lineage Services Incorporated Delaware
Maitland-Smith U.S., Inc. North Carolina
Maitland-Smith Pacific, Inc. Vanuatu
Maitland-Smith Fine Furnishings, Inc. Hong Kong
- 2 -
<PAGE>
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Maitland-Smith International Ltd. Vanuatu
P.T. Maitland Smith Indonesia Indonesia
Marbro Lamp Company California
The Marvel Group, Inc. Delaware
Masco Capital Corporation Delaware
Masco Holdings Limited Delaware
Masco Building Products Corp. Delaware
Bowers Manufacturing Corporation California
Computerized Security Systems, Inc. Michigan
Computerized Security Systems of Canada, Inc Canada
Computerized Security Systems (Asia) Ltd. - 50% Asia
Safekeeper Systems, Inc. Michigan
Computerized Security Systems (Asia) Limited-50% Asia
Industrias Weiser, S.A. de C.V. Mexico
Productos Para La Construccion De Mexicali, S.A.
de C.V. Mexico
Premier Sales & Mfg. Co. California
Thermador Corporation California
Weiser Lock Corporation California
Winfield Locks, Inc. California
Masco Corporation of Indiana Indiana
N.V. Damixa A/S Denmark
Damixa AB Sweden
Damixa S.A. Belgium
Mix-A-Mix A/S Denmark
DAMIXA Armaturen GmbH Germany
Delta Faucet of Oklahoma, Inc. Delaware
Hydrotech, Inc. Michigan
Studio Technico Sviluppo E. Richerche Srl Italy
Masco Canada Limited Ontario
Peerless Home Products, Inc. Ontario
Masco Corporation Limited United Kingdom
Ametex U.K. Limited United Kingdom
Ametex Sarl France
Green & Kirk Ltd. United Kingdom
- 3 -
<PAGE>
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Herbert Green (Silsden) Ltd. United Kingdom
Berglen Furniture Limited United Kingdom
Berglen Group Limited United Kingdom
Berglen Products Limited United Kingdom
Berglen Distributors Limited United Kingdom
Berglen Associates Limited United Kingdom
CDI Technologies Ltd. United Kingdom
Destiny Limited Isle of Man
Hanhill (Great Britain) Limited England
Ramm Son & Crocker Limited England
Damixa Ltd. United Kingdom
Kiloheat Limited United Kingdom
Maitland-Smith Limited United Kingdom
Weiser (U.K.) Ltd. United Kingdom
Masco GmbH - 98% Germany
Alfred Reinecke GmbH & Co. KG Germany
Gebhardt Aktiebolag 90% Sweden
Gebhardt Sarl France
Gebhardt Ventilatoren Gesellschaft mbh Austria
Gebhardt Ventilatoren GmbH & Co. Germany
Gebhardt Ventiladores Srl Spain
Hans Grohe GmbH & Co. KG - 27% Germany
HTH Haustechnische Handelsgesellschaft mbh Germany
Hueppe Gesellschaft mbh Austria
Hueppe GmbH & Co. Germany
Hueppe Sarl France
Jung-Pumpen GmbH Germany
Jung-Pumpen Handelsgesellschaft mbh Austria
Masco Europe, Inc. Delaware
N.V. Weiser Europe, S.A. Belgium
Rubinetterie Mariani S.A. Italy
Weiser, Inc. British Columbia
Masco Home Furnishings, Inc. North Carolina
Masco International Sales, Inc. Barbados
Masco Services, Inc. Delaware
- 4 -
<PAGE>
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Mascomex S.A. de C.V. Mexico
Melard Manufacturing Corp. Delaware
Merillat Industries, Inc. Michigan
Merillat Corporation Delaware
Merillat Transportation Company Delaware
Morgantown Plastics Company Delaware
Outlet Corp. Delaware
Ramm, Son & Crocker, Inc. New York
Robert Allen Fabrics, Inc. Delaware
Robert Allen Fabrics of N.Y., Inc. Delaware
Robert Allen Fabrics (Canada) Ltd. Canada
Sherle Wagner Accessories, Inc. New York
Sherle Wagner International, Inc. New York
StarMark, Inc. South Dakota
SMI Franchising Corp. Delaware
Starmark of Virginia, Inc. Virginia
Sunbury Textile Mills, Inc. Delaware
Trayco, Inc. Michigan
Universal Furniture Limited Delaware
American Furniture Limited Hong Kong
Del Mar Furniture Industries (Singapore) Pte. Ltd. Singapore
Farvel Enterprises S.A. British Virgin Il
H.K.T. (Malaysia) Sdn. Bhd. Malaysia
Hong Kong Teakwood Works Limited Hong Kong
Hong Kong Teakwood Works (Singapore) Pte. Ltd. Singapore
Hong Kong Teakwood Works (Taiwan) Limited Taiwan
Log and Timber Products (Singapore) Pte. Ltd. Singapore
Rigel Enterprises Limited (Singapore) Pte. Ltd. Singapore
Shin Shin Wood Products Co. Ltd. - 51% Taiwan
Sterling Home Furnishings (Singapore) Pte. Ltd. Singapore
Sterling Home Furnishings (Taiwan) Ltd. Taiwan
Swaps Investment Limited Hong Kong
Syarikat Malaysia Wood Industries Sdn. Bhd. Malaysia
TMWZ Holdings Limited Canada
Universal Furniture Industries (Canada) Limited-51% Canada
- 5 -
<PAGE>
<PAGE>
Jurisdiction of
Incorporation
Name or Organization
Teakwood Finance Inc. British Virgin Il
Teakwood Property Development Ltd. Hong Kong
Teakwood (U.K.) Ltd. United Kingdom
Universal Furniture Industries (U.K.) Ltd. United Kingdom
Universal Furniture Industries, Inc. Delaware
Blue Mountain Trucking Corporation Mississippi
Custom Truck Tires, Inc. Mississippi
Universal Furniture Industries (Deutschland) GmbH Germany
Universal Furniture Industries (Scandinavia) AB Sweden
Universal Furniture (Japan) Ltd. Japan
Universal Furniture (Taiwan) Co. Ltd. Taiwan
Universal Furniture (Thailand) Ltd. Thailand
Universal Woodfloor (Europe) AB Sweden
Woodmaster Inc. British Virgin Il
World Wide Furniture Sales, Inc. British Virgin Il
Xin Jia Po Huan Mei Furniture Ltd. Hong Kong
Chang Chun Universal Flooring Company Ltd 50% China
Chang Chun Wood Products Company Limited 50% China
Universal Furniture (Tianjin) Co. Ltd. 80% China
Universal Veneer (Tianjin) Co. Ltd. 51% China
Universal Flooring (Tianjin) Co. Ltd. 80% China
Universal Furniture (Guanzhou) Co. Ltd. - 85% China
Watkins Manufacturing Corporation California
W/C Technology Corporation Delaware
Zenith Products Corporation Delaware
- 6 -
<PAGE>
<PAGE>
Exhibit 23.a
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of Masco Corporation on Form S-3 (Registration
Nos. 33-2374, 33-42722, 33-53330, 33-52483 and 33-52485) and Form S-8
(Registration Nos. 2-95969, 33-28142 and 33-42229) and amendments and
supplements thereto, of our report dated February 24, 1994, on our audits of the
consolidated financial statements and financial statement schedules of Masco
Corporation and subsidiaries as of December 31, 1993 and 1992 and for each of
the three years in the period ended December 31, 1993, which report is included
in this Annual Report on Form 10-K. We also consent to the reference to our
Firm under the caption "Experts" in such prospectuses and amendments and
supplements thereto.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Detroit, Michigan
March 24, 1994
<PAGE>
<PAGE>
Exhibit 23.b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of Masco Corporation on Form S-3 (Registration
Nos. 33-2374, 33-42722, 33-53330, 33-52483 and 33-52485) and Form S-8
(Registration Nos. 2-95969, 33-28142 and 33-42229) and amendments and
supplements thereto, of our report dated February 24, 1994, on our audits of the
consolidated financial statements and financial statement schedules of
MascoTech, Inc. and subsidiaries as of December 31, 1993 and 1992 and for each
of the three years in the period ended December 31, 1993, which report is
included in this Annual Report on Form 10-K. We also consent to the reference
to our Firm under the caption "Experts" in such prospectuses and amendments and
supplements thereto.
/s/Coopers & Lybrand
COOPERS & LYBRAND
Detroit, Michigan
March 24, 1994
<PAGE>
<PAGE>
