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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, 1996 COMMISSION FILE NUMBER 1-5794
MASCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
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)
</TABLE>
Registrant's telephone number, including area code: 313-274-7400
Securities Registered Pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<C> <C>
Common Stock, $1.00 Par Value New York Stock Exchange, Inc.
5 1/4% Convertible Subordinated
Debentures Due 2012 New York Stock Exchange, Inc.
</TABLE>
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant on February 28, 1997 (based on the closing sale
price of $35 1/8 of the Registrant's Common Stock, as reported on the New York
Stock Exchange Composite Tape on such date) was approximately $5,437,650,000.
Number of shares outstanding of the Registrant's Common Stock at February 28,
1997:
160,764,934 shares of Common Stock, par value $1.00 per share
Portions of the Registrant's definitive Proxy Statement to be filed for its 1997
Annual Meeting of Stockholders are incorporated by reference into Part III of
this Report.
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TABLE OF CONTENTS
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ITEM PAGE
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PART I
1. Business.................................................... 2
2. Properties.................................................. 7
3. Legal Proceedings........................................... 8
4. Submission of Matters to a Vote of Security Holders......... 8
Supplementary Item. Executive Officers of Registrant........ 9
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 10
6. Selected Financial Data..................................... 10
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 11
8. Financial Statements and Supplementary Data................. 19
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 42
PART III
10. Directors and Executive Officers of the Registrant.......... 42
11. Executive Compensation...................................... 42
12. Security Ownership of Certain Beneficial Owners and
Management................................................ 42
13. Certain Relationships and Related Transactions.............. 42
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 43
Signatures.................................................. 47
FINANCIAL STATEMENT SCHEDULES
Masco Corporation Financial Statement Schedule.............. F-1
MascoTech, Inc. and Subsidiaries Consolidated Financial
Statements and Financial Statement Schedule............... F-3
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PART I
ITEM 1. BUSINESS.
Masco Corporation is engaged principally in the manufacture, sale and
installation of home improvement and building products. Masco believes that it
is the largest domestic manufacturer of faucets, kitchen and bath cabinets and
plumbing supplies and that it is a leading domestic producer of a number of
other home improvement and building 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.
The Company is among the country's largest manufacturers of brand-name
consumer products designed for the improvement and building of the home,
including faucets, kitchen and bath cabinets, kitchen appliances, bath and
shower enclosure units, spas and hot tubs, other shower, bath and plumbing
specialties and accessories, door locks and other builders' hardware, air
treatment products, venting and ventilating equipment and water pumps. These
products are sold through mass merchandisers, hardware stores, home centers,
distributors, wholesalers and other outlets to consumers and contractors. The
Company's operations are categorized into two industry segments: Kitchen and
Bath Products and Other Specialty Products.
INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1996,
the contribution of the Company's industry segments to net sales and operating
profit:
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NET SALES(1)
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Kitchen and Bath Products.................. $2,519,000 $2,283,000 $2,077,000
Other Specialty Products................... 718,000 644,000 506,000
---------- ---------- ----------
Total.................................... $3,237,000 $2,927,000 $2,583,000
========== ========== ==========
<CAPTION>
OPERATING PROFIT(1)(2)
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Kitchen and Bath Products.................. $ 462,000 $ 411,000 $ 441,000
Other Specialty Products................... 104,000 82,000 70,000
---------- ---------- ----------
Total.................................... $ 566,000 $ 493,000 $ 511,000
========== ========== ==========
</TABLE>
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(1) Results exclude the home furnishings products segment, which was classified
as discontinued operations in 1995. See the Note to the Company's
Consolidated Financial Statements captioned "Discontinued Operations,"
included in Item 8 of this Report.
(2) Amounts are before general corporate expense.
The net sales and operating profit attributable to industry segments for
1995 and 1994 have been restated to conform to the current year classification
of the Company's operations into the Kitchen and Bath Products and Other
Specialty Products segments. Additional financial information concerning the
Company's operations by industry segments as of and for the three years ended
December 31, 1996 is set forth in the Note to the Company's Consolidated
Financial Statements captioned "Segment Information," included in Item 8 of this
Report.
KITCHEN AND BATH PRODUCTS
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 primarily through manufacturers' representatives to
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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
ARTISTIC BRASS(R) and SHERLE WAGNER(TM) faucets and accessories are produced for
the decorator markets and are sold through wholesalers, distributor showrooms
and other outlets. ALSONS(R) hand showers and shower heads and MIXET(R) valves
and accessories are distributed through manufacturers' representatives to the
wholesale market and to retailers.
Sales of faucets worldwide approximated $757 million in 1996, $698 million
in 1995 and $667 million in 1994. The percentage of operating profit on faucets
is somewhat higher than that on other products offered by the Company. The
Company believes that the simplicity, quality and reliability of its faucet
mechanisms, manufacturing efficiencies and capabilities, 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
cabinets under a number of trademarks, including MERILLAT(R), KRAFTMAID(R),
STARMARK(R) and FIELDSTONE(R), with sales to distributors, home centers, dealers
and direct to builders for both the home improvement and new construction
markets. In addition to its domestic manufacturing, the Company manufactures
cabinetry in Germany, where sales are made primarily through Company-owned
showrooms to consumers, and in England, with sales primarily to builders for the
new construction market. Sales of kitchen and bath cabinets were approximately
$832 million in 1996, $758 million in 1995 and $665 million in 1994.
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
BRASSCRAFT(R) trademark and for the "do-it-yourself" market under the PLUMB
SHOP(R), HOME PLUMBER(R) and MELARD(TM) trademarks and are also sold under
private label.
Other Kitchen and Bath Products sold by the Company include THERMADOR(R)
cooktops, ovens, ranges and related cooking equipment and refrigerators, which
are marketed through appliance distributors and dealers. The Company's AQUA
GLASS(R) acrylic and gelcoat bath and shower units and whirlpools are sold
primarily to wholesale plumbing distributors for use in the home improvement and
new home construction markets. Other bath and shower enclosure units, shower
trays and laundry tubs are sold to the home improvement market through hardware
stores and home centers under the brand names AMERICAN SHOWER & BATH(TM) and
TRAYCO(TM). HUPPE(R) luxury bath and shower enclosures are manufactured and sold
by the Company through wholesale channels primarily in Germany. The Company
manufactures bath and shower accessories, vanity mirrors and bath storage
products and sells these products under the brand name ZENITH PRODUCTS(R) and
other tradenames to home centers, hardware stores and mass merchandisers for the
"do-it-yourself" market. The Company's spas and hot tubs are sold under the
brand name HOT SPRING SPA(R) and other trademarks directly to retailers for sale
to residential customers. In early 1997, the Company acquired Franklin Brass
Manufacturing Company, a leading manufacturer of bath accessories and bath
safety products.
OTHER SPECIALTY PRODUCTS
The Company's Other Specialty Products include premium BALDWIN(R) quality
brass rim and mortise lock sets, knobs and trim and other builders' hardware
which are manufactured and sold for the home improvement and new home
construction markets. WEISER(R) lock sets and related hardware are sold through
contractor supply outlets, hardware distributors and home centers. SAFLOK(TM)
electronic lock sets and WINFIELD(TM) mechanical lock sets are sold primarily to
the hospitality market. In early 1997, the Company acquired LaGard Inc., whose
electronic lock sets are used primarily in containers for the banking industry,
such as safes, ATMs, vaults and cabinetry.
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The Company has recently begun to incorporate on many of its decorative
brass products a durable coating that offers anti-tarnish protection, under the
names BRILLIANCE(TM) and THE LIFETIME FINISH(TM). This innovative finish is
currently available on certain of the Company's bath and door hardware.
The Company manufactures ventilation products under the tradename AMP(R),
including grilles, registers, diffusers and humidifiers which are sold through
wholesale distribution and home centers. GEBHARDT(TM) commercial ventilating
products and JUNG(TM) water pumps are manufactured and distributed by the
Company in Europe. Through local offices across the United States, the Company
also installs fiberglass insulation and other building products primarily for
the residential home building industry.
RECENT DEVELOPMENTS
In August 1996, the Company completed the sale of its home furnishings
products businesses to Furnishings International Inc. These operations were
principally engaged in the manufacture and sale of quality furniture, fabrics
and other home furnishings. The total proceeds from the sale were $1,050
million, consisting of $708 million in cash, $285 million in junior debt
securities due 2008, and the balance in 13% cumulative preferred stock, 15
percent of the common stock of Furnishings International and preferred stock
convertible into an additional 25 percent ownership. The Company, however, is
restricted from maintaining ownership of Furnishings International in excess of
20 percent, so any additional common stock would be acquired only for resale.
The Company's financial statements and related notes reflect a 1995 pre-tax and
after-tax charge of $650 million approximating the actual loss on disposition as
of the 1996 sale date. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Discontinued Operations" included in Item
7 of this Report and the Note to the Company's Consolidated Financial Statements
included in Item 8 of this Report captioned "Discontinued Operations." Unless
otherwise noted, reference to the Company excludes information relating to the
discontinued operations.
GENERAL INFORMATION
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 -- Cash Flows from Operating Activities," included in Item
7 of this Report. The Company does not consider backlog orders to be material
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 home improvement and building
products manufacturing plants in Belgium, Canada, Denmark, England, France,
Germany, Italy, Mexico, Spain, Taiwan and Turkey. Home improvement and building
products manufactured by the Company outside of the United States include
faucets and accessory products, bath and shower enclosures, bath accessories,
kitchen and bath cabinets, decorative accessories, door lock sets and related
hardware, floor registers, humidifiers, ventilating equipment, submersible water
pumps and special insulation materials. The Company expanded its European
operations during 1996 through the acquisition of three manufacturers: The Moore
Group Ltd., a leading United Kingdom based manufacturer of kitchen cabinets,
Horst
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Breuer GmbH, a German manufacturer of shower enclosures and E. Missel GmbH, a
leading German manufacturer of proprietary plumbing insulation materials.
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 export sales and foreign and
domestic operations, including the net sales, operating profit and assets which
are attributable to the Company's operations in North America and in other
geographic areas, as of and for the three years ended December 31, 1996, is set
forth in Item 8 of this Report in the Note to the Company's Consolidated
Financial Statements captioned "Segment Information."
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 tradenames. As a manufacturer of brand name consumer products,
the Company views its trademarks and other proprietary rights as important, but
does not believe that there is any reasonable likelihood of a loss of such
rights that would have a material adverse effect on the Company's present
business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products are
highly competitive. Competition is based primarily on performance, quality,
style, customer 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, 1996, approximately 22,800 people were employed by the
Company. Satisfactory relations have generally prevailed between the Company and
its employees.
EQUITY INVESTMENTS
MascoTech, Inc.
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. In October 1996, the
Company reduced its common equity interest in MascoTech from 45 percent to 21
percent through the sale to MascoTech of MascoTech common stock and warrants to
purchase shares of MascoTech common stock. Payment of $115 million of the
purchase price was made in cash at closing and the balance of $151 million is
due by September 30, 1997 payable in cash, or at MascoTech's option, in cash and
publicly traded securities of Emco Limited held by MascoTech. As part of that
transaction, the Company granted MascoTech a right of first refusal, which
expires September 30, 2000, to purchase the remaining shares of MascoTech common
stock held by the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," included in Item 7 of this
Report, regarding the effect of this transaction on the Company. Emco is a
Canadian manufacturer and distributor of home improvement and building products.
MascoTech's conversion of its outstanding preferred stock into MascoTech common
stock in mid-1997 will further reduce the Company's ownership in MascoTech to
approximately 17 percent.
MascoTech is a leading supplier of metalworked and aftermarket products for
the transportation industry. MascoTech's net sales for 1996 were approximately
$1.3 billion.
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During the last decade, MascoTech pursued diversified growth in the
transportation-related, architectural and defense markets. Structural changes in
recent years in the markets served by MascoTech, combined with the growth
opportunities and the capital requirements of certain of MascoTech's
transportation-related businesses, led MascoTech to an evaluation of the
prospects for all of its businesses. This evaluation resulted in a strategic
plan to focus on its core operating capabilities and divest certain other
businesses. MascoTech's engine and drivetrain group and aftermarket group
constitute its core operating businesses.
In late 1994, MascoTech adopted a plan to dispose of its architectural
products, defense and certain of its transportation-related businesses. The
disposition of these businesses was completed in 1996. In addition, in 1996,
MascoTech disposed of its heavy-gauge stamping operations and in early 1997, it
completed the sale of its engineering and technical services businesses. The
cash portion of the proceeds from the disposition of these businesses has been
applied to reduce MascoTech's indebtedness and to provide capital to invest in
its core businesses. The disposition of these businesses did not meet the
criteria for discontinued operations treatment for accounting purposes;
accordingly, the sales and results of operations of these businesses are
included in the results of continuing operations through the date of
disposition. Businesses held for sale or sold, including the engineering and
technical services businesses and the heavy-gauge stamping operations, had sales
of approximately $412 million in 1996. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," included in Item 7 of this
Report, regarding the effect of these actions on the Company.
Approximately 80 percent of MascoTech's transportation-related Products
sales in 1996 (including businesses held for disposition) were original
equipment automotive products and services. Sales to original equipment
manufacturers are made through factory sales personnel and independent sales
representatives. During 1996, sales to various divisions and subsidiaries of
Ford Motor Company, Chrysler Corporation, General Motors Corporation and New
Venture Gear, Inc. accounted for approximately 18 percent, 11 percent, 10
percent and 12 percent, respectively, of MascoTech's net sales (including
businesses held for disposition). Sales to the automotive aftermarket are made
primarily to distributors utilizing factory sales personnel. Aftermarket
products are sold to companies distributing into the traditional, retail and
heavy-duty segments of the automotive aftermarket.
MascoTech's engine and drivetrain products include semi-finished
transmission shafts, drive gears, engine connecting rods, wheel spindles and
front wheel drive components. Aftermarket products include fuel and emission
systems components, windshield wiper blades, constant-velocity joints, brake
hardware repair kits and other automotive accessories. MascoTech's metalworked
products are manufactured using various technologies, including cold, warm and
hot forming, powder metal forming, value-added machining, tubular steel
fabricating and hydroforming.
TriMas Corporation
The Company and MascoTech currently own approximately 4 percent and 37
percent, respectively, of the outstanding common stock of TriMas Corporation.
TriMas is a diversified proprietary products company with leadership positions
in commercial, industrial and consumer niche markets, including specialty
container products, pressurized gas cylinders, specialty industrial gaskets,
towing systems products, specialty fasteners, pressure-sensitive tapes and
products for fiberglass insulation, and precision cutting tools.
Hans Grohe
The Company has a 27 percent partnership interest in Hans Grohe GmbH & Co.
KG, a German manufacturer of faucets, handheld showers, shower heads and other
shower accessories.
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ITEM 2. PROPERTIES.
The following list sets forth the location of the Company's principal
manufacturing facilities and identifies the industry segments utilizing such
facilities:
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Arizona............... Tucson (2)
California............ Carlsbad (1), Corona (1), Costa Mesa (2), Los Angeles (1),
Pico Rivera (1), Rancho Dominguez (1), Torrance (2) and
Vista (1)
Colorado.............. Boulder (2)
Delaware.............. New Castle (1)
Illinois.............. Chicago (2)
Indiana............... Cumberland (1), Greensburg (1) and Kendallville (2)
Iowa.................. Northwood (1)
Kentucky.............. Henderson (1) and Morgantown (1)
Michigan.............. Adrian (1), Hillsdale (1), Lapeer (1), Riverview (1) and
Troy (2)
Minnesota............. Lakeville (1)
Mississippi........... Olive Branch (2)
Nevada................ Las Vegas (1)
New Jersey............ Moorestown (1) and Passaic (1)
North Carolina........ Thomasville (1)
Ohio.................. Jackson (1), Loudonville (1), Middlefield (1) and Orwell (1)
Oklahoma.............. Chickasha (1)
Oregon................ Klamath Falls (1)
Pennsylvania.......... Reading (1 and 2)
South Dakota.......... Rapid City (1) and Sioux Falls (1)
Tennessee............. Adamsville (1), Jackson (1), LaFollette (2) and McEwen (1)
Texas................. Lancaster (1)
Virginia.............. Atkins (1), Culpeper (1), Lynchburg (1) and Mt. Jackson (1)
Belgium............... Brussels (2) and St. Niklaas (2)
Canada................ Burnaby, British Columbia (2); Brantford (1), Cambridge (1),
London (1) and St. Thomas (1), Ontario
Denmark............... Odense (1)
England............... Brownhills (1), Corby (1), Warminster (1) and Wetherby (1)
France................ Sevres (1)
Germany............... Ahaus (1), Bad Zwischenahn (1), Iserlohn (1), Netzschkau
(2), Neuwied (1), Steinhagen (2), Stuttgart (2) and
Waldenburg (2)
Italy................. Lacchiarella (1) and Zingonia (1)
Mexico................ Mexicali (2)
Spain................. Barcelona (1)
Taiwan................ Tai Chung (1)
Turkey................ Czerkezkoy (1)
</TABLE>
Industry segments identified in the preceding table are: (1) Kitchen
and Bath Products and (2) Other Specialty Products. Multiple footnotes
within the same parentheses indicate that significant activities
relating to more than one segment are conducted at that location.
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The three principal faucet manufacturing plants are located in Greensburg,
Indiana, Chickasha, Oklahoma and Jackson, Tennessee. The faucet manufacturing
plants and the majority of the Company's other manufacturing facilities range in
size from approximately 10,000 square feet to 900,000 square feet. The Company
owns most of its manufacturing facilities and none of the properties is subject
to significant encumbrances. In addition to its manufacturing facilities, the
Company operates approximately 65 facilities (the majority of which are leased)
which install fiberglass insulation and other building products. 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 sets forth the location of MascoTech's principal
manufacturing facilities:
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Florida........................ Deerfield Beach and Ocala
Indiana........................ Elkhart, Fort Wayne and North Vernon
Kentucky....................... Nicholasville
Michigan....................... Burton, Canton, Detroit, Farmington Hills,
Fraser, Green Oak Township, Hamburg, Holland,
Livonia, Royal Oak, St. Clair, Troy and
Ypsilanti
Ohio........................... Bucyrus, Canal Fulton, Lima, Minerva and Port
Clinton
Oklahoma....................... Tulsa
Pennsylvania................... Ridgway
Virginia....................... Duffield
Czech Republic................. Brno
England........................ Wolverhampton
Germany........................ Nurnberg and Zell am Harmersbach
Italy.......................... Poggio Rusco
</TABLE>
All of MascoTech's manufacturing facilities are primarily engaged in
MascoTech's Transportation -- Related Products operations. MascoTech's principal
manufacturing facilities range in size from approximately 10,000 square feet to
320,000 square feet, substantially all of which are owned by MascoTech and are
not subject to significant encumbrances. The MascoTech 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
requirements.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to 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.
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SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
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<CAPTION>
OFFICER
NAME POSITION AGE SINCE
---- -------- --- -------
<S> <C> <C> <C>
Richard A. Manoogian.................. Chairman of the Board and Chief 60 1962
Executive Officer
Raymond F. Kennedy.................... President and Chief Operating Officer 54 1989
Dr. Lillian Bauder.................... Vice President -- Corporate Affairs 57 1996
David A. Doran........................ Vice President -- Taxes 55 1984
Daniel R. Foley....................... Vice President -- Human Resources 55 1996
Eugene A. Gargaro, Jr................. Vice President and Secretary 54 1993
Frank M. Hennessey.................... Executive Vice President 58 1995
John R. Leekley....................... Senior Vice President and General Counsel 53 1979
Richard G. Mosteller.................. Senior Vice President -- Finance 64 1962
Robert B. Rosowski.................... Vice President -- Controller and 56 1973
Treasurer
Samuel Valenti, III................... Vice President -- Investments 51 1971
</TABLE>
Executive officers who are elected by the Board of Directors serve for a
term of one year or less. Each elected executive officer has been employed in a
managerial capacity with the Company for over five years except for Messrs.
Foley and Gargaro and Dr. Bauder. Mr. Foley was employed by MascoTech, Inc. as
its Vice President -- Human Resources from 1994 to 1996 and was President of
Executive Business Partners, Inc., a training and consulting firm, from 1993 to
1994. From 1991 to 1992, he was Vice President -- Administration and General
Counsel at Domino's Pizza, Inc., a company engaged in producing, distributing
and retail sales of food products through franchised and company-owned stores.
Mr. Gargaro joined the Company as its Vice President and Secretary in October,
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 as a director and Secretary of TriMas
Corporation since 1989. From 1984 to 1996, Dr. Bauder served as President and
Chief Executive Officer of Cranbrook Educational Community.
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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> <C> <C>
1996
Fourth.................................... $36 7/8 $28 7/8 $.20
Third..................................... 31 1/4 26 5/8 .20
Second.................................... 32 1/8 26 5/8 .19
First..................................... 31 3/8 27 7/8 .19
----
Total.................................. $.78
====
1995
Fourth.................................... $31 1/2 $27 $.19
Third..................................... 29 1/2 25 3/8 .19
Second.................................... 29 3/8 24 5/8 .18
First..................................... 27 3/4 22 1/2 .18
----
Total.................................. $.74
====
</TABLE>
On February 28, 1997, there were approximately 5,700 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
for the Company's continuing operations, for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales.............................. $3,237,000 $2,927,000 $2,583,000 $2,243,000 $2,042,000
Income from continuing operations(1)... $ 295,200 $ 200,050 $ 172,710 $ 215,210 $ 179,130
Per share of common stock:
Income from continuing
operations(1)..................... $1.84 $1.25 $1.09 $1.41 $1.18
Dividends declared................... $ .78 $ .74 $ .70 $ .66 $ .62
Dividends paid....................... $ .77 $ .73 $ .69 $ .65 $ .61
At December 31:
Total assets......................... $3,701,650 $3,778,630 $4,177,100 $3,864,850 $3,765,220
Long-term debt....................... $1,236,320 $1,577,100 $1,587,160 $1,413,480 $1,481,680
</TABLE>
(1) The year 1994 includes a $79 million after-tax ($.50 per share) non-cash
equity investment charge.
10
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following financial and business analysis provides information which
the Company believes is relevant to an assessment and understanding of the
Company's consolidated financial position and results of operations. This
financial and business analysis should be read in conjunction with the
consolidated financial statements and related notes.
OVERVIEW
The Company is engaged principally in the manufacture, sale and
installation of home improvement and building products. These products are sold
to the home improvement and home construction markets through mass
merchandisers, hardware stores, home centers, distributors, wholesalers and
other outlets for consumers and contractors.
Factors which affect the Company's results of operations include the levels
of home improvement and residential construction activity principally in the
U.S. and Europe (including repair and remodeling and new construction), cost
management and the Company's ability to maintain its leadership positions in an
increasingly competitive marketplace. Historically, the Company has been able to
largely offset cyclical declines in housing markets through new product
introductions and market share gains.
Net sales and operating profit from continuing operations for 1996 were
$3,237 million and $481 million, representing increases of 11 percent and 19
percent, respectively, over 1995. Net income from continuing operations and
income from continuing operations per share for 1996 were $295 million and
$1.84, representing increases of 48 percent and 47 percent, respectively, and
include the benefits of higher other income in 1996. Increases in net sales
typically result in operating profit improvements that exceed the net sales
increases due to the allocation of fixed and semi-fixed costs over a higher
sales base. The 1996 fourth quarter included after-tax charges (primarily for
adjustments of miscellaneous assets to their estimated fair value) of $37.5
million or $.23 per share, which were more than offset by the after-tax gain
from the sale of certain MascoTech investments of $40.7 million or $.25 per
share.
CORPORATE DEVELOPMENT
Consistent with the Company's objective of building on its European
presence, the Company during 1996 acquired: The Moore Group Ltd., a leading
United Kingdom manufacturer of kitchen cabinets; Horst Breuer GmbH, a German
manufacturer of shower enclosures; and E. Missel GmbH, a leading German
manufacturer of proprietary specialty products. The aggregate purchase price for
these companies was approximately $173 million, and the acquisitions were
accounted for as purchase transactions. These companies had combined annual net
sales in 1995 of approximately $140 million.
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.
DISCONTINUED OPERATIONS
In late November 1995, the Company's Board of Directors approved a formal
plan to dispose of the Company's home furnishings products segment. Operations
that were included in this segment were principally engaged in the manufacture
and sale of quality furniture, fabrics and other home furnishings. The
appropriate provisions were recorded in the fourth quarter of 1995 for the
estimated loss on the discontinued operations through the expected disposal
date, the reduction of assets to their estimated net realizable value and the
anticipated liabilities related to the disposal. The total provision amounted to
$650 million on a pre-tax and after-tax basis. The approximate results of
operations for the
11
<PAGE> 13
period after the decision to discontinue were previously estimated and included
in the expense provision established in 1995.
In early August 1996, the Company completed the sale of its home
furnishings products businesses to Furnishings International Inc. Furnishings
International's investors include 399 Venture Partners (a subsidiary of
Citibank), certain members of Furnishings International's management, the
Company and certain affiliates of Travelers Group Inc. Total proceeds to the
Company from the sale were $1,050 million with approximately $708 million of the
purchase price in cash. The balance consisted of $285 million of 12 percent
pay-in-kind junior debt securities, and equity securities totalling $57 million,
consisting of 13 percent cumulative preferred stock with a stated value of $55
million, 15 percent of the common stock of Furnishings International and
convertible preferred stock.
The junior debt securities mature in 2008; the Company is recording the 12
percent pay-in-kind interest income from these securities. The Company will
record dividend income from the 13 percent cumulative preferred stock if and
when such dividends are declared. The convertible preferred stock represents
transferable rights for up to a 25 percent common ownership, although the
Company is restricted from maintaining an ownership in excess of 20 percent of
Furnishings International's common equity. As such, the Company will not acquire
additional common equity, except for purposes of resale only. Of the cash
proceeds received from this sale, approximately $550 million was applied to
reduce bank debt. The balance of the proceeds will eventually be invested in the
future growth of the Company.
Under a transitional services agreement, the Company provides
corporate-related services for a fee to Furnishings International through April
1997. Substantially all of these services will be discontinued after such date.
The Company's $650 million pre-tax and after-tax charge for the disposition
of the home furnishings products segment, which was recorded at December 31,
1995, approximated the actual loss on disposition as of the 1996 sale date.
The majority of the charge from the disposition of the home furnishings
products segment resulted in a capital loss for tax purposes. The ultimate tax
benefit from the disposition cannot be determined currently and will be reported
in subsequent periods if and when taxable capital gains are realized.
The Company's former President and Chief Operating Officer, Wayne B. Lyon,
has retired as a Company employee and joined Furnishings International as its
full-time Chairman, President and Chief Executive Officer. The Company's
Executive Vice President and President -- Building Products, Raymond F. Kennedy,
was appointed President and Chief Operating Officer of the Company in August
1996.
PROFIT MARGINS
Operating profit margin, before general corporate expense, improved to 17.5
percent in 1996 following a decline to 16.8 percent in 1995 from 19.8 percent in
1994. The improvement in 1996 is principally due to a reduction in selling,
general and administrative expenses as a percentage of sales. The Company's
operating margin from faucet sales is somewhat higher than that on other
products offered by the Company due to the simplicity, quality and reliability
of its faucet mechanisms, manufacturing efficiencies and capabilities, extensive
marketing and merchandising activities and breadth of product offering.
General corporate expense in 1996 was $85 million, as compared with $90
million in 1995 and $80 million in 1994. Operating profit margin, after general
corporate expense, was 14.8 percent, 13.7 percent and 16.7 percent in 1996, 1995
and 1994, respectively.
Net income from continuing operations as a percentage of sales increased to
9.1 percent in 1996 from 6.8 percent and 6.7 percent in 1995 and 1994,
respectively. After-tax profit return on shareholders'
12
<PAGE> 14
equity, as measured by net income from continuing operations, increased to 17.8
percent in 1996 from 9.4 percent and 8.6 percent in 1995 and 1994, respectively.
For 1994, net income from continuing operations reflects an unusual
after-tax charge of $79 million or approximately $.50 per share for the
Company's equity share of its affiliate MascoTech, Inc.'s $315 million non-cash
after-tax charge for the divestiture of its non-core businesses. Prior to giving
effect to such charge, net income from continuing operations as a percentage of
sales and after-tax profit return on shareholders' equity for 1994 were 9.7
percent and 12.5 percent, respectively.
FINANCIAL CONDITION
Over the years, the Company has largely funded its growth through cash
provided by a combination of operations and long-term bank and other borrowings.
At December 31, 1996, the Company's shelf-registration statement permits the
issuance of up to a combined $759 million of debt and equity securities.
Bank credit lines are maintained to ensure availability of short-term funds
on an as-needed basis. At December 31, 1996, the Company had available $750
million under its bank revolving-credit facility. Any outstanding balances under
this facility are due and payable in November 2001. Certain debt agreements
contain limitations on additional borrowings and requirements for maintaining a
certain level of tangible net worth. At December 31, 1996, the Company was in
compliance with these limitations and requirements, and the Company's tangible
net worth exceeded the most restrictive of such provisions by approximately $347
million.
Maintaining high levels of liquidity and cash flow are among the Company's
financial strategies. During 1996, the Company strengthened its balance sheet
and reduced both its short-term and long-term debt. The Company's working
capital ratio was 2.8 to 1 at December 31, 1996 compared with 2.2 to 1 at
December 31, 1995. The Company's debt as a percent of total capitalization
approximated 39 percent at December 31, 1996 compared with 47 percent at
December 31, 1995. The Company's improved financial strength at December 31,
1996 compared with December 31, 1995 is primarily due to the payment of
long-term debt from a portion of the cash consideration from the sale of the
Company's home furnishings products businesses, the sale of certain MascoTech
investments and improved earnings from operations in 1996. The Company's cash
balance at December 31, 1996 includes approximately $150 million from European
borrowings which should improve the Company's utilization of foreign tax credits
in future years.
CASH FLOWS
Significant sources and uses of cash in the past three years are shown in
the following table, in thousands:
<TABLE>
<CAPTION>
CASH SOURCES (USES) 1996 1995 1994
------------------- --------- --------- ---------
<S> <C> <C> <C>
From continuing operations................... $ 340,140 $ 260,910 $ 290,140
Sale of discontinued operations.............. 707,630 -- --
Sale of MascoTech investments................ 115,000 -- --
Sale of Formica investment................... -- 74,470 --
Acquisitions of companies.................... (173,110) -- (126,830)
Capital expenditures......................... (138,540) (165,080) (121,790)
Increase (decrease) in debt, net............. (368,160) (52,180) 182,470
Cash dividends paid.......................... (123,530) (116,350) (108,960)
Repurchase of Company common stock........... -- -- (61,730)
From discontinued operations, net............ -- 34,560 (102,040)
Other, net................................... 53,830 (12,390) (9,870)
--------- --------- ---------
Cash: increase (decrease)............... $ 413,260 $ 23,940 $ (58,610)
========= ========= =========
</TABLE>
13
<PAGE> 15
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing operations generated $79.2 million and $50.0 million more cash
in 1996 than in 1995 and 1994, respectively, primarily due to increased earnings
and a decreased impact from changes in working capital. During 1996, the
Company's accounts receivable and inventories increased by $27.0 million and
$20.2 million, respectively, primarily as a result of acquisitions. 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.
CASH FLOWS FROM INVESTING ACTIVITIES
Investing activities of continuing operations provided cash of $564.8
million in 1996 compared with cash used for investing activities of $141.3
million in 1995. The increase of $706.1 million is primarily the result of cash
proceeds from the sale of discontinued operations and certain MascoTech
investments, offset by cash used for the acquisition of three European companies
at an aggregate purchase price of approximately $173 million, which was
principally provided by European borrowings. The Company anticipates the
continued use of cash for the acquisition of companies.
In early August 1996, the Company completed the sale of its home
furnishings products segment to Furnishings International Inc. Total proceeds to
the Company from the sale were $1,050 million with approximately $708 million of
the purchase price in cash. (See Discontinued Operations in this Management's
Discussion and Analysis.)
During October 1996, the Company completed the sale to MascoTech, Inc. of
17 million shares of MascoTech common stock and warrants to purchase 10 million
shares of MascoTech common stock. Under the sale agreement, the Company received
$266 million, with $115 million cash paid at closing. The Company receives
interest income at 6.625 percent on the $151 million balance of the
consideration, which is due by September 1997; this amount is included in
non-current assets inasmuch as the Company may receive publicly traded
securities of Emco Limited held by MascoTech, in payment of a substantial
portion of this balance. Emco Limited is a Canadian manufacturer and distributor
of home improvement and building products. The Company recorded a 1996 fourth
quarter net pre-tax gain of $67.8 million ($40.7 million after-tax) from the
sale. This gain was principally offset by fourth quarter charges aggregating
$49.1 million pre-tax ($37.5 million after-tax) primarily for adjustments of
miscellaneous assets to their estimated fair value. This transaction reduced the
Company's common equity ownership in MascoTech from 45 percent to 21 percent.
The transaction, when considered along with the conversion by mid-1997 of
outstanding MascoTech preferred stock into MascoTech common stock, will reduce
the Company's ownership in MascoTech to approximately 17 percent (which equals
the Company's voting interest at December 31, 1996). MascoTech holds an option
expiring in 2002 to require the Company to purchase up to $200 million aggregate
amount of subordinated debt securities of MascoTech. As part of the transaction,
Masco Chairman Richard Manoogian also agreed to sell to MascoTech one million
shares of his holdings of MascoTech common stock at the then market price of
$13 5/8. As a result, his common ownership in MascoTech before the transaction
remains approximately the same, at seven percent, following the purchases by
MascoTech.
Capital expenditures totalled $138.5 million in 1996 compared with $165.1
million in 1995. These amounts primarily pertain to expenditures for additional
facilities related to increased demand for existing products as well as for new
Masco products. The Company also 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. The Company
expects capital expenditures for 1997, excluding those of potential 1997
acquisitions, to approximate the 1996 level. Depreciation and amortization
expense for 1996 totalled $99.7 million, compared with $90.1 million for 1995;
for 1997, depreciation and amortization expense is expected to be approximately
$105 million, excluding 1997 acquisitions.
14
<PAGE> 16
Costs of environmental responsibilities and compliance with existing
environmental laws and regulations have not had, nor in the opinion of the
Company are they expected to have, a material adverse effect on the Company's
capital expenditures, financial position, or results of operations.
CASH FLOWS FOR FINANCING ACTIVITIES
Cash used for financing activities increased to $491.7 million in 1996 from
$156.1 million in 1995. During 1996, the Company paid the $250 million of 9
percent notes due April 15, 1996 through borrowings under its bank
revolving-credit agreement. The Company later in 1996 applied approximately $550
million of the proceeds from the 1996 sale of the home furnishings products
segment to reduce bank debt.
During 1996, the Company increased its dividend rate 5 percent to $.20 per
share quarterly. This marks the 38th consecutive year in which dividends have
been increased.
The Company believes that its present cash balance and cash flows from
operations are sufficient 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 cash flows from
operations and, to the extent necessary, from future financial market
activities, from proceeds from asset sales and from bank borrowings.
CONSOLIDATED RESULTS OF OPERATIONS
Net sales for 1996 were $3,237 million, representing an increase of 11
percent over 1995. After adjusting for acquisitions and the divestiture of two
small operations, net sales for 1996 increased 7 percent over 1995. Net sales
for 1995 increased 13 percent to $2,927 million from $2,583 million in 1994;
after adjusting for acquisitions in 1995 and 1994, net sales for 1995 increased
7 percent.
Cost of sales as a percentage of sales was 63.3 percent in 1996 compared
with 63.1 percent and 60.9 percent for 1995 and 1994, respectively. The modest
increase in the cost of sales percentage for 1996 over 1995 is primarily
attributable to softness in the Company's European markets, expenses associated
with manufacturing process improvement initiatives and product sales mix, which
offset the benefits resulting from increased sales volume and new product
introductions. The increase in the cost of sales percentage for 1995 over 1994
was primarily the result of plant start-up costs related to a major new faucet
facility in the U.S. and product sales mix. Product sales mix was primarily
occasioned by a higher percentage of lower margin sales to total sales.
Excluding amortization of excess cost over acquired net assets ($12.1
million, $10.0 million and $6.7 million in 1996, 1995 and 1994, respectively),
selling, general and administrative expenses as a percentage of sales were 21.5
percent in 1996 compared with 22.8 percent and 22.1 percent for 1995 and 1994,
respectively. The decrease in the selling, general and administrative expenses
percentage in 1996 results from the Company's cost-reduction initiatives, the
substitution of contingent incentive-based compensation for the reduction in
compensation for certain executives and the leverage of fixed and semi-fixed
costs over a higher sales base. The increase in the selling, general and
administrative expenses percentage in 1995 resulted from higher promotional,
advertising and insurance costs in 1995 versus 1994.
Included in other income and expense, net are equity earnings from
MascoTech of $13.9 million for 1996 as compared with equity earnings of $18.2
million for 1995 and $106.1 million of equity loss from MascoTech in 1994. The
decrease in equity earnings from MascoTech for 1996 compared with 1995
principally reflects the Company's $11.7 million pre-tax equity share of
MascoTech's loss from the sale of its metal stamping businesses. The Company
recognized a $67.8 million net pre-tax gain ($40.7 million after-tax) from the
fourth quarter 1996 sale to MascoTech of 17 million shares of MascoTech common
stock and warrants to purchase 10 million shares of MascoTech common stock. The
equity loss from MascoTech in 1994 reflects the Company's $138 million pre-tax
($79 million
15
<PAGE> 17
after-tax) equity share of MascoTech's unusual non-cash 1994 fourth quarter
charge for the disposition of its non-core businesses.
Included in other income and expense, net for 1996 are $36.3 million of
fourth quarter charges primarily related to adjustments of miscellaneous assets
to estimated fair value and $14.0 million of interest income from the
pay-in-kind notes of Furnishings International Inc.
Other income and expense, net for 1995 includes a $15.9 million gain from
the sale of the Company's investment in Formica Corporation; this gain was
offset primarily by charges for product line disposals.
After-tax income and income per share from continuing operations for 1996
were $295 million and $1.84 compared with $200 million and $1.25 for 1995 and
$173 million and $1.09 for 1994, respectively. Excluding the Company's equity
share of the above-mentioned 1994 MascoTech charge, after-tax income and income
per share from continuing operations for 1994 were approximately $252 million
and $1.59. The Company's effective tax rate decreased to 41.3 percent in 1996
from 43.1 percent in 1995 due primarily to a reduction in higher-taxed foreign
income as a percentage of total income. The 1994 tax rate was 41.0 percent.
OUTLOOK FOR THE COMPANY
Assuming that the U.S. economy maintains its present rate of moderate
growth and interest rates remain relatively stable, the Company expects
improvement in both sales and earnings for 1997. The Company also expects to
improve its results in 1997 and in future years: by continuing to invest in new
manufacturing technologies and productivity improvement initiatives in order to
reduce costs and increase efficiency; by maintaining a lower level of selling,
general and administrative expenses; by introducing new products and marketing
initiatives to increase market share and share of customer; and by actively
pursuing acquisition candidates that complement or support the Company's core
competencies.
NET SALES BY PRODUCT SEGMENT AND GEOGRAPHIC AREA
The following table sets forth the Company's net sales from continuing
operations by product group and geographic area, in millions.
<TABLE>
<CAPTION>
PERCENT
CHANGE
------------
NET SALES 1996 1995
-------------------------- VS VS
1996 1995 1994 1995 1994
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Kitchen and Bath Products:
Faucets................................. $ 757 $ 698 $ 667 8% 5%
Cabinets................................ 832 758 665 10% 14%
Other................................... 930 827 745 12% 11%
------ ------ ------
2,519 2,283 2,077 10% 10%
Other Specialty Products.................. 718 644 506 11% 27%
------ ------ ------
Total................................ $3,237 $2,927 $2,583 11% 13%
====== ====== ======
North America............................. $2,680 $2,441 $2,247 10% 9%
European Union............................ 557 486 336 15% 45%
------ ------ ------
Total................................ $3,237 $2,927 $2,583 11% 13%
====== ====== ======
</TABLE>
16
<PAGE> 18
BUSINESS SEGMENT RESULTS
Kitchen and Bath Products
Net sales of the Company's Kitchen and Bath Products increased 10 percent
in 1996 over 1995 and 10 percent in 1995 over 1994; after adjusting for
acquisitions, net sales increased 7 percent in 1996 over 1995 and 6 percent in
1995 over 1994. These increases are largely due to higher unit sales volume of
faucets, cabinets and other kitchen and bath products, and to a lesser extent,
selling price increases and new product introductions.
Operating profit of the Company's Kitchen and Bath Products, before general
corporate expense, was $462 million, $411 million and $441 million in 1996, 1995
and 1994, respectively. Operating margin, before general corporate expense,
improved to 18.3 percent in 1996 following a decline to 18.0 percent in 1995
from 21.2 percent in 1994.
Operating results of this business segment showed a net improvement in 1996
over 1995. This net improvement results from higher unit sales volume, increased
efficiency and utilization of new and existing manufacturing facilities and the
leverage of fixed and semi-fixed selling, general and administrative expenses
over a higher sales base, which more than offset the modestly weaker results of
the Company's U.S. cabinet businesses and the lower results of European
operations. Operating results of the Company's U.S. cabinet businesses were
modestly weaker in 1996 and 1995 due to the influence of a higher percentage of
lower margin sales to total sales and the recognition of certain expenses for
various initiatives undertaken to improve manufacturing processes and customer
service and to shorten product delivery time. Operating results of this business
segment were also lower in 1995, as compared with 1994, due to plant start-up
costs related to a major new faucet facility in the U.S.
Other Specialty Products
Net sales of the Company's Other Specialty Products increased 11 percent in
1996 over 1995 and 27 percent in 1995 over 1994. After adjusting for
acquisitions and divestitures, net sales increased 7 percent in 1996 over 1995
and 11 percent in 1995 over 1994. Operating profit of the Company's Other
Specialty Products, before general corporate expense, was $104 million, $82
million and $70 million in 1996, 1995 and 1994, respectively. Operating margin,
before general corporate expense, improved to 14.5 percent in 1996 following a
decline to 12.7 percent in 1995 from 13.8 percent in 1994.
Operating results of this business segment for 1996 as compared with 1995
benefitted from higher unit sales volume of mechanical and electronic lock sets
and higher installation sales of fiberglass insulation, and to a lesser extent,
selling price increases and new product introductions. Operating results in 1996
also benefitted from the leverage of fixed and semi-fixed selling, general and
administrative expenses over a higher sales base and the divestiture of two
under-performing operations. Operating profit as a percentage of sales decreased
in 1995 from 1994, in part due to lower unit sales volume of mechanical lock
sets. Operating results were negatively affected in 1996 and 1995 by lower
results of European operations.
GEOGRAPHIC AREA RESULTS
North America
Net sales of North American operations increased 10 percent in 1996 over
1995 and 9 percent in 1995 over 1994. Net sales of North American operations,
after adjusting for acquisitions and divestitures, increased 9 percent in 1996
over 1995 and 5 percent in 1995 over 1994. Operating profit from North American
operations, before general corporate expense, was $479 million, $407 million and
$437 million for 1996, 1995 and 1994, respectively. Operating margin, before
general corporate expense, improved to 17.9 percent in 1996 following a decline
to 16.7 percent in 1995 from 19.5 percent in 1994.
Operating results of North American operations in 1996 benefitted from
higher sales volume which was partly driven by an increase in U.S. housing
transactions, including higher levels of new construction and existing homes
sales. Operating results of North American operations in 1995 were
17
<PAGE> 19
lower, in part due to plant start-up costs related to a major new faucet
facility and product sales mix. Operating results of the Company's Canadian
operations were relatively flat in 1996 and 1995, as compared with 1994.
European Union
Net sales of European operations increased 15 percent in 1996 over 1995 and
45 percent in 1995 over 1994; after adjusting for acquisitions, net sales
decreased 1 percent in 1996 from 1995 and increased 19 percent in 1995 over
1994. Operating profit from European operations, before general corporate
expense, was $87 million, $86 million and $74 million for 1996, 1995 and 1994,
respectively. Operating margin, before general corporate expense, decreased to
15.6 percent in 1996 following a decline to 17.7 percent in 1995 from 22.0
percent in 1994.
Results of European operations were lower in 1996 and 1995, in part due to
softness in the Company's European markets beginning in mid-1995, competitive
pricing pressures on certain products and the influence of a higher percentage
of lower margin sales to total sales. In addition, a stronger U.S. dollar had a
negative effect on the translation of European results in 1996 as compared with
1995, lowering European net sales by approximately 3 percent. A weaker U.S.
dollar in 1995 as compared with 1994 resulted in an increase in European net
sales of approximately 12 percent.
RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and the American Institute of Certified Public Accountants' Statement of
Position No. 96-1, "Environmental Remediation Liabilities," become effective in
January 1997 and will not have a material impact on the Company's financial
statements.
The Company has elected to continue to apply the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
and, accordingly, stock options do not constitute compensation expense in the
determination of net income in the statement of operations. Had stock option
compensation expense been determined pursuant to the methodology of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," the pro forma effect for 1996 would have been a reduction in the
Company's earnings per share of approximately $.03 or less than two percent,
which would not have been material.
18
<PAGE> 20
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 sheets of Masco
Corporation and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 1996 and the financial statement schedule as
listed in Item 14(a)(2) of the Form 10-K. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 18, 1997
19
<PAGE> 21
MASCO CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Current Assets:
Cash and cash investments................................. $ 473,730,000 $ 60,470,000
Receivables............................................... 466,900,000 439,900,000
Inventories............................................... 411,940,000 391,760,000
Prepaid expenses and other................................ 77,200,000 72,370,000
-------------- --------------
Total current assets................................. 1,429,770,000 964,500,000
Receivable from MascoTech, Inc.............................. 151,380,000 --
Equity investment in MascoTech, Inc......................... 10,150,000 202,380,000
Equity investments in other affiliates...................... 57,680,000 62,570,000
Securities of Furnishings International Inc................. 356,340,000 --
Property and equipment...................................... 940,590,000 856,690,000
Excess of cost over acquired net assets..................... 457,350,000 343,510,000
Other assets................................................ 298,390,000 296,310,000
Net assets of discontinued operations....................... -- 1,052,670,000
-------------- --------------
Total assets......................................... $3,701,650,000 $3,778,630,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable............................................. $ 7,590,000 $ 25,690,000
Accounts payable.......................................... 149,500,000 125,230,000
Accrued liabilities....................................... 361,350,000 294,930,000
-------------- --------------
Total current liabilities............................ 518,440,000 445,850,000
Long-term debt.............................................. 1,236,320,000 1,577,100,000
Deferred income taxes and other............................. 107,080,000 100,250,000
-------------- --------------
Total liabilities.................................... 1,861,840,000 2,123,200,000
-------------- --------------
Shareholders' Equity:
Common shares authorized: 400,000,000;
issued: 1996 -- 160,870,000; 1995 -- 160,380,000....... 160,870,000 160,380,000
Preferred shares authorized: 1,000,000.................... -- --
Paid-in capital........................................... 140,010,000 128,550,000
Retained earnings......................................... 1,536,410,000 1,366,330,000
Cumulative translation adjustments........................ 2,520,000 170,000
-------------- --------------
Total shareholders' equity........................... 1,839,810,000 1,655,430,000
-------------- --------------
Total liabilities and shareholders' equity........... $3,701,650,000 $3,778,630,000
============== ==============
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 22
MASCO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales...................................... $3,237,000,000 $2,927,000,000 $2,583,000,000
Cost of sales.................................. 2,048,070,000 1,846,330,000 1,574,100,000
-------------- -------------- --------------
Gross profit......................... 1,188,930,000 1,080,670,000 1,008,900,000
Selling, general and administrative expenses... 696,290,000 668,310,000 571,480,000
Amortization of excess of cost over acquired
net assets................................... 12,140,000 10,020,000 6,670,000
-------------- -------------- --------------
Operating profit..................... 480,500,000 402,340,000 430,750,000
-------------- -------------- --------------
Other income (expense), net:
Re: MascoTech, Inc.:
Equity earnings (loss).................... 13,860,000 18,200,000 (106,110,000)
Gain from sale of investments, net........ 67,800,000 -- --
Equity earnings, other affiliates............ 6,230,000 8,010,000 6,630,000
Other, net................................... 8,990,000 (2,960,000) 23,090,000
Interest expense............................. (74,680,000) (73,800,000) (61,530,000)
-------------- -------------- --------------
22,200,000 (50,550,000) (137,920,000)
-------------- -------------- --------------
Income from continuing operations
before income taxes................ 502,700,000 351,790,000 292,830,000
Income taxes................................... 207,500,000 151,740,000 120,120,000
-------------- -------------- --------------
Income from continuing operations.... 295,200,000 200,050,000 172,710,000
-------------- -------------- --------------
Discontinued operations (net of income taxes):
Income from operations....................... -- 8,270,000 20,990,000
Loss on disposition, net..................... -- (650,000,000) --
-------------- -------------- --------------
Net income (loss).................... $ 295,200,000 $ (441,680,000) $ 193,700,000
============== ============== ==============
Earnings (loss) per share:
Continuing operations........................ $1.84 $ 1.25 $1.09
Discontinued operations:
Income from operations.................... -- .05 .13
Loss on disposition, net.................. -- (4.07) --
-------------- -------------- --------------
Earnings (loss) per share............ $1.84 $(2.77) $1.22
============== ============== ==============
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 23
MASCO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Cash Flows From (For):
Operating Activities:
Income from continuing operations............. $ 295,200,000 $ 200,050,000 $ 172,710,000
Depreciation and amortization................. 99,680,000 90,090,000 73,830,000
Equity (earnings) loss, net................... (12,310,000) (17,770,000) 106,200,000
Deferred income taxes......................... 28,850,000 18,240,000 (31,930,000)
Gain from sale of MascoTech investments,
net......................................... (67,800,000) -- --
(Increase) in receivables..................... (7,510,000) (56,660,000) (25,750,000)
(Increase) in inventories..................... (1,890,000) (13,970,000) (39,900,000)
Increase in accounts payable and accrued
liabilities, net............................ 38,410,000 42,110,000 33,780,000
Other, net.................................... (32,490,000) (1,180,000) 1,200,000
------------- ------------- -------------
Net cash from operating activities of
continuing operations.................. 340,140,000 260,910,000 290,140,000
Operating activities of discontinued
operations.................................. -- 60,370,000 24,500,000
------------- ------------- -------------
Net cash from operating activities....... 340,140,000 321,280,000 314,640,000
------------- ------------- -------------
Investing Activities:
Acquisition of companies...................... (173,110,000) -- (126,830,000)
Capital expenditures.......................... (138,540,000) (165,080,000) (121,790,000)
Cash proceeds from sale of discontinued
operations.................................. 707,630,000 -- --
Cash proceeds from sale of MascoTech
investments................................. 115,000,000 -- --
Proceeds from sale of Formica investment...... -- 74,470,000 --
Other, net.................................... 53,830,000 (12,390,000) (9,870,000)
Investing activities of discontinued
operations.................................. -- (38,290,000) (78,290,000)
------------- ------------- -------------
Net cash from (for) investing
activities............................. 564,810,000 (141,290,000) (336,780,000)
------------- ------------- -------------
Financing Activities:
Retirement of notes........................... (250,000,000) (200,000,000) --
Increase in other debt........................ 537,380,000 497,830,000 239,710,000
Payment of other debt......................... (655,540,000) (350,010,000) (57,240,000)
Repurchase of Company common stock............ -- -- (61,730,000)
Cash dividends paid........................... (123,530,000) (116,350,000) (108,960,000)
Financing activities of discontinued
operations.................................. -- 12,480,000 (48,250,000)
------------- ------------- -------------
Net cash (for) financing activities...... (491,690,000) (156,050,000) (36,470,000)
------------- ------------- -------------
Cash and Cash Investments:
Increase (decrease) for the year................. 413,260,000 23,940,000 (58,610,000)
At January 1..................................... 60,470,000 36,530,000 95,140,000
------------- ------------- -------------
At December 31................................... $ 473,730,000 $ 60,470,000 $ 36,530,000
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 24
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. The Company
classified its home furnishings products segment as discontinued operations in
1995. (See "Discontinued Operations" note.) Accordingly, the financial
statements and related notes present the home furnishings products segment as
discontinued operations. Certain amounts for prior years have been reclassified
to conform to the current year presentation.
Use of Estimates in the Preparation of Financial Statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from such estimates and assumptions.
Average Shares Outstanding. The average number of common shares outstanding
in 1996, 1995 and 1994 approximated 160.6 million, 159.6 million and 158.8
million, respectively.
Cash and Cash Investments. The Company considers all highly liquid
investments with an original maturity of three months or less to be cash and
cash investments.
Receivables. The Company does significant business with a number of
individual customers. The Company monitors its exposure for credit losses and
maintains adequate allowances for doubtful accounts. At December 31, 1996 and
1995 accounts and notes receivable are presented net of allowances for doubtful
accounts of $17.9 million and $16.3 million, respectively.
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 the statement of operations. 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 $71.7
million, $65.3 million and $54.5 million in 1996, 1995 and 1994, 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, 1996 and 1995 such accumulated amortization totalled $70.2 million and $58.1
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
annual sales, operating income and annual cash flows on an undiscounted basis
with the related annual amortization expense; management also considers business
prospects, market trends and other economic factors in performing this
assessment. Based on this assessment, there was no permanent impairment related
to the excess of cost over net assets of acquired companies at December 31, 1996
and 1995. Purchase costs of patents are being amortized using the straight-line
method over the legal lives of the patents, not to exceed 17 years. Amortization
of intangible assets was $28.0 million, $24.8 million and $19.3 million in 1996,
1995 and 1994, 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
23
<PAGE> 25
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ACCOUNTING POLICIES -- (CONCLUDED)
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
available 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, 1996 was approximately $631 million and $1,248 million, as
compared with the Company's aggregate carrying value of $601 million and $1,236
million, respectively, and at December 31, 1995 was approximately $157 million
and $1,603 million, as compared with the Company's aggregate carrying value of
$116 million and $1,577 million, respectively.
Recently Issued Statements of Financial Accounting Standards. Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," and the American
Institute of Certified Public Accountants' Statement of Position No. 96-1,
"Environmental Remediation Liabilities," become effective in January 1997 and
will not have a material impact on the Company's financial statements.
ACQUISITIONS
During the second quarter of 1996, the Company acquired The Moore Group
Ltd., a leading United Kingdom manufacturer of kitchen cabinets, and Horst
Breuer GmbH, a German manufacturer of shower enclosures. In the third quarter of
1996, the Company acquired E. Missel GmbH, a leading German manufacturer of
proprietary specialty products. The aggregate purchase price for these companies
was approximately $173 million and the acquisitions were accounted for as
purchase transactions. These companies had combined annual net sales in 1995 of
approximately $140 million.
DISCONTINUED OPERATIONS
In late November 1995, the Company's Board of Directors approved a formal
plan to dispose of the Company's home furnishings products segment. Operations
that were included in this segment were principally engaged in the manufacture
and sale of quality furniture, fabrics and other home furnishings. The
appropriate provisions were recorded in the fourth quarter of 1995 for the
estimated loss on the discontinued operations through the expected disposal
date, the reduction of assets to their estimated net realizable value and the
anticipated liabilities related to the disposal. The total provision amounted to
$650 million on a pre-tax and after-tax basis.
During August 1996, the Company completed the sale of its home furnishings
products segment to Furnishings International Inc. Furnishings International's
investors include: 399 Venture Partners (a subsidiary of Citibank), certain
members of Furnishings International's management, the Company and certain
affiliates of Travelers Group Inc. Total proceeds to Masco from the sale were,
in millions:
<TABLE>
<S> <C> <C>
Cash........................................................ $ 708
Junior debt securities (12% pay-in-kind).................... 285
Preferred stock (13% cumulative)............................
Common stock (15% ownership)................................ H 57
Convertible preferred stock.................................
------
Total proceeds from the sale................................ $1,050
======
</TABLE>
The junior debt securities mature in 2008. The Company will record dividend
income from the 13% cumulative preferred stock, with a stated value of $55
million, if and when such dividends are declared. The convertible preferred
stock represents transferable rights for up to a 25 percent common ownership,
although the Company is restricted from maintaining an ownership in excess of 20
percent of Furnishings International's common equity. As such, the Company will
not acquire additional
24
<PAGE> 26
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DISCONTINUED OPERATIONS -- (CONCLUDED)
common equity, except for purposes of resale only. Of the cash proceeds received
from this sale, approximately $550 million was applied to reduce bank debt.
Under a transitional services agreement, the Company provides
corporate-related services for a fee to Furnishings International through April
1997. Substantially all of these services will be discontinued after such date.
Net sales and income from operations of the discontinued segment for the
eleven months ended November 30, 1995 and the year ended December 31, 1994 were
$1,852 million and $8.3 million, and $1,885 million and $21.0 million,
respectively. Income from operations of the discontinued segment for 1995 and
1994 is net of applicable income taxes of $22.0 million and $8.8 million,
respectively. The income tax rate of discontinued operations was higher in 1995
primarily due to higher taxes on foreign operations and decreased foreign tax
credits.
INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-------------------
1996 1995
-------- --------
<S> <C> <C>
Raw material............................................. $185,500 $171,670
Finished goods........................................... 135,190 130,070
Work in process.......................................... 91,250 90,020
-------- --------
$411,940 $391,760
======== ========
</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 common
equity and partnership interests:
<TABLE>
<CAPTION>
AT DECEMBER 31
------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
MascoTech, Inc........................................... 21% 45% 44%
Hans Grohe, a German partnership......................... 27% 27% 27%
TriMas Corporation....................................... 4% 5% 5%
</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, 1996 (which may differ from the amounts that could
then have been realized upon disposition), based upon quoted market prices at
that date, was $166 million, as compared with the Company's related aggregate
carrying value of $27 million.
The Company's carrying value of its equity investments at December 31,
1996, approximated the Company's equity in the underlying net book value in
these affiliates, except for $20 million of excess carrying value pertaining to
the equity investment in MascoTech. Such excess is being amortized over a period
not to exceed 40 years.
During October 1996, the Company completed the sale to MascoTech, Inc. of
17 million shares of MascoTech common stock and warrants to purchase 10 million
shares of MascoTech common stock.
25
<PAGE> 27
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EQUITY INVESTMENTS IN AFFILIATES -- (CONCLUDED)
Under the sale agreement, the Company received approximately $266 million, with
$115 million cash paid at closing. The Company receives interest income at 6.625
percent on the $151 million balance of the consideration, which is due in
September 1997; this amount is included in non-current assets inasmuch as the
Company may receive publicly traded securities of Emco Limited held by
MascoTech, in payment of a substantial portion of this balance. The Company
recorded a 1996 fourth quarter net pre-tax gain of $67.8 million ($40.7 million
after-tax) from the sale.
The transaction reduced the Company's common equity ownership in MascoTech
from 45 percent to 21 percent. This transaction, when considered along with the
conversion in mid-1997 of outstanding MascoTech preferred stock into MascoTech
common stock, will reduce the Company's ownership in MascoTech to approximately
17 percent (which equals the Company's voting interest at December 31, 1996).
MascoTech holds an option expiring in 2002 to require the Company to purchase up
to $200 million aggregate amount of subordinated debt securities of MascoTech.
Approximate combined condensed financial data of the above-listed
affiliates are summarized in U.S. dollars as follows, in thousands:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
At December 31:
Current assets........................ $ 770,980 $ 788,020 $ 944,940
Current liabilities................... (287,200) (276,180) (277,260)
----------- ----------- -----------
Working capital.................... 483,780 511,840 667,680
Property and equipment................ 662,520 728,730 626,670
Other assets.......................... 571,610 624,430 681,630
Long-term liabilities................. (1,152,980) (1,083,140) (1,266,060)
----------- ----------- -----------
Shareholders' equity............... $ 564,930 $ 781,860 $ 709,920
=========== =========== ===========
Net sales............................... $ 2,136,740 $ 2,488,900 $ 2,465,070
=========== =========== ===========
Income (loss) from continuing
operations............................ $ 181,710 $ 201,860 $ (165,200)
=========== =========== ===========
Net income (loss) attributable to common
shareholders.......................... $ 109,500 $ 115,570 $ (164,750)
=========== =========== ===========
The Company's net equity in above net
income (loss)......................... $ 20,090 $ 26,210 $ (99,480)
=========== =========== ===========
Cash dividends received by the Company
from affiliates....................... $ 7,780 $ 8,440 $ 6,720
=========== =========== ===========
</TABLE>
In December 1994, MascoTech announced and recorded a non-cash after-tax
charge of $315 million in anticipation of losses associated with the planned
disposition of its non-core businesses. As a result, the Company recorded its
equity share of this non-cash charge.
Equity in undistributed earnings of affiliates of $32 million at December
31, 1996, $30 million at December 31, 1995 and $17 million at December 31, 1994
are included in consolidated retained earnings.
26
<PAGE> 28
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Land and improvements................................. $ 68,750 $ 61,490
Buildings............................................. 428,860 408,570
Machinery and equipment............................... 976,470 872,310
---------- ----------
1,474,080 1,342,370
Less accumulated depreciation......................... 533,490 485,680
---------- ----------
$ 940,590 $ 856,690
========== ==========
</TABLE>
ACCRUED LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-------------------------
1996 1995
-------- --------
<S> <C> <C> <C>
Salaries, wages and related retirement benefits....... $ 92,450 $ 79,520
Advertising and sales promotion....................... 51,150 40,480
Insurance............................................. 49,260 40,930
Dividends payable..................................... 31,240 29,640
Property, payroll and other taxes..................... 23,100 18,040
Interest.............................................. 22,130 28,060
Income taxes.......................................... 3,230 4,100
Other................................................. 88,790 54,160
-------- --------
$361,350 $294,930
======== ========
</TABLE>
27
<PAGE> 29
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Notes, 6.625%, due September 15, 1999................. $ 200,000 $ 200,000
Notes, 9% , due October 1, 2001.................... 175,000 175,000
Notes, 6.125%, due September 15, 2003................. 200,000 200,000
Notes, 7.125%, due August 15, 2013.................... 200,000 200,000
Notes, 9% , due April 15, 1996..................... -- 250,000
Bank revolving-credit agreement....................... -- 250,000
European bank debt.................................... 275,050 119,810
Convertible subordinated debentures, 5.25%, due
2012................................................ 177,920 177,920
Other................................................. 15,940 22,060
---------- ----------
1,243,910 1,594,790
Less current portion.................................. 7,590 17,690
---------- ----------
$1,236,320 $1,577,100
========== ==========
</TABLE>
At December 31, 1996, all of the outstanding notes above are nonredeemable.
The Company paid the 9% notes due April 15, 1996 through borrowings under
its bank revolving-credit agreement. The Company later in 1996 applied
approximately $550 million of the proceeds from the 1996 sale of the home
furnishings products businesses to reduce bank debt.
European bank debt relates to borrowings for acquisitions and expansion
primarily in Germany. At December 31, 1996, approximately $134 million of
European debt relates to lines of credit in Germany, which are largely due and
payable in November 2000. The balance are short-term borrowings, which the
Company has classified as long-term since it is currently negotiating to replace
such debt with a new term loan expiring in 2002, or it can replace such debt
with the utilization of its existing bank revolving-credit agreement. Interest
is payable on European borrowings based upon various floating rates as selected
by the Company (approximately 4.5 percent at December 31, 1996).
The 5.25% subordinated debentures due February 15, 2012 are convertible
into common stock at $42.28 per share.
Certain debt agreements contain limitations on additional borrowings and
requirements for maintaining a certain level of tangible net worth. At December
31, 1996, the Company's tangible net worth exceeded the most restrictive of such
provisions by approximately $347 million.
At December 31, 1996, the maturities of long-term debt during each of the
next five years were approximately as follows: 1997-$7.6 million; 1998-$16.7
million; 1999-$209.5 million; 2000-$154.8 million; and 2001-$277.2 million.
The Company has a $750 million bank revolving-credit agreement, with any
outstanding balance due and payable in November 2001. Interest is payable on
borrowings under this agreement based upon various floating rates as selected by
the Company.
The Company has on file with the Securities and Exchange Commission, an
unallocated shelf registration pursuant to which the Company is able to issue up
to a combined $759 million of debt and equity securities.
Interest paid was approximately $102 million, $115 million and $103 million
in 1996, 1995 and 1994, respectively. Amounts paid include interest pertaining
to discontinued operations.
28
<PAGE> 30
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Common Shares, $1 Par Value
Balance, January 1....................... $ 160,380 $ 156,990 $ 152,850
Shares issued............................ 490 3,390 6,910
Shares repurchased....................... -- -- (2,770)
---------- ---------- ----------
Balance, December 31..................... 160,870 160,380 156,990
---------- ---------- ----------
Paid-In Capital
Balance, January 1....................... 128,550 44,840 69,880
Shares issued............................ 11,460 83,710 33,920
Shares repurchased....................... -- -- (58,960)
---------- ---------- ----------
Balance, December 31..................... 140,010 128,550 44,840
---------- ---------- ----------
Retained Earnings
Balance, January 1....................... 1,366,330 1,924,740 1,805,170
Retained earnings of pooled companies.... -- -- 37,820
Net income (loss)........................ 295,200 (441,680) 193,700
Cash dividends declared.................. (125,120) (116,730) (111,950)
---------- ---------- ----------
Balance, December 31..................... 1,536,410 1,366,330 1,924,740
---------- ---------- ----------
Cumulative Translation Adjustments
Balance, December 31..................... 2,520 170 (8,240)
---------- ---------- ----------
Shareholders' Equity
Balance, December 31..................... $1,839,810 $1,655,430 $2,118,330
========== ========== ==========
</TABLE>
On the basis of amounts paid (declared), cash dividends per share were $.77
($.78) in 1996, $.73 ($.74) in 1995 and $.69 ($.70) in 1994.
In December 1995, the Company's Board of Directors announced the approval
of a Shareholder Rights Plan. The Rights were designed to enhance the Board's
ability to protect the Company's shareholders against, among other things,
unsolicited attempts to acquire control of the Company that do not offer an
adequate price to all shareholders or are otherwise not in the best interests of
the shareholders. The Rights were issued to shareholders of record in December
1995 and will expire in December 2005.
In 1994, the Company's Board of Directors authorized the repurchase of up
to 10 million shares of its common stock in open-market transactions or
otherwise. Pursuant to this authorization, approximately 2.8 million common
shares were repurchased in 1994 at an aggregate cost of approximately $62
million.
29
<PAGE> 31
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK OPTIONS AND AWARDS
The Company's Long-Term Stock Incentive Plan (the "Plan") provides for the
issuance of stock-based incentives in various forms. At December 31, 1996,
outstanding stock-based incentives were in the form of restricted long-term
stock awards and stock options.
Pursuant to the Plan, the Company granted long-term stock awards, net, for
540,000, 1,250,000 and 598,000 shares of Company common stock during 1996, 1995
and 1994, respectively, to key employees of the Company and affiliated
companies. These long-term stock awards do not cause share dilution inasmuch as
the Company reacquires an equal number of shares on the open market. The
weighted average grant date fair value per share of long-term stock awards
granted during 1996 and 1995 was $31 and $27, respectively. Compensation expense
for the vesting of long-term stock awards was $14.9 million, $13.3 million and
$10.7 million in 1996, 1995 and 1994, respectively. The unamortized costs of
unvested stock awards, aggregating approximately $78.3 million at December 31,
1996, are being amortized over the ten-year vesting periods.
Fixed stock options are granted to key employees of the Company and
affiliated companies and have a maximum term of 10 years. The exercise price of
each fixed option equals the market price of the Company's common stock on the
date of grant. These options generally vest in installments beginning in the
third year and extending through the eighth year after grant.
To demonstrate his commitment to enhance shareholder value, the Company's
Chief Executive Officer requested that his annual salary and bonus be reduced to
$1 per year effective January 1, 1996. The Compensation Committee of the Board
of Directors, in acceding to this request, considered alternative compensation
arrangements for the Chief Executive Officer based upon the Board's own desire
to improve shareholder value, and accordingly in April 1996 granted the Chief
Executive Officer a ten-year option to purchase one million shares of Company
common stock. This option, however, will become exercisable only if the price of
Company common stock exceeds $41 per share within three years of the date of
grant or, if that target is not exceeded, exceeds $50 per share within five
years of the date of grant. The exercise price of this option is set at either
$41 or $50 per share, based on whether the three-year or five-year target is
met. The option will expire unexercised if neither target price is met.
As a demonstration of their commitment to enhance shareholder value, the
officers and other key employees of the Company have also agreed to have a
significant portion of their compensation tied to stock options, with a grant
date fair value exercise price of $32, which are subject to accelerated
exercisability if the price of Company common stock exceeds $41 per share within
three years of the date of grant or, if that target is not met, exceeds $50 per
share within five years of the date of grant. Such options were granted for
approximately 1,615,000 shares of Company common stock in 1996. In addition, the
executive officers were granted career stock awards with annual vestings
commencing if and when the Company common stock price reaches $50 per share by
April 2001; if such stock price is not achieved, then vesting of these awards
will commence at retirement.
30
<PAGE> 32
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK OPTIONS AND AWARDS -- (CONCLUDED)
A summary of the status of the Company's stock options granted under the
Plan or prior plans for the three years ended December 31, 1996 is presented
below.
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Option shares outstanding, January 1........... 5,456 5,510 5,686
Weighted average exercise price.............. $23 $23 $22
Option shares granted.......................... 2,680 205 73
Weighted average exercise price.............. $35 $28 $37
Option shares exercised........................ 467 196 224
Weighted average exercise price.............. $21 $21 $21
Option shares cancelled........................ 361 63 25
Weighted average exercise price.............. $22 $21 $21
Option shares outstanding, December 31......... 7,308 5,456 5,510
Weighted average exercise price.............. $28 $23 $23
Weighted average remaining option term (in
years).................................... 5.5 4.3 5.1
Option shares exercisable, December 31......... 2,807 2,916 2,445
Weighted average exercise price.............. $24 $24 $24
</TABLE>
At December 31, 1996, a combined total of 8,188,000 shares of Company
common stock was available for the granting of stock options and long-term stock
awards under the Plan.
The Company has elected to continue to apply the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
and, accordingly, stock options do not constitute compensation expense in the
determination of net income in the statement of operations. Had stock option
compensation expense been determined pursuant to the methodology of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," the pro forma effect for 1996 would have been a reduction in the
Company's earnings per share of approximately $.03 or less than two percent,
which would not have been material.
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 1996, 1995 or 1994. At December 31, 1996, there were 4,695,000
of such shares available for granting future awards under this plan.
The data in this note include discontinued operations.
31
<PAGE> 33
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EMPLOYEE RETIREMENT PLANS
The Company sponsors defined-benefit pension plans and defined-contribution
retirement 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 Company's pension and profit-sharing plans were $24.4 million in 1996,
$24.0 million in 1995 and $17.5 million in 1994.
Net periodic pension cost for the Company's qualified pension plans
includes the following components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- -------- --------
<S> <C> <C> <C>
Service cost.................................. $ 6,220 $ 5,050 $ 5,930
Interest cost................................. 9,450 8,430 7,830
Actual (return) loss on assets................ (7,070) (11,550) 2,780
Net amortization and deferral................. (2,610) 2,550 (13,700)
------- -------- --------
Net periodic pension cost..................... $ 5,990 $ 4,480 $ 2,840
======= ======== ========
</TABLE>
The funded status of the Company's qualified pension plans is summarized as
follows, in thousands, at December 31:
<TABLE>
<CAPTION>
1996 1995
------------------------- -------------------------
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.............. $ 71,060 $30,920 $ 69,100 $ 28,750
======== ======= ======== ========
Accumulated benefit
obligation.............. 73,400 32,110 71,440 31,620
======== ======= ======== ========
Projected benefit
obligation.............. 97,430 32,110 94,830 31,620
Assets at fair value........... 76,910 25,130 73,690 16,090
-------- ------- -------- --------
Projected benefit obligation
in excess of plan
assets.................... (20,520) (6,980) (21,140) (15,530)
Reconciling items:
Unrecognized net loss........ 18,830 6,210 27,750 7,890
Unrecognized prior service
cost...................... 60 3,690 (3,960) 3,300
Unrecognized net (asset)
obligation at
transition................ (2,530) (890) (3,090) (260)
Requirement to recognize
minimum liability......... -- (9,010) -- (10,930)
-------- ------- -------- --------
Accrued pension cost........... $ (4,160) $(6,980) $ (440) $(15,530)
======== ======= ======== ========
</TABLE>
Major assumptions used in accounting for the Company's pension plans are as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ------ -----
<S> <C> <C> <C>
Discount rate for obligations....................... 7.5% 7.25% 8.5%
Rate of increase in compensation levels............. 5.0% 5.0 % 5.0%
Expected long-term rate of return on plan assets.... 11.0% 11.0 % 13.0%
</TABLE>
32
<PAGE> 34
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EMPLOYEE RETIREMENT PLANS -- (CONCLUDED)
In addition to the Company's qualified pension plans, the Company has
non-qualified unfunded supplemental pension plans covering certain employees,
which provide for pension benefits in addition to those provided by the
qualified pension plans. The actuarial present value of accumulated benefit
obligations and projected benefit obligations related to the Company's
non-qualified pension plans totalled $24.7 million and $30.2 million, and $17.6
million and $24.6 million at December 31, 1996 and 1995, respectively; net
periodic pension cost for these plans was $4.9 million, $3.7 million and $2.3
million in 1996, 1995, and 1994, respectively.
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, 1996,
the aggregate present value of the accumulated postretirement benefit obligation
approximated $4.0 million.
SEGMENT INFORMATION
The Company is engaged principally in the manufacture, installation and
sale of home improvement and building products. In 1996, the Company categorized
its home improvement and building products businesses into the following
segments:
Kitchen and Bath Products - kitchen and bath cabinets; kitchen
appliances; faucets; plumbing fittings; bath and shower tubs and
enclosures; whirlpools and spas; and bath accessories.
Other Specialty Products - builders' hardware, including mechanical and
electronic lock sets; venting and ventilating equipment; insulation;
and water pumps.
These products are sold to the home improvement and home construction
markets through mass merchandisers, hardware stores, home centers, distributors,
wholesalers and other outlets for consumers and contractors.
The Company's operations are principally located in North America and
Europe. Segment information for 1995 and 1994 has been reclassified to conform
to the current year presentation.
Corporate assets consist primarily of real property, cash and cash
investments 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 $7
million in 1996, $9 million in 1995 and $11 million in 1994 and is included as a
reduction of general corporate expense.
33
<PAGE> 35
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEGMENT INFORMATION -- (CONCLUDED)
The following table presents information about the Company by product
segment and geographic area:
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES(1)(2) OPERATING PROFIT ASSETS AT DECEMBER 31
---------------------------------- ---------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company's operations by
segment were:
Kitchen and Bath
Products............. $2,519,000 $2,283,000 $2,077,000 $462,000 $411,000 $441,000 $1,646,000 $1,445,000 $1,293,000
Other Specialty
Products............. 718,000 644,000 506,000 104,000 82,000 70,000 632,000 591,000 459,000
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Total................ $3,237,000 $2,927,000 $2,583,000 $566,000 $493,000 $511,000 $2,278,000 $2,036,000 $1,752,000
========== ========== ========== ======== ======== ======== ========== ========== ==========
The Company's operations by
geographic area were:
North America.......... $2,680,000 $2,441,000 $2,247,000 $479,000 $407,000 $437,000 $1,667,000 $1,623,000 $1,400,000
European Union......... 557,000 486,000 336,000 87,000 86,000 74,000 611,000 413,000 352,000
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Total................ $3,237,000 $2,927,000 $2,583,000 566,000 493,000 511,000 2,278,000 2,036,000 1,752,000
========== ========== ==========
Other (income) expense, net.................................... (22,000) 51,000 138,000
General corporate expense, net................................. 85,000 90,000 80,000
-------- -------- --------
Income from continuing operations before income taxes(3)....... $503,000 $352,000 $293,000
======== ======== ========
Equity investments in and receivable from affiliates......................................... 220,000 265,000 242,000
Securities of Furnishings International Inc.................................................. 356,000 -- --
Corporate assets............................................................................. 848,000 425,000 454,000
Net assets of discontinued operations........................................................ -- 1,053,000 1,729,000
---------- ---------- ----------
Total assets........................................................................... $3,702,000 $3,779,000 $4,177,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS(4) AMORTIZATION
---------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
-------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by segment were:
Kitchen and Bath Products.................................... $116,000 $111,000 $113,000 $58,000 $51,000 $41,000
Other Specialty Products..................................... 42,000 43,000 20,000 21,000 20,000 15,000
-------- -------- -------- ---------- ---------- ----------
Total.................................................... $158,000 $154,000 $133,000 $79,000 $71,000 $56,000
======== ======== ======== ========== ========== ==========
</TABLE>
(1) Included in net sales in 1996, 1995 and 1994 are export sales from the U.S.
of $46.2 million, $40.9 million and $45.5 million, respectively.
(2) Intra-company sales between segments and geographic areas represented less
than one percent of consolidated net sales in 1996, 1995 and 1994.
(3) Income from continuing operations before income taxes and net income
pertaining to continuing foreign operations were $82 million and $40
million, $96 million and $52 million, and $94 million and $56 million for
1996, 1995 and 1994, respectively.
(4) Property additions include assets of acquired companies.
34
<PAGE> 36
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
Re: MascoTech, Inc.:
Equity earnings (loss)....................... $ 13,860 $ 18,200 $(106,110)
-------- -------- ---------
Gain from sale of investments, net........... 67,800 -- --
-------- -------- ---------
Equity earnings, other affiliates.............. 6,230 8,010 6,630
-------- -------- ---------
Other, net:
Income from cash and cash investments........ 6,910 2,600 1,480
Other interest income........................ 20,710 4,500 4,950
Other items.................................. (18,630) (10,060) 16,660
-------- -------- ---------
8,990 (2,960) 23,090
-------- -------- ---------
Interest expense............................... (74,680) (73,800) (61,530)
-------- -------- ---------
$ 22,200 $(50,550) $(137,920)
======== ======== =========
</TABLE>
Other interest income for 1996 includes $14.0 million of interest income
from the 12% pay-in-kind junior debt securities of Furnishings International
Inc.
Other items in 1996 include $36.3 million of fourth quarter charges
primarily related to adjustments of miscellaneous assets to their estimated fair
value.
Interest expense is presented net of interest expense pertaining to
discontinued operations of $21.8 million, $44.0 million and $43.2 million in
1996, 1995 and 1994, respectively.
Equity earnings from MascoTech for 1994 were $32 million, prior to the
Company's pre-tax equity share of MascoTech's non-cash 1994 fourth quarter
charge.
35
<PAGE> 37
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Income from continuing operations before
income taxes:
Domestic................................... $420,560 $256,190 $199,000
Foreign.................................... 82,140 95,600 93,830
-------- -------- --------
$502,700 $351,790 $292,830
======== ======== ========
Provision for income taxes:
Currently payable:
Federal.................................... $119,250 $ 84,230 $106,550
State and local............................ 18,280 14,740 13,950
Foreign.................................... 41,120 34,530 31,550
Deferred:
Federal.................................... 27,880 9,300 (38,510)
Foreign.................................... 970 8,940 6,580
-------- -------- --------
$207,500 $151,740 $120,120
======== ======== ========
Deferred tax assets at December 31:
Intangibles................................... $ 27,350 $ 29,340
Inventories................................... 12,870 8,910
Accrued liabilities........................... 53,660 40,430
Capital loss carryforward..................... 163,960 --
Other, principally equity investments......... 46,470 50,000
-------- --------
304,310 128,680
Valuation allowance........................... (206,310) --
-------- --------
98,000 128,680
-------- --------
Deferred tax liabilities at December 31:
Property and equipment........................ 116,000 102,550
Other......................................... 10,580 25,860
-------- --------
126,580 128,410
-------- --------
Net deferred tax liability (asset) at December
31............................................ $ 28,580 $ (270)
======== ========
</TABLE>
Net deferred tax liability (asset) at December 31, 1996 and 1995 consists
of net short-term deferred tax assets of $14.5 million and $44.3 million,
respectively, and net long-term deferred tax liabilities of $43.1 million and
$44.0 million, respectively.
A valuation allowance of $206.3 million has been recorded at December 31,
1996 due to the Company's inability to quantify the portion of its capital loss
benefit which may ultimately be realized. Such capital loss benefit results from
a $164.0 million after-tax capital loss carryforward on the disposition of the
Company's home furnishings products segment and a $42.3 million after-tax future
deductible temporary difference of a capital nature on the Company's equity
investments.
At December 31, 1995, the Company had estimated a potential unrecorded
deferred tax asset of $230.0 million from the anticipated loss on disposition of
its home furnishings products segment. Following this disposition, the Company
estimates the potential useable capital loss benefit to be approximately $200.0
million. The 1996 tax provision included $36.0 million of this previously
36
<PAGE> 38
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES -- (CONCLUDED)
unrecorded benefit, which was offset by the $42.3 million tax provision for the
valuation allowance provided on the deferred tax asset pertaining to the
Company's equity investments.
The following is a reconciliation of the U.S. federal statutory rate to the
effective tax rate allocated to income from continuing operations before income
tax:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate................................. 35% 35% 35%
State and local taxes, net of federal tax benefit........... 2 3 3
Higher taxes on foreign earnings............................ 3 5 4
Dividends-received deduction................................ -- -- (2)
Amortization in excess of tax............................... 1 1 1
Valuation allowance, net of capital loss benefit............ 1 -- --
Other, net.................................................. (1) (1) --
--- --- ---
Effective tax rate on income from continuing operations... 41% 43% 41%
=== === ===
</TABLE>
Income taxes paid were approximately $201 million, $170 million and $175
million in 1996, 1995 and 1994, respectively. Amounts paid include taxes on
discontinued operations.
Earnings of foreign subsidiaries generally become subject to U.S. tax upon
the remittance of dividends and under certain other circumstances. Provision has
not been made at December 31, 1996 for U.S. or additional foreign withholding
taxes on approximately $32 million of remaining undistributed earnings of
foreign subsidiaries, as those earnings are intended to be permanently
reinvested; it is not practical to estimate the amount of deferred tax liability
on such earnings.
37
<PAGE> 39
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED FINANCIAL STATEMENTS (UNAUDITED)
The following presents the combined financial statements of the Company,
MascoTech, Inc. and TriMas Corporation as one entity, with Masco Corporation as
the parent company. These combined financial statements present the Company's
home furnishings products segment as discontinued operations. (See "Discontinued
Operations" note.) Intercompany transactions have been eliminated. Amounts,
except earnings per share, are in thousands.
<TABLE>
<CAPTION>
AT DECEMBER 31
------------------------
1996 1995
---------- ----------
<S> <C> <C>
COMBINED BALANCE SHEETS
Assets
Current assets:
Cash and cash investments........................... $ 599,020 $ 169,240
Marketable securities............................... 37,760 4,120
Receivables......................................... 674,530 727,300
Prepaid expenses and other.......................... 81,320 52,160
Deferred income taxes............................... 53,670 95,650
Net current assets of businesses held for 85,980 62,410
disposition......................................
Inventories:
Raw material..................................... 238,250 230,290
Finished goods................................... 209,590 198,680
Work in process.................................. 125,950 142,700
---------- ----------
573,790 571,670
---------- ----------
Total current assets........................... 2,106,070 1,682,550
Equity investments in affiliates...................... 221,380 199,330
Securities of Furnishings International Inc........... 356,340 --
Property and equipment................................ 1,523,590 1,496,840
Excess of cost over acquired net assets............... 660,690 618,190
Net non-current assets of businesses held for 22,850 104,510
disposition.........................................
Net assets of discontinued operations................. -- 1,052,670
Other assets.......................................... 415,280 390,300
---------- ----------
Total assets................................... $5,306,200 $5,544,390
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable....................................... $ 16,620 $ 31,050
Accounts payable.................................... 241,420 249,330
Accrued liabilities................................. 501,800 406,570
---------- ----------
Total current liabilities...................... 759,840 686,950
Long-term debt........................................ 2,020,400 2,466,210
Deferred income taxes and other....................... 300,170 271,030
Other interests in combined affiliates................ 385,980 464,770
---------- ----------
Total liabilities.............................. 3,466,390 3,888,960
Equity of shareholders of Masco Corporation........... 1,839,810 1,655,430
---------- ----------
Total liabilities and shareholders' equity..... $5,306,200 $5,544,390
========== ==========
</TABLE>
38
<PAGE> 40
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
COMBINED STATEMENTS OF OPERATIONS
Net sales............................... $ 5,095,710 $ 5,141,160 $ 4,807,560
Cost of sales........................... (3,476,820) (3,598,140) (3,307,870)
Selling, general and administrative (933,250) (938,480) (855,390)
expenses..............................
Gains (charge) on disposition of (31,520) 5,290 (400,000)
businesses, net.......................
----------- ----------- -----------
Operating profit................. 654,120 609,830 244,300
----------- ----------- -----------
Other income (expense), net:
Interest expense...................... (115,460) (137,230) (124,290)
Other, net............................ 106,810 26,990 81,070
----------- ----------- -----------
(8,650) (110,240) (43,220)
----------- ----------- -----------
Income from continuing operations 645,470 499,590 201,080
before income taxes and other
interests.....................
Income taxes............................ 279,830 230,850 118,230
Other interests in combined 70,440 68,690 (89,860)
affiliates............................
----------- ----------- -----------
Income from continuing 295,200 200,050 172,710
operations....................
----------- ----------- -----------
Discontinued operations (net of income
taxes):
Income from operations............. -- 8,270 20,990
Loss on disposition, net........... -- (650,000) --
----------- ----------- -----------
Net income (loss)................ $ 295,200 $ (441,680) $ 193,700
=========== =========== ===========
Earnings (loss) per share:
Continuing operations................. $1.84 $ 1.25 $1.09
Discontinued operations:
Income from operations............. -- .05 .13
Loss on disposition, net........... -- (4.07) --
----------- ----------- -----------
Earnings (loss) per share........ $1.84 $(2.77) $1.22
=========== =========== ===========
</TABLE>
39
<PAGE> 41
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMBINED FINANCIAL STATEMENTS (UNAUDITED) -- (CONCLUDED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-----------------------------------
1996 1995 1994
----------- --------- ---------
<S> <C> <C> <C>
COMBINED STATEMENTS OF CASH FLOWS
Cash Flows From (For) Operating Activities:
Income from continuing operations........ $ 295,200 $ 200,050 $ 172,710
Depreciation and amortization............ 167,080 158,640 161,170
Equity earnings, net..................... (12,730) (5,860) (6,850)
Deferred income taxes.................... 39,590 75,130 (96,480)
(Gains) charge on disposition of
businesses, net....................... 31,520 (5,290) 400,000
Gain from change in investment........... -- (5,100) --
Other interests in net income (loss) of
combined affiliates, net.............. 70,440 68,690 (89,860)
(Increase) decrease in receivables....... 1,230 (83,240) (70,970)
(Increase) decrease in inventories....... 14,870 (15,250) (66,150)
Increase in accounts payable and accrued
liabilities, net...................... 93,700 28,640 72,220
Discontinued operations, net............. (19,240) 62,560 (5,910)
Other, net............................... (40,050) (2,500) (5,990)
----------- --------- ---------
Net cash from operating
activities....................... 641,610 476,470 463,890
----------- --------- ---------
Cash Flows From (For) Investing Activities:
Capital expenditures..................... (207,600) (284,350) (261,320)
Acquisitions, net of cash acquired....... (247,800) (23,850) (126,830)
Cash proceeds from sale of discontinued
operations............................ 707,630 -- --
Proceeds from sale of subsidiaries....... 223,720 122,190 41,220
Proceeds from sale of Formica
investment............................ -- 74,470 --
Other, net............................... (34,200) 52,440 (41,250)
Discontinued operations, net............. -- (38,290) (78,290)
----------- --------- ---------
Net cash from (for) investing
activities....................... 441,750 (97,390) (466,470)
----------- --------- ---------
Cash Flows From (For) Financing Activities:
Increase in debt......................... 570,520 577,290 659,680
Payment of debt.......................... (1,063,720) (855,250) (406,800)
Repurchase of common stock............... (14,040) (13,130) (115,860)
Cash dividends paid...................... (146,340) (137,380) (128,150)
Discontinued operations, net............. -- 12,480 (48,250)
----------- --------- ---------
Net cash (for) financing
activities....................... (653,580) (415,990) (39,380)
----------- --------- ---------
Cash and Cash Investments:
Increase (decrease) for the year......... 429,780 (36,910) (41,960)
At January 1............................. 169,240 206,150 248,110
----------- --------- ---------
At December 31........................... $ 599,020 $ 169,240 $ 206,150
=========== ========= =========
</TABLE>
40
<PAGE> 42
MASCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUARTERS ENDED
---------------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
----------- ------------ -------- --------
<S> <C> <C> <C> <C>
1996:
Net sales........................ $ 843,000 $843,000 $787,000 $764,000
Gross profit..................... $ 293,830 $321,000 $290,430 $283,670
Net income:
Income......................... $ 83,400 $ 81,800 $ 68,000 $ 62,000
Income per share............... $.52 $.51 $.42 $.39
1995:
Net sales........................ $ 754,000 $738,000 $714,000 $721,000
Gross profit..................... $ 256,950 $276,670 $264,880 $282,170
Income from continuing
operations:
Income......................... $ 10,650 $ 62,070 $ 57,410 $ 69,920
Income per share............... $.06 $.39 $.36 $.44
Net income (loss):
Income (loss).................. $(646,580) $ 67,100 $ 63,400 $ 74,400
Income (loss) per share........ $(4.06) $.42 $.40 $.47
</TABLE>
The fourth quarter of 1996 includes a $67.8 million net pre-tax gain from
the sale of certain MascoTech, Inc. investments ($40.7 million after-tax or $.25
per share). This gain was principally offset by fourth quarter charges
aggregating $49.1 million pre-tax ($37.5 million after-tax or $.23 per share)
primarily for adjustments of miscellaneous assets to their estimated fair value.
Fourth quarter 1995 net loss and loss per share reflect the Company's $650
million non-cash pre-tax and after-tax charge for the disposition of its home
furnishings products segment.
Quarterly net sales and gross profit amounts exclude net sales and gross
profit of the Company's home furnishings products segment, which the Company
classified as discontinued operations during the fourth quarter of 1995. Net
sales and gross profit of the Company's home furnishings products segment for
the 1995 quarters ended March 31, June 30, September 30 and December 31 were
$505 million and $128.4 million, $494 million and $121.2 million, $497 million
and $115.5 million and $518 million and $123.8 million, respectively.
41
<PAGE> 43
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 1997 Annual
Meeting of Stockholders, to be filed on or before April 30, 1997, 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 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, 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 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, 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 1997 Annual Meeting of Stockholders, to be
filed on or before April 30, 1997, and such information is incorporated herein
by reference.
42
<PAGE> 44
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,
1996 and 1995, and for the years ended December 31, 1996, 1995 and
1994, consist of the following:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
<TABLE>
<S> <C> <C>
(i) Financial Statement Schedule of the Company appended hereto,
as required for the years ended December 31, 1996, 1995 and
1994, consists of the following:
II. Valuation and Qualifying Accounts
(ii) (A) MascoTech, Inc. and Subsidiaries Consolidated Financial
Statements appended hereto, at December 31, 1996 and 1995,
and for the years ended December 31, 1996, 1995 and 1994,
consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(B) MascoTech, Inc. and Subsidiaries Financial Statement
Schedule appended hereto, for the years ended December 31,
1996, 1995 and 1994, consists of the following:
II. Valuation and Qualifying Accounts
</TABLE>
(3) Exhibits.
<TABLE>
<S> <C> <C>
3.i Restated Certificate of Incorporation of Masco Corporation
and amendments thereto.
3.ii Bylaws of Masco Corporation, as amended.(5)
4.a.i Indenture dated as of December 1, 1982 between Masco
Corporation and Morgan Guaranty Trust Company of New York,
as Trustee, and Directors' resolutions establishing Masco
Corporation's: (i) 9% Notes Due October 1, 2001 (all filed
herewith), (ii) 6 5/8% Notes Due September 15, 1999(7),
(iii) 6 1/8% Notes Due September 15, 2003(6), and (iv)
7 1/8% Debentures Due August 15, 2013.(6)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee
dated as of July 25, 1994 among Masco Corporation, Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago.(4)
4.a.iii Supplemental Indenture dated as of July 26, 1994 between
Masco Corporation and The First National Bank of Chicago.(4)
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.
4.c $750,000,000 Amended and Restated Credit Agreement dated as
of November 14, 1996 among Masco Corporation, the banks
party thereto and Morgan Guaranty Trust Company of New York,
as agent.
</TABLE>
43
<PAGE> 45
<TABLE>
<S><C>
4.d Rights Agreement dated as of December 6, 1995 between Masco
Corporation and The Bank of New York, as Rights Agent.(2)
4.e 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(5),
Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago and Supplemental Indenture dated as of
August 5, 1994 among MascoTech, Inc. and The First National
Bank of Chicago.(3)
4.f Credit Agreement dated as of February 28, 1997, by and among
MascoTech, Inc., the banks party thereto, NBD Bank, as agent
for the banks, and Comerica Bank, The Bank of New York,
NationsBank, N.A. and Bank of America Illinois, 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.).(2)
10.b Corporate Services Agreement dated as of January 1, 1987
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(7) and Amendment No. 1 dated as of
October 31, 1996.(1)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(2) and Amendment No. 1 dated as of
October 31, 1996.(1)
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 letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 (all filed herewith), and amendment to
Stock Repurchase Agreement included in Agreement dated as of
November 23, 1993.(5)
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
(Restated December 6, 1995).(2)
10.f Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(2)
10.g Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).(2)
10.h Masco Corporation 1984 Restricted Stock (Industries)
Incentive Plan (Restated December 6, 1995).(2)
10.i Masco Corporation 1984 Stock Option Plan (Restated December
6, 1995).(2)
10.j Masco Corporation Restricted Stock Incentive Plan (Restated
December 6, 1995).(2)
</TABLE>
44
<PAGE> 46
<TABLE>
<S><C>
10.k MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(2)
10.1 MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(2)
10.m MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).(2)
10.n Masco Corporation Supplemental Executive Retirement and
Disability Plan.(3)
10.o Masco Corporation Benefits Restoration Plan.(3)
10.p.i Form of Agreement dated June 29, 1989 between Masco
Corporation and certain of its officers.(5)
10.p.ii Registration Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco
Corporation and TriMas Corporation, Amendment dated as of
April 21, 1992, Amendment to Registration Agreement dated as
of January 5, 1993, Amendment to Registration Agreement
dated as of May 26, 1994, and Amendment to Registration
Agreement dated as of May 15, 1996.
10.q Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 between Masco Corporation and
MascoTech, Inc., including form of Note (5) and Amendment
No. 1 thereto dated as of October 31, 1996.(1)
10.r Registration Agreement dated as of March 31, 1993 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.).(5)
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).
10.t Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.(1) and related
promissory note.
10.u 12% Senior Note Due 2008 by Furnishings International Inc.
to Masco Corporation and Registration Rights Agreement dated
as of August 5, 1996 between Furnishings International Inc.
and Masco Corporation.
11 Computation of Primary and Fully Diluted Per Share Earnings
(Loss).
12 Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to Masco
Corporation's Financial Statements and Financial Statement
Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to MascoTech,
Inc.'s Financial Statements and Financial Statement
Schedule.
27 Financial Data Schedule.
</TABLE>
- -------------------------
(1) Incorporated by reference to the Exhibits filed with Masco Corporation's
Current Report on Form 8-K dated November 13, 1996.
(2) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1995.
(3) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994.
(4) Incorporated by reference to the Exhibits filed with Masco Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(5) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993.
45
<PAGE> 47
(6) Incorporated by reference to the Exhibits filed with Masco Corporation's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(7) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
THE COMPANY WILL FURNISH ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE
EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND
THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN
FURNISHING SUCH COPY OR COPIES.
(B) REPORTS ON FORM 8-K.
The following Current Report on Form 8-K was filed by Masco Corporation
during the quarter ended December 31, 1996:
1. Current Report on Form 8-K dated November 13, 1996 reporting under Item
5. "Other Events" the Company's sale of MascoTech, Inc. common stock and
warrants to purchase common stock.
46
<PAGE> 48
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 /s/ RICHARD G. MOSTELLER
------------------------------------
RICHARD G. MOSTELLER
Senior Vice President -- Finance
March 27, 1997
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> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- --------------------------------------------- and Chief Executive Officer
RICHARD A. MANOOGIAN
PRINCIPAL FINANCIAL OFFICER:
/s/ RICHARD G. MOSTELLER Senior Vice President -- Finance
- ---------------------------------------------
RICHARD G. MOSTELLER
PRINCIPAL ACCOUNTING OFFICER:
/s/ ROBERT B. ROSOWSKI Vice President -- Controller and
- --------------------------------------------- Treasurer
ROBERT B. ROSOWSKI
/s/ LILLIAN BAUDER Director
- ---------------------------------------------
LILLIAN BAUDER
/s/ ERWIN L. KONING Director
- ---------------------------------------------
ERWIN L. KONING
/s/ JOSEPH L. HUDSON, JR. Director
- ---------------------------------------------
JOSEPH L. HUDSON, JR.
/s/ WAYNE B. LYON Director
- ---------------------------------------------
WAYNE B. LYON
/s/ JOHN A. MORGAN Director
- ---------------------------------------------
JOHN A. MORGAN
/s/ ARMAN SIMONE Director
- ---------------------------------------------
ARMAN SIMONE
/s/ PETER W. STROH Director
- ---------------------------------------------
PETER W. STROH
</TABLE>
March 27, 1997
47
<PAGE> 49
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, for the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
II. Valuation and Qualifying Accounts....................... F-2
MascoTech, Inc. and Subsidiaries Consolidated Financial
Statements and Financial Statement Schedule............... F-3
</TABLE>
F-1
<PAGE> 50
MASCO CORPORATION
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ----------- -------------------------- ----------- -----------
ADDITIONS
--------------------------
BALANCE AT CHARGED CHARGED BALANCE AT
BEGINNING TO COSTS TO OTHER END OF
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- ---------- ------------ -------- ---------- ----------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, deducted from
accounts receivable in the
balance sheet:
1996.................... $16,260,000 $5,060,000 $ 640,000 $(4,010,000) $17,950,000
=========== ========== ========== =========== ===========
1995.................... $12,050,000 $6,450,000 $ 80,000 $(2,320,000) $16,260,000
=========== ========== ========== =========== ===========
1994.................... $ 9,010,000 $4,380,000 $1,230,000 $(2,570,000) $12,050,000
=========== ========== ========== =========== ===========
</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-2
<PAGE> 51
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 as of December 31, 1996 and 1995, and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 1996 and the financial statement schedule as
listed in Item 14(a)(2)(ii)(A) and (B) of this Form 10-K. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepting 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, 1996 and 1995, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
As discussed in the footnotes to the consolidated financial statements,
effective January 1, 1996, the Company changed its method of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 28, 1997
F-3
<PAGE> 52
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash investments................................. $ 19,400,000 $ 16,380,000
Marketable securities..................................... 37,760,000 4,120,000
Receivables............................................... 127,530,000 216,490,000
Inventories............................................... 69,640,000 94,420,000
Deferred and refundable income taxes...................... 39,180,000 51,300,000
Prepaid expenses and other assets......................... 14,480,000 21,630,000
Net current assets of businesses held for disposition..... 85,980,000 62,410,000
-------------- --------------
Total current assets................................. 393,970,000 466,750,000
Equity and other investments in affiliates.................. 282,470,000 237,530,000
Property and equipment, net................................. 388,460,000 466,450,000
Excess of cost over net assets of acquired companies........ 69,140,000 115,750,000
Notes receivable and other assets........................... 72,090,000 47,780,000
Net non-current assets of businesses held for disposition... 22,850,000 104,510,000
-------------- --------------
Total assets......................................... $1,228,980,000 $1,438,770,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 58,170,000 $ 99,710,000
Accrued liabilities....................................... 96,910,000 82,400,000
Current portion of long-term debt......................... 3,370,000 5,150,000
-------------- --------------
Total current liabilities............................ 158,450,000 187,260,000
Long-term debt held by Masco Corporation.................... 151,380,000 --
Other long-term debt........................................ 601,020,000 701,910,000
Deferred income taxes and other long-term liabilities....... 153,170,000 134,420,000
-------------- --------------
Total liabilities.................................... 1,064,020,000 1,023,590,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par: Authorized: 25 million;
Outstanding: 10.8 million (liquidation value -- $216
million)............................................... 10,800,000 10,800,000
Common stock, $1 par: Authorized: 250 million;
Outstanding: 37.3 million and 55.5 million............. 37,250,000 55,520,000
Paid-in capital........................................... 41,080,000 307,910,000
Retained earnings......................................... 61,060,000 32,380,000
Other..................................................... 14,770,000 8,570,000
-------------- --------------
Total shareholders' equity........................... 164,960,000 415,180,000
-------------- --------------
Total liabilities and shareholders' equity........... $1,228,980,000 $1,438,770,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 53
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales...................................... $ 1,281,220,000 $ 1,678,210,000 $ 1,702,260,000
Cost of sales.................................. (1,048,110,000) (1,397,880,000) (1,385,430,000)
--------------- --------------- ---------------
Gross profit............................... 233,110,000 280,330,000 316,830,000
Selling, general and administrative expenses... (132,260,000) (176,810,000) (194,680,000)
Gains (charge) on disposition of businesses,
net.......................................... (31,520,000) 5,290,000 (400,000,000)
--------------- --------------- ---------------
Operating profit (loss).................... 69,330,000 108,810,000 (277,850,000)
--------------- --------------- ---------------
Other income (expense), net:
Interest expense............................. (29,970,000) (49,900,000) (49,830,000)
Equity and interest income from affiliates... 40,460,000 31,420,000 29,810,000
Gain from change in investment of an equity
affiliate.................................. -- 5,100,000 --
Other, net................................... (2,600,000) 4,850,000 33,380,000
--------------- --------------- ---------------
7,890,000 (8,530,000) 13,360,000
--------------- --------------- ---------------
Income (loss) from continuing operations
before income taxes (credit),
extraordinary item and cumulative effect
of accounting change, net............... 77,220,000 100,280,000 (264,490,000)
Income taxes (credit).......................... 37,300,000 41,090,000 (30,070,000)
--------------- --------------- ---------------
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting change, net........ 39,920,000 59,190,000 (234,420,000)
Gain on disposition of discontinued energy
operations (net of income taxes)............. -- -- 11,700,000
--------------- --------------- ---------------
Income (loss) before extraordinary item and
cumulative effect of accounting change,
net..................................... 39,920,000 59,190,000 (222,720,000)
Extraordinary income (net of income taxes)..... -- -- 2,600,000
Cumulative effect of accounting change (net of
income taxes)................................ 11,700,000 -- --
--------------- --------------- ---------------
Net income (loss).......................... $ 51,620,000 $ 59,190,000 $ (220,120,000)
=============== =============== ===============
Preferred stock dividends...................... $ 12,960,000 $ 12,960,000 $ 12,960,000
=============== =============== ===============
Earnings (loss) attributable to common
stock................................... $ 38,660,000 $ 46,230,000 $ (233,080,000)
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
1996
------------------
ASSUMING
FULL 1995 1994
PRIMARY DILUTION PRIMARY PRIMARY
------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings (loss) per common and
common equivalent share:
Continuing operations........................... $.50 $.49 $.81 $(4.20)
Gain on disposition of discontinued
energy operations............................. -- -- -- .20
------ ------ ------ -------
Income (loss) before extraordinary
item and cumulative effect of
accounting change, net........................ .50 .49 .81 (4.00)
Extraordinary income............................ -- -- -- .04
Cumulative effect of accounting
change, net................................... .22 .21 -- --
------ ------ ------ -------
Earnings (loss) attributable to
common stock.................................. $.72 $.70 $.81 $(3.96)
====== ====== ====== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 54
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATING ACTIVITIES:
Net income (loss)................................ $ 51,620,000 $ 59,190,000 $(220,120,000)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities, excluding
reclassification of businesses held for
disposition:
(Gains) charge on disposition of businesses,
net......................................... 31,520,000 (5,290,000) 400,000,000
Gain from change in investment of an equity
affiliate.................................... -- (5,100,000) --
Gains from sales of TriMas common stock....... -- -- (17,900,000)
Depreciation and amortization................. 44,470,000 47,070,000 66,760,000
Equity earnings, net of dividends............. (31,650,000) (23,360,000) (23,720,000)
Deferred income taxes......................... 8,640,000 51,330,000 (67,760,000)
(Increase) decrease in marketable securities,
net......................................... (24,890,000) 57,990,000 (34,320,000)
Decrease (increase) in receivables............ 10,200,000 (21,910,000) (37,940,000)
Decrease (increase) in inventories............ 19,190,000 4,650,000 (23,390,000)
Decrease (increase) in prepaid expenses and
other current assets......................... 38,650,000 (1,900,000) (32,860,000)
Increase (decrease) in accounts payable and
accrued liabilities.......................... 9,320,000 (9,070,000) 65,330,000
Other, net, including extraordinary item...... (8,820,000) 2,390,000 (6,000,000)
Net assets of businesses held for disposition,
net, including cumulative effect of
accounting change............................ (19,240,000) 2,190,000 (30,410,000)
------------- ------------- -------------
Net cash from operating activities.......... 129,010,000 158,180,000 37,670,000
------------- ------------- -------------
FINANCING ACTIVITIES:
Issuance of convertible debt..................... -- -- 337,240,000
Increase in other debt........................... 5,220,000 79,460,000 82,730,000
Payment or repurchase of other debt.............. (114,900,000) (253,770,000) (349,230,000)
Retirement of Company Common Stock............... (14,040,000) (13,130,000) (54,130,000)
Repurchase of Company Common Stock and warrants
from Masco Corporation for cash................. (116,000,000) -- --
Payment of dividends............................. (22,940,000) (21,000,000) (18,980,000)
Other, net....................................... (8,610,000) (2,250,000) (5,010,000)
------------- ------------- -------------
Net cash used for financing activities...... (271,270,000) (210,690,000) (7,380,000)
------------- ------------- -------------
INVESTING ACTIVITIES:
Cash received from sales of TriMas securities.... -- -- 18,180,000
Cash received from sale of businesses............ 223,720,000 122,190,000 41,220,000
Acquisition of businesses........................ (47,200,000) (23,850,000) --
Capital expenditures............................. (42,390,000) (95,800,000) (115,220,000)
Receipt of cash from notes receivable............ 9,300,000 6,570,000 14,640,000
Other, net....................................... 1,850,000 (2,170,000) (10,360,000)
------------- ------------- -------------
Net cash from (used for) investing
activities............................... 145,280,000 6,940,000 (51,540,000)
------------- ------------- -------------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year................. 3,020,000 (45,570,000) (21,250,000)
At January 1..................................... 16,380,000 61,950,000 83,200,000
------------- ------------- -------------
At December 31.............................. $ 19,400,000 $ 16,380,000 $ 61,950,000
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 55
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; ownership
less than 20 percent is accounted for on the cost basis unless the Company
exercises significant influence over the investee. Capital transactions by
equity affiliates, which change the Company's ownership interest at amounts
differing from the Company's carrying amount, are reflected in other income or
expense and the investment in affiliates account.
The consolidated balance sheet at December 31, 1996 reflects the
segregation of net current and net non-current assets related to the disposition
of the Company's Technical Services Group ("TSG") and, at December 31, 1995,
reflects the segregation of assets related to the plan adopted in late 1994 to
dispose of certain businesses.
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1996 owned approximately 21 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, aggregated approximately $7 million in
1996, $9 million in 1995, and $11 million in 1994.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Such estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting periods. Actual results may differ
from such estimates and assumptions.
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.
Marketable Securities. The Company's marketable equity securities holdings
are categorized as either trading or available-for-sale securities, and, as a
result, are stated at fair value. Changes in the fair value of trading
securities are recognized in earnings and the changes in the fair value of
available-for-sale securities are recorded in shareholders' equity, net of
deferred taxes.
Receivables. Receivables are presented net of allowances for doubtful
accounts of approximately $2.0 million at both December 31, 1996 and 1995.
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
F-7
<PAGE> 56
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 the excess of cost over net assets of acquired companies at December
31, 1996.
At December 31, 1996 and 1995, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $29.4 million and
$42.3 million, respectively. Amortization expense was $8.5 million, $13.7
million and $22.9 million in 1996, 1995 and 1994, respectively.
Income Taxes. The Company records income taxes in accordance with 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. A provision has not been made
for U.S. or additional foreign withholding taxes on approximately $47 million of
undistributed earnings of foreign subsidiaries as those earnings are intended to
be permanently reinvested. Generally, such earnings become subject to U.S. tax
upon the remittance of dividends and under certain other circumstances. It is
not practicable to estimate the amount of deferred tax liability on such
undistributed earnings.
Earnings (Loss) Per Common Share. Primary earnings per common share are
based on the weighted average shares of common stock and common stock
equivalents outstanding (including the dilutive effect of options and warrants,
utilizing the treasury stock method) of 53.8 million and 57.1 million in 1996
and 1995, respectively. Primary loss per common share in 1994 is based on 58.9
million weighted average shares of common stock outstanding. The effect of
options and warrants on earnings per common share in 1994 would be
anti-dilutive. Primary earnings (loss) per common share are calculated on
earnings (loss) after deducting preferred stock dividends of $13.0 million in
each of 1996, 1995 and 1994.
Fully diluted earnings per common share is presented only when the assumed
conversion of convertible securities is dilutive. Convertible securities did not
have a dilutive effect on earnings (loss) per common share in 1996, 1995 or
1994. Fully diluted earnings per common share is presented in 1996 due to the
utilization of the treasury stock method.
In late 1996, the Company purchased from Masco Corporation 17 million
shares of MascoTech common stock and warrants to purchase 10 million shares of
MascoTech common stock. These shares and warrants have been retired. If such
retirement had taken place at the beginning of 1996, the pro forma primary and
fully diluted earnings per common and common equivalent share amounts would have
been $.78 and $.77, respectively, in 1996.
Recently Issued Accounting Pronouncements. At January 1, 1996, the Company
adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which resulted in a pre-tax gain
(because the fair value of the businesses being held for sale at January 1, 1996
exceeded the carrying value for such businesses) of $16.7 million ($11.7 million
after-tax), recorded as the cumulative effect of an accounting change. The pro
forma effect of the retroactive application of the change on the financial
statements for the years prior to 1996 has not been presented because the new
method did not have a material effect on the earnings reported for those years.
The Company adopted the disclosure requirements of SFAS No. 123, "Accounting for
F-8
<PAGE> 57
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock-Based Compensation," effective with the 1996 financial statements, and
elected to continue to measure compensation cost using the intrinsic value
method, in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly, no compensation cost for stock options has been
recognized. If compensation cost had been determined based on the estimated fair
value of options granted in 1996 and 1995, consistent with the methodology in
SFAS No. 123, the pro forma effects on the Company's net income and income per
common share would not have been material. SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and the American Institute of Certified Public Accountants' Statement of
Position No. 96-1, "Environmental Remediation Liabilities," become effective in
1997 and will not have a material impact on the Company's financial statements.
The Company expects that SFAS No. 128, "Earnings Per Share," will not have a
material impact on earnings per share when adopted in 1997.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1996: in addition to
cash received, approximately $25 million comprised of both common stock and
warrants (with a portion of the common stock subsequently sold for approximately
$14 million of cash), as consideration from the sale of MascoTech Stamping
Technologies, Inc.; in addition to the cash payment by the Company of $121
million, notes approximating $159 million were issued for the purchase of 18
million shares of the Company's Common Stock and warrants to purchase 10 million
shares of the Company's Common Stock (see "Shareholders' Equity" note); in 1995:
in addition to cash received, approximately $34 million comprised of both notes
receivable due from, and a 29 percent equity interest in, the acquiring company,
as consideration for a non-core business unit.
Income taxes paid (refunded) were $(12) million, $11 million and $28
million in 1996, 1995 and 1994, respectively. Interest paid was $30 million, $55
million and $61 million in 1996, 1995 and 1994, respectively.
DISPOSITIONS OF OPERATIONS:
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its architectural products,
defense and certain of its transportation-related products and services
businesses, as part of its long-term strategic plan to increase the focus on its
core operating capabilities. Through dates of sale, the businesses held for
disposition had sales of approximately $90 million, $468 million and $637
million in 1996, 1995 and 1994, respectively, and operating losses before gains
(charge) on disposition of businesses, net of $14 million, $11 million and $7
million in 1996, 1995 and 1994, respectively. At December 31, 1996, the Company
has substantially completed the disposition of such businesses, and the
liability for accrued exit costs approximates $17 million, including
approximately $11 million related to post-employment benefits.
The Company's carrying value of a number of the businesses disposed of
exceeded the estimated proceeds expected from such dispositions. To reflect the
estimated loss on the disposition of these businesses, the Company in 1994
recorded a non-cash charge aggregating $400 million pre-tax (approximately $315
million after-tax or $5.35 per common share) for those businesses for which a
loss was anticipated.
During 1995, the Company divested a number of such businesses, in separate
transactions, for aggregate proceeds of approximately $180 million, which
resulted in net gains of approximately $25 million. These net gains were
substantially offset by reductions in the estimated net proceeds the Company
expected to receive from certain remaining businesses to be sold, aggregating
approximately $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million.
In May, 1996, the Company sold MascoTech Stamping Technologies, Inc.
(MSTI), a wholly owned subsidiary, to Tower Automotive, Inc. (Tower) resulting
in an after-tax loss of approximately $26
F-9
<PAGE> 58
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
million ($.47 per common share), including after-tax losses of approximately $1
million related to the closure of a MSTI manufacturing facility not included in
the sale. The Company received initial consideration of approximately $80
million, consisting principally of $55 million in cash, 785,000 shares of Tower
common stock and warrants to purchase additional Tower common stock. The Company
applied the cash proceeds (including approximately $14 million received from the
subsequent sale of 600,000 shares of Tower common stock) to reduce its
indebtedness. The Company may receive additional consideration, contingent upon
the future earnings of MSTI over the next three years, which, if entirely
earned, would substantially offset the loss.
On January 3, 1997, the Company completed the sale of its Technical
Services Group (comprised of the Company's engineering and technical business
services units) to MSX International, Inc. Also included in this transaction
were the net assets of APX International which were acquired by the Company in
November, 1996 for approximately $44 million. The sale will result in total
proceeds to the Company of approximately $145 million, subject to certain
adjustments, consisting of cash, subordinated debentures, preferred stock and an
approximate 45 percent common equity interest in MSX International, Inc. Net
proceeds to the Company will approximate $90 million, after taking into account
the purchase price for APX International and taxes payable in connection with
this transaction. The excess of the consideration received by the Company over
the book value of the related net assets has been deferred and will be
recognized when cash is received. The net assets of the Technical Services Group
and APX International are reflected on the consolidated balance sheet as net
assets of businesses held for disposition at December 31, 1996. The Company has
not reflected any revenues or expenses in the consolidated statement of
operations related to APX International from the date of acquisition through
December 31, 1996 as control was deemed to be temporary.
The disposition of businesses held for sale or sold, including MSTI and
TSG, did not meet the criteria for discontinued operations treatment for
accounting purposes; accordingly, the sales and results of operations of these
businesses were included in continuing operations until disposition. Businesses
held for sale or sold, including MSTI and TSG, had sales of approximately $412
million, $874 million and $964 million in 1996, 1995 and 1994, respectively, and
operating income (losses) before gains (charge) on disposition of businesses,
net of $(13) million, $5 million and $8 million in 1996, 1995 and 1994,
respectively.
In late 1993, the Company adopted a plan to divest the business units in
its energy segment. Certain of the remaining business units were sold in 1994 at
prices greater than those used in estimating the loss on disposition in 1993,
resulting in a reversal in 1994 of approximately $18 million pre-tax ($11.7
million after-tax) of the charge established in 1993.
Amounts included in the consolidated balance sheet for net assets of
businesses held for disposition consist of the following at December 31, 1996
and 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
-------- --------
<S> <C> <C>
Receivables.............................................. $ 59,110 $ 49,510
Other current assets..................................... 46,050 88,000
Current liabilities...................................... (19,180) (75,100)
-------- --------
Net current assets..................................... 85,980 62,410
-------- --------
Property and equipment, net.............................. 22,090 26,180
Other non-current assets and liabilities, net............ 760 78,330
-------- --------
Net non-current assets................................. 22,850 104,510
-------- --------
Net assets of businesses held for disposition............ $108,830 $166,920
======== ========
</TABLE>
F-10
<PAGE> 59
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------
1996 1995
------- -------
<S> <C> <C>
Finished goods............................................. $21,020 $21,120
Work in process............................................ 20,360 38,480
Raw material............................................... 28,260 34,820
------- -------
$69,640 $94,420
======= =======
</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
--------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation.......................................... 41% 41% 41%
Emco Limited................................................ 43% 43% 43%
Titan Wheel International, Inc. ............................ 12% 15% 20%
</TABLE>
TriMas Corporation ("TriMas") is a diversified manufacturer of commercial,
industrial and consumer products. Emco Limited ("Emco") is a Canadian-based
manufacturer and distributor of building and other industrial products. Titan
Wheel International, Inc. ("Titan") is a manufacturer of wheels, tires and other
products for agricultural, construction and off-highway equipment markets. At
December 31, 1996, the investments in Titan common stock and in Emco convertible
and other debt are classified for accounting purposes as available-for-sale
securities. Accordingly, these investments have been recorded at fair value
which was in excess of their carrying value resulting in unrealized gains of
approximately $8 million pre-tax which have been reflected as an adjustment to
shareholders' equity, net of deferred taxes of $3 million, at December 31, 1996.
The carrying amount of investments in affiliates at December 31, 1996 and
1995 and quoted market values at December 31, 1996 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996
QUOTED 1996 1995
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
<S> <C> <C> <C>
Common stock:
TriMas Corporation............................ $362,690.. $101,880 $ 80,150
Emco Limited.................................. 65,130.. 49,400 43,720
Titan Wheel International, Inc................ 42,280.. 42,280 32,240
-------- -------- --------
Common stock holdings........................... 470,100.. 193,560 156,110
Convertible and other debt:
Emco Limited.................................. 35,130.. 35,130 32,390
-------- -------- --------
Investments in publicly traded affiliates....... $505,230.. 228,690 188,500
========
Other non-public affiliates..................... 53,780 49,030
-------- --------
Total........................................... $282,470 $237,530
======== ========
</TABLE>
F-11
<PAGE> 60
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1994, the Company sold a portion of its common stock holdings in
TriMas, decreasing the Company's common equity ownership interest in TriMas to
41 percent, and resulting in a pre-tax gain of $17.9 million.
In June, 1995, Titan sold newly issued common stock in a public offering
and issued common stock as a result of the conversion of convertible securities.
The Company recognized pre-tax income of approximately $5.1 million as a result
of the change in the Company's common equity ownership interest in Titan.
In December, 1996, Titan called for redemption its 4 3/4% Convertible
Subordinated Notes which resulted in the issuance of approximately 4.5 million
common shares, reducing the Company's common equity ownership interest in Titan
to approximately 12 percent. As a result, the investment in Titan has been
classified for accounting purposes as available-for-sale.
In addition to its equity and other investments in publicly traded
affiliates, the Company has equity and other investment interests in privately
held manufacturers of automotive components, including the Company's common
equity ownership interest in Delco Remy International, Inc., a manufacturer of
automotive electric motors and other components (acquired in 1994), and Saturn
Electronics & Engineering, Inc., a manufacturer of electromechanical and
electronic automotive components (acquired in 1995).
Equity in undistributed earnings of affiliates of $57 million at December
31, 1996, $38 million at December 31, 1995 and $24 million at December 31, 1994
are included in consolidated retained earnings.
Approximate combined condensed financial data of the Company's equity
affiliates accounted for under the equity method are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1996 1995
--------- ---------
<S> <C> <C>
Current assets......................................... $ 839,250 $ 985,310
Current liabilities.................................... (342,980) (413,290)
--------- ---------
Working capital...................................... 496,270 572,020
Property and equipment, net............................ 453,350 581,670
Excess of cost over net assets of acquired companies... 257,160 261,300
Other assets........................................... 78,990 90,180
Long-term debt......................................... (655,370) (745,480)
Deferred income taxes and other long-term
liabilities.......................................... (73,680) (60,240)
--------- ---------
Shareholders' equity................................. $ 556,720 $ 699,450
========= =========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $2,959,980 $2,729,260 $1,989,670
========== ========== ==========
Operating profit........................... $ 269,440 $ 235,510 $ 174,850
========== ========== ==========
Earnings attributable to common stock...... $ 128,820 $ 92,700 $ 74,870
========== ========== ==========
</TABLE>
F-12
<PAGE> 61
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Equity and interest income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
The Company's equity in affiliates' earnings
available for common shareholders................ $35,190 $26,230 $25,970
Interest income.................................... 5,270 5,190 3,840
------- ------- -------
Equity and interest income from affiliates......... $40,460 $31,420 $29,810
======= ======= =======
</TABLE>
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................ $ 17,530 $ 16,030
Buildings............................................. 109,730 121,470
Machinery and equipment............................... 513,010 609,730
-------- --------
640,270 747,230
Less accumulated depreciation........................... 251,810 280,780
-------- --------
$388,460 $466,450
======== ========
</TABLE>
Depreciation expense totalled $37 million, $38 million and $44 million in
1996, 1995 and 1994, respectively.
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Salaries, wages and commissions........................... $15,930 $19,690
Income taxes.............................................. 2,810 3,260
Interest.................................................. 4,050 3,940
Insurance................................................. 33,940 30,880
Property, payroll and other taxes......................... 5,500 6,830
Other..................................................... 34,680 17,800
------- -------
$96,910 $82,400
======= =======
</TABLE>
F-13
<PAGE> 62
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
Bank revolving credit agreement......................... $250,000 $350,000
4 1/2% Convertible Subordinated Debentures, due 2003.... 310,000 310,000
6 5/8% Note held by Masco Corporation................... 151,380 --
Other................................................... 44,390 47,060
-------- --------
755,770 707,060
Less current portion of long-term debt.................. 3,370 5,150
-------- --------
Long-term debt.......................................... $752,400 $701,910
======== ========
</TABLE>
The interest rates applicable to the revolving credit agreement are
principally at alternative floating rates provided for in the agreement
(approximately six percent at December 31, 1996). In early 1997, the Company
amended the revolving credit agreement; as a result, the new $575 million
revolving credit agreement is due 2002.
The amended revolving credit agreement requires the maintenance of a
specified level of tangible shareholders' equity as defined, with limitations on
the ratios of senior debt to earnings and debt to equity (as defined). Under the
most restrictive of these provisions, approximately $70 million was available at
December 31, 1996 for the payment of cash dividends and the acquisition of
Company Capital Stock.
The note held by Masco Corporation was part of the consideration paid by
the Company for the purchase of 17 million shares of MascoTech common stock and
warrants to purchase 10 million shares of MascoTech common stock from Masco
Corporation. Although the note payable to Masco Corporation is due September 30,
1997, it is classified as non-current at December 31, 1996 as the Company has
the intent and the ability to refinance this borrowing on a long-term basis.
On March 15, 1995, the Company redeemed at maturity $233 million of its 10%
Senior Subordinated Notes utilizing its bank revolving credit agreement. During
1994, the Company recognized extraordinary income of $4.4 million pre-tax ($2.6
million after-tax) related to the early extinguishment of a portion of the
4 1/2% Convertible Subordinated Debentures.
The maturities of debt during the next five years are as follows (taking
into account the amended credit agreement and assuming the short-term debt
referred to above is refinanced by the amended credit agreement) (in millions):
1997 - $3; 1998 - $3; 1999 - $3; 2000 - $3; and 2001 - $1.
F-14
<PAGE> 63
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
RETAINED
PREFERRED COMMON PAID-IN EARNINGS SHAREHOLDERS'
STOCK STOCK CAPITAL (DEFICIT) OTHER EQUITY
--------- -------- --------- --------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994............. $10,800 $ 60,510 $ 367,290 $ 232,120 $(3,090) $ 667,630
Net loss........................... -- -- -- (220,120) -- (220,120)
Preferred stock dividends.......... -- -- -- (12,960) -- (12,960)
Common stock dividends............. -- -- -- (6,630) -- (6,630)
Retirement of common stock......... -- (4,070) (50,060) -- -- (54,130)
Translation adjustments, net....... -- -- -- -- 5,450 5,450
Exercise of stock options.......... -- 170 1,730 -- -- 1,900
------- -------- --------- --------- ------- ---------
Balance, December 31, 1994........... 10,800 56,610 318,960 (7,590) 2,360 381,140
Net income......................... -- -- -- 59,190 -- 59,190
Preferred stock dividends.......... -- -- -- (12,960) -- (12,960)
Common stock dividends............. -- -- -- (6,260) -- (6,260)
Retirement of common stock......... -- (1,210) (11,920) -- -- (13,130)
Translation adjustments, net....... -- -- -- -- 6,210 6,210
Exercise of stock options.......... -- 120 870 -- -- 990
------- -------- --------- --------- ------- ---------
Balance, December 31, 1995........... 10,800 55,520 307,910 32,380 8,570 415,180
Net income......................... -- -- -- 51,620 -- 51,620
Preferred stock dividends.......... -- -- -- (12,960) -- (12,960)
Common stock dividends............. -- -- -- (9,980) -- (9,980)
Retirement of common stock and
warrants........................ -- (18,720) (270,320) -- -- (289,040)
Translation adjustments and
other........................... -- -- -- -- 6,200 6,200
Exercise of stock options.......... -- 450 3,490 -- -- 3,940
------- -------- --------- --------- ------- ---------
Balance, December 31, 1996........... $10,800 $ 37,250 $ 41,080 $ 61,060 $14,770 $ 164,960
======= ======== ========= ========= ======= =========
</TABLE>
In July, 1993, the Company issued 10.8 million shares of 6% Dividend
Enhanced Convertible Stock (DECS, classified as Convertible Preferred Stock) at
$20 per share ($216 million aggregate liquidation amount) in a public offering.
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.
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).
On October 31, 1996, the Company purchased from Masco Corporation 17
million shares of MascoTech common stock and warrants to purchase 10 million
shares of MascoTech common stock, for cash and notes approximating $266 million.
Payment of the note, which approximates $151 million and bears interest at 6 5/8
percent, is due September 30, 1997 and is payable in cash or at the Company's
F-15
<PAGE> 64
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
option partially by the transfer of its holdings in its equity affiliate, Emco
Limited. As part of this transaction, Richard A. Manoogian, Chairman of both
Masco Corporation and MascoTech, also sold to MascoTech one million shares of
MascoTech common stock (at the then current market price) for approximately
$13.6 million, for cash and a $7.6 million note bearing interest at 6 5/8
percent, payable on September 30, 1997. In addition, as part of this
transaction, Masco Corporation's agreement to purchase from the Company, at the
Company's option, up to $200 million of subordinated debentures was extended
through 2002, and the corporate services agreement with Masco Corporation was
extended until September 30, 1998. Masco Corporation also agreed that MascoTech
will have the right of first refusal to purchase the approximate 7.8 million
shares of MascoTech common stock that Masco Corporation continues to hold,
should Masco Corporation decide to dispose of such shares.
In addition, during each of 1996 and 1995, the Company repurchased and
retired approximately one million shares of its common stock in open-market
purchases, pursuant to a Board of Directors' authorized repurchase program. At
December 31, 1996, the Company may repurchase approximately four million
additional shares of Company Common Stock and Convertible Preferred Stock
pursuant to this repurchase authorization.
Under a Stock Repurchase Agreement, Masco Corporation has the right to sell
to the Company, at approximate fair market value, shares of Company Common Stock
following the occurrence of certain events that would result in an increase in
Masco Corporation's ownership percentage in excess of 49 percent of the then
outstanding shares of Company Common Stock. Such events include repurchases of
Company Common Stock initiated by MascoTech or any of its subsidiaries, and
reacquisitions of Company Common Stock through forfeitures of shares previously
awarded by the Company pursuant to its employee stock incentive plans. In each
case, MascoTech has control over the amount of Company Common Stock it would
ultimately acquire, including shares subject to repurchase under the Stock
Repurchase Agreement. The aforementioned rights expire 30 days from the date
notice is given by MascoTech. To the extent these rights have been exercised at
any balance sheet date, the Company would reclassify from permanent capital an
amount representative of the repurchase obligation.
On the basis of amounts paid (declared), cash dividends per common share
were $.18 ($.18) in 1996, $.14 ($.11) in 1995 and $.10 ($.11) in 1994.
STOCK OPTIONS AND AWARDS:
The Company's Long-Term Stock Incentive Plan (the "Plan") provides for the
issuance of stock-based incentives in various forms. At December 31, 1996,
outstanding stock-based incentives are in the form of restricted long-term stock
awards and stock options.
Pursuant to the Plan, the Company granted long-term stock awards, net, for
480,000, 461,000 and 213,000 shares of Company Common Stock during 1996, 1995
and 1994, respectively, to key employees of the Company and affiliated
companies. The weighted average grant date fair value per share of long-term
stock awards granted during 1996 and 1995 was $14 and $12, respectively.
Compensation expense for the vesting of long-term stock awards was approximately
$2.3 million, $4.8 million and $3.3 million in 1996, 1995 and 1994,
respectively. The unamortized costs of unvested stock awards, aggregating
approximately $26 million at December 31, 1996, are being amortized over the
ten-year vesting periods.
Fixed stock options are granted to key employees of the Company and
affiliated companies and have a maximum term of 10 years. The exercise price of
each fixed option equals the market price of Company Common Stock on the date of
grant. These options either vest no later than 10 years after grant or in
installments beginning in the third year and extending through the eighth year
after grant.
F-16
<PAGE> 65
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the status of the Company's stock options granted under the
Plan or prior plans for the three years ended December 31, 1996 is presented
below.
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Option shares outstanding, January 1........................ 3,440 3,620 3,810
Weighted average exercise price........................... $ 8 $ 7 $ 7
Option shares granted....................................... 1,370 -- 20
Weighted average exercise price........................... $15 -- $24
Option shares exercised..................................... (450) (120) (170)
Weighted average exercise price........................... $ 7 $ 7 $ 6
Option shares canceled...................................... (70) (60) (40)
Weighted average exercise price........................... $ 5 $ 5 $ 5
Option shares outstanding, December 31...................... 4,290 3,440 3,620
Weighted average exercise price........................... $10 $ 8 $ 7
Weighted average remaining option term (in years)......... 5.3 4.4 5.4
Option shares exercisable, December 31...................... 1,710 1,640 1,080
Weighted average exercise price........................... $ 9 $ 9 $ 9
</TABLE>
At December 31, 1996, 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.
At December 31, 1996 and 1995, a combined total of 4,656,000 and 5,646,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
The Company has elected to continue to apply the provisions of Accounting
Principles Board Opinion No. 25 and, accordingly, no stock option compensation
expense is included in the determination of net income in the statement of
operations. The weighted average grant date fair value of options granted was
$6.20 in 1996. Had stock option compensation expense been determined pursuant to
the methodology of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," the pro forma effects on the
Company's earnings and earnings per common share in 1996, 1995 and 1994 would
not have been material.
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 $11.0 million in 1996, $13.0 million in 1995 and $9.8 million in
1994.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1996:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 5,230 $ 4,680 $ 4,800
Interest cost on projected benefit obligations..... 6,490 6,330 5,800
Actual (return) loss on assets..................... (3,970) (6,540) 1,850
Net amortization and deferral...................... (740) 1,600 (8,240)
------- ------- -------
Net periodic pension cost.......................... $ 7,010 $ 6,070 $ 4,210
======= ======= =======
</TABLE>
F-17
<PAGE> 66
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Discount rate for obligations....................... 7.50% 7.25% 8.50%
Rate of increase in compensation levels............. 5.00% 5.00% 5.00%
Expected long-term rate of return on plan assets.... 11.00% 11.00% 13.00%
</TABLE>
The funded status of the Company's defined-benefit pension plans at
December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
----------- -----------
ACCUMULATED ACCUMULATED
BENEFITS BENEFITS
EXCEED EXCEED
RECONCILIATION OF FUNDED STATUS ASSETS ASSETS
------------------------------- ----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation........................... $ 72,450 $ 70,960
======== ========
Accumulated benefit obligation...................... $ 77,380 $ 76,370
======== ========
Projected benefit obligation........................ $ 89,620 $ 89,410
Assets at fair value.................................. 59,710 54,480
-------- --------
Projected benefit obligation in excess of plan
assets........................................... (29,910) (34,930)
Reconciling items:
Unrecognized net loss............................... 14,690 22,350
Unrecognized prior service cost..................... 8,050 7,540
Unrecognized net asset at transition................ (930) (1,060)
Adjustment required to recognize minimum
liability........................................ (12,580) (15,810)
-------- --------
Accrued pension cost.................................. $(20,680) $(21,910)
======== ========
</TABLE>
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
The Company records its postretirement benefit plans in accordance with
Statement of Financial Accounting Standards No. 106 ("SFAS No. 106"),
"Employers' Accounting for Postretirement Benefits Other Than Pensions." 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 SFAS No. 106,
the Company recognizes the transition obligation on a prospective basis with the
net transition obligation amortized over 20 years. Net periodic postretirement
benefit cost includes the following components for the years ended December 31,
1996, 1995 and 1994:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost................................................ $ 400 $ 300 $ 400
Interest cost............................................... 1,600 1,900 1,800
Net amortization............................................ 800 1,100 1,300
------ ------ ------
Net periodic postretirement benefit cost.................... $2,800 $3,300 $3,500
====== ====== ======
</TABLE>
F-18
<PAGE> 67
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit obligations, none of which are funded, are
summarized as follows at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees.................................................. $13,900.. $ 18,400
Fully eligible active plan participants................... 800..... 900
Other active participants................................. 5,300... 5,600
-------- --------
Total accumulated postretirement benefit obligation......... 20,000 24,900
Unrecognized prior service cost........................... (300) --
Unrecognized net gain..................................... 700 400
Unamortized transition obligation......................... (11,000) (16,000)
-------- --------
Accrued postretirement benefits............................. $ 9,400 $ 9,300
======== ========
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25 percent in both 1996 and 1995. The assumed health
care cost trend rate in 1996 was 12 percent, decreasing to an ultimate rate in
the year 2002 of seven percent. If the assumed medical cost trend rates were
increased by one percent, the accumulated postretirement benefit obligation
would increase by $1.6 million and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost would increase by
$.2 million. Included in the Company's 1994 charge for the disposition of
certain businesses are curtailment costs for postretirement benefit obligations
relating to these businesses of approximately $3.7 million.
F-19
<PAGE> 68
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEGMENT INFORMATION:
The Company's business segments involve the sale of the following products
and services:
Transportation-Related Products and Services:
Precision products, generally produced using advanced metalworking
technologies with significant proprietary content, and
aftermarket products for the transportation industry.
Engineering and technical business services.
Specialty Products:
Other Industrial -- Principally doors, windows, security grilles and
office panels and partitions for commercial and residential
markets.
The Company's export sales approximated $75 million, $85 million and $102
million in 1996, 1995 and 1994, respectively.
Corporate assets consist primarily of cash and cash investments, marketable
securities, equity and other investments in affiliates and notes receivable.
F-20
<PAGE> 69
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NET SALES OPERATING PROFIT (LOSS)(B)
------------------------------------ -------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by
industry segment are:
Transportation-Related Products
and Services (A)............. $1,151,000 $1,340,000 $1,332,000 $ 90,000 $144,000 $ (55,000)
Specialty Products:
Other Industrial............. 130,000 338,000 370,000 1,000 (3,000) (196,000)
---------- ---------- ---------- -------- -------- ---------
Total.................... $1,281,000 $1,678,000 $1,702,000 91,000 141,000 (251,000)
========== ========== ==========
Other income (expense), net.... 8,000 (9,000) 13,000
General corporate expense...... (22,000) (32,000) (26,000)
-------- -------- ---------
Income (loss) from continuing
operations before income
taxes (credit), extraordinary
item and cumulative effect of
accounting change, net....... $ 77,000 $100,000 $(264,000)
======== ======== =========
Corporate assets...............
Total assets.............
Foreign Operations (F)......... $ 170,000 $ 166,000 $ 116,000 $ 17,000 $ 22,000 $ 16,000
========== ========== ========== ======== ======== =========
<CAPTION>
(IN THOUSANDS)
ASSETS EMPLOYED AT
DECEMBER 31(C)
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
The Company's operations by
industry segment are:
Transportation-Related Products
and Services (A)............. $ 742,000 $ 870,000 $ 796,000
Specialty Products:
Other Industrial............. 55,000 150,000 181,000
---------- ---------- ----------
Total.................... 797,000 1,020,000 977,000
Other income (expense), net....
General corporate expense......
Income (loss) from continuing
operations before income
taxes (credit), extraordinary
item and cumulative effect of
accounting change, net.......
Corporate assets............... 432,000 419,000 554,000
---------- ---------- ----------
Total assets............. $1,229,000 $1,439,000 $1,531,000
========== ========== ==========
Foreign Operations (F)......... $ 155,000 $ 140,000 $ 93,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS(D) AMORTIZATION(E)
----------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by industry segment are:
Transportation-Related Products and Services................ $41,000 $ 96,000 $101,000 $44,000 $45,000 $48,000
Specialty Products:
Other Industrial.......................................... 3,000 14,000 14,000 2,000 7,000 19,000
------- -------- -------- ------- ------- -------
Total................................................. $44,000 $110,000 $115,000 $46,000 $52,000 $67,000
======= ======== ======== ======= ======= =======
</TABLE>
(A) Included within this segment are sales to one customer of $232 million, $397
million and $361 million in 1996, 1995 and 1994, respectively; sales to
another customer of $146 million, $182 million and $225 million in 1996,
1995 and 1994, respectively; sales to a third customer of $122 million, $178
million and $212 million in 1996, 1995 and 1994, respectively; and sales to
a fourth customer of $155 million, $136 million and $111 million in 1996,
1995 and 1994, respectively.
(B) Operating profit in 1996 includes a $32 million pre-tax loss principally
from the sale of MascoTech Stamping Technologies, Inc. This charge impacted
the Company's Transportation-Related Products and Services industry segment.
Operating profit in 1995 includes $25 million in net gains resulting from
sales of non-core businesses in the third quarter. These net gains were
substantially offset by reductions in the estimated proceeds the Company
expected to receive from businesses to be sold, aggregating $12 million, and
by certain exit costs incurred in 1995 aggregating approximately $8 million.
The net gains (charge) impact the Company's industry segments as follows:
Transportation-Related Products and Services -- $21 million and Specialty
Products -- $(2) million. The remaining $(14) million of the net gains
(charge) was allocated to General Corporate Expense. Operating loss in 1994
includes the impact of a pre-tax charge in the amount of $400 million for
the disposition of businesses. The charge impacts the Company's industry
segments as follows: Transportation-Related Products and Services -- $196
million and Specialty Products -- $191 million. The remaining $13 million of
the charge was allocated to General Corporate Expense.
(C) Assets employed at December 31, 1996, 1995 and 1994 include net assets
related to the disposition of certain operations (see "Dispositions of
Operations" note).
(D) Property additions include approximately $2 million and $14 million in 1996
and 1995, respectively, of capital expenditures for those businesses held
for disposition related to the plan adopted in late 1994.
(E) Depreciation and amortization expense include approximately $5 million in
1995 of expense for those businesses held for disposition related to the
plan adopted in late 1994.
(F) The Company's foreign operations are located principally in Western Europe.
F-21
<PAGE> 70
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- ------ -------
<S> <C> <C> <C>
Other, net:
Net realized and unrealized gains (losses) from marketable
securities............................................. $ (160) $ 730 $ 4,360
Gains from sales of TriMas common stock................... -- -- 17,900
Interest income........................................... 1,160 2,390 5,490
Dividend income........................................... 420 950 2,880
Other, net................................................ (4,020) 780 2,750
------- ------ -------
$(2,600) $4,850 $33,380
======= ====== =======
</TABLE>
Gains and losses realized from sales of marketable securities and gains
from sales of common stock of equity affiliates are determined on a specific
identification basis at the time of sale.
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- -------- ---------
<S> <C> <C> <C>
Income (loss) from continuing operations before
income taxes (credit), extraordinary item and
cumulative effect of accounting change, net:
Domestic................................... $59,870 $ 78,870 $(280,900)
Foreign.................................... 17,350 21,410 16,410
------- -------- ---------
$77,220 $100,280 $(264,490)
======= ======== =========
Provision for income taxes (credit):
Federal, current.............................. $16,170 $(24,210) $ 36,660
State and local............................... 4,650 6,110 8,880
Foreign, current.............................. 7,840 7,860 (7,850)
Deferred, principally federal................. 8,640 51,330 (67,760)
------- -------- ---------
Income taxes (credit) on income (loss) from
continuing operations before
extraordinary
item and cumulative effect of accounting
change, net.............................. $37,300 $ 41,090 $ (30,070)
======= ======== =========
</TABLE>
F-22
<PAGE> 71
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of deferred taxes at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Inventories............................................ $ 2,860 $ 3,550
Expected capital loss benefit related to net assets of
businesses held for disposition..................... -- 15,600
Accrued liabilities and other, principally expected
ordinary loss benefit related to net assets of
businesses held for disposition..................... 35,170 37,250
Alternative minimum tax................................ 6,750 --
-------- --------
44,780 56,400
-------- --------
Deferred tax liabilities:
Property and equipment................................. 59,580 71,610
Other, principally equity investments in affiliates.... 57,370 45,280
-------- --------
116,950 116,890
-------- --------
Net deferred tax liability............................... $ 72,170 $ 60,490
======== ========
</TABLE>
Net current and non-current assets of businesses held for disposition at
December 31, 1995 include approximately $41 million of the foregoing deferred
tax assets.
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), extraordinary
item and cumulative effect of accounting change, net:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
U.S. federal statutory rate....................... 35% 35% 35%
------- ------- --------
Tax (credit) at U.S. federal statutory rate....... $27,020 $35,100 $(92,570)
State and local taxes, net of federal tax
benefit......................................... 3,020 3,970 5,770
Higher effective foreign tax rate................. 2,100 2,710 3,380
Tax benefit on distributed foreign earnings,
net............................................. -- -- (4,200)
Non-deductible portion of charge for disposition
of businesses................................... 5,780 -- 54,600
Amortization in excess of tax, net................ (140) 1,630 2,190
Other, net........................................ (480) (2,320) 760
------- ------- --------
Income taxes (credit) from continuing operations
before extraordinary item and cumulative
effect of accounting change, net............. $37,300 $41,090 $(30,070)
======= ======= ========
</TABLE>
F-23
<PAGE> 72
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:
MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS
Fair values of financial instruments included in marketable securities,
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, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996 1995
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash investments........................... $ 19,400 $ 19,400 $ 16,380 $ 16,380
Marketable securities, notes receivable and other
assets............................................ $124,270 $125,460 $ 38,710 $ 38,990
Long-term debt:
Bank debt......................................... $265,000 $265,000 $375,000 $375,000
4 1/2% Convertible Subordinated Debentures........ $310,000 $252,650 $310,000 $244,900
6 5/8% Note due Masco Corporation................. $151,380 $151,380 -- --
Other long-term debt.............................. $ 26,020 $ 24,490 $ 16,910 $ 15,330
</TABLE>
F-24
<PAGE> 73
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 SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996:
- -----
Net sales................................... $271,450 $290,790 $345,060 $373,920
Gross profit................................ $58,160 $ 55,580 $ 57,930 $ 61,440
Income (loss) before accounting change item:
Income (loss)............................. $16,450 $ 19,390 $ (6,660) $ 10,740
Per common and common equivalent share:
Primary........................... $.29 $.28 $(.18) $.16
Assuming full dilution............ $.28 $.28 $(.18) $.17
Net income (loss):
Income (loss)............................. $16,450 $ 19,390 $ (6,660) $ 22,440
Income (loss) attributable to common
stock.................................. $13,210 $ 16,150 $ (9,900) $ 19,200
Per common and common equivalent share:
Primary........................... $.29 $.28 $(.18) $.33
Assuming full dilution............ $.28 $.28 $(.18) $.32
Market price per common share:
High...................................... $17 $15 1/2 $16 1/8 $13 5/8
Low....................................... $13 1/2 $13 $12 1/2 $10 3/8
1995:
- -----
Net sales................................... $389,010 $404,900 $439,290 $445,010
Gross profit................................ $67,570 $ 67,050 $ 69,250 $ 76,460
Net income:
Income.................................... $14,670 $ 15,960 $ 15,100 $ 13,460
Income attributable to common stock....... $11,430 $ 12,720 $ 11,860 $ 10,220
Per common share.......................... $.20 $.22 $.21 $.18
Market price per common share:
High...................................... $12 1/2 $13 3/4 $12 7/8 $13 1/2
Low....................................... $10 $11 1/4 $10 1/2 $11 3/8
</TABLE>
Since dilution occurs in the first quarter 1996, earnings per common share
is presented on a fully diluted basis. However, earnings per common share on
income before accounting change item is anti-dilutive.
Results for the second quarter 1996 include an after-tax loss of
approximately $26 million related to the sale of MascoTech Stamping
Technologies, Inc.
Net income for the first quarter of 1996 includes an after-tax gain of
approximately $12 million as a result of the adoption of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996
which was recorded as a cumulative effect of an accounting change.
The 1996 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the purchase and retirement of shares
throughout the year.
F-25
<PAGE> 74
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
Results for the third quarter of 1995 include net gains aggregating
approximately $25 million from the sale of certain businesses held for
disposition. These net gains were offset by reductions in the estimated net
proceeds the Company expected to receive from businesses to be sold, aggregating
$12 million and by certain exit costs incurred in 1995 aggregating approximately
$8 million.
Results for the second quarter of 1995 include pre-tax income of
approximately $5 million as a result of gains associated with the sale of common
stock through a public offering by an equity affiliate.
The following supplemental unaudited financial data combine the Company
with TriMas and have been presented for analytical purposes. The Company had a
common equity ownership interest in TriMas of approximately 41 percent at
December 31, 1996 and December 31, 1995. 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
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Current assets......................................... $ 676,590 $ 718,340
Current liabilities.................................... (241,690) (241,390)
--------- ---------
Working capital................................... 434,900 476,950
Property and equipment, net............................ 583,000 640,150
Excess of cost over net assets of acquired companies... 183,690 200,210
Other assets........................................... 320,330 355,880
Bank and other debt.................................... (935,460) (889,110)
Deferred income taxes and other long-term
liabilities.......................................... (193,090) (170,780)
Equity of other shareholders of TriMas................. (228,410) (198,120)
--------- ---------
Equity of shareholders of MascoTech............... $ 164,960 $ 415,180
========= =========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $1,877,080 $2,227,850 $2,232,430
========== ========== ==========
Operating profit (loss).................... $ 173,620 $ 207,490 $ (186,450)
========== ========== ==========
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting change, net......... $ 39,920 $ 59,190 $ (234,420)
========== ========== ==========
</TABLE>
F-26
<PAGE> 75
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULE
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1996
Schedule, as required for the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
II. Valuation and Qualifying Accounts....................... F-2
</TABLE>
F-27
<PAGE> 76
MASCOTECH, INC.
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------- ---------- --------------------------- ---------- -------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED (CREDITED)
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:
1996.......................... $1,880,000 $ 890,000 $ 20,000 $ 790,000 $2,000,000
========== ========== =========== ========== ==========
1995.......................... $1,590,000 $ 400,000 $ 410,000 $ 520,000 $1,880,000
========== ========== =========== ========== ==========
1994.......................... $5,130,000 $3,480,000 $(4,310,000) $2,710,000 $1,590,000
========== ========== =========== ========== ==========
</TABLE>
NOTES:
(A) Allowance of companies reclassified for businesses held for disposition, and
other adjustments, net in 1996, 1995 and 1994. Allowance of companies
acquired, and other adjustments, net in 1995.
(B) Deductions, representing uncollectible accounts written off, less recoveries
of accounts written off in prior years.
F-28
<PAGE> 77
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- ------- ----------- ----
<S> <C> <C>
3.i Restated Certificate of Incorporation of Masco Corporation
and amendments thereto.
3.ii Bylaws of Masco Corporation, as amended.(5)
4.a.i Indenture dated as of December 1, 1982 between Masco
Corporation and Morgan Guaranty Trust Company of New York,
as Trustee and Directors' resolutions establishing Masco
Corporation's: (i) 9% Notes Due October 1, 2001 (all filed
herewith), (ii) 6 5/8% Notes Due September 15, 1999(7),
(iii) 6 1/8% Notes Due September 15, 2003(8), and (iv)
7 1/8% Debentures Due August 15, 2013.(6)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee
dated as of July 25, 1994 among Masco Corporation, Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago.(4)
4.a.iii Supplemental Indenture dated as of July 26, 1994 between
Masco Corporation and The First National Bank of Chicago.(4)
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.
4.c $750,000,000 Amended and Restated Credit Agreement dated as
of November 14, 1996 among Masco Corporation, the banks
party thereto and Morgan Guaranty Trust Company of New York,
as agent.
4.d Rights Agreement dated as of December 6, 1995 between Masco
Corporation and The Bank of New York, as Rights Agent.(2)
4.e 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(5),
Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago and Supplemental Indenture dated as of
August 5, 1994 among MascoTech, Inc. and The First National
Bank of Chicago.(3)
4.f Credit Agreement dated as of February 28, 1997, by and among
MascoTech, Inc., the banks party thereto, NBD Bank, as agent
for the banks, and Comerica Bank, The Bank of New York,
NationsBank, N.A. and Bank of America Illinois, 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.).(2)
10.b Corporate Services Agreement dated as of January 1, 1987
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(7) and Amendment No. 1 dated as of
October 31, 1996.(1)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(2) and Amendment No. 1 dated as of
October 31, 1996.(1)
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- ------- ----------- ----
<S> <C> <C>
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 letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 (all filed herewith), and amendment to
Stock Repurchase Agreement included in Agreement dated as of
November 23, 1993.(5)
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
(Restated December 6, 1995).(2)
10.f Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(2)
10.g Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).(2)
10.h Masco Corporation 1984 Restricted Stock (Industries)
Incentive Plan (Restated December 6, 1995).(2)
10.i Masco Corporation 1984 Stock Option Plan (Restated December
6, 1995).(2)
10.j Masco Corporation Restricted Stock Incentive Plan (Restated
December 6, 1995).(2)
10.k MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated December 6, 1995).(2)
10.1 MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(2)
10.m MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).(2)
10.n Masco Corporation Supplemental Executive Retirement and
Disability Plan.(3)
10.o Masco Corporation Benefits Restoration Plan.(3)
10.p.i Form of Agreement dated June 29, 1989 between Masco
Corporation and certain of its officers.(5)
10.p.ii Registration Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco
Corporation and TriMas Corporation, Amendment dated as of
April 21, 1992, Amendment to Registration Agreement dated as
of January 5, 1993, Amendment to Registration Agreement
dated as of May 26, 1994, and Amendment to Registration
Agreement dated as of May 15, 1996.
10.q Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 between Masco Corporation and
MascoTech, Inc., including form of Note(5) and Amendment No.
1 thereto dated as of October 31, 1996.(1)
10.r Registration Agreement dated as of March 31, 1993 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.).(5)
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).
10.t Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.(1) and related
promissory note.
10.u 12% Senior Note Due 2008 by Furnishings International Inc.
to Masco Corporation and Registration Rights Agreement dated
as of August 5, 1996 between Furnishings International Inc.
and Masco Corporation.
11 Computation of Primary and Fully Diluted Per Share Earnings
(Loss).
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NO.
- ------- ----------- ----
<S> <C> <C>
12 Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to Masco
Corporation's Financial Statements and Financial Statement
Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to MascoTech,
Inc.'s Financial Statements and Financial Statement
Schedule.
27 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the Exhibits filed with Masco Corporation's
Current Report on Form 8-K dated November 13, 1996.
(2) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1995.
(3) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994.
(4) Incorporated by reference to the Exhibits filed with Masco Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(5) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993.
(6) Incorporated by reference to the Exhibits filed with Masco Corporation's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(7) Incorporated by reference to the Exhibits filed with Masco Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
<PAGE> 1
EXHIBIT 3.i
RESTATED CERTIFICATE OF INCORPORATION
OF
MASCO CORPORATION
* * * * *
MASCO CORPORATION, a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is MASCO CORPORATION. The date of
filing its original Certificate of Incorporation with the Secretary of State
was June 15, 1962.
2. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or
changes to read as herein set forth in full:
FIRST: The name of the corporation is
MASCO CORPORATION.
SECOND: Its registered office in the State of Delaware is located at the
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are: To engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
- 1 -
<PAGE> 2
FOURTH: The total number of shares of stock the Corporation shall have
authority to issue is four hundred one million (401,000,000) shares.
Four hundred million (400,000,000) of such shares shall consist of common
shares, par value one dollar ($1.00) per share, and one million (1,000,000) of
such shares shall consist of preferred shares, par value one dollar ($1.00) per
share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
A. Each share of common stock shall be equal in all respects to all
other shares of such stock, and each share of outstanding common stock is
entitled to one vote.
B. Each share of preferred stock shall have or not have voting
rights as determined by the Board of Directors prior to issuance.
Dividends on all outstanding shares of preferred stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of common
stock with respect to the same dividend period.
In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders
of the preferred stock shall be entitled, before any assets of the
Corporation shall be distributed among or paid over to the holders of the
common stock, to an amount per share to be determined before issuance by
the Board of Directors, together with a sum of money equivalent to the
amount of any dividends declared thereon and remaining unpaid at the date
of such liquidation, dissolution or winding up of the Corporation. After
the making of such payments to the holders of the preferred stock, the
remaining assets of the Corporation shall be distributed among the
holders of the common stock alone, according to the number of shares held
by each. If, upon such liquidation, dissolution or winding up, the
assets of the Corporation distributable as aforesaid among the holders of
the preferred stock shall be insufficient to permit the payment to them
of said amount, the entire assets shall be distributed ratably among the
holders of the preferred stock.
The Board of Directors shall have authority to divide the shares of
preferred stock into series and fix, from time to time, before issuance,
the number of shares to be included in any series and the designation,
relative rights, preferences
- 2 -
<PAGE> 3
and limitations of all shares of such series. The authority of the Board
of Directors with respect to each series shall include the determination
of any or all of the following, and the shares of each series may vary
from the shares of any other in the following respects: (a) the number of
shares constituting such series and the designation thereof to
distinguish the shares of such series from the shares of all other
series; (b) the rate of dividend, cumulative or noncumulative, and the
extent of further participation in dividend distribution, if any; (c) the
prices at which issued (at not less than par) and the terms and
conditions upon which the shares may be redeemable by the Corporation;
(d) sinking fund provisions for the redemption or purchase of shares; (e)
the voting rights; and (f) the terms and conditions upon which the shares
are convertible into other classes of stock of the Corporation, if such
shares are to be convertible.
C. No holder of any class of stock issued by this Corporation shall
be entitled to pre-emptive rights.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
SEVENTH: (a) The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not less than
five nor more than twelve directors, 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. At the 1988 Annual
Meeting of stockholders, Class I directors shall be elected for a one-year
term, Class II directors for a two-year term and Class III directors for a
three-year term. At each succeeding Annual Meeting of stockholders beginning
in 1989, successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case will a decrease in the
number of directors shorten the term of any incumbent director. A director
shall hold office until the annual meeting for the year in which his term
expires and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement or removal from office.
Except as otherwise required by law, any vacancy on the Board of
- 3 -
<PAGE> 4
Directors that results from an increase in the number of directors shall be
filled only by a majority of the Board of Directors then in office, provided
that a quorum is present, and any other vacancy occurring in the Board of
Directors shall be filled only by a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors shall serve for the remaining term of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Corporation shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the election,
term of office, filling of vacancies and other features of such directorships
shall be governed by the terms of the Certificate of Designation with respect
to such stock, such directors so elected shall not be divided into classes
pursuant to this Article SEVENTH, and the number of such directors shall not be
counted in determining the maximum number of directors permitted under the
foregoing provisions of this Article SEVENTH, in each case unless expressly
provided by such terms.
(b) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote in the election of directors.
Any stockholder entitled to vote in the election of directors, however, may
nominate one or more persons for election as director only if written notice of
such stock- holder's intent to make such nomination or nominations has been
given either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Corporation not later than (i) with respect to an election
to be held at an Annual Meeting of stockholders, 45 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 of stockholders and (ii)
with respect to an election to be held at a special meeting of stockholders for
the election of directors, the close of business on the seventh day following
the day on which notice of such meeting is first given to stockholders. Each
such notice shall include: (A) the name and address of the stockholder who
intends to make the nomination or nominations and of the person or persons to
be nominated; (B) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (C) a description of all arrangements or
understandings between such stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations is or are to be made by the stockholder; (D) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange
- 4 -
<PAGE> 5
Commission if the nominee had been nominated by the Board of Directors; and (E)
the written consent of each nominee to serve as a director of the Corporation
if elected. The chairman of any meeting of stockholders may refuse to
acknowledge the nomination of any person if not made in compliance with the
foregoing procedure.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the
by-laws), and in addition to any affirmative vote required by law, the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding capital stock of the Corporation entitled to vote, voting together
as a single class, shall be required to amend, adopt in this Certificate of
Incorporation or in the by-laws any provision inconsistent with, or repeal this
Article SEVENTH.
EIGHTH: Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special meeting
of such holders and may not be effected by any consent in writing by any such
holders. Except as otherwise required by law, special meetings of stockholders
of the Corpora- tion 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. Notwithstanding any other
provision of this Certificate of Incorporation or the by-laws (and
notwithstanding that a lesser percentage may be specified by law, this
Certificate of Incorporation or the by-laws), and in addition to any
affirmative vote required by law, the affirmative vote of the holders of at
least 80% of the voting power of the outstanding capital stock of the
Corporation entitled to vote, voting together as a single class, shall be
required to amend, adopt in this Certificate of Incorporation or in the by-laws
any provision inconsistent with, or repeal this Article EIGHTH.
NINTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
- 5 -
<PAGE> 6
By resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the Directors of
the Corporation, which, to the extent provided in the resolution or in the
by-laws of the Corporation, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be stated in the by-laws of the Corporation or as may be determined from
time to time by resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets of the Corporation, including its good will and
its corporate franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock in, and/or
other securities of, any other corporation or corporations, as its Board of
Directors shall deem expedient and for the best interests of the Corporation.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ELEVENTH: Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in
- 6 -
<PAGE> 7
the by-laws of the Corporation. Elections of Directors need not be by ballot
unless the by-laws of the Corporation shall so provide.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEENTH: 1. The affirmative vote of the holders of 95% of all shares
of stock of the Corporation entitled to vote in elections of directors,
considered for the purposes of this Article THIRTEENTH as one class, shall be
required for the adoption or authorization of a business combination (as
hereinafter defined) with any other entity (as hereinafter defined) if, as of
the record date for the determination of stockholders entitled to notice
thereof and to vote thereon, such other entity is the beneficial owner,
directly or indirectly, of 30% or more of the outstanding shares of stock of
the Corporation entitled to vote in elections of directors considered for the
purposes of this Article THIRTEENTH as one class; provided that such 95% voting
requirement shall not be applicable if:
(a) The cash, or fair market value of other consideration, to be received
per share by common stockholders of the Corporation in such business
combination bears the same or a greater percentage relationship to the market
price of the Corporation's common stock immediately prior to the announcement
of such business combination as the highest per share price (including
brokerage commissions and soliciting dealers' fees) which such other entity has
theretofore paid for any of the shares of the Corporation's common stock
already owned by it bears to the market price of the common stock of the
Corporation immediately prior to the commencement of acquisition of the
Corporation's common stock by such other entity;
(b) The cash, or fair market value of other consideration, to be received
per share by common stockholders of the Corporation in such business
combination (i) is not less than the highest per share price (including
brokerage commissions and soliciting dealers' fees) paid by such other entity
in acquiring any of its holdings of the Corporation's common stock, and (ii) is
not less than the earnings per share of common stock of the Corporation for the
four full consecutive fiscal quarters immediately preceding the record date for
solicitation of votes on such business combination, multiplied by the then
price/earnings multiple (if any) of such other entity as customarily computed
and reported in the financial community;
(c) After such other entity has acquired a 30% interest and prior to the
consummation of such business combination: (i) such other entity shall have
taken steps to ensure that the Corpora- tion's Board of Directors included at
all times representation by
- 7 -
<PAGE> 8
continuing director(s) (as hereinafter defined) proportionate to the
stockholdings of the Corporation's public common stockholders not affiliated
with such other entity (with a continuing director to occupy any resulting
fractional board position); (ii) there shall have been no reduction in the rate
of dividends payable on the Corporation's common stock except as necessary to
insure that a quarterly dividend payment does not exceed 5% of the net income
of the Corporation for the four full consecutive fiscal quarters immediately
preceding the declaration date of such dividend, or except as may have been
approved by a unanimous vote of the directors; (iii) such other entity shall
not have acquired any newly issued shares of stock, directly or indirectly,
from the Corporation (except upon conversion of convertible securities acquired
by it prior to obtaining a 30% interest or as a result of a pro rata stock
dividend or stock split); and (iv) such other entity shall not have acquired
any additional shares of the Corporation's outstanding common stock or
securities convertible into common stock except as a part of the transaction
which results in such other entity acquiring its 30% interest;
(d) Such other entity shall not have (i) received the benefit, directly or
indirectly (except proportionately as a stockholder) of any loans, advances,
guarantees, pledges or other financial assis- tance or tax credits of or
provided by the Corporation, or (ii) made any major change in the Corporation's
business or equity capital structure without the unanimous approval of the
directors, in either case prior to the consummation of such business
combination; and
(e) A proxy statement responsive to the requirements of the United States
securities laws shall be mailed to all common stock- holders of the
Corporation for the purpose of soliciting stock- holder approval of such
business combination and shall contain on its first page thereof, in a
prominent place, any recommendations as to the advisability (or inadvisability)
of the business combination which the continuing directors, or any of them, may
choose to state and, if deemed advisable by a majority of the continuing
directors, an opinion of a reputable investment banking firm as to the fairness
(or not) of the terms of such business combination, from the point of view of
the remaining public stockholders of the Corporation (such investment banking
firm to be selected by a majority of the continuing directors and to be paid a
reasonable fee for their services by the Corporation upon receipt of such
opinion).
The provisions of this Article THIRTEENTH shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of 30% or more of the outstanding shares of
stock of the Corporation entitled to vote in elections of directors considered
for the purposes of this Article THIRTEENTH as one class, notwithstanding the
fact that such other entity has reduced its shareholdings below 30% if, as of
the
- 8 -
<PAGE> 9
record date for the determination of stockholders entitled to notice of and to
vote on to the business combination, such other entity is an "affiliate" of the
Corporation (as hereinafter defined).
2. As used in this Article THIRTEENTH, (a) the term "other entity" shall
include any corporation, person or other entity and any other entity with which
it or its "affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of stock of the Corporation, or which
is its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934 as
in effect on March 31, 1981, together with the successors and assigns of such
persons in any transaction or series of transactions not involving a public
offering of the Corpora- tion's stock within the meaning of the Securities Act
of 1933; (b) an other entity shall be deemed to be the beneficial owner of any
shares of stock of the Corporation which the other entity (as defined above)
has the right to acquire pursuant to any agreement, arrangement or
understanding or upon exercise of conversion rights, warrants or options, or
otherwise; (c) the outstanding shares of any class of stock of the Corporation
shall include shares deemed owned through application of clause (b) above but
shall not include any other shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise; (d) the term "business combination" shall include any merger or
consolidation of the Corporation with or into any other entity, or the sale or
lease of all or any substantial part of the assets of the Corporation to, or
any sale or lease to the Corporation or any subsidiary thereof in exchange for
securities of the Corporation of any assets (except assets having an aggregate
fair market value of less than $5,000,000) of any other entity; (e) the term
"continuing director" shall mean a person who was a member of the Board of
Directors of the Corporation elected by stockholders prior to the time that
such other entity acquired in excess of 10% of the stock of the Corporation
entitled to vote in the election of directors, or a person recommended to
succeed a continuing director by a majority of continuing directors; and (f)
for the purposes of subparagraphs l(a) and (b) of this Article THIRTEENTH the
term "other consideration to be received" shall mean, in addition to other
consideration received, if any, capital stock of the Corporation retained by
its existing public stockholders in the event of a business combination with
such other entity in which the Corporation is the surviving corporation.
3. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article THIRTEENTH on the basis of
information known to them whether (a) such other entity beneficially owns 30%
or more of the outstanding shares of stock of the Corporation entitled to vote
in elections of directors; (b) an other entity is an "affiliate" or "associate"
(as
- 9 -
<PAGE> 10
defined above) of another; (c) an other entity has an agreement, arrangement or
understanding with another; or (d) the assets being acquired by the
Corporation, or any subsidiary thereof, have an aggregate fair market value of
less than $5,000,000.
4. No amendment to the Certificate of Incorporation of the Corporation
shall amend or repeal any of the provisions of this Article THIRTEENTH, unless
the amendment effecting such amendment or repeal shall receive the affirmative
vote of the holders of 95% of all shares of stock of the corporation entitled
to vote in elections of directors, considered for the purposes of this Article
THIRTEENTH as one class; provided that this paragraph 4 shall not apply to, and
such 95% vote shall not be required for, any amendment or repeal unanimously
recommended to the stockholders by the Board of Directors of the Corporation if
all of such directors are persons who would be eligible to serve as "continuing
directors" within the meaning of paragraph 2 of this Article THIRTEENTH.
5. Nothing contained in this Article THIRTEENTH shall be construed to
relieve any other entity from any fiduciary obligation imposed by law.
FOURTEENTH: A director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law, or (d) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law hereafter
is amended to authorize the further limitation or elimination of the liability
of directors, then the liability of a director of the Corporation, in addition
to the limitation on liability provided herein, shall be limited to the fullest
extent permitted by the Delaware General Corporation Law, as amended. Any
repeal or modification of this Article FOURTEENTH shall not increase the
liability of any director of this Corporation for any act or occurrence taking
place prior to such repeal or modification, or otherwise adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
FIFTEENTH: 1. Each person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer or employee of the Corporation,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or employee or in any other capacity while serving as a
director, officer, or employee, shall be indemnified
- 10 -
<PAGE> 11
and held harmless by the Corporation to the fullest extent permitted by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than such law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines and amounts paid in settlement) reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of such person's heirs,
executors and administrators. The Corporation shall indemnify a director,
officer or employee in connection with an action, suit or proceeding (other
than an action, suit or proceeding to enforce indemnification rights provided
for herein or elsewhere) initiated by such director, officer or employee only
if such action, suit or proceeding was authorized by the Board of Directors.
The right to indemnification conferred in this Paragraph 1 shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any action, suit or proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person) in advance of the final
disposition of an action, suit or proceeding shall be made only upon delivery
to the Corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be determined
by final judicial decision from which there is no further right to appeal that
such director or officer is not entitled to be indemnified for such expenses
under this Article FIFTEENTH or otherwise.
2. The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide indemnification and the advancement of expenses, to
any agent of the Corporation and to any person (other than directors, officers
and employees of the Corpo- ration, who shall be entitled to indemnification
under Paragraph 1 above) who is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, to such extent and
to such effect as the Board of Directors shall determine to be appropriate and
permitted by applicable law, as the same exists or may hereafter be amended.
3. The rights to indemnification and to the advancement of expenses
conferred in this Article FIFTEENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation or
- 11 -
<PAGE> 12
by-laws of the Corporation, agreement, vote of stockholders or disinterested
directors or otherwise.
4. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Section 245 of the General Corporation
Law of Delaware.
IN WITNESS WHEREOF, said MASCO CORPORATION has caused its
corporate seal to be affixed and this Certificate to be signed by Richard A.
Manoogian, its Chairman of the Board, and attested by Gerald Bright, its
Secretary, this 25th day of May, 1988.
MASCO CORPORATION
BY /s/ Richard A. Manoogian
------------------------
Richard A. Manoogian
Chairman of the Board
ATTEST:
/s/ Gerald Bright
- --------------------------
Gerald Bright
Secretary
- 12 -
<PAGE> 13
STATE OF MICHIGAN )
)
COUNTY OF WAYNE )
I, , a notary public, do hereby certify
that on this 25th day of May, 1988, personally appeared before me Richard A.
Manoogian, who, being by me first duly sworn, declared that he is the Chairman
of the Board of Masco Corporation, that he signed the foregoing document as the
act and deed of said corporation, and that the statements therein contained are
true.
/s/ Terry Lynn Przybylo
-----------------------
Notary Public
Wayne County, Michigan
My commission expires:
- 13 -
<PAGE> 14
CERTIFICATE OF MERGER
OF
WASTE KING, INC.
INTO
MASCO CORPORATION
Masco Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "GCL"),
certifies that:
FIRST: The name and state of incorporation of each of the constituent
corporations is as follows:
State of
Name Incorporation
---- -------------
Masco Corporation ("Masco") Delaware
Waste King, Inc. ("Waste King") Delaware
SECOND: An Agreement of Merger between Masco and Waste King with respect
to the merger of Waste King into Masco (the "Merger"), has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with Section 251 of the GCL.
THIRD: That the name of the surviving corporation of the Merger is Masco
Corporation, a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Masco, which is
the surviving corporation, shall continue in full force and effect as the
Restated Certificate of Incorporation of the surviving corporation.
FIFTH: The executed Agreement is on file at the principal place of
business of the surviving corporation, 21001 Van Born Road, Taylor, Michigan
48180.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of the constituent
corporations.
SEVENTH: This Certificate of Merger shall be effective as of January 1,
1993.
MASCO CORPORATION
By /s/ Richard G. Mosteller
--------------------------
Richard G. Mosteller
Senior Vice President - Finance
ATTEST:
By /s/ Gerald Bright
------------------
Gerald Bright
Secretary
<PAGE> 15
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MASCO CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Richard G. Mosteller, Senior Vice President - Finance, and Eugene A.
Gargaro, Jr., Vice President and Secretary, of Masco Corporation, a corporation
organized and existing under the General Corporation Law of the State of
Delaware ("Delaware Law"), in accordance with the provisions thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors on
December 6, 1995, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 175,106. Such number of shares of the Series A Preferred Stock may be
increased or decreased by resolution of the Board of Directors; provided that
no decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares issuable upon exercise or conversion of outstanding rights, options or
other securities issued by the Corporation.
<PAGE> 16
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable on February 15,
May 15, August 15 and November 15 of each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 and (b) subject
to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends or other distributions and
1,000 times the aggregate per share amount of all non-cash dividends or other
distributions (other than (i) a dividend payable in shares of Common Stock, par
value $1.00 per share, of the Corporation (the "Common Stock") or (ii) a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise)), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. If the Corporation shall at any time after
December 6, 1995 (the "Rights Declaration Date") pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the Common Stock (other than as
described in clauses (i) and (ii) of the first sentence of paragraph (A));
provided that if no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to the
first Quarterly Dividend Payment Date, the period between the first issuance of
any share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
<PAGE> 17
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is on or before the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue and be cumulative from the date of issue of such shares,
or unless the date of issue is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and on or before such Quarterly Dividend Payment
Date, in which case dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall not be more than 60 days prior to the date fixed for
the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of stockholders of the Corporation.
If the Corporation shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock shall
vote together as a single class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency
<PAGE> 18
shall mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During each default period,
all holders of Preferred Stock and any other series of Preferred Stock then
entitled as a class to elect directors, voting together as a single class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized number
of Directors shall be exercised unless the holders of 10% in number of shares
of Preferred Stock outstanding shall be present in person or by proxy. The
absence of a quorum of holders of Common Stock shall not affect the exercise by
holders of Preferred Stock of such voting right. At any meeting at which
holders of Preferred Stock shall exercise such voting right initially during an
existing default period, they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of Directors as may then
exist up to two Directors or, if such right is exercised at an annual meeting,
to elect two Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of the Preferred
Stock shall have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised their right to
elect Directors in any default period and during the continuance of such
period, the number of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the Series
A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of special
meeting of holders of Preferred Stock, which meeting shall thereupon be called
by the President, a Vice President or the Secretary of the Corporation. Notice
of such meeting and of any annual meeting at which holders of Preferred Stock
are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of
<PAGE> 19
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after such order
or request or in default of the calling of such meeting within 60 days after
such order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10% of the
total number of shares of Preferred Stock outstanding, irrespective of series.
Notwithstanding the provisions of this paragraph (C)(iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two Directors voting as a
class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as provided
in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References
in this paragraph (C) to Directors elected by the holders of a particular class
of stock shall include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right of
the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or bylaws). Any
vacancies in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the remaining
Directors.
(D) The Certificate of Incorporation of the Corporation shall not be
amended in any manner (whether by merger or otherwise) so as to adversely
affect the powers, preferences or special rights of the Series A Preferred
Stock without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
<PAGE> 20
(E) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not be
required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock and
all such other parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
<PAGE> 21
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for value any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Section 4, purchase
or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received $1.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment; provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, or (2)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
other parity stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution or winding up.
If the Corporation shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such
event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
<PAGE> 22
Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE> 23
IN WITNESS WHEREOF, we have executed and subscribed this Certificate this
12th day of December, 1995.
/s/Richard G. Mosteller
------------------------
Richard G. Mosteller
Senior Vice President - Finance
Masco Corporation
Attest:
/s/Eugene A. Gargaro, Jr.
- ------------------------------
Eugene A. Gargaro, Jr.
Vice President and Secretary
Masco Corporation
<PAGE> 24
CERTIFICATE OF MERGER
OF
LA GARD, INC.
INTO
MASCO CORPORATION
MASCO Corporation, a coropration organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "GCL"),
certifies that:
FIRST: The name and state of incorporation of each of the constituent
corporations are as follows:
State of
Name Incorporation
--------------------------- --------------
La Gard, Inc. ("La Gard") California
MASCO Corporation ("Masco") Delaware
SECOND: An Agreement and Plan of Reorganization dated February 21, 1997
(the "Agreement"), among Masco, La Gard and the Shareholders of La Gard, with
respect to, among other things, the merger of La Gard into Masco (the
"Merger"), has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
Section 252 of the GCL.
THIRD: That the name of the surviving corporation of the Merger is Masco
Corporation, a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Masco
Corporation, a Delaware corporation which is surviving the merger, shall be the
Certificate of Incorporation of the surviving corporation.
FIFTH: The executed Agreement is on file at the principal place of
business of the surviving corporation 21001 Van Born Road, Taylor, Michigan
48180.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of Masco and La
Gard.
SEVENTH: The authorized capital stock of LaGard, Inc., the foreign
corporation which is a party to the merger is 1,000,000 shares of Common Stock,
no par value, of which 134,000 shares are issued, outstanding and owned by the
Stockholders.
<PAGE> 25
EIGHTH: The Merger has been approved by the Shareholders of LaGard, Inc.
This Certificate of Merger shall be effective as of filing with the
Secretary of State of Delaware.
MASCO CORPORATION
By /s/ Richard G. Mosteller
------------------------
Richard G. Mosteller
Vice President
ATTEST:
By /s/ Eugene A. Gargaro, Jr.
----------------------------
Eugene A. Gargaro, Jr.
<PAGE> 1
EXHIBIT 4a.i
[CONFORMED COPY]
========================================================================
MASCO CORPORATION
AND
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
TRUSTEE
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INDENTURE
DATED AS OF DECEMBER 1, 1982
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TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of December
1, 1982 between Masco Corporation and Morgan Guaranty Trust Company of New
York, Trustee:
SECTION OF ACT SECTION OF INDENTURE
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310(a)(1) and (2) 6.09
310(a)(3) and (4) Not applicable
310(b) 6.08 and 6.10(a)(b)
and (d)
310(c) Not applicable
311(a) and (b) 6.13
311(c) Not applicable
312(a) 4.01 and 4.02(a)
312(b) and (c) 4.02(b) and (c)
313(a) 4.04(a)
313(b)(1) Not applicable
313(b)(2) 4.04(b)
313(c) 4.04(c)
313(d) 4.04(d)
314(a) 4.03
314(b) Not applicable
314(c)(1) and (2) 13.05
314(c)(3) Not applicable
314(d) Not applicable
314(e) 13.05
314(f) Not applicable
315(a)(c) and (d) 6.01
315(b) 5.08
315(e) 5.09
316(a)(1) 5.01 and 5.07
316(a)(2) Omitted
316(a) last sentence 7.04
316(b) 5.04
317(a) 5.02
317(b) 3.04(a)
318(a) 13.07
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This tie-sheet is not part of the Indenture as executed.
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TABLE OF CONTENTS*
PAGE
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PARTIES 1
RECITALS 1
Authorization of Indenture 1
Compliance with Legal Requirements 1
Purpose of and Consideration for Indenture 1
ARTICLE ONE.
DEFINITIONS.
SECTION 1.01. Definitions 1
Attributable Debt 2
Authenticating Agent 3
Board of Directors 3
Company 3
Consolidated Net Tangible Assets 3
Event of Default 4
Funded Debt 4
Indenture 4
Interest 5
Officers' Certificate 5
Opinion of Counsel 5
Original Issue Date 5
Original Issue Discount Security 5
Person 5
Principal Office of the Trustee 6
Principal Property 6
Responsible Officer 6
Security or Securities; Outstanding 6
Securityholder 7
Subsidiary; Consolidated Subsidiary 7
Trustee 8
Trust Indenture Act of 1939 8
Yield to Maturity 9
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*This table of contents shall not, for any purpose, be deemed to be a part of
the Indenture.
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ii
ARTICLE TWO.
SECURITIES.
PAGE
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SECTION 2.01. Forms Generally 9
SECTION 2.02. Form of Trustee's Certificate of Authentication 9
SECTION 2.03. Amount Unlimited; Issuable in Series 9
SECTION 2.04. Authentication and Delivery 11
SECTION 2.05. Date and Denomination of Securities 13
SECTION 2.06. Execution of Securities 14
SECTION 2.07. Exchange and Registration of Transfer of Securities 14
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities 15
SECTION 2.09. Temporary Securities 17
SECTION 2.10. Cancellation of Securities Paid, etc. 17
ARTICLE THREE.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 3.01. Payment of Principal, Premium and Interest 18
SECTION 3.02. Offices for Notices and Payments, etc. 18
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office 19
SECTION 3.04. Provision as to Paying Agent 19
SECTION 3.05. Limitation on Liens 20
SECTION 3.06. Limitation on Sale and Leaseback 22
SECTION 3.07. Certificate to Trustee 23
ARTICLE FOUR.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.
SECTION 4.01. Securityholders' Lists 23
SECTION 4.02. Preservation and Disclosure of Lists 24
SECTION 4.03. Reports by Company 26
SECTION 4.04. Reports by the Trustee 26
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iii
ARTICLE FIVE.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT.
PAGE
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SECTION 5.01. Events of Default 28
SECTION 5.02. Payment of Securities on Default; Suit Therefor 31
SECTION 5.03. Application of Moneys Collected by Trustee 34
SECTION 5.04. Proceedings by Securityholders 35
SECTION 5.05. Proceedings by Trustee 35
SECTION 5.06. Remedies Cumulative and Continuing 36
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders 36
SECTION 5.08. Notice of Defaults 37
SECTION 5.09. Undertaking to Pay Costs 38
ARTICLE SIX.
CONCERNING THE TRUSTEE.
SECTION 6.01. Duties and Responsibilities of Trustee 38
SECTION 6.02. Reliance on Documents, Opinions, etc. 40
SECTION 6.03. No Responsibility for Recitals, etc. 41
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities 41
SECTION 6.05. Moneys to be Held in Trust 41
SECTION 6.06. Compensation and Expenses of Trustee 42
SECTION 6.07. Officers' Certificate as Evidence 43
SECTION 6.08. Conflicting Interest of Trustee 43
SECTION 6.09. Eligibility of Trustee 50
SECTION 6.10. Resignation or Removal of Trustee 50
SECTION 6.11. Acceptance by Successor Trustee 52
SECTION 6.12. Succession by Merger, etc. 53
SECTION 6.13. Limitation on Rights of Trustee as a Creditor 53
SECTION 6.14. Authenticating Agents 58
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iv
ARTICLE SEVEN.
CONCERNING THE SECURITYHOLDERS.
PAGE
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SECTION 7.01. Action by Securityholders 60
SECTION 7.02. Proof of Execution by Securityholders 60
SECTION 7.03. Who Are Deemed Absolute Owners 60
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding 61
SECTION 7.05. Revocation of Consents; Future Holders Bound 61
ARTICLE EIGHT.
SECURITYHOLDERS' MEETINGS.
SECTION 8.01. Purpose of Meetings 62
SECTION 8.02. Call of Meetings by Trustee 63
SECTION 8.03. Call of Meetings by Company or Securityholders 63
SECTION 8.04. Qualifications for Voting 63
SECTION 8.05. Regulations 63
SECTION 8.06. Voting 64
ARTICLE NINE.
SUPPLEMENTAL INDENTURES.
SECTION 9.01. Supplemental Indentures without Consent of
Securityholders 65
SECTION 9.02. Supplemental Indentures with Consent of Securityholders 67
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures 68
SECTION 9.04. Notation on Securities 69
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee 69
ARTICLE TEN.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE BY THE COMPANY.
SECTION 10.01. Consolidations and Mergers of Company and Con-
veyances Permitted Subject to Certain Conditions 69
SECTION 10.02. Successor Corporation to be Substituted for Company 70
SECTION 10.03. Securities to be Secured in Certain Events 71
SECTION 10.04. Evidence to be Furnished Trustee 71
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v
ARTICLE ELEVEN.
SATISFACTION AND DISCHARGE OF INDENTURE.
PAGE
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SECTION 11.01. Discharge of Indenture 71
SECTION 11.02. Deposited Moneys to be Held in Trust by Trustee 73
SECTION 11.03. Paying Agent to Repay Moneys Held 73
SECTION 11.04. Return of Unclaimed Moneys 74
ARTICLE TWELVE.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 12.01. Indenture and Securities Solely Corporate Obligations 74
ARTICLE THIRTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 13.01. Successors 74
SECTION 13.02. Official Acts by Successor Corporation 75
SECTION 13.03. Addresses for Notices, etc. 75
SECTION 13.04. New York Contract 75
SECTION 13.05. Evidence of Compliance with Conditions Precedent 75
SECTION 13.06. Legal Holidays 76
SECTION 13.07. Trust Indenture Act to Control 76
SECTION 13.08. Table of Contents, Headings, etc. 76
SECTION 13.09. Execution in Counterparts 76
SECTION 13.10. No Security Interest Created 76
ARTICLE FOURTEEN.
REDEMPTION OF SECURITIES-MANDATORY AND
OPTIONAL SINKING FUND.
SECTION 14.01. Applicability of Article 77
SECTION 14.02. Notice of Redemption; Selection of Securities 77
SECTION 14.03. Payment of Securities Called for Redemption 78
SECTION 14.04. Mandatory and Optional Sinking Fund 78
TESTIMONIUM 82
SIGNATURES 82
ACKNOWLEDGEMENTS 83
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THIS INDENTURE, dated as of December 1, 1982, between MASCO CORPORATION, a
Delaware corporation (hereinafter sometimes called the "Company"), and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as trustee (hereinafter sometimes called the
"Trustee").
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue from time to time of its unsecured 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 meanings specified in this Section 1.01. All other
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
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2
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.
Attributable Debt:
The term "Attributable Debt" in respect of a sale and leaseback
arrangement, shall mean, at the time of determination, the lesser of (x) the
fair value of the property subject to such arrangement (as determined by the
Board of Directors of the Company) or (y) the present value (discounted at the
rate per annum equal to the interest borne by fixed-rate Securities or the Yield
to Maturity at the time of issuance of any Original Issue Discount Securities
determined on a weighted average basis compounded semi-annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such arrangement (including any period for which such lease
has been extended or may, at the option of the lessor, be extended) after
excluding all amounts required to be paid on account of maintenance and repairs,
insurance, taxes, assessments, water and utility rates and similar charges. In
the case of any such lease which may be terminated by the lessee upon the
payment of a penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated.
Notwithstanding the foregoing, there shall not be deemed to be any Attributable
Debt in respect of a sale and leaseback arrangement if (i) such arrangement
involves property of a type to which Section 3.05 does not apply, (ii) the
Company or a Consolidated Subsidiary would be entitled pursuant to the
provisions of Section 3.05(a) to issue, assume or guarantee Debt (as defined in
said Section 3.05(a)) secured by a mortgage upon the property involved in such
arrangement without equally and ratably securing the Securities, or (iii) the
greater of the proceeds of such arrangement or the fair market value of the
property so leased has been applied or credited in accordance with clause (b) of
Section 3.06.
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3
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
6.14.
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 hereunder.
Company:
The term "Company" shall mean Masco Corporation, a Delaware corporation,
and, subject to the provisions of Article Ten, shall include its successors and
assigns.
Consolidated Net Tangible Assets:
The term "Consolidated Net Tangible Assets" shall mean the aggregate amount
of assets (less applicable reserves) of the Company and its Consolidated
Subsidiaries after deducting therefrom (a) all current liabilities (excluding
any such liabilities deemed to be Funded Debt), (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, and (c) all investments in any Subsidiary other than a Consolidated
Subsidiary, in all cases computed in accordance with generally accepted
accounting principles and which under generally accepted accounting principles
would appear on a consolidated balance sheet of the Company and its Consolidated
Subsidiaries. For purposes of the foregoing, the term "investment in any
Subsidiary other than a Consolidated Subsidiary" shall mean all evidences of
indebtedness, capital stock, other securities, obligations or indebtedness of
any Subsidiary other than a Consolidated Subsidiary owned or held by or owed to
the Company or any Consolidated Subsidiary, except an evidence of indebtedness,
an account receivable or an obligation or indebtedness on open account resulting
directly from the sale of goods or merchandise or services for fair value in the
ordinary course of business by the Company or the Consolidated Subsidiary to a
Subsidiary other than a Consolidated Subsidiary.
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4
Event of Default:
The term "Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
Funded Debt:
The term "Funded Debt" shall mean all indebtedness having a maturity of
more than twelve months from the date of the determination thereof or having a
maturity of less than twelve months but by its terms being renewable or
extendible at the option of the borrower beyond twelve months from the date of
such determination (a) for money borrowed or (b) 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 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.
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 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 of 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.
<PAGE> 12
5
Interest:
The term "Interest" shall mean, when used with respect to non-interest
bearing Securities, interest payable after maturity.
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 or an Assistant Secretary of
the Company and delivered to the Trustee. Each such certificate shall include
the statements provided for in Section 13.05 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 13.05 if and 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.
Original Issue Discount Security:
The term "Original Issue Discount Security" shall mean any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.01.
Person:
The term "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated organi-
zation or government or any agency or political subdivision thereof.
<PAGE> 13
6
Principal Office of the Trustee:
The term "principal office of the Trustee", or other similar term, shall
mean the office of the Trustee at which at any particular time its corporate
trust business shall principally be administered.
Principal Property:
The term "Principal Property" shall mean any manufacturing plant, research
or engineering facility owned or leased by the Company or any Consolidated
Subsidiary which is located within the United States of America or Puerto Rico,
except any such plant or facility which, in the opinion of the Board of
Directors, is not of material importance to the total business conducted by the
Company and its Consolidated Subsidiaries as an entirety.
Responsible Officer:
The term "Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or vice chairman of the board of directors, the
president, the secretary, the treasurer or any vice president, trust officer or
other officer or assistant officer of the Trustee performing its corporate trust
functions.
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, 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, exclusive, however, of securities of any series as to which such
Person is not Trustee.
The term "outstanding" (except as otherwise provided in Section 6.08), when
used with reference to Securities, shall, subject to the provisions of
<PAGE> 14
7
Section 7.04, 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 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 Fourteen provided or
provisions satisfactory to the Trustee shall have been made for giving such
notice; and
(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.
In determining whether the holders of the requisite principal amount of
outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of an Original Issue
Discount Security that shall be deemed to be outstanding for such purposes shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the maturity
thereof pursuant to Section 5.01.
Securityholder:
The terms "Securityholder", "holder of Securities", "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.
Subsidiary; Consolidated Subsidiary:
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary
<PAGE> 15
8
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 owned by the Company, or by one or
more Subsidiaries, or by the Company and one or more Subsidiaries.
The term "Consolidated Subsidiary" shall mean each Subsidiary other than
any Subsidiary the accounts of which (i) are not required by generally accepted
accounting principles to be consolidated with those of the Company for
financial reporting purposes, (ii) were not consolidated with those of the
Company in the Company's then most recent annual report to stockholders and
(iii) are not intended by the Company to be consolidated with those of the
Company in its next annual report to stockholders; provided, however, that the
term "Consolidated Subsidiary" shall not include (a) any Subsidiary which is
principally engaged in (i) owning, leasing, dealing in or developing real
property, or (ii) purchasing or financing accounts receivable, making loans,
extending credit or other activities of a character conducted by a finance
company or (b) any Subsidiary, substantially all of the business, properties
or assets of which were acquired after December 1, 1982 (by way of merger,
consolidation, purchase or otherwise), unless the Board of Directors
thereafter designates such Subsidiary a Consolidated Subsidiary.
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 Act
of 1939 as in force at the date of execution of this Indenture, except as
provided in Sections 2.03 and 9.03.
<PAGE> 16
9
Yield to Maturity:
The term "Yield to Maturity" shall mean the yield to maturity on a series
of Securities, calculated at the time of issuance of such series of Securities,
or if applicable, at the most recent redetermination of interest on such series
and calculated in accordance with accepted financial practice.
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.
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 substan-
tially 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.
<PAGE> 17
10
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, 9.04 or 14.03);
(3) the date or dates on which the principal of and 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, if any, 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;
(5) the place or places where the principal of, and premium, if any,
and any 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 11.01 (c) or to limit
the
<PAGE> 18
11
Indenture as to the Securities of the series pursuant to the last sentence
of Section 11.01 (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 11.01 (c) or the limitation
of the Indenture pursuant to the last sentence of Section 11.01);
(9) if other than denominations of $1,000 and any multiple thereof,
the denominations in which Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 5.01
or provable in bankruptcy pursuant to Section 5.02;
(11) any Events of Default with respect to the Securities of a
particular series, in addition to or in lieu of those set forth herein;
(12) any trustees, authenticating or paying agents, warrant agents,
transfer agents or registrars with respect to the Securities of such series;
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 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, its President or any Vice President and by its
Treasurer or Assistant Treasurer, its Secretary or an Assistant
<PAGE> 19
12
Secretary without any further action by the Company hereunder.
In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 6.01) 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
13.05 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
13.05 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;
(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,
<PAGE> 20
13
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 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, if any, 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, if any,
payable on such interest payment date notwithstanding the cancellation of such
Security upon any transfer or exchange 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 day of a calendar month, the first day of
such calendar month, whether or not such record date is a business day.
<PAGE> 21
14
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 3.02, 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 3.02, 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
<PAGE> 22
15
any Security by the Trustee or by any agent of the Company appointed pursuant to
Section 3.02, and delivery of such Security, shall be deemed to complete the
registration or registration of transfer of such Security.
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
<PAGE> 23
16
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 to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith
and in addition a 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.
<PAGE> 24
17
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 3.02,
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 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 or for credit in lieu of retiring Funded Debt pursuant to Section
3.06 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
<PAGE> 25
18
satisfaction of the indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation.
ARTICLE THREE.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 3.01. 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 and premium, if
any, and any 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
installment of interest, if any, 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 3.02. 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 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. 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
<PAGE> 26
19
for registration of transfer and for exchange in the 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 or 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.
SECTION 3.03. 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 6.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent. (a) If the Company shall
appoint a paying agent other than the Trustee with respect to the Securities of
any series, it will cause such paying 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 3.04:
(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, if any, 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; and
(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,
if any, on the Securities of such series when the same shall be due and
payable.
(b) If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of and premium, if any, or interest, if any, 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, if any, on the Securities of such
series when the same shall become due and payable.
<PAGE> 27
20
(c) Anything in this Section 3.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a 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 3.04, such sums to be held by
the Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.04 is subject
to Sections 11.03 and 11.04.
SECTION 3.05. Limitation on Liens. (a) The Company will not, nor will it
permit any Consolidated Subsidiary to, issue, assume or guarantee any debt for
money borrowed or any Funded Debt (hereinafter in this Article Three referred to
as "Debt"), secured by a mortgage, security interest, pledge, lien or other
encumbrance (mortgages, security interests, pledges, liens and other
encumbrances being hereinafter called a "mortgage" or "mortgages") upon any
Principal Property or upon any shares of stock or indebtedness of any
Consolidated Subsidiary which owns or leases a Principal Property (whether such
Principal Property, shares of stock or indebtedness are now owned or hereafter
acquired) without in any such case effectively providing concurrently with the
issuance, assumption or guaranty of any such Debt that the Securities (together
with, if the Company shall so determine, any other indebtedness of or guaranteed
by the Company or such Consolidated Subsidiary ranking equally with the
Securities and then existing or thereafter created) shall be secured equally and
ratably with such Debt; provided, however, that the foregoing restrictions shall
not apply to Debt secured by
(i) mortgages on property, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a Consolidated
Subsidiary;
(ii) mortgages on property existing at the time of acquisition of such
property by the Company or a Consolidated Subsidiary, or mortgages to
secure the payment of all or any part of the purchase price of such
property upon the acquisition of such property by the Company or a
Consolidated Subsidiary or to secure any Debt incurred by the
<PAGE> 28
21
Company or a Consolidated Subsidiary prior to, at the time of, or
within 120 days after the later of the acquisition, the completion of
construction (including any improvements on an existing property) or
the commencement of commercial operation of such property, which Debt
is incurred for the purpose of financing all or any part of the
purchase price thereof or construction or improvements thereon; pro-
vided, however, that in the case of any such acquisition, construction
or improvement, the mortgage shall not apply to any property
theretofore owned by the Company or a Consolidated Subsidiary, other
than any property on which the property so constructed or the
improvement is located or to which the property so constructed or the
improvement is appurtenant;
(iii) mortgages securing Debt of a Consolidated Subsidiary owing
to the Company or to another Consolidated Subsidiary;
(iv) mortgages on property of a corporation existing at the time
such corporation is merged or consolidated with the Company or a
Consolidated Subsidiary or at the time of a sale, lease or other
disposition of the properties of a corporation or firm as an entirety
or substantially as an entirety to the Company or a Consolidated
Subsidiary; provided, however, that no such mortgage shall extend to
any other Principal Property of the Company or any Consolidated
Subsidiary or to any shares of capital stock or any indebtedness of
any Consolidated Subsidiary which owns or leases a Principal Property;
(v) mortgages on property of the Company or a Consolidated
Subsidiary in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof, or
in favor of any other country, or any political subdivision thereof,
to secure partial, progress, advance or other payments pursuant to any
contract or statute (including Debt of the pollution control or
industrial revenue bond type) or to secure any indebtedness incurred
for the purpose of financing all or any part of the purchase price or
the cost of construction of the property subject to such mortgages; or
(vi) any extension, renewal or replacement (or successive exten-
sions, renewals or replacements) in whole or in part of mortgages
existing at the date of this Indenture, or any mortgage referred to in
the
<PAGE> 29
22
foregoing clauses (i) through (v), inclusive, provided, however,
that the principal amount of Debt secured thereby shall not
exceed the principal amount of Debt so secured at the time of
such extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to all or a part of the
property which secured the mortgage so extended, renewed or
replaced (plus improvements on such property).
(b) Notwithstanding the foregoing provisions of this Section
3.05, the Company may, and may permit any Consolidated Subsidiary to,
issue, assume or guarantee Debt secured by a mortgage not excepted by
clauses (i) through (vi) of paragraph (a) above without equally and
ratably securing the Securities, provided, however, that the aggregate
principal amount of all such Debt then outstanding, plus the aggregate
principal amount of the Debt then being issued, assumed, or
guaranteed, and the aggregate amount of the Attributable Debt in
respect of sale and lease-back arrangements, shall not exceed 5% of
Consolidated Net Tangible Assets, determined as of a date not more
than 90 days prior thereto.
SECTION 3.06. Limitation on Sale and Leaseback. The Company will not, nor
will it permit any Consolidated Subsidiary to, enter into any arrangement with
any person providing for the leasing by the Company or any Consolidated
Subsidiary of any Principal Property (whether such Principal Property is now
owned or hereafter acquired) (except for leases for a term of not more than
three years and except for leases between the Company and a Consolidated
Subsidiary or between Consolidated Subsidiaries), which property has been or
is to be sold or transferred by the Company or such Consolidated Subsidiary to
such person, unless (a) the Company or such Subsidiary would be entitled,
pursuant to the provisions of Section 3.05, to issue, assume or guarantee Debt
secured by a mortgage upon such property at least equal in amount to the
Attributable Debt in respect of such arrangement without equally and ratably
securing the Securities or (b) the Company or a Consolidated Subsidiary, within
120 days of the effective date of any such arrangement, applies an amount equal
to the greater of the net proceeds of the sale of the Principal Property leased
pursuant to such arrangement or the fair market value of the Principal Property
so leased at the time of entering into such arrangement (as determined by the
Board of Directors of the Company) to the retirement (other than any mandatory
retirement or by way of payment at maturity) of
<PAGE> 30
23
Funded Debt of the Company or any Consolidated Subsidiary (other than Funded
Debt owned by the Company or any Consolidated Subsidiary and other than Funded
Debt subordinated in the payment of principal or interest to the Securities and
except that no Security shall be retired if such retirement of Securities
pursuant to this provision would be prohibited by the resolutions or
supplemental indentures referred to in Section 2.03), provided, however, that in
lieu of applying all or any part of such net proceeds or fair market value to
such retirement, the Company may at its option (i) deliver to the Trustee
Securities theretofore purchased or otherwise acquired by the Company, or (ii)
receive credit for Securities theretofore redeemed pursuant to the resolutions
or supplemental indentures referred to in Section 2.03 hereof, which Securities
have not theretofore been made the basis for the reduction of a sinking fund
payment pursuant to Section 14.04 or applied in lieu of retiring Funded Debt
pursuant hereto. If the Company shall so deliver Securities to the Trustee (or
receive credit for Securities so delivered), the amount of cash which the
Company shall be required to apply to the retirement of Funded Debt pursuant to
this Section 3.06 shall be reduced by an amount equal to the aggregate principal
amount of such Securities.
SECTION 3.07. Certificate to Trustee. The Company will deliver to the
Trustee on or before April 1 in each year (beginning with April 1, 1983), 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
Sections 3.05, 3.06 and 10.03, 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 FOUR.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE.
SECTION 4.01. 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
<PAGE> 31
24
reasonably require, of the names and addresses of the Securityholders
of such series of Securities as of such record date (and on dates to
be determined pursuant to Section 2.03 for non-interest bearing
Securities in each year); 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 4.02. Preservation and Disclosure of Lists. (a) The Trustee shall
preserve, in as current a 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 4.01 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 4.01 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 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 4.02, 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
<PAGE> 32
25
Trustee in accordance with the provisions of subsection (a) of this Section
4.02, 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
4.02 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.
(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 4.02,
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).
<PAGE> 33
26
SECTION 4.03. 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 4.03 as may
be required by rules and regulations prescribed from time to time by the
Securities and Exchange Commission.
SECTION 4.04. Reports by the Trustee. (a) On or before June 15, 1983, and
on or before June 15 in every year thereafter, so long as any Securities are
outstanding hereunder, the Trustee shall transmit to the Securityholders of each
series of Securities for which such Trustee is appointed, as hereinafter in this
Section 4.04 provided, a brief report dated as of a date convenient to the
Trustee no more than 60 days prior thereto with respect to:
<PAGE> 34
27
(1) its eligibility under Section 6.09, and its qualification under
Section 6.08, 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 held 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 obligor 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 6.13;
(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 5.08.
(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
<PAGE> 35
28
(a) of this Section 4.04 (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 4.04 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 FIVE.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT.
SECTION 5.01. Events of Default. "Event of Default", whenever 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 any 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 of (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
<PAGE> 36
29
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 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 (or, if
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the
<PAGE> 37
30
terms of that series) of all the Securities of such series 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 (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 or 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 (or, if any Securities are Original Issue Discount Securities, such
portion of the principal as may be specified in the terms thereof) 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.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal (or, if the Securities are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof) 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, if any, upon all the
Securities of any series (or of 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 or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series, or at the respective
rates of interest or Yields to Maturity of all 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, and all other expenses
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith, and if any
and all Events of Default under this
<PAGE> 38
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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 5.02. 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
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 or Yield
to Maturity (in the case of Original Issue Discount Securities) borne by the
Securities of that series, and, in addition thereto, such further amount as
shall be sufficient to cover the costs
<PAGE> 39
32
and expenses of collection, including reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabilities incurred by
the Trustee hereunder other than through its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and 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 5.02, 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
(or, if the Securities of that series are Original Issue Discount Securities
such portion of the principal amount as may be specified by the terms of that
series) 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, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Securityholders allowed in such judicial proceedings
relative to the
<PAGE> 40
33
Company or any other obligor on the Securities of any series or to the creditors
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, and all amounts owing to the Trustee and each predecessor Trustee under
Section 6.06.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Secunityholder 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 at 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.
<PAGE> 41
34
SECTION 5.03. 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 appli-
cable to each such series and all other amounts owing to the Trustee or any
predecessor Trustee under Section 6.06;
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 instalments 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 or Yield to
Maturity ( in the case of Original Issue Discount Securities) 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 instalment of interest over any other instalment
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.
<PAGE> 42
35
Any surplus then remaining shall be paid to the Company or to such other
person as shall be entitled to receive it.
SECTION 5.04. 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, 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 herein before 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 5.10, 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 reasonable 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, suit 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, if any, 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 5.05. Proceedings by Trustee. In case of an Event of Default
hereunder the Trustee may in its discretion proceed to protect and enforce
<PAGE> 43
36
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 suit 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 5.06. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five 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 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 5.04, every power and remedy given by this Article Five 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 5.07. 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 affected 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 Sections 6.01 and 6.02) 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 Section 5.01 the holders
<PAGE> 44
37
of a majority in aggregate principal amount of the Securities of any such series
at the time outstanding may on behalf of the holders of all of 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 5.01, 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 5.07, said default or Event of Default shall for all purposes of
the Securities of that series (or of all Securities, as the case may be) and
this Indenture be deemed to have been cured and to be not continuing.
SECTION 5.08. 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 5.08 being hereby defined to be the events specified in clauses (a),
(b), (c), (d) and (e) of Section 5.01, not including periods of grace, if any,
provided for therein, and irrespective of the giving of written notice specified
in clause (c) of Section 5.01 ); 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 or trustees, the executive
committee, or a trust committee of directors or trustees 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
<PAGE> 45
38
specified in Section 5.01 (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 5.09. 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 5.09 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 5.01, 10% in aggregate principal amount of all Securities)
outstanding, or to any suit instituted by any Securityholder for the enforce-
ment 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.
ARTICLE SIX.
CONCERNING THE TRUSTEE.
SECTION 6.01. 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
<PAGE> 46
39
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 truth of the statements and
the correctness of the opinions expressed therein, upon any certifi-
cates 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 specific-
ally 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 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 5.07, 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.
<PAGE> 47
40
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 6.02. Reliance on Documents, Opinions, etc. Except as otherwise
provided in Section 6.01
(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 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
<PAGE> 48
41
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;
(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; and
(h) the Trustee shall not be deemed to have knowledge or notice
of any Event of Default or default with respect to any series of
Securities unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless holders of not less than 25% in aggregate
principal amount of the outstanding Securities of that series shall have
notified the Trustee thereof.
SECTION 6.03. 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 and delivered by the Trustee or the
Authenticating Agent in conformity with the provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents
or Registrar May Own Securities. The Trustee or any Authenticating Agent or any
paying agent or any transfer 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 or Securities registrar.
SECTION 6.05. Moneys to be Held in Trust. Subject to the provisions of
Section 11.04, 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
<PAGE> 49
42
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 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 6.06. 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 each of the Trustee and any
predecessor Trustee upon its request for all its reasonable expenses,
disbursements and advances incurred or made 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 it paid to any Authenticating Agent pursuant to
Section 6.14) except any such expense, disbursement or advance as may arise from
its own 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 it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part and 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. The obligations of the Company under this
Section 6.06 to compensate the Trustee and to pay or reimburse each of the
Trustee and any predecessor 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.
<PAGE> 50
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SECTION 6.07. Officers' Certificate as Evidence. Except as otherwise
provided in Section 6.01 and 6.02, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter 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 6.08. Conflicting Interest of Trustee. (a) If the Trustee has or
shall acquire any conflicting interest, as defined in this Section 6.08 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 6.10.
(b) In the event that the Trustee shall fail to comply with the provisions
of subsection (a) of this Section 6.08 with respect to the Securities of any
series, the Trustee shall, within ten 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 6.08 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 (A) the Indenture between the Company and
Morgan Guaranty Trust Company of New York, Trustee, dated as of June 1,
1976, pursuant to the provisions of which the Company's
<PAGE> 51
44
8 7/8% Debentures Due 2001 are outstanding, (B) the Indenture between the
Company and Morgan Guaranty Trust Company of New York, Trustee, dated as of May
1, 1980, pursuant to the provisions of which the Company's 12 1/4% Notes Due
1985 are outstanding, and (C) 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 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 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 if 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;
<PAGE> 52
45
(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 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;
<PAGE> 53
46
(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 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 any 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 para-
graph (3) or (7) of this subsection (c).
<PAGE> 54
47
For the purposes of paragraphs (6), (7), (8), 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 an 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 word
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 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 6.08:
(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
<PAGE> 55
48
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 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 6.08 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 6.08 (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.
<PAGE> 56
49
(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 obligation 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 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 holder 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.
<PAGE> 57
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SECTION 6.09. 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 6.09 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 6.09, the Trustee shall resign immediately
in the manner and with the effect specified in Section 6.10.
SECTION 6.10. 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 to 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 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 5.09, on behalf of himself and all others 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.
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51
(b) In case at any time any of the following shall occur--
(1) the Trustee shall fail to comply with the provisions of
subsection (a) of Section 6.08 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 6.09 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 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 5.09, 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 others similarly
situated, petition any court of competent jurisdiction for the removal of
the Trustee 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 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 6.10 provided, may petition any court of
competent jurisdiction for an appointment of a successor trustee with
respect to such series.
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(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 6.10 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 6.06, 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 6.06.
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.
<PAGE> 60
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No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.08 and eligible under the provisions
of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 6.11, 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 6.12. 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 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 6.13. Limitation on Rights of Trustee as a Creditor. (a) Subject to
the provisions of subsection (b) of this Section 6.13, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or
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unsecured, of the Company or of any other obligor on the Securities (each
of which is hereafter in this Section 6.13 called a "Security party")
within four months prior to a default, as defined in paragraph (1) of
subsection (c) of this Section 6.13, 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
6.13),
(1) an amount equal to any and all reductions in the amount due
and owing 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 has 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 cash, securities, or other property in respect of claims filed
against such Security party in bankruptcy or receivership or in
proceedings for reorganization pursuant to Title II, 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;
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(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 6.13, 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 Title 11,
United States Code or applicable state law, but after crediting thereon receipts
on account of the indebtedness represented
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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 to
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 6.13 a creditor relationship arising from
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(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;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of pre-
serving 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
hereon, 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 4.04 with respect to reports pursuant to
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, custo-
dian, 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 6.13;
(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 6.13.
(c) As used in this Section 6.13:
(1) The term "default" shall mean any failure to make payment in full
of the principal of or interest, if any, 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)
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under which the Trustee is also trustee, (B) which contains provisions
substantially similar to the provisions of subsection (a) of this Section
6.13, 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;
(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 6.14. 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
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least annually pursuant to law or the requirements of such authority, then for
the purposes of this Section 6.14 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 provision
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 6.14, without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
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 6.14, 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 6.14, 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
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entitled to be reimbursed for such payments. 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.
ARTICLE SEVEN.
CONCERNING THE SECURITYHOLDERS.
SECTION 7.01. 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 Eight, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
SECTION 7.02. Proof of Execution by Securityholders. Subject to the
provisions of Section 6.01, 6.02 and 8.05, 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 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners. The Trustee, any
Authenticating Agent, any paying agent, any transfer 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
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thereon) for the purpose of receiving payment of or on account of the principal
of, premium, if any, and any 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 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.
SECTION 7.04. 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 of the Trustee 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
7.04 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 persons; and, subject to the provisions of
Section 6.01, 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 7.05. Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in
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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 7.02, 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 all the Securities.
ARTICLE EIGHT.
SECURITYHOLDERS' MEETINGS.
SECTION 8.01. Purpose 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 Eight 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
Five;
(b) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article Six;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; 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.
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SECTION 8.02. 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 8.01, 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 the 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 8.03. 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 the 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 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 8.01, by mailing notice thereof as provided in
Section 8.02.
SECTION 8.04. 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 8.05. 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 appointments of proxies, and in regard to
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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 8.03, 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 7.04, 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 (in the case of
Original Issue Discount Securities, such principal amount to be determined as
provided in the definition "outstanding") 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 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 8.02 or 8.03 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 8.06. 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
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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 8.02.
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 the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE NINE.
SUPPLEMENTAL INDENTURES.
SECTION 9.01. 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 sucessor corporation of
the covenants, agreements and obligations of the Company pursuant to
Article Ten hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the holders of
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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 convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities any property or assets which the Company may
desire or may be required to convey, transfer, assign, mortgage or
pledge in accordance with the provisions of Section 3.05 or Section 10.03;
(e) 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 other provisions in regard to
matters or questions arising under this Indenture or to make any other
changes hereto; provided that any such action shall not adversely affect
the interests of the holders of the Securities;
(f) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.03; and
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or
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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 6.11.
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, obligations or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
9.01 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 9.02.
SECTION 9.02. Supplemental Indentures with Consent of Securityholders. With
the consent (evidenced as provided in Section 7.01) 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 reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 5.01 or the amount thereof provable in bankruptcy
pursuant to Section 5.02, or impair or affect the right of any Securityholder to
institute suit for payment thereof or the right of repay-
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ment, if any, at the option of the holder, 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 5.07 or to consent
to any such supplemental indenture, without the consent of the holders of each
Security 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
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 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance hereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of Supplemental
Indentures. Any supplemental indenture executed pursuant to the provisions of
this Article Nine 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 Nine, 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 and 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.
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69
SECTION 9.04. Notation on Securities. Securities of any series authenti-
cated and delivered after the execution of any supplemental indenture affecting
such series pursuant to the provisions of this Article Nine may bear a notation
in 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.
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee. The Trustee, subject to the provisions of Sections 6.01 and
6.02, 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 Nine.
ARTICLE TEN.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE BY THE COMPANY.
SECTION 10.01. Consolidations and Mergers of Company and Conveyances
Permitted Subject to Certain Conditions. Subject to the provisions of Section
10.03, nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other
corporation or corporations, or successive consolidations or mergers in which
the Company or its successor or successors shall be a party or parties or shall
prevent any sale or conveyance of all or substantially all of the property of
the Company to any other corporation authorized to acquire and operate the same;
provided, that in any such case, (i) either the Company shall be the continuing
corporation, or the successor corporation (if other than the Company) shall be a
corporation organized and existing under the laws of the United States of
America or a State thereof and 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
<PAGE> 77
70
Trustee, executed and delivered to the Trustee by such corporation, and (ii) the
Company or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any such covenant or condition and shall not
immediately thereafter have outstanding any secured Debt (as defined in Section
3.05) not expressly permitted by the provisions of Section 3.05 unless the
provisions of Section 10.03 shall previously have been complied with.
SECTION 10.02. Successor Corporation to be Substituted for Company. In case
of any such consolidation, merger, sale or conveyance (other than a conveyance
by way of lease) 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 the Company thereupon shall be relieved of any further liability or
obligation hereunder or upon the Securities and may thereupon or at any time
thereafter 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 Corporation, 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 change
in phraseology and form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.
<PAGE> 78
71
SECTION 10.03. Securities to be Secured in Certain Events. If, upon any
such consolidation or merger of the Company with or into any other corporation,
or upon any sale or conveyance of the property of the Company as an entirety or
substantially as an entirety to any other corporation, any Principal Property or
any shares of stock or indebtedness of any Consolidated Subsidiary owning any
Principal Property owned immediately prior thereto would thereupon become
subject to any mortgage (as defined in Section 3.05), unless the Company could
create such mortgage pursuant to Section 3.05 without equally and ratably
securing the Securities, the Company, prior to or simultaneously with such
consolidation, merger, sale or conveyance, will secure the Securities
outstanding hereunder, equally and ratably with any other obligation of the
Company or any such Subsidiary then entitled thereto, prior to the Debt (as
defined in Section 3.05) secured by such mortgage.
SECTION 10.04. Evidence to be Furnished Trustee. The Trustee, subject to
the provisions of Sections 6.01 and 6.02, 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 Ten.
ARTICLE ELEVEN.
SATISFACTION AND DISCHARGE OF INDENTURE.
SECTION 11.01. 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) 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 redeem-
<PAGE> 79
72
able at the option of the holder thereof not later than the 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 11.04, 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) the rights, obligations and immunities of the Trustee
hereunder and (iv) 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
<PAGE> 80
73
(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 Five,
Section 3.05 and Section 3.06 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 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 11.02. Deposited Moneys to be Held in Trust by Trustee. Subject to
the provisions of Section 11.04, all moneys and obligations deposited with the
Trustee pursuant to Section 11.01 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, if any; 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 11.01 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 last sentence of Section 11.01. 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 11.03. 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.
<PAGE> 81
74
SECTION 11.04. 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, if any,
on Securities and not applied but remaining unclaimed by the holders of
Securities for two years after the date upon which the principal of, and
premium, if any, or interest, if any, 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; 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.
ARTICLE TWELVE.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 12.01. Indenture and Securities Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest, if
any, 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 THIRTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 13.01. 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.
<PAGE> 82
75
SECTION 13.02. 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 13.03. 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 or
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 Corporation, 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, N. Y. 10015, addressed to the
attention of the Corporate Trust Department.
SECTION 13.04. 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 13.05. 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
3.07) 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
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76
upon which the statements or opinions contained in such certificate or opinions
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 13.06. 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 13.07. 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.
SECTION 13.08. 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 in no way modify or restrict any of the terms or provisions
hereof.
SECTION 13.09. 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 13.10. 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.
<PAGE> 84
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ARTICLE FOURTEEN.
REDEMPTION OF SECURITIES-MANDATORY AND
OPTIONAL SINKING FUND.
SECTION 14.01. 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 14.02. 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
least 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 addresses 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 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.
<PAGE> 85
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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 14.03. Payment of Securities Called for Redemption. If notice of
redemption has been given as provided in Section 14.02 or Section 14.04, 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 (unless such date is an
interest payment date, in which case such accrued interest shall be paid to the
holders of record on the relevant record date, and no such accrued interest
shall be paid with the redemption price), 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 (unless
such date is an interest payment date, in which case such accrued interest shall
be paid to the holders of record on the relevant record date, and no such
accrued interest shall be paid with the redemption price).
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 the Company, a new Security or
<PAGE> 86
79
Securities of such series of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.
SECTION 14.04. Mandatory and Optional Sinking Fund. The minimum amount of
any sinking fund payment provided for by the terms of Securities of any series
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 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.
<PAGE> 87
80
At its option the Company may pay into the sinking fund for the retirement
of Securities of any particular series, on or 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 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 14.02,
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 14.02 and 14.03 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
14.04. 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
<PAGE> 88
81
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of the Securities of that series at maturity.
On or before each sinking fund payment date, the Company shall pay to the
Trustee or to one or more paying agents in cash a 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.
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 Fourteen. 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 14.04.
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.
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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 CORPORATION
Company
By RICHARD G. MOSTELLER
--------------------------
Senior Vice President-Finance
[CORPORATE SEAL]
Attest:
JOHN R. LEEKLEY
-------------------------------
Assistant Secretary
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Trustee
By J. N. CREAN
------------------------
Trust Officer
J. N. Crean
[CORPORATE SEAL]
Attest:
G. J. CASTELLANO
--------------------------------
Assistant Trust Officer
G. J. Castellano
<PAGE> 90
83
STATE OF MICHIGAN ) SS.:
COUNTY OF WAYNE )
On the 20th day of November, 1985, before me personally came
Richard G. Mosteller, to me known, who, being by me duly sworn, did
depose and say that he resides at 531 Brentwood Dr., Dearborn, Mi.;
that he is Senior Vice President-Finance of MASCO CORPORATION, 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.
DIANE G. SALESKI
----------------------------
Notary Public
DIANE G. SALESKI
Notary Public, Wayne County, Mi.
My Commission Expires May 18, 1986
[NOTARIAL SEAL]
STATE OF NEW YORK ) SS.:
COUNTY OF NEW YORK )
On the 21st day of November, 1985, before me personally came J. N.
Crean, to me known, who, being by me duly sworn, did depose and say
that he resides at 837 Franklin Turnpike, Allendale, N.J. 07401; that
he is a 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.
KAM LAW
----------------------------
Notary Public
KAM LAW
Notary Public, State of New York
No. 4823386
Qualified in New York County
My Commission Expires March 30, 1987
[NOTARIAL SEAL]
<PAGE> 91
RESOLUTIONS
OF THE
PRICING COMMITTEE
OF THE
BOARD OF DIRECTORS
OF MASCO CORPORATION
(September 24, 1991)
WHEREAS, the Company has filed Registration Statements (No. 33-19168 and
No. 33-40067) on Form S-3 with the Securities and Exchange Commission, which
are in effect;
WHEREAS, the Company desires to create an additional series of securities
under the Indenture dated as of December 1, 1982 (the "Indenture"), with Morgan
Guaranty Trust Company of New York, as trustee (the "Trustee"), providing for
the issuance from time to time of unsecured debentures, notes or other
evidences of indebtedness of this 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;
THEREFORE RESOLVED, that there is established a series of Securities under
the Indenture, the terms of which shall be as follows:
1. The Securities of such series shall be designated as the
"9% Notes Due October 1, 2001".
2. The aggregate principal amount of Securities of such
series which may be authenticated and delivered under the
Indenture is limited to One Hundred Seventy-Five Million Dollars
($175,000,000), 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, 9.04 or 14.03 of the Indenture.
3. The date on which the principal of the Securities of such
series shall be payable is October 1, 2001.
4. The Securities of such series shall bear interest from
October 1, 1991, at the rate of 9% per annum, payable
semi-annually on April 1 and October 1 of each year commencing on
April 1, 1992, until the principal thereof is paid or made
available for payment. The March 15 or September 15 (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 interest on the Securities of such
series shall be payable at the office or agency of this Company
maintained for such purpose under Section 3.02 of the Indenture in
the Borough of Manhattan, The City of New York,
<PAGE> 92
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 Company's registry books.
6. The Securities of such series shall not be redeemable
prior to maturity.
7. The Securities of such series shall be issuable in
denominations of One Thousand Dollars ($1,000) and any integral
multiples thereof.
8. The Securities shall be issuable at a price such that
this Company shall receive $173,818,750 (plus accrued interest, if
any, from October 1, 1991) after discount of $1,181,250.
FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions hereof;
FURTHER RESOLVED, that the Chairman of the Board or the President and the
Secretary or any Assistant Secretary of the Company is authorized, on the
Company's behalf and in its name and under its seal (which may be in the form
of a facsimile of the seal of the Company) to execute $175,000,000 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 in substantially the form of the note filed
as an exhibit to the Company's Registration Statement on Form S-3 (No.
33-40067), but with such changes and insertions therein as are appropriate to
conform the Notes to the terms set forth herein or otherwise as the respective
officers executing the 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 the Trustee is authorized and
directed thereupon to authenticate and deliver the same to or upon the written
order of this Company as provided in the Indenture;
FURTHER RESOLVED, that the signatures of the Company officers so
authorized to execute the Securities of such series may be the manual or
facsimile signatures of the present or any future authorized officers and may
be imprinted or otherwise reproduced thereon, and the Company for such purpose
adopts each 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 individual so signing shall have ceased to hold such
office;
FURTHER RESOLVED, that Salomon Brothers Inc. and Smith Barney, Harris
Upham & Co. Incorporated are appointed as the 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 Company's
name and on its behalf, to execute and deliver an Underwriting Agreement,
substantially in the form heretofore approved by the Company's Board of
Directors, with such underwriters, with such changes and insertions therein as
are appropriate to conform such Underwriting Agreement to the terms set forth
herein or otherwise as the officer executing such
2
<PAGE> 93
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 the 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 this Company for the purpose of effecting the
registration, transfer and exchange 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 and exchange
and where notices and demands to or upon this Company in respect of the
Securities and the Indenture may be served;
FURTHER RESOLVED, that Morgan Guaranty Trust Company of New York is
appointed Paying Agent of this Company for the payment of interest on the
principal of 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 Securities may be
presented for payment; and
FURTHER RESOLVED, that each of the Company's officers is authorized and
directed, on behalf of the Company and in its name, to do or cause to be done
everything such officer deems advisable to effect the sale and delivery of the
Securities of such series pursuant to the Underwriting Agreement and otherwise
to carry out the Company's obligations under the Underwriting Agreement, and to
do or cause to be done everything and to execute and deliver all documents as
such officer deems advisable in connection with the execution and delivery of
the Underwriting Agreement and the execution, authentication and delivery of
such Securities (including, without limiting the generality of the foregoing,
delivery to the Trustee of the Securities for authentication and of requests or
orders for the authentication and delivery of Securities).
3
<PAGE> 94
REGISTERED REGISTERED
R
MASCO CORPORATION CUSIP 574599 AK 2
9% NOTE DUE OCTOBER 1, 2001
Masco Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Company"), for value
received, hereby promises to pay to SEE REVERSE FOR CERTAIN DEFINITIONS
9% 9%
DUE DUE
2001 2001
or registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, the principal sum of
DOLLARS
on October 1, 2001, 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, semi-annually on April 1 and October 1 of
each year, on said principal sum at said office or agency, in like coin or
currency, at the rate per annum specified in the title of this Note, from April
1 or October 1, as the case may be, next preceding the date of this Note to
which interest has been paid or duly provided for, unless the date hereof is a
date to which interest has been paid or duly provided for, in which case from
the date of this Note, or unless no interest has been paid or duly provided for
on the Notes since the original issue date (as defined in the Indenture
referred to on the reverse hereof) of this Note, in which case from April 1 or
October 1 next preceding such original issue date or if the original issue date
is an April 1 or October 1 then from such original issue date, until payment of
said principal sum has been made or duly provided for. Notwithstanding the
foregoing, if the date hereof is after March 15 or September 15, as the case
may be, and before the following April 1 or October 1, this Note shall bear
interest from such April 1 or October 1; provided, however, that if the Company
shall default in the payment of interest on such April 1 or October 1, then
this Note shall bear interest from the next preceding April 1 or October 1 to
which interest has been paid or duly provided for, or, if no interest has been
paid or duly provided for on the Notes since the original issue date (as
defined in such Indenture) of this Note, from the April 1 or October 1 next
preceding such original issue date unless the original issue date is an April 1
or October 1, in which case from the original issue date hereof. The interest
so payable on any April 1 or October 1 will, subject to certain exceptions
provided in such Indenture, be paid to the person in whose name this Note is
registered at the close of business on the March 15 or September 15, as the
case may be, next preceding such April 1 or October 1, whether or not such
March 15 or September 15 is a business day, and may, at the option of the
Company, be paid by check mailed to the registered address of such person.
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this
place. This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by or on
behalf of the Trustee under such
Indenture.
In Witness Whereof, Masco Corporation has caused this instrument to be
executed in its corporate name by the facsimile signature of its Chairman of
the Board or its President and imprinted with a facsimile of its corporate
seal, attested by the facsimile signature of its Secretary or an Assistant
Secretary.
CERTIFICATE OF AUTHENTICATION
4
<PAGE> 95
<TABLE>
<S><C>
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture. Dated
Masco Corporation
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ATTEST:
BY:
BY AS TRUSTEE
AUTHORIZED OFFICER SECRETARY
CHAIRMAN OF THE BOARD
</TABLE>
[Masco Corporation Corporate Seal Delaware]
MASCO CORPORATION
9% NOTE DUE OCTOBER 1, 2001
5
<PAGE> 96
This Note is one of a duly authorized issue of debentures, notes, bonds or
other evidences of indebtedness of the Company (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of December 1, 1982 (herein called
the "Indenture"), duly executed and delivered by the Company to Morgan Guaranty
Trust Company of New York, Trustee (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and holders of the
Securities. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided. This Note is one of a series designated as the 9% Notes
Due October 1, 2001 of the Company, limited in aggregate principal amount to
$175,000,000.
In case an Event of Default with respect to the 9% Notes Due October 1,
2001 shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable, in the
manner, with effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3% in aggregate principal
amount of the Securities at the time outstanding of all series to be affected
(voting as a class), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or any supplemental
indenture or modifying in any manner the rights of the holders of the
Securities of each such series; 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 hereinbefore provided,
or impair or affect the right of any holder to institute suit for payment
thereof or the right repayment, if any, at the option of the holder, without
the consent of the holder of each Security so affected, or (ii) reduce the
aforesaid principal amount of the Securities of all series to be affected, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Securities so affected then
outstanding. It is also provided in the Indenture that, with respect to
certain defaults or Events of Default regarding the Securities of any series,
prior to any declaration accelerating the maturity of such Securities, the
holders of a majority in aggregate principal amount of the Securities of such
series at the time outstanding (or, in the case of certain defaults or Events
of Default, all the Securities) may on behalf of the holders of all of the
Securities of such series (or all the Securities, as the case may be) waive any
such past default or Event of Default under the Indenture and its consequences
except a default in the payment of principal of, premium, if any, or interest,
if any, on any of the Securities. Any such consent or waiver by the holder of
this Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such holder and upon all future holders
and owners of this Note and any Notes which may be issued in exchange or
transfer hereof or in substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, at the rate and in the coin or currency
herein prescribed.
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any multiple of $1,000. Upon due presentment for registration of
transfer of this Note at the office or agency of the Company for such
registration in the Borough of Manhattan, The City of New York, or any other
location or locations as may be provided for pursuant to the Indenture, a new
Note or Notes of authorized denominations for any equal aggregate principal
amount will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Indenture, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Notes may not be redeemed prior to maturity.
The Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the holder hereof as the absolute owner of this Note (whether or
not this Note shall be overdue and notwithstanding any notation of ownership or
other writing hereon), for the purpose of receiving payment of or on account of
the principal hereof and, subject to the provisions on the face hereof,
interest hereon, and for all other purposes, and neither the Company nor the
Trustee nor any such agent shall be affected by any notice to the contrary.
All payments made to or upon the order of such holder shall, to the extent of
the sum or sums paid, effectually satisfy and discharge liability for moneys
payable on this Note.
No recourse for the payment of the principal of, or premium, if any, or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, 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, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
All terms used in this Note which are defined in the Indenture shall have
the respective meanings ascribed to them therein.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of that State.
6
<PAGE> 97
The following abbreviations, where such abbreviations appear on this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common UNIF GIFT MIN ACT-
...Custodian.........................
TEN ENT --as tenants by the entireties (Cust)
(Minor) JT TEN
--as joint tenants with right of
under Uniform Gifts to Minors
survivorship and not as tenants
Act...........................
in common
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_______________________________________________________________________________
the within Note of MASCO CORPORATION and hereby does irrevocably constitute and
appoint
Attorney
_______________________________________________________________________________
to transfer the said Note on the books of the within-named Company, with full
power of substitution in the premises
Dated________________________________________
______________________
NOTICE: THE
SIGNATURE TO THIS
ASSIGNMENT MUST
CORRESPOND WITH THE
NAME AS WRITTEN UPON
THE FACE OF THE
CERTIFICATE IN EVERY
PARTICULAR WITHOUT
ALTERATION OR
ENLARGEMENT OR ANY
CHANGE WHATEVER
7
<PAGE> 1
EXHIBIT 4.b
[CONFORMED COPY]
================================================================================
MASCO CORPORATION
AND
CITIBANK, N.A.,
Trustee
----------------------
INDENTURE
Dated as of December 1, 1982
----------------------
================================================================================
<PAGE> 2
TIE-SHEET*
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
December 1, 1982 between Masco Corporation and Citibank, N.A., Trustee:
<TABLE>
<CAPTION>
Section of Act Section of Indenture
-------------- --------------------
<S> <C>
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
</TABLE>
- --------------
*This tie-sheet is not part of the Indenture as executed.
<PAGE> 3
TABLE OF CONTENTS*
--------------------
PAGE
----
PARTIES 1
RECITALS 1
Authorization of Indenture 1
Compliance with Legal Requirements 1
Purpose of and Consideration for Indenture 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 2
Event of Default 3
Indenture 3
Officers' Certificate 3
Opinion of Counsel 3
Original Issue Date 4
Person 4
Principal Office of the Trustee 4
Responsible Officer 4
Security or Securities; Outstanding 4
Securityholder 5
Senior Indebtedness 6
Subsidiary 6
Trustee 7
Trust Indenture Act of 1939 7
- ------------
*This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 4
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 10
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 18
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 23
SECTION 3.08. Taxes on Conversions 24
SECTION 3.09. Company to Provide Stock 24
SECTION 3.10. Disclaimer of Responsibility for Certain Matters 25
SECTION 3.11. Return of Funds Deposited for Redemption of Con-
verted Securities 26
SECTION 3.12. Disposition of Converted Securities 26
ARTICLE FOUR.
SUBORDINATION OF SECURITIES.
SECTION 4.01. Agreement to Subordinate 26
SECTION 4.02. No Payment on Securities if Senior Indebtedness in
Default 26
<PAGE> 5
iii
PAGE
----
SECTION 4.03. Priority of Senior Indebtedness 27
SECTION 4.04. Company to Give Notice of Certain Events; Reliance by
Trustee 28
SECTION 4.05. Subrogation of Securities 30
SECTION 4.06. Company Obligation to Pay Unconditional 30
SECTION 4.07. Authorization of Holders of Securities to Trustee to Effect
Subordination 31
SECTION 4.08. Notice to Trustee of Facts Prohibiting Payments 31
SECTION 4.09. Trustee May Hold Senior Indebtedness 31
SECTION 4.10. All Indenture Provisions Subject to this Article 31
ARTICLE FIVE.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 5.01. Payment of Principal, Premium and Interest 32
SECTION 5.02. Offices for Notices and Payments, etc. 32
SECTION 5.03. Appointments to Fill Vacancies in Trustee's Office 33
SECTION 5.04. Provision as to Paying Agent and Conversion Agent 33
SECTION 5.05. Certificate to Trustee 34
ARTICLE SIX
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.
SECTION 6.01. Securityholders' Lists 34
SECTION 6.02. Preservation and Disclosure of Lists 35
SECTION 6.03. Reports by Company 36
SECTION 6.04. Reports by the Trustee 37
ARTICLE SEVEN.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT.
SECTION 7.01. Events of Default 39
SECTION 7.02. Payment of Securities on Default; Suit Therefor 42
SECTION 7.03. Application of Moneys Collected by Trustee 44
SECTION 7.04. Proceedings by Securityholders 45
SECTION 7.05. Proceedings by Trustee 46
<PAGE> 6
iv
PAGE
----
SECTION 7.06. Remedies Cumulative and Continuing 46
SECTION 7.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders 47
SECTION 7.08. Notice of Defaults 48
SECTION 7.09. Undertaking to Pay Costs 48
ARTICLE EIGHT.
CONCERNING THE TRUSTEE.
SECTION 8.01. Duties and Responsibilities of Trustee 49
SECTION 8.02. Reliance on Documents, Opinions, etc. 50
SECTION 8.03. No Responsibility for Recitals, etc. 51
SECTION 8.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents, Conversion Agents or Registrar May Own
Securities 52
SECTION 8.05. Moneys to Be Held in Trust 52
SECTION 8.06. Compensation and Expenses of Trustee 52
SECTION 8.07. Officers' Certificate as Evidence 53
SECTION 8.08. Conflicting Interest of Trustee 53
SECTION 8.09. Eligibility of Trustee 60
SECTION 8.10. Resignation or Removal of Trustee 60
SECTION 8.11. Acceptance by Successor Trustee 62
SECTION 8.12. Succession by Merger, etc. 63
SECTION 8.13. Limitation on Rights of Trustee as a Creditor 64
SECTION 8.14. Authenticating Agents 68
ARTICLE NINE.
CONCERNING THE SECURITYHOLDERS.
SECTION 9.01. Action by Securityholders 71
SECTION 9.02. Proof of Execution by Securityholders 71
SECTION 9.03. Who Are Deemed Absolute Owners 71
SECTION 9.04. Securities Owned by Company Deemed Not Outstanding 72
SECTION 9.05. Revocation of Consents; Future Holders Bound 72
<PAGE> 7
v
ARTICLE TEN.
SECURITYHOLDERS' MEETINGS.
PAGE
----
SECTION 10.01. Purposes of Meetings 73
SECTION 10.02. Call of Meetings by Trustee 73
SECTION 10.03. Call of Meetings by Company or Securityholders 74
SECTION 10.04. Qualifications for Voting 74
SECTION 10.05. Regulations 74
SECTION 10.06. Voting 75
ARTICLE ELEVEN.
SUPPLEMENTAL INDENTURES.
SECTION 11.01. Supplemental Indentures without Consent of Security-
holders 76
SECTION 11.02. Supplemental Indentures with Consent of Securityholders 78
SECTION 11.03. Compliance with Trust Indenture Act; Effect of Sup-
plemental Indentures 79
SECTION 11.04. Notation on Securities 79
SECTION 11.05. Evidence of Compliance of Supplemental Indenture to
Be Furnished Trustee 80
SECTION 11.06. Effect on Senior Indebtedness 80
ARTICLE TWELVE.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 12.01. Consolidation, Merger or Sale of Assets Permitted 80
SECTION 12.02. Successor Corporation to Be Substituted for Company 81
SECTION 12.03. Evidence to Be Furnished Trustee 81
ARTICLE THIRTEEN.
SATISFACTION AND DISCHARGE OF INDENTURE.
SECTION 13.01. Discharge of Indenture 82
SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee 83
SECTION 13.03. Paying Agent to Repay Moneys Held 84
SECTION 13.04. Return of Unclaimed Moneys 84
<PAGE> 8
vi
ARTICLE FOURTEEN.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.
PAGE
----
SECTION 14.01. Indenture and Securities Solely Corporate Obligations 84
ARTICLE FIFTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 15.01. Successors 85
SECTION 15.02. Official Acts by Successor Corporation 85
SECTION 15.03. Addresses for Notices, etc. 85
SECTION 15.04. New York Contract 86
SECTION 15.05. Evidence of Compliance with Conditions Precedent 86
SECTION 15.06. Legal Holidays 86
SECTION 15.07. Trust Indenture Act to Control 86
SECTION 15.08. Table of Contents, Headings, etc. 87
SECTION 15.09. Execution in Counterparts 87
SECTION 15.10. No Security Interest Created 87
ARTICLE SIXTEEN.
REDEMPTION OF SECURITIES-MANDATORY AND
OPTIONAL SINKING FUND.
SECTION 16.01. Applicability of Article 87
SECTION 16.02. Notice of Redemption; Selection of Securities 87
SECTION 16.03. Payment of Securities Called for Redemption 88
SECTION 16.04. Mandatory and Optional Sinking Fund 89
TESTIMONIUM 92
SIGNATURES 92
ACKNOWLEDGEMENTS 93
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THIS INDENTURE, dated as of December 1, 1982, between MASCO CORPORATION, a
Delaware corporation (hereinafter sometimes called the "Company"), and CITIBANK,
N.A., trustee (hereinafter sometimes called the "Trustee").
W I T N E S S E T H :
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 meanings specified in this Section 1.01. All other
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
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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.
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 Corporation, 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 consolidated 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.
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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 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 of 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 or 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 and to the extent required by the
provisions of such Section.
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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 organi-
zation or government or any agency or political subdivision thereof.
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,
shall mean the chairman or any vice chairman of the board of directors, the
chairman or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any senior trust officer, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other employee
to whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
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 convertible or non-convertible into shares of Common
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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 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
(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
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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' acceptances, 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 of materials or services).
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.
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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
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.
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:
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This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CITIBANK, N.A., 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 and 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;
(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;
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(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 registrars 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 provided in or pursuant
to such resolution of the Board of Directors or in any such indenture
supplemental hereto.
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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, and
accepting the additional responsibilities under this Indenture in
relation to 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;
(d) that all laws and requirements in respect of the
execution and delivery by the Company of the Securities have
been complied
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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
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"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 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.
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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.
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,
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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 to cover any tax or other govern-
mental charge that may be imposed in relation thereto and any other
expenses connected therewith and in addition a 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 provi-
sions 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
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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 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
<PAGE> 24
16
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 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 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
<PAGE> 25
17
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 Convertible Security converted or for
dividends or distributions on any shares of Common Stock issued upon
conversion of any Convertible Security.
<PAGE> 26
18
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 each
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:
<PAGE> 27
19
(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 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
<PAGE> 28
20
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.
(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 the 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
<PAGE> 29
21
(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.
(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 an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by 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.
<PAGE> 30
22
(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 or distribution of stock or issuance of 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 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
<PAGE> 31
23
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 dis-
tribution) 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 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;
<PAGE> 32
24
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.
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 Convert-
ible Securities are presented for conversion.
<PAGE> 33
25
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 Certifi-
cate 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.
<PAGE> 34
26
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 con-
version 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 hereunder shall, to the extent and in the
manner hereinafter in this Article set forth, be subordinate and
junior in 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
<PAGE> 35
27
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. 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
<PAGE> 36
28
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.
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, and 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
<PAGE> 37
29
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 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. The Trustee does not have any
fiduciary duties to holders of Senior Indebtedness and shall not be liable
to any such holders if it shall mistakenly pay over or distribute to
holders of Securities or the Company or any other person, moneys or assets
to which any holder of Senior Indebtedness shall be entitled by virtue of
this Article or otherwise.
Nothing in this Section shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.06.
<PAGE> 38
30
SECTION 4.05. Subrogation of Securities. Subject to the payment in
full of all Senior Indebtedness, the holders of the Securities shall be
subrogated 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, and 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 provi-
sions 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 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.
<PAGE> 39
31
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 or 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 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 any, or interest on any
Security), the Trustee shall not have 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.
<PAGE> 40
32
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
and 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 Citibank, N.A. 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 the manner provided in this
<PAGE> 41
33
Indenture, and the Company may from time to time rescind such designa-
tion, as the Company may deem desirable or expedient; provided, however,
that no such designation or 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.
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 and Conversion 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
(3) that it will notify the Trustee promptly of such details as
the Trustee may require with respect to any conversions of Convertible
Securities at the office of such agent.
(b) If the Company shall act as its own paying agent, it will, on or
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
<PAGE> 42
34
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 a 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.
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, 1983),
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
<PAGE> 43
35
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 a 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 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,
<PAGE> 44
36
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.
(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
<PAGE> 45
37
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 re-
quired 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, 1983,
and on or before June 15 in every year thereafter, so long as any
Securities are outstanding hereunder, the Trustee shall transmit to the
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)
<PAGE> 46
38
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 held 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 obligor 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
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
<PAGE> 47
39
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 of
(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 other-
wise; 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
<PAGE> 48
40
90 days after there has been given, by registered or 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 such default
or breach and requiring it to be remedied and a written notice specifying
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 or the holders of not
<PAGE> 49
41
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.
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 instalments 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 instalments 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.
<PAGE> 50
42
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 recission 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
instalment 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
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 instalments 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.
<PAGE> 51
43
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
provided 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 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.
<PAGE> 52
44
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.
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 instalments of such interest, with
interest (to the extent that such interest has been collected by the
Trustee) upon the overdue instalments 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;
<PAGE> 53
45
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 instalments 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 instalment of interest over any other instalment
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, 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 reasonable 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, suit or proceeding,
it being understood and intended, and being expressly covenanted by the taker
and holder of every
<PAGE> 54
46
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 suit 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 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,
<PAGE> 55
47
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 of 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 be) and this Indenture be deemed to have been cured
and to be not continuing.
<PAGE> 56
48
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
<PAGE> 57
49
any Security against the Company on or after the same shall have become due and
payable.
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 truth of the statements and
the correctness of the opinions expressed therein, upon any certifi-
cates 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 specific-
<PAGE> 58
50
ally 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 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;
<PAGE> 59
51
(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 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
<PAGE> 60
52
Authenticating Agent shall not be accountable for the use or application by the
Company of any Securities or the proceeds of any Securities authenticated and
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.
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
<PAGE> 61
53
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. The obligation of the Company under this
Section 8.06 shall survive the resignation of the Trustee hereunder and the
satisfaction and discharge of this Indenture.
SECTION 8.07. Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.01 and 8.02, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter 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.
<PAGE> 62
54
(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 (A) the Indenture between the Company and Citibank, N.A.,
Trustee, dated as of February 1, 1973, pursuant to the provisions of
which the Company's 4 1/2% Convertible Subordinated Debentures Due
1988 are outstanding, and (B) 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 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
<PAGE> 63
55
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 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
<PAGE> 64
56
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 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
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57
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 para-
graph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), (8), 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 an 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 word
"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 profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription, transferable share,
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58
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 night 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 cashier, the secretary, and
the
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59
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 obligation 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;
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60
provided, however, that any 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 holder 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
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61
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 to 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 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 others 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
subsection (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 others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities
and the appointment of
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62
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 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
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63
held or collected by such trustee to secure any amounts then due it pursuant to
the provisions of Section 8.06.
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 provided
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.
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64
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 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
owing 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 com-
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65
position 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 cash,
securities, or other property in respect of 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;
(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.
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66
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 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 to 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.
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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;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of pre-
serving 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
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, custo-
dian, 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
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(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;
(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
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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.
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
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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.
CITIBANK, N.A.,
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
<PAGE> 80
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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.
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 the Trustee 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 persons; 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
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
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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.
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
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determine. Notice of every meeting of the Securityholders of any or all series,
setting forth the record date, time and the 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 the 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 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.
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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
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
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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 the
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 Security-
holders. 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 Com-
pany pursuant to Article Twelve hereof;
(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
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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.
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,
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78
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
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79
modifies the rights of Securityholders of such series with respect to such
covenant or 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 and 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 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
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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.
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 In-
debtedness under Article Four without the consent of such holder.
ARTICLE TWELVE.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 12.01. Consolidation, Merger or 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.
<PAGE> 89
81
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 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
Corporation 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.
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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 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
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83
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 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
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84
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.
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
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85
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 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 or 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
Corporation, 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, 5 Hanover Square, New York, New York 10043, Attention: Corporate
Trust Administration.
<PAGE> 94
86
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
<PAGE> 95
87
Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act of 1939, such required provision shall control.
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 in no way modify or restrict any of
the terms or 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 least 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 addresses 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
<PAGE> 96
88
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 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.
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,
<PAGE> 97
89
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 the Company, a new Security or
Securities of such series of authorized denominations, in principal amount
equal to the unredeemed portion of 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
<PAGE> 98
90
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 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 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
<PAGE> 99
91
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 before each sinking fund payment date, the Company shall pay to
the Trustee or to one or more paying agents in cash a 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.
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
<PAGE> 100
92
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.
CITIBANK, N.A. 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 CORPORATION
Company
By RICHARD G. MOSTELLER
---------------------------
Vice President
[CORPORATE SEAL]
Attest:
JOHN R. LEEKLEY
-------------------------------
Assistant Secretary
CITIBANK, N.A.
Trustee
By ROBERT C. SPIERS III
---------------------------
Senior Trust Officer
[CORPORATE SEAL]
Attest:
LAWRENCE OLSEN
---------------------------
Trust Officer
<PAGE> 101
93
STATE OF MICHIGAN }
COUNTY OF WAYNE } SS.:
On the 19th day of February, 1987, before me personally came
RICHARD G. MOSTELLER, to me known, who, being by me duly sworn, did
depose and say that he resides at Dearborn, Michigan; that he is Vice
President of MASCO CORPORATION, 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.
LISE M. MARTIN
--------------------------------------
Notary Public
LISE M. MARTIN
Notary Public, Wayne County, MI
My Commission Expires August 21, 1988
[NOTARIAL SEAL]
STATE OF NEW YORK }
COUNTY OF NEW YORK } SS.:
On the 20th day of February, 1987, before me personally came
ROBERT C. SPIERS III, to me known, who, being by me duly sworn, did
depose and say that he resides at Staten Island, New York; that he
is Senior Trust Officer of CITIBANK, N.A., 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.
ENZO L. CARBOCCI
------------------------------------
Notary Public
ENZO L. CARBOCCI
Notary Public, State of New York
No. 43-5605595
Qualified in Richmond County
Certificate Filed in New York County
Term Expires March 30, 1988
[NOTARIAL SEAL]
<PAGE> 102
RESOLUTIONS OF THE
PRICING COMMITTEE
OF THE
BOARD OF DIRECTORS OF
MASCO CORPORATION
WHEREAS, this Company has filed Registration Statements (Nos. 2-95488,
33-2374 and 33-7387) on Form S-3 with the Securities and Exchange Commission,
each of which currently remains in effect;
WHEREAS, this Company desires to create and make provision for a series of
securities under the Indenture dated as of December 1, 1982 (the "Indenture"),
with Citibank, N.A., as trustee (the "Trustee"), providing for the issuance
from time to time of convertible or non-convertible unsecured subordinated
debentures, notes or other evidences of indebtedness of this Corporation
("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 "5-1/4% Convertible Subordinated Debentures Due 2012" of this
Company.
2. The aggregate principal amount of Securities of such series which
may be authenticated and delivered under the Indenture is limited to Two
Hundred Fifty Million Dollars ($250,000,000), 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 February 15, 2012.
4. The Securities of such series shall bear interest from February
23, 1987, at the annual rate of 5-1/4%, payable semi-annually on February
15 and August 15 of each year commencing on August 15, 1987, (calculated
on a standard 360 day year of 12 thirty day months) until the principal
thereof is paid or made available for payment. The February 1 or August
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.
<PAGE> 103
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
this 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 this Company for such purpose
pursuant to the Indenture; provided, however, that, at the option of this
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
through the operation of a mandatory sinking fund on each February 15,
commencing on February 15, 1998 and continuing to and including February
15, 2011, at 100 percent of their principal amount together with accrued
interest to the date fixed for redemption (subject to the right of the
registered holder on the record date for an interest payment to receive
such interest). The sinking fund shall provide for the redemption on
each such date of five percent of the aggregate principal amount of the
Securities issued. The Company may, at its option, receive credit
against sinking fund payments for Securities acquired through purchase
(including under the procedures provided in paragraph 8 below), called
for redemption otherwise than through the mandatory sinking fund or which
have not been called for redemption through operation of the mandatory
sinking fund and have been surrendered for conversion. If the amount of
any sinking fund payment required to be satisfied in cash, plus any
balance of any preceding sinking fund payment, is $50,000 or less, the
Company shall have the right to carry over such payment to the next
sinking fund payment date.
7. The Securities of such series shall be subject to redemption
otherwise than through the operation of the sinking fund described in
paragraph 6 above, in whole or in part, at the option of the Company, at
any time at a redemption price equal to the percentage of the principal
amount set forth below if redeemed during the twelve-month period
beginning February 15 in each of the following years:
YEAR PERCENTAGE YEAR PERCENTAGE
---- ---------- ----- ----------
1987 105.250% 1993 102.100%
1988 104.725 1994 101.575
1989 104.200 1995 101.050
1990 103.675 1996 100.525
1991 103.150 1997 and
1992 102.625 thereafter 100.000
together in each case with interest accrued to the date fixed for
redemption (subject to the right of the registered holder on the record
date for an interest payment to receive such interest), except that such
Securities may not be redeemed prior to February 15, 1989 unless the
closing price (as referred to in Section 3.05(d) of the Indenture) per
share of the Common Stock has equaled or exceeded 150 percent of the then
effective conversion price for at least twenty trading days within thirty
consecutive trading days ending not more than five trading days prior to
the date the notice of redemption is mailed.
<PAGE> 104
8. (a) The holder of any Security of such series shall have the
right, at his 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 Security of such series, in whole or in
part, without regard to whether the Securities of such series are then
otherwise redeemable, for cash in an amount equal to the principal amount
of such Security 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 Security to the office or agency to be maintained by the Company
pursuant to Section 5.02 of the Indenture, accompanied by written notice
that the holder elects to tender such Security and (if so required by the
Company or the Trustee) by a written instrument or instruments of
transfer in form satisfactory to the Company and the Trustee duly
executed by the holder or his duly authorized legal representative and
transfer tax stamps or funds therefor, if required. All Securities of
such series surrendered for redemption shall, if surrendered to the
Company or any redemption agent, be delivered to the Trustee for
cancellation and, if surrendered to the Trustee, shall be canceled by it.
(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 of the Securities Exchange Act of 1934, of at
least 50% of the voting power for election of the Directors
of the Company, unless approved in advance by a majority of
the Company's Continuing Directors (as hereinafter defined),
or
(ii) The Company, 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
Company's Continuing Directors.
A "Continuing Director" is a Director who is a member of the Board
of Directors of the Company elected by stockholders prior to the time the
other entity hereafter acquires in excess of 10% of the voting power for
the election of Directors of the Company or Masco Corporation, as the
case may be, or a person recommended to succeed a Continuing Director by
a majority of the Continuing Directors.
(c) The Company shall file with the Trustee and shall mail,
or cause the Trustee to mail, to each holder of Securities of such
series at his last address appearing on the registry books of the
Company, as promptly as possible but in any event not more than ten days
after learning of an occurrence specified in clause (i) above or not more
than ten days after an occurrence specified in clause (ii) above, a
notice stating that the event
<PAGE> 105
specified in the notice has occurred and that each holder has the right
to tender his Securities of such series for cash pursuant to the terms
hereof. Upon demand to the Company at any time by the Trustee or any
holder of Securities of such series, such notice shall be filed with the
Trustee and mailed to each holder of Securities of such series, unless
the Company can demonstrate to the Trustee's satisfaction that no event
described in clause (b) has occurred. The Trustee shall not be deemed to
have any knowledge of such event or any corresponding obligation with
respect thereto until so notified in writing by the Company.
(d) On or before the sixty-second day after the date of the notice
provided pursuant to clause (c) above, the Company shall deposit with the
Trustee or with a paying agent an amount of money sufficient to pay the
principal of, and (except if the Mandatory Redemption Date shall be an
interest payment date) accrued interest on, all the Securities of such
series to be redeemed on the Mandatory Redemption Date.
(e) After giving the notice of redemption as provided above, the
Securities of such series 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 Company shall default in the payment of principal and accrued
interest thereon) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance herewith,
such Security shall be paid on the Mandatory Redemption Date by the
Trustee or paying agent at a price equal to the principal amount thereof,
together with accrued interest to the Mandatory Redemption Date;
provided, however, that if the Mandatory Redemption Date is an interest
payment date, the interest accrued to such Mandatory Redemption Date
shall be payable to the holders of record of such Securities at the close
of business on the relevant record date according to the provisions of
the Indenture.
If any Security to be redeemed shall not be so paid on the Mandatory
Redemption Date, the principal shall, until paid, bear interest from the
Mandatory Redemption Date at the rate borne by the Security.
(f) Securities of such series may be redeemed in whole or in any
integral multiple of $1,000. Any Security which is to be redeemed only
in part shall be surrendered at an office or agency of the Company
designated for that purpose (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument to transfer inform
satisfactory to the Company and the Trustee duly exectued by, the holder
thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the
holder of such Security without service charge, a new Security or
Securities of such series, of any authorized denomination in aggregate
principal amount equal to and in exchange for the unredeemed portion of
the principal amount.
Unless the context otherwise requires, all provisions relating to
the mandatory redemption of the Securities hereunder shall relate, in the
case of Securities redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
<PAGE> 106
9. The Securities of such series shall be issuable in denominations
of One Thousand Dollars ($1,000) and any integral multiple thereof.
10. The Company shall receive 99% of the price of such Securities
sold to the public after discount of 1%.
11. The Securities of such series shall be convertible at any time
prior to maturity, unless previously redeemed, into an aggregate maximum
amount of 5,841,121 fully paid and non-assessable shares of Common Stock,
par value $1 per share of the Company, at a conversion price of $42.80
per share, such number of shares of Common Stock and conversion price
being subject to adjustment as provided in the Indenture.
12. 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).
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 or the President and the
Secretary or any Assistant Secretary of this Company are authorized, on behalf
of the Company and in its name and under its corporate seal (which may be in
the form of a facsimile of the seal of the Company) to execute $250,000,000
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 exhibits to the Company's Registration
Statements (Nos. 33-2374 and 33-7387) on Form S-3 filed with the Securities and
Exchange Commission, 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 evidence 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 this Company as provided in the Indenture;
FURTHER RESOLVED, that the signatures of the officers of this 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, Harris Upham & Co. Incorporated and
Salomon Brothers Inc. are appointed as managing 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 this Company is authorized, in the name and
on behalf of this Company, to execute and deliver an
<PAGE> 107
Underwriting Agreement, substantially in the form heretofore approved by the
Board of Directors of this Company, with such managing underwriters, as
representatives of such underwriters as may be selected by such managing
underwriters and listed in Schedule II to such Underwriting Agreement, 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 Citibank, N.A., the Trustee under the Indenture, is
appointed trustee for Securities of such series, and as Agent of this 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 Citibank, N.A., in the Borough of Manhattan, City
of New York is designated pursuant to the Indenture as the office or agency of
this Company where such Securities may be presented for registration, transfer,
exchange and conversion and where notices and demands to or upon this Company
in respect of the Securities of such series and of the Indenture may be served;
FURTHER RESOLVED, that Citibank, N.A., is appointed Paying Agent of this
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 Citibank,
N.A., is designated, pursuant to the Indenture, as the office or agency of this
Company where such Securities may be presented for payment; and
FURTHER RESOLVED, that each of the officers of this Company is authorized
and directed, on behalf of this Company and in its name, 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 and otherwise to carry out the obligations of this
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 and 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).
<PAGE> 108
REGISTERED
REGISTERED
R
MASCO CORPORATION CUSIP 574599 AG 1
5 1/4% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2012
Masco Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Company"), for value
received, hereby promises to pay to SEE REVERSE FOR CERTAIN DEFINITIONS
5 1/4 % 5 1/4%
DUE DUE
2012 2012
or registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, the principal sum of
DOLLARS
on February 15, 2012, 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, semi-annually on February 15 and August 15
of each year, on said principal sum at said office or agency, in like coin or
currency, at the rate per annum specified in the title of this Debenture, from
February 15 or August 15, as the case may be, next preceding the date of this
Debenture to which interest has been paid or duly provided for, unless the date
hereof is a date to which interest has been paid or duly provided for, in which
case from the date of this Debenture, or unless no interest has been paid or
duly provided for on the Debentures since the original issue date (as defined
in the Indenture referred to on the reverse hereof) of this Debenture, in which
case from February 23, 1987, until payment of said principal sum has been made
or duly provided for. Notwithstanding the foregoing, if the date hereof is
after February 1 or August 1, as the case may be, and before the following
February 15 or August 15, this Debenture shall bear interest from such February
15 or August 15; provided, however, that if the Company shall default in the
payment of interest on such February 15 or August 15, then this Debenture shall
bear interest from the next preceding February 15 or August 15 to which
interest has been paid or duly provided for, or, if no interest has been paid
or duly provided for the Debentures since the original issue date (as defined
in such Indenture) of the Debenture, from February 23, 1987. The interest so
payable on any February 15 or August 15 will, subject to certain exceptions
provided in such Indenture, be paid to the person in whose name this Debenture
is registered at the close of business on the February 1 or August 1, as the
case may be, next preceding such February 15 or August 15, whether or not such
February 1 or August 1 is a business day, and may, at the option of the
Company, be paid by check mailed to the registered address of such person.
Reference is made to the further provisions of this Debenture set forth on
the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth
at this place. This Debenture shall not be valid or become obligatory for
any purpose until the certificate of authentication hereon shall have been
signed by or on behalf of the Trustee
under such Indenture.
In Witness Whereof, Masco Corporation, has caused this instrument to be
executed in its corporate name by the facsimile signature of its Chairman of
the Board or its President and imprinted with a facsimile of its corporate
seal, attested by the facsimile signature of its Secretary or an Assistant
Secretary.
<PAGE> 109
<TABLE>
<S><C>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture. Dated
Masco Corporation
CITIBANK, N.A. Attest:
By:
By as Trustee
Authorized Officer Secretary
Chairman of the Board
</TABLE>
[Masco Corporation Corporate Seal Delaware]
MASCO CORPORATION
5 1/4% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2012
This Debenture is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of December 1, 1982 (herein called
the "Indenture"), duly executed and delivered by the Company to Citibank, N.A.,
Trustee (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and holders of the Securities. The Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking, purchase or analogous funds (if
any), may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided. This Debenture is one of a series
designated as the 5 1/4% Convertible Subordinated Debentures Due 2012 of the
Company, limited in aggregate principal amount to $250,000,000.
Subject to the provisions of the Indenture, the Holder of this Debenture
is entitled, at his option, at any time on or before February 15, 2012
<PAGE> 110
(except that, in case this Debenture or any portion hereof shall be called for
redemption, such right shall terminate with respect to this Debenture or
portion hereof, as the case may be, so called for redemption at the close of
business on the date fixed for redemption as provided in the Indenture, unless
the Company shall default in the payment due upon redemption thereof), to
convert the principal amount of this Debenture (or any portion hereof which is
$1,000 or an integral multiple thereof), into shares of the Common Stock of the
Company (calculated to the nearest 1/100th of a share), as said shares shall be
constituted at the Date of Conversion, at the Conversion Price of $42.80
principal amount of Debentures for each share of Common Stock, or at the
adjusted Conversion Price in effect at the Date of Conversion determined as
provided in the Indenture, upon surrender of this Debenture, together with the
conversion notice hereon duly executed, to the Company at the designated office
or agency of the Company in the Borough of Manhattan, The City of New York,
accompanied (if so required by the Company) by instruments of transfer, in form
satisfactory to the Company and to the Trustee, duly executed by the Holder or
by his duly authorized attorney in writing. Such surrender shall, if made
during any period beginning at the close of business on a record date and
ending at the opening of business on the interest payment date next following
such record date (unless this Debenture or the portion being converted shall
have been called for redemption on a redemption date during such period) also
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 this Debenture then being
surrendered for conversion. Except as aforesaid no adjustment is to be made on
conversion for interest accrued hereon or for dividends on shares of Common
Stock issued on conversion. The Company is not required to issue fractional
shares upon any such conversion, but shall make adjustment therefor in cash on
the basis of the market value of such fractional interest as provided in the
Indenture.
The indebtedness evidenced by the Debentures is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full of the principal of (and premium, if any) and
interest on all Senior Indebtedness as defined in the Indenture, and this
Debenture is issued subject to such provisions and each Holder of this
Debenture, by accepting the same, agrees to and shall be bound by such
provisions, and authorizes the Trustee in his behalf to take such action as may
be necessary or appropriate to effectuate as between the Holders of the
Debentures and the holders of Senior Indebtedness the subordination as provided
in the Indenture and appoints the Trustee his attorney-in-fact for such
purpose.
In case an Event of Default with respect to the 5 1/4% Convetible
Subordinated Debentures Due 2012 shall have occurred and be continuing, the
principal hereof may be delcared, and upon such delcaration shall become, due
and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3% in aggregate principal
amount of the Securities at the time outstanding of all series to be affected
(voting as a class), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminatingany of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holder of the Securities
of each such series; 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 hereinbefore provided, or
impair the right to convert the 5 1/4% Convertible Subordinated Debentures Due
2012 into Common Stock on the terms defined in the Indenture, or impair or
affect the right of any Holder 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 the 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 principal amount of
Securities of all series to be affected, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Securities so affected then outstanding.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. In the manner and subject
to the limitations provided in the Indenture, but without the payment of any
charge (except for any tax or other governmental charge imposed in connection
therewith), Debentures may be exchanged for an equal aggregate principal amount
of Debentures of other authorized denominations at the office or agency of the
Company for such exchange in the Borough of Manhattan, The City of New York or
at such other location or locations as may be provided for pursuant to the
Indenture.
The Debentures may be redeemed at the option of the Company as a whole, or
from time to time in part, on any date prior to maturity, upon mailing a notice
of such redemption not less than thirty nor more than sixty days prior to the
date fixed for redemption to the Holders of Debentures at their last registered
addresses, all as provided in the Indenture, at the following optional
redemption prices (expressed in percentages of the principal amount to be
redeemed) together in each case with accrued interest to the date fixed for
redemption; provided, however, that id the date fixed for redemption of any
Debenture is an interest payment date, then the regular semi-annual payment of
interest becoming due on such date shall be payable to the registered Holder of
such Debenture at the close of business on the applicable record date.
If redeemed during the twelve-month period beginning February 15,
Year Percentage Year Percentage
1987.............. 105.250% 1993............ 102.100%
1988.............. 104.725 1994............ 101.575
1989.............. 104.200 1995............ 101.050
1990.............. 103.675 1996............ 100.525
1991.............. 103.150 1997 and thereafter 100.000
1992.............. 102.625
except that the Debentures may not be so redeemed prior to February 15, 1989,
unless for a period of twenty trading days within thirty consecutive trading
days ending not more than five trading days prior to the date the notice of
redemption is mailed, the closing price per share (as referred to in the
Indenture) of Common Stock of the Company shall have been at least 150% of the
Conversion Price in effect on each such day.
The Debentures are also subject to redemption in part, through the
operation of the sinking fund provided for in the Indenture, on each February
15, commencing on February 15, 1998 and continuing to and including February
15, 2011, on notice as set forth above and at 100% of the principal amount
thereof (the sinking fund redemption price), together with accrued interest to
the date fixed for redemption.
The Holder of this Debenture will have the option, upon the occurrence of
either of the events specified in clauses (i) or (ii) below, for a specified
period of sixty days, to require the Company to redeem the principal amount of
this Debenture (or any portion thereof which is $1,000 or an integral multiple
thereof), at a redemption price equal to the principal amount to be redeemed,
plus accrued interest to the date of redemption: (i) any person or group (an
"other entity"), within
<PAGE> 111
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, attains
beneficial ownership, within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, of at least 50% of the voting power for election of the
Directors of the Company unless approved in advance by a majority of the
Company's Continuing Directors (as hereinafter defined), or (ii) the Company
consolidates or merges with 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 Company's Continuing Directors. A "Continuing Director" is a
Director who is a member of the Board of Directors of the Company elected by
stockholders prior to the time the other entity hereafter acquires in excess of
10% of the voting power for the election of Directors of the Company, or a
person recommended to succeed a Con tinuing Director by a mojority purpose. In
case an Event of Default with respect to the 5 1/4% Convertible Subordinated
Debentures Due 2012 shall have occurred and be continuing, the principal hereof
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee, with
the consent of the holders of not less than 66 2/3% in aggregate principal
amount of the Securities at the time outstanding of all series to be affected
(voting as a class), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Securities
of each such series; 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 hereinbefore provided, or impair
the right to convert the 5 1/4% Convertible Subordinated Debentures Due 2012
into Common Stock on the terms defined in the Indenture, or impair or affect the
right of any Holder to institute suit for payment thereof or the right of
repayment, if any, at the option of the Holder, or modify any provisions of the
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 principal amount of Securities of all
series to be affected, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Securities so
affected then outstanding. It is also provided in the Indenture that, with
respect to certain defaults of Events of Default regarding the Securities of any
series, prior to any declaration accelerating the maturity of such Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series at the time outstanding (or, in the case of certain defaults or
Events of Default, all the Securities) may on behalf of the holders of all of
the Securities of such series (or all the Securities, as the case may be) waive
any such past default or Event of Default under the Indenture and its
consequences except a default in the payment of principal of, premium, if any,
or interest, if any, on any of the Securities. Any such consent or waiver by
the Holder of this Debenture (unless revoked as provided in the Indenture) shall
be conclusive and binding upon such Holder and upon all future Holders and
owners of this Debenture and any Debentures which may be issued in exchange or
transfer hereof or in substitution herefor, irrespective of whether or not any
notation thereof is made upon this Debenture or such other Debentures. No
reference herein to the Indenture and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and interest on this Debenture at the
place, at the respective times, at the rate and in the coin or currency herein
prescribed. Continuing Director by a majority of the Continuing Directors.
Upon due presentment for registration of transfer of this
Debenture at the office or agency of the Company for such registration in the
Borough of Manhattan, The City of New York, or any other location or locations
as may be provided for pursuant to the Indenture, a new Debenture or Debentures
of authorized denominations for an equal aggregate principal amount will be
issued to the transferee in exchange therefor, subject to the limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may deem
and treat the Holder hereof as the absolute owner of this Debenture (whether or
not this Debenture shall be overdue and notwithstanding any notation of
ownership or other writing hereon), for the purpose of receiving payment of or
on account of the principal hereof and, subject to the provisions on the face
hereof, interest hereon, and for all other purposes, and neither the Company nor
the Trustee nor any such agent shall be affected by any notice to the contrary.
All payments made to or upon the order of such Holder shall, to the extent of
the sum or sums paid, effectually satisfy and discharge liability for moneys
payable on this Debenture.
No recourse for the payment of the principal of, or premium, if any, or
interest on this Debenture, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, 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, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
All terms used in this Debenture which are defined in the Indenture
shall have the respective meanings ascribed to them herein.
This Debenture shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of that State.
TO MASCO CORPORATION:
The undersigned owner of this Debenture hereby irrevocably exercises the
option to convert this Debenture into shares of Common Stock of the Company in
accordance with the terms of the Indenture referred to in this Debenture, and
directs that the shares issuable and deliverable upon the conversion, together
with any check in payment for fractional shares and any Debentures representing
any unconverted principal amount hereof, be issued and delivered to the
registered holder hereof unless a different name has been indicated below. If
shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect hereto. Any
amount required to be paid by the undersigned on account of interest
accompanies this Debenture.
Dated____________________________________________
<PAGE> 112
____________________________________________________ Signature
Fill in for registration of shares of Common Stock and Debentures if to be
issued otherwise than to the registered holder.
_________________________________________________________________
__________________________________________________
(Name) Social Security or other
Taxpayer Identifying Number
___________________________________________
(Address)
______________________________________________________________________________
Please print name and address (including zip code number)
The following abbreviations, where such abbreviations appear on this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common UNIF GIFT MIN ACT--
.......................Custodian....................
TEN ENT --as tenants by the entireties
(Cust) (Minor)
JT TEN --as joint tenants with right of
under Uniform Gifts to Minors
survivorship and not as tenants
Act..................................
in common
(State)
Additional abbreviations may also be
used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_______________________________________________________________________________
the within Debenture of MASCO CORPORATION and hereby does irrevocably
constitute and appoint
Attorney
_______________________________________________________________________________
to transfer the said Debenture on the books of the within-named Company, with
full power of substitution in the premises.
_______________________________________________________________________________
Dated_______________________________________________
______________________________________________________________________
NOTICE: THE SIGNATURE TO THIS
ASSESSMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 4.c
CONFORMED COPY
$750,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
November 14, 1996
among
Masco Corporation
The Banks Party Hereto
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE> 2
TABLE OF CONTENTS*
----------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . 14
SECTION 1.03. Types of Borrowings . . . . . . . . . . . . . . . . . . . 14
ARTICLE 2
THE CREDITS
SECTION 2.01. Committed Borrowings . . . . . . . . . . . . . . . . . . . 15
SECTION 2.02. Notice of Committed Borrowings . . . . . . . . . . . . . . 15
SECTION 2.03. Money Market Borrowings . . . . . . . . . . . . . . . . . 16
SECTION 2.04. Notice to Banks; Funding of Loans . . . . . . . . . . . . 20
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.06. Maturity of Loans . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.07. Interest Rates . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.08. Facility Fees . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.09. Optional Termination or Reduction of Commitments . . . . . 26
SECTION 2.10. Mandatory Termination of Commitments . . . . . . . . . . . 26
SECTION 2.11. Optional Prepayments . . . . . . . . . . . . . . . . . . . 26
SECTION 2.12. General Provisions as to Payments . . . . . . . . . . . . 27
SECTION 2.13. Funding Losses . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.14. Computation of Interest and Fees . . . . . . . . . . . . . 28
SECTION 2.15. Withholding Tax Exemption . . . . . . . . . . . . . . . . 28
SECTION 2.16. Regulation D Compensation . . . . . . . . . . . . . . . . 29
SECTION 2.17. Application of Interest Rates and Fees . . . . . . . . . . 29
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.02. All Borrowings . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.03. Consequences of Effectiveness . . . . . . . . . . . . . . 31
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
__________________________________
* The Table of Contents is not a part of this Agreement.
i
<PAGE> 3
PAGE
----
SECTION 4.01. Corporate Existence and Power. . . . . . . . . . . . . . . 32
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.04. Financial Information . . . . . . . . . . . . . . . . . . 32
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . . 33
SECTION 4.07. Environmental Matters . . . . . . . . . . . . . . . . . . 34
SECTION 4.08. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.09. Not an Investment Company . . . . . . . . . . . . . . . . 34
SECTION 4.10. Compliance with Laws . . . . . . . . . . . . . . . . . . . 34
ARTICLE 5
COVENANTS
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.02. Minimum Consolidated Tangible Net Worth . . . . . . . . . 37
SECTION 5.03. Limitations on Debt . . . . . . . . . . . . . . . . . . . 38
SECTION 5.04. Negative Pledge . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.05. Consolidations, Mergers and Sale of Assets . . . . . . . . 40
SECTION 5.06. Compliance with Laws . . . . . . . . . . . . . . . . . . . 41
SECTION 5.07. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . . 45
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . . . . 45
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . . 45
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.09. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . 46
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . 47
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . 48
SECTION 8.04. Substitute Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.05. Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.03. Expenses; Documentary Taxes; Indemnification . . . . . . . . . . . . . 52
SECTION 9.04. Sharing of Set-Offs . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.07. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.08. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.09. Severalty of Obligations . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.10. New York Law; Submission to Jurisdiction . . . . . . . . . . . . . . . 56
SECTION 9.11. Counterparts; Integration . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.12. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
COMMITMENT SCHEDULE
PRICING SCHEDULE
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of Special Counsel for the Agent
Exhibit G - Assignment and Assumption Agreement
iii
<PAGE> 5
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 14, 1996
among MASCO CORPORATION, the BANKS party hereto and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent.
WHEREAS, Masco Corporation, certain banks and Morgan Guaranty Trust
Company of New York, as agent, are parties to a credit agreement dated as
of May 18, 1994, as heretofore amended (the "Existing Credit Agreement")
providing commitments in the aggregate amount of $750,000,000;
WHEREAS, the parties hereto desire to amend the Existing Credit
Agreement (i) to extend the Termination Date from May 15, 2000 to November
14, 2001, (ii) to reduce the rates of interest and fees payable thereunder,
(iii) to delete or modify certain covenants and (iv) to make certain other
changes; and
WHEREAS, the parties hereto desire to restate the Existing Credit
Agreement as so amended to read in full as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Acquired Debt" means, with respect to any Person which becomes a
Subsidiary after the date of this Agreement, 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; provided
that such Debt shall no longer constitute
"Acquired Debt" at any time that is more than six months after such
Person becomes a Subsidiary.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
<PAGE> 6
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrower) duly completed by such Bank.
"Affiliate" means at any date a Person (other than a Consolidated
Subsidiary) whose earnings or losses (or the appropriate proportionate share
thereof) would be included in determining the Consolidated Net Income of the
Borrower and its Consolidated Subsidiaries for a period ending on such date
under the equity method of accounting for investments in common stock (and
certain other investments).
"Agent" means Morgan Guaranty Trust Company of New York in its capacity as
agent for the Banks hereunder, and its successors in such capacity.
"Agreement," when used with reference to this Agreement, means this Amended
and Restated Credit Agreement dated as of November 14, 1996 as amended from time
to time after the date hereof.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means each bank listed on the signature pages hereof, each Assignee
which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of (i)
the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank as a Base Rate
Loan in accordance with the applicable Notice of Committed Borrowing or pursuant
to Article 8.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
2
<PAGE> 7
Plan and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"Borrower" means Masco Corporation, a Delaware corporation, and its
successors.
"Borrower's 1995 Form 10-K" means the Borrower's annual report on Form 10-K
for the year ended December 31, 1995, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
"Borrower's Equity Securities" means shares of any class of the Borrower's
capital stock or options, warrants or other rights to acquire such shares.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a Bank as a CD Loan in
accordance with the applicable Notice of Committed Borrowing.
"CD Margin" means, subject to Section 2.17, a rate per annum determined in
accordance with the Pricing Schedule.
"CD Reference Banks" means NBD Bank, Royal Bank of Canada and Morgan
Guaranty Trust Company of New York and each other bank, if any, which is
appointed as a CD Reference Bank pursuant to Section 8.01(b) or 9.06(f).
"Commitment" means (i) with respect to any Bank listed on the Commitment
Schedule, the amount set forth opposite the name of such Bank on the Commitment
Schedule, or (ii) with respect to any Assignee, the amount of the transferor
Bank's Commitment assigned to such Assignee pursuant to Section 9.06(c), in each
case as such amount may be reduced from time to time pursuant to Section 2.09 or
2.10 or changed as a result of an assignment pursuant to Section 9.06(c).
"Commitment Schedule" means the Commitment Schedule attached hereto.
3
<PAGE> 8
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01.
"Consolidated Adjusted Net Worth" means at any date (i) Shareholders'
Equity at such date less (ii) the amount (if any) by which the aggregate amount
of all equity and other investments in Affiliates of the Borrower reflected in
such Shareholders' Equity exceeds $250,000,000.
"Consolidated Current Assets" means at any date the consolidated current
assets of the Borrower and its Consolidated Subsidiaries determined as of such
date.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Net Income" means, for any period, the consolidated net
income of the Borrower and its Consolidated Subsidiaries for such period
(considered as a single accounting period), but excluding the net income or
deficit of any Person (other than the equity in earnings or losses of an
Affiliate previously included in such consolidated net income determined under
the equity method of accounting for investments) prior to the effective date on
which it becomes a Consolidated Subsidiary or is merged into or consolidated
with the Borrower or a Consolidated Subsidiary.
"Consolidated Subsidiary" means at any date any Subsidiary the accounts of
which would be consolidated with those of the Borrower in its consolidated
financial statements as of such date.
"Consolidated Tangible Net Worth" means at any date the aggregate of all
assets (excluding treasury stock) which would be shown on a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of such date;
provided that there shall be deducted from the amount of such assets, to the
extent otherwise included therein, (i) any reserves on assets of the Borrower
and its Consolidated Subsidiaries where a reserve is proper in accordance with
generally accepted accounting principles, including, without limitation,
reserves for depreciation, amortization or obsolescence, loss on receivables or
inventory valuations, (ii) any unamortized goodwill, patents, trademarks, trade
names or other like intangible assets of the Borrower and its Consolidated
Subsidiaries, (iii) unamortized debt discount or expense of the Borrower and its
Consolidated Subsidiaries and (iv) any deferred charges or prepaid expenses of
the Borrower and its Consolidated Subsidiaries which are not Consolidated
Current Assets; and
4
<PAGE> 9
provided further that there shall also be deducted from such amount (v)
Consolidated Total Liabilities at such date.
"Consolidated Total Liabilities" means at any date the aggregate of all
liabilities or other items which would appear on the liability side of a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of such date, except the amount so appearing which constitutes Shareholders'
Equity.
"Continuing Director" means any member of the Borrower's board of directors
who either (i) is a member of such board as of November 14, 1996 or (ii) is
thereafter elected to such board, or nominated for election by stockholders, by
a vote of at least two-thirds of the directors who are Continuing Directors at
the time of such vote; provided that an individual who is so elected or
nominated in connection with a merger, consolidation, acquisition or similar
transaction shall not be a Continuing Director unless such individual was a
Continuing Director prior thereto.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of property,
except trade accounts payable, (iv) all obligations of such Person as lessee
which are capitalized in accordance with generally accepted accounting
principles, (v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (vi) all Debt of
others for which such Person is contingently liable. In calculating the amount
of any Debt at any date for purposes of this Agreement, accrued interest shall
be excluded to the extent that it would be properly classified as a current
liability for interest under the heading "Accrued liabilities" (and not under
the heading "Notes payable") in a balance sheet prepared as of such date in
accordance with the accounting principles and practices used in preparing the
balance sheet referred to in Section 4.04(a) and the related footnotes thereto.
"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.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
5
<PAGE> 10
"Domestic Lending Office" means, as to each Bank, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrower and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section 2.07(b).
"Domestic Subsidiary" means a Subsidiary which is incorporated under the
laws of the United States of America or any state thereof.
"Effective Date" has the meaning set forth in Section 3.01.
"Environmental Laws" means any and all federal, state and local statutes,
laws, judicial decisions, regulations, ordinances, rules, judgments, orders,
decrees, injunctions, permits, concessions, grants, franchises, licenses,
agreements and other governmental restrictions relating to the environment, the
effect of the environment on human health 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 manufacture, 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.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
6
<PAGE> 11
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as a
Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" means, subject to Section 2.17, a rate per annum
determined in accordance with the Pricing Schedule.
"Euro-Dollar Reference Banks" means the principal London offices of The
First National Bank of Chicago, Royal Bank of Canada and Morgan Guaranty Trust
Company of New York and each other bank, if any, which is appointed as a
Euro-Dollar Reference Bank pursuant to Section 8.01(b) or 9.06(f).
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of
"Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" has the meaning set forth in the first Whereas
Clause.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal
7
<PAGE> 12
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Morgan Guaranty Trust Company of New York on
such day on such transactions as determined by the Agent.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)) or any combination of the foregoing.
"High Quality Investment" means any investment in (i) direct obligations of
the United States of America or any agency thereof, or obligations guaranteed by
the United States of America or any agency thereof, (ii) commercial paper rated
at least A-1 by S&P and at least P-1 by Moody's or (iii) time deposits with,
including certificates of deposit issued by, any Bank which was a party to this
Agreement on the Effective Date or any office located in the United States of
America of any bank or trust company which is organized under the laws of the
United States of America or any State thereof and has capital, surplus and
undivided profits aggregating at least $500,000,000; provided in each case that
such investment matures within six months from the date of acquisition thereof
by the Borrower or a Subsidiary.
"Interest Period" means: (1) with respect to each Euro-Dollar Borrowing,
the period commencing on the date of such Borrowing and ending one, two, three
or six months thereafter (or, subject to Section 2.07(d), nine or twelve months
thereafter), as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
8
<PAGE> 13
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Borrowing, the period commencing on the date of
such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Base Rate Borrowing, the period commencing on the
date of such Borrowing and ending 90 days thereafter; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending such whole number of
months thereafter as the Borrower may elect in accordance with Section
2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
9
<PAGE> 14
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(5) with respect to each Money Market Absolute Rate Borrowing, the period
commencing on the date of such Borrowing and ending such number of days
thereafter (but not less than 30 days) as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or similar encumbrance of any kind 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 Borrower 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.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market
Loans or any combination of the foregoing.
10
<PAGE> 15
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(c).
"Material Debt" means Debt (other than the Notes) of the Borrower and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate outstanding principal amount exceeding
$25,000,000.
"Material Plan" has the meaning set forth in Section 6.01(i).
"Money Market Absolute Rate" has the meaning set forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic Lending
Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Borrower
and the Agent; provided that any Bank may from time to time by notice to the
Borrower and the Agent designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money Market Absolute Rate
Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to a
LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant
to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money Market Loan
in accordance with Section 2.03.
"Moody's" has the meaning set forth in the Pricing Schedule.
11
<PAGE> 16
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group 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 a member of the ERISA Group during such five year
period.
"Notes" means promissory notes of the Borrower, substantially in the form
of Exhibit A hereto, evidencing the obligation of the Borrower to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined in
Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)).
"Parent" means, with respect to any Bank, any Person controlling such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"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.
"Plan" means at any time an 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 Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Pricing Schedule" means the Pricing Schedule attached hereto.
"Prior Plan" means at any time (i) any Plan which at such time is no longer
maintained or contributed to by any member of the ERISA Group or (ii)
12
<PAGE> 17
any Multiemployer Plan to which no member of the ERISA Group is at such time
any longer making contributions or, pursuant to an applicable collective
bargaining agreement, accruing an obligation to make contributions.
"Prime Rate" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar Reference
Banks, as the context may require, and "Reference Bank" means any one of such
Reference Banks.
"Refunding Borrowing" means a Committed Borrowing which, after application
of the proceeds thereof, results in no net increase in the aggregate outstanding
principal amount of the Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"S&P" has the meaning set forth in the Pricing Schedule.
"Shareholders' Equity" means at any date the shareholders' equity of the
Borrower.
"Significant Subsidiaries" means any one or more Subsidiaries which, if
considered in the aggregate as a single Subsidiary, would be a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X under the Securities
Exchange Act of 1934. For purposes of this Agreement, a type of event shall not
be deemed to have occurred with respect to Significant Subsidiaries unless such
type of event has occurred with respect to each of the Subsidiaries required to
be included to constitute "Significant Subsidiaries" as defined in the preceding
sentence.
"Subsidiary" means any corporation or other entity of which securities 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
13
<PAGE> 18
owned by the Borrower or by the Borrower and one or more Subsidiaries or by one
or more Subsidiaries.
"Termination Date" means November 14, 2001, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(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 a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
SECTION 1.02 Accounting Terms and Determinations. 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 in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if the Borrower notifies the Agent that the
Borrower wishes to amend any covenant in Article 5 to eliminate the effect of
any change in generally accepted accounting principles on the operation of such
covenant (or if the Agent notifies the Borrower that the Required Banks wish to
amend Article 5 for such purpose), then the Borrower'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 Borrower
and the Required Banks.
SECTION 1.03 Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article 2 on a single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference to the pricing of
the Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a
Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of
Article 2 under which participation therein is determined (i.e., a "Committed
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<PAGE> 19
Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in
proportion to their Commitments, while a "Money Market Borrowing" is a
Borrowing under Section 2.03 in which the Bank participants are determined on
the basis of their bids in accordance therewith).
ARTICLE 1
THE CREDITS
SECTION 2.01 Committed Borrowings. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section from time to time on and after the Effective Date;
provided that the aggregate principal amount of the Committed Loans made by such
Bank at any one time outstanding shall not exceed the amount of its Commitment
at that time. Each Borrowing under this Section shall be in an aggregate
principal amount of $25,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be in the aggregate amount available in accordance
with Section 3.02(b)) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the foregoing limits, the
Borrower may borrow under this Section, repay, or to the extent permitted by
Section 2.11, prepay Loans and reborrow at any time under this Section. Amounts
repaid pursuant to Section 8.02 shall not be reborrowed except as provided
therein.
SECTION 1.2. Notice of Committed Borrowings. The Borrower shall give the
Agent notice (a "Notice of Committed Borrowing") not later than 10:00 A.M. (New
York City time) on (x) the date of each Base Rate Borrowing, (y) the second
Domestic Business Day before each CD Borrowing and (z) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to be
CD Loans, Base Rate Loans or Euro-Dollar Loans, and
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<PAGE> 20
(d) in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this
Section, request the Banks on and after the Effective Date to make
offers to make Money Market Loans to the Borrower. The Banks may, but shall
have no obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes
to request offers to make Money Market Loans under this Section, it shall
transmit to the Agent by telex or facsimile transmission a Money Market Quote
Request substantially in the form of Exhibit B hereto so as to be received no
later than 10:00 A.M. (New York City time) on (x) the fifth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$25,000,000 or a larger multiple of $1,000,000, 0.1.2.3 the duration of
the Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iii) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market
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<PAGE> 21
Quote Request shall be given within five Euro-Dollar Business Days (or such
other number of days as the Borrower and the Agent may agree) of any other
Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a
Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission (or by telephone promptly confirmed by telex or
facsimile transmission) an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance
with this Section.
(d) Submission and Contents of Money Market Quotes. Each
Bank may submit a Money Market Quote containing an offer or offers to make
Money Market Loans in response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Agent by telex or facsimile transmission (or by
telephone promptly confirmed by telex or facsimile transmission) at its offices
specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York
City time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:00 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Borrower and the Agent shall
have mutually agreed and shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective); provided that Money
Market Quotes submitted by the Agent (or any affiliate of the Agent) in the
capacity of a Bank may be submitted, and may only be submitted, if the Agent or
such affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than (x) one hour prior to the deadline for the
other Banks, in the case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute Rate Auction. Subject
to Articles 3 and 6, any Money Market Quote so made shall be irrevocable except
with the written consent of the Agent given on the instructions of the
Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing (as specified in the
relevant Money Market Quote Request),
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<PAGE> 22
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $1,000,000 or a larger multiple
thereof, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above
or below the applicable London Interbank Offered Rate (the
"Money Market Margin") offered for each such Money Market
Loan, expressed as a percentage (specified to the nearest
1/10,000th of 1%) to be added to or subtracted from such
applicable London Interbank Offered Rate,
(D) in the case of an Absolute Rate Auction, the rate
of interest per annum (specified to the nearest 1/10,000th
of 1%) (the "Money Market Absolute Rate") offered for each such
Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the
quoting Bank with respect to each Interest Period specified in the
related Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market Quotes;
or
(D) arrives after the time set forth in subsection
(d)(i).
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<PAGE> 23
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a
Bank that is in accordance with subsection (d) and (y) of any Money
Market Quote that amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with respect to the
same Money Market Quote Request. Any such subsequent Money Market
Quote shall be disregarded by the Agent unless such subsequent Money
Market Quote is submitted solely to correct a manifest error in such
former Money Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest Period
specified in the related Money Market Quote Request, (B) the
respective principal amounts and Money Market Margins or Money Market
Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money
Market Loans for which offers in any single Money Market Quote may be
accepted.
(f) Acceptance and Notice by Borrower. Not later than
10:00 A.M. (New York City time) on (x) the third Euro-Dollar Business
Day prior to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) the proposed date of Borrowing, in the case of an
Absolute Rate Auction (or, in either case, such other time or date
as the Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective), the Borrower shall notify the
Agent of its acceptance or non-acceptance of the offers so notified to
it pursuant to subsection (e). In the case of acceptance, such notice
(a "Notice of Money Market Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted.
The Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $25,000,000 or a larger multiple of
$1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be, and
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<PAGE> 24
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) 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 Money Market Margins or Money Market Absolute Rates, 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 Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in multiples of
$1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts
of Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's share (if any) of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable
by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Bank participating therein shall (except as provided in
subsection (c) of this Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address referred to in Section 9.01. Unless the Agent determines that any
applicable condition specified in Article 3 has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower at the
Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan 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 being
borrowed and the amount being repaid shall be made available by such Bank to
the Agent as provided in subsection (b) of this Section, or remitted by the
Borrower to the Agent as provided in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing 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
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<PAGE> 25
such share available to the Agent on the date of such Borrowing in accordance
with subsections (b) and (c) of this Section and the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not have so made such share
available to the Agent, such Bank and the Borrower severally agree to repay to
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, a rate per annum equal to the higher of the Federal Funds
Rate and the interest rate applicable thereto pursuant to Section 2.07 and
(ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be evidenced by a
single Note payable to the order of such Bank for the account of its Applicable
Lending Office in an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request that
its Loans of a particular type be evidenced by a separate Note in an amount
equal to the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Agent shall mail such Note to such Bank. Each Bank shall record the date,
amount, type and maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect thereto, and prior
to any transfer of its Note shall endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding; provided that the failure of any Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
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SECTION 2.06. Maturity of Loans. Each Loan included in any Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of or overdue interest on any Base
Rate Loan shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 1% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal amount
thereof, for each day during the Interest Period applicable thereto, at a rate
per annum equal to the sum of the CD Margin for such day plus the Adjusted CD
Rate applicable to such Interest Period; provided that, if any CD Loan or any
portion thereof shall, as a result of clause (2)(b) of the definition of
Interest Period, have an Interest Period of less than 30 days, such CD Loan or
portion thereof shall bear interest for each day during such Interest Period at
the Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than 90
days, 90 days after the first day thereof. Any overdue principal of or overdue
interest on any CD Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 1% plus the higher of (i) the
sum of the CD Margin for such day plus the Adjusted CD Rate applicable to the
Interest Period for such Loan and (ii) the Base Rate for such day.
The "Adjusted CD Rate" applicable to any Interest Period means a rate per
annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ------------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
---------------
* The amount in brackets being rounded upwards, if necessary, to the
next higher 1/100 of 1%
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<PAGE> 27
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City 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 for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York City having a maturity
comparable to the related Interest Period and in an amount of $100,000 or more.
The Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in effect on
such day which is payable by a member of the Bank Insurance Fund classified as
adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R.
Section 327.4(a) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective date
of any change in the Assessment Rate.
(c) Subject to Section 2.16, each Euro-Dollar Loan shall bear interest
on the outstanding principal amount thereof, for each day during the Interest
Period applicable thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Interest Period. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest Period means
the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
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<PAGE> 28
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period; provided that, if such Interest Period has a duration of
nine or twelve months, the London Interbank Offered Rate applicable thereto
shall be determined as provided in subsection (d) of this Section.
(d) If requested to do so by the Borrower at least four Euro-Dollar
Business Days before the beginning of any Interest Period applicable to a
Euro-Dollar Borrowing, each Bank will advise the Borrower before 12:00 noon on
the third Euro-Dollar Business Day before the beginning of such Interest Period
as to (i) whether, if the Borrower selects a duration of nine or twelve months
for such Interest Period, such Bank expects that deposits in dollars with a term
corresponding to such Interest Period will be available to it in the London
interbank market two Euro-Dollar Business Days before the beginning of such
Interest Period in the amount required to fund its Euro-Dollar Loan to which
such Interest Period would apply and, if so, (ii) the interest rate which such
Bank would have been required to pay as of 10:00 A.M. (New York City time) on
such third Euro-Dollar Business Day before the beginning of such Interest Period
to obtain such deposits. If, but only if, all of the Banks confirm that they
expect such deposits to be available to them, the Borrower shall be entitled to
select a duration of nine or twelve months (as the case may be) for such
Interest Period pursuant to Section 2.02, in which event (i) each Bank shall
advise the Agent as to the interest rate per annum at which such deposits were
offered to it in the London interbank market at approximately 10:00 A.M. (New
York City time) two Euro-Dollar Business Days before the beginning of such
Interest Period and (ii) the London Interbank Offered Rate applicable to such
Interest Period shall be the highest of the rates so quoted; provided that, as
an alternative to the foregoing procedure, the London Interbank Offered Rate
applicable to any nine-month or twelve-month Interest Period may be established
by agreement among the Borrower and all the Banks.
(e) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 1% plus the higher of (i) the sum of the
Euro-Dollar Margin for such day plus any additional interest rate applicable
pursuant to Section 2.16 plus the London Interbank Offered Rate applicable to
the Interest
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<PAGE> 29
Period for such Loan and (ii) the sum of the Euro-Dollar Margin for such day
plus any additional interest rate applicable pursuant to Section 2.16 plus the
average (rounded upwards, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period of
time not longer than six months as the Agent may elect) deposits in dollars in
an amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference Bank in
the London interbank market for the applicable period determined as provided
above (or, if the circumstances described in clause (a) or (b) of Section 8.01
shall exist, at a rate per annum equal to the sum of 1% plus the Base Rate for
such day).
(f) Subject to Section 8.01(a), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing were a Committed
Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the
Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or overdue interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 1% plus the Base Rate for such day.
(g) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks by telex or cable of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(h) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
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SECTION 2.08. Facility Fees. The Borrower shall pay to the Agent, for the
account of the Banks ratably in proportion to their Commitments, a facility fee
calculated, subject to Section 2.17, for each day at the Facility Fee Rate for
such day determined in accordance with the Pricing Schedule. Such facility fee
shall accrue for each day (i) from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the aggregate amount of the Commitments
(whether used or unused) in effect on such day and (ii) from and including such
date of termination of the Commitments to but excluding the date the Loans shall
be repaid in their entirety, on the aggregate principal amount of the Loans
outstanding on such day. Fees accrued under this Section shall be payable
quarterly on the last Domestic Business Day of each March, June, September and
December and upon the termination of the Commitments in their entirety (and, if
later, the date the Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. (a) The
Borrower may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce from time to time by an aggregate amount of
$25,000,000 or any larger multiple of $1,000,000, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans.
(b) Upon receipt of a notice of termination or reduction pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of the new amount (if any) of such Bank's Commitment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.10. Mandatory Termination of Commitments. The Commitments shall
terminate on the Termination Date, and any Loans then outstanding (together with
accrued interest thereon) shall be due and payable on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may (i) upon at
least one Domestic Business Day's notice to the Agent, prepay any Base Rate
Borrowing (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)), (ii) upon at least two Domestic Business Days'
notice to the Agent, subject to Section 2.13, prepay any CD Borrowing or (iii)
upon at least three Euro-Dollar Business Days' notice to the Agent, subject to
Section 2.13, prepay any Euro-Dollar Borrowing, in whole at any time, or from
time to time in part in amounts aggregating $25,000,000 or any larger multiple
of
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<PAGE> 31
$1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Borrowing.
(b) Except as provided in clause (i) of Section 2.11(a), the Borrower may
not prepay all or any portion of the principal amount of any Money Market Loan
prior to the maturity thereof.
(c) 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
ratable share (if any) of such prepayment and such notice shall not thereafter
be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrower shall
make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 12:00 Noon (New York City time) on the date when due,
in Federal or other funds immediately available in New York City, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent
that
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the Borrower shall not have so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan (pursuant to Section 2.11, Article
6, Article 8 or otherwise) on any day other than the last day of the Interest
Period applicable thereto, or the last day of an applicable period fixed
pursuant to Section 2.07(e), or if the Borrower fails to borrow any Fixed Rate
Loan after notice has been given to any Bank in accordance with Section 2.04(a)
or if the Borrower fails to prepay any Fixed Rate Loan after notice has been
given to any Bank in accordance with Section 2.11(c), the Borrower shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow, provided that
such Bank shall have delivered to the Borrower a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Withholding Tax Exemption. At least five Domestic Business
Days prior to the first date on which interest or fees are payable hereunder for
the account of any Bank, each Bank that is not incorporated under the laws of
the United States of America or a state thereof agrees that it will deliver to
each of the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Bank is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Borrower and the Agent two additional copies of such form (or a successor
form) on or before the date that such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent
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form so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, in each
case certifying that such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises the Borrower and the Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
SECTION 2.16. Regulation D Compensation. For so long as any Bank maintains
reserves against "Eurocurrency liabilities" (or any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of such Bank to United
States residents), and as a result the cost to such Bank (or its Applicable
Lending Office) of making or maintaining its Euro-Dollar Loans is increased,
then such Bank may require the Borrower to pay, contemporaneously with each
payment of interest on the Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum determined by such Bank up to
but not exceeding the excess of (i)(A) the applicable London Interbank Offered
Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the
applicable London Interbank Offered Rate. Any Bank wishing to require payment
of such additional interest (x) shall so notify the Borrower and the Agent, in
which case such additional interest on the Euro-Dollar Loans of such Bank shall
be payable to such Bank at the place indicated in such notice with respect to
each Interest Period commencing at least five Business Days after the giving of
such notice and (y) shall furnish to the Borrower at least five Euro-Dollar
Business Days prior to each date on which interest is payable on the Euro-Dollar
Loans an officer's certificate setting forth the amount to which such Bank is
then entitled under this Section (which shall be consistent with such Bank's
good faith estimate of the level at which the related reserves are maintained by
it).
SECTION 2.17. Application of Interest Rates and Fees. Interest and fees
shall accrue on and after the Effective Date at the rates described in Sections
2.07 and 2.08. Interest and fees (including commitment fees) for all periods
prior to the Effective Date shall be calculated and paid in accordance with the
Existing Credit Agreement.
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ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") that each of the following conditions shall have
been satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the
Agent in form satisfactory to it of facsimile or other written
confirmation from such party that it has executed a counterpart
hereof);
(b) receipt by the Agent for the account of each Bank of
a duly executed Note, dated on or before the Effective Date, complying
with the provisions of Section 2.05;
(c) receipt by the Agent of an opinion of John R.
Leekley, Senior Vice President-General Counsel of the Borrower,
substantially in the form of Exhibit E hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(d) receipt by the Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agent, substantially in the form of
Exhibit F hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(e) receipt by the Agent of a certificate of a duly
authorized officer of the Borrower, dated the Effective Date,
certifying that (i) as of such date no Default shall have occurred
and be continuing and (ii) as of such date the representations and
warranties of the Borrower contained in this Agreement are true in all
material respects; and
(f) receipt by the Agent of all documents it may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and the
Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Agent;
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provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
December 14, 1996. The Agent shall promptly notify the Borrower and the Banks
of the Effective Date, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.02. All Borrowings. The obligation of any Bank to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and after such Borrowing,
(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, no Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the
Borrower contained in this Agreement (except, in the case of a Refunding
Borrowing, the representations and warranties set forth in Sections
4.04(b), 4.05, 4.06 (other than clause (i) thereof), 4.07 and 4.10) shall
be true in all material respects on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
SECTION 3.03. Consequences of Effectiveness. On the Effective Date the
Existing Credit Agreement will be amended and restated to read in full as set
forth herein and the promissory notes of the Borrower delivered pursuant thereto
will become void, all without further action by any of the parties thereto.
Notwithstanding such amendment and restatement of the Existing Credit Agreement,
the rights and obligations of the parties thereto with respect to the
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period prior to the Effective Date will continue to be governed by the
provisions thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower and its
Domestic Subsidiaries are corporations duly incorporated, validly existing and
in good standing under the laws of their respective states of incorporation, and
have all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on their businesses,
considered as a whole, substantially as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Borrower of this Agreement and
the Notes are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official (except filings under the
Securities Exchange Act of 1934) and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and the Notes, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of December 31, 1995 and the related consolidated statements of
income and cash flows for the Fiscal Year then ended, reported on by Coopers &
Lybrand L.L.P. and set forth in the Borrower's 1995 Form 10-K, a copy of which
has been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
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the Borrower and its Consolidated Subsidiaries as of such date and the
consolidated results of their operations and their cash flows for such Fiscal
Year.
(b) The unaudited condensed consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of June 30, 1996 and the related unaudited
condensed statements of consolidated income and consolidated cash flows for the
six months then ended, set forth in the Borrower's quarterly report for the
fiscal quarter ended June 30, 1996 as filed with the Securities and Exchange
Commission on Form 10-Q, a copy of which has been delivered to each of the
Banks, fairly present, on a basis consistent with the financial statements
referred to in subsection (a) of this Section, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such six-month
period (subject to normal year-end adjustments).
(c) There has been no material adverse change since June 30, 1996 in the
business or financial position of the Borrower and its Consolidated
Subsidiaries, considered as a whole, as reflected in the financial statements
referred to in subsection (b) of this Section.
SECTION 4.05. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which, in the reasonable opinion of the
Borrower, is likely to have a material adverse effect on the business or
financial position of the Borrower and its Consolidated Subsidiaries, considered
as a whole, or which in any manner draws into question the validity of this
Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group (i)
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and (ii) is in compliance
in all material respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member of the ERISA
Group has (x) sought a waiver of the minimum funding standard under Section 412
of the Internal Revenue 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 Internal Revenue Code, in each case
securing an amount greater than $10,000,000 or (z)
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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 Borrower and its Consolidated Subsidiaries.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Borrower conducts appropriate reviews of the effect of
Environmental Laws on the business, operations and properties of the Borrower
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 Borrower 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
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. United States Federal income tax returns of the
Borrower and its Subsidiaries have been examined and closed through the Fiscal
Year ended December 31, 1993. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes shown as due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary, except such taxes, if any, as are being contested in good
faith and as to which, in the opinion of the Borrower, adequate reserves have
been provided. The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of taxes or other governmental charges are, in
the opinion of the Borrower, adequate.
SECTION 4.09. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.10. Compliance with Laws. The Borrower 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 (i) the necessity of compliance
therewith is contested in good faith by appropriate proceedings, (ii) no
officer of the Borrower
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is aware that the Borrower or the relevant Subsidiary has failed to comply
therewith or (iii) the Borrower 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 Borrower and its
Consolidated Subsidiaries, taken as a whole.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 3.1. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days
after the end of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
Fiscal Year and the related consolidated statements of income and cash
flows for such Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal Year, all
reported on by Coopers & Lybrand L.L.P. or other independent public
accountants of nationally recognized standing, whose report shall be
without material qualification;
(b) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each Fiscal Year,
a condensed consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter, the related
condensed consolidated statement of income for such quarter and the
related condensed consolidated statements of income and cash flows for
the portion of such Fiscal Year ended at the end of such quarter,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year, all
in reasonable detail and certified, to the best of his knowledge
(subject to normal year-end adjustments), as to fairness of
presentation, and consistency with generally accepted accounting
principles (except for changes concurred in by the Borrower's
independent public accountants) by the chief financial officer or the
chief accounting officer of the Borrower;
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(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and (b)
above, a certificate of the chief financial officer or the
chief accounting officer of the Borrower (i) setting forth
in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements
of Sections 5.02 to 5.04, inclusive, on the date of such
financial statements, (ii) stating, to the best of his
knowledge, whether any Default exists on the date of such
certificate and (iii) if any Default then exists, setting
forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(d) within 15 days after any officer of the Borrower
becomes aware of the existence of any Default, unless such
Default shall have been cured before the end of such 15 day
period, a certificate of the chief financial officer or
the chief accounting officer of the Borrower setting forth the
details of such Default and the action which the Borrower is
taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
reports on Forms 10-K, 10-Q and 8-K and similar regular and
periodic reports which the Borrower shall have filed
with the Securities and Exchange Commission;
(g) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as 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
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Internal Revenue 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 Borrower setting forth details as to such occurrence
and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take; provided that no such
certificate shall be required unless the aggregate unpaid actual or
potential liability of members of the ERISA Group involved in all
events referred to in (i) through (vii) above of which officers of the
Borrower have obtained knowledge and have not previously reported
under this clause (g) exceeds $25,000,000;
(h) immediately after any officer of the Borrower obtains
knowledge of a change or a proposed change in the rating of the
Borrower's outstanding senior unsecured long-term debt securities by
Moody's or S&P, a certificate of the chief financial officer or chief
accounting officer of the Borrower setting forth the details thereof;
and
(i) from time to time such additional information
regarding the financial position or business of the Borrower as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Minimum Consolidated Tangible Net Worth. At no time
will Consolidated Tangible Net Worth be less than Minimum Consolidated Tangible
Net Worth. "Minimum Consolidated Tangible Net Worth" means $800,000,000;
provided that such amount shall be adjusted at the end of each Fiscal Quarter
ending after June 30, 1996, as follows:
(i) increased by 50% of Consolidated Net Income for such
Fiscal Quarter; provided that, if Consolidated Net Income for such
Fiscal Quarter is a negative number (a "Consolidated Net Loss"), an
amount up to 50% of such Consolidated Net Loss shall be applied first
to reduce Minimum Consolidated Tangible Net Worth to the extent of
offsetting prior increases (if any) in Minimum Consolidated Tangible
Net Worth made pursuant to this clause (i) during the same Fiscal Year
and second to
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reduce (but not below zero) any future increase in Minimum
Consolidated Tangible Net Worth that would otherwise be made
pursuant to this clause (i) during the same Fiscal Year; and
(ii) increased by an amount equal to 50% of all increases in
Consolidated Tangible Net Worth during such Fiscal Quarter attributable to
sales or issuances of the Borrower's Equity Securities; provided that an amount
up to 50% of all decreases in Consolidated Tangible Net Worth during such
Fiscal Quarter attributable to purchases or other retirements of the Borrower's
Equity Securities shall be applied first to offset any increase in Minimum
Consolidated Tangible Net Worth that would otherwise be made pursuant to this
clause (ii) at the end of such Fiscal Quarter, second to reduce Minimum
Consolidated Tangible Net Worth to the extent of offsetting prior increases (if
any) in Minimum Consolidated Tangible Net Worth made pursuant to this clause
(ii) and third to reduce (but not below zero) any future increase in Minimum
Consolidated Tangible Net Worth that would otherwise be made pursuant to this
clause (ii).
SECTION 5.03. Limitations on Debt. (a) The Borrower will not at any
time, and will not suffer or permit any Consolidated Subsidiary at any time to,
create, incur, issue, guarantee or assume any Debt if, immediately after giving
effect thereto, the ratio of (i) Consolidated Debt to (ii) the sum of
Consolidated Debt and Consolidated Adjusted Net Worth would exceed 57%.
(b) The Borrower will not at any time suffer or permit any
Consolidated Subsidiary to create, incur, issue, guarantee or assume any Debt
if, immediately after giving effect thereto, the aggregate outstanding amount
(determined at that time) of Debt of all Consolidated Subsidiaries (other than
Debt owed to the Borrower or one or more other Consolidated Subsidiaries) would
exceed 30% of Shareholders' Equity.
(c) Subsections (a) and (b) above shall not prevent (i) the Borrower
from creating, incurring, issuing, guaranteeing or assuming Debt for the
purpose of extending, renewing or Refunding (as such term is defined in this
subsection) an equal or greater principal amount of Debt then outstanding of
the Borrower or of Debt then outstanding of a Consolidated Subsidiary or (ii) a
Consolidated Subsidiary from creating, incurring, issuing, guaranteeing or
assuming Debt for the purpose of extending, renewing or Refunding an equal or
greater principal amount of Debt then outstanding of such Consolidated
Subsidiary, or (iii) the creation, incurrence, issuance, guarantee or
assumption of Debt owed to or owned
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by the Borrower or a Consolidated Subsidiary. For purposes of this subsection
(c), Debt is deemed to be for the purpose of "Refunding" other Debt if and to
the extent that (i) no later than 5 Domestic Business Days after the refunding
Debt is incurred, the Borrower delivers to the Agent written notice stating
that the purpose of such Debt is to refund outstanding Debt and specifying the
Debt to be refunded, (ii) the proceeds of such refunding Debt are held in the
form of cash or High Quality Investments (free of any Lien except a Lien
securing the specified Debt to be refunded) until such specified Debt is repaid
and (iii) such specified Debt to be refunded is repaid within 45 days after the
refunding Debt is incurred.
(d) For purposes of the limitations provided in, and computations under,
this Section, (i) when a corporation becomes a Consolidated Subsidiary it shall
be deemed to create at such time all the Debt it has outstanding immediately
after such time (provided that, if after giving effect to this clause (i), the
aggregate outstanding amount of Debt of all Consolidated Subsidiaries (other
than Debt owed to the Borrower or one or more other Consolidated Subsidiaries)
would be greater than 30% but less than 60% of Shareholders' Equity, this clause
(i) shall not apply at the time such corporation becomes a Consolidated
Subsidiary, but such corporation shall be deemed to create on the 15th day after
it becomes a Consolidated Subsidiary all the Debt it has outstanding on such
15th day), (ii) the disposition (other than to a Consolidated Subsidiary or the
Borrower) by the Borrower or a Subsidiary of capital stock of any Consolidated
Subsidiary which holds Debt of the Borrower or any other Consolidated Subsidiary
so that the Consolidated Subsidiary ceases to be a Consolidated Subsidiary after
such disposition shall be deemed the creation of such Debt, and (iii) the
disposition (other than to a Consolidated Subsidiary or the Borrower) of Debt of
the Borrower or any Consolidated Subsidiary by any Consolidated Subsidiary or
the Borrower shall be deemed the creation of such Debt.
SECTION 5.04. Negative Pledge. Neither the Borrower 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 June 30, 1996 securing Debt outstanding on
June 30, l996 in an aggregate principal amount not exceeding $30,000,000;
(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;
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(c) any Lien on any asset securing Debt incurred
or assumed solely 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
Borrower 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 Borrower 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 or entity acting for or on behalf of such holder) arising
pursuant to any order of attachment, 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;
(h) Liens incidental to the normal conduct of its business or
the ownership of its assets which (i) do not secure Debt, (ii) do
not secure any obligation in an amount exceeding $100,000,000 and (iii)
do not in the aggregate materially detract from the value of the
assets of the Borrower and its Consolidated Subsidiaries taken as a
whole or in the aggregate materially impair the use thereof in the
operation of the business of the Borrower and its Consolidated
Subsidiaries taken as a whole; and
(i) Liens securing Debt which are 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
Consolidated 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
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not at any time exceed the sum of (A) 20% of Consolidated Current
Assets plus (B) 5% of Consolidated Tangible Net Worth.
SECTION 5.05 Consolidations, Mergers and Sale of Assets. (a) The
Borrower will not directly or indirectly sell, lease, transfer or otherwise
dispose of all or substantially all of its assets, or merge or consolidate with
any other Person, or acquire any other Person through purchase of assets or
capital stock, unless either (i) the Borrower shall be the continuing or
surviving corporation or (ii) the successor or acquiring corporation (if other
than the Borrower) shall be a corporation organized under the laws of one of
the States of the United States of America and shall assume, by a writing
satisfactory in form and substance to the Required Banks, all of the
obligations of the Borrower under this Agreement and the Notes, including all
covenants herein and therein contained, in which case such successor or
acquiring corporation shall succeed to and be substituted for the Borrower with
the same effect as if it had been named herein as a party hereto.
(b) No disposition of assets, merger, consolidation or acquisition
referred to in subsection (a) of this Section shall be permitted if,
immediately after giving effect thereto, the Borrower would be in default under
any of the terms or provisions of this Agreement.
SECTION 5.06. Compliance with Laws. The Borrower 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 (i) the
necessity of compliance therewith is contested in good faith by appropriate
proceedings, (ii) no officer of the Borrower is aware that the Borrower or
the relevant Subsidiary has failed to comply therewith or (iii) the Borrower
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 the Borrower and its Consolidated Subsidiaries, taken as a whole.
SECTION 5.07. 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.
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ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal
of any Loan, or shall fail to pay within five days of the due date
thereof any interest or fees payable under this Agreement;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.02 to 5.05, inclusive;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clause (a) or (b) above) for 30 days after written notice
thereof has been given to the Borrower by the Agent at the request of
any Bank;
(d) any representation, warranty, certification or
statement made by the Borrower in this Agreement or any amendment
hereof or in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made or deemed to have been
made; provided that, if any representation and warranty deemed to have
been made by the Borrower pursuant to the last sentence of Section
3.02 as to the satisfaction of the condition of borrowing set forth in
clause (c)(i) of Section 3.02 shall have been incorrect solely by
reason of the existence of an Event of Default of which the Borrower
was not aware when such representation and warranty was deemed to have
been made and which was cured before or promptly after the Borrower
became aware thereof, then such representation and warranty shall be
deemed not to have been incorrect in any material respect;
(e) the Borrower and its Consolidated Subsidiaries shall
fail to make one or more payments in respect of Material Debt (other
than Acquired Debt in an aggregate outstanding principal amount not
exceeding $50,000,000) when due or within any applicable grace period,
and such failure has not been waived;
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(f) the Borrower or any Consolidated Subsidiary
shall fail to observe or perform any term, covenant or agreement
contained in any instrument or agreement (other than this Agreement)
by which it is bound relating to Debt (other than Acquired Debt in an
aggregate outstanding principal amount not exceeding $50,000,000), or
any other event or condition referred to therein shall occur, and the
effect of all such failures, events and conditions (each a "default")
is to cause the maturity of Material Debt to be accelerated or to
permit (any applicable period of grace having expired) the holder or
holders of Material Debt (or any Person acting on their behalf) to
accelerate the maturity thereof;
(g) the Borrower or Significant Subsidiaries shall, in
each case, commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property under any such law, or shall consent
to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced
against it under any such law, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or a resolution shall be adopted by either the
shareholders or the board of directors of such corporation to
authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or Significant Subsidiaries in any
United States Federal court or other court of competent jurisdiction
seeking in each case liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property under any such law, and in
each case such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or Significant
Subsidiaries as debtors under the federal bankruptcy laws as now or
hereafter in effect;
(i) any member of the ERISA Group 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
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ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Liabilities in excess of $50,000,000 (collectively,
a "Material Plan") shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title
IV of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to
be appointed to administer any Material Plan; 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 there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $50,000,000;
provided that no Event of Default shall exist under this clause (i)
with respect to any Prior Plan unless it is reasonably likely that one
or more members of the ERISA Group is liable with respect to the
relevant Unfunded Liabilities or current payment obligation, as the
case may be;
(j) a judgment or order for the payment of money in
excess of $10,000,000 shall be rendered against the Borrower or any
Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 45 days; or
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 30% or more of the outstanding shares of common stock of the
Borrower; or Continuing Directors shall cease to constitute a majority
of the board of directors of the Borrower;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate
outstanding principal amount of the Loans, by notice to the Borrower declare
the Notes (together with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that in the case of any of the Events of Default specified
in clause (g) or
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(h) above with respect to the Borrower, without any notice to the Borrower or
any other act by the Agent or the Banks, the Commitments shall thereupon
terminate and the Notes (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE 7
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank 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.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of New
York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or affiliate of the Borrower as if
it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default, except as expressly provided in Article 6.
SECTION 7.04. Consultation with Experts. The Agent may consult with legal
counsel (who may be counsel for the Borrower), independent public accountants
and other experts selected by it and shall not be liable 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.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable (i) to the Banks for
any
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action taken or not taken by such Person in connection herewith with the consent
or at the request of the Required Banks or (ii) to the Banks or the Borrower for
any action taken or not taken by such Person in the absence of such Person's own
gross negligence or willful 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 (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition specified in
Article 3, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of this Agreement, the Notes or
any other instrument or writing furnished in connection herewith. The Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any action taken or omitted by the Agent
hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges 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 credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
State thereof
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and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.
SECTION 7.09. Agent's Fees. The Borrower shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Borrower and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
(a) If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing (other than a Money Market Absolute Rate Borrowing):
(i) the Agent is advised by each of the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
such Reference Bank in the relevant market for such Interest Period, or
(ii) in the case of a Committed Borrowing, Banks having 50% or more
of the aggregate amount of the Commitments advise the Agent that the
Adjusted CD Rate or the London Interbank Offered Rate, as the case may be,
as determined by the Agent will not adequately and fairly reflect the cost
to such Banks of funding their CD Loans or Euro-Dollar Loans, as the case
may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the case
may be, shall be suspended. Unless the Borrower notifies the Agent at least
two Domestic Business Days before the date of any such Fixed Rate Borrowing
for which a Notice of Borrowing has previously been given that it elects
not to borrow on such date, (A) if such Fixed Rate Borrowing is a
Committed Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (B) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising
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such Borrowing shall bear interest for each day from and including the first day
to but excluding the last day of the Interest Period applicable thereto at the
Base Rate for such day.
(b) If deposits in dollars (in the applicable amounts) are not being
offered to any of the Reference Banks in the relevant market for any Interest
Period, by reason of circumstances affecting such Reference Bank, and not
affecting the London interbank market or the United States market for
certificates of deposit generally (as the case may be), the Agent shall, in
consultation with the Borrower and with the consent of the Required Banks,
appoint another bank to act as a Reference Bank hereunder.
SECTION 8.02. Illegality. If, after November 14, 1996, the adoption of any
applicable law, rule or regulation, or any change therein, or any change 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 Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to honor its binding
legal obligation hereunder to make, maintain or fund its Euro-Dollar Loans and
such Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until such Bank notifies
the Borrower and the Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Bank shall designate a different Euro-Dollar 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. If such Bank shall determine
that it may not lawfully continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal amount of each
such Euro-Dollar Loan, together with accrued interest thereon. Concurrently
with prepaying each such Euro-Dollar Loan, the Borrower shall borrow a Base Rate
Loan (or, if the Borrower so elects by at least one Domestic Business Day's
notice to the Agent and such Bank, a CD Loan) in an equal principal amount from
such Bank (on which interest and principal shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and such Bank shall make
such a Base Rate Loan or CD Loan, as the case may be.
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SECTION 8.03. Increased Cost and Reduced Return. (a) If on or after
(x) November 14, 1996, in the case of any Committed Loan or any obligation to
make Committed Loans or (y) the date of the related Money Market Quote, in the
case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change therein, or any change 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
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Bank (or its Applicable Lending Office) to any
tax, duty or other charge with respect to its Fixed Rate Loans, its Note or
its obligation to make Fixed Rate Loans, or shall change the basis of
taxation of payments to any Bank (or its Applicable Lending Office) of the
principal of or interest on its Fixed Rate Loans or any other amounts due
under this Agreement in respect of its Fixed Rate Loans or its obligation
to make Fixed Rate Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Applicable Lending Office imposed by
the United States of America or any State or political subdivision thereof
or 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 such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding (A) with respect to any CD
Loan any such requirement included in an applicable Domestic Reserve
Percentage and (B) with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment (excluding, with respect to any CD
Loan, any such requirement reflected in an applicable Assessment Rate) or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Applicable Lending Office) or shall
impose on any Bank (or its Applicable Lending Office) or on the United
States market for certificates of deposit or the London interbank market
any other condition affecting its Fixed Rate Loans, its Note or its
obligation to make Fixed Rate 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 any Fixed Rate Loan, or
to reduce the amount of any sum received or receivable by such Bank (or its
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Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction; provided that, if such Bank fails to demand
such compensation (or notify the Borrower that it will demand such compensation)
promptly upon becoming aware of the facts entitling it to do so, such Bank shall
not be entitled to such compensation for the period before the date on which it
actually demands (or notifies the Borrower that it will demand) such
compensation. If any Bank demands compensation under this subsection (a), the
Borrower may at any time, upon at least five Euro-Dollar Business Days' prior
notice to such Bank through the Agent, prepay in full each then outstanding
affected Fixed Rate Loan of such Bank, together with accrued interest thereon to
the date of prepayment. Concurrently with prepaying each such Fixed Rate Loan
of such Bank, the Borrower shall borrow a Base Rate Loan (or, if the Borrower
shall so elect in its notice of prepayment, a Fixed Rate Committed 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 Loan notwithstanding any
provision herein to the contrary.
(b) If any Bank shall have determined that, after November 14, 1996 the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such reduction; provided that, if
such Bank fails to demand such compensation (or notify the Borrower that it will
demand such compensation) promptly upon becoming aware of the facts entitling it
to do so, such Bank shall not be entitled to such compensation for the period
before the date on which it actually demands (or notifies the Borrower that it
will demand) such compensation.
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(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after November 14 ,1996, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.04. Substitute Loans. If (i) the obligation of any Bank to make
Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank
has demanded compensation under Section 8.03(a) and the Borrower shall, by at
least five Euro-Dollar Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section 8.04 shall apply to such
Bank, then, unless and until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension or demand for compensation no
longer apply, all Loans which would otherwise be made by such Bank as CD Loans
or Euro-Dollar Loans, as the case may be, shall be made instead as Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Fixed Rate Loans of the other Banks) or, if the Borrower shall so
elect in the Notice of Borrowing, CD Loans or Euro-Dollar Loans (whichever type
is not affected by such circumstances) for an Interest Period coincident with
the related Fixed Rate Borrowing.
SECTION 8.05. Substitution of Bank. If (i) the obligation of any Bank to
make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any
Bank has demanded compensation under Section 8.03, the Borrower shall have the
right, with the assistance of the Agent, to seek a mutually satisfactory
substitute bank or banks (which may be one or more of the Banks) to purchase the
Note and assume the Commitment of such Bank.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
or similar writing) and shall be given to such party: (x) in the case of the
Borrower
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or the Agent, at its address or its facsimile or telex number set forth on the
signature pages hereof, (y) in the case of any Bank, at its address or its
facsimile or telex number set forth in its Administrative Questionnaire or (z)
in the case of any party, such other address or facsimile or telex number as
such party may hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the telex number
specified in this Section 9.01 and the appropriate answerback is received, (ii)
if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified in this Section 9.01;
provided that notices to the Agent under Article 2 or Article 8 shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note 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.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification. (a) The
Borrower shall pay (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 hereunder and (ii) if an Event
of Default occurs, all reasonable out-of-pocket expenses incurred by the Agent
and each Bank, including reasonable fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom. The Borrower 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 Borrower agrees to indemnify and defend each Bank and their
respective directors, officers, agents, employees and affiliates from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages
or expenses substantially relating to or arising out of (i) the Borrower's
actual or proposed use of proceeds of Loans for the purpose of acquiring equity
securities of any other Person, or (ii) a change of ownership or control of the
Borrower, including but not limited to reasonable attorney's fees and settlement
costs; provided that (x) the foregoing indemnity shall not apply to any losses,
liabilities,
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claims, damages or expenses that do not relate to or arise out of this Agreement
or the activities of the parties hereto in connection herewith and (y) no Bank
shall have the right to be indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Note held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due with
respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other than its
indebtedness under the Notes. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all the Banks) or subject any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for the termination of the
Commitments, or (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement.
53
<PAGE> 58
SECTION 9.06. Successors and Assigns. 7.6.1 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 the Borrower may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks, except as provided in Section 5.05.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii) or (iii) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article 8 with respect
to its participating interest. An assignment or other transfer which is not
permitted by subsection (c) or (d) below shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all (but not
less than $10,000,000), of its rights and obligations under this Agreement and
the Notes, and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of Exhibit G
hereto executed by such Assignee and such transferor Bank, with (and subject to)
the subscribed consent of the Borrower and the Agent (which consent will not
unreasonably be withheld); provided that if an Assignee is a Bank or an
affiliate of such transferor Bank, no such consent shall be required; and
provided further that such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be a Bank party to this Agreement
and shall have
54
<PAGE> 59
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Note is issued
to the Assignee. In connection with any such assignment, the transferor Bank
shall pay to the Agent an administrative fee for processing such assignment in
the amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior to the first date
on which interest or fees are payable hereunder for its account, deliver to the
Borrower and the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
2.15.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 than such
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Applicable Lending Office under certain circumstances or
at a time when the circumstances giving rise to such greater payment did not
exist.
(f) If any Reference Bank assigns or otherwise transfers its Note to an
unaffiliated institution, the Agent shall, in consultation with the Borrower and
with the consent of the Required Banks, appoint another bank to act as a
Reference Bank hereunder.
SECTION 9.07. 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.
SECTION 9.08. Confidentiality. Each Bank agrees that all documentation
and other information made available by the Borrower to such Bank, whether under
the terms of this Agreement or any other loan agreement, shall (except to the
extent required by legal or governmental process or otherwise by law, or if such
documentation and other information is publicly available or hereafter
55
<PAGE> 60
becomes publicly available other than by action of any Bank, or was theretofore
known to such Bank independent of any disclosure thereto by the Borrower) be
held in the strictest confidence by such Bank and used solely in connection with
administration of loans from time to time outstanding from such Bank to the
Borrower; provided that (i) such Bank may disclose such documentation and
other information to any other bank to which such Bank sells or proposes to sell
a participation in its Loans hereunder, if such other bank, prior to such
disclosure, agrees for the benefit of the Borrower to comply with the provisions
of this Section, (ii) such Bank may disclose the provisions of this Agreement
and the Notes and the amounts, maturities and interest rates of its Loans to any
purchaser or potential purchaser of such Bank's interest in any Loan and (iii)
such Bank may disclose such documentation and other information to the extent
required, in such Bank's good faith judgment, to enforce its rights under this
Agreement and the Notes.
SECTION 9.09. Severalty of Obligations. The obligations of the Banks
hereunder are several. No failure by any Bank to perform its obligations
hereunder shall relieve any other Bank of its obligations hereunder, and no Bank
shall be responsible for the performance of any other Bank's obligations
hereunder or for any action taken or omitted by any other Bank hereunder.
SECTION 9.10. New York Law; Submission to Jurisdiction. This Agreement
and each Note shall be construed in accordance with and governed by the laws of
the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
SECTION 9.11. Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof, except that the Existing
Credit Agreement shall continue to govern the rights and obligations of the
parties thereto with respect to the period prior to the Effective Date.
56
<PAGE> 61
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
57
<PAGE> 62
IN WITNESS WHEREOF, 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 /s/ Robert B. Rosowski
---------------------------
Title: Vice President - Controller
and Treasurer
21001 Van Born Road
Taylor, Michigan 48180
Attention: President and Vice
President-General Counsel
Telecopy Number: (313) 374-6135
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ Douglas A. Cruikshank
---------------------------
Title: Vice President
NBD BANK
By /s/ Richard H. Huttenlocher
---------------------------
Title: First Vice President
BANK OF AMERICA ILLINOIS
By /s/ Steven K. Ahrenholz
---------------------------
Title: Vice President
<PAGE> 63
COMERICA BANK
By /s/ James R. Grossett
--------------------------------
Title: Vice President
NATIONSBANK, N.A.
By /s/ Wallace Harris, Jr.
--------------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ Peter F. Stack Title:
--------------------------------
Assistant Vice President
THE BANK OF NEW YORK
By /s/ Douglas Ober
--------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK
By /s/ Andris G. Kalnins
--------------------------------
Title: Vice President
<PAGE> 64
COMMERZBANK AKTIENGESELLSCHAFT
CHICAGO BRANCH
By /s/ William J. Binder
-------------------------------------
Title: Assistant Vice President
By /s/ J. Timothy Shortly
-------------------------------------
Title: Senior Vice President
ROYAL BANK OF CANADA
By /s/ Patrick K. Shields
-------------------------------------
Title: Manager, Corporate Banking
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ John A. Whitner
-------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ A. S. Norsworthy
-------------------------------------
Title: Senior Team Leader-Loan
Operations
THE BANK OF TOKYO-MITSUBISHI LTD.,
CHICAGO BRANCH
<PAGE> 65
By /s/ Tokutaro Sekine
-----------------------------------
Title: General Manager
THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By /s/ Seiichiro Ino
-----------------------------------
Title: Vice President
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES
By /s/ Andrew K. Mittag
-----------------------------------
Title: Vice President
By /s/ Anthony Berti
-----------------------------------
Title: Assistant Treasurer
KEYBANK NATIONAL ASSOCIATION
By /s/ Thomas A. Crandell
-----------------------------------
Title: Assistant Vice President
ISTITUTO BANCARIO SAN PAOLO
DI TORINO SPA
By /s/ William J. De Angelo
-----------------------------------
Title: First Vice President
By /s/ Robert S. Wurster
-----------------------------------
Title: First Vice President
<PAGE> 66
THE SANWA BANK LTD.
CHICAGO BRANCH
By: /s/ Richard H. Ault
--------------------------------
Title: Vice President
THE SUMITOMO BANK, LTD.
By: /s/ Hiroyuki Iwami
------------------------------
Title: Joint General Manager
<PAGE> 67
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Douglas A. Cruikshank
-------------------------------
Title: Vice President
Attention: Douglas A. Cruikshank
60 Wall Street
New York, New York 10260-0060
Telex Number: 177615 MGT UT
Telecopy Number: (212) 648-5336
<PAGE> 68
COMMITMENT SCHEDULE
Name of Bank Commitment
------------ ----------
Morgan Guaranty Trust Company of New York $ 78,000,000
NBD Bank $ 70,000,000
Bank of America Illinois $ 60,000,000
Comerica Bank $ 60,000,000
NationsBank, N.A. $ 60,000,000
PNC Bank, National Association $ 60,000,000
The Bank of New York $ 34,000,000
The Chase Manhattan Bank $ 34,000,000
Commerzbank Aktiengesellschaft Chicago
Branch $ 34,000,000
Royal Bank of Canada $ 34,000,000
Wachovia Bank of Georgia, N.A. $ 34,000,000
The Bank of Nova Scotia $ 24,000,000
The Bank of Tokyo-Mitsubishi, Ltd.,
Chicago Branch $ 24,000,000
The Dai-Ichi Kangyo Bank, Ltd., Chicago
Branch $ 24,000,000
Dresdner Bank AG New York and Grand Cayman
Branches $ 24,000,000
Istituto Bancario San Paolo Di Torino,
S.p.A $ 24,000,000
KeyBank National Association $ 24,000,000
The Sanwa Bank Ltd. Chicago Branch $ 24,000,000
The Sumitomo Bank, Ltd. $ 24,000,000
Total ------------
Commitments $750,000,000
<PAGE> 69
PRICING SCHEDULE
Each of "Facility Fee Rate", "Euro-Dollar Margin" and "CD Margin" means for any
day the rate per annum set forth below in the applicable row under the column
corresponding to the Pricing Level that applies on such day:
<TABLE>
<CAPTION>
Pricing Level Level I Level II Level III Level IV Level V Level VI
------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Facility Fee Rate .075% .085% .1% .125% .15% .2%
Euro-Dollar Margin .125% .165% .20% .275% .325% .55%
CD Margin .25% .29% .325% .4% .45% .675%
</TABLE>
For purposes of this Schedule, the following terms have the following meanings:
"Level I Pricing" applies for any day if on such day any of the Borrower's
outstanding senior unsecured long-term debt is rated A or higher by S&P and A2
or higher by Moody's.
"Level II Pricing" applies for any day if on such day (i) any of the
Borrower's outstanding senior unsecured long-term debt is rated A- or higher by
S&P or A3 or higher by Moody's, and (ii) Level I Pricing does not apply.
"Level III Pricing" applies for any day if on such day (i) any of the
Borrower's outstanding senior unsecured long-term debt is rated BBB+ or higher
by S&P or Baa1 or higher by Moody's, and (ii) neither Level I Pricing nor Level
II Pricing applies.
"Level IV Pricing" applies for any day if on such day (i) any of the
Borrower's outstanding senior unsecured long-term debt is rated BBB or higher by
S&P and Baa2 or higher by Moody's, and (ii) none of Level I Pricing, Level II
Pricing, or Level III Pricing applies.
"Level V Pricing" applies for any day if on such day (i) any of the
Borrower's outstanding senior unsecured long-term debt is rated BBB- or higher
by S&P and Baa3 or higher by Moody's, and (ii) none of Level I Pricing, Level II
Pricing, Level III Pricing or Level IV Pricing applies.
"Level VI Pricing" applies for any day if on such day no other Pricing
Level applies.
"Moody's" means Moody's Investors Services, Inc.
"Pricing Level" refers to the determination of which of Level I, Level II,
Level III, Level IV, Level V or Level VI Pricing applies on any day.
"S&P" means Standard & Poor's Ratings Services.
<PAGE> 70
The credit ratings to be utilized for purposes of this Schedule are the
ratings assigned to outstanding senior unsecured long-term debt securities of
the Borrower without third party credit support. Ratings assigned to any
obligation of the Borrower which is secured or which has the benefit of third
party credit support shall be disregarded. For purposes of this Pricing
Schedule, the credit ratings in effect on any day are those in effect at the
close of business on such day.
<PAGE> 71
EXHIBIT A
NOTE
New York, New York
For value received, MASCO CORPORATION, a Delaware corporation (the
"Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the last day of the Interest Period
relating to such Loan. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities thereof and
all repayments of the principal thereof shall be recorded by the Bank and, prior
to any transfer hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding shall be endorsed by
the Bank on the schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the failure of the Bank to
make any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Amended and Restated
Credit Agreement dated as of November 14, 1996 among the Borrower, the banks
party thereto and Morgan Guaranty Trust Company of New York, as Agent (as the
same may be amended from time to time, the "Credit Agreement"). Terms defined
in the Credit Agreement are used herein with the same meanings. Reference is
made to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
MASCO CORPORATION
By
-----------------------
Title:
<PAGE> 72
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2
<PAGE> 73
EXHIBIT B
Form of Money Market Quote Request
----------------------------------
[Date]
To: Morgan Guaranty Trust Company of New York (the "Agent")
From: Masco Corporation (the "Borrower")
Re: Amended and Restated Credit Agreement (the "Credit Agreement") dated
as of November 14, 1996 among the Borrower, the Banks party thereto
and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount** Interest Period***
- ------------------ ------------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
MASCO CORPORATION
By:____________________________
Title:
__________________________________
* Amount must be $25,000,000 or a larger multiple of $1,000,000.
** Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE> 74
EXHIBIT C
Form of Invitation for Money Market Quotes
------------------------------------------
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to Masco Corporation (the "Borrower")
Pursuant to Section 2.03 of the Amended and Restated Credit Agreement
dated as of November 14, 1996 among the Borrower, the Banks party thereto and
the undersigned, as Agent, we are pleased on behalf of the Borrower to invite
you to submit Money Market Quotes to the Borrower for the following proposed
Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
- ---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:00
A.M.] (New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:__________________________________
Authorized Officer
<PAGE> 75
EXHIBIT D
Form of Money Market Quote
-------------------------------
To: Morgan Guaranty Trust Company
of New York, as Agent
Re: Money Market Quote to
Masco Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote
on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank: ______________________
3. Date of Borrowing: ____________________ *
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount ** Period *** [Margin****] [Absolute Rate *****]
- --------- ----------- ------------ ---------------------
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$____________.] **
- ----------------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must be
made for $1,000,000 or a larger multiple thereof.
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
<PAGE> 76
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Amended and Restated
Credit Agreement dated as of November 14, 1996 among the Borrower, the Banks
party thereto and yourselves, as Agent, irrevocably obligates us to make the
Money Market Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By:
---------------- --------------------
Authorized Officer
2
<PAGE> 77
EXHIBIT E
OPINION OF
COUNSEL FOR THE BORROWER
------------------------
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am Senior Vice President-General Counsel of Masco Corporation (the
"Borrower") and am familiar with the Amended and Restated Credit Agreement dated
as of November 14, 1996 (the "Credit Agreement") among the Borrower, the Banks
party thereto and Morgan Guaranty Trust Company of New York, as Agent. Terms
defined in the Credit Agreement are used herein as therein defined. This
opinion is being rendered to you pursuant to Section 3.01(c) of the Credit
Agreement.
I have examined originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and has all corporate powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its businesses substantially as now conducted.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action of the Borrower, require
no action in respect of the Borrower by, or filing in respect of the Borrower
with, any governmental body, agency or official (except filings under the
Securities Exchange Act of 1934) and do not contravene,
<PAGE> 78
Page Two
or constitute a default under any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other instrument known to me
to be binding upon the Borrower or result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries under any such
agreement or instrument.
3. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable in accordance with its terms except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
4. There is no action, suit or proceeding pending against, or to the
best of my knowledge threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which, in my opinion, is likely to have a material adverse effect on
the business or financial position of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws into question
the validity of the Credit Agreement or the Notes.
Very truly yours,
John R. Leekley
Senior Vice President-General Counsel
<PAGE> 79
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
----------------------
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Amended and Restated Credit
Agreement dated as of November 14, 1996 (the "Credit Agreement") among Masco
Corporation, a Delaware corporation (the "Borrower"), the banks party thereto
(the "Banks") and Morgan Guaranty Trust Company of New York, as Agent (the
"Agent"), and have acted as special counsel for the Agent for the purpose of
rendering this opinion pursuant to Section 3.01(d) of the Credit Agreement.
Terms defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the Credit
Agreement and the Notes are within the Borrower's corporate powers and have been
duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
the Borrower and the Notes constitute valid and binding obligations of the
Borrower.
In giving the foregoing opinion, we express no opinion as to the effect (if
any) of any law of any jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such Bank may charge or
collect.
Very truly yours,
<PAGE> 80
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), MASCO CORPORATION (the "Borrower") and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the Amended and Restated Credit Agreement dated as of November 14, 1996 among
the Borrower, the Assignor and the other Banks party thereto, as Banks, and the
Agent (the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Committed Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion
<PAGE> 81
of the principal amount of the Committed Loans made by the Assignor outstanding
at the date hereof. Upon the execution and delivery hereof by the Assignor, the
Assignee, the Borrower and the Agent and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the Assignee shall, as of
the date hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a Commitment in an amount
equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as
of the date hereof, be reduced by a like amount and the Assignor released from
its obligations under the Credit Agreement to the extent such obligations have
been assumed by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds an amount equal to $_________*. It is understood
that facility fees accrued to the date hereof are for the account of the
Assignor and such fees accruing from and including the date hereof [in respect
of the Assigned Amount] are for the account of the Assignee. Each of the
Assignor and the Assignee hereby agrees that if it receives any amount under the
Credit Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
[SECTION 4. Consent of the Borrower and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agent is evidence of this consent. Pursuant to Section 9.06(c) the
Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of the Borrower, or the
validity and enforceability of the obligations of the Borrower in respect of the
Credit Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and will
continue to
- ---------------
* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee. It may be preferable in an
appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
2
<PAGE> 82
be responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
[ASSIGNOR]
By
Title:
[ASSIGNEE]
By
Title:
[MASCO CORPORATION
By
Title:
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By
Title:]
3
<PAGE> 1
EXHIBIT 4.f
Execution Copy
MASCOTECH, INC.
________________________________________________
$575,000,000
CREDIT AGREEMENT
DATED AS OF FEBRUARY 28, 1997
______________________________________________
NBD BANK, AS AGENT
AND
COMERICA BANK,
THE BANK OF NEW YORK,
NATIONSBANK, N.A., AND
BANK OF AMERICA ILLINOIS,
AS CO-AGENTS
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I. ............................................................ 1
DEFINITIONS ........................................................... 1
1.1 CERTAIN DEFINITIONS ....................................... 1
1.2 ACCOUNTING TERMS .......................................... 17
1.3 OTHER DEFINITIONS; RULES OF CONSTRUCTION .................. 17
ARTICLE II ........................................................... 18
TERMINATION OF EXISTING CREDIT AGREEMENT .............................. 18
2.1 TERMINATION ............................................... 18
ARTICLE III. .......................................................... 18
THE LOANS AND LETTER OF CREDIT ISSUANCES .............................. 18
3.1 SYNDICATED BORROWINGS...................................... 18
3.2 NOTICE OF SYNDICATED BORROWINGS............................ 18
3.3 LETTERS OF CREDIT.......................................... 19
3.4 BID-OPTION BORROWINGS ..................................... 22
3.5 NOTICE TO BANKS; FUNDING OF LOANS. ........................ 25
3.6 THE NOTES ................................................. 27
3.7 CERTAIN FEES .............................................. 27
3.8 TERMINATION OR REDUCTION OF COMMITMENTS.................... 28
3.9 MANDATORY TERMINATION OF COMMITMENTS....................... 28
3.10 EXTENSION OF SCHEDULED EXPIRATION DATE.................... 28
ARTICLE IV ............................................................ 29
PRINCIPAL PAYMENTS; INTEREST; ETC ..................................... 29
4.1 SCHEDULED PRINCIPAL PAYMENTS .............................. 29
4.2 PREPAYMENTS OF PRINCIPAL .................................. 29
4.3 INTEREST PAYMENTS ......................................... 30
4.4 PAYMENT PROCEDURES ........................................ 31
4.5 COMPUTATION OF INTEREST AND FEES .......................... 32
<PAGE> 3
4.6 NO SETOFF OR DEDUCTION .................................... 32
4.7 OTHER PROVISIONS APPLICABLE TO FOREIGN CURRENCY
BID-OPTION LOANS .......................................... 32
ARTICLE V.............................................................. 33
CHANGE IN CIRCUMSTANCES ............................................... 33
5.1 IMPOSSIBILITY; INTEREST RATE INADEQUATE OR UNFAIR ......... 33
5.2 ILLEGALITY................................................. 33
5.3 INCREASED COST; YIELD PROTECTION........................... 34
5.4 SUBSTITUTE LOANS........................................... 36
5.5 FUNDING LOSSES............................................. 36
ARTICLE VI............................................................. 37
REPRESENTATIONS AND WARRANTIES......................................... 37
6.1 CORPORATE EXISTENCE AND POWER.............................. 37
6.2 CORPORATE AUTHORITY; NO VIOLATIONS;
GOVERNMENTAL FILINGS; ETC ................................. 37
6.3 BINDING EFFECT ............................................ 37
6.4 LITIGATION ................................................ 37
6.5 TAXES...................................................... 38
6.6 FINANCIAL CONDITION........................................ 38
6.7 COMPLIANCE WITH ERISA ..................................... 38
6.8 ENVIRONMENTAL MATTERS ..................................... 38
6.9 COMPLIANCE WITH LAWS ...................................... 39
ARTICLE VII............................................................ 39
COVENANTS ............................................................. 39
7.1 FINANCIAL STATEMENTS ...................................... 39
7.2 CERTIFICATES OF NO DEFAULT AND COMPLIANCE ................. 40
7.3 PRESERVATION OF CORPORATE EXISTENCE, ETC. ................ 41
7.4 [INTENTIONALLY OMITTED] ................................... 41
7.5 TOTAL LEVERAGE RATIO ...................................... 41
7.6 [INTENTIONALLY OMITTED] ................................... 41
7.7 TANGIBLE CAPITAL FUNDS..................................... 41
7.8 SENIOR DEBT COVERAGE ...................................... 46
<PAGE> 4
7.9 SUBSIDIARY INDEBTEDNESS.................................... 41
7.10 NEGATIVE PLEDGE .......................................... 42
7.11 DISPOSITIONS OF ASSETS; MERGERS AND CONSOLIDATIONS;
RESTRICTED TRANSFERS...................................... 43
7.12 CHANGES IN SUBORDINATED DEBT ............................. 43
7.13 USE OF PROCEEDS........................................... 43
7.14 FISCAL YEAR............................................... 44
7.15 COMPLIANCE WITH LAWS...................................... 44
ARTICLE VIII........................................................... 44
CONDITIONS OF BORROWINGS AND LETTER OF CREDIT ISSUANCES ............... 44
8.1 EACH BORROWING AND LETTER OF CREDIT ISSUANCE............... 44
8.2 INITIAL BORROWING OR LETTER OF CREDIT ISSUANCE............. 45
8.3 CLOSING ................................................... 45
ARTICLE IX............................................................. 46
EVENTS OF DEFAULT AND REMEDIES ........................................ 46
9.1 EVENTS OF DEFAULT.......................................... 46
9.2 REMEDIES................................................... 48
9.3 SET OFF ................................................... 48
ARTICLE X.............................................................. 49
THE AGENTS AND THE BANKS .............................................. 49
10.1 APPOINTMENT AND AUTHORIZATION............................. 49
10.2 AGENT AND AFFILIATES ..................................... 49
10.3 SCOPE OF AGENT'S DUTIES .................................. 49
10.4 RELIANCE BY AGENT ........................................ 49
10.5 DEFAULT .................................................. 49
10.6 LIABILITY OF AGENT........................................ 50
10.7 NONRELIANCE ON AGENT AND OTHER BANKS...................... 50
10.8 INDEMNIFICATION........................................... 50
10.9 RESIGNATION OF AGENT...................................... 51
10.10 SHARING OF PAYMENTS...................................... 51
10.11 WITHHOLDING TAX EXEMPTION ............................... 51
<PAGE> 5
10.12 THE CO-AGENTS ........................................... 52
ARTICLE XI............................................................. 52
MISCELLANEOUS ......................................................... 52
11.1 AMENDMENTS, ETC........................................... 52
11.2 NOTICES................................................... 53
11.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE................. 53
11.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS............ 53
11.5 EXPENSES AND INDEMNIFICATION.............................. 54
11.6 SUCCESSORS AND ASSIGNS.................................... 55
11.7 CONFIDENTIALITY.......................................... 57
11.8 COUNTERPARTS; EFFECTIVENESS OF TELECOPIED SIGNATURES...... 58
11.9 TABLE OF CONTENTS AND HEADINGS............................ 58
11.10 CONSTRUCTION OF CERTAIN PROVISIONS....................... 58
11.11 INDEPENDENCE OF COVENANTS................................ 58
11.12 INTEREST RATE LIMITATION................................. 58
11.13 SUBSTITUTION OF BANKS.................................... 59
11.14 COLLATERAL............................................... 59
11.15 GOVERNING LAW............................................ 59
11.16 INTEGRATION AND SEVERABILITY............................. 59
11.17 WAIVER OF JURY TRIAL..................................... 59
<PAGE> 6
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
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 28, 1997 (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 lenders party hereto from time to time
(collectively, the "Banks" and individually, a "Bank"), NBD BANK, a Michigan
banking corporation formerly named NBD Bank, N.A., as agent (in such capacity,
the "Agent") for the Banks, and COMERICA BANK, a Michigan banking corporation,
THE BANK OF NEW YORK, a New York banking corporation, NATIONSBANK, N.A., a
national banking association, and BANK OF AMERICA ILLINOIS, an Illinois banking
corporation, 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 $675,000,000.
B. The Company now desires to replace the existing revolving 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 $575,000,000, including standby letters of
credit in an aggregate amount not exceeding $20,000,000, in order to provide
funds for its general corporate purposes.
C. The Banks are willing to provide such a replacement revolving
credit facility on the terms and conditions 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:
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).
MASCOTECH, INC. CREDIT AGREEMENT
-1-
<PAGE> 8
"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, plus (d)
an amount equal to the lesser of (i) the Deferred MSX Gain or (ii) $35,000,000.
"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.
"Applicable Margin" means, with respect to any Application Period for
Eurodollar Rate Syndicated Loans, CD Rate Loans, Facility Fees and Letters of
Credit, the percentage found in the applicable 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, the
Applicable Margin for Eurodollar Rate Syndicated Loans during the Application
Period shall be 0.40%. 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, (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, and (d) any change in the
Applicable Margin during any Interest Period for any Syndicated Loan shall be
effective as to such Syndicated Loan upon such change in the Applicable Margin
taking effect pursuant to this definition, but any change in the Applicable
Margin while any Letter of Credit is outstanding shall not be effective with
respect to such Letter of Credit for any quarterly period for which the fee for
such Letter of Credit has already been paid under Section 3.3(c). For purposes
of determining the Applicable Margin,
(i) if the proceeds resulting from all Stock Issuances, net of the cost of
all Stock Redemptions (other than any issuance or redemption, purchase,
retirement or other acquisition in connection with the Company's employee stock
award programs), or if the payments resulting from all Stock Redemptions, net of
the proceeds resulting from all Stock Issuances, 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
Stock Redemptions (other than any issuance or redemption, purchase retirement or
other acquisition in
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 9
connection with the Company's employee stock award programs) and the
related application of proceeds or funding or payment thereof within such
45-day period; and
(ii) if the proceeds resulting from all Stock Issuances, net of the cost
of Stock Redemptions (other than any issuance or redemption, purchase,
retirement or other acquisition in connection with the Company's employee stock
awards programs), or if the payments resulting from all Stock Redemptions, net
of the proceeds resulting from all Stock Issuances, 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 Stock Redemption (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 or payment thereof had occurred on the first day of such
Determination Period.
Notwithstanding anything in this definition of "Applicable Margin" to the
contrary, if the Company has a Senior Debt Rating at any time, including at any
time prior to the end of an Application Period, the Applicable Margin shall
change on the date such Senior Debt Rating is effective such that the Applicable
Margin is (x) 0.25% for Eurodollar Rate Syndicated Loans and, subject to clause
(d) above, Letters of Credit, (y) 0.375% for CD Rate Loans and (z) 0.10% for
Facility Fees.
"Application Period" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Assignment and Acceptance" is defined in Section 11.6(d).
"Available Masco Corporation Funding Commitment" means, as of any date, any
unused and available amount of the "Commitment" of Masco Corporation under, and
as defined in, the Securities Purchase Agreement, provided that such amount for
purposes of this definition shall not exceed $100,000,000, provided that such
"Commitment" relates only to the purchase by Masco Corporation of equity
securities of the Company or of Subordinated Debt of the Company.
"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
MASCOTECH, INC. CREDIT AGREEMENT
-3-
<PAGE> 10
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-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.
MASCOTECH, INC. CREDIT AGREEMENT
-4-
<PAGE> 11
"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
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.
"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:
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 12
(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 The First National Bank of Chicago 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 SectionE3.1, 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.
"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 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
MASCOTECH, INC. CREDIT AGREEMENT
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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.
"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).
"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 MSX 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 MSX International on January 3, 1997, which amount
was approximately $40,000,000 as of January 3, 1997 and has not been recognized
as income to the Company.
"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 $63,520,000 as of December 31, 1996 and has not been recognized as
income to the Company.
"Determination Date" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Determination Period" shall have the meaning ascribed thereto in the
definition of the term "Applicable Margin".
"Dollar Bid-Option Loan" means a Bid-Option Loan made in Dollars.
"Dollar Bid-Option Percentage" means, with respect to any Bank and any
Dollar Bid-Option Borrowing, the percentage of the aggregate outstanding
principal amount of all the Dollar Bid-Option Loans comprising such Borrowing
represented by the outstanding principal amount of the Dollar Bid-Option Loan
made by such Bank as part of such Borrowing.
"Dollar Equivalent" means, as of any date, (a) with respect to any amount
of Dollars, the amount thereof, and (b) with respect to any amount of any
Foreign Currency, the amount of Dollars that could be purchased with such amount
of such Foreign Currency at the spot rate of exchange (except as provided in
Section 3.7(a)) quoted by the Agent at approximately 10:00 a.m. (Detroit time)
on such date or such number of Business Days before such date as may reasonably
be deemed necessary by the Agent for purposes of this Agreement.
"Dollars" and "$" shall mean the lawful money of the United States.
MASCOTECH, INC. CREDIT AGREEMENT
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"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: (a) Interest Charges for such period, and (b) income and other taxes.
"EBITDA Minus Capital Expenditures" means, as of the end of any fiscal
quarter, the amount determined by subtracting (a) Capital Expenditures
calculated as follows: (i) for the fiscal quarter ended December 31, 1996,
Capital Expenditures for such fiscal quarter then ending and the three
immediately preceding fiscal quarters, (ii) for the fiscal quarter ending March
31, 1997, Capital Expenditures for such fiscal quarter then ending and the four
immediately preceding fiscal quarters times four-fifths, (iii) for the fiscal
quarter ending June 30, 1997, Capital Expenditures for such fiscal quarter then
ending and the five immediately preceding fiscal quarters times two-thirds, (iv)
for the fiscal quarter ending September 30, 1997, Capital Expenditures for such
fiscal quarter then ending and the six immediately preceding fiscal quarters
times four-sevenths and (v) for the fiscal quarter ending December 31, 1997 and
any fiscal quarter thereafter, Capital Expenditures for such fiscal quarter then
ending and the seven immediately preceding fiscal quarters times one-half, from
(b) the sum of EBIT for such fiscal quarter plus the three immediately preceding
fiscal quarters 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
purposes of Section 7.8, 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 eight 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 manufacture, 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.
MASCOTECH, INC. CREDIT AGREEMENT
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"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
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, four months,
five 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.
MASCOTECH, INC. CREDIT AGREEMENT
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"Eurodollar Reference Bank" means the principal London office of each of
The First National Bank of Chicago 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.
"Existing Agent" means NBD Bank, a Michigan banking corporation, formerly
known as NBD Bank, N.A., in its capacity as agent for the Existing Banks.
"Existing Banks" means the banks that are parties to the Existing Credit
Agreement.
"Existing Bid-Option Loans" means the "Bid-Option Loans" (as defined in the
Existing Credit Agreement) outstanding on the Closing Date.
"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 dated as of
September 2, 1993, 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 "Loans" (as defined in the Existing Credit
Agreement) outstanding under the Existing Credit Agreement on the Closing Date.
"Facility Fees" means the facility fees payable pursuant to Section 3.7(b).
"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 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:
MASCOTECH, INC. CREDIT AGREEMENT
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(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).
"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.
"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
MASCOTECH, INC. CREDIT AGREEMENT
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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.
"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 Group" means Masco Corporation or any Person who, on the date
hereof, is an Affiliate of Masco Corporation or who hereafter becomes an
Affiliate controlled by Masco Corporation.
"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 January
1, 1997 for Investments (other than the Investment in MSX International on
January 3, 1997 (in the approximate amount of $70,000,000)) 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 (whether or not
accounted for on the equity method at the time of disposition) made since
January 1, 1997 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 (whether or not
accounted for on the equity method at the time of disposition) made on or prior
to January 1, 1997 (other than
MASCOTECH, INC. CREDIT AGREEMENT
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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 difference of the Dollar Equivalent of the Cash and Cash Equivalents of all
such excluded Investments minus the Dollar Equivalent of the Cash and Cash
Equivalents received by the Company from the disposition of all such excluded
Investments in the aggregate is less than $5,000,000.
"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
Any rating or change in rating given by Moody's shall be deemed effective, and
in effect, when publicly announced by Moody's.
"MSX International" shall mean MSX International, Inc., a Delaware
corporation.
"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 Worth" means, as of any date, (a) the amount of total shareholders'
equity of the Company and its Consolidated Subsidiaries on such date, determined
on a consolidated basis in accordance with generally accepted accounting
principles, minus (or, if the amount determined pursuant to the following clause
(b) is negative, plus the absolute amount thereof) (b) to the extent included in
total shareholders' equity the amount of the foreign currency translation
adjustment account, plus (c) 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".
"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.
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"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, limited liability company 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 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 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".
"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.
"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 51% of the aggregate
amount of the Commitments or, if the Commitments have terminated, Banks holding
Notes evidencing not less than 51% of the aggregate unpaid principal amount of
the Loans.
"Restricted Transfer" has the meaning ascribed thereto in Section 7.11(b).
"S&P" means Standard & Poor's Ratings Group or any successor thereto. Any
rating or change in rating given by S&P shall be deemed effective, and in
effect, when publicly announced by S&P.
MASCOTECH, INC. CREDIT AGREEMENT
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"Scheduled Expiration Date" means February 28, 2002; provided that, if and
only if the requirements of Section 3.10 are satisfied, the "Scheduled
Expiration Date" shall be extended to February 28, 2003.
"Securities Purchase Agreement" means the Amended and Restated Securities
Purchase Agreement dated as of November 23, 1993, as amended by that certain
Amendment No. 1 to Amended and Restated Securities Purchase Agreement made as of
October 31, 1996, between the Company and Masco Corporation, as in effect on the
Closing Date in the form attached hereto as Exhibit J, and as heretofore or
hereafter amended, supplemented or otherwise modified from time to time.
Nothing in this Agreement shall prohibit the Company and Masco Corporation from
amending or terminating such Securities Purchase Agreement, provided that at the
time of such amendment or termination, and immediately after giving effect
thereto, no Default exists or would exist.
"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 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 as of the end of such fiscal quarter.
"Senior Debt Rating" means, at any date, that the senior unsecured
unenhanced long term debt of the Company is rated BBB or better by S&P or Baa2
or better by Moody's, regardless of whether the Company has any such debt
outstanding.
"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.
"Stock Redemptions" means any redemption, purchase, retirement or other
acquisition by the Company of any 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
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holders of the Notes than the provisions set forth on Exhibit O; (b) Debt
evidenced by the Company's 4-1/2% Convertible Subordinated Debentures due 2003,
in the original principal amount of $345,000,000 and (c) Debt hereafter issued
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; provided further, however, that
any of such Debt referred to in clauses (b) and (c) of this definition shall
cease to be "Subordinated Debt" upon any amendment or other modification to the
Debentures referred to in such clause (b) evidencing such Debt, relating to the
subordination thereof, unless, in any such case, the provisions of such
Debentures 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 at least thirty days after the then
existing Scheduled Expiration Date, plus (d) the Available Masco Corporation
Funding Commitment minus (e) 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.
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"Termination Date" means the earlier to occur of (a) the Scheduled
Expiration Date and (b) 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.
"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 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. 125.
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
MASCOTECH, INC. CREDIT AGREEMENT
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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.
Except as provided in the definition of Eurodollar Rate Interest Period, if any
payment, report, financial statement, notice or other obligation is due
hereunder on a day which is not a Business Day, then the due date thereof shall
be extended to the next Business Day.
ARTICLE II.
TERMINATION OF EXISTING CREDIT AGREEMENT
2.1 Termination. The Company and the Banks acknowledge and agree that
the Existing Commitment of each Existing Bank is hereby terminated. 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. Notwithstanding the foregoing, the Company and each of
the Banks acknowledge and agree that each Existing Bid-Option Loan shall
continue with its existing principal amount, interest rate and Interest Period,
except that each Existing Bid-Option Loan shall be deemed a Bid-Option Loan
under this Agreement and shall be governed by the provisions of this Agreement.
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 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. 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 12:00 p.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:
MASCOTECH, INC. CREDIT AGREEMENT
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(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
(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 but excluding 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 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,
MASCOTECH, INC. CREDIT AGREEMENT
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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, 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
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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");
(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 of 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
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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 after 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; furthermore, each Bank
may limit the aggregate amount of Bid-Option Loans when quoting rates for more
than one Bid-Option Interest Period in any Bid-Option Quote, provided that such
limitation shall not be less than the minimum amounts required hereunder for
Bid-Option Loans and the Company may choose among the Bid-Option Loans if such
limitation is imposed. 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 the lesser of (i) the excess of (A) the
aggregate amount of the Commitments over (B) the sum of (x) the aggregate
outstanding principal amount of Syndicated Loans plus (y) the Letter of Credit
Obligations Amount, or (ii) fifty percent (50%) of the aggregate amount of the
Commitments (as the same may be reduced in accordance with the terms of 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 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
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one currency in any Bid-Option Quote Request and may not make more than
five Bid-Option Borrowings during any month.
(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-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, 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
MASCOTECH, INC. CREDIT AGREEMENT
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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
(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'sEnotice 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.
MASCOTECH, INC. CREDIT AGREEMENT
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(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
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.
MASCOTECH, INC. CREDIT AGREEMENT
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(b) Each Bank, not later than 1:00 p.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'sEaddress 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 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 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.
MASCOTECH, INC. CREDIT AGREEMENT
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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. [Intentionally Omitted]
(b) Facility Fee. The Company will 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, whether used or unused, during such
period, at a rate equal to the Applicable Margin for Facility Fees. 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 such amount as may be agreed upon between
the Company and the Banks. 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.
MASCOTECH, INC. CREDIT AGREEMENT
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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 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 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) [intentionally omitted].
(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. (a) The Company may
request that the Banks extend the Scheduled Expiration Date from February 28,
2002 to February 28, 2003. No such request shall be effective unless it is made
in writing by the Company at any time after February 28, 1999.
(b)(i) Upon receipt of any such written request, the Agent shall
promptly distribute a copy thereof to each Bank.
(ii) Each Bank shall have the time specified in such request 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 so to extend the Scheduled Expiration Date.
(iii) The Agent shall promptly notify the Company which Banks have
consented to such written request (a "Consenting Bank"). Any failure by the
Agent to so notify the Company shall not be deemed a consent to the Company's
request.
(iv) Each Bank that elects not to extend the requested Scheduled
Expiration Date or
MASCOTECH, INC. CREDIT AGREEMENT
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fails to so notify the Agent of such consent (a "Non-Consenting Bank")
hereby agrees that if any other Bank or financial institution acceptable to the
Company and the Agent offers to purchase such Non-Consenting Bank's
Commitment(s) for a purchase price equal to the sum of all amounts then owing
with respect to the Loans and all other amounts accrued for the account of such
Non-Consenting Bank and any amounts which may become owing as a result of such
purchase, such Non-Consenting Bank will, promptly or upon the existing
Scheduled Expiration Date for such Non-Consenting Bank, as elected by the
Company, assign, sell and transfer all of its right, title and obligations with
respect to the foregoing to such other Bank or financial institution pursuant
to and on the terms specified in the form of Assignment and Acceptance and
Section 11.6.
(v) Notwithstanding anything herein to the contrary, the
Scheduled Expiration Date will not be extended if the aggregate Commitments of
each Consenting Bank plus the additional Commitments of each Bank or other
financial institution replacing any Non-Consenting Bank pursuant to clause (iv)
above and agreeing to the request does not equal or exceed 75% of the then
existing aggregate Commitments. If the Scheduled Expiration Date is extended
hereunder, it will not be extended for the Non-Consenting Banks whose
Commitments are not purchased pursuant to clause (iv) above, and each such
Non-Consenting Bank's Commitment shall remain in effect and not be terminated
until the Scheduled Expiration Date that is then in effect.
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.
MASCOTECH, INC. CREDIT AGREEMENT
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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 SectionE4.2(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.
(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.
MASCOTECH, INC. CREDIT AGREEMENT
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(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 facility fees, closing fees, Letter of
Credit fees, Agent'sEfees, 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'sEprincipal 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 ExhibitEI. 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 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
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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
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. 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.
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
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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 (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
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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 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
MASCOTECH, INC. CREDIT AGREEMENT
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obligations or Loans hereunder and such increase has the effect of
reducing the rate of return on such Bank's or the Agent'sE(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
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'sEobligations 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 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,
MASCOTECH, INC. CREDIT AGREEMENT
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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 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.
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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, 1995, 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 nine-month period ended on September 30, 1996,
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 Consolidated Subsidiaries for the respective periods indicated,
all in accordance with generally accepted accounting principles consistently
applied (except as disclosed in the notes thereto and subject, in the case of
interim statements, to year-end audit adjustments). Except as disclosed in the
financial statements as of or for the nine-month period ended September 30,
1996, 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, 1995.
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
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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 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 and reimbursement and other 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 46 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 defined in Section 4043 of ERISA) with
MASCOTECH, INC. CREDIT AGREEMENT
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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
the Agent (with a copy delivered 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 7.5, 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. The certificate will be
accompanied by a calculation of the ratio of (i) Senior Debt as of the end of
such fiscal quarter to (ii) EBITDA Minus Capital Expenditures as of the end of
such fiscal quarter (calculated on a pro forma basis as appropriate).
(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 year), the Company will deliver to the Agent (with a copy delivered 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.
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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. [Intentionally Omitted]
7.5 Total Leverage Ratio. The Company will not permit or suffer the
Total Leverage Ratio to be greater than (a) 3.75 to 1.0 as of the last day of
any fiscal quarter of the Company occurring during the period from January 1,
1997 through December 30, 1998, (b) 3.00 to 1.0 as of the last day of any fiscal
quarter of the Company during the period from December 31, 1998 through December
30, 1999, (c) 2.75 to 1.0 as of the last day of any fiscal quarter of the
Company during the period from December 31, 1999 through December 30, 2000 or
(d) 2.50 to 1.0 as of the last day of any fiscal quarter of the Company
thereafter.
7.6 Net Worth. [Intentionally Omitted].
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) $450,000,000
plus (b) 66-2/3% of Net Income Minus Preferred Dividends for the period from
January 1, 1998 through the then latest fiscal year end of the Company; 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 and the Deferred
MSX 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) 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 the Closing Date through June 30, 1997, (ii) 3.50 to 1.00 on the
Relevant Day immediately following the last day of any fiscal quarter of the
Company ending during the period from July 1, 1997 through December 31, 1998,
and (iii) 3.00 to 1.00 on the Relevant Day immediately following the last day of
any fiscal quarter of the Company ending after December 31, 1998. 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.
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.
MASCOTECH, INC. CREDIT AGREEMENT
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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 $25,000,000;
(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 attachment,
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 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
MASCOTECH, INC. CREDIT AGREEMENT
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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;
provided, for purposes of this Section 7.11(b), the aggregate amount of assets
disposed of in all Restricted Transfers by the Company and the Consolidated
Subsidiaries prior to the Closing Date shall be deemed to be equal to zero. 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
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. The Company will not (a) 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 which is not required under the
instruments and agreements relating to such Subordinated Debt (provided that any
payment which is blocked by any creditors of the Company or any of its
Subsidiaries pursuant to the terms of the applicable instrument or agreement
shall not be deemed to be required) or (b) or amend, modify or waive any term or
provision of any instrument or agreement relating to any Subordinated Debt such
that it would not constitute "Subordinated Debt" as defined herein if (i) at the
time of any such transfer, conveyance, assignment, delivery, amendment,
modification or waiver there shall exist and be continuing, or if immediately
after giving effect thereto as a reasonably foreseeable result thereof on a pro
forma basis there would exist or would be caused thereby, an Event of Default or
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.
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.
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7.14 Fiscal Year. The Company will not change its fiscal year from
beginning on JanuaryE1 of the calendar year and ending on December 31 of the
calendar year.
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 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
MASCOTECH, INC. CREDIT AGREEMENT
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(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. On or prior to the Closing Date, 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 ExhibitEM hereto, and covering such other matters as any Bank may
reasonably request, dated the Closing Date;
(b) An opinion of Dickinson, Wright, Moon, Van DusenE& 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
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;
(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 December 31, 1996 and the
Interest Coverage Ratio for the period of four consecutive fiscal quarters of
the Company
MASCOTECH, INC. CREDIT AGREEMENT
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ending December 31, 1996, 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; and
(h) The Company shall pay all Existing Loans, all interest due
thereon and all fees and other liabilities owing pursuant to the Existing Credit
Agreement, other than the principal and interest due on the Existing Bid-Option
Loans.
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 shall fail to pay within five days of the due date
thereof any interest on any Note or any facility fee, closing fee, Letter
of Credit fee, or Agent'sEfee 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 this Agreement (other than those covered by clauses
(a) and (b) above) for thirty (30) days after written notice thereof has
been given to the Company by any Bank or the Agent; or
(d) Any representation or warranty of the Company or any officer
of the Company to the Banks contained herein 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 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
subsectionE(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
MASCOTECH, INC. CREDIT AGREEMENT
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RegulationEU), 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 ScheduleE2 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
(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
MASCOTECH, INC. CREDIT AGREEMENT
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(j)(i) Any Person or "group" (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended), other than any
Person in the Masco Group or any group that includes any Person in the
Masco Group (A) shall have acquired beneficial ownership of 25% or more of
the capital stock having ordinary voting power in the election of directors
of the Company or (B) shall obtain the power (whether or not exercised) to
elect a majority of the Company's directors or (ii) the Board of Directors
of the Company shall not consist of a majority of Continuing Directors;
"Continuing Directors" shall mean the directors of the Company on the
Closing Date and each other director, if such other director's nomination
for election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors;
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, 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
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.
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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
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.
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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 willful
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
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 willful 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 willful 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 willful misconduct) and cease,
or not commence, to take any action until such additional indemnity is
furnished.
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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'sEresignation 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 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 participation 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 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
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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 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 SectionE11.6 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.
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(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 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 SectionE3.8, requests
for Loans and Letter of Credit Issuances pursuant to SectionE3.2, 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.
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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
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 willful 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 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'sEwrongful 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
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(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 willful
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 willful 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 willful 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 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.
MASCOTECH, INC. CREDIT AGREEMENT
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(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, and
which consent in the case of the Company may not be withheld if there is any
Event of Default under Section 9.1(a), (f) or (g)) 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 ExhibitEK 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 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.
MASCOTECH, INC. CREDIT AGREEMENT
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(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
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 SectionE5.3 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
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
MASCOTECH, INC. CREDIT AGREEMENT
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confidence by such Bank and disclosed only to those officers, employees
and agents of such Bank or of any Affiliate of 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 and to be used only in connection with
this Agreement; 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
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.
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 65
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 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, (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 and (iv) the Company or the Additional Bank, and
not the Bank being terminated pursuant to subsection (a) of this Section 11.13,
shall pay the processing and recordation fee required under Section 11.6(d)(iv).
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 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 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
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 66
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.
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
By: /s/ Richard H. Huttenlocher.
----------------------------
Richard H. Huttenlocher.
Its: First Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Telex: 230729
Fax: (313) 225-2290
MASCOTECH, INC. CREDIT AGREEMENT
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"CO-AGENTS":
COMERICA BANK
By: /s/
-------------------------------
Its: Account Officer
THE BANK OF NEW YORK
By: /s/
-------------------------------
Its:
---------------------------
NATIONSBANK, N.A.
By: /s/
-------------------------------
Its: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Steve Ahrenholz
-------------------------------
Steve Ahrenholz
Its: Vice President
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 68
"COMMITMENT": "BANKS":
$97,500,000 NBD BANK
By: /s/ Richard H. Huttenlocher
-------------------------------
Richard H. Huttenlocher
Its: First Vice President
Domestic and Eurodollar
Lending Offices
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Telex: 230729
Fax: (313) 225-2290
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 69
$70,000,000 COMERICA BANK
By: /s/
-------------------------------
Its: Account Officer
Domestic and Eurodollar
Lending Office:
500 Woodward Avenue
Detroit, Michigan 48226
Attention:
--------------------------
Telex: 170363
Fax: (313) 222-9514
MASCOTECH, INC. CREDIT AGREEMENT
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$55,000,000 THE BANK OF NEW YORK
By: /s/
-------------------------------
Its: Vice President
Domestic and Eurodollar
Lending Office:
One Wall Street
New York, New York 10286
Attention: Susan Baratta
-------------------------
Telex: TRT177363
Fax: (212) 635-6434
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 71
$45,000,000 NATIONSBANK, N.A.
By: /s/
-------------------------------
Its: Vice President
Domestic and Eurodollar
Lending Office:
NationsBank Plaza
NC1-002-17-21
Charlotte, North Carolina 28255
Attention: Renita Hines
-------------------------
Fax: (704) 386-8694
MASCOTECH, INC. CREDIT AGREEMENT
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$45,000,000 BANK OF AMERICA ILLINOIS
By: /s/ Steve K. Ahrenholz
------------------------------
Steve K. Ahrenholz
Its: Vice President
Domestic and Eurodollar
Lending Office:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Zack Zarr
Fax: (312) 974-9626
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 73
$40,000,000 PNC BANK, NATIONAL ASSOCIATION
By: /s/
-------------------------------
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:
---------------------------
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 74
$32,500,000 MICHIGAN NATIONAL BANK
By: /s/ Joseph M. Redoutey
-------------------------------
Joseph M. Redoutey
Its: Commercial Relationship
Manager
--------------------------
Domestic and Eurodollar
Lending Office:
27777 Inkster Road 10-36
Farmington Hills, MI 48333-9065
Attention: Joseph M. Redoutey
Fax: (810) 473-4345
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 75
$27,500,000 THE ROYAL BANK OF CANADA
By: /s/ Patrick K. Shields
----------------------------------
Patrick K. Shields
Its: Manager, Corporate Banking
-----------------------------
Domestic and Eurodollar
Lending Office:
Grand Cayman Branch
Royal Bank of Canada
One Financial Square 23rd Floor
New York, New York 10005-3531
Attention: Linda Smith
Fax: (212) 428-2372
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 76
$25,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW
YORK
By: /s/
----------------------------------
Its: Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
60 Wall Street
New York, New York 10260-0060
Attention:
----------------------------
Telex: 177615 or 620106
Fax: (212) 648-5336
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 77
$25,000,000 NATIONAL CITY BANK
By: /s/
----------------------------------
Its: Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
1900 E. Ninth Street
Cleveland, Ohio 44114
Attention:___________________________
Telex: 212537
Fax: (216) 575-9396
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 78
$22,500,000 CIBC INC.
By: /s/
----------------------------------
Its: Director CIBC Wood Gundy
Securities Corp., As Agent
-----------------------------
Domestic and Eurodollar
Lending Office (Borrowing Notices):
Atlanta Agency
Two Paces Ferry West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Kelli Jones
Fax: (770) 319-4950
Other Notices:
425 Lexington Avenue
New York, New York 10017
Attention: Brian O'Callahan
Fax: (212) 885-4940
with a copy to:
Atlanta Agency
Two Paces Ferry West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Klu Auchter
Fax: (770) 319-4950
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 79
$22,500,000 THE FUJI BANK, LTD.
By: /s/ Peter L. Chinniei
----------------------------------
Peter L. Chinniei
Its: Joint General Manager
-----------------------------
Domestic and Eurodollar
Lending Office:
225 W. Wacker Drive
Chicago, Illinois 60606
Attention: Cely Navarro
----------------------------
Telex: 253114
Fax: (312) 621-0539
MASCOTECH, INC. CREDIT AGREEMENT
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$17,500,000 KEYBANK, NATIONAL ASSOCIATION
By: /s/
----------------------------------
Its: Assistant Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
127 Public Square, N.E.
Cleveland, Ohio 44114
Attention: Thomas A. Crandell
----------------------------
Telex:
------
Fax: (216) 689-4981
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 81
$17,500,000 CORESTATES BANK
By: /s/
----------------------------------
Its: Vice President
-----------------------------
Domestic and Eurodollar
Lending Office:
1345 Chestnut Street, P.O. Box 7618
Philadelphia, PA 19101-7618
Attention: Diane Cypher
----------------------------
Telex: 71-499-0118
-----------
Fax: (215) 973-6745
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 82
$17,500,000 FLEET NATIONAL BANK
By: /s/
------------------------------
Robert J. Lord
Its: Vice President
Domestic and Eurodollar
Lending Office:
One Federal Street
Boston, MA 02211
Attention: Anahid Varjabedian
Telex:
------
Fax: (617) 346-0145
MASCOTECH, INC. CREDIT AGREEMENT
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<PAGE> 83
$15,000,000 THE SANWA BANK, LIMITED, CHICAGO BRANCH
By: /s/ Kenneth C. Eichwald
---------------------------------
Kenneth C. Eichwald
Its: First Vice President and
Assistant General Manager
----------------------------
Domestic and Eurodollar
Lending Office:
10 South Wacker Drive, 31st Floor
Chicago, Illinois 60606
Attention: Richard H. Ault
Fax: (312) 346-6677
MASCOTECH, INC. CREDIT AGREEMENT
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EXHIBIT A
SYNDICATED NOTE
February 28, 1997
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 February 28, 1997, 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, as Agent, and
Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America
Illinois, 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:___________________________
<PAGE> 85
EXHIBIT B
BID-OPTION NOTE
February 28, 1997
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 February 28, 1997, 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, as Agent, and
Comerica Bank, The Bank of New York, NationsBank, N.A. and Bank of America
Illinois, 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:___________________________
<PAGE> 86
EXHIBIT C
NOTICE OF SYNDICATED BORROWING
[Date]
To each Bank party to the
referenced Credit Agreement
c/o NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
MASCOTECH, INC., a Delaware corporation (the "Company"), hereby requests a
Syndicated Borrowing pursuant to Section 3.2 of the Credit Agreement, dated as
of February 28, 1997, as amended, supplemented or otherwise modified (the
"Credit Agreement"), by and among the Company, the Banks and Co-Agents party
thereto, and NBD Bank, 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 comprising 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:______________________________
<PAGE> 87
EXHIBIT D
REQUEST FOR LETTER OF CREDIT ISSUANCE
[Date]
To each Bank party to the
referenced Credit Agreement
c/o NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
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 February 28, 1997, as amended, supplemented or otherwise modified
(the "Credit Agreement"), by and among the Company, the Banks and Co-Agents
party thereto, and NBD Bank, 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:__________________________
________________
* Specify the Company or identify a Consolidated Subsidiary.
<PAGE> 88
EXHIBIT E
BID-OPTION QUOTE REQUEST
[Date]
NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
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
February 28, 1997, as amended, supplemented or otherwise modified (the "Credit
Agreement"), by and among the Company, the Banks and Co-Agents party thereto,
and NBD Bank, 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
$5,000,000, in the case of Foreign Currency Bid-Option Borrowings.
**Must comply with the definition of the term "Bid-Option Interest Period."
<PAGE> 89
EXHIBIT F
INVITATION FOR BID-OPTION QUOTES
[Date]
To: [Name of Bank]
Attention: ____________________
Reference is made to the Credit Agreement, dated as of February 28, 1997,
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, 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, 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, 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.
<PAGE> 90
EXHIBIT G
BID-OPTION QUOTE
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Reference is made to the Credit Agreement, dated as of February 28, 1997,
as amended, supplemented or otherwise modified, by and among MASCOTECH, INC., a
Delaware corporation, the Banks and Co-Agents party thereto, and NBD Bank, as
Agent. Capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in such 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__(1)
3. Quotes:
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)(2) Amount(3) Margin(4) Period(5)
----------------------- --------- ------------------- -----------
<PAGE> 91
(a) _______________________ _________ ___________________ ___________
(b) _______________________ _________ ___________________ ___________
(c) _______________________ _________ ___________________ ___________
4. The aggregate amount of Bid-Option Loans which may be accepted by the
Company pursuant to this Bid-Option Quote shall not exceed $_________.6
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: _________________________________
(1). As specified in the related Invitation for Bid-Option Quotes.
(2). As specified in the related Invitation for Bid-Option Quotes.
(3). 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.
(4). 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.
(5). As specified in the related Invitation for Bid-Option Quotes.
(6). Must be at least equal to the minimum amount specified in note 3 above.
<PAGE> 92
EXHIBIT H
NOTICE OF DISBURSEMENT OF
FOREIGN CURRENCY BID-OPTION LOAN
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
Reference is made to the Credit Agreement, dated as of February 28,
1997, 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, 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.
<PAGE> 93
EXHIBIT I
NOTICE OF RECEIPT OF
FOREIGN CURRENCY BID-OPTION LOAN PAYMENT
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
Reference is made to the Credit Agreement, dated as of February 28, 1997,
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, 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.
<PAGE> 94
EXHIBIT K
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of February 28, 1997
(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, 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 copies of the financial statements delivered pursuant
to Section 7.1 of the Credit Agreement 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
<PAGE> 95
such action as agent on its behalf and to exercise such powers and discretion
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 thehe
terms of the Credit Agreement all of the obligations that are required to be it
performed by it as a Bank; and (v) if the Assignee is organized under the laws
of a jurisdiction outside of the United States, attaches the forms prescribedhe
by the Internal Revenue Service of the United States certifying as to theee's
Assignee's status for purposes of determining exemption from United Statesg
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.
<PAGE> 96
EXHIBIT L
NOTICE OF SUBSTITUTION OF BANKS
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
[Terminated Bank]
___________________________
___________________________
Attention: ________________
Reference is made to the Credit Agreement, dated as of February 28, 1997,
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, 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
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.
<PAGE> 97
EXHIBIT M
February __, 1997
To the Banks, Co-Agents and Agent
party to the Credit Agreement described
herein, in care of
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of February 28, 1997
(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, as agent (in such capacity, the "Agent") for the Banks. I am Vice
President and Corporate 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 referred to in the definition of the term "Subordinated
Debt" in the Credit Agreement and the indenture governing the issuance of such
Convertible Subordinated Debentures (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
<PAGE> 98
To the Banks, Co-Agents and Agent
February __, 1997
Page 2
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
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
qualifications 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.
<PAGE> 99
To the Banks, Co-Agents and Agent
February __, 1997
Page 3
Very truly yours,
David B. Liner
Vice President and Corporate Counsel
MascoTech, Inc.
<PAGE> 100
EXHIBIT N
February 28, 1997
To the Banks, Co-Agents and Agent
party to the Credit Agreement described
herein, in care of
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard Huttenlocher
RE: MASCOTECH, INC. CREDIT AGREEMENT
DATED AS OF FEBRUARY 28, 1997
Ladies and Gentlemen:
We have acted as special counsel for the Agent (as defined below) in
connection with the Credit Agreement, dated as of February 28, 1997 (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, 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 $575,000,0000. 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 _______ __, 1997 by
the Secretary of State of Delaware and to ________ __, 1997 by an officer of
the Company, (b) a copy of the Bylaws of the Company certified to _______ __,
1997 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, _________ __, 1997 and _____________ __, 1997, (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. David B. Liner, Vice President and Corporate Counsel of the
Company, dated February __, 1997, 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
<PAGE> 101
To the Banks, Co-Agents and Agent
September 2, 1997
Page 2
or of any other matters.
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. Liner
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,
<PAGE> 102
EXHIBIT O
TERMS OF SUBORDINATION
These terms of subordination refer to the Credit Agreement dated as of
February 28, 1997 by and among MascoTech, Inc., the banks party thereto, the
co-agents referred to therein and NBD Bank, as agent.
In addition to Debt of the Company which qualifies as Subordinated
Debt pursuant to clauses (b) and (c) 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, as Trustee, as amended
and supplemented by Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company
of New York and The First National Bank of Chicago and the Supplemental
Indenture dated as of August 5, 1994 between MascoTech, Inc. and The First
National Bank of Chicago as Trustee 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
-1-
<PAGE> 103
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 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 February __,
1997, by and among the Company, the banks party thereto, the co-agents referred
to therein and NBD Bank, 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) hereof or this
clause (b), 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 Indebtedness 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.
"Designated Senior Indebtedness" means (a) all Senior Indebtedness under
the
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<PAGE> 104
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".
"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 acceptances 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
obligations 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) 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.
"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
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<PAGE> 105
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 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 in
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 the 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
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<PAGE> 106
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
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.
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<PAGE> 107
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, 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
(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
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<PAGE> 108
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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<PAGE> 109
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 representative 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 on 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
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<PAGE> 110
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 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.
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<PAGE> 111
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
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,
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<PAGE> 112
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
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.
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<PAGE> 113
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
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.
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<PAGE> 114
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, as Agent MascoTech, Inc.
By: ___________________________ By: _____________________________
Its: ______________________ Its: ________________________
<PAGE> 115
SCHEDULE 2
City of Fort Wayne, Indiana Industrial Development Revenue Bonds (ND Tech
Project)
<PAGE> 116
SCHEDULE 1
Applicable Margin for Eurodollar Rate Syndicated Loans and Letters of Credit
<TABLE>
<CAPTION>
APPLICABLE MARGIN Interest Coverage Interest Coverage Interest Coverage
FOR EURODOLLAR RATE Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage
SYNDICATED LOANS Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or
AND LETTERS OF Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than
CREDIT CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00
<S> <C> <C> <C> <C> <C>
Senior Leverage
Ratio greater than
1.15:1.00 1.00% 0.75% 0.625% 0.50% 0.40%
Senior Leverage
Ratio equal to or
less than 1.15:1.00
and greater than
0.80:1.00 0.80% 0.625% 0.50% 0.40% 0.325%
Senior Leverage
Ratio equal to or
less than 0.80:1.00
and greater than
0.55:1.00 0.675% 0.50% 0.40% 0.325% 0.25%
Senior Leverage
Ratio equal to or
less than 0.55:1.00 0.55% 0.40% 0.325% 0.25% 0.25%
</TABLE>
PAGE 1 of 3
<PAGE> 117
SCHEDULE 1 (CONTINUED)
Applicable Margin for CD Rate Loans
<TABLE>
<CAPTION>
Interest Coverage Interest Coverage Interest Coverage
Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage
APPLICABLE MARGIN Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or
FOR CD RATE LOANS Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than
CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00
<S> <C> <C> <C> <C> <C>
Senior Leverage
Ratio greater than
1.15:1.00 1.125% 0.875% 0.750% 0.625% 0.525%
Senior Leverage
Ratio equal to or
less than 1.15:1.00
and greater than
0.80:1.00 0.925% 0.750% 0.625% 0.525% 0.450%
Senior Leverage
Ratio equal to or
less than 0.80:1.00
and greater than
0.55:1.00 0.800% 0.625% 0.525% 0.450% 0.375%
Senior Leverage
Ratio equal to or
less than 0.55:1.00 0.675% 0.525% 0.450% 0.375% 0.375%
</TABLE>
PAGE 2 of 3
<PAGE> 118
SCHEDULE 1 (CONTINUED)
Applicable Margin for Facility Fees
<TABLE>
<CAPTION>
Interest Coverage Interest Coverage Interest Coverage
Ratio equal to or Ratio equal to or Ratio equal to or Interest Coverage
APPLICABLE MARGIN Interest Coverage greater than 2.00:1.00 greater than greater than Ratio equal to or
FOR FACILITY FEES Ratio less than and less than 3.00:1.00 and less 4.25:1.00 and less greater than
CHART 2.00:1.00 3.00:1.00 than 4.25:1.00 than 5.25:1.00 5.25:1.00
<S> <C> <C> <C> <C> <C>
Senior Leverage
Ratio greater than
1.15:1.00 0.25% 0.225% 0.225% 0.20% 0.175%
Senior Leverage
Ratio equal to or
less than 1.15:1.00
and greater than
0.80:1.00 0.225% 0.225% 0.20% 0.175% 0.15%
Senior Leverage
Ratio equal to or
less than 0.80:1.00
and greater than
0.55:1.00 0.225% 0.20% 0.175% 0.15% 0.125%
Senior Leverage
Ratio equal to or
less than 0.55:1.00 0.20% 0.175% 0.150% 0.125% 0.125%
</TABLE>
PAGE 3 of 3
<PAGE> 1
EXHIBIT 10.d
STOCK REPURCHASE AGREEMENT
This Agreement is made as of May 1, 1984 between Masco Corporation, a
Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco is transferring to Industries certain assets pursuant to
the Masco Corporation Corporate Restructuring Plan (the "Plan") dated as of May
1, 1984 and proposes thereafter, pursuant to the Plan, to distribute as a
dividend (the "Distribution") in excess of 40% of Industries' Common Stock,
$1.00 par value (the "Common Stock"), to the stockholders of Masco;
WHEREAS, as a result of the Distribution, Industries will become a
publicly held corporation and Masco will initially own approximately 50% of the
Common Stock;
WHEREAS, employees of and consultants to Masco and Industries and
their respective subsidiaries may on the date of the Distribution possess share
awards of Common Stock under the Masco Corporation 1984 Restricted Stock
(Industries) Incentive Plan (the "Masco Plan") which are forfeitable to Masco
upon the occurrence of the events specified therein, Industries has established
its own Restricted Stock Incentive Plan and may in the future establish
additional plans (the "Industries Plans") under which shares of Common Stock of
Industries could be awarded to employees of and consultants to Industries and
its
<PAGE> 2
subsidiaries and affiliated companies subject to forfeiture to Industries, and
Industries may in the future desire to repurchase shares of its outstanding
Common Stock; and
WHEREAS, Masco desires to prevent any of the foregoing events, without
the concurrence of Masco, from resulting in an increase in Masco's percentage
ownership of the outstanding Common Stock as it exists immediately prior to
occurrence of such event;
NOW, THEREFORE, the parties hereby agree as follows:
1. If at any time prior to May 1, 1994, (a) Industries or any of its
subsidiaries shall repurchase any Common Stock or (b) any shares of Common
Stock, which have been awarded to any employees of or consultants to Industries
or its subsidiaries or affiliated companies pursuant to the Industries Plans,
or which have been awarded to any employees of or consultants to Industries or
its subsidiaries or affiliated companies or Masco or its subsidiaries or
affiliated companies pursuant to the Masco Plan, shall be forfeited to
Industries or Masco pursuant to the terms thereof, Industries shall offer to
Masco the opportunity to sell to Industries on the terms and conditions
hereinafter set forth, the number of shares of Common Stock (the "Offered
Shares") necessary to prevent any increase in the percentage of outstanding
shares of Common Stock owned by Masco immediately prior to such repurchase or
forfeiture.
-2-
<PAGE> 3
2. Promptly after any forfeiture pursuant to the Masco Plan should
Masco desire to sell shares of Common Stock to Industries, Masco shall notify
Industries thereof, specifying the number of shares of Common Stock so
forfeited. Promptly after any such repurchase by Industries or forfeiture
pursuant to the Industries Plans, Industries shall notify Masco thereof in
writing, specifying the number of shares of Common Stock so repurchased or
forfeited and the number of shares of Common Stock required to be sold by Masco
to Industries to prevent the increase in percentage ownership as provided in
Paragraph 1. Industries shall thereafter offer Masco the opportunity for 30
days from the date of either of such notices to sell to Industries all (or such
lesser number as is specified by Masco in its acceptance referred to in
Paragraph 3) of the Offered Shares for a purchase price (the "Purchase Price")
equal to (a) in the case of a repurchase of Common Stock by Industries, the
highest repurchase price paid by Industries to a third party during the 30-day
period ending on the date of such repurchase or (b) in the case of the
forfeiture of shares of Common Stock pursuant to the Industries Plans or the
Masco Plan, as the case may be, the fair market value of shares of the Common
Stock at the close of trading on the date of such forfeiture.
3. If Masco shall accept Industries' offer within the 30-day period
specified in Paragraph 2 above by written notice to Industries, then on the date
5 days after the date
-3-
<PAGE> 4
of Masco's acceptance, Masco shall deliver to Industries duly executed
certificates representing the Offered Shares as to which Industries' offer has
been accepted against receipt from Industries of the amount of the Purchase
Price for such Offered Shares.
4. This agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
5. This Agreement shall not be assigned by either party, except to a
successor to substantially all of the business of a party, without the express
written consent of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ [sig] By /s/ [sig]
----------------------- ----------------------
Executive Vice President President
-4-
<PAGE> 5
[MASCO INDUSTRIES INC. LETTERHEAD]
September 20, 1985
Mr. Richard G. Mosteller
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Re: Restricted Stock Incentive Plans
Dear Mr. Mosteller:
This will confirm (i) our arrangements regarding reimbursement of costs
relating to unvested incentive award shares of Masco Corporation ("Masco")
common stock and Masco Industries, Inc. ("Industries") common stock upon
transfers of employment and consulting relationships between Masco and
Industries, (ii) our arrangements regarding reimbursement upon forfeitures of
such shares, and (iii) our prior understandings on the implementation of the
Stock Repurchase Agreement dated May 1, 1984 between Masco and Industries with
respect to Industries' repurchases of its common stock from Masco following the
forfeiture of shares of Industries common stock granted under either Masco's or
Industries' restricted stock incentive plan (the "Industries Stock Incentive
Plans") and following open market repurchases of such stock by Industries.
These procedures have been established in order to attribute the cost of such
incentive shares in respect of the employees of and consultants to Masco and
Industries and to permit Masco, among other things, to achieve its expressed
objective of maintaining its equity ownership in Industries at not more than
50% after any forfeiture of Industries incentive award shares. These procedures
are not intended to alter the rights of the parties under the Corporate
Restructuring Plan or the Stock Repurchase Agreement except as expressly
provided herein, and may be terminated by Masco or Industries at any time
without cause, effective ten days after notice of termination.
<PAGE> 6
Mr. Richard G. Mosteller
September 20, 1985
Page Two
1. Transfers.
If a person changes employment or a consulting relationship from Masco
to Industries or from Industries to Masco, the new employer will reimburse the
former employer for the cost on the books of the former employer which is
associated with unvested shares of Masco common stock or Industries common
stock awarded under a Masco or Industries incentive plan, to the extent such
shares may continue to vest while the person is engaged by the new employer.
2. Forfeitures By Industries Employees And Consultants.
A. Shares of Industries common stock forfeited by an Industries
employee or consultant which were granted pursuant to either of the Industries
Stock Incentive Plans are deemed automatically acquired by Industries from the
employee or consultant as of the date of the forfeiture notwithstanding any
contrary provision in either of the Industries Stock Incentive Plans.
Industries waives its right under Paragraph 4.02 of the Corporate Restructuring
Plan to require Masco to pay Industries an amount equal to the unamortized cost
of Industries shares forfeited by Industries employees which were granted under
Masco's Industries Stock Incentive Plan and no amount is payable by Industries
to Masco on account of Industries' acquisition of such forfeited shares.
B. Shares of Masco common stock that were granted under the Masco
Restricted Stock Incentive Plan are forfeited by Industries employees and
consultants to Masco upon termination of employment or the consulting
relationship. Masco will reimburse Industries for the cost on Industries' books
which is associated with such forfeited Masco shares.
3. Forfeitures By Masco Employees And Consultants.
If Masco's equity ownership in Industries would exceed 50% at the end
of any month, shares of Industries common stock forfeited by Masco employees
and consultants during such month are deemed automatically acquired by
Industries from those employees and consultants (notwithstanding any contrary
provision in Masco's Industries Stock Incentive Plan) on the last day of such
month to the extent necessary so that Masco's ownership will not exceed 50% as
of such
<PAGE> 7
Mr. Richard G. Mosteller
September 20, 1985
Page Three
date. Industries will reimburse Masco for its loss arising from such forfeiture
by paying to Masco an amount equal to the fair market value of such shares (as
determined under Paragraph 4 hereof) on the last trading day of such month.
4. Repurchase of Industries Shares On Account Of Forfeitures. If
Masco's equity ownership in Industries would exceed 50% at the end of any month
in which forfeited Industries shares are deemed automatically acquired by
Industries, Industries is deemed to repurchase from Masco, on the last day of
such month, additional shares of Industries common stock to the extent
necessary so that Masco's ownership of Industries common stock does not exceed
50% as of the last day of such month. Pursuant to Paragraph 2(b) of the Stock
Repurchase Agreement, the price for the Industries shares so repurchased from
Masco is the fair market value of such shares at the close of trading on the
last trading day of such month (which is determined by the last sale price for
Industries shares as reported in the NASDAQ National Market System).
5. Repurchase of Industries Shares On Account Of Open Market Purchases.
If Masco's equity ownership in Industries would exceed 50% at the end of any
month in which Industries makes open market purchases of its common stock in
connection with awards of shares under its Industries Stock Incentive Plan or
in connection with employee stock options, Industries is deemed to repurchase
from Masco, on the last day of such month, shares of Industries common stock to
the extent necessary so that Masco's ownership of Industries common stock does
not exceed 50% as of the last day of such month. Notwithstanding Paragraph 2(a)
of the Stock Repurchase Agreement, the price for the Industries shares so
repurchased from Masco is the weighted average price paid by Industries for its
open market share purchases during such month. If Masco's equity ownership of
Industries would exceed 50% at the end of any month in which forfeited
Industries shares are deemed automatically acquired by Industries and in which
Industries makes open market purchases of the types contemplated under
Paragraph 5 hereof, shares shall be deemed to be repurchased by Industries
first pursuant to Paragraph 4. If, after such repurchases pursuant to Paragraph
4, Masco's equity ownership would still exceed 50%, shares shall then be deemed
to be repurchased by Industries pursuant to this Paragraph 5.
<PAGE> 8
Mr. Richard G. Mosteller
September 20, 1985
Page Four
6. Quarterly Settlement. Masco and Industries will effect a quarterly
settlement of the amounts required hereunder to be (i) reimbursed upon the
transfer of employment or a consulting relationship between Masco and
Industries, (ii) reimbursed to Masco upon the forfeiture of Industries shares
by Masco employees and consultants, (iii) reimbursed to Industries upon the
forfeiture of Masco shares by Industries employees and consultants, and (iv)
paid to Masco for any repurchase of Industries shares pursuant to Paragraphs 4
and 5 hereof.
7. Additional Provisions.
A. Appropriate instructions will be given to Industries' transfer agent
to reflect Industries' ownership of forfeited Industries shares and repurchase
of additional Industries shares.
B. Masco and Industries will promptly notify each other of forfeitures
of shares which are subject to these procedures.
C. These procedures are deemed to be effective as of May 1, 1984,
notwithstanding the fact that certain reports prepared prior to the date hereof
are inconsistent herewith, and this letter supersedes any prior arrangements
with respect to such procedures.
Please confirm your agreement with the foregoing procedures.
Sincerely,
/s/ James J. Sigouin
James J. Sigouin
Vice President - Finance
Confirmed by Masco Corporation:
By /s/ Richard G. Mosteller
-------------------------
Richard G. Mosteller
Senior Vice President
- Finance
<PAGE> 9
AMENDMENT TO STOCK REPURCHASE AGREEMENT
AMENDMENT dated as of December 20, 1990 between Masco Corporation, a
Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco and Industries are parties to a Stock Repurchase
Agreement dated as of May 1, 1984 and a related letter agreement dated
September 20, 1985; and
WHEREAS, Masco and Industries desire to amend the Stock Repurchase
Agreement in connection with the transactions contemplated by the Exchange
Agreement dated as of December 18, 1990 between Masco and Industries;
NOW, THEREFORE, the parties agree that Paragraph 1 of the Stock
Repurchase Agreement dated as of May 1, 1984 is amended to read as follows:
"1. If at any time prior to May 1, 1994, (a) Industries or any of its
subsidiaries shall repurchase any Common Stock or (b) any shares of Common
Stock, which have been awarded to any employees of or consultants to Industries
or its subsidiaries or affiliated companies pursuant to the Industries Plans,
or which have been awarded to any employees of or consultants to Industries or
its subsidiaries or affiliated companies or Masco or its subsidiaries or
affiliated companies pursuant to the Masco Plan, shall be forfeited to
Industries or Masco pursuant to the terms thereof, and as a result of such
repurchase or forfeiture the percentage of outstanding shares of Common Stock
owned by Masco would increase to an amount in excess of 49%, Industries shall
offer to Masco the opportunity to sell to Industries on the terms and
conditions hereinafter set forth, the number of shares of Common Stock (the
"Offered Shares") necessary to reduce the percentage of outstanding shares of
Common Stock owned by Masco to 49%."
Except as specifically amended hereby, the Stock Repurchase Agreement
and related letter agreement referred to above remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ [sig] By /s/ [sig]
---------------------- -----------------------------------
Vice President and Secretary President and Chief Operating Officer
<PAGE> 1
EXHIBIT 10.p.ii
REGISTRATION AGREEMENT
This Agreement is made as of December 27, 1988, among TriMas
Corporation, a Delaware corporation ("TriMas"), Masco Corporation, a Delaware
Corporation ("Masco") and Masco Industries, Inc., a Delaware corporation
("Industries").
WHEREAS, Industries has agreed, pursuant to an Acquisition and
Subscription Agreement dated as of November 7, 1988 (the "Acquisition
Agreements"), to transfer certain businesses and cash to TriMas in exchange
for TriMas common stock, TriMas preferred stock and TriMas subordinated
debentures;
WHEREAS, Masco currently owns TriMas common stock and has agreed,
pursuant to the Acquisition Agreement, to contribute cash to TriMas in exchange
for additional shares of TriMas common stock, and proposes thereafter to
distribute as a dividend a portion of its shares of TriMas common stock to its
stockholders, as a result of which TriMas will become a publicly held
corporation with approximately 48% of its outstanding common stock owned by
Industries and approximately 19% owned by Masco; and
WHEREAS, in connection with the Acquisition Agreement, TriMas has
agreed to provide to Masco and Industries certain registration rights as
provided herein.
NOW, THEREFORE, the parties agree as follows:
1 (a). Registration of TriMas Common Stock. At any time that Masco and
Industries own in the aggregate at least 20% of the outstanding common stock of
TriMas, par value $.01 per share (the "Common Stock"), whenever TriMas shall
receive a written request signed by Masco or Industries requesting TriMas 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 "Common Stock Registration Statement"), TriMas shall promptly
prepare and file a Common Stock Registration Statement covering the Common Stock
requested to be registered and any other Common Stock of registered holders who
acquired such Common Stock from Masco or Industries and who have obtained a
written agreement from Masco or Industries to participate hereunder (which
agreement shall have been filed with TriMas), which, upon inquiry to be then
made of all such holders by TriMas, is requested by such holders to be included
therein (the "Common Stock Holders"), and use its best efforts to cause the
Common Stock Registration Statement to become effective and remain effective for
the period required to permit the public offering and sale of the Common Stock
covered thereby; provided, however, that (i) TriMas shall not be
<PAGE> 2
obligated to make any such filing with respect to less than 300,000 shares of
Common Stock (as adjusted from time to time for stock splits, dividends and
similar events), (ii) TriMas shall not be obligated to make any such filing
within 12 months from the effective date of the next preceding filing made
pursuant to this Paragraph 1, and (iii) TriMas may elect to defer, for a period
not exceeding a total of 90 days, the preparation of any such Common Stock
Registration Statement if in TriMas' good faith judgment pending or prospective
business developments justify a temporary delay. All expenses (other than fees
and expenses of any underwriters and counsel to Masco, Industries and the Common
Stock Holders) in connection with registrations undertaken by TriMas pursuant to
this Paragraph 1 shall be borne by TriMas. Either Masco or Industries, as
determined by which of them first requests the filing of each Common Stock
Registration Statement, shall be deemed to be the representative of the other
and all Common Stock Holders, with full authority to select a managing
underwriter, withdraw or abandon the Common Stock Registration Statement, and
make comparable decisions on behalf of the other and all Common Stock Holders
after reasonable consultation therewith
1 (b). Registration Procedures. (i) Whenever TriMas shall file a Common
Stock Registration Statement pursuant to this Paragraph 1, TriMas 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 and all filings under the Securities Exchange Act of 1934 that are
necessary or appropriate so that neither the Common Stock Registration Statement
nor any related prospectus shall contain any material misstatement or omission
relative to TriMas or any of its assets or its business or affairs and so that
the Common Stock Registration Statement and such prospectus will otherwise
comply with all applicable legal requirements, (B) furnish to Masco, Industries
and the Common Stock Holders such number of copies of the Common Stock
Registration Statement and any related preliminary prospectus, prospectus,
post-effective amendment or supplement as Masco, Industries and the Common Stock
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 by Masco, Industries or the Common Stock Holders to permit the public
offering and sale of the Common Stock covered by the Common Stock Registration
Statement; provided, however, that in no event shall TriMas 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 Common Stock, in any
jurisdiction where it is not now subject. In connection with any such Common
Stock
-2-
<PAGE> 3
Registration Statement, TriMas shall deliver to Masco, Industries and the
Common Stock Holders and any underwriters for Masco, Industries and the Common
Stock Holders such indemnities, contribution agreements, opinions of counsel
and letters of independent public accountants as are then customarily given to
underwriters of registered public offerings and selling security holders. The
underwriters and Masco, Industries and the Common Stock Holders shall deliver
to TriMas such indemnities, contribution agreements and opinions as are then
customarily given to issuers of registered public offerings.
(ii) Anything in this Agreement to the contrary notwithstanding, TriMas
shall not be obligated to file a Common Stock Registration Statement pursuant
to this Paragraph 1 unless Masco, Industries and the Common Stock Holders shall
have furnished TriMas in writing all information with respect to Masco,
Industries and the Common Stock Holders, the Common Stock held by Masco,
Industries and the Common Stock Holders and requested to be so included, the
transaction or transactions which Masco, Industries and the Common Stock
Holders contemplate and each underwriter who will act for Masco, Industries and
the Common Stock Holders in connection therewith, that any law, rule or
regulation requires to be disclosed therein.
(iii) TriMas 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 and Industries at their
request a written statement affirming that it has complied with such
requirements.
2 (a). Registration of TriMas Preferred Stock. Whenever TriMas shall
receive a written request signed by Industries requesting TriMas 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 "Preferred Stock Registration Statement") with respect to the $100
Convertible Participating Preferred Stock of TriMas, par value $1.00 per share
(the "Preferred Stock"), TriMas shall promptly prepare and file a Preferred
Stock Registration Statement covering the Preferred Stock requested to be
registered and any other Preferred Stock of registered holders thereof who
acquired such Preferred Stock from Industries and who have obtained a written
agreement from Industries to participate hereunder (which agreement shall have
been filed with TriMas) which, upon inquiry to be then made of all such holders
by TriMas, is requested by such holders to be included therein (the "Preferred
Stock Holders"), and use its best efforts to cause the Preferred Stock
Registration Statement to become effective and to remain effective for the
-3-
<PAGE> 4
period required to permit the public offering and sale of the Preferred Stock
covered thereby; provided, however, that (i) TriMas shall not be obligated to
make any such filing with respect to less than 10,000 shares of Preferred Stock,
(ii) TriMas shall not be obligated to make any such filing within 12 months from
the effective date of the next preceding filing made pursuant to this Paragraph
2, and (iii) TriMas may elect to defer, for a period not exceeding a total of 90
days, the preparation of any such Preferred Stock Registration Statement if in
TriMas's good faith judgment pending or prospective business developments
justify a temporary delay. All expenses (other than fees and expenses of any
underwriters and counsel to Industries and the Preferred Stock Holders) in
connection with registrations undertaken by TriMas pursuant to this Paragraph 2
shall be borne by TriMas. Industries shall be deemed to be the representative of
all Preferred Stock Holders, with full authority to select a managing
underwriter, withdraw or abandon the Preferred Stock Registration Statement, and
make comparable decisions on behalf of all Preferred Stock Holders after
reasonable consultation therewith.
2 (b). Preferred Stock Registration Procedures. (i) Whenever TriMas
shall file a Preferred Stock Registration Statement pursuant to this Paragraph
2, TriMas 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 and all filings under the
Securities Exchange Act of 1934 that are necessary or appropriate so that
neither the Preferred Stock Registration Statement nor any related prospectus
shall contain any material misstatement or omission relative to TriMas or any of
its assets or its business or affairs and so that the Preferred Stock
Registration Statement and such prospectus will otherwise comply with all
applicable legal requirements, (B) furnish to Industries and the Preferred Stock
Holders such number of copies of the Preferred Stock Registration Statement and
any related preliminary prospectus, prospectus, post-effective amendment or
supplement as Industries and the Preferred Stock 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 by Industries and the
Preferred Stock Holders, to permit the public offering and sale of the Preferred
Stock covered by the Preferred Stock Registration Statement; provided, however,
that in no event shall TriMas 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 Preferred Stock in any jurisdiction where it is not now
subject. In connection with any such Preferred Stock Registration Statement,
TriMas shall deliver to
-4-
<PAGE> 5
Industries and the Preferred Stock Holders and any underwriters for Industries
and the Preferred Stock Holders such indemnities, contribution agreements,
opinions of counsel and letters of independent public accountants as are then
customarily given to underwriters of registered public offerings and selling
security holders. The underwriters and Industries and the Preferred Stock
Holders shall deliver to TriMas such indemnities, contribution agreements and
opinions as are then customarily given to issuers of registered public
offerings.
(ii) Anything in this Agreement to the contrary notwithstanding,
TriMas shall not be obligated to file a Preferred Stock Registration Statement
pursuant to this Paragraph 2 unless Industries and the Preferred Stock Holders
shall have furnished TriMas in writing all information with respect to
Industries and the Preferred Stock Holders, the Preferred Stock held by
Industries and the Preferred Stock Holders and requested to be so included, the
transaction or transactions which Industries and the Preferred Stock Holders
contemplate and each underwriter who will act for Industries and the Preferred
Stock Holders in connection therewith, that any law, rule or regulation
requires to be disclosed therein.
(iii) TriMas 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 Industries at its request a written
statement affirming that it has complied with such requirements.
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.
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> 6
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 TRIMAS CORPORATION
By [sig] By [sig]
-------------------- -------------------------
MASCO INDUSTRIES, INC.
By [sig]
--------------------
-6-
<PAGE> 7
[MASCO CORPORATION LETTERHEAD]
April 21, 1992
Mr. Brian P. Campbell, President
TriMas Corporation
315 E Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48108
Dear Brian:
This will confirm our understanding to modify the Registration Agreement
dated December 27, 1988 among TriMas Corporation, Masco Corporation and Masco
Industries (the "Registration Agreement"). The Registration Agreement currently
limits Masco Corporation and Masco Industries from requesting more than one
registration within a period of twelve months. At the request of your
underwriters, each of Masco Corporation and Masco Industries agrees that it will
not, for a period of 120 days after the effective date of TriMas' definitive
prospectus relating to its proposed offering of Common Stock, provided that such
effective date is prior to May 15, 1992, (i) offer for sale, sell, contract to
sell or otherwise dispose of any shares of TriMas Common Stock, or (ii) exercise
any Common Stock registration rights granted to each of them in the Registration
Agreement (including but not limited to requesting registration of shares owned
by others).
In return for the foregoing, and whether or not TriMas' current
registration statement it declared effective, TriMas agrees that the
Registration Agreement is hereby modified so that if Masco Corporation or Masco
Industries requests registration of shares of TriMas Common Stock heretofore
sold to the respective executives of Masco Corporation and Masco Industries
pursuant to the Executive Agreements (as defined below), and such registration
is filed during 1992, they may also request that TriMas file not earlier than
January 1, 1993 a second registration statement covering additional such shares
of TriMas Common Stock heretofore sold pursuant to the Executive Agreements,
even if such second registration is within twelve months of the effective date
of the initial filing during 1992 (so long as such request otherwise complies
with the terms of the Registration Agreement and is made not less than 90 days
from the date of the initial such request). It is understood that if a
registration request is made in 1992 and the registration statement is for any
reason not filed during 1992, Masco Corporation or Masco Industries shall be
entitled, prior to filing, to increase the number of shares covered by such
request. All other provisions contained in the Registration Agreement
<PAGE> 8
[MASCO CORPORATION LETTERHEAD]
Mr. Brian P. Campbell
April 21, 1992
Page 2
including but not limited to those limiting registration requests are
unaffected hereby.
In connection with the foregoing, we advise you as follows:
1. All executives who have purchased TriMas stock from Masco
Corporation or Masco Industries have done so pursuant to the agreements which
shall be provided to you prior to any request for registration (the "Executive
Agreements").
2. None of the executives who have purchased TriMas stock pursuant to
the Executive Agreements have notified Masco Corporation or Masco Industries
that they wish to sell any of their TriMas stock in the immediate future.
3. The Executive Agreements currently contain restrictions on sales of
stock by the executive which do not permit the executives to sell in a
registered offering more than 50% of such executive's TriMas stock subject to
the Executive Agreements during 1992, and 75% of such stock by the end of 1993.
Masco Corporation and Masco Industries will not amend, waive or modify the
Executive Agreements to permit any sales in a registered offering in excess of
these restrictions
Please confirm TriMas' Agreement with the modifications set forth above
which will become effective upon signature as provided below.
Sincerely,
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian
------------------------- -------------------------
Richard A. Manoogian Richard A. Manoogian
TriMas Corporation and the Oversight Committee of its Board of Directors concur
with the foregoing.
TRIMAS CORPORATION OVERSIGHT COMMITTEE
By /s/ Brian P. Campbell By /s/ Herbert S. Amster
------------------------- -------------------------
Brian P. Campbell Herbert S. Amster
President
By /s/ Helmut F. Stern
-------------------------
Helmut F. Stern
<PAGE> 9
AMENDMENT TO REGISTRATION AGREEMENT
This is an Amendment dated as of January 5, 1993 to a Registration
Agreement dated as of December 27, 1988 and amended as of April 21, 1992 (the
"Registration Agreement") among TriMas Corporation, a Delaware corporation
("TriMas"), Masco Corporation, a Delaware corporation ("Masco"), and Masco
Industries, Inc., a Delaware corporation ("Industries").
WHEREAS, the common stock, par value $.01 per share, of TriMas is
referred to herein as the "Common Stock";
WHEREAS, Masco and Industries have certain registration rights pursuant
to the Registration Agreement with respect to their shares of Common Stock;
WHEREAS, the Registration Agreement provides that Masco and Industries
may assign certain of their registration rights under certain circumstances to
transferees who purchase shares of Common Stock from Masco and Industries;
WHEREAS, Masco and Industries sold certain shares of Common Stock (the
"Executive Shares") to certain members of their senior management, including
Richard A. Manoogian (the "Executives"), pursuant to letter agreements dated
June 29, 1989 (the "Executive Letter Agreements");
WHEREAS, Masco and Industries gave the Executives certain registration
rights pursuant to the Executive Letter Agreements with respect to the
Executive Shares;
WHEREAS, TriMas, Masco, and Industries wish to amend the Registration
Agreement to alter the arrangements for registration of the Executive Shares
and to address certain other issues in connection therewith; and
WHEREAS, Masco, Industries, and the Executives are entering into
conforming amendments to the Executive Letter Agreements concurrently herewith;
NOW, THEREFORE, the parties hereto agree as follows:
A. Paragraph 1 of the Registration Agreement is hereby amended and
restated in its entirety to read as follows:
"1. Registration of TriMas Common Stock.
(a) Masco and Industries. At any time that Masco and Industries own in
the aggregate at least 20% of the outstanding Common Stock, whenever TriMas
shall receive a written request on behalf of Masco or Industries requesting
TriMas to file a registration statement under the Securities Act of 1933, as in
<PAGE> 10
effect at the relevant time (the "Securities Act"), or a comparable statement
under any similar federal statute then in effect (in either case a "Common
Stock Registration Statement"), with respect to any or all of the Common Stock
of the requesting party, TriMas shall promptly prepare and file a Common Stock
Registration Statement covering the Common Stock requested to be registered and
any other Common Stock of Masco or Industries or of registered holders (other
than the Executives) who acquired such Common Stock from Masco or Industries
and who have obtained a written agreement from Masco or Industries to
participate hereunder (which agreement shall have been filed with TriMas),
which, upon inquiry to be then made of Masco, Industries, and all such other
holders by TriMas, is requested by such holders ("the Common Stock Holders")
to be included therein, and use its best efforts to cause the Common Stock
Registration Statement to become effective and remain effective for the period
required to permit the public offering and sale of the Common Stock covered
thereby; provided, however, that (i) TriMas shall not be obligated to make any
such filing with respect to less than 600,000 shares of Common Stock (as
adjusted from time to time for stock splits, dividends and similar events after
the date of this amendment), (ii) TriMas shall not be obligated to make any
such filing within 12 months after the effective date of the next preceding
filing made pursuant to this Paragraph 1(a), (iii) TriMas may elect to defer,
for a period not exceeding a total of 90 days, the filing of any such Common
Stock Registration Statement if in its good faith judgment pending or
prospective business developments justify a temporary delay, and (iv) TriMas
shall not be obligated to effect any "shelf" registration pursuant to this
Paragraph 1(a). All expenses (other than fees and expenses of any underwriters
and counsel to Masco, Industries, and the Common Stock Holders) in connection
with any registration undertaken by TriMas pursuant to this Paragraph 1(a)
shall be borne by TriMas. Either Masco or Industries, as determined by which of
them first requests the filing of each Common Stock Registration Statement,
shall be deemed to be the representative of the other and of all other Common
Stock Holders, with full authority to select a managing underwriter, withdraw
or abandon the Common Stock Registration Statement, and make comparable
decisions on behalf of the other and of all other Common Stock Holders after
reasonable consultation therewith.
(b) Richard A. Manoogian. If TriMas shall receive a written request on
behalf of Richard A. Manoogian on or before June 30, 1996 requesting TriMas to
file a Common Stock Registration Statement with respect to any or all of the
Executive Shares which he purchased under his Executive Letter Agreements,
TriMas shall promptly prepare and file a Common Stock Registration Statement
covering the Executive Shares requested to be registered, and use its best
efforts to cause the Common Stock Registration Statement to become effective
and remain effective for the period required to permit the public offering and
sale of the Executive Shares covered thereby; provided, however, that (i)
TriMas shall not be obligated
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<PAGE> 11
to make any such filing with respect to less than 600,000 Executive Shares (as
adjusted from time to time for stock splits, dividends and similar events after
the date of this amendment), (ii) TriMas shall not be obligated to make more
than one such filing pursuant to this Paragraph 1(b), (iii) TriMas may elect to
defer, for a period not exceeding a total of 90 days, the filing of any such
Common Stock Registration Statement if in its good faith judgment pending or
prospective business developments justify a temporary delay, and (iv) TriMas
shall not be obligated to effect any "shelf" registration pursuant to this
Paragraph 1(b). All expenses (other than fees and expenses of any underwriters
and counsel to Richard A. Manoogian) in connection with any registration
undertaken by TriMas pursuant to this Paragraph 1(b) shall be borne by TriMas.
(c) Other Executives. Promptly on or after the date of this Amendment,
TriMas shall prepare and file a Common Stock Registration Statement covering
645,000 Executive Shares (as adjusted from time to time for stock splits,
dividends and similar events after the date of this amendment) owned by the
Executives other than Richard A. Manoogian (with such shares to be registered
allocated among such Executives according to the number of shares each such
Executive purchased under his Executive Letter Agreement), and shall use its
best efforts to cause the Common Stock Registration Statement to become
effective as soon as possible. Furthermore, on or before December 31, 1993,
TriMas shall prepare and file a Common Stock Registration Statement covering an
additional 215,000 Executive Shares (as adjusted from time to time for stock
splits, dividends and similar events after the date of this amendment) owned by
the Executives other than Richard A. Manoogian (with such shares to be
registered allocated among such Executives according to the number of shares
each such Executive purchased under his Executive Letter Agreement), and shall
use its best efforts to cause the Common Stock Registration Statement to become
effective as soon as possible thereafter; provided, however, that TriMas may
elect to defer, for a period not exceeding a total of 90 days, the filing of
such Common Stock Registration Statement if in its good faith judgment pending
or prospective business developments justify a temporary delay. TriMas shall
use its best efforts to keep each such Common Stock Registration Statement
effective and in compliance with the Securities Act on a continuous basis
(i.e., a "shelf" registration), and to provide the Executives with prospectuses
and prospectus supplements in compliance with the Securities Act as may be
required from time to time, until the earlier of (A) June 30, 1996 or (B) the
date when none of the Executives retains any of the Common Stock registered
thereunder. All expenses (other than fees and expenses of counsel to the
Executives) in connection with the initial registration pursuant to this
Paragraph 1(c) shall be borne by TriMas. All expenses in connection with the
second registration pursuant to this Paragraph 1(c) shall be borne by Masco and
Industries on behalf of their respective Executives, allocated among such
Executives and ultimately between Masco and Industries
-3-
<PAGE> 12
according to the number of shares each such Executive is registering, except
that TriMas will bear normal accounting expenses (e.g., consents). Any
Executive who proposes to sell any shares of Common Stock under a Common Stock
Registration Statement pursuant to this Paragraph 1(c) shall notify the Vice
President - General Counsel or the Vice President - Investments of Masco, who in
turn shall notify the President (or, if the President is absent or unavailable,
any Vice President) of TriMas, and the Executive will not consummate such sale
until the President or a Vice President of TriMas has been notified (or if more
than 10 days have elapsed since the last such notice was given); provided,
however, that following a "Change in Control" of Masco (as defined in the
Executive Letter Agreements) such Executive may notify the President (or, if
the President is absent or unavailable, any Vice President) of TriMas directly.
TriMas will have the right at any time to suspend all sales of Executive Shares
under this Paragraph 1(c), for a period not exceeding a total of 90 days, by
notice to Masco, Industries, and the Executives (with a copy to the Vice
President - General Counsel of Masco) if in its good faith judgment the
relevant prospectus contains an untrue statement of a material fact, or omits
to state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading. The
Executives shall sell their Executive Shares under the Common Stock
Registration Statements pursuant to this Paragraph 1(c) only in accordance with
the terms of the related prospectuses and any prospectus supplements, and shall
not sell any Executive Shares pursuant to any such Common Stock Registration
Statement while any suspension of sales thereunder is in effect.
(d) Registration Procedures.
(i) Whenever TriMas shall file a Common Stock Registration Statement
pursuant to this Paragraph 1, TriMas 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 and all
filings under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are necessary or appropriate so that neither the Common Stock
Registration Statement nor any related prospectus shall contain any material
misstatement or omission relative to TriMas or any of its assets or its
business or affairs and so that the Common Stock Registration Statement and
such prospectus will otherwise comply with all applicable legal requirements,
(B) furnish to Masco, Industries, the Executives, and the other Common Stock
Holders such number of copies of the Common Stock Registration Statement and
any related preliminary prospectus, prospectus, post-effective amendment, or
supplement as Masco, Industries, the Executives, and the other Common Stock
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
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<PAGE> 13
reasonably may be requested by any of Masco, Industries, the Executives, and
the other Common Stock Holders to permit the public offering and sale of the
Common Stock covered by the Common Stock Registration Statement; provided,
however, that in no event shall TriMas 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 Common Stock, in any jurisdiction where it is
not now subject; provided, further, that the obligations of TriMas under this
clause (i) shall be subject to the provisions of the next to last sentence of
Paragraph 1(c) above.
(ii) In connection with any such Common Stock Registration Statement,
TriMas shall deliver to Masco, Industries, the Executives, and the other Common
Stock Holders and any underwriters acting for them such indemnities,
contribution agreements, opinions of counsel, and letters of independent public
accountants as are then customarily given to underwriters of registered public
offerings and selling security holders. Masco, Industries, the Executives, and
the other Common Stock Holders and any underwriters acting for them shall
deliver to TriMas such indemnities, contribution agreements, and opinions as
are then customarily given to issuers of registered public offerings.
(iii) Anything in this Agreement to the contrary notwithstanding,
TriMas shall not be obligated to file a Common Stock Registration statement
pursuant to this Paragraph 1, or to permit such Common Stock Registration
Statement to become effective if filed, unless Masco, Industries, the
Executives, and the other Common Stock Holders shall have furnished TriMas in
writing all information with respect to the Common Stock Holders, the Common
Stock held by the Common Stock Holders and requested to be so included, the
transaction or transactions which the Common Stock Holders contemplate, and
each underwriter who will act for the Common Stock Holders in connection
therewith, that any law, rule, or regulation requires to be disclosed therein.
(iv) TriMas covenants that it will file on a timely basis the reports
required to be filed by it under the Exchange Act, and the rules and
regulations adopted by the Securities and Exchange Commission thereunder, and
will deliver to Masco and Industries at their request a written statement
affirming that it has complied with such requirements."
B. Except as provided herein, the Registration Agreement shall remain
in full force and effect and not otherwise be modified or affected by the
provisions hereof. This Amendment to Registration Agreement may be executed in
multiple counterparts.
-5-
<PAGE> 14
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By: /s/ Richard A. Manoogian By: /s/ Richard A. Manoogian
------------------------- -------------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By: By:
-------------------- ------------------------
Brian P. Campbell Herbert S. Amster
President
By:
------------------------
Helmut F. Stern
<PAGE> 15
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By: By:
--------------------- -----------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By: /s/ Brian P. Campbell By: /s/ Herbert S. Amster
---------------------- ----------------------
Brian P. Campbell Herbert S. Amster
President
By: /s/ Helmut F. Stern
-----------------------
Helmut F. Stern
<PAGE> 16
AMENDMENT TO REGISTRATION AGREEMENT
This is an Amendment dated as of May 26, 1994 to a Registration
Agreement dated as of December 27, 1988 and amended as of April 21, 1992 and
January 5, 1993 (the "Registration Agreement") among TriMas Corporation, a
Delaware corporation ("TriMas"), Masco Corporation, a Delaware corporation
("Masco"), and MascoTech, Inc. (formerly Masco Industries, Inc.), a Delaware
corporation ("Industries").
WHEREAS, the common stock, par value $.01 per share, of TriMas is
referred to herein as the "Common Stock";
WHEREAS, Masco and Industries have certain registration rights pursuant
to the Registration Agreement with respect to their shares of Common Stock;
WHEREAS, the Registration Agreement provides that Masco and Industries
may assign certain of their registration rights under certain circumstances to
transferees who purchase shares of Common Stock from Masco and Industries;
WHEREAS, Masco and Industries sold certain shares of Common Stock (the
"Executive Shares") to certain members of their senior management (the
"Executives"), including Richard A. Manoogian, pursuant to letter agreements
dated June 29, 1989 (the "Executive Letter Agreements");
WHEREAS, Masco and Industries gave the Executives certain registration
rights pursuant to the Executive Letter Agreements with respect to the
Executive Shares;
WHEREAS, TriMas, Masco, and Industries wish to amend the Registration
Agreement to alter the arrangements for registration of the Executive Shares
owned by Richard A. Manoogian; and
WHEREAS, Masco, Industries and Richard A. Manoogian are entering into
conforming amendments to Richard A. Manoogian's Executive Letter Agreements
concurrently herewith.
NOW, THEREFORE, the parties hereto agree as follows:
A. Paragraph 1(b) of the Registration Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) Richard A. Manoogian. Promptly on or after the date of this
Amendment, TriMas shall prepare and file a Common Stock Registration Statement
covering all of the Executive Shares which Richard A. Manoogian purchased under
his Executive Letter Agreements (as adjusted from time to time for stock
splits, dividends and similar events) and shall use its best efforts to cause
the Common Stock Registration Statement to become effective as soon as
<PAGE> 17
possible. TriMas shall use its best efforts to keep such Common Stock
Registration Statement effective and in compliance with the Securities Act on a
continuous basis (i.e., a "shelf" registration), and to provide Richard A.
Manoogian with prospectuses and prospectus supplements in compliance with the
Securities Act as may be required from time to time, until the earlier of (A)
June 30, 1996 or (B) the date when Richard A. Manoogian ceases to own any of
the Common Stock registered thereunder. All expenses (other than fees and
expenses of counsel to Richard A. Manoogian) in connection with such
registration pursuant to this Paragraph 1(b) shall be borne by TriMas. If
Richard A. Manoogian proposes to sell any shares of Common Stock under such
Common Stock Registration Statement pursuant to this Paragraph 1(b), he shall
notify the Vice President - General Counsel or the Vice President - Investments
of Masco, who in turn shall notify the President (or, if the President is
absent or unavailable, any Vice President) of TriMas, and he shall not
consummate such sale until the President or a Vice President of TriMas has been
notified (or if more than 10 days have elapsed since the last such notice was
given); provided, however, that following a "Change in Control" of Masco (as
defined in the Executive Letter Agreement) he may notify the President (or, if
the President is absent or unavailable, any Vice President) of TriMas directly.
TriMas will have the right at any time to suspend all sales of Executive Shares
under this Paragraph 1(b), for a period not exceeding a total of 90 days, by
notice to Richard A. Manoogian if in its good faith judgment the relevant
prospectus contains an untrue statement of a material fact, or omits to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. Richard A.
Manoogian shall sell his Executive Shares under the Common Stock Registration
Statement pursuant to this Paragraph 1(b) only in accordance with the terms of
the related prospectus and any prospectus supplements, and shall not sell any
Executive Shares pursuant to such Common Stock Registration Statement while any
suspension of sales thereunder is in effect. In lieu of a Common Stock
Registration Statement, TriMas at its option may utilize a prospectus or
prospectus supplement under its currently effective shelf registration
statement, in which event the rights and obligations with respect thereto shall
be the same as if TriMas had filed a Common Stock Registration Statement."
B. Except as provided herein, the Registration Agreement shall remain
in full force and effect and not otherwise be modified or affected by the
provisions hereof. This Amendment to Registration Agreement may be executed in
multiple counterparts.
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<PAGE> 18
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCOTECH, INC.
By By ____________________________
-----------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By /s/ Brian P. Campbell By /s/ Herbert S. Amster
----------------------- ----------------------------
Brian P. Campbell Herbert S. Amster
President
By ____________________________
Helmut F. Stern
-3-
<PAGE> 19
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCOTECH, INC.
By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian
------------------------- --------------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By By
------------------------- -------------------------
Brian P. Campbell Herbert S. Amster
President
By /s/ Helmut F. Stern
-------------------------
Helmut F. Stern
-3-
<PAGE> 20
AMENDMENT TO REGISTRATION AGREEMENT
This is an Amendment dated as of May 15, 1996 to a Registration
Agreement dated as of December 27, 1988 and amended as of April 21, 1992,
January 5, 1993 and May 26, 1994 (the "Registration Agreement") among TriMas
Corporation, a Delaware corporation ("TriMas"), Masco Corporation, a Delaware
corporation ("Masco"), and MascoTech, Inc. (formerly Masco Industries, Inc.), a
Delaware corporation ("Industries").
WHEREAS, TriMas, Masco, and Industries wish to amend the Registration
Agreement to alter the arrangements for registration of the Executive Shares
owned by Richard A. Manoogian.
NOW, THEREFORE, the parties hereto agree as follows:
A. The second sentence of Paragraph l(b) of the Registration Agreement
is hereby amended by deleting the year "1996" and by substituting therefor the
year "1997".
B. Except as provided herein, the Registration Agreement shall remain
in full force and effect and not otherwise be modified or affected by the
provisions hereof. This Amendment to Registration Agreement may be executed in
multiple counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCOTECH, INC.
By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian
------------------------- -------------------------
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By /s/ Brian P. Campbell By /s/ Herbert S. Amster
------------------------- -------------------------
Brian P. Campbell Herbert S. Amster
President
By /s/ Helmut F. Stern
-------------------------
Helmut F. Stern
<PAGE> 21
ACKNOWLEDGMENT
I acknowledge that the Letter Agreements with each of Masco Corporation and
MascoTech, Inc. dated as of June 29, 1989 are amended to conform with the
Registration Agreement, as amended, and that the Letter Agreements shall
otherwise continue in full force and effect.
/s/ Richard A. Manoogian
--------------------------
Richard A. Manoogian
<PAGE> 1
EXHIBIT 10.s
CONFORMED
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this 23rd day of December, 1991 by and
between Masco Corporation, a Delaware corporation ("Masco"), and Masco
Industries, Inc., a Delaware corporation ("Industries").
Masco and Industries each own one share of the two issued and outstanding
shares of Masco Capital Corporation, a Delaware corporation ("Masco Capital"),
which has been jointly managed by Masco and Industries. Its most significant
investment was the Junior Subordinated Discount Debentures of Payless Cashways,
Inc. which were recently sold. Related bank loans and indebtedness to the
shareholders have been fully repaid. Masco Capital has also made a
distribution of its retained earnings.
Due to Masco Capital's reduced scope, Masco and Industries deem it
appropriate to place the management of Masco Capital under the exclusive
control of Masco. Further, Industries desires a return of its original capital
investment and to be relieved of the responsibility to provide additional funds
to satisfy its pro rata portion of Masco Capital's future funding obligations.
Accordingly, Industries has agreed to sell and Masco has agreed to purchase
Industries' 50% interest in Masco Capital. In light of the fact that Masco
Capital's investments generally have no public market, their current value,
which is believed to be in excess of the current book value, is uncertain. The
parties anticipate that the uncertainty will significantly decrease over the
next three years as the investments are liquidated. Therefore, the parties
have structured this purchase and sale to pay Industries a small premium over
its current carrying cost of Masco Capital and to provide that Industries will
be in at least as favorable an after-tax financial position at the time of
settlement of obligations as it would have been in if the Masco Capital
investment portfolio were frozen as of December 20, 1991 and then liquidated
over time and the proceeds of the liquidation distributed prior to December 31,
1994.
NOW, THEREFORE, in consideration of the above premises and the agreements
set forth herein, the parties hereto agree as follows:
1. Conditions Precedent. The respective obligations of Masco and
Industries to consummate the transactions contemplated by this Agreement are
subject to (i) the approval on behalf of Masco by the Oversight Committee of
the Masco Board of Directors and (ii) the approval on behalf of Industries by
the Oversight Committee of the Industries Board of Directors.
-1-
<PAGE> 2
2. Agreement to Purchase and Sell. Subject to the terms and conditions of
this Agreement, Industries agrees to sell, transfer and convey all of its
right, title and interest in and to one share of the capital stock, par value
$1.00 per share, of Masco Capital (the "Masco Capital Share") and Masco agrees
to purchase the Masco Capital Share.
3. Delivery by Industries. At the Closing of the transactions
contemplated hereby (the "Closing"), Industries shall deliver to Masco a
certificate representing the Masco Capital Share registered in the name of
Industries and endorsed to Masco Corporation. The Closing shall be held at the
offices of Masco Capital in Taylor, Michigan on December 30, 1991 at 10:00 a.m.
or at such other time or place as mutually agreed upon by the parties hereto.
4. Payment. The aggregate purchase price shall be equal to the sum of (i)
the Closing Price (as hereinafter defined) and (ii) (A) one-half of the
Incremental Value (as hereinafter defined) less (B) $5,200,000, and less (C)
interest on the Closing Price accrued and compounded annually at a rate
equivalent to Masco's average after-tax cost of bank borrowing from the Closing
to the date of payment of such one-half of the Incremental Value; provided,
however, that if Masco has no bank borrowings at a time during the term hereof,
the interest rate during such time shall be the equivalent of an after-tax cost
of 1% under the Prime Rate of NBD Bank, N.A. The aggregate purchase price
shall be payable as follows:
(a) The Closing Price shall be $49,451,500 (representing 50% of the Net
Book Value indicated on the balance sheet Masco Capital prepared as of December
20, 1991 and heretofore initialled by the parties plus $5,200,000) and shall be
paid upon the delivery of the Masco Capital Share as provided in Section 3.
For purposes of this Agreement, the term Net Book Value shall mean Total
Shareholders' Equity of Masco Capital without reflecting any write up or write
down in the carrying value of the assets or liabilities of Masco Capital as a
result of a change in the fair market value of such assets or liabilities.
(b) Subject to the provisions of Section 10 hereof, the amount determined
under Section 4(ii) shall be paid at the earlier of (i) thirty days after the
date on which the Valuation (as hereinafter defined) is completed but no later
than December 31, 1994 and (ii) thirty days after the date on which the last of
the Investments (as hereinafter defined) shall have been sold, liquidated or
otherwise turned into cash.
(c) Investments shall mean the investments and assets of Masco Capital
existing on December 20, 1991.
(d) Incremental Value shall mean the total of:
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<PAGE> 3
(i) for Investments that are sold, liquidated or otherwise turned
into cash, the aggregate of the gain or loss on each such Investment
determined with reference to the carrying cost of each such Investment;
plus or minus
(ii) for Investments which have not been sold, liquidated or
otherwise turned into cash, and all non-cash proceeds (received or
receivable) relating thereto, including, without limitation, dividends,
interest, additional securities and securities derived from such
Investments by way of reorganization, recapitalization or otherwise (the
"Proceeds"), the aggregate gain or loss determined with reference to the
carrying cost of each such Investment and based on a Valuation of such
Investment (and Proceeds) on September 30, 1994; plus
(iii) the aggregate of Masco Capital's dividend and interest income
from (x) the Investments, (y) the Proceeds thereof and (z) cash realized
on sale, liquidation or otherwise turning into cash of Investments from
December 20, 1991 until September 30, 1994; minus
(iv) all management and other fees relating to the Investments paid
or payable to the investment advisors and managers of the partnerships
which hold the Investments and all legal, accounting, management and
other expenses reasonably incurred by Masco Capital relating to
Investments, in each case from December 20, 1991 until September 30,
1994; minus
(v) all federal, state and local taxes paid or payable on the
aggregate income from the Investments, including without limitation
dividends, interest and the gain and loss of such Investments which have
been sold, liquidated or otherwise turned into cash and an appropriate
reserve (to be determined by Masco in its sole discretion) to cover all
such taxes which may be due after September 30, 1994 based on the
Valuation of all Investments which have not been sold, liquidated or
otherwise turned into cash at such date.
(e) For purposes of this Agreement, Valuation shall mean the value placed
on the Investments (and Proceeds), which have not been sold, liquidated or
otherwise turned into cash on or before September 30, 1994, by the respective
Oversight Committees of the Boards of Directors of Masco and Industries acting
jointly. However, if such directors do not unanimously agree on such value,
the value of the Investments (and Proceeds) shall be determined by the
valuation department or group of Masco's independent public accountants (which,
unless Masco informs Industries otherwise, shall be Coopers & Lybrand), and the
persons performing the valuation (the "Valuation Group") shall take into
account all relevant business and management considerations using customary
valuation techniques. If at such time Masco's independent public
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<PAGE> 4
accountants do not have a valuation department or group, then Masco shall
have the right to select another independent entity to serve as the "Valuation
Group" which, in Masco's reasonable judgment, is experienced and reputable with
respect to such matters. All determinations by the Valuation Group shall be
final and binding.
(f) Masco and Industries acknowledge that the Net Book Value of
$88,503,000 is based on the best information contained in the books and records
of Masco Capital at December 20, 1991. As soon as practicable after the
Closing (but no later than February 1, 1992) Masco Capital shall prepare a
final balance sheet as of December 20, 1991 based on the books and records of
Masco Capital setting forth an exact Net Book Value and deliver such balance
sheet to Masco and Industries. If Industries shall not have delivered a
written objection to Masco within 10 business days of receipt of such balance
sheet, such balance sheet will become final. If the Oversight Committee of the
Industries Board of Directors does deliver a timely written objection with
which Masco does not agree, the balance sheet will be delivered to Coopers &
Lybrand for a final determination of the correct Net Book Value, which shall be
made no later than March 15, 1992. Upon the final determination of the Net
Book Value on such balance sheet, Masco and Industries shall adjust the Closing
Price based thereon by, (A) if such Net Book Value has increased from
$88,503,000, paying one-half of such increase to Industries in cash within 3
business days of such determination and (B) if such Net Book Value has
decreased, by deducting such decrease from the Incremental Value. Masco
Capital shall also prepare a definitive list of Investments and the carrying
cost thereof as of the Closing.
(g) In no event shall the purchase price hereunder be less than the
Closing Price as finally determined pursuant to Section 4(f) hereof.
5. Subsequent Fundings by Masco. (a) If after December 20, 1991 Masco
should provide any additional funds to Masco Capital, Industries shall not
share in any gain or loss resulting from such funds or be paid any amount as
interest, dividends or otherwise relating thereto and any interest expense on
such additional funds shall be disregarded for all purposes hereunder.
(b) Notwithstanding the determination of Incremental Value in accordance
with Section 4 hereof, if during the term hereof Masco Capital supplies funds
to a partnership for an investment in an existing Investment and such
additional investment has an impact on the value of the Investment which is
disproportionate to the Investment (as valued by the Oversight Committees
acting jointly at the time of such additional investment) and not reflected in
the value of any security received by Masco in respect of such additional
investment, the Valuation of such Investment (and Proceeds) at September 30,
1994 (or, in the case of an Investment previously sold, liquidated, or
otherwise turned into cash, the amount of gain or loss realized and Proceeds
thereof) shall be
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<PAGE> 5
equitably adjusted by action of the Committees or, if such
Committees cannot reach unanimous agreement, by the Valuation Group provided in
Section 4(e).
6. Termination of Fee Agreement. The Fee Agreement dated as of December
16, 1988 among Masco, Industries and Masco Capital is hereby terminated as of
December 20, 1991 and no liability of any kind will arise to either party from
prior performance or neglect of its terms other than payment of fees up to and
including such date.
7. Payless Preferred Supplier Agreement. It is Masco's current
intention, so long as Masco is a party to the Supply Agreement dated as of
August 4, 1988 by and between Masco and Payless Cashways, Inc., that Masco
shall continue to designate Industries and its subsidiaries "affiliated
companies" under Article I thereof; provided, however, that Masco is under no
obligation to keep the Supply Agreement in effect, and provided further that
Masco may in its sole discretion terminate such designation at any time upon
reasonable notice.
8. Management of Masco Capital. From the date hereof, Masco shall have
the sole right to manage Masco Capital, make investment decisions and take all
other acts which it may deem necessary or appropriate and Masco shall have no
liability to Industries with respect to such management, investment decisions
or any other matter involving Masco Capital based on action or inaction of
Masco or recklessness, misfeasance, gross negligence or negligence of Masco or
of any of its officers, directors, employees, shareholders or agents in the
handling of Masco Capital's affairs; provided, however, that if Masco is
requested or required by one of the partnerships managing an Investment to make
a decision which may affect the value of such Investment, Masco will notify
Industries before it makes such decision.
9. Funding Commitments. Masco and Masco Capital hereby release
Industries from any and all current or future funding commitments of Masco
Capital which Industries may have or have had with respect to the Investments
or the partnerships holding the Investments or otherwise and Masco agrees to
hold Industries harmless from any loss occasioned by an attempt by any entity
to enforce any such funding commitment.
10. Termination and Distribution. (a) Notwithstanding anything in this
Agreement to the contrary, if the Oversight Committees of the Boards of
Directors of Masco and Industries jointly determine that it is inappropriate to
pay all or part of the Incremental Value based on the Valuation as of September
30, 1994, or if they otherwise jointly determine to defer such Valuation or
payment, then such Committees may in their sole discretion set such payment to
occur in whole or in part after a Valuation on September 30, 1995 or September
30, 1996 and pay only such portion of the Incremental Value prior to December
31, 1994 as
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<PAGE> 6
such Committees shall jointly determine. In such case all references to
September 30, 1994 in Section 4 or Section 5 hereof will be deemed to refer to
such later valuation date.
(b) Notwithstanding anything in this Agreement to the contrary, the
Oversight Committees of the Boards of Directors of Masco and Industries, acting
jointly, may determine following the liquidation of one or more Investments
that it is appropriate for Masco to make a cash payment to Industries prior to
December 31, 1994 (or December 31, 1995 or 1996 as the case may be) as an
advance against amounts that such Committees believe may subsequently be due to
Industries hereunder. Such advances may be made on such terms (including a
requirement that Industries agree to repay such advance if, after sale,
liquidation or otherwise turning into cash of all Investments, the advance was
not warranted) as such Committees may establish.
11. Liquidation of Masco Capital. Nothing in this Agreement shall
preclude Masco from reorganizing, merging, combining or liquidating and winding
up Masco Capital; provided, however, in the event of such a transaction or
series of transactions Masco shall keep separate accounts to enable it to
satisfy its obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
MASCO CORPORATION
By /s/ Richard A. Manoogian
--------------------------
MASCO INDUSTRIES, INC.
By /s/ Timothy Wadhams
--------------------------
Masco Capital Corporation accepts and agrees to the provisions of this
Agreement relating to it.
MASCO CAPITAL CORPORATION
By /s/ John R. Leekley
--------------------------
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<PAGE> 1
EXHIBIT 10.t
CONFORMED COPY
PROMISSORY NOTE
$151,375,000.00 October 31, 1996
FOR VALUE RECEIVED, MascoTech, Inc., a Delaware corporation with its
principal offices located at 21001 Van Born Road, Taylor, Michigan 48180
("MascoTech"), hereby promises to pay to the order of Masco Corporation, a
Delaware corporation with its principal offices located at 21001 Van Born Road,
Taylor, Michigan 48180 ("Payee"), in lawful money of the United States of
America, the principal sum of One Hundred Fifty One Million Three Hundred
Seventy Five Thousand Dollars ($151,375,000.00) (the "Principal Amount"),
together with interest, in accordance with the terms hereof.
This Note is referred to in, and issued pursuant to, that certain Stock
Purchase Agreement, dated as of October 15, 1996, by and between MascoTech and
Payee (the "Stock Purchase Agreement"). Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Stock
Purchase Agreement.
The Principal Amount shall be due and payable in one, lump-sum payment on
September 30, 1997 (the "Maturity Date"). Interest from the date hereof on the
unpaid Principal Amount shall accrue at the per annum rate of six and
five-eights percent (6-5/8%), and shall be payable in four installments on
December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997.
Notwithstanding the first paragraph of this Note, MascoTech may repay all
or any portion of the Principal Amount and any accrued interest thereon by
transferring any publicly-traded securities (debt or equity) of Emco Limited
that MascoTech holds at the time of payment which were held on the date hereof.
Any such Emco Limited securities shall be valued at an amount equal to 97% of
the average of the closing prices for such securities on the Toronto Stock
Exchange during the 20 trading days ending on the third day prior to the date
of payment, expressed in U.S. Dollars at the prevailing exchange rate on the
date of payment. Any such payment in Emco Limited securities shall be subject
to applicable regulatory approvals, which MascoTech and Payee agree to
diligently seek to obtain upon MascoTech's written notice to Payee of its
intention to transfer to Payee any Emco Limited securities.
This Note may be prepaid in whole at any time or in part from time to
time, with accrued interest, without penalty or premium.
MascoTech agrees to pay all costs of collection of any amounts due
hereunder when incurred, including, without limitation, reasonable attorneys'
fees and expenses, unless prohibited by law.
<PAGE> 2
MascoTech hereby waives presentment for payment, demand, notice of
dishonor, notice of protest and all other notices and demands in connection
with the delivery, acceptance, performance or default of this Note and agrees
that this Note may not be changed, modified or terminated orally, but only by
an agreement in writing signed by MascoTech and Payee.
This Note shall become immediately due and payable upon notice by Payee to
MascoTech if one or more of the following events shall have occurred and be
continuing (except in the case of the events specified in clauses (e) and (f)
in which event this Note shall become immediately due and payable without any
such notice):
(a) any event or condition shall occur which results in the acceleration
of the maturity of any indebtedness for borrowed money in excess of
$10,000,000 or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such indebtedness or any person acting
on such holder's behalf to accelerate the maturity thereof;
(b) default in the payment of interest upon this Note when it becomes due
and payable and continuance of such default for a period of 5 days; or
(c) default in the payment of all or any part of the principal of this
Note as and when the same shall become due and payable;
(d) any representation or warranty of MascoTech in the Stock Purchase
Agreement should prove to have been incorrect in any material respect
when made or deemed made;
(e) MascoTech shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors;
(f) an involuntary case or other proceeding shall be commenced against
MascoTech seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against MascoTech under the
federal bankruptcy laws as now or hereafter in effect;
(g) a judgment or order for the payment of money in excess of $5,000,000
shall be rendered against MascoTech and such judgment or order shall
continue unsatisfied and unstayed for a period of 20 days.
<PAGE> 3
This Note shall be governed by, and construed in accordance with, the law
of the State of Michigan.
Any notice or other communication under this Note shall be in writing and
shall be considered given when mailed by certified or registered mail, return
receipt requested, to the Chief Financial Officer of MascoTech or the Payee, as
the case may be, at the address set forth in the first paragraph of this Note
(or at such other address as either party may specify by notice to the other).
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed in
its corporate name by a duly authorized officer, as of the date first written
above.
MASCOTECH, INC.
By: /s/ Timothy Wadhams
-----------------------------------
Name: Timothy Wadhams
Title: Vice President
<PAGE> 1
EXHIBIT 10.u
THE SECURITY REPRESENTED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES
LAWS, AND MAY NOT BE RESOLD OR TRANSFERRED, IN WHOLE OR IN PART,
UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND ALL APPLICABLE STATE SECURITIES LAWS.
FURNISHINGS INTERNATIONAL INC.
12% Senior Note Due 2008
August 5, 1996 $285,000,000.00
New York, New York No. 1
FOR VALUE RECEIVED, FURNISHINGS INTERNATIONAL INC., a Delaware
corporation (the "Company"), promises to pay to Masco Corporation, a Delaware
corporation ("Masco" or the "Lender"), or its registered assigns, the principal
sum of TWO HUNDRED EIGHTY-FIVE MILLION DOLLARS ($285,000,000.00), as such sum
may be increased in accordance with the provisions of Section 3(a) below and
decreased by prepayments made pursuant to Section 4 below, on August 5, 2008
(the "Maturity Date") in accordance with the provisions of this Note.
This Note is the promissory note required to be issued pursuant to
Section 2(b) of the Acquisition Agreement dated as of March 29, 1996, among the
Company and the Lender, as amended by Amendment No. 1 thereto dated as of June
21, 1996 and Amendment No. 2 thereto dated as of the Issue Date (as such
Acquisition Agreement may be further amended, supplemented or otherwise
modified from time to time, the "Acquisition Agreement"). This Note, any notes
issued pursuant to Section 3 below, any Exchange Notes or Public Notes (in each
case as defined in the Registration Rights Agreement) issued pursuant to
Article II or Section 9.4 or 9.5 of the Registration Rights Agreement, any
notes issued in payment of interest on this Note, on any note issued pursuant
to Section 3 below or on any such Exchange Note or Public Note (or on any notes
so issued in payment of interest), and any notes issued upon registration of
transfer or exchange of this Note or any of the aforementioned Exchange Notes,
Public Notes or other notes, are collectively referred to herein as the "Notes".
<PAGE> 2
1. Interest; Default Interest. (a) Interest will accrue on the
unpaid principal amount of this Note during the period from and including the
date hereof to but excluding the Maturity Date at the rate of 12% per annum
(computed on the basis of a 360-day year consisting of twelve 30-day months).
The Company will pay interest in arrears on June 15 and December 15 of each
year, beginning December 15, 1996, and on the Maturity Date.
(b) If the Company shall default in the payment of any principal of or
interest on this Note when due (whether upon the Maturity Date or any scheduled
interest payment date, by acceleration or otherwise), the Company agrees to pay,
to the extent permitted by law, interest on demand from time to time on such
defaulted amount to but excluding the date of actual payment at the rate of 14%
per annum (computed on the basis of a 360-day year consisting of twelve 30-day
months).
2. Method of Payment. (a) The Company will pay the
interest on this Note provided for in Section 1 above (i) in the case of
interest which accrues pursuant to Section 1(a) above, to the person who is the
registered holder of this Note (the "Holder") at the close of business on June 1
or December 1 next preceding the applicable interest payment date,
notwithstanding any cancellation of this Note after the record date and on or
before such interest payment date, and (b) in the case of interest which accrues
pursuant to Section 1(b) above, to the Holder as of the close of business on the
date on which the payment of such interest is demanded. Subject to paragraph
(b) below, the Company will pay the principal of and interest on this Note, and
all other amounts (if any) required to be paid by it under this Note, in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. The Company may pay principal, interest and any such
other amount by check payable in such money and may mail an interest check to
the Holder's registered address. If the outstanding principal amount of this
Note is at least $2,500,000 and the Holder so requests, the Company shall make
all payments of principal of and interest on this Note, and all other payments
(if any) required to be made by it under this Note, by wire transfer of
immediately available funds to the account specified by the Holder in a written
notice to the Company delivered at least three Business Days prior to the
relevant payment date.
If the due date for any payment in respect of this Note is not a
Business Day, such payment shall be made on the next succeeding Business Day and
no interest shall accrue on such payment for the intervening period.
(b) The Company may and, to the extent that (i) the provisions of
Section 7 below, or of any agreement or instrument evidencing or relating to
any Senior Indebtedness, then prohibit (including by means of a financial or
negative covenant) the payment of interest on the Notes in cash or (ii) the
Relevant Subsidiaries are then prohibited (including by means of a financial or
negative covenant) from paying cash dividends to the Company for the purpose of
paying such interest by reason of the provisions of the agreements and
instruments evidencing or relating to Indebtedness of such subsidiaries or by
reason of any applicable law, rule, regulation, judgment, order or decree, the
Company shall, on each interest payment date occurring prior to December 15,
2004, in lieu of the payment in whole or in part of interest in cash on this
Note, pay interest on this Note through the issuance of additional Notes of
like tenor (the "Secondary Notes") in an aggregate principal amount equal to
the amount of interest that would be payable with respect to this Note if such
interest were paid in cash. Notwithstanding the immediately preceding
sentence, on each interest payment date occurring on or after December 15, 2001
but prior to December 15, 2004, to the extent that (x) the provisions of
Section 7 below and the agreements and instruments evidencing or relating to
any Senior Indebtedness do not then prohibit (including by means of a financial
or negative covenant) the payment of interest on the Notes in cash and (y) the
Relevant Subsidiaries are not then prohibited (including by means of a
financial or negative covenant) from paying cash dividends to the Company for
the purpose of paying such interest by reason of the provisions of the
agreements and instruments evidencing or relating to Indebtedness of such
subsidiaries or by reason of any applicable law, rule, regulation,
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<PAGE> 3
judgment, order or decree, the Company shall pay interest on the Notes in cash
in the amount at least equal to the amount by which (A) the lesser of (I) the
Excess Cash Flow for the fiscal year of the Company immediately preceding the
fiscal year in which such interest payment dateoccurs and (II) if, as of the
end of such immediately preceding fiscal year, any Bank Indebtedness (or
commitment to extend credit constituting Bank Indebtedness) is outstanding, the
amount, if any, by which (1) the "Excess Cash Flow" (as defined in the Credit
Agreement or any successor agreement or instrument in effect on the date of the
prepayment referred to in clause (2) below (or, if earlier, such interest
payment date) evidencing or relating to Bank Indebtedness) for such immediately
preceding fiscal year exceeds (2) the aggregate principal amount of Bank
Indebtedness required to be prepaid during the fiscal year in which such
interest payment date occurs in respect of such "Excess Cash Flow," exceeds (B)
the aggregate amount of cash interest previously paid on the Notes during the
fiscal year in which such interest payment date occurs. All interest on the
Notes payable on or after December 15, 2004 shall be paid in cash.
(c) In the event that Secondary Notes are issued by the Company in
lieu of interest paid in cash, the Company shall deliver to the Holder (or any
prior registered holder of this Note entitled thereto under Section 2(a)), on
the relevant interest payment date, Secondary Notes, dated the date of such
interest payment date, in an aggregate principal amount equal to the amount of
cash interest not paid on this Note on such interest payment date. In the event
that, on any interest payment date, the Company pays in cash part (but less than
all) of the interest then due on the Notes, the payment of such cash interest
will be made pro rata among the registered holders of the Notes (or any prior
registered holders of Notes entitled thereto under Section 2(a)) on the basis of
the outstanding principal amount of the Notes held by each such holder (or prior
holder) on the record date for the payment of such interest.
(d) In the case of each interest payment date occurring on or after
December 15, 2001 but prior to December 15, 2004, the Company shall deliver to
the registered holders of the Notes (or any prior registered holders of Notes
entitled to receive interest on such
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<PAGE> 4
interest payment date pursuant to Section 2(a)), at least 10 Business Days prior
to such interest payment date, a written notice setting forth the amount of
interest that will be paid on the Notes in cash on such interest payment date.
Such notice shall also set forth (i) a brief summary of the Company's
calculation of the Annual Amount applicable to such interest payment date and
(ii) the aggregate amount of cash interest previously paid on the Notes during
the fiscal year in which such interest payment date occurs. Once delivered,
such notice shall be irrevocable, unless the Company's Board of Directors
determines that (x) an error has been made in the calculation of any amount set
forth in such notice or (y) an event has occurred on or after the date of such
notice which would reduce the amount of cash interest required to be paid by the
Company pursuant to Section 2(b) on such interest payment date.
3. Increase in Principal Amount. (a) In the event that
the aggregate outstanding principal amount of the Notes is required to be
increased pursuant to Section 2(f)(ii) of the Acquisition Agreement, the Company
will give written notice of such increase to the Holder (if other than the
Lender or any of its Affiliates) within five Business Days after the date (the
"Determination Date") on which Adjusted Net Investment and Advances (as defined
in the Acquisition Agreement) is finally determined pursuant to Section 2(e) of
the Acquisition Agreement. From and after the Determination Date, the portion
of the aggregate principal amount of the Notes represented by such increase (the
"Increased Amount") shall be deemed to have been outstanding effective as of the
Issue Date for all purposes hereunder; provided, however, that the failure to
pay interest in respect of the Increased Amount on any interest payment date
occurring prior to the Determination Date shall not constitute a Default or an
Event of Default hereunder, so long as such interest is paid, in any manner
permitted by Section 2, within 10 Business Days after the Determination Date (it
being understood that any Secondary Notes issued to pay interest due in respect
of the Increased Amount on any such interest payment date shall be deemed to
have been outstanding effective as of such interest payment date and shall be
dated the date of such interest payment date). The Increased Amount shall be
allocated solely to the Lender, regardless of whether the Lender is then a
registered holder of Notes. Within 10 Business Days after the Determination
Date, (i) if the Lender is a registered holder of Notes as of the Determination
Date, such Notes shall be surrendered to the Company and cancelled in exchange
for new Notes of like tenor issued by the Company reflecting the Increased
Amount or (ii) if the Lender is not a registered holder of Notes as of the
Determination Date, the Company shall issue to the Lender a new Note of like
tenor, dated the Issue Date, in an original principal amount equal to the
Increased Amount. Notwithstanding anything in the Notes to the contrary,
Section 2(b) of the Notes shall apply to all interest payable in respect of the
Increased Amount.
(b) In the event that from time to time the Company is obligated to
issue a promissory note to the Lender pursuant to Section 12(r) of the
Acquisition Agreement, then in satisfaction of such obligation (and whether or
not the Lender is a registered holder of Notes on the date on which the
obligation to issue such promissory note arises under such Section 12(r) (the
"Indemnification Issue Date")), the Company shall issue to the Lender, within 10
Business
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<PAGE> 5
Days after the date on which the obligation to issue such promissory note is
finally determined pursuant to such Section 12(r), a new Note of like tenor,
dated the Indemnification Issue Date, in an original principal amount determined
in accordance with such Section 12(r). From and after the date of such final
determination, the Note issued in respect thereof shall be deemed to have been
outstanding effective as of the related Indemnification Issue Date for all
purposes hereunder; provided, however, that the failure to pay interest in
respect of such Note on any relevant interest payment date occurring prior to
the date of such final determination shall not constitute a Default or an Event
of Default hereunder, so long as such interest is paid, in any manner permitted
by Section 2, within 10 Business Days after the date of such final determination
(it being understood that any Secondary Notes issued to pay interest due in
respect of such Note on any such interest payment date shall be deemed to have
been outstanding effective as of such interest payment date and shall be dated
the date of such interest payment date).
4. Mandatory and Optional Prepayments; Change of Control
Offer. (a) Mandatory Prepayments. On each of December 15, 2006 (or February 5,
2007, if any principal, interest or other amount payable in respect of the LFI
Notes remains unpaid on December 15, 2006), June 15, 2007 and December 15, 2007,
the Company shall prepay principal of the Notes in an amount equal to 25% of the
outstanding aggregate principal amount of the Notes as of the close of business
on December 14, 2006 (or, if any principal, interest or other amount payable in
respect of the LFI Notes remains unpaid on December 15, 2006, as of the close of
business on February 4, 2007); provided, however, that the aggregate principal
amount of Notes which the Company is required to prepay on each such mandatory
prepayment date shall be reduced pro rata by an aggregate amount equal to the
amount of each prepayment or purchase of Notes made pursuant to Section 4(b) or
4(c) on or after the first such mandatory prepayment date. Each prepayment of
Notes pursuant to this Section 4(a) shall be made at a price equal to 100% of
the principal amount of the Notes being prepaid, plus accrued but unpaid
interest thereon to (but excluding) the prepayment date.
(b) Optional Prepayments. The Company, at its option, may prepay all
or a portion of the outstanding principal amount of the Notes at any time and
from time to time, in each case at a purchase price equal to 100% of the
principal amount of the Notes being prepaid plus accrued but unpaid interest
thereon to (but excluding) the prepayment date.
(c) Change of Control Offer. (i) Upon the occurrence of a Change
of Control, the Company shall, in accordance with paragraph (ii) below, notify
the Holder and each other registered holder of Notes of the occurrence of such
Change of Control, and accompanying such notice shall be an offer to purchase
the Notes (a "Change of Control Offer") at a purchase price equal to 100% of the
principal amount thereof, plus accrued but unpaid interest thereon to (but
excluding) the date of purchase.
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<PAGE> 6
(ii) Within 30 days following any Change of Control, the Company shall
mail a notice to the Holder and each other registered holder of Notes stating,
among other things: (1) that a Change of Control has occurred and a Change of
Control Offer is being made pursuant to this Section 4(c) and that all Notes (or
portions thereof) timely tendered will be accepted for payment; (2) the purchase
price and the purchase date (the "Change of Control Payment Date"), which shall
be, subject to any contrary requirements of applicable law, no earlier than 30
days nor later than 60 days from the date such notice is mailed; (3) that any
Note (or portion thereof) paid on the Change of Control Payment Date pursuant to
the Change of Control Offer shall cease to accrue interest from and after the
Change of Control Payment Date; (4) that any Note (or portion thereof) not
tendered will continue to accrue interest; (5) a description of the transaction
or transactions constituting the Change of Control; (6) that the Holder or any
other registered holder of Notes accepting the offer to have its Notes purchased
pursuant to the Change of Control Offer will be required to surrender such Notes
(or portions thereof) to the Company prior to the close of business on the
Business Day immediately preceding the Change of Control Payment Date; (7) that
the Holder or any other registered holder of Notes will be entitled to withdraw
its acceptance if the Company receives, not later than the close of business on
the third Business Day preceding the Change of Control Payment Date, written
notice setting forth the name of the Holder or such other holder, the principal
amount of the Notes (or portions thereof) delivered for purchase by the Holder
or such other holder, and a statement that the Holder or such other holder is
withdrawing its election to have such Notes (or portions thereof) purchased; (8)
that registered holders whose Notes are being purchased only in part will be
issued new Notes equal in aggregate principal amount to the unpurchased portion
of the Notes surrendered; and (9) any other procedures that the Holder and the
other registered holders of Notes must follow to accept the Change of Control
Offer or effect withdrawal of such acceptance.
(iii) On the Change of Control Payment Date, the Company shall accept
for payment the Notes (or portions thereof) properly tendered (and not
withdrawn) pursuant to the Change of Control Offer (which Notes (or the tendered
portions thereof) shall become due and payable on the Change of Control Payment
Date) and shall pay, to the Holder and each other registered holder of Notes
entitled thereto, the purchase price of the Notes (or portions thereof) so
tendered by the Holder or such other holder, plus accrued but unpaid interest
thereon to (but excluding) the Change of Control Payment Date. The Holder and
each other registered holder of Notes electing to have a Note (or portion
thereof) purchased pursuant to the Change of Control Offer will be required to
surrender such Note to the Company not later than the close of business on the
Business Day immediately preceding the Change of Control Payment Date. The
Holder and each other registered holder of Notes will be entitled to withdraw
its election if the Company receives, not later than the close of business on
the third Business Day preceding the Change of Control Payment Date, written
notice setting forth the name of the Holder or such other holder, the principal
amount of Notes (or portions thereof) delivered for purchase by the Holder or
such other holder and a statement that the Holder or such other holder is
withdrawing its election to have such Notes (or portions thereof) purchased.
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(iv) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Notes (or portions
thereof) pursuant to this Section 4(c). To the extent that the provisions of
any securities laws or regulations conflict with provisions of this Section
4(c), the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4(c) by virtue thereof.
(d) Miscellaneous Provisions. In the event that the Company
prepays less than all the outstanding principal amount of a Note pursuant to
Section 4(a) or 4(b), or purchases a portion (but less than all) of a Note
pursuant to a Change of Control Offer, the Company shall deliver to the
registered holder thereof upon such prepayment or purchase a replacement Note
of like tenor representing the remaining outstanding principal amount of such
Note. Any prepayment of less than all of the outstanding principal amount of
the Notes pursuant to Section 4(a) or 4(b) will be made pro rata among the
registered holders of the Notes on the basis of the outstanding principal
amount of the Notes then held by each such holder. From and after the date of
any prepayment or purchase of this Note pursuant to this Section 4, interest
shall cease to accrue on the portion of this Note so prepaid or purchased.
(e) Notice of Prepayment. Notice of any prepayment of this
Note pursuant to Section 4(b) above will be delivered at least 15 days but not
more than 60 days before the prepayment date to the Holder at the address
specified in (or pursuant to) Section 16, and shall be irrevocable.
5. Repayment. The Company will repay this Note on the
Maturity Date at 100% of the then outstanding principal amount of this Note plus
accrued but unpaid interest thereon to (but excluding) such date.
6. Certain Covenants. The Company covenants and agrees
with the Holder and each other registered holder of Notes from time to time
that, until the outstanding principal of, and the accrued but unpaid interest
on, each Note shall have been paid in full:
6.1 Indebtedness. The Company will not issue, assume, Guarantee,
become liable for or otherwise incur any Indebtedness, other than:
(a) Indebtedness represented by Bank Indebtedness or Guarantees by
the Company of Bank Indebtedness;
(b) Indebtedness represented by Guarantees by the Company of, or
letters of credit or other credit support issued or provided in support
of, Indebtedness of a subsidiary of the Company (other than Bank
Indebtedness and Indebtedness of the Receivables Subsidiary); provided,
however, that in the case of a Guarantee of, or letter of credit or other
credit support relating to, Indebtedness of Simmons, the recourse
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against the Company under such Guarantee, letter of credit or other credit
support shall be limited to a pledge of all or any part of the Capital Stock of
Simmons and the Class D Common Stock;
(c) Indebtedness of a Relevant Subsidiary assumed by the Company upon
the consolidation or merger of such Relevant Subsidiary with or into the
Company or the transfer of all or part of the properties and assets of
such Relevant Subsidiary to the Company, provided that such Indebtedness was
not incurred by such Relevant Subsidiary in anticipation of such consolidation,
merger or transfer;
(d) Indebtedness represented by the Notes (including any Notes issued
pursuant to Sections 2 and 3 above or pursuant to Article II and Sections 9.4
and 9.5 of the Registration Rights Agreement);
(e) Indebtedness represented by the Debentures and any Refinancing
Indebtedness incurred in respect of Debentures in connection with any purchase
or redemption of such Debentures permitted by clause (iv) of Section 6.2(b);
(f) Indebtedness consisting of Subordinated Obligations issued by the
Company, in lieu of the payment of cash, to purchase or redeem shares of
Capital Stock (or options or warrants in respect of such shares) of the Company
or any Relevant Subsidiary (including related stock appreciation rights or
similar securities) held by any current or former director, officer or employee
of the Company or any subsidiary thereof (or permitted transferees of such
current or former director, officer or employee) upon any such person's death,
disability, retirement or termination of employment or pursuant to the terms of
any agreements (including employment agreements) or plans (or amendments
thereto), approved by the Company's or a Relevant Subsidiary's Board of
Directors (as applicable), under which any such person may purchase and sell,
or is granted options to purchase and sell, any of the securities referred to
in this clause (f) (any such purchase or redemption by the Company, an
"Employee Stock Redemption");
(g) Indebtedness of the Company owing to and held by any Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer
of any such Indebtedness (except to a Wholly Owned Subsidiary) will be deemed,
in each case, to constitute an incurrence of such Indebtedness by the Company
not permitted by this clause (g);
(h) Indebtedness of the Company (A) in respect of performance bonds,
bankers' acceptances, letters of credit, surety or appeal bonds and similar
obligations, in each case provided by the Company in the ordinary course of its
business (including those incurred to secure health, safety and environmental
obligations in the ordinary
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<PAGE> 9
course of business) but which do not secure other Indebtedness, and
(B) in respect of interest rate protection agreements, foreign
currency exchange agreements and any other interest or exchange rate
hedging arrangements that are designed to protect the Company
against fluctuations in interest rates or currency exchange rates and
not for the purposes of speculation;
(i) Indebtedness of the Company, to the extent the net proceeds
thereof are immediately used after the incurrence thereof to purchase
Notes tendered in an offer to purchase made as a result of a Change
of Control;
(j) Indebtedness of the Company arising from agreements
(including the Acquisition Agreement) providing for indemnification,
adjustment of purchase price or similar obligations, in any case
(other than in the case of the Acquisition Agreement) incurred in
connection with the disposition of any business or assets of the
Company or any subsidiary thereof or the disposition of any Capital
Stock of any subsidiary of the Company (in each case other than
Guarantees of Indebtedness incurred by any person acquiring all or
any portion of such business, assets or Capital Stock for the purpose
of financing such acquisition), in a principal amount not to exceed
the gross proceeds actually received by the Company or any subsidiary
thereof in connection with such disposition;
(k) Indebtedness of the Company owed to (including obligations in
respect of letters of credit for the benefit of) any person in
connection with worker's compensation, health, disability, or other
employee benefits or property, casualty or liability insurance
provided by such person to the Company or any subsidiary thereof,
pursuant to reimbursement or indemnification obligations to such
person, in each case incurred in the ordinary course of business;
(l) any Refinancing Indebtedness incurred in respect of any
Indebtedness under clauses (c), (d), (i) and (l) of this Section
6.1;
(m) Indebtedness of the Company in an aggregate principal
amount at any time outstanding not in excess of $20 million; and
(n) Indebtedness incurred pursuant to any Permitted Receivables
Financing in respect of receivables sold by the Company to a
Receivables Subsidiary.
provided, however, that the aggregate principal amount of Indebtedness incurred
by the Company pursuant to clauses (c), (l) (but only in the case of any
Refinancing Indebtedness incurred to refinance Indebtedness under clause (c)
above) and (m) above shall not exceed $20 million at any time outstanding.
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<PAGE> 10
6.2 Restricted Payments. (a) The Company shall not (i) declare or
pay any dividend or make any distribution on or in respect of its Capital Stock
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
held by persons other than the Relevant Subsidiaries, (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each
case due within one year of the date of acquisition) or (iv) make any
Investment (other than a Permitted Investment) in any person (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment").
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of the Company
(other than Disqualified Stock and other than Capital Stock issued or sold to a
Relevant Subsidiary or an employee stock ownership plan or other trust
established by the Company or any of its subsidiaries to the extent the
purchase by such plan or trust is financed by Indebtedness of such plan or
trust and for which the Company or a Relevant Subsidiary is liable, directly or
indirectly, as a guarantor or otherwise (including by the making of cash
contributions to such plan or trust which are used to pay interest or principal
on such Indebtedness));
(ii) any purchase or redemption of Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Refinancing Indebtedness incurred to
refinance Indebtedness under clause (i) of Section 6.1;
(iii) the issuance of Debentures in exchange for shares of
Restricted Preferred Securities in accordance with the Company's articles of
incorporation;
(iv) upon the occurrence of a Change of Control and
within 60 days after the completion of the related Change of Control Offer
(including the purchase of all Notes properly tendered), any purchase or
redemption of Subordinated Obligations required pursuant to the terms thereof
as a result of such Change of Control;
(v) at any time and from time to time prior to the first
anniversary of the Issue Date, any purchase, redemption or other acquisition
for value of shares of the Company's Capital Stock pursuant to the terms of the
Call Agreement as in effect on the Issue Date;
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<PAGE> 11
(vi) Employee Stock Redemptions, in each case regardless
of whether the Company pays cash or issues notes in connection therewith, and
any payment of principal or interest on, or any purchase or redemption of, any
such notes; provided, however, that the aggregate amount (net of purchases of
the Company's or any Relevant Subsidiary's Capital Stock by officers, directors
and employees of the Company and its subsidiaries) of (A) Employee Stock
Redemptions made in cash and (B) cash payments to pay principal of, or interest
on, or to purchase or redeem, any such notes shall not exceed as of any date
the product of (x) $6.0 million and (y) the number of years (or fractions
thereof) elapsed since the Issue Date; and
(vii) any dividend or distribution in respect of the Class
D Common Stock, or any purchase or redemption of Class D Common Stock, that
consists of or is directly funded by (x) a distribution in kind of the common
stock of Simmons, (y) distributions (including distributions of assets) made in
respect of the Capital Stock of Simmons held by the Company or (z) proceeds
from the sale of Capital Stock or assets of Simmons.
6.3 Transactions with Affiliates. (a) The Company will
not, and will not permit any Relevant Subsidiary to, directly or indirectly,
enter into or conduct any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
the Company on terms (i) that are less favorable to the Company or such
Relevant Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a person who is not
such an Affiliate and (ii) that, in the event such transaction involves an
aggregate amount in excess of $2.5 million, are not evidenced by a written
agreement, instrument or other document and have not been approved by a
majority of the members of the Company's Board of Directors having no personal
economic stake in such transaction.
(b) The provisions of the foregoing paragraph (a) will
not prohibit (i) any Restricted Payment (other than Permitted Investments)
permitted to be made pursuant to Section 6.2, (ii) any Permitted Investment,
other than Permitted Investments in Simmons, in 399 or in any Affiliate of 399,
(iii) any Permitted Investment in Simmons described in clause (i) of the
definition of "Permitted Investment" in Section 12.1, (iv) fees, compensation
or employee benefits paid to, and any indemnity provided for the benefit of,
current or former directors, officers or employees of the Company or any
subsidiary of the Company in the ordinary course of business, (v) any issuance
of securities, or other payments, awards or grants in cash, securities or
otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Company's Board of Directors,
(vi) Employee Stock Redemptions, including any payment of principal of or
interest on, or any purchase or redemption of, any note issued in connection
therewith, (vii) transactions pursuant to agreements entered into or in effect
on the Issue Date (including the Transitional Services Agreement between the
Lender and the Company), together with amendments thereto entered into after
the Issue Date, provided that the terms of any such amendment are not, in the
aggregate, materially less favorable to the Company or such Relevant Subsidiary
than the terms of such agreement
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<PAGE> 12
prior to such amendment, (viii) loans or advances to officers, directors or
employees (of the Company or any subsidiary thereof) that are Affiliates of
the Company made in the ordinary course of business, but in any event not to
exceed $2.5 million in the aggregate outstanding at any one time, or (ix) any
transaction between the Company and a Relevant Subsidiary or between Relevant
Subsidiaries (so long as the other stockholders of any participating Relevant
Subsidiaries which are not direct or indirect wholly owned subsidiaries of the
Company are not themselves Affiliates of the Company).
6.4 Liens. The Company will not, directly or indirectly,
create or permit to exist any Lien on any of its property or assets
(including Capital Stock), whether owned on the Issue Date or thereafter
acquired, securing any Indebtedness of the Company other than Indebtedness
permitted by Section 6.1 (excluding any such permitted Indebtedness incurred
pursuant to clause (e), (f), (g) or (i) of Section 6.1 and Refinancing
Indebtedness incurred in respect of the Notes or in respect of Indebtedness
incurred pursuant to such clause (e), (f), (g) or (i)), unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with (or on a senior basis to, in the case of Indebtedness
subordinated in right of payment to the Notes) such Indebtedness for so long as
such Indebtedness is so secured.
6.5 Mergers, Consolidations, etc. The Company will not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any person, unless: (a) the resulting,
surviving or transferee person (the "Successor Company") will be a corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor Company (if not the
Company) will expressly assume, by a written instrument in form satisfactory to
the registered holders of a majority of the then outstanding principal amount
of the Notes, all the obligations of the Company under the Notes; (b)
immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company as a result
of such transaction as having been incurred by the Successor Company at the
time of such transaction), no Default will have occurred and be continuing;
(c) immediately after giving effect to such transaction, the Successor Company
shall have Consolidated Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company immediately prior to such transaction;
and (d) the Company will have delivered to the Holder and each other registered
holder of Notes an officers' certificate and an opinion of counsel, each
stating that such transaction complies with this Section 6.5.
The foregoing paragraph will not prohibit the Company from
conveying or transferring Capital Stock of Simmons. Notwithstanding the
foregoing clauses (b), (c) and (d), any Relevant Subsidiary may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under the Notes,
but the predecessor Company
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<PAGE> 13
in the case of a conveyance, transfer or lease of all or substantially all its
assets shall not be released from the obligation to pay the principal of and
interest on the Notes.
6.6 Certain Amendments. The Company will not permit any
amendment or other modification of the Credit Agreement (including Sections
2.13(c) and 6.08(b)(v) thereof) to the extent that the effect of such amendment
or other modification is to prohibit the Company, in the absence of a default or
event of default under the Credit Agreement, from prepaying Notes at its option
with up to 60% of the Net Cash Proceeds (as defined in the Credit Agreement as
in effect on the Issue Date) of any public offering of the Company's Common
Stock.
6.7 Existence. Except as otherwise permitted by Section 6.5,
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be required to
preserve or keep in full force and effect any such right or franchise if the
Company's Board of Directors (or any duly authorized committee thereof) shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the holders of Notes.
6.8 Financial Statements and Other Reports. The Company will
furnish to the Holder and to each other registered holder of Notes:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of income, stockholders'
equity and cash flows showing the consolidated financial condition of the
Company and its consolidated subsidiaries as of the close of such fiscal year
and the consolidated results of its operations and the operations of such
subsidiaries during such year (and showing, on a comparative basis commencing
with the fiscal year ending December 31, 1998, the corresponding figures for the
preceding fiscal year), all audited by Ernst & Young LLP, Coopers and Lybrand
LLP or other independent public accountants of recognized national standing and
accompanied by an opinion of such accountants to the effect that such
consolidated financial statements fairly present in all material respects the
financial condition and results of operations of the Company and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its unaudited consolidated balance sheet
and related statements of income, stockholders' equity and cash flows showing
the consolidated financial condition of the Company and its consolidated
subsidiaries as of the close of such fiscal quarter and the consolidated results
of its operations and the operations of such subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal year (and showing, on a
comparative basis commencing with the fiscal quarter ending March 31, 1998, such
information as of and for the corresponding dates and periods of the preceding
fiscal year), all certified by the principal financial officer of the Company as
fairly presenting in all material respects the financial
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<PAGE> 14
condition and results of operations of the Company and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP (except for the
absence of footnote disclosure) consistently applied, subject to year-end audit
adjustments;
(c) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
the Company or any of the Relevant Subsidiaries with the Securities and Exchange
Commission, or with any national securities exchange, or distributed to its
shareholders generally, as the case may be; and
(d) promptly after (and, in any event, no later than 10 Business
Days after) the chief executive officer, the president or the principal
financial officer of the Company obtains knowledge thereof, written notice of
any Event of Default or Default, specifying the nature and extent thereof and
the corrective action (if any) taken or proposed to be taken with respect
thereto.
6.9 Officers' Certificates as to Defaults. The Company will deliver
to the Holder and each other registered holder of Notes, within 90 days after
the end of each fiscal year of the Company ending after the date hereof, an
officers' certificate (signed by the president, the principal financial officer
or any vice president of the Company and by the secretary or any assistant
secretary of the Company), stating whether or not to the knowledge of the
signers thereof the Company is in default in the performance and observance of
any of its covenants and agreements contained in the Notes (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults of which the signers
have knowledge and the nature and status thereof.
7. Subordination.
7.1 Notes Subordinated to Senior Indebtedness. The Company, for
itself and its successors, and the Lender, for itself and its successors and
assigns by its acceptance of this Note, agree that the payment by the Company of
the principal of and interest on the Notes and all other amounts owed in respect
of the Notes, both before and after the commencement of a bankruptcy or similar
proceeding (collectively, the "Note Obligations"), is subordinated, to the
extent and in the manner provided in this Section 7, to the prior payment in
full in cash of all amounts payable under or in respect of the Senior
Indebtedness.
The provisions of this Section 7 are for the benefit of the holders of the
Senior Indebtedness, and such holders are made beneficiaries of this Section 7
and may enforce its provisions.
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<PAGE> 15
7.2 No Payment on Notes in Certain Circumstances.
(a) Subject to Section 7.9, prior to the payment in full in cash of
all amounts payable under or in respect of the Senior Indebtedness, no payment
(whether of cash, properties or securities) will be made by the Company on
account of principal of or interest on the Notes or any other amount owed in
respect of the Notes, or to redeem, retire, purchase, deposit moneys for
defeasance of or otherwise acquire any Notes for value, and the Company shall
not segregate and hold separate for the benefit of the Lender or any other
holder of Notes, money for any such payment, if (i) there shall have occurred
and be continuing (x) any default in the payment when due of any amount
constituting Senior Indebtedness (whether principal, interest or otherwise, and
whether due on the scheduled payment date, a date fixed for prepayment or
otherwise) or (y) any other default under any agreement or instrument evidencing
or relating to any Senior Indebtedness that has resulted in, or would permit the
holders of any Senior Indebtedness to cause (subject to any applicable notice
requirement or grace period), the acceleration of any Senior Indebtedness or
(ii) immediately after giving effect thereto, such payment would result in a
default described in clause (i) above.
(b) If any payment or distribution of assets of the Company is
received by the Lender or any other holder of Notes in respect of principal of,
interest on or any other amount owed in respect of the Notes at a time when the
payment or distribution should not have been made because of paragraph (a)
above, such payment or distribution (subject to the provisions of Section 7.9)
will be received and held in trust for the benefit of, and will be paid over to,
the holders of the Senior Indebtedness or their representatives (pro rata as to
each of such holders on the basis of the respective unpaid amounts of Senior
Indebtedness held by them) for application to the payment of the Senior
Indebtedness until all Senior Indebtedness has been paid in full in cash, after
giving effect to any concurrent payment to the holders of the Senior
Indebtedness.
7.3 Notes Subordinated to Prior Payment of All Senior Indebtedness
upon Dissolution, Liquidation or Reorganization. Subject to Section 7.9, in the
event of (i) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization, adjustment, composition or other
similar case or proceeding, relative to the Company or to its creditors, as
such, or to its assets, (ii) any liquidation, dissolution or other winding up of
the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors
or any other marshalling of assets and liabilities of the Company (collectively,
"Bankruptcy Events"), then in any such event:
(a) the holders of the Senior Indebtedness will first be entitled
to receive payment in full in cash of the principal and interest due on the
Senior Indebtedness and all other amounts payable under or in respect of the
Senior Indebtedness before the Lender and the other holders of Notes are
entitled to receive any payment on account of the principal of or interest on,
or any other amount owed in respect of, the Notes;
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<PAGE> 16
(b) any payment or distribution of assets of the Company of any
kind or character (whether in cash, property or securities) to which the Lender
and the other holders of Notes would be entitled except for the provisions of
this Section 7.3 will be paid by the person making such payment or distribution
(whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee
or otherwise) directly to the holders of the Senior Indebtedness or their
representatives to the extent necessary to make payment in full in cash of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment to the holders of the Senior Indebtedness; and
(c) if, notwithstanding the foregoing, any payment or distribution
of assets of the Company of any kind or character (whether in cash, property or
securities) is received by the Lender or any other holder of Notes on account of
the principal of or interest on, or any other amount owed in respect of, the
Notes before the Senior Indebtedness is paid in full in cash, such payment or
distribution will be received and held in trust for the benefit of, and will be
paid over to, the holders of the Senior Indebtedness or their representatives
(pro rata as to each of such holders on the basis of the respective unpaid
amounts of Senior Indebtedness held by them) for application to the payment of
the Senior Indebtedness until all Senior Indebtedness has been paid in full in
cash, after giving effect to any concurrent payment to the holders of the Senior
Indebtedness.
The Company will give prompt written notice to the Holder and each
other registered holder of Notes of any dissolution, winding up, liquidation or
reorganization of the Company or any assignment for the benefit of the Company's
creditors.
(d) Any holder of Senior Indebtedness shall have the right to
request the Holder to file and, in the event the Holder fails to do so within 10
days, is hereby authorized to file a proper claim or proof of debt in the form
required in any Bankruptcy Event for and on behalf of the Holder or any other
holder of this Note, to accept and receive any payment or distribution which may
be payable or deliverable at any time upon or in respect of the Note Obligations
in an amount not in excess of the aggregate amount of Senior Indebtedness then
unpaid, and to take such other action as may be reasonably necessary to
effectuate the foregoing. The Holder and any other holder of this Note shall
provide to such holder of Senior Indebtedness all information and documents
reasonably necessary to present claims or seek enforcement as aforesaid. The
Holder of this Note shall retain the right in respect of this Note to vote to
accept or reject any plan of partial or complete liquidation, reorganization,
arrangement, composition or extension; provided, however, that neither the
Lender nor any other holder of this Note shall take any action or vote in any
way so as to contest the enforceability of this Section 7, any Senior
Indebtedness or any other agreement or instrument with or for the benefit of any
holder of any Senior Indebtedness (in its capacity as such).
7.4 Acceleration of Payment of Notes. If an Event of Default
(other than an Event of Default occurring pursuant to clause (i) (but only in
the case of a failure to pay principal), (iv) or (v) of Section 11(a)) shall
have occurred and be continuing at any time that any
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<PAGE> 17
Senior Indebtedness is outstanding, the registered holders of the Notes
electing to accelerate the Notes pursuant to Section 11(b) shall give the
holders of the Senior Debt (or their representatives) at least 10 days' prior
written notice before accelerating the Notes, which notice shall state that it
is a "Notice of Intent to Accelerate." If payment of the Notes is accelerated
because of an Event of Default, the Company shall promptly notify the holders
of the Senior Indebtedness (or their representatives) of the acceleration.
Prior to the payment in full in cash of all amounts payable under or in respect
of the Senior Indebtedness, any amount received by the Lender or any other
holder of this Note in respect of any Note Obligation as a result of any
acceleration of this Note or any other exercise of remedies in respect of this
Note shall be paid to the holders of Senior Indebtedness in accordance with the
provisions of this Section 7.
7.5 Holders to be Subrogated to Rights of Holders of Senior
Indebtedness. Upon the payment in full in cash of all Senior Indebtedness, the
Holder and the other registered holders of Notes will be subrogated to the
rights of the holders of the Senior Indebtedness to receive payments and
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing in respect of the Notes have been paid in full, and for
the purpose of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness by or on behalf of the Company or by or on behalf of the
Lender or any other holder of Notes by virtue of this Section 7 which otherwise
would have been made to the Holder or any other holder of Notes will, as between
the Company, on the one hand, and the Holder and the other registered holders of
Notes, on the other hand, be deemed to be payment by the Company to or on
account of the Senior Indebtedness, it being understood that the provisions of
this Section 7 are, and are intended to be, solely for the purpose of defining
the relative rights of the Holder and the other holders of Notes, on the one
hand, and the holders of the Senior Indebtedness, on the other hand.
7.6 Obligations of the Company Unconditional. Nothing contained
in this Note is intended to or will impair, as between the Company and the
Holder, the obligations of the Company, which are absolute and unconditional, to
pay to the Holder the principal of and interest on this Note as and when they
become due and payable in accordance with the terms hereof, or is intended to or
will affect the relative rights of the Holder and the other registered holders
of Notes, on the one hand, and the other creditors of the Company (other than
the holders of the Senior Indebtedness), on the other hand, nor, except as
provided in this Section 7, will anything herein prevent the Holder and the
other registered holders of Notes from exercising all remedies otherwise
permitted by applicable law upon an Event of Default, subject to the rights, if
any, under this Section 7 of the holders of Senior Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.
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<PAGE> 18
7.7 Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of Senior Indebtedness. No right of any
present or future holders of any Senior Indebtedness to enforce subordination,
as provided herein, will at any time or 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 on the part of any such holder, or by any noncompliance by the Company
with the terms of this Note, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with. The holders of the Senior
Indebtedness may increase, extend, renew, amend, waive or otherwise modify the
terms of the Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company, all without
releasing or otherwise impairing the rights of such holders hereunder.
7.8 Reinstatement. The provisions of this Section 7
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Senior Indebtedness is rescinded or must
otherwise be returned by any holder of Senior Indebtedness upon the occurrence
of a Bankruptcy Event, all as though such payment had not been made.
7.9 Issuance of Additional Notes Not Prohibited.
Notwithstanding anything in this Section 7 to the contrary, nothing in this
Section 7 shall prohibit the Company from issuing, or the Lender, the Holder or
any other registered holder of Notes (as applicable) from receiving and
retaining, (a) Secondary Notes issued on any interest payment date to pay
interest on the Notes in lieu of the payment in whole or in part of such
interest in cash, (b) any Note issued pursuant to Section 3 or (c) any Exchange
Note or Public Note (in each case as defined in the Registration Rights
Agreement) issued in exchange for one or more other Notes pursuant to Article
II or Section 9.4 or 9.5 of the Registration Rights Agreement; provided,
however, that each such Secondary Note, Note, Exchange Note or Public Note
(and, in the case of an Exchange Note or a Public Note, the indenture relating
thereto) shall contain provisions substantially identical to this Section 7.
7.10 Amendment. Any amendment, waiver or other
modification of the provisions of this Section 7 shall not be effective against
any holder of Senior Indebtedness without such holder's consent.
7.11 Remedies. The holders of Senior Indebtedness shall
be entitled to enforce their rights under this Section 7 specifically, to
recover damages by reason of any breach of any provision of this Section 7 and
to exercise all other rights existing in their favor. The Lender and each
other holder of Notes acknowledges and agrees that money damages may not be an
adequate remedy for any breach of the provisions of this Section 7 and that any
holder of Senior Indebtedness may apply to any court of competent jurisdiction
for specific performance and injunctive relief in order to enforce and prevent
any violation of the provisions of this Section 7.
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<PAGE> 19
8. Registered Holder Deemed Owner. The Company may
treat the Holder as the owner of this Note for all purposes hereof.
9. Transfers; Note Register; Replacement of Notes.
9.1 Transfers. (a) This Note shall not be sold,
assigned, pledged, hypothecated or otherwise transferred, in whole or in part,
except as provided in paragraphs (b) and (c) below and except for transfers by
will or applicable laws of descent.
(b) After the earlier of (i) a Qualifying Offering and (ii)
August 5, 1998, the Holder may either (x) sell or assign this Note, in whole or
in part, to any person, or (y) pledge this Note in a bona fide financing
transaction to a commercial bank or other lending institution that agrees in
writing to be bound by the provisions of this Section 9; provided, however,
that the Holder shall not make any such sale, assignment or pledge unless (A)
the ratio of (1) Consolidated EBITDA minus Capital Expenditures to (2)
Consolidated Interest Expense, in each case for the four most recent fiscal
quarters of the Relevant Subsidiaries ending at least 45 days prior to the date
of such sale, assignment or pledge, is at least 2.5 to 1 and (B) the ratio of
(1) Total Debt as of the end of such four-quarter period to (2) Consolidated
EBITDA for such four-quarter period is not more than 3.1 to 1.
For purposes of this Section 9.1(b), "Consolidated EBITDA,"
"Capital Expenditures" and "Total Debt" shall be calculated on a consolidated
(or, if necessary to include all the Relevant Subsidiaries, a combined) basis
solely with respect to the Relevant Subsidiaries, and shall not reflect any
financial data to the extent pertaining solely to the Company.
(c) Prior to any sale, assignment or pledge of this Note
pursuant to paragraph (b) above, the Holder shall give at least 15 days' prior
written notice to the Company of the Holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer and (except in the case of any pledge pursuant to clause (y)
of such paragraph (b)) shall indicate the exemption under the Securities Act
pursuant to which the proposed transfer of this Note may be effected without
registration under the Securities Act. Every Note surrendered for registration
of transfer shall be duly endorsed, or shall be accompanied by a written
instrument of transfer duly executed, by the registered holder of such Note.
The Note issued upon such transfer shall bear the restrictive legend set forth
in paragraph (d) below.
(d) Each Note that is not an Exchange Note or a Public Note
(in each case as defined in the Registration Rights Agreement) will be stamped
or otherwise imprinted with a legend in capital letters and otherwise in
substantially the following form:
"THE SECURITY REPRESENTED BY THIS NOTE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES
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<PAGE> 20
ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE
RESOLD OR TRANSFERRED, IN WHOLE OR IN
PART, UNLESS REGISTERED OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ALL APPLICABLE
STATE SECURITIES LAWS."
9.2 Note Register; Replacement of Notes.
(a) The Company shall keep a register in which provisions
shall be made for the registration of transfers and exchanges of Notes. The
register shall be kept at the chief executive office of the Company. Upon
surrender for registration of transfer of any Note at the chief executive
office of the Company (and provided that such transfer is effected in
compliance with Section 9.1), the Company shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Notes of like
tenor for a like aggregate principal amount of Notes. At the option of any
registered holder of Notes, its Notes may be exchanged for other Notes of like
tenor of any authorized denominations and of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at the chief executive office of
the Company. Each new Note issued upon transfer or exchange shall be in a
principal amount of at least $500,000 and dated the date to which interest on
the Notes surrendered shall have been paid. All Notes issued upon any
registration of transfer or exchange of Notes shall be the valid obligations of
the Company evidencing the same respective obligations, and entitled to the
same benefits, as the Notes surrendered upon such registration of transfer or
exchange. The Company shall make a notation on each new Note of the amount of
all payments of principal previously made on the old Notes with respect to
which such new Note is issued and the date to which interest accrued on such
old Note has been paid, and shall stamp or otherwise imprint on each new Note
that is not an Exchange Note or a Public Note (in each case as defined in the
Registration Rights Agreement) the restrictive legend set forth in Section
9.1(d).
Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any Note and, in the case of
any such loss, theft or destruction, upon delivery of an indemnity agreement
satisfactory to the Company, or in the case of any such mutilation, upon
surrender of such Note (which surrendered Note shall be cancelled by the
Company), the Company will, without charge, issue a new Note of like tenor
in lieu of such lost, stolen, destroyed or mutilated Note as if the lost,
stolen, destroyed or mutilated Note were then surrendered for exchange.
10. Amendments and Waivers. The terms of the Notes may
not be amended by the Company without the consent of the registered holders of
a majority of the then outstanding principal amount of the Notes, and any
existing default may be waived only with the consent of the registered holders
of a majority of the then outstanding principal amount of the
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<PAGE> 21
Notes; provided, however, that without the consent of the Holder, the
interest rate on this Note may not be reduced, the principal amount of this
Note may not be reduced, the Maturity Date may not be changed to a later date
and Sections 4(a), 4(c), 4(d) and 7 and this Section 10 may not be amended.
11. Defaults and Remedies. (a) An "Event of Default" shall
occur if:
(1) the Company defaults in the payment of any principal of
or interest on any Note when the same becomes due and payable
(whether on the Maturity Date, a date fixed for the prepayment
or repurchase of such Note pursuant to Section 4 or otherwise),
and the default continues for a period of 10 days;
(ii) there is a default in the performance, or a breach, of any
covenant or agreement of the Company contained in the Notes
(other than a default specified in clause (i) above) and
continuance of such default or breach for a period of 80 days
after there shall have been given, to the Company by the
registered holders of at least 25% of the then outstanding
principal amount of the 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";
(iii) there is a default under any Bank Indebtedness, the
Indebtedness represented by the LFI Notes or any other
Indebtedness for borrowed money of the Company or any Relevant
Subsidiary, or under any agreement or instrument under which
there may be issued or by which there may be secured or
evidenced any such Indebtedness, which default shall have
resulted in an aggregate outstanding principal amount greater
than $75 million of such Indebtedness becoming or being
accelerated and declared due and payable prior to the date on
which it would otherwise have become due and payable, or a
failure to pay any such Indebtedness in an aggregate outstanding
principal amount greater than $75 million at maturity, in each
case without such Indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period
of 10 days after there shall have been given, to the Company by
the registered holders of at least 25% of the then outstanding
principal amount of the Notes, a written notice specifying such
default or failure and requiring the Company to cause such
Indebtedness to be discharged or such acceleration to be
rescinded or annulled, as the case may be, and stating that such
notice is a "Notice of Default";
(iv) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
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<PAGE> 22
(A) is for relief against the Company in an involuntary case;
(B) appoints a Custodian of the Company or for all or any
substantial part of its property; or
(C) orders the liquidation of the Company;
and, in each case, the order or decree remains unstayed and in effect
for 60 days; or
(v) the Company, pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property; or
(D) makes a general assignment for the benefit of its
creditors.
The term "Bankruptcy Law" means Title 11 of the United States Code and any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.
(b) If an Event of Default (other than an Event of Default
specified in clause (iv) or (v) of Section 11(a)) occurs and is
continuing, the registered holders of a majority of the then outstanding
principal amount of the Notes, by five Business Days' prior written notice to
the Company, may, subject to Section 7, declare the unpaid principal of and
accrued interest on all the Notes to be due and payable. If such Event of
Default is not cured or waived within such five Business Days, such
acceleration shall become effective upon the expiration of such five-Business
Day period, and such unpaid principal and interest shall, subject to Section 7
hereof, thereupon become and be immediately due and payable. If an Event of
Default specified in clause (iv) or (v) of Section 11(a) occurs, the unpaid
principal of and accrued interest on all the Notes shall, subject to Section 7
hereof, forthwith become and be immediately due and payable without any
declaration or other act on the part of any registered holder of Notes. The
registered holders of a majority of the then outstanding principal amount of
the Notes may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and all existing Events of
Default have been cured or waived except nonpayment of principal, interest or
any other amount that has become due solely because of the acceleration.
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<PAGE> 23
(c) In the case of an Event of Default resulting
from the failure to pay any principal of or interest on any Note, or from a
default in the performance, or breach, of any other agreement or covenant of
the Company contained in the Notes, the Company agrees to pay to the registered
holders of the Notes, in addition to any interest otherwise required pursuant
to Section 1(b), such further amount as shall be required to cover any and all
reasonable out-of-pocket costs and expenses of enforcement and collection,
including reasonable attorneys' fees and expenses.
(d) Subject to any applicable requirement under
Section 7.4 to give prior written notice before accelerating the Notes, if an
Event of Default occurs and is continuing, the registered holders of a majority
of the then outstanding principal amount of the Notes may pursue any available
remedy to collect the unpaid principal of and interest on the Notes or to
enforce the performance of any provision of the Notes. The holders of a
majority of the then outstanding principal amount of the Notes may direct the
time, method and place of conducting any proceeding for any remedy then
available to any holder of Notes.
12. Definitions.
12.1 Defined Terms. As used in the Notes, the following
terms shall have the respective meanings set forth below:
"Acquisition Agreement" has the meaning specified in the
forepart of this Note.
"Additional Management Stockholder" means an Additional
Stockholder who is an employee, officer or director of the Company or any of
its subsidiaries.
"Additional Stockholder" means any person (other than any
Institutional Stockholder, Masco Stockholder or Management Stockholder), to
whom the Company issues Restricted Securities or Restricted Preferred
Securities after the Issue Date, other than pursuant to a public offering
registered under the Securities Act, in each case who has executed a joinder
agreement as an Additional Stockholder pursuant to Section 6.2 of the
Stockholders' Agreement (or any successor provision), and its direct and
indirect Permitted Transferees, so long as any such person shall hold (directly
or indirectly through the Voting Trust) Restricted Securities or Restricted
Preferred Securities.
"Affiliate" means, with respect to any person, any other
person that Controls, is Controlled by or is under common Control with such
person. For purposes of the definition of the term "Permitted Transferees,"
employees, officers and directors of 399 and its Affiliates shall be
"Affiliates" of 399.
"Associate" means, with respect to any person, (i) any trust
or other estate in which such person has a substantial beneficial interest or
as to which such person serves as
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<PAGE> 24
trustee or in a similar fiduciary capacity and (ii) any relative or
spouse of such person, or any relative of such spouse, who has the same home as
such person.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or scheduled redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by (ii) the sum
of all such payments.
"Bank Indebtedness" means any and all amounts payable under or
in respect of the Credit Agreement and any increase, extension, renewal,
refinancing or replacement thereof or of any subsequent Bank Indebtedness,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization
relating to the Company whether or not a claim for post-filing interest is
allowed in such proceeding), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Bankruptcy Events" has the meaning specified in Section 7.3.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in New York State are authorized or
required by law to close.
"Call" means the right of the Company to purchase Restricted
Securities and Restricted Preferred Securities from 399 Stockholders pursuant
to the Call Agreement.
"Call Agreement" means the Call Agreement dated as of the
Issue Date, between 399 and the Company, as the same may be amended,
supplemented or otherwise modified from time to time.
"Capital Expenditures" means, for any period, without
duplication, the sum of (a) the aggregate of all expenditures (whether paid in
cash or other consideration) by the Company and
the Relevant Subsidiaries during such period that, in accordance with GAAP, are
or should be included in "additions to property, plant or equipment" or similar
items reflected in the consolidated statement of cash flows of the Company and
the Relevant Subsidiaries for such period and (b) to the extent not covered by
clause (a) above, the aggregate of all expenditures by the Company and the
Relevant Subsidiaries to acquire by purchase or otherwise the business,
property or fixed assets of, or stock or other evidence of beneficial ownership
of, any person (it being understood that this clause (b) does not include any
Investment in a person that is not a subsidiary at the time of such Investment
and that will not become a subsidiary as a result of such Investment);
provided, however, that Capital Expenditures shall not include (i) expenditures
relating to the development, purchase or acquisition of sample fabric books,
(ii) in the case of
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<PAGE> 25
clause (b) above, the portion of such expenditures allocable in accordance with
GAAP to net current assets, (iii) expenditures of proceeds of insurance
settlements, condemnation awards and other settlements in respect of lost,
destroyed, damaged or condemned assets, equipment or other property to the
extent such expenditures are made to replace or repair such lost, destroyed,
damaged or condemned assets, equipment or other property or otherwise to
acquire assets or properties useful in the business of the Company or any of
the Relevant Subsidiaries within 12 months of receipt of such proceeds or (iv)
with respect to any person, expenditures that are accounted for as capital
expenditures of such person and that actually are paid for by a third party and
for which neither such person nor any subsidiary of such person has provided or
is required to provide or incur, directly or indirectly, any consideration or
obligation to such third party.
"Capital Lease Obligation" of any person means an obligation
of such person that is required to be classified and accounted for as a capital
lease for financial reporting purposes in accordance with GAAP, and the amount
of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of
(i) a sale in one or more transactions of more than 66
2/3% of the consolidated assets of the Company and its Control
Subsidiaries,
(ii) any transaction as a result of which the 399
Stockholders cease to own at least 10% of the HFG Common Stock on a
Fully-Diluted Basis,
(iii) any transaction as a result of which any person
other than an Institutional Stockholder, a Masco Stockholder or a
Management Stockholder (or any group consisting of such persons who
(x) shall have agreed in writing (other than pursuant to the
Stockholders' Agreement) to act as a group with respect to the
acquisition or voting of securities of the Company or the power to
designate and elect members of the Company's Board of Directors, with
a copy of such agreement having been provided to the Company, (y)
shall have advised the Company that such group is acting as a group
with respect to the acquisition or voting of securities of the Company
or the power to designate and elect members of the Company's Board of
Directors, or (z) in connection with the purchase of securities of the
Company, shall have filed or notified the Company that it will file,
as a group, a Schedule 13D or 13G under the Exchange Act) has the
power to designate and elect members of the Company's Board of
Directors with weighted votes constituting a majority of the weighted
votes on such Board (or, if no such weighting is then in effect,
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<PAGE> 26
the power to designate and elect a majority of the members of such
Board), excluding, however, any such person or group that would not
have held such power if it had not acquired from a Masco Stockholder
securities of the Company having rights and privileges conferring such
power, other than by a transfer from a Masco Stockholder through the
exercise of "Rights of Inclusion" under Article III of the
Stockholders' Agreement in connection with a transfer by the 399
Stockholders, provided, that no Change of Control under the
circumstances set forth in this clause (iii) shall be deemed to have
occurred under any circumstances solely as a result of the acquisition
by any such person or group of the right to designate and elect the
Management Directors and the Masco Director, or
(iv) the 399 Stockholders (x) have sold in one or more transactions
to persons other than their Permitted Transferees in excess of 66 2/3%
of the HFG Common Stock, on a Fully-Diluted Basis (excluding HFG
Common Stock which is subject to transfer by 399 Stockholders to the
Company pursuant to the Call), owned by the 399 Stockholders on the
Issue Date (subject to adjustment for any stock dividends, stock
splits, combinations, reclassifications, mergers, consolidations and
the like) and (y) following such sales, the percentage of HFG Common
Stock on a Fully-Diluted Basis owned by the 399 Stockholders on the
date of the last of such sales is less than the percentage thereof
owned by the Masco Stockholders on the date of the last of such sales.
For purposes of this definition of Change of Control, the terms "399
Stockholders" and "Permitted Transferees" do not include any Permitted
Transferee of a 399 Stockholder pursuant to clauses (iii)(C) and (iii)(D) of
the definition of Permitted Transferee (unless such Permitted Transferee is,
with respect to 399, a person described in clauses (iii)(A) and (iii)(B) of
such definition).
"Change of Control Offer" has the meaning specified in Section
4(c).
"Change of Control Payment Date" has the meaning specified in
Section 4(c).
"Class A Common" means the Company's Class A Common Stock, par
value $.01 per share, consisting of four series of Class A Common Stock, the
Series A-1 Common Stock, the Series A-2 Common Stock, the Series A-3 Common
Stock and the Series I Common Stock, and any securities into which such Class A
Common shall have been changed or any securities resulting from any
reclassification or recapitalization of such Class A Common.
"Class B Common" means the Company's Class B Common Stock, par
value $.01 per share, consisting of four series of Class B Common Stock, the
Series B-1 Common Stock, the Series B-2 Common Stock, the Series B-3 Common
Stock and the Series II Common Stock, and any securities into which such Class B
Common shall have been changed or any securities resulting from any
reclassification or recapitalization of such Class B Common.
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<PAGE> 27
"Class C Common" means the Company's Class C Common Stock, par
value $.01 per share, and any securities into which such Class C Common shall
have been changed or any securities resulting from any reclassification or
recapitalization of such Class C Common.
"Class D Common" means the Company's Class D Common Stock, par
value $.01 per share, and any securities into which such Class D Common shall
have been changed or any securities resulting from any reclassification or
recapitalization of such Class D Common.
"Class D Equity Equivalents" means securities exercisable,
convertible or exchangeable for or into Class D Common.
"Common Stock" means the Class A Common, the Class B Common, the
Class C Common and the Class D Common, any securities into which the Class A
Common, the Class B Common, the Class C Common or the Class D Common shall have
been changed, and all other securities of any class or classes (however
designated) of the Company, the holders of which have the right, without
limitation as to amount, after payment on any securities entitled to a
preference on dividends or other distributions upon any dissolution, liquidation
or winding-up, either to all or to a share of the balance of payments upon such
dissolution, liquidation or winding-up.
"Company" has the meaning specified in the forepart of this Note.
"Consolidated Current Assets" means, at any date of
determination, all assets (other than cash and cash-equivalents) that would, in
accordance with GAAP, be classified on a consolidated balance sheet of the
Company and the Relevant Subsidiaries as current assets at such date of
determination.
"Consolidated Current Liabilities" means at any date of
determination, all liabilities (other than the current portion of long-term
Indebtedness) that would, in accordance with GAAP, be classified on a
consolidated balance sheet of the Company and the Relevant Subsidiaries as
current liabilities at such date of determination.
"Consolidated EBITDA" means, for any period, the Consolidated Net
Income for such period, plus, without duplication, to the extent deducted in
computing Consolidated Net Income, the sum of (a) income tax expense, (b)
interest expense (including interest-equivalent costs associated with any
Permitted Receivables Financing, whether accounted for as interest expense or
loss on the sale of receivables), (c) depreciation and amortization expense,
including amortization of sample fabric books, (d) any extraordinary losses, (e)
any non-cash charges or non-cash losses and (f) cash restructuring charges
minus, without duplication, to the extent added in computing such Consolidated
Net Income, (i) interest income, (ii) any extraordinary gains and (iii) any
non-cash income or non-cash gains, all as determined on a consolidated basis
with respect to the Company and the Relevant Subsidiaries in accordance with
GAAP.
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<PAGE> 28
Notwithstanding anything in the Notes to the contrary, the aggregate
amount of cash restructuring charges added back to Consolidated Net Income in
the determination of Consolidated EBITDA for any twelve-month (or shorter)
period shall not exceed $3,500,000.
"Consolidated Interest Expense" means, for any period, the gross
interest expense accrued or paid by the Relevant Subsidiaries during such
period, as determined on a consolidated (or, if necessary to include all the
Relevant Subsidiaries, a combined) basis in accordance with GAAP, plus
interest-equivalent costs associated with any Permitted Receivables Financing
for such period, whether accounted for as interest expense or loss on the sale
of receivables; provided, however, that "Consolidated Interest Expense" shall
not include (i) expenses relating to the transactions contemplated by the Credit
Agreement or the Acquisition Agreement or amortization thereof and (ii)
penalties and premiums associated with any prepayment of Indebtedness.
"Consolidated Net Income" means, for any period, net income or
loss of the Company and the Relevant Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP, provided that there shall be
excluded (a) the net income (or loss) of any person in which any other person
(other than the Company, any wholly owned Relevant Subsidiary or any director
holding qualifying shares or any nominee holding shares for the indirect benefit
of the Company in compliance with applicable law) has an equity interest, except
that (i) the Company's or such Relevant Subsidiary's equity in the net income of
any such person shall be included in determining Consolidated Net Income to the
extent of the amount of dividends, other distributions or payments in respect of
loans actually paid to the Company or any of the Relevant Subsidiaries, as the
case may be, by such person during such period, provided that if the ownership
of such equity interest by such other person is required by local ownership laws
in any foreign country, the Company's or such Relevant Subsidiary's equity in
the net income of any such person shall be included in determining Consolidated
Net Income to the extent that cash could have been distributed by such person
during such period to the Company or such Relevant Subsidiary, as the case may
be, as a dividend, and (ii) the Company's or any Relevant Subsidiary's equity in
a net loss of any such person for such period shall be included in determining
Consolidated Net Income, (b) the net income (or loss) of any person for any
period prior to the date it becomes a Relevant Subsidiary or is merged into or
consolidated with the Company or any of the Relevant Subsidiaries or the date
that person's assets are acquired by the Company or any of the Relevant
Subsidiaries and (c) any after tax gains or losses attributable to sales of
assets out of the ordinary course of business.
"Consolidated Net Worth" means the total of the amounts shown on
the balance sheet of the Company and the Relevant Subsidiaries, determined on a
consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital
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<PAGE> 29
surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus minus (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
"Consolidated Working Capital" means, at any date of
determination, Consolidated Current Assets at such date of determination minus
Consolidated Current Liabilities at such date of determination.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Control Subsidiary" means, with respect to any person, any
corporation, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or Controlled,
directly or indirectly, by that person or one or more of the other Control
Subsidiaries of that person or a combination thereof, or (ii) if a partnership,
association or other business entity, a majority of the partnership or other
similar ownership interest thereof is at the time owned or Controlled, directly
or indirectly, by that person or one or more Control Subsidiaries of that person
or a combination thereof. For purposes hereof, a person or persons shall be
deemed to have a majority ownership interest in a partnership, association or
other business entity if such person or persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
Control the managing director or general partner of such partnership,
association or other business entity.
"Credit Agreement" means the Credit Agreement dated as of August
5, 1996, among the Company, LFI and the other borrowers party thereto from time
to time, the lenders party thereto from time to time and The Chase Manhattan
Bank, a New York banking corporation, as administrative agent and collateral
agent, and Chase Manhattan Bank Delaware, as issuing bank, as the same may be
amended, supplemented or otherwise modified from time to time.
"Debentures" means the Company's Junior Subordinated Debentures
issued from time to time after the Issue Date in exchange for shares of the
Restricted Preferred Securities or in payment of interest on any such Junior
Subordinated Debentures (including those so issued in payment of interest).
"Default" means any event or condition that, upon notice, lapse
of time or both would constitute an Event of Default.
"Determination Date" has the meaning specified in Section 3(a).
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"Disqualified Stock" means, with respect to any person, any
capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible into or exchangeable
for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of
the holder thereof, in whole or in part, in each case on or prior to 91 days
after the Stated Maturity of the Notes. Disqualified Stock shall not include
any Capital Stock that is not otherwise Disqualified Stock if by its terms the
holders thereof have the right to require the issuer to repurchase such stock
upon a Change of Control (or upon events substantially similar to a Change of
Control).
"Employee Stock Redemption" has the meaning specified in Section
6.1.
"Equity Equivalents" means securities exercisable, convertible or
exchangeable for or into HFG Common Stock, including without limitation the
Series B Preferred and the Series C Preferred.
"Event of Default" has the meaning specified in Section 11(a).
"Excess Cash Flow" means, for any fiscal year, the Consolidated
EBITDA of the Company and the Relevant Subsidiaries on a consolidated basis for
such fiscal year, minus, without duplication, (a) cash interest paid during such
fiscal year (including interest-equivalent costs during such fiscal year that
are associated with any Permitted Receivables Financing, whether accounted for
as interest expense or loss on the sale of receivables), (b) scheduled principal
repayments of Total Debt made during such year, (c) voluntary prepayments of
Total Debt of the Relevant Subsidiaries during such fiscal year, (d) Capital
Expenditures by the Company and the Relevant Subsidiaries on a consolidated
basis during such fiscal year that are paid in cash, except to the extent that
such Capital Expenditures are prohibited by Section 6.2, (e) taxes paid in cash
by the Company and the Relevant Subsidiaries on a consolidated basis during such
fiscal year, (f) the portion (if any) of such Consolidated EBITDA which (in the
reasonable judgment of the Company's Board of Directors) is required to be
retained for use in the business of the Relevant Subsidiaries (including (i) to
make Capital Expenditures and (ii) to pay interest on Indebtedness of any
Relevant Subsidiary and to repay or prepay any outstanding Indebtedness of any
Relevant Subsidiary), (g) cash payments made by the Company to Simmons pursuant
to the Tax Sharing Agreement during such fiscal year, (h) an amount equal to any
increase in Consolidated Working Capital during such fiscal year, (i) capital
expenditures in cash relating to the development, purchase or acquisition of
sample fabric books during such fiscal year, (j) restructuring charges paid in
cash during such fiscal year to the extent included in determining Consolidated
EBITDA, (k) any increase in Investments in customers, suppliers and Joint
Ventures during such fiscal year and (l) to the extent included in Consolidated
EBITDA, all non-cash payments received by the Company and the Relevant
Subsidiaries on a consolidated basis during such fiscal year, plus, without
duplication, (i) an amount equal to any decrease in
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Consolidated Working Capital during such fiscal year, (ii) interest income
received in cash during such fiscal year, (iii) any decrease in Investments
in customers, suppliers and Joint Ventures during such fiscal year, (iv) the
proceeds of any Capital Lease Obligations, purchase money Indebtedness and
other Indebtedness (to the extent permitted under Section 6.1, in the case of
Indebtedness of the Company), in each case to the extent used to finance
Capital Expenditures during such fiscal year, (v) to the extent deducted in
determining Consolidated EBITDA, all non-cash payments made by the Company and
the Relevant Subsidiaries on a consolidated basis during such fiscal year and
(vi) the portion (if any) of the Consolidated EBITDA for the immediately
preceding fiscal year which has been subtracted pursuant to clause (f) above in
determining Excess Cash Flow for such immediately preceding fiscal year.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the Securities and
Exchange Commission thereunder.
"Fully-Diluted Basis" means, (A) with respect to the
calculation of the number of shares of HFG Common Stock, (i) all shares of HFG
Common Stock outstanding at the time of determination and (ii) all shares of
HFG Common Stock issuable upon the exercise, conversion or exchange of Equity
Equivalents and (B) with respect to the calculation of the number of shares of
Class D Common, (i) all shares of Class D Common outstanding at the time of
determination and (ii) all shares of Class D Common issuable upon the exercise,
conversion or exchange of Class D Equity Equivalents.
"GAAP" means generally accepted accounting principles applied
on a consistent basis. All accounting terms shall be interpreted, and all
accounting determinations under the Notes shall be made, in accordance with
Section 12.2.
"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; provided,
however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Guarantee of any guaranteeing person shall be deemed to be the lower of (i) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made and (ii) the maximum amount for which
such guaranteeing person may be liable pursuant to the terms of the instrument
embodying such
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Guarantee, unless such primary obligation and the maximum amount
for which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee shall be such
guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Company in good faith.
"Guaranty" means the Holdings Guarantee Agreement, dated the
Issue Date, made by the Company in favor of the collateral agent for the lenders
under the Credit Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"HFG Common Stock" means the Common Stock, but excluding the
Class D Common.
"HFG Restricted Securities" means the Restricted Securities, but
excluding the Class D Common and Class D Equity Equivalents.
"Holder" has the meaning specified in Section 2(a).
"Increased Amount" has the meaning specified in Section 3(a).
"Indebtedness" of any person shall mean, without duplication,
(a) all obligations of such person for borrowed money, (b) all obligations of
such person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such person upon which interest charges are customarily paid
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (d) all obligations of such person under
conditional sale or other title retention agreements relating to property or
assets purchased by such person, (e) all obligations of such person issued or
assumed as the deferred purchase price of property or services (excluding trade
accounts payable and accrued obligations incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, provided that the amount of such
Indebtedness of such person shall be the lesser of (i) the fair market value of
such property on the date of determination and (ii) the outstanding principal
amount of such Indebtedness of such other person on the date of determination,
(g) all Guarantees by such person of Indebtedness of others, (h) all Capital
Lease Obligations of such person, (i) all obligations of such person in respect
of interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (j) all obligations of
such person as an account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner, other than to the
extent that the instrument or agreement evidencing such Indebtedness expressly
limits the liability of such person in respect thereof.
"Indemnification Issue Date" has the meaning specified in Section
3(b).
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"Institutional Directors" means any member of the Company's Board
of Directors designated and elected pursuant to Section 5.1(a)(i) of the
Stockholders' Agreement (or any successor provision).
"Institutional Stockholder Group Members" means, collectively,
399, Associated Madison Companies, Inc., a Delaware corporation, TRV Employees
Fund, L.P., a Delaware limited partnership, Greenwich Street Capital, L.P., a
Delaware limited partnership, GSCP Offshore Fund Ltd., a British Virgin Islands
corporation, The Travelers Insurance Company, a Connecticut corporation, and The
Travelers Life and Annuity Company, a Connecticut corporation.
"Institutional Stockholders" means each Institutional Stockholder
Group Member and their respective direct and indirect Permitted Transferees, so
long as any such person shall hold Restricted Securities or Restricted Preferred
Securities.
"Investment" in any person means any advance or loan (other than
advances or loans to customers or suppliers in the ordinary course of business
that are recorded as accounts receivable on the balance sheet of the person
making such advance or loan) or other extension of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (including by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by, such person.
"Issue Date" means August 5, 1996.
"Joint Venture" means any person of which securities or other
ownership interests representing at least 20% but no greater than 50% of the
equity or ordinary voting power are owned, Controlled or held by the Company or
any Relevant Subsidiary.
"Lender" has the meaning specified in the forepart of this Note.
"LFI" means Lifestyle Furnishings International Ltd., a Delaware
corporation, and its successors.
"LFI Notes" means the 10.875% Senior Subordinated Notes due 2006
issued by LFI on the Issue Date and shall include any substantially identical
notes subsequently issued in exchange therefor pursuant to the terms of the
indenture governing such Senior Subordinated Notes.
"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to
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<PAGE> 34
such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Management Director" means any member of the Company's Board of
Directors designated and elected pursuant to Section 5.1(a)(ii) of the
Stockholders' Agreement (or any successor provision).
"Management Group" means, collectively, the individuals whose
names appear on the omnibus signature pages to the Stockholders' Agreement.
"Management Stockholders" means the Management Group and their
respective direct and indirect Permitted Transferees, so long as any such person
shall hold (directly or indirectly through the Voting Trust) Restricted
Securities or Restricted Preferred Securities.
"Masco Director" means any member of the Company's Board of
Directors designated and elected pursuant to Section 5.1(a)(iii) of the
Stockholders' Agreement (or any successor provision).
"Masco Stockholders" means Masco and its direct and indirect
Permitted Transferees, so long as any such person shall hold Restricted
Securities, Restricted Preferred Securities or Debentures.
"Maturity Date" has the meaning specified in the forepart of this
Note.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Note Obligations" has the meaning specified in Section 7.1.
"Notes" has the meaning specified in the forepart of this Note.
"Permitted Investment" means an Investment by the Company in: (i)
Simmons, to the extent that such Investment is either (x) existing on the Issue
Date or (y) directly funded by a contemporaneous capital contribution from a
stockholder of the Company in connection with a purchase of Class D Common Stock
by such stockholder; (ii) a Relevant Subsidiary or a person which will, upon the
making of such Investment, become a Relevant Subsidiary; provided, however, that
the primary business of such person is a Related Business; (iii) another person
if as a result of such Investment such other person is merged or consolidated
with or into, or transfers or conveys all or substantially all its assets to,
the Company or a Relevant Subsidiary; provided, however, that such person's
primary business is a Related Business; (iv) Temporary Cash Investments; (v)
receivables owing to the Company, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms; provided, however, that such trade terms may include such concessionary
trade terms as the Company
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deems reasonable under the circumstances; (vi) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vii) loans or advances to employees made in
the ordinary course of business and not exceeding $6.0 million in the aggregate
outstanding at any one time; (viii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any subsidiary thereof or in satisfaction of judgments; (ix)
Investments in property or assets to be used in (or in Relevant Subsidiaries and
any entity that, as a result of such Investment, is a Relevant Subsidiary
engaged in) a Related Business; (x) securities or other property received as
consideration in sales of assets; (xi) Guarantees which are permitted to be
incurred under Section 6.1; (xii) Investments existing and held by the Company
on the Issue Date (after giving effect to the transactions contemplated by the
Acquisition Agreement to occur on the Issue Date) and set forth on Schedule
6.04(l) to the Credit Agreement (as in effect on the Issue Date) and renewals,
extensions and replacements thereof, provided that the amount of any such
renewed, replaced or extended Investment shall not exceed the amount of the
Investment being renewed, replaced or extended; or (xiii) other Investments of
any type, provided that the outstanding amount of Investments made after the
Issue Date in reliance on this clause (xiii) may not at any time exceed $10
million in the aggregate.
"Permitted Receivables Financing" means (a) the Bridge
Receivables Financing (as defined in the Credit Agreement) and (b) any
subsequent financing secured substantially by receivables (and related assets)
originated by the Company or any Relevant Subsidiary in any amount, provided
that (i) any such subsequent receivables financing has a later or equal final
maturity and a longer or equal weighted average life than the Bridge Receivables
Financing, (ii) sales of receivables to any Receivables Subsidiary are made at
fair market value (as determined in good faith by the Company's or LFI's Board
of Directors), (iii) the interest rate applicable to such subsequent receivables
financing shall be a market interest rate (as determined in good faith by the
Company's or LFI's Board of Directors) as of the time such financing is entered
into, (iv) such financing is non-recourse to the Company except to a limited
extent customary for such financings and (v) the covenants, events of default
and other provisions thereof, collectively, shall be market terms (as determined
in good faith by the Company's or LFI's Board of Directors).
"Permitted Transferee" means:
(i) with respect to any Stockholder who is a natural
person, the spouse or any lineal descendant (including by
adoption and stepchildren) of such Stockholder, or any trust of
which such Stockholder is the trustee and which is established
solely for the benefit of any of the foregoing individuals and
whose terms are not inconsistent with the terms of the
Stockholders' Agreement, or any partnership, all of the general
partner(s) and limited partner(s) (if any) of which are one or
more persons identified in this clause (i) (or any other trust
or
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partnership established by any such Stockholder to the extent
approved in writing by the Company (acting with the approval of
the Company's Board of Directors, including the consent of the
Masco Director and the Institutional Directors));
(ii) with respect to a Masco Stockholder, (x) any direct
or indirect Control Subsidiary of Masco (including any such
Control Subsidiary which ceases to be a Control Subsidiary of
Masco after the Issue Date) unless such Control Subsidiary or
former Control Subsidiary does not qualify as (A) a "Permitted
Transferee" of Masco, under the more restrictive of the
definitions of such term with respect to Masco ("Permitted
Transferee Definitions"), under the Credit Agreement (as in
effect on the Issue Date) and the indenture pertaining to the LFI
Notes (as in effect on the Issue Date), or (B) in the event that
the agreements referred to in clause (A) above are no longer in
effect, a "Permitted Transferee" of Masco under the most
restrictive Permitted Transferee Definition in any other material
agreement or instrument evidencing indebtedness for borrowed
money of the Company or any of its Significant Subsidiaries,
which Permitted Transferee Definition is no more restrictive in
scope with respect to "Permitted Transferees" of Masco than the
more restrictive of the Permitted Transferee Definitions referred
to in clause (A) above, and (y) subject to the prior written
consent of the Institutional Stockholders (which consent shall be
in their sole discretion), any corporation (I) in which Masco
owns shares of capital stock representing at least 19% of the
total ordinary voting power of such corporation and (II) which is
"controlled" (within the meaning under Rule 12b-2 of the
regulations under the Exchange Act) by Masco;
(iii) with respect to the Institutional Stockholders, (A)
any Associate or Affiliate of any such Institutional Stockholder
and any officer, director or employee of any Institutional
Stockholder or of any such Associate or Affiliate, (B) any spouse
or lineal descendant (including by adoption and stepchildren) of
the officers, directors and employees referred to in clause (A)
above, and any trust (where a majority in interest of the
beneficiaries thereof are any of the persons described in this
clause (B) and in clause (A) above), corporation or partnership
(where a majority in interest of the stockholders or limited
partners, or where the managing general partner, is one of more
of the persons described in clause (A) above), (C) any other
Institutional Stockholder or (D) if, after taking commercially
reasonable steps, with the cooperation of the Company, such
Institutional Stockholder is unable to restructure its ownership
of the Company's securities in a manner which avoids a Regulatory
Problem and which is not materially adverse to such Institutional
Stockholder, upon the giving of notice to the Company and the
Masco Stockholders that the Institutional Stockholders have
determined that such Regulatory Problem may not be avoided, then
to any third party to avoid such Regulatory Problem;
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(iv) with respect to any Additional Stockholder
who is not a natural person, any Affiliate of such Additional
Stockholder; and
(v) with respect to any Management Stockholder
and any Additional Management Stockholder, the Voting Trust
established pursuant to the Voting Trust Agreement.
"person" means an individual, partnership, corporation, trust,
unincorporated organization, joint venture, government (or agency or political
subdivision thereof) or any other entity of any kind.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Qualifying Offering" means the consummation by the Company of
an underwritten primary or secondary public offering of HFG Common Stock
pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of the HFG Common Stock (a) which (taken together
with all similar previous public offerings) raises at least $100,000,000 of
aggregate net proceeds to the Company (after underwriters' fees, commissions
and discounts and offering expenses) and (ii) as a result of which, at that
time, at least 25% of the HFG Common Stock on a Fully-Diluted Basis has been
sold to the public.
"Receivables Subsidiary" means LFI Receivables Corporation or
any successor thereto or other entity formed solely for purposes of a Permitted
Receivables Financing.
"Refinancing Indebtedness" means Indebtedness that is incurred
to refund, refinance, replace, renew, repay, purchase, redeem or extend
(including pursuant to any defeasance or discharge mechanism) (collectively,
"refinances," and "refinanced" and "refinancing" shall have a correlative
meaning) any other Indebtedness, including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced, (iii) such
Refinancing Indebtedness is incurred in an aggregate principal amount (or, if
issued with original issue discount, an aggregate issue price) that is equal to
or less than the aggregate principal amount (or, if issued with original issue
discount, the aggregate accreted value) then outstanding of the Indebtedness
being refinanced plus an amount necessary to pay any fees and expenses,
including premiums, relating to such refinancing and (iv) if the Indebtedness
being refinanced is subordinated in right of payment to the Notes, such
Refinancing
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Indebtedness is subordinated in right of payment to the Notes to at least the
same extent as the Indebtedness being refinanced.
"Registration Rights Agreement" has the meaning specified in
Section 15.
"Regulatory Problem" means (i) the Institutional Stockholder's
investment in the Common Stock exceeds any limitation to which it is subject,
or is otherwise not permitted, under any law, rule or regulation of any
governmental authority (including any position to that effect taken by such
governmental authority), or (ii) restrictions are imposed on the Institutional
Stockholder as a result of any law, regulation, rule or directive (whether or
not having the force of law) of any governmental or regulatory authority which,
in the reasonable judgment of the Institutional Stockholder, make it illegal or
unduly burdensome for the Institutional Stockholder to continue to hold such
Common Stock.
"Related Business" means any business of the Company and the
Relevant Subsidiaries as conducted on the Issue Date and any business related,
ancillary or complementary thereto.
"Relevant Subsidiary" means any subsidiary of the Company,
other than Simmons.
"Restricted Payment" has the meaning specified in Section
6.2(a).
"Restricted Preferred Securities" means the Series A-1
Preferred and the Series A-2 Preferred.
"Restricted Securities" means the Common Stock, the Class D
Equity Equivalents, the Equity Equivalents and any securities issued with
respect thereto as a result of any stock dividend, stock split,
reclassification, recapitalization, reorganization, merger, consolidation or
similar event or upon the conversion, exchange or exercise thereof.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc., and its successors.
"Secondary Notes" has the meaning specified in Section 2(b).
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the Securities and Exchange
Commission thereunder.
"Senior Indebtedness" of the Company means (i) the Bank
Indebtedness, to the extent that any of the Bank Indebtedness is a direct
obligation of the Company, and (ii) the "Obligations," as such term is defined
in the Guaranty or in any other written Guarantee of Bank
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Indebtedness (provided that the definition of "Obligations" in such other
written Guarantee shall be substantially the same (without regard to amounts) as
the definition of "Obligations" in the Guaranty) entered into by the Company on
or after the Issue Date, in each case including any interest accruing thereon on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceeding; provided, however, that Senior Indebtedness shall not include
any portion of the Bank Indebtedness (in the case of clause (i) above) or such
"Obligations" (in the case of clause (ii) above) that, at or promptly following
the time of the incurrence thereof, is not secured by a Lien on all or
substantially all of the Company's properties and assets (including Capital
Stock).
"Series A-1 Preferred" means the Company's Series A-1
Preferred Stock, par value $.01 per share, and any securities (other than the
Debentures) into which such Series A-1 Preferred shall have been changed or any
securities resulting from any reclassification or recapitalization of such
Series A-1 Preferred.
"Series A-2 Preferred" means the Company's Series A-2
Preferred Stock, par value $.01 per share, and any securities (other than the
Debentures) into which such Series A-2 Preferred shall have been changed or any
securities resulting from any reclassification or recapitalization of such
Series A-2 Preferred.
"Series B Preferred" means the Company's Series B Convertible
Preferred Stock, par value $.01 per share, and any securities into which such
Series B Preferred shall have been changed or any securities resulting from any
reclassification or recapitalization of such Series B Preferred.
"Series C Preferred" means the Company's Series C Convertible
Preferred Stock, par value $.01 per share, and any securities into which such
Series C Preferred shall have been changed or any securities resulting from any
reclassification or recapitalization of such Series C Preferred.
"Significant Subsidiaries" means those Control Subsidiaries of
the Company which constitute a "Significant Subsidiary" as defined in
Regulation S-X promulgated by the Securities and Exchange Commission under the
Securities Act, as such Regulation is in effect on the Issue Date.
"Simmons" means Simmons Upholstered Furniture Corporation, a
Delaware corporation, and its successors (other than a Relevant Subsidiary into
which it merges or to which it transfers all or substantially all its assets)
and subsidiaries.
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"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase or redemption of such security at the option of the holder thereof
upon the happening of any contingency beyond the control of the issuer unless
such contingency has occurred).
"Stockholders" means each of the Institutional Stockholders,
the Masco Stockholders, the Management Stockholders and the Additional
Stockholders.
"Stockholders' Agreement" means the Stockholders' Agreement
dated as of the Issue Date, among the Company, Masco, the Institutional
Stockholders and the Management Stockholders, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"Subordinated Obligation" means any Indebtedness of the
Company outstanding from time to time which is subordinate or junior in right
of payment to the Notes pursuant to a written agreement or instrument entered
into or accepted by the holders of such Indebtedness.
"subsidiary" means, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, association or
other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or more than 50% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held, or (b) that
is, at the time any determination is made, otherwise Controlled, by the parent
or one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent, provided that the term "subsidiary," when used in
respect of the Company or any of its subsidiaries, shall not include any
foreign joint venture in which the Company or any Relevant Subsidiary owns less
than or equal to 50% of the equity interest in such joint venture.
"Successor Company" has the meaning specified in Section 6.5.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated
as of the Issue Date, among the Company, LFI, the Receivables Subsidiary and
Simmons, as the same may be amended, supplemented or otherwise modified,
renewed or replaced from time to time.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations (x) of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof or (y) of any foreign country recognized by the United States of
America rated at least "A" by S&P or "A-1" by Moody's; (ii) investments in time
deposit accounts, certificates of deposit and money market deposits maturing
-40-
<PAGE> 41
within 365 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States of America, any
state thereof or any foreign country recognized by the United States of America
having capital and surplus in excess of $250.0 million (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized rating
agency; (iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered into
with a bank or trust company meeting the qualifications described in clause
(ii) above; (iv) investments in commercial paper, maturing not more than 365
days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to
S&P; (v) investments in securities maturing within 365 days of the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or "A-1" by Moody's; (vi) any
money market deposit accounts issued or offered by a domestic commercial bank
or a commercial bank organized and located in a country recognized by the
United States of America, in each case, having capital and surplus in excess of
$250.0 million (or the foreign currency equivalent thereof), or investments in
money market funds complying with the risk limiting conditions of Rule 2a-7 (or
any successor rule) of the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended; and (vii)
similar investments approved by the Company's Board of Directors in the
ordinary course of business.
"399" means 399 Venture Partners, Inc., a Delaware
corporation.
"399 Stockholders" means 399 and each of its respective direct
and indirect Permitted Transferees, so long as any such person shall hold
Restricted Securities or Restricted Preferred Securities.
"Total Debt" means, at any time, all Indebtedness of the Company
and the Relevant Subsidiaries of the type referred to in clauses (a), (b), (c),
(e), (h) and (j) (provided that obligations in respect of letters of credit
shall not be included in Total Debt, except to the extent of any unreimbursed
drawings thereunder) of the definition of the term "Indebtedness."
"Voting Trust" means the Voting Trust created under the Voting
Trust Agreement.
"Voting Trust Agreement" means the Voting Trust Agreement
dated as of the Issue Date, by and among the Company, the Management
Stockholders named therein and the trustee named therein, as such agreement may
be amended, supplemented or otherwise modified from time to time.
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<PAGE> 42
"Wholly Owned Subsidiary" means a Relevant Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders) is owned by the Company or one or more other Wholly Owned
Subsidiaries (including shares held of record by a nominee for the benefit of
the Company or another Wholly Owned Subsidiary).
12.2 Terms Generally. The definitions in Section 12.1 shall
apply equally to both the singular and plural forms of the terms defined. The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation." Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time, provided, however, that for purposes
of determining compliance with the covenants and agreements contained in
Sections 2(b), 6.1, 6.2, 6.3, 6.4, 6.5 and 9.1(b), all accounting terms herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP as in effect on the Issue Date.
13. No Recourse Against Others. A director, officer,
employee or stockholder of the Company, as such, shall not have any liability
for any obligations of the Company under this Note or for any claim based on,
in respect of or by reason of such obligations or their creation. The Lender
and each other holder hereof, by accepting this Note, waives and releases all
such liability. The waiver and release set forth in this Section 13 are part
of the consideration for the issuance of this Note.
14. No Offset. Notwithstanding anything to the contrary
in any Note or in the Acquisition Agreement, the Lender shall not be entitled
to satisfy or otherwise discharge any of its payment obligations owed to the
Company or any Relevant Subsidiary (whether arising under the Acquisition
Agreement or otherwise) by means of an offset against the Company's obligations
under any Note.
15. Registration Rights Agreement. The Company and the
Lender have entered into a Registration Rights Agreement dated as of the Issue
Date, relating to the Notes (as the same may be amended, supplemented or
otherwise modified from time to time, the "Registration Rights Agreement").
The Holder, by its acceptance of this Note, agrees that it is subject to and
bound by the terms and provisions of the Registration Rights Agreement as if it
were a party thereto.
16. Notices. All notices and other communications
delivered pursuant to the Notes shall be in writing and (together with all
payments of interest on this Note made by the issuance of Secondary Notes and
all payments of principal and interest on this Note made by check) shall be
delivered by hand, by express courier service, by registered or certified mail,
return receipt requested, postage prepaid, by first-class mail or by telecopy,
addressed, (a) if to
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<PAGE> 43
the Holder, at the following address or at such other
address as the Holder shall have furnished to the Company in writing:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Facsimile No.: 313-374-6135
Attn: President
with a copy to:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Facsimile No.: 313-374-6135
Attn: General Counsel
or (b) if to the Company, at the following address or at such other address as
the Company shall have furnished to the Holder in writing:
FURNISHINGS INTERNATIONAL INC.
1300 National Highway
Thomasville, North Carolina 27360
Facsimile No.: 910-476-4551
Attn: President
with copies to:
FURNISHINGS INTERNATIONAL INC.
1300 National Highway
Thomasville, North Carolina 27360
Facsimile No.: 910-476-4551
Attn: General Counsel
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner
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<PAGE> 44
Any notice so addressed and mailed or delivered shall be deemed
to be given (i) one Business Day after being consigned to an express courier
service, (ii) five Business Days after being mailed by registered, certified or
first-class mail, (iii) on the same Business Day, if delivered by hand and (iv)
when received, if delivered by telecopy.
17. Headings; Certain Conventions. The headings of the
various Sections of this Note are for convenience of reference only and shall
not define, limit or otherwise affect any of the terms or provisions hereof.
Unless the context otherwise expressly requires, all references herein to
Sections are to Sections of this Note. The words "herein," "hereunder" and
"hereof" and words of similar import refer to this Note as a whole and not to
any particular Section or provision.
18. Governing Law. The construction, validity and
interpretation of this Note shall be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of the date first above written.
FURNISHINGS INTERNATIONAL INC.
By: /s/ Robert L. George
-------------------------
Name: Robert L. George
Title: Executive Vice President
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<PAGE> 45
EXECUTION COPY
==============================================================================
REGISTRATION RIGHTS AGREEMENT
between
FURNISHINGS INTERNATIONAL INC.
and
MASCO CORPORATION
Dated as of August 5, 1996
==============================================================================
<PAGE> 46
TABLE OF CONTENTS
Page
RECITALS ............................................................... 1
ARTICLE I
DEFINITIONS ............................................................ 1
1.1 Definitions ............................................... 1
1.2 Cross-References ........................................ 2
ARTICLE II
REGISTERED EXCHANGE OFFER .............................................. 3
2.1 Request for Exchange Offer ................................ 3
2.2 Exchange Offer Registration Statement; One Exchange Offer . 3
2.3 Exchange Notes Indenture .................................. 4
2.4 Exchange Offer Procedures ................................. 4
2.5 Exchange Offer Registration Procedures .................... 6
ARTICLE III
REGISTRATIONS UPON REQUEST ............................................. 8
3.1 Requests for Registration ................................. 8
3.2 Number of Registrations ................................... 10
3.3 Effective Registration Statement .......................... 10
3.4 Priority on Registrations ................................. 11
3.5 Registration Statement Form ............................... 11
3.6 Selection of Underwriters ................................. 12
ARTICLE IV
HOLDBACK AGREEMENTS .................................................... 12
4.1 Holdback .................................................. 12
4.2 Company Holdback .......................................... 12
4.3 Black-Out Rights and Postponement ......................... 12
ARTICLE V
REGISTRATION PROCEDURES ................................................ 13
ARTICLE VI ............................................................. 17
REGISTRATION EXPENSES .................................................. 17
6.1 Fees Generally .................................... 17
6.2 Counsel Fees ...................................... 17
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<PAGE> 47
Page
----
ARTICLE VII
UNDERWRITTEN OFFERINGS ................................................. 17
ARTICLE VIII
INDEMNIFICATION ........................................................ 18
8.1 Indemnification by the Company ............................ 18
8.2 Indemnification by a Selling Noteholder ................... 19
8.3 Indemnification Procedure ................................. 20
8.4 Underwriting Agreement .................................... 21
8.5 Contribution .............................................. 21
8.6 Periodic Payments ......................................... 22
ARTICLE IX
INDENTURE .............................................................. 23
9.1 Indenture Generally ....................................... 23
9.2 Indenture ................................................. 23
9.3 Opinion ................................................... 24
9.4 Exchanges by Requesting Holders ........................... 24
9.5 Exchanges by Other Holders ................................ 25
ARTICLE X
RULE 144 ............................................................... 25
ARTICLE XI
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS ............................ 25
ARTICLE XII
MISCELLANEOUS .......................................................... 26
12.1 No Inconsistent Agreements ............................... 26
12.2 Specific Performance ..................................... 26
12.3 Amendments and Waivers ................................... 26
12.4 Nominees for Beneficial Owners ........................... 27
12.5 Successors and Assigns ................................... 27
12.6 Notices .................................................. 27
12.7 Headings; Certain Conventions ............................ 28
12.8 Gender ................................................... 29
12.9 Invalid Provisions ....................................... 29
12.10 Governing Law ........................................... 29
12.11 Consent to Jurisdiction and Service of Process .......... 29
12.12 Waiver of Jury Trial .................................... 30
12.13 Counterparts ............................................ 30
-ii-
<PAGE> 48
Page
----
Annex A
Annex B
Annex C
Annex D
-iii-
<PAGE> 49
REGISTRATION RIGHTS AGREEMENT dated as August 5, 1996, between
FURNISHINGS INTERNATIONAL INC., a Delaware corporation (the "Company") and
Masco Corporation, a Delaware corporation ("Masco"), on its own behalf and on
behalf of each subsequent registered holder of Notes (as defined below).
RECITALS
WHEREAS, the Company and Masco have entered into an Acquisition
Agreement dated as of March 29, 1996, as amended by Amendment No 1 thereto
dated as of June 21, 1996 and Amendment No. 2 thereto dated as of the date
hereof (as such Acquisition Agreement may be further amended, supplemented or
otherwise modified from time to time, the "Acquisition Agreement"), pursuant to
which the Company is acquiring all of the issued and outstanding capital stock
of the HFG Companies (as such term is defined in the Acquisition Agreement);
WHEREAS, the Acquisition Agreement provides that, in consideration for
its acquisition of the capital stock of the HFG Companies, the Company will
(among other things) issue to Masco a 12% Senior Note Due 2008 of the Company
in an original principal amount equal to $285,000,000 (such Note, any notes
issued to Masco pursuant to Section 2(f)(ii) or 12(r) of the Acquisition
Agreement, any notes issued in payment of interest on such Note (or on such
other notes or any notes so issued in payment of interest), and any notes
issued upon registration of transfer or exchange of such Note or any of the
other aforementioned notes, being collectively referred to herein as the
"Notes"); and
WHEREAS, the Acquisition Agreement contemplates that, at the closing
thereunder, a registration rights agreement relating to the Notes will be
executed by the Company and Masco (on its own behalf and on behalf of each
subsequent registered holder of Notes).
NOW THEREFORE, in connection with the Acquisition Agreement and the
Notes and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions.
As used in this Agreement, the following terms shall have the meanings
set forth below (such definitions to be equally applicable to both singular and
plural forms of the terms defined):
<PAGE> 50
"Affiliate" means, with respect to any person, any other person that
Controls, is Controlled by or is under common Control with such person.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in New York State are authorized or required by
law to close.
"Commission" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the Commission thereunder.
"Initial Public Offering" means the first time a registration statement
filed under the Securities Act with the Commission respecting an offering,
whether primary or secondary, of common stock of the Company (or securities
convertible, exercisable or exchangeable for or into common stock of the
Company or rights to acquire common stock of the Company or such securities),
which is underwritten on a firmly committed basis, is declared effective and
the securities so registered are issued and sold.
"person" means an individual, partnership, corporation, trust,
unincorporated organization, joint venture, government (or agency or political
subdivision thereof) or any other entity of any kind.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the Commission thereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, and the rules and regulations of the Commission thereunder.
1.2 CROSS-REFERENCES.
The following defined terms, when used in this Agreement, shall have
the respective meanings ascribed to them in the corresponding Sections of this
Agreement listed below:
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<PAGE> 51
"Acquisition Agreement" - Recitals
"Black-Out Notice" - Section 4.3
"Company" - Preamble
"Exchange Notes" - Section 2.2
"Exchange Offer Registration Period" - Section 2.2
"Exchange Offer Registration Statement" - Section 2.2
"Exchanging Dealer" - Section 2.4(a)
"First Indenture Holders" - Section 9.2
"Indenture" - Section 9.1
"Masco" - Preamble
"Notes" - Recitals
"Other Provisions" - Section 9.2
"Public Notes" - Section 9.1
"Registered Exchange Offer" - Section 2.1
"Registrable Notes" - Section 3.1
"Registration Expenses" - Section 6.1
"Registrations" - Section 3.1
"Requesting Holders" - Section 3.1
"Special Counsel" - Section 9.2
"Trustee" - Section 9.1
ARTICLE II
REGISTERED EXCHANGE OFFER
-------------------------
2.1 Request for Exchange Offer.
If, at any time, (a) any persons (other than Masco and its Affiliates)
then own (beneficially and of record) Notes, the aggregate outstanding
principal amount of which is at least $100,000,000, (b) a Registered Exchange
Offer has not previously been effected, (c) the Company is not then engaged in
attempting to effect a Registration requested pursuant to Section 3.1 and (d)
at least 90 days have elapsed since the effective date of any underwritten
Registration pursuant to Article III, then the registered holders (other than
Masco or any Affiliate thereof) of Notes (other than Notes beneficially owned
by Masco or any Affiliate thereof), the aggregate outstanding principle amount
of which is at least $100,000,000, may at such time request that the Company
make a Registered Exchange Offer.
2.2 EXCHANGE OFFER REGISTRATION STATEMENT; ONE EXCHANGE OFFER.
Following its receipt of a request made in accordance with Section 2.1
for a Registered Exchange Offer, if the Company is then permitted to effect the
Registered Exchange Offer, under the Securities Act and applicable
interpretations thereof by the
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<PAGE> 52
Commission's staff, the Company shall (a) prepare and, not later than 60 days
following its receipt of such request, file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities act with respect to a proposed offer (the "Registered
Exchange Offer") to the registered holders of Notes to issue and deliver to
such registered holders, in exchange for the Notes, a like aggregate principal
amount of new notes of the Company (the "Exchange Notes"), with terms identical
in all material respects to, and except as contemplated in Section 2.3, having
all the rights and privileges carried by, the Notes outstanding at the time of
the exchange and (b) use all reasonable efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act within 120
days of its receipt of such request and to keep the Exchange Offer Registration
Statement effective for a period of not less than 30 days (or longer, if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the registered holders of Notes (such period being called the
"Exchange Offer Registration Period").
Notwithstanding anything in this Agreement to the contrary, the Company
will not have any obligation to effect more than one Registered Exchange Offer
pursuant to this Article II. A Registered Exchange Offer shall be deemed to
have been effected for purposes of this Article II if an Exchange Offer
Registration Statement has become effective under the Securities Act and has
been kept effective during the related Exchange Offer Registration Period.
2.3 EXCHANGE NOTES INDENTURE.
The Exchange Notes will be issued under an indenture that satisfies the
applicable requirements of Article IX.
2.4 EXCHANGE OFFER PROCEDURES.
(a) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each
registered holder of Notes electing to exchange Notes for Exchange Notes
(assuming that such registered holder is not an affiliate of the Company within
the meaning of the Securities Act, acquires the Exchange Notes in the ordinary
course of such registered holder's business and has no arrangements or
understandings with any person to participate in the distribution of the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any limitation or restrictions under the Securities Act and without
material restrictions under the securities laws of the several states of the
United States. The Company acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
each registered holder of Notes that is a broker-dealer electing to exchange
Notes, acquired for its own account as a result of market making activities or
other trading activities , for Exchange Notes (an "Exchanging Dealer"), is
required to deliver a prospectus containing the information set forth in
Annexes A,B,C and D relating to the terms of the Exchange Notes, the procedures
for the Registered
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<PAGE> 53
Exchange Offer, the purpose of the Registered Exchange Offer and the plan of
distribution for Exchange Notes in connection with a sale of any such Exchange
Notes received by such Exchanging Dealer pursuant to the Registered Exchange
Offer.
(b) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each registered holder of Notes a copy of the
prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related
documents;
(ii) keep the Registered Exchange Offer open for not less
than 30 days after the date notice thereof is mailed to such registered
holders (or longer if required by applicable law);
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York;
(iv) permit such registered holders to withdraw tendered
Notes at any time prior to the close of business, New York time, on
the last business day on which the Registered Exchange Offer shall
remain open; and
(v) otherwise comply in all material respects with all
applicable laws applicable to the Registered Exchange Offer.
(c) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) cancel all Notes so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
to each registered holder of Notes so accepted for exchange, Exchange
Notes equal in principal amount to the Notes of such registered holder
so accepted for exchange.
(d) Interest on each Exchange Note issued pursuant to the
Registered Exchange Offer will accrue from the last date on which interest was
paid (whether in cash or in additional Notes) on the Notes surrendered in
exchange therefor.
(e) Each registered holder of Notes participating in the Registered
Exchange Offer shall be required to represent to the Company that at the time
of the consummation of the Registered Exchange Offer (i) any Exchange
Securities received by such registered holder
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<PAGE> 54
will be acquired in the ordinary course of business, (ii) such registered
holder will have no arrangements or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the Securities Act and (iii) such registered holder is not an
affiliate of the Company within the meaning of the Securities Act.
2.5 EXCHANGE OFFER REGISTRATION PROCEDURES.
In connection with an Exchange Offer Registration Statement, the
following provisions shall apply:
(a) The Company shall include in the prospectus forming a part of
the Exchange Offer Registration Statement the information set forth in Annex A
on the cover, in Annex B in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C in the "Plan of
Distribution" section, and shall include the information set forth in Annex D
in the letter of transmittal delivered pursuant to clause (i) of Section
2.4(b).
(b) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules included therein, and, if such Exchanging Dealer so
requests in writing, all exhibits thereto (including those incorporated by
reference).
(c) During the Exchange Offer Registration Period, the Company will
promptly deliver to each Exchanging Dealer, without charge, as many copies of
the prospectus included in the Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably
request for delivery by such Exchanging Dealer in connection with a sale of
Exchange Notes received by it pursuant to the Registered Exchange Offer; and
the Company consents to the use of such prospectus or any amendment or
supplement thereto by any such Exchanging Dealer, but in each case only to the
extent that such use is in accordance with this Article II.
(d) The Company shall make available for a period of 180 days after
the consummation of the Registered Exchange Offer, a copy of the prospectus
forming part of the Exchange Offer Registration Statement to any broker-dealer
(other than any Exchanging Dealer) for use in connection with any resale of any
Exchange Notes.
(e) The Company shall ensure that (i) the Exchange Offer
Registration Statement and any amendment thereto and any prospectus forming
part thereof and any amendment or supplement thereto complies in all material
respects with the Securities Act, (ii) the Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances under which they were made, and (iii)
the prospectus forming
-6-
<PAGE> 55
part of the Exchange Offer Registration Statement and any supplement to such
prospectus, does not, as of its date, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading, in light of the circumstances under which they were
made.
(f) Upon the occurrence, during the period in which the Company is
required to keep the Exchange Offer Registration Statement effective pursuant to
Section 2.2, of any event known to the Company as a result of which the
prospectus included in the Exchange Offer Registration Statement, as then in
effect, contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were
made, the Company shall promptly (i) notify any Exchanging Dealer or other
broker-dealer known by it to be using such prospectus in connection with
resales of Exchange Notes of the occurrence thereof and (ii) prepare and
furnish to each such Exchanging Dealer or other broker-dealer a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to prospective purchasers of
Exchange Notes, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
(g) The Company shall notify the registered holders of the Exchange
Notes (or, if the relevant event occurs prior to the issuance of the Exchange
Notes, the registered holders of Notes that requested the Registered Exchange
Offer pursuant to Section 2.1):
(i) of the date on which the Exchange Offer Registration
Statement or any amendment thereto has been filed with the Commission
or on which the Exchange Offer Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission to amend or supplement
the Exchange Offer Registration Statement or the prospectus included
therein;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Exchange Offer Registration
Statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Exchange Notes
for sale in any jurisdiction or the initiation or (if known to the
Company) threatening of any proceeding for such purpose; and
(v) of the occurrence of any event that requires
notification to certain Exchanging Dealers and other broker-dealers
pursuant to paragraph (f) above.
-7-
<PAGE> 56
(h) The Company shall use all reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Exchange Offer
Registration Statement at the earliest possible time.
(i) The Company shall use its best efforts to register or qualify
the Exchange Notes under such other securities or blue sky laws of such
jurisdictions as any registered holder of Notes tendered pursuant to the
Registered Exchange Offer shall reasonably request, to keep such registration
or qualification in effect for so long as the Exchange Offer Registration
Statement remains in effect and to do any and all other acts and things which
may be reasonably necessary or advisable to enable the offer and sale in such
jurisdictions of the Exchange Notes received by such registered holder pursuant
to the Registered Offer; provided, however, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (i), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of the process in any such jurisdiction.
(j) Not later than the effective date of the Exchange Offer
Registration Statement, the Company shall provide a CUSIP number for the
Exchange Notes and provide the Trustee with printed certificates for the
Exchange Notes in a form eligible for deposit with The Depositary Trust
Company.
(k) The Company shall use its reasonable efforts to cause the
Exchange Notes issued in the Registered Exchange Offer to be listed on each
securities exchange (if any) on which debt securities issued by the Company are
then listed and shall enter into such customary agreements as may be required
in furtherance thereof, including listing applications and indemnification
agreements in customary form;
(l) The Company shall use all reasonable efforts to comply with all
applicable rules and regulations of the Commission and make available to its
security holders, as soon as practicable, an earnings statement covering a
period of at least twelve months, beginning with the first month after the
effective date of the Exchange Offer Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
ARTICLE III
REGISTRATIONS UPON REQUEST
3.1 REQUESTS FOR REGISTRATION.
(a) if, at any time, (i) the sale or assignment of Notes is
permitted by Section 9.1(b) of the Notes, (ii) the Company is not then engaged
in attempting to effect a
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<PAGE> 57
Registered Exchange Offer requested pursuant to Section 2.1 and (iii) at least
90 days have elapsed since the later of (x) the effective date of any Exchange
Offer Registration Statement and (y) the effective date of any prior
underwritten Registration pursuant to this Article III, then the registered
holders of a majority of the then outstanding principal amount of the Notes
(the "Requesting Holders") may at such time request registration under the
Securities Act of all or part of the Public Notes issuable to the Requesting
Holders pursuant to Section 9.4 or 9.5 (the "Registrable Notes") in exchange
for the outstanding Notes then held by them; provided, however, that
notwithstanding anything in this Agreement to the contrary, (i) the registered
holders of Notes shall not be entitled to request, and the Company shall not be
obligated to effect, any such registration that does not involve at least $100
million aggregate principal amount of Registrable Notes and (ii) the Company
shall not be obligated to effect any such registration if, at any time prior to
the effective date of the registration statement relating thereto, the sale or
assignment of Notes is no longer permitted by Section 9.1(b) of the Notes.
Within 10 days after its receipt of any such request, the Company will give
written notice of such request to all other registered holders of Notes.
Thereafter, the Company will use all reasonable efforts to effect the
registration under the Securities Act requested by the Requesting Holders and
will include in such registration all Registrable Notes with respect to which
the Company has received written requests for inclusion therein by such other
registered holders within 30 days after the receipt of the Company's notice,
subject to the provisions of Section 3.4. All registrations requested pursuant
to this Section 3.1 are referred to herein as "Registrations." Notwithstanding
anything in this Agreement to the contrary, in the event that (x) a registered
holder of Notes has previously exchanged its Notes for Exchange Notes pursuant
to a Registered Exchange Offer and (y) as of the time when a Registration is
requested pursuant to Section 3.1, there is a material risk (confirmed in
writing by counsel reasonably satisfactory to the Company) that such
registered holder is not eligible to sell the Exchange Notes then held by it
under the exemption from registration set forth in Section 4(1) of the
Securities Act, then, solely for purposes of such Registration and all matters
relating thereto, such Exchange Notes shall be eligible for registration
pursuant to this Article III and shall be deemed to constitute "Notes" under
this Section 3.1 and all related Sections of this Agreement.
(b) In the event that the Requesting Holders request a Registration
under this Article III, such Requesting Holders may, at any time prior to the
effective date of the registration statement relating to such Registration,
revoke such request by providing written notice to the Company; provided,
however, that notwithstanding such revocation, such Registration shall be
deemed to have been effected for purposes of Section 3.2 unless after
consultation with the Company and any proposed underwriter, the Requesting
Holders in good faith determine that the Registrable Notes which they have
requested to be registered would not be sold pursuant to such Registration
within a reasonable amount of time or at a price acceptable to such
Requesting Holders.
(c) Any request for a Registration pursuant to this Article III
shall specify the aggregate principal amount of Registrable Notes proposed to be
sold by the Requesting Holders and the intended method of disposition thereof.
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3.2 NUMBER OF REGISTRATIONS.
The Company will not have any obligation to effect more than two
Registrations pursuant to this Article III. The Company will pay all
Registration Expenses in connection with each such Registration.
3.3 EFFECTIVE REGISTRATION STATEMENT.
No registration shall be deemed to have been effected for purposes of
Section 3.2:
(i) unless a registration statement with respect thereto has become
effective (other than in connection with a revocation notice
delivered pursuant to Section 3.1(b));
(ii) if after such registration statement has become effective, any
stop order, injunction or other order or requirement affecting
any of the Registrable Notes covered by such registration
statement is issued or threatened by the Commission or any other
governmental agency or court;
(iii) if the Company delivers a Black-Out Notice with respect to such
Registration;
(iv) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection
with such Registration are not satisfied by reason of a failure
by or inability of the Company to satisfy any of such
conditions, or the occurrence of an event outside the
reasonable control of any Requesting Holder or other holder of
Registrable Notes covered by such agreement;
(v) if the Requesting Holders have made the determination
contemplated by the proviso to Section 3.1(b) and have notified
the Company of such determination in a revocation notice
delivered in accordance with Section 3.1(b) with respect to such
Registration; or
(vi) if the Requesting Investors are not able to register and sell at
least 90% of the amount of Registrable Notes which they
requested to be included in such Registration;
provided that the Company will pay all Registration Expenses in connection with
any
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Registration if pursuant to this Section 3.3 the Registration is deemed not to
have been effected.
3.4 Priority on Registrations.
(a) The Company will not include in any Registration any
securities which are not Registrable Notes without the written consent of
holders of Notes representing not less than 66 2/3% of the aggregate principal
amount of Registrable Notes requested to be included in such Registration in
accordance with Section 3.1(a).
(b) If the Requesting Holders and other registered holders of
Notes request Registrable Notes to be included in a Registration which is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the amount of Registrable Notes requested to be
included exceeds the amount of Registrable Notes which can be sold in such
offering within a price range acceptable to the holders of Notes representing
not less than 66 2/3% of the aggregate principal amount of Registrable Notes
requested to be included in such Registration in accordance with Section 3.1(a),
the Company will include any securities to be sold in such Registration in the
following order: (i) first, the Registrable Notes owned by the Requesting
Holders; (ii) second, the Registrable Notes requested to be included in such
registration by such other registered holders of Notes in accordance with
Section 3.1(a), provided, that if the managing underwriters determine in good
faith that a lower number of Registrable Notes should be included, then only
that lower number of Registrable Notes requested to be included by such other
registered holders shall be included in such Registration, and such other
registered holders shall participate in the registration pro rata based upon
their relative ownership of the aggregate principal amount of Registrable Notes
requested to be included in such Registration by such other registered holders
in accordance with Section 3.1(a); (iii) third, subject to Section 3.4(a), any
securities the Company proposes to sell and (iv) fourth, any securities other
than Registrable Notes to be sold by persons other than the Company included
pursuant to Section 3.4(a) hereof. Any person including any securities (other
than Registrable Notes) in a Registration pursuant to Article III hereof must
pay its share of the Registration Expenses allocable to such securities as
provided in Article VI hereof.
3.5 Registration Statement Form.
Each Registration effected pursuant to this Article III shall be on
such appropriate registration form of the Commission (a) as shall be selected by
the Company and (b) as shall permit the disposition of the Registrable Notes
covered thereby in accordance with the intended method of disposition specified
in the request for such Registration by the Requesting Holders.
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3.6 SELECTION OF UNDERWRITERS
The Requesting Holders will have the right to select the underwriters
and the managing underwriter to administer any Registration (which underwriters
and managing underwriter shall be reasonably acceptable to the Company).
ARTICLE IV
HOLDBACK AGREEMENTS
4.1 HOLDBACK.
Each registered holder of Notes agrees not to effect any public sale or
distribution of Exchange Notes or Registrable Notes during the seven days prior
to, and the 90-day period beginning on, the effective date of (a) an Initial
Public Offering, (b) any underwritten Registration in which such registered
holder had an opportunity to participate without cutback under Article III
hereof (except as part of such underwritten Registration), or (c) any
underwritten registration under the Securities Act of other debt securities of
the Company, in each case unless the managing underwriters of the relevant
registered public offering otherwise agree.
4.2 COMPANY HOLDBACK.
The Company agrees not to effect any public sale or distribution of its
debt securities, or any securities convertible, exchangeable or exercisable
for or into such debt securities, during the 14 days prior to, and during the
90-day period beginning on, the effective date of any Exchange Offer
Registration Statement or any underwritten Registration pursuant to Article III,
unless the registered holders of Notes that requested the Registered Exchange
Offer or the managing underwriters of such underwritten Registration (as the
case may be) otherwise agree.
4.3 BLACK-OUT RIGHTS AND POSTPONEMENT.
Notwithstanding anything in this Agreement to the contrary, the Company
may, upon written notice (a "Black-Out Notice") to the registered holders of
Notes requesting a Registered Exchange Offer or the Requesting Holders
requesting a Registration, require such registered holders or Requesting
Holders, as the case may be, to withdraw such request upon the good faith
determination by the Company that postponement of such Registered Exchange
Offer or Registration, as the case may be, is necessary (i) to avoid
disclosure of material non-public information or (ii) as a result of a pending
material financing or acquisition transaction, and in each case, each of the
registered holders of the Notes may not request another Registered Exchange
Offer or Registration for a period of up to 60 days, as specified by the
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Company in such Black-Out Notice. The Company may only give a Black-Out Notice
where the giving of such notice has been specifically approved by the Company's
Board of Directors. Upon receipt of a Black-Out Notice, the related Registered
Exchange Offer or Registration shall be deemed to be rescinded and retracted
and shall not be counted as a Registered Exchange Offer or a Registration, as
the case may be, for any purpose. The Company may not deliver more than one
Black-Out Notice in any 12-month period.
ARTICLE V
REGISTRATION PROCEDURES
-----------------------
Whenever the Requesting Holders and any other registered
holders of Notes have requested that Registrable Notes be registered in
accordance with Articles III and IV, the Company will use all reasonable
efforts to effect the registration and the sale of such Registrable Notes in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible (or, in the case
of clause (p) below, will not):
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Notes (such registration statement
to include all information which the holders of Registrable Notes to be
registered thereby shall reasonably request) and use all reasonable efforts to
cause such registration statement to become effective, provided that as
promptly as practicable before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will (i) furnish to counsel
selected by the holders of a majority of the aggregate principal amount of
Registrable Notes covered by such registration statement copies of all such
documents proposed to be filed, and the Company shall not file any such
documents to which such counsel shall have reasonably objected on the grounds
that such document does not comply in all material respects with the
requirements of the Securities Act, and (ii) notify each holder of Registrable
Notes covered by such registration statement of (x) any request by the
Commission to amend such registration statement or amend or supplement any
prospectus, or (y) any stop order issued or threatened by the Commission, and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered;
(b) (i) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective during the period commencing on the effective date of such
registration statement and ending on the earlier of (x) the 90th day after such
effective date and (y) the first date as of which all Registrable Notes covered
by such registration statement are sold in accordance with the intended plan of
distribution for the Registrable Notes set forth in such registration statement
and (ii) comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of
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disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Notes covered by such
registration statement, without charge, such number of conformed copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus
and, in each case, including all exhibits thereto and documents incorporated by
reference therein) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Notes owned
by such seller;
(d) use its best efforts to register or qualify the Registrable
Notes covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as any seller thereof shall reasonably request,
to keep such registration or qualification in effect for so long as such
registration statement remains in effect and to do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Notes owned
by such seller, provided, however, that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this clause (d), (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction;
(e) furnish to each seller of Registrable Notes covered by such
registration statement a signed copy, addressed to such seller (and the
underwriters, if any) of an opinion of counsel for the Company or special
counsel to the selling securityholders, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), reasonably satisfactory in form and substance to such seller,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily covered in
opinions of issuer's counsel delivered to the underwriters in underwritten
public offerings, and such other legal matters as the seller (or the
underwriters, if any) may reasonably request;
(f) notify each seller of Registrable Notes covered by such
registration statement, at a time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of any
event known to the Company as a result of which the prospectus included in such
registration statement, as then in effect, contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and, at the request of any such
seller, the Company will prepare and furnish to such seller a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Notes, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and in
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the event the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be maintained effective
by the number of days during the period from and including the date of the
giving of such notice to such seller to the date when the Company made
available to such seller an appropriately amended or supplemented prospectus;
(g) cause all Registrable Notes covered by such registration statement
to be listed on each securities exchange (if any) on which debt securities
issued by the Company are then listed and enter into such customary agreements
as may be required in furtherance thereof, including without limitation listing
applications and indemnification agreements in customary form;
(h) provide a transfer agent and registrar for all Registrable Notes
covered by such registration statement not later than the effective date of
such registration statement;
(i) enter into such customary arrangements and take all such other
actions as the holders of a majority of the aggregate principal amount of
Registrable Notes covered by such registration statement or the underwriters,
if any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Notes;
(j) make available for inspection by any seller of Registrable Notes
covered by such registration statement, any underwriter participating in any
disposition of Registrable Notes pursuant to such registration statement and
any attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(k) subject to other provisions hereof, use all reasonable efforts to
cause the Registrable Notes covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
or self-regulatory organizations as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Notes;
(l) use all reasonable efforts to obtain a "comfort" letter, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public accountants who
have certified the Company's financial statements included in such registration
statement, addressed to each seller of Registrable Notes covered by such
registration statement and to the underwriters, if any, covering substantially
the same matters with respect to such registration statement (and the
prospectus included therein) and with respect to events subsequent to the date
of such financial statements, as are customarily covered in accountants'
letters delivered to the underwriters in underwritten public offerings
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of securities and such other financial matters as such seller (or the
underwriters, if any) may reasonably request;
(m) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the Commission and make available to its security
holders, as soon as practicable, an earnings statement covering a period of at
lease twelve months, beginning with the first month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(n) permit any holder of Registrable Notes covered by such registration
statement, which holder, in the sole judgment, exercised in good faith, of such
holder might be deemed to be a controlling person of the Company (within the
meaning of the Securities Act or the Exchange Act) to participate in the
preparation of such registration statement and to include therein material,
furnished to the Company in writing, which in the reasonable judgment of such
holder should be included and which is reasonably acceptable to the Company;
(o) use all reasonable efforts to obtain the withdrawal at the earliest
possible time of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of any
preliminary prospectus included therein;
(p) at any time file or make any amendment to such registration
statement, or any amendment of or supplement to the prospectus included therein
(including amendments of the documents incorporated by reference into the
prospectus), of which each seller of Registrable Notes covered by such
registration statement or the managing underwriters, if any, shall not have
previously been advised and furnished a copy or to which the sellers of a
majority of the aggregate principal amount of such Registrable Securities, the
managing underwriters, if any, or counsel for such sellers or for such
underwriters shall reasonably object;
(q) make such representations and warranties (subject to appropriate
disclosure schedule exceptions) to sellers of Registrable Notes covered by such
registration statement and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters and selling holders,
as the case may be, in underwritten public offerings of substantially the same
type; and
(r) if such registration statement refers to any seller of Registrable
Notes covered thereby by name or otherwise as the holder of any securities of
the Company then(whether or not such seller is or might be deemed to be a
controlling person of the Company), (i) at the request of such seller, insert
therein language, in form and substance reasonably satisfactory to such seller,
the Company and the managing underwriters, if any, to the effect that the
holding by such seller of such securities is not to be construed as a
recommendation by such seller of the investment quality of the Registrable
Notes or the Company's other securities covered thereby and that such holding
does not imply that such seller will assist in
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meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such seller by name or otherwise is not required by the
Securities Act, any similar Federal or state statute, or any rule or regulation
of any other regulatory body having jurisdiction over the offering, at the
request of such seller, delete the reference to such seller.
ARTICLE VI
REGISTRATION EXPENSES
---------------------
6.1 FEES GENERALLY.
--------------
All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation internal expenses
(including without limitation all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance, the expenses
and fees for listing Exchange Notes or Registrable Notes on each securities
exchange (if any) on which debt securities issued by the Company are then
listed, all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including without limitation reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Exchange Notes or Registrable Notes), printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding underwriting
fees, discounts and commissions) and other persons retained by the Company (all
such expenses being herein called "Registration Expenses") shall be borne by
the Company, except that each seller of Exchange Notes or Registrable Notes
shall pay any underwriting fees, discounts or commissions attributable to the
sale of its Exchange Notes or Registrable Notes.
6.2 COUNSEL FEES.
------------
In connection with a Registered Exchange Offer, the Company
will reimburse the registered holders of Notes that requested the Registered
Exchange Offer for the reasonable fees and disbursements of one counsel chosen
by such registered holders. In connection with each Registration, the Company
will reimburse the Requesting Holders in such Registration for the reasonable
fees and disbursements of one counsel chosen by such Requesting Holders.
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ARTICLE VII
UNDERWRITTEN OFFERINGS
If requested by the underwriters for any underwritten offering of
Registrable Notes pursuant to a Registration, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to the holders of Notes representing a
majority of the aggregate principal amount of Registrable Notes requested to be
included in such Registration and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally included in agreements of such type, including without limitation
indemnities customarily included in such agreements. The sellers of Registrable
Notes to be distributed by such underwriters will cooperate in good faith with
the Company in the negotiation of the underwriting agreement. The sellers
of Registrable Notes to be distributed by such underwriters shall be parties to
such underwriting agreement and may, at their option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such sellers and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement also be conditions precedent to the obligations of such sellers. The
Company shall cooperate with any such seller of Registrable Notes in order to
limit any representations or warranties to, or agreements with, the Company or
the underwriters to be made by such seller only to representations, warranties
or agreements regarding such seller, such seller's Registrable Notes, such
seller's intended method of distribution, any other information required by law
and supplied in writing by such seller to the Company or the underwriters
specifically for use in the relevant registration statement and any other
representation required by applicable law.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless, to the fullest extent
permitted by law, each of the holders of any Exchange Notes or Registrable Notes
covered by a registration statement that has become effective under the
Securities Act pursuant to this Agreement, each other person, if any, who
controls such holder within the meaning of the Securities Act or the Exchange
Act, and each of their respective directors, general partners and officers, as
follows:
(i) against any and all loss, liability, claim, damage or expense
(other than amounts paid in settlement) incurred by them arising
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out of or based upon an untrue statement or alleged untrue statement
of a material fact contained in such registration statement (or any
amendment or supplement thereto), including all documents
incorporated therein by reference, or in any preliminary prospectus or
prospectus included therein (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances under which they
were made;
(ii) against any and all loss, liability, claim, damage and expense
incurred by them to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense incurred by them in connection with
investigating, preparing or defending against any litigation,
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under clause
(i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company or the underwriters by or on behalf of such holder expressly for use in
the preparation of such registration statement (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or in any
preliminary prospectus or prospectus included therein (or any amendment or
supplement thereto); and provided further, however, that the Company will not be
liable to any holder of Exchange Notes or Registrable Notes (or any other
indemnified person) under the indemnity agreement in this Section 8.1, with
respect to any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, liability, claim, damage or expense of such holder (or other
indemnified person) results from the fact that such holder sold Exchange Notes
or Registrable Notes to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously and
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timely furnished copies thereof to such holder. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of such holder or any such director, officer, general partner, or other
controlling person and shall survive the transfer of the relevant Exchange
Notes or Registrable Notes by such holder.
8.2 INDEMNIFICATION BY A SELLING NOTEHOLDER.
In connection with any Registered Exchange Offer in which a holder of Notes
is participating or any Registration in which a holder of Registrable Notes is
participating, each such holder agrees to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 8.1 of this
Agreement), to the extent permitted by law, the Company and its directors,
officers and controlling persons, and their respective directors, officers and
general partners, with respect to any statement or alleged statement in or
omission or alleged omission from the related registration statement (including
all documents incorporated therein by reference), any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto
or to such preliminary prospectus or prospectus, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information that relates only to such holder or the
plan of distribution that is expressly furnished to the Company or the
underwriters by or on behalf of such holder for use in the preparation of
such registration statement, preliminary, final or summary prospectus or
amendment or supplement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, or such
holder, as the case may be, or any of their respective directors, officers,
controlling persons or general partners and shall survive any transfer of
Exchange Notes or Registrable Notes by such holder. With respect to each claim
pursuant to this Section 8.2, each holder's maximum liability under this
Section 8.2 shall be limited to an amount equal to the net proceeds actually
received by such holder (after deducting any underwriting fees, discount and
commissions) from the sale of the Exchange Notes or Registrable Notes being
sold or exchanged pursuant to such registration statement or prospectus by such
holder.
8.3 INDEMNIFICATION PROCEDURE.
Promptly after receipt by an indemnified party hereunder of written notice
of the commencement of any action or proceeding involving a claim referred to
in Section 8.1 or Section 8.2, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Section 8.1 or Section
8.2 except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action or proceeding is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof,
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the indemnifying party will not be liable to such indemnified party for any
legal fees and expenses subsequently incurred by the latter in connection
with the defense thereof, unless in such indemnified party's reasonable
judgment an actual or potential conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, in which case the
indemnifying party shall not be liable for the fees and expenses of (i) in the
case of a claim referred to in Section 8.1, more than one counsel (in addition
to any local counsel) for all indemnified persons selected by the holders of
Exchange Notes or Registrable Notes (as the case may be) representing a
majority in aggregate principal amount of the Exchange Notes or Registrable
Notes (as the case may be) held by such indemnified persons, or (ii) in the
case of a claim referred to in Section 8.2, more than one counsel (in addition
to any local counsel) for the Company, in each case in connection with any one
action or separate but similar or related actions. An indemnifying party who
is not entitled to (pursuant to the immediately preceding sentence), or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel (in addition to any local counsel) for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party an actual or
potential conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels as may be reasonable in light of such conflict.
The indemnifying party will not, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such indemnified
party or any person who controls such indemnified party is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit or proceeding.
Notwithstanding anything to the contrary set forth herein, and without
limiting any of the rights set forth above, in any event any party will have
the right to retain, at its own expense, counsel with respect to the defense of
a claim.
8.4 UNDERWRITING AGREEMENT.
The Company, and each holder of Registrable Notes requesting registration
of all or any part of such Notes pursuant to Article III, shall provide for the
foregoing indemnity (with appropriate modifications) in any underwriting
agreement entered into in connection with a Registration with respect to any
required registration or other qualification of Registrable Notes under any
Federal or state law or regulation of any governmental authority.
8.5 CONTRIBUTION.
If the indemnification provided for in Sections 8.1 or 8.2 is unavailable
to hold harmless an indemnified party under such Section, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages, liabilities or expenses referred to
in Section 8.1 or Section 8.2, as the case may
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be, in such proportion as is appropriate to reflect the relative fault of such
indemnifying party on the one hand, and the indemnified party on the other, in
connection with statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations, including without limitation the relative benefits
received by each party from the Registered Exchange Offer or the offering of
the Registrable Notes and other securities covered by the relevant registration
statement (as the case may be), the parties' relative knowledge and access to
information concerning the matter with respect to which the relevant claim was
asserted and the parties' relative opportunities to correct and prevent any
relevant statement or omission. Without limiting the generality of the
foregoing, the parties' relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to relevant
information and opportunity to correct or prevent any such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 8.5 were to be determined by pro rata or
per capita allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the first and second sentences
of this Section 8.5. The amount paid by an indemnified party as a result of
the losses, claims, damages, liabilities or expenses referred to in the first
sentence of this Section 8.5 shall be deemed to include any legal or other
expenses reasonably incurred by the indemnified party in connection with
investigating or defending the relevant action or proceeding and shall be
limited as provided in Section 8.3 if the indemnifying party has assumed the
defense of the relevant action or proceeding in accordance with the provisions
of this Section 8.5. Promptly after receipt by an indemnified party under this
Section 8.5 of notice of the commencement of any action or proceeding against
such party in respect of which a claim for contribution may be made against an
indemnifying party under this Section 8.5, such indemnified party shall notify
the indemnifing party in writing of the commencement thereof if the notice
specified in Section 8.3 has not been given with respect to such action or
proceeding; provided, however, that the omission to so notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
otherwise have to any indemnified party under this Section 8.5, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. The Company and each holder of Registrable Notes agrees with each
other and the underwriters of any Registrable Notes, if requested by such
underwriters, that (i) the underwriters' portion of such holder's contribution
shall not exceed the total underwriting fees, discounts and commissions in
connection with the relevant Registration and (ii) the amount of such holder's
contribution shall not exceed an amount equal to the net proceeds actually
received by such holder from the sale of Registrable Notes pursuant to the
Registration to which the losses, liabilities, claims, damages or expenses of
the indemnified parties relate. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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8.6 PERIODIC PAYMENTS.
The indemnification required by this Article VIII shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
ARTICLE IX
INDENTURE
9.1 INDENTURE GENERALLY. As soon as reasonably possible after
the Company's receipt of the first written request for a Registered Exchange
Offer pursuant to Section 2.1 or a Registration pursuant to Section 3.1(a), the
Company shall, subject to the other provisions of this Article IX, prepare and,
simultaneously with the effectiveness of the registration statement relating to
such Registered Exchange Offer or Registration, execute and deliver to a bank or
trust company, as trustee (the "Trustee"), selected by the Company, having
capital and surplus of at least $100,000,000 and having its principal office
either in Charlotte, North Carolina or in New York, New York, an Indenture
(the "Indenture"), providing for the issuance, and shall authorize the issuance
thereunder as hereinafter provided, of the Exchange Notes (in the case of a
Registered Exchange Offer) or new notes (in the case of a Registration)
(the "Public Notes") in exchange for the Notes, in each case with terms
identical in all respects to the Notes and, except as contemplated in Section
9.2, having all the rights and privileges carried by, the Notes outstanding at
the time of such authorization. In the event that an Indenture has previously
been entered into pursuant to this Section 9.1, the Company shall cause any
Exchange Notes or Public Notes issued in connection with a subsequent Registered
Exchange Offer or Registration to be issued under such Indenture (or a
successor Indenture satisfying the applicable requirements of this Article IX).
9.2 INDENTURE. The Indenture and the Exchange Notes and
Public Notes to be issued thereunder shall, insofar as may be appropriate,
respectively embody the substance of all covenants, events of default and other
provisions of the Notes, together with such other provisions (not inconsistent
with the provisions of the Notes) as are usually contained in indentures
providing for obligations of comparable aggregate principal amount and maturity
and having comparable substantive provisions, including without limitation a
provision to the effect that during the continuance of an event of default the
Trustee may, to the extent that the amount of Exchange Notes and Public Notes
then outstanding under the Indenture is sufficient for the Trustee to do so,
declare (and upon the written request of the holders of Exchange Notes and
Public Notes representing a majority of the aggregate principal amount of the
Notes, the Exchange Notes and the Public Notes at the time outstanding (taken
together as a single class), shall declare) by notice in writing to the Company,
the principal of all of the Notes, the Exchange Notes and the Public Notes at
the time outstanding to be due and payable immediately (collectively, the "Other
Provisions"); provided, however, that (a) the
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covenants, events of default and other provisions of the Indenture and the
Exchange Notes and Public Notes issued thereunder (except for the Other
Provisions) shall be no more restrictive to the Company than the covenants,
conditions and provisions set forth in the Notes and (b) the Indenture, the
Exchange Notes and the Public Notes will provide that, for all purposes
thereunder (including, without limitation, the granting of any waiver, the
exercise of any remedy or the taking of any other action by the holders of
Exchange Notes and Public Notes or by the Trustee on their behalf), the Notes,
the Exchange Notes and the Public Notes will be treated as a single class of
debt securities. The Indenture and the Exchange Notes and Public Notes issued
thereunder shall be, respectively, in such form and shall contain such
procedural provisions as may be necessary to comply with any applicable
statutes and with any rules or regulations thereunder and as may be necessary
to register such Exchange Notes and Public Notes under the Securities Act and
to render the Indenture eligible for qualification under the Trust Indenture
Act. The Indenture shall be satisfactory in form and substance to the Company
and to the registered holders of Notes who requested pursuant to Section 2.1 or
3.1(a) the first Registered Exchange Offer or Registration effected hereunder
(the "First Indenture Holders") and their special counsel, who shall be
selected by the First Indenture Holders (the "Special Counsel"), and shall
permit the issuance of Public Notes only in exchange for Notes requested to
included in a Registration and otherwise exchanged in accordance with Section
9.4 or 9.5 (except in the case of (i) mutilated, lost, destroyed or stolen
Public Notes, (ii) exchanges, transfers and reissues of Public Notes and (iii)
issuances of Public Notes in payment of interest on other Public Notes).
9.3 OPINION. At the time an Indenture is first entered into
pursuant to Section 9.1, Special Counsel shall furnish to the First Indenture
Holders and to the Trustee under the Indenture an opinion to the effect that
(a) the Indenture and the Exchange Notes or Public Notes to be issued in
connection with the related Registered Exchange Offer or Registration are in
compliance as to form with this Agreement (or have otherwise been consented to
by each of the First Indenture Holders and the Company), (b) the Indenture has
been duly authorized, executed and delivered and is a legal, valid and binding
instrument enforceable in accordance with its terms (subject, however, to
qualification in respect of (i) any applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors' rights generally, and (ii) the effect of certain laws and judicial
decisions upon the enforceability of certain of the remedies provided in the
Indenture without, however, in the opinion of such counsel, materially
interfering with the practical realization of the benefits provided by the
Indenture), and (c) such Exchange Notes or Public Notes, as the case may be,
have been duly authorized, and, when executed, authenticated and delivered as
provided in the Indenture, will constitute legal, valid and binding obligations
of the Company enforceable in accordance with their terms and entitled to the
benefits of the Indenture in accordance with the terms of the Indenture and
such Exchange Notes or Public Notes (subject, however, to qualifications
corresponding to those set forth in clauses (i) and (ii) above). The Company
will bear all expenses incurred in connection with the preparation, execution
and delivery of the Indenture and issuing Exchange Notes and Public Notes
thereunder, including the reasonable fees and disbursements of Special Counsel
in connection therewith.
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9.4 EXCHANGES BY REQUESTING HOLDERS. From and after the execution and
delivery of the Indenture, upon surrender of any Note by a Requesting Holder in
connection with the first Registration effected pursuant to Article III, the
Company will deliver to or upon the order of such Requesting Holder, in
exchange therefor, Public Notes, in the same aggregate unpaid principal amount
as the Note surrendered, in such authorized form and denomination as such
holder may elect, and bearing interest from the last date on which interest was
paid (whether in cash or in additional Notes) on the Note so surrendered, and
the Company will effect such exchange without charge to such holder.
9.5 EXCHANGES BY OTHER HOLDERS. If an Indenture is entered into and
any Public Notes of the Company are issued pursuant to this Article IX, each
remaining registered holder of Notes shall be entitled to exchange any of the
Notes held by it for Public Notes issued under such Indenture in accordance
with the terms of this Article IX as if such holder were a Requesting Holder in
the first Registration effected pursuant to Article III; provided, however, that
such holder shall have requested registration of such Public Notes in
accordance with Section 3.1.
ARTICLE X
RULE 144
If the Company shall have filed a registration statement pursuant to
the requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company covenants that
it will file the reports required to be filed by it under the Securities Act
and the Exchange Act (or, if the Company is not required to file such reports,
it will, upon the request of any registered holder of Notes, Exchange Notes or
Public Notes, make publicly available other information), and it will take such
further action as any registered holder of Notes, Exchange Notes or Public
Notes may reasonably request, all to the extent required from time to time to
enable such holder to sell its Notes, Exchange Notes or Public Notes without
registration under the Securities Act in compliance with (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any registered holder of Notes, Exchange Notes or Public Notes, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
ARTICLE XI
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No holder of Registrable Notes may participate in any underwritten
registration
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hereunder unless such holder (i) agrees to sell such holder's securities on the
basis provided in any underwriting arrangements approved by the person or
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, escrow agreements and other documents reasonably required under the
terms of such underwriting arrangements and consistent with the provisions of
this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 NO INCONSISTENT AGREEMENTS.
The Company will not hereafter enter into any agreement which is
inconsistent with, or would otherwise restrict the performance by the Company
of, its obligations hereunder.
12.2 SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement was not performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy that may be available to any
of them at law or equity; provided, however, that each of the parties hereto
agrees to provide the other parties hereto with written notice at least two
business days prior to filing any motion or other pleading seeking a temporary
restraining order, a temporary or permanent injunction, specific performance,
or any other equitable remedy and to give the other parties hereto and their
counsel a reasonable opportunity to attend and participate in any judicial or
administrative hearing or other proceeding held to adjudicate or rule upon any
such motion or pleading.
12.3 AMENDMENTS AND WAIVERS.
(a) Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement will be effective against the Company
or any holder of Notes, Exchange Notes or Public Notes, unless such
modification, amendment or waiver is approved in writing by the Company, or by
either such holder or the registered holders of Notes, Exchange Notes and
Public Notes representing a majority of the aggregate principal amount of
Notes, Exchange Notes and Public Notes then outstanding, as the case may be.
Each holder of any Notes, Exchange Notes or Public Notes at the time or
thereafter outstanding shall be bound by each modification, amendment or waiver
authorized pursuant to this Section 12.3, whether or not such Notes, Exchange
Notes or Public Notes shall have been marked to indicate such modification,
amendment or waiver.
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(b) The failure of any party hereto to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of provisions and will
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
12.4 NOMINEES FOR BENEFICIAL OWNERS.
In the event that any Notes, Exchange Notes or Public Notes are held by a
nominee for the beneficial owner thereof, the beneficial owner thereof may, at
its election by written notice to the Company effective upon receipt by the
Company, be treated as the holder of such Notes, Exchange Notes or Public Notes
for purposes of any request or other action by any holder or holders of Notes,
Exchange Notes or Public Notes pursuant to this Agreement or any determination
of any number or percentage of aggregate principal amount of Notes, Exchange
Notes or Public Notes held by any holder or holders of Notes, Exchange Notes or
Public Notes contemplated by this Agreement. If the beneficial owner of any
Notes, Exchange Notes or Public Notes makes such election, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Notes, Exchange Notes or Public Notes. Prior to receipt by
the Company of written notice contemplated hereby, any action taken by any such
nominee shall be binding upon each related beneficial owner.
12.5 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
In addition, and whether or not any express assignment shall have been made,
the provisions of this Agreement which are binding upon or for the benefit of
the parties hereto other than the Company shall also be binding upon, for the
benefit of and enforceable by or against any subsequent holder of any Notes,
Exchange Notes or Public Notes, as applicable, subject to all the provisions
herein, including those respecting the minimum percentages of aggregate
principal amount of notes required in order to be entitled to certain rights, or
to take certain actions, provided for herein.
12.6 NOTICES.
All notices, requests and other communications hereunder shall be in
writing and shall be delivered by hand, by express courier service, by
registered or certified mail, return receipt requested, postage prepaid, by
first-class mail or by telecopy, addressed, (a) if to any holder of Notes,
Exchange Notes or Public Notes, at the following address or at such other
address as such holder shall have furnished to the Company in writing:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Facsimile No.: 313-374-6135
Attn: President
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with a copy to:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Facsimile No.: 313-374-6135
Attn: General Counsel
or (b) to the Company, at the following address or at such other address as the
Company shall have furnished to the registered holders of Notes and the Trustee
(if any) in writing:
FURNISHINGS INTERNATIONAL INC.
1300 National Highway
Thomasville, North Carolina 27360
Facsimile No.: 910-476-4551
Attn: President
with copies to:
FURNISHINGS INTERNATIONAL INC.
1300 National Highway
Thomasville, North Carolina 27360
Facsimile No.: 910-476-4551
Attn: General Counsel
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner
Any notice so addressed and mailed or delivered shall be deemed
to be given (i) one Business Day after being consigned to an express courier
service, (ii) five Business Days after being mailed by registered, certified or
first-class mail, (iii) on the same Business Day, if by hand and (iv) when
received, if by telecopy.
12.7 HEADINGS; CERTAIN CONVENTIONS.
----------------------------
The headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not define, limit or
otherwise affect any of the terms or provisions hereof. Unless the context
otherwise expressly requires, all references herein to Articles, Sections and
Annexes are to Articles, Sections and Annexes of this Agreement. The words
"herein," "hereunder" and "hereof" and words of similar import refer to this
Agreement as a whole and not to any particular Section or provision. The words
"include," "includes"
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and "including" shall be deemed to be followed by the phrase "without
limitation".
12.8 GENDER.
------
Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "she" or "hers" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be construed as though in the singular in all cases
where they would so apply.
12.9 INVALID PROVISIONS.
------------------
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
12.10 GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of New York without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
12.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK
AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF
THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR
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CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS SPECIFIED IN THIS
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY PARTY
HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO
BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES HERETO IN
SUCH OTHER JURISDICTIONS, AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY ANY
APPLICABLE LAW.
12.12 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY
OTHER PARTY HERETO. THE SCOPE OF THIS WAIVE IS INTENDED TO BE ALL ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHT FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
12.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FURNISHINGS INTERNATIONAL INC.
By: Robert L. George
--------------------------
Name: Robert L. George
Title: Executive Vice President
MASCO CORPORATION
By: John R. Leekley
-------------------------
Name: John R. Leekley
Title: Vice President
<PAGE> 80
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Secuities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180
days after the Expiration Date (as defined herein), it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
<PAGE> 81
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such Notes acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
<PAGE> 82
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until [insert date], all dealers effecting
transactions in the Exchange Notes may be required to deliver a prospectus.(1)
The Company will not receive any proceeds form any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Registered Exchange Offer may be sold form time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Registered Exchange Offer and any broker or
dealer that participates in distribution of such Exchange Notes may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Notes and any commission or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the registered holders of the Notes) other than commissions of concessions
of any brokers or dealers and will indemnify the registered holders of the Notes
(including any broker-dealer) against certain liabilities, including liabilities
under the Securities Act.
- --------------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer prospectus.
<PAGE> 83
ANNEX D
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _________________________________________________
Address:_______________________________________________
_______________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE> 1
EXHIBIT 11
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED PER SHARE EARNINGS (LOSS)
(INCLUDING EFFECT OF FULL DILUTION)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT AS INDICATED)
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
Shares for computation of primary and fully diluted earnings
per share:
Weighted average number of shares outstanding.......... 160,600 159,600 158,800
Common stock equivalents:
Convertible debentures(1)............................ 4,200 -- 4,200
Stock options(1)..................................... 1,300 -- 800
-------- --------- --------
Total shares for primary earnings per share
computation.................................. 166,100 159,600 163,800
======== ========= ========
Income from continuing operations........................... $295,200 $ 200,050 $172,710
Add back of debenture interest, net(1)...................... 5,880 -- 5,880
-------- --------- --------
Earnings from continuing operations per common share, as
adjusted.................................................. 301,080 200,050 178,590
Discontinued operations:
Income from operations.................................... -- 8,270 20,990
Loss on disposition, net.................................. -- (650,000) --
-------- --------- --------
Earnings (loss) attributable to common stock.... $301,080 $(441,680) $199,580
======== ========= ========
Primary and fully diluted earnings (loss) per common share:
Continuing operations..................................... $1.81 $ 1.25 $1.09
Discontinued operations:
Income from operations................................. -- .05 .13
Loss on disposition, net............................... -- (4.07) --
-------- --------- --------
Primary and fully diluted earnings per share
(in dollar amounts).......................... $1.81 $(2.77) $1.22
======== ========= ========
Earnings per share as reported.................. $1.84 $(2.77) $1.22
======== ========= ========
</TABLE>
(1) Common stock equivalents have an anti-dilutive effect in 1995 and dilutive
influences are less than 3% in 1996 and 1994.
<PAGE> 1
EXHIBIT 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
YEAR ENDED DECEMBER 31
--------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS BEFORE INCOME TAXES AND FIXED
CHARGES:
Income from continuing operations
before income taxes................ $502,700 $351,790 $292,830 $349,190 $296,020
Deduct/add equity in undistributed
(earnings) loss of
fifty-percent-or-less-owned
companies.......................... (12,310) (17,770) 106,200 (13,750) (13,210)
Add interest on indebtedness, net.... 74,790 73,400 60,360 62,860 57,190
Add amortization of debt expense..... 1,400 1,930 2,220 2,650 2,710
Add estimated interest factor for
rentals............................ 6,150 4,970 4,220 3,190 3,290
-------- -------- -------- -------- --------
Earnings before income taxes and
fixed charges...................... $572,730 $414,320 $465,830 $404,140 $346,000
======== ======== ======== ======== ========
FIXED CHARGES:
Interest on indebtedness............. $ 77,250 $ 76,460 $ 63,220 $ 63,600 $ 69,890
Amortization of debt expense......... 1,400 1,930 2,220 2,650 2,710
Estimated interest factor for
rentals............................ 6,150 4,970 4,220 3,190 3,290
-------- -------- -------- -------- --------
$ 84,800 $ 83,360 $ 69,660 $ 69,440 $ 75,890
======== ======== ======== ======== ========
Ratio of earnings to fixed charges........ 6.8 5.0 6.7 5.8 4.6
======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
Exhibit 21
MASCO CORPORATION
(A DELAWARE CORPORATION)
Subsidiaries as of March 15, 1997
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
Name or Organization
---- ---------------
<S> <C> <C>
Alsons Corporation Michigan
American Metal Products Company Delaware
A.M.P. Industrial Mexicana S.A. de C.V. Mexico
American Shower & Bath Corporation Michigan
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 Decorative Coatings, Inc. Delaware
Baldwin Hardware Service Corp. Delaware
Brass-Craft Manufacturing Company Michigan
Brass-Craft Holding Company Michigan
Brass-Craft Canada, Ltd. Canada
Brass-Craft Western Company Texas
Plumbers Quality Tool Mfg. Co., Inc. Michigan
Tempered Products, Inc. Taiwan
Thomas Mfg. Company Inc. of Thomasville North Carolina
Brush Creek Ranch II, Inc. Missouri
Cal-Style Furniture Mfg. Co. California
Composite Products Inc. Delaware
</TABLE>
1
<PAGE> 2
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
Name or Organization
---- ---------------
<S> <C>
Delta Faucet Services International, Inc. Delaware
Epic Fine Arts Company Delaware
Beacon Hill Fine Art Corporation New York
Morning Star Gallery, Ltd. New Mexico
Fieldstone Cabinetry, Inc. Iowa
Fieldstone Transportation Company Iowa
Flint & Walling Industries, Inc. Delaware
Franklin Brass Manufacturing Co. Delaware
Gale Industries, Inc. Florida
Gamco Products Company Delaware
Gibralter Lock Co. Ltd. Canada
Intro Europe, B.V. Netherlands
KraftMaid Cabinetry, Inc. Ohio
KraftMaid Trucking, Inc. Ohio
Landex, Inc. Michigan
Landex of Wisconsin, Inc. Wisconsin
The Marvel Group, Inc. Delaware
Masco Capital Corporation Delaware
Masco Holdings Limited Delaware
Masco Building Products Corp. Delaware
Computerized Security Systems, Inc. Michigan
Computerized Security Systems of Canada, Inc Canada
Computerized Security Systems (Asia) Limited Asia
Thermador Corporation California
Weiser Lock Corporation California
Winfield Locks, Inc. California
Masco Corporation of Indiana Indiana
Damixa A/S Denmark
Damixa AB Sweden
N.V. Damixa S.A. Belgium
Mix-A-Mix A/S Denmark
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
Name or Organization
---- ---------------
<S> <C>
DAMIXA Armaturen GmbH Germany
Delta Faucet Company of Tennessee Delaware
Delta International Services, Inc. Delaware
Delta Faucet of Oklahoma, Inc. Delaware
Hydrotech, Inc. Michigan
Studio Technico Sviluppo E. Richerche Srl Italy
Masco Canada Limited Ontario
3072002 Ontario Limited Ontario
Masco Corporation Limited United Kingdom
Berglen Furniture Limited United Kingdom
Berglen Group Limited United Kingdom
Cebu Limited United Kingdom
Damixa Ltd. United Kingdom
Kiloheat Limited United Kingdom
Moore Group Limited England
George A. Moore & Co. Ltd. England
George A. Moore (Properties) Limited England
Moore Furniture Group Limited England
George A. Moore (Properties) Limited England
KBB Properties Limited England
KBB Limited England
Masterpiece Kitchens and Bathrooms Limited England
Moore International Limited England
Sheridan Home Improvement Products Limited England
NewTeam Management Services Limited Jersey
NewTeam Electronics Ltd. United Kingdom
NewTeam Export (Jersey) Limited Jersey
NewTeam France SARL France
NewTeam Ltd. United Kingdom
NewTeam Plastics Ltd. United Kingdom
Chromeco Ltd. United Kingdom
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
Name or Organization
---- ---------------
<S> <C>
Harplace Ltd. United Kingdom
Showerforce Ltd. United Kingdom
Weiser (U.K.) Ltd. United Kingdom
Masco GmbH - 98% Germany
Alfred Reinecke GmbH & Co. KG Germany
Alma Kuchen Aloys Meyer Gmbh Germany
E Missel GmbH & Co. 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 Belgium NV/SA Belgium
Hueppe Gesellschaft mbh Austria
Hueppe GmbH & Co. Germany
Hueppe Sarl France
Intermart Insaat Malzemeleri Sanayi ve Ticaret AS Turkey
Jung-Pumpen GmbH Germany
Jung-Pumpen Handelsgesellschaft mbh Austria
RESER Srl Spain
Teknomar Insaat Malzemeleri Sanayi ve Ticaret AS Turkey
Masco Europe, Inc. Delaware
N.V. Weiser Europe, S.A. Belgium
Rubinetterie Mariani S.A. Italy
Weiser, Inc. British Columbia
Masco de Puerto Rico, Inc. Puerto Rico
Masco Home Furnishings, Inc. North Carolina
Masco International Sales, Inc. Barbados
Masco International, Inc. Delaware
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
Name or Organization
---- ---------------
<S> <C>
Masco IRC, Inc. Delaware
Masco Philippines Inc. Philippines
Masco of Russia Russia
Masco Services, Inc. Delaware
Masco Training Services, Inc. Delaware
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
Norlok Hardware Ltd. Canada
Outlet Corp. Delaware
Peerless Faucet Sales Corporation Delaware
Sherle Wagner Accessories, Inc. New York
Sherle Wagner International, Inc. New York
StarMark, Inc. South Dakota
SMI Retail Corp. Delaware
StarMark of Virginia, Inc. Virginia
Vapor Technologies, Inc. Delaware
Watkins Manufacturing Corporation California
W/C Technology Corporation Delaware
Zenith Products Corporation Delaware
</TABLE>
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.
5
<PAGE> 6
MASCOTECH, INC.
(A DELAWARE CORPORATION)
Subsidiaries as of March 15, 1997
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
NAME OR ORGANIZATION
---- ---------------
<S> <C>
Arrow Specialty Company Delaware
BLD Products, Ltd. Michigan
Novo Products, Inc. Florida
Hebco Products, Inc. Ohio
International Brake Industries, Inc. Delaware
Kendallville Foundry, Inc. Delaware
Longman Enterprises, Inc. Florida
Pylon Manufacturing Corp. Delaware
W.C. McCurdy Co. Michigan
Masco Industries International Sales, Inc. Barbados
MASG Disposition, Inc. Michigan
McGuane Industries, Inc. Delaware
MascoTech Coatings, Inc. Michigan
MascoTech Edison, Inc. New Jersey
MascoTech Europe, Inc. Delaware
MascoTech European Holdings, Inc. Delaware
Glo SpA Italy
MascoTech GmbH Germany
H&B Hyprotec Technology OHG Germany
Huber & Bauer GmbH 20% Germany
Holzer GmbH & Co. Germany
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
NAME JURISDICTION OF INCORPORATION OR ORGANIZATION
<S> <C>
Holzer Limited United Kingdom
Holzer Verwaltungs GmbH Germany
Neumeyer Fliesspressen GmbH Germany
MascoTech Forming Technologies - Fort Wayne, Inc. Delaware
MascoTech Holding Company Delaware
MascoTech Industrial Components, Inc. Delaware
Huron/St. Clair Manufacturing Company Delaware
MascoTech Services, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Tubular Products, Inc. Michigan
MASX Energy Services Group, Inc. Delaware
Mr. Bracket, Inc. Delaware
NI Industries, Inc. Delaware
NI Foreign Military Sales, Inc. Delaware
NI West, Inc. California
NI Wheel, Inc. Ontario
Norris Industries, Inc. California
Plastic Form, Inc. Delaware
</TABLE>
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 trade names or other assumed names
in the conduct of their business.
<PAGE> 1
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. 33-56043, 33,53330, 33-2374, 33-53959, 33-53985 and 33-60031) and Form S-8
(Registration Nos. 2-95969, 33-28142 and 33-42229) of our report dated February
18, 1997, on our audits of the consolidated financial statements and financial
statement schedule of Masco Corporation and subsidiaries as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996,
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.
COOPERS & LYBRAND, L.L.P.
Detroit, Michigan
March 26, 1997
<PAGE> 1
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. 33-56043, 33,53330, 33-2374, 33-53959, 33-53985 and 33-60031) and Form S-8
(Registration Nos. 2-95969, 33-28142 and 33-42229) of our report dated February
28, 1997, on our audits of the consolidated financial statements and financial
statement schedule of MascoTech, Inc. and subsidiaries as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996,
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.
COOPERS & LYBRAND, L.L.P.
Detroit, Michigan
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S DECEMBER 31, 1996 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 473,730
<SECURITIES> 0
<RECEIVABLES> 484,800
<ALLOWANCES> 17900
<INVENTORY> 411,940
<CURRENT-ASSETS> 1,429,770
<PP&E> 1,474,080
<DEPRECIATION> 533,490
<TOTAL-ASSETS> 3,701,650
<CURRENT-LIABILITIES> 518,440
<BONDS> 1,236,320
0
0
<COMMON> 160,870
<OTHER-SE> 1,678,940
<TOTAL-LIABILITY-AND-EQUITY> 3,701,650
<SALES> 3,237,000
<TOTAL-REVENUES> 3,237,000
<CGS> 2,048,070
<TOTAL-COSTS> 2,048,070
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,680
<INCOME-PRETAX> 502,700
<INCOME-TAX> 207,500
<INCOME-CONTINUING> 295,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 295,200
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.81
</TABLE>
