SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
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Commission file number 1-1373
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MODINE MANUFACTURING COMPANY
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0482000
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 636-1200
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Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $0.625 par value
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(Title of Class)
An Exhibit index appears at pages 18-25 herein.
Page 1 of 207
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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
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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 ]
Approximately 53% of the outstanding shares are held by non-
affiliates. The aggregate market value of these shares was
approximately $453,683,001 based on the market price of $28.75
per share on June 17, 1997. The remaining outstanding shares are
owned or controlled by or for directors, officers, employees,
retired employees, and their families.
The number of shares outstanding of the registrant's Common
Stock, $0.625 par value, was 29,774,110 at June 17, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
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Portions of the following documents are incorporated by reference
into the parts of this Form 10-K designated to the right of the
document listed.
Incorporated Document Location in Form 10-K
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Annual Report to Shareholders for the
fiscal year ended March 31, 1997 Part I of Form 10-K
(Item 1)
Part II of Form 10-K
(Items 7, 8)
Part IV of Form 10-K
(Item 14)
1997 Definitive Proxy Statement dated
June 6, 1997 Part III of Form 10-K
(Items 10, 11, 12, 13)
<PAGE>
TABLE OF CONTENTS
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MODINE MANUFACTURING COMPANY - FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1997
10-K Pages
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Cover
Table of Contents
Part I
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Item 1 - Business
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General, Foreign and Domestic
Operations, Competitive Position,
Customer Dependence, Backlog of
Orders, Raw Materials, Patents,
Research and Development,
Environmental Matters, Employees,
Seasonal Nature of Business,
Working Capital Items 5
Item 2 - Properties 12
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Item 3 - Legal Proceedings 13
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Item 4 - Submission of Matters To A Vote of
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Security Holders 14
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Part II
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Item 5 - Market for Registrant's Common
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Equity and Related Stockholder
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Matters 14
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Item 6 - Selected Financial Data 15
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Item 7 - Management's Discussion and
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Analysis of Financial Condition
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and Results of Operations 16
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Item 8 - Financial Statements &
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Supplementary Data 16
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<PAGE>
10-K Pages
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Item 9 - Changes in and Disagreements
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with Accountants on Accounting
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and Financial Disclosure 16
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Part III
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Items 10 and 11 - Directors and Executive
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Officers of the Registrant; Executive
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Compensation 16
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Item 12 - Security Ownership of Certain
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Beneficial Owners and Management 18
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Item 13 - Certain Relationships and Related
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Transactions 18
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Part IV
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Item 14 - Exhibits, Financial Statement
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Schedules, and Reports on Form 8-K 18
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1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
Signatures 26
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<PAGE>
PART I
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ITEM 1. BUSINESS.
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General
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Throughout this Report, the terms "Modine," "the Company" and/or
"the Registrant" refer to Modine Manufacturing Company and
consolidated subsidiaries.
Modine was incorporated under the laws of the State of Wisconsin
on June 23, 1916.
Modine operates primarily in a single industry consisting of the
manufacture and sale of heat transfer equipment. This includes
heat exchangers for cooling all types of engines, transmissions,
auxiliary hydraulic equipment, air conditioning components used
in cars, trucks, farm and construction machinery and equipment,
and heating and cooling equipment for residential and commercial
building HVAC (heating, ventilating, air conditioning and
refrigeration equipment). The principal markets consist of
automobile, truck and bus manufacturers, farm implement
manufacturers, heating and cooling equipment manufacturers,
construction equipment manufacturers, construction contractors,
wholesalers of plumbing and heating equipment, radiator repair
shops, and wholesalers of auto repair parts. The Company
distributes its products through Company salesmen, through
independent manufacturer's representatives, independent warehouse
distributors, and mass merchandisers. No industry segment
information is required under Statement of Financial Accounting
Standards Board, Number 14 "Financial Reporting for Segments of a
Business Enterprise," since the Company operates predominantly in
a single industry.
Within this industry, the Company manufactures various products
as is demonstrated by the following table :
Years ended March 31
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1997 1996 1995 1994 1993
Radiators & Radiator 39% 41% 42% 45% 45%
Cores
Vehicular Condensers
& Evaporators 22% 18% 14% 12% 12%
Oil Coolers 16% 16% 16% 15% 13%
Charge Air Coolers 11% 12% 12% 11% 10%
Building HVAC 8% 8% 9% 11% 14%
Miscellaneous 4% 5% 7% 6% 6%
A world trend has been consolidation to fewer but larger
suppliers in the markets the Company serves. To serve its global
markets, Modine has established manufacturing operations in North
America, Europe, and Asia/Pacific. The Company's significant
international operations are located in the following countries:
<PAGE>
North America
The Company maintains a Canadian subsidiary, Modine of Canada,
Ltd., an Ontario company, which manufactures cores for the
automotive aftermarket, and which owned 100% of The Radman
Corporation, Ltd., a Canadian federal company which licenses
certain trademarks to automotive radiator repair shops. On
April 1, 1996 the Radman Corporation, Ltd. was amalgamated with
and into Modine of Canada, Ltd. and ceased to exist as a separate
entity as of that date.
The Company operates a subsidiary, Modine Transferencia de Calor,
S.A. de C.V., a Mexican company which manufactures, assembles,
and exports to the U.S., heat exchangers for a variety of non-
vehicular applications.
The Company operates Manufacturera Mexicana de Partes de
Automoviles, S.A. ("Mexpar"), a Mexican producer of radiators and
other automotive components for original equipment manufacturers
and the automotive aftermarket. Mexpar's manufacturing
facilities are located in Mexico City.
Europe
The Company operates in Europe through subsidiaries organized
into three business groups and two support groups. The three
business groups are:
(1) An automotive business unit which the Company
operates primarily through its subsidiary, Modine
Holding GmbH located in Filderstadt-Bernhausen,
Germany. This unit includes (a) Langerer & Reich
Automobiltechnik GmbH located in Pliezhausen, Germany,
which manufactures aluminum heat exchangers for the
passenger car market; (b) Modine Uden B.V. located in
Uden, The Netherlands, which was reopened during 1996-
97 and converted to the production of transmission and
engine oil coolers and latent heat batteries; and (c)
Austria Warmetauscher GmbH located in Berndorf,
Austria, which manufactures aluminum air conditioning
condensers and oil coolers for a number of European
automakers.
Early in fiscal 1998, another facility for the
European automotive market will begin assembly of
automotive cooling modules in Wackersdorf, Germany.
(2) A heavy-duty business unit which the Company
operates through Modine Holding GmbH. This unit
includes (a) Langerer & Reich GmbH located in
Bernhausen, Germany, which manufactures heat exchangers
for the truck, bus and industrial markets, and also
includes research and development and administrative
facilities; (b) Modine GmbH located in Neuenkirchen,
Germany, which manufactures copper/brass sheet metal
radiators for the European industrial and agricultural
market; and (c) Hungaro Langerer Gep. Kft., located in
Mezokovesd, Hungary.
<PAGE>
(3) An aftermarket business unit which the Company
operates under the aegis of the automotive business
unit, but operates primarily through its subsidiary,
NRF B.V. This unit includes (a) NRF B.V. located in
Mill, The Netherlands, which produces replacement
radiator cores, sheet metal radiators, and industrial
and marine heat exchangers; and (b) Radiadores Montana
S.A. located in Granada, Spain, which manufactures and
distributes radiators, radiator cores, oil coolers,
heaters, and air conditioning condensers and
evaporators for the automotive aftermarket and for
industrial applications.
NRF also owns subsidiaries that export products
and distribute products throughout Europe.
The two support groups are: (1) European central research
group, that is similar to Modine's Research and Development
Department in Racine, Wisconsin; and (2) a European central
administration unit, that includes the functions of I/S
(Information Services); purchasing; quality and environment; and
the accounting functions of controlling, cost accounting, and
financial accounting.
The Company operates, through Signet Systems, Inc., Signet
Systems GmbH located in Goch, Germany. Signet Systems GmbH is a
supplier of climate-control systems and components to the
automotive, truck, and off-highway vehicle markets in Europe.
In the third quarter of fiscal 1996-97, Modine purchased 41.3
percent of Constructions Mecaniques Mota, S.A. (CMM), based near
Marseilles, France, with other facilities in Aubagne, France, and
Lenta, Italy. CMM is a manufacturer of tube-bundle oil coolers
and charge-air coolers for trucks and marine engine markets,
which complements Modine's other European businesses.
The European operations are organized similarly to the way the
Company is organized in the United States, which allows Modine to
be able to better serve its markets in Europe with manufacturing
in Europe.
The Company maintains sales subsidiaries and/or offices in
Austria, England, France, Italy, Germany, and The Netherlands.
The Company also maintains stocks of goods in bulk warehouses in
Birmingham, England; Rotterdam, The Netherlands; and Bremen,
Germany as reserve inventory for certain European customers.
Asia/Pacific
The Company participates (50% interest) in a joint venture with
Nippon Light Metal, Ltd., a Japanese company. The joint venture
company, Nikkei Heat Exchanger Company, Ltd., produces automotive
heat exchangers for sale to original equipment manufacturers in
the Japanese market.
The Company established a sales subsidiary in Japan, Modine Asia
K.K., in February, 1995.
<PAGE>
In addition to normal business risks, operations outside of the
United States are subject to other risks including, but not
limited to, changing governmental laws and regulations, and
currency re-evaluations and market fluctuations.
Exports
In addition, the Company exports to foreign countries and
receives royalties from foreign licensees. Export sales as a
percentage of total sales were 11.8%, 12.9% and 13.8% for fiscal
years ended in 1997, 1996 and 1995, respectively. Estimated
after-tax earnings on export sales as a percentage of total net
earnings were 11.8%, 12.9% and 13.8% for fiscal years ended in
1997, 1996 and 1995, respectively. Royalties from foreign
licensees as a percentage of total earnings were 1.6%, 1.0% and
1.0% for the last three fiscal years, respectively.
Modine believes its international presence has positioned the
Company to profitably share in the anticipated long-term growth
of the global vehicular and industrial markets. Modine is
committed to increasing its involvement and investment in
international markets in the years ahead.
Foreign and Domestic Operations
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Financial information relating to the Company's foreign and
domestic operations, including export sales, is included in the
Company's 1997 Annual Report to Shareholders and is incorporated
herein by reference at Note 18 on Page 28 therein.
Events subsequent to the End of the Quarter
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On June 6, 1997, the Company mailed its Annual Report to
Shareholders and released its sales forecast for the upcoming
year. See Current Reports on Form 8-K at page 25 herein for
further details.
Competitive Position
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The Company competes with several manufacturers of heat transfer
products, some of which are divisions of larger companies and
some of which are independent companies. The Company also
competes for business with parts manufacturing divisions of some
of its major customers. The markets for the Company's products
are increasingly competitive and have changed significantly in
the past few years as the Company's traditional OEM customers in
the United States, faced with dramatically increased
international competition, have expanded their worldwide sourcing
of parts to better compete with lower-cost imports. These market
changes have caused the Company to experience competition from
suppliers in other parts of the world which enjoy economic
advantages such as lower labor costs, lower health care costs,
and other factors.
<PAGE>
Customer Dependence
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Ten customers accounted for approximately 40.7% of the Company's
sales in the fiscal year ended March 31, 1997. These customers,
listed alphabetically, were: BMW, Caterpillar, Chrysler Motor
Corporation, Citroen/PSA, Fiat, Ford Motor Company, John Deere,
Navistar International, Paccar, Inc. and Volkswagen. Goods are
supplied to these customers on the basis of individual purchase
orders received from them. When it is in the customer's and the
Company's best interests, the Company utilizes long-term supply
agreements to minimize investment risks and provide a proven
source of competitively priced products. There are no other
relationships between the Company and its customers.
Backlog of Orders
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While the Company has a large backlog of orders, the backlog is
not deemed significant or material; backlog historically has had
little relation to shipments. Modine's products are produced
from readily available materials such as copper, brass, steel,
and aluminum and have a relatively short manufacturing cycle.
The Company's operating units maintain their own inventories and
production schedules. Current production capacity (including
additional capacity planned to become operational this year) is
capable of handling the sales volumes expected in fiscal 1997-98.
Raw Materials
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Copper, brass, steel, aluminum, and solder, all essential to the
business, are purchased regularly from several domestic and
foreign producers. In general, the Company does not rely on any
one supplier for these materials, which are for the most part
available from numerous sources in quantities required by the
Company. The Company normally does not experience material
shortages within its operations and believes that producers'
supplies of these materials will be adequate through the end of
fiscal year 1997.
Patents
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The Company, and certain of its wholly-owned subsidiaries, own
outright or are licensed to produce products under a number of
patents and licenses. These patents and licenses, which have
been obtained over a period of years, will expire at various
times. Because the Company is involved with many product lines,
the Company believes that its business as a whole is not
materially dependent upon any particular patent or license, or
any particular group of patents or licenses. Modine considers
each of its patents, trademarks and licenses to be of value and
aggressively defends its rights throughout the world against
infringement. See also Item 3 - Legal Proceedings.
<PAGE>
Research and Development
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Company-sponsored research activities relate to the development
of new products, processes, or services, or the improvement of
existing products, processes, and services. Expenditures in
fiscal 1996-97 amounted to $16,877,000; in fiscal 1995-96
amounted to $14,256,000; and in fiscal 1994-95 amounted to
approximately $10,907,000. There were no significant
expenditures on research activities which were customer-
sponsored. Over the course of the last few years, the Company
has become involved in a number of industry or university
sponsored research organizations. These consortia conduct
research and provide data on technical topics deemed to be of
interest to the Company for practical applications in the markets
the Company serves. The research and data developed is generally
shared among the member companies. In addition, to achieve
efficiencies and lower developmental costs, Modine's research and
engineering groups work closely with Modine's customers on
special projects and systems designs.
Environmental Matters
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Modine has a long-standing corporate environmental policy which
demonstrates the Company's commitment to the environment and
compliance with all environmental laws and regulations. Modine
continues to appraise environmental issues and regulatory
compliance with a proactive approach. The benefits realized from
the Company's environmental programs include conserved resources,
more efficient manufacturing processes, minimized liability
exposure and reduced operational costs. Modine evaluates the
performance of the Company's environmental programs through
continuous monitoring, auditing and accounting systems. The
Company constantly examines its operations and processes to
minimize their impact on the environment. In 1996, the Company
revised its corporate waste minimization program, which
originated in 1991, to encompass all by-products of the
manufacturing process. All Modine facilities have committed to
one and five year goals for their own unique programs.
Modine accrues for environmental remediation activities relating
to past operations --- including those under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA),
often referred to as "Superfund," and under the Resource
Conservation and Recovery Act (RCRA) --- when it is probable that
a liability has been incurred and reasonable estimates can be
made. In addition, an obligation may arise when a facility is
closed or sold. These expenditures most often relate to
facilities and sites where past operations followed practices and
procedures that were considered acceptable under then-existing
regulations, but will now require investigatory and/or remedial
work to ensure sufficient protection to the environment.
Seven of the Company's manufacturing facilities currently have
been identified as requiring soil and/or groundwater remediation.
Because of the joint and several liability of former landowners,
contractual obligations, and certain state programs that provide
for partial reimbursement of certain remediation costs, it is
<PAGE>
unlikely these remediation efforts will have a material effect on
the Company's consolidated financial condition.
Although there are no currently known liabilities that might have
a material effect on the Company's consolidated net assets, the
Environmental Protection Agency ("EPA") has designated Modine as
a potentially responsible party ("PRP") for remediation of eleven
waste disposal sites. These sites are not company-owned and
allegedly contain wastes attributable to Modine from past
operations. For the eleven sites currently known, the Company's
potential liability will be significantly less than the total
site remediation because the percentage of material attributable
to Modine is relatively low ("de minimis"), there may be
insufficient documentation linking Modine to the site, and the
other PRPs have the financial resources to meet their
obligations.
Recent environmental legislation will require significant capital
equipment expenditures over the next four to five years. For the
fiscal year ending March 31, 1997 capital expenditures related to
environmental projects were $0.6 million. These environmental
expenditures include capital outlays to retrofit existing
facilities, as well as those associated with new facilities and
other compliance costs. Modine currently expects expenditures
for environmentally related capital projects to be about $3.5
million in 1997-98. A major portion of these additional costs
can be attributed to wastewater treatment system upgrades at two
Modine manufacturing facilities. These upgrades are necessary to
accommodate an increase in wastewater generation due to expanded
production and to insure compliance with wastewater discharge
permits.
Environmental expenses charged to current operations, including
remediation costs, totaled about $2.3 million for the fiscal year
ending March 31, 1997. These expenses include: operation and
maintenance costs for solid-waste treatment, storage, and
disposal; for costs incurred in conducting environmental-
compliance activities; and for other matters. Operating expenses
of some facilities may increase during fiscal year 1997-98
because of such charges but the competitive position of the
Company is not expected to change materially.
Although environmental costs are substantial, the Company has no
reason to believe such costs vary significantly from similar
costs incurred by other companies engaged in similar businesses.
Employees
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The number of persons employed by the Company at March 31, 1997,
was approximately 7,900.
Seasonal Nature of Business
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In recent years the Company's business has become more continuous
and less seasonal. However, a degree of seasonality may still be
experienced since the Aftermarket, Commercial Products, Heating,
and Signet Systems Divisions are affected by weather patterns,
<PAGE>
constructions starts, and other factors. Sales to original
equipment manufacturers are dependent upon the demand for new
vehicles and equipment. The following quarterly net sales detail
illustrates the degree of fluctuation for the past five years:
Fiscal Fiscal
Year First Second Third Fourth Year
Ended Quarter Quarter Quarter Quarter Total
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March 31
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($ In Thousands)
1997 $248,514 $254,224 $252,972 $243,336 $999,046
1996 239,216 254,292 252,817 244,168 990,493
1995 208,436 221,760 240,505 242,309 913,010
1994 147,171 156,964 172,351 193,067 669,553
1993 133,817 144,603 146,591 145,828 570,839
Five-year $195,431 $206,369 $213,047 $213,741 $828,588
Average
Percent 23% 25% 26% 26% 100%
of Year
Working Capital Items
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The Company's products for the original equipment market are
manufactured on an as ordered basis. Therefore, large
inventories of such products are not necessary, nor is the amount
of products returned significant. In the HVAC and aftermarket
areas, due to the distribution systems and seasonal sales
programs, varying levels of finished goods inventory are
necessary. This inventory is spread throughout the distribution
systems. In these areas, in general, the industry and the
Company make use of extended terms of payment for customers on a
limited and/or seasonal basis.
ITEM 2. PROPERTIES.
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The Company's general offices, along with laboratory,
experimental and tooling facilities, are maintained in Racine,
Wisconsin. Additional technical support functions are located in
Harrodsburg, Kentucky and Bernhausen, Germany. Almost all of the
Company's manufacturing and larger distribution centers are owned
outright. A few manufacturing facilities and numerous regional
sales and service centers, distribution centers and offices are
occupied under various lease arrangements.
In December 1996, Modine announced that it plans to expand its
existing testing capabilities in Racine, Wisconsin. The Company
will invest approximately $32 million over two and one-half years
in this project, which will include a climatic vehicular wind
tunnel, a test vehicle preparation site, and incorporation of the
existing vehicular wind tunnel into the new structure.
<PAGE>
The Company's facilities, on a geographic basis, are as follows:
Type of North Asia/
Facility America Europe Pacific Total
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Manufacturing 21 11 32
Distribution 3 1 4
Sales & Service
Centers/Offices 14 15 1 30
Joint Ventures 3 1 4
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Total 38 30 2 70
Total square footage of the 70 facilities is approximately
7,327,000 square feet.
The Company currently uses its facilities for the purposes as
noted above.
The Company's facilities, in general, are well maintained and
conform to the sales, distribution, or manufacturing operations
for which they are being used, and their productive capacity is,
from time to time, adjusted and expanded as necessitated by
product market considerations and customer growth.
ITEM 3. LEGAL PROCEEDINGS.
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In the normal course of business, the Company and its
subsidiaries are named as defendants in various lawsuits and
enforcement proceedings by private parties, the Occupational
Safety and Health Administration, the Environmental Protection
Agency, other governmental agencies, and others in which claims,
such as personal injury, property damage, or antitrust and trade
regulation issues, are asserted against the Company. While the
outcome of these proceedings is uncertain, in the opinion of the
Company's management and counsel, any liabilities that may result
from such proceedings are not reasonably likely to have a
material effect on the Company's liquidity, financial condition
or results of operations. Many of the pending damage claims are
covered by insurance and, in addition, the Company from time to
time establishes reserves for uninsured liabilities.
The Mitsubishi and Showa Litigation
-----------------------------------
In November 1991, the Company filed a lawsuit against Mitsubishi
Motor Sales of America, Inc., and Showa Aluminum Corporation,
alleging infringement of the Company's patent on parallel-flow
air-conditioning condensers. The suit seeks an injunction to
prohibit continued infringement, an accounting for damages, a
trebling of such damages for willful infringement, and
reimbursement of attorneys' fees. In December 1991, the Company
submitted a complaint to the U.S. International Trade Commission
(ITC) requesting that the ITC ban the import and sale of parallel-
<PAGE>
flow air-conditioning condensers and systems or vehicles that
contain them, which are the subject of the aforementioned
lawsuit. In July 1993, the ITC reversed an earlier ruling by a
hearing officer and upheld, as valid and enforceable, the
Company's basic patent on parallel-flow air-conditioning
condensers. The ITC also ruled that specific condensers from the
two Japanese companies did not infringe the Company's patent.
Each of the parties appealed, to the U.S. Court of Appeals for
the Federal Circuit, the portion of the ITC opinion adverse to
them. In February 1996, the U.S. Court of Appeals for the
Federal Circuit, upheld the patent as valid and enforceable and
remanded the case to the ITC for a determination with respect to
Showa infringement. In July of 1994, Showa filed a lawsuit
against the Company alleging infringement by the Company of
certain Showa patents pertaining to condensers. (In June 1995,
the Company filed a motion for partial summary judgment against
such lawsuit). In December of 1994, the Company filed another
lawsuit against Mitsubishi and Showa pertaining to a newly issued
patent on parallel-flow air-conditioning condensers. Both 1994
suits have been stayed pending the outcome of re-examination in
the U.S. Patent Office of the patents involved. All legal and
court costs associated with these cases have been expensed as
they were incurred.
Other previously reported legal proceedings have been settled or
the issues resolved so as to not merit further reporting.
Under the rules of the Securities and Exchange Commission,
certain environmental proceedings are not deemed to be ordinary
or routine proceedings incidental to the Company's business and
are required to be reported in the Company's annual and/or
quarterly reports. The Company is not currently a party to any
such proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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Omitted as not applicable.
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
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STOCKHOLDER MATTERS.
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The Company's Common Stock is quoted on the National Association
of Securities Dealers' Automated Quotation system ("NASDAQ") as a
National Market issue. The Company's trading symbol is "MODI."
The table below shows the range of high and low bid information
for the Company's Common Stock for fiscal years 1996-97 and
1995-96. As of April 1, 1997, shareholders of record numbered
approximately 6,157; it is estimated that beneficial owners
numbered at least 13,000.
<PAGE>
1996-97 1995-96
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Quarter High Low Dividends High Low Dividends
First $29.75 $24.50 $.17 $39.75 $31.50 $.15
Second 28.00 25.00 .17 40.50 28.75 .15
Third 27.25 23.75 .17 32.00 24.00 .15
Fourth 29.75 24.50 .17 26.50 22.50 .15
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TOTAL $.68 $.60
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Certain of the Company's loan agreements limit the use of retained
earnings for the payment of cash dividends and the acquisition of
treasury stock. Under the most restrictive, $145,950,000 was
available for these purposes at March 31, 1997. (However, these
restricted payments may not exceed $30,000,000 in any fiscal year.)
In October 1986, the Company adopted a shareholder rights plan and
issued one right for each share of common stock. The rights are not
currently exercisable but will become exercisable 10 days after a
shareholder has acquired 20 percent or more, or commenced a tender or
exchange offer for 30 percent or more, of the Company's common stock.
Each right will initially entitle the holder to purchase a unit of 1/100
Preferred Series A Participating Stock. During fiscal 1996-1997, the
Company amended the Plan increasing the price from $21.25 to $95.00 per
unit. In the event of certain mergers, sales of assets, or self-dealing
transactions involving a 20 percent or more shareholder, each right not
owned by such 20 percent or more shareholder will be modified so that it
will then be exercisable for common stock having a market value of twice
the exercise price of the right. The rights are redeemable in whole by
the Company, at a price of $0.0125 per right, at any time before 20
percent or more of the Company's common stock has been acquired. On
January 18, 1995, the Board of Directors of the Company authorized an
amendment to the Rights Agreement by extending the final expiration date
of the Rights from October 27, 1996 to October 27, 2006. Accordingly,
the Rights expire on October 27, 2006, unless previously redeemed.
ITEM 6. SELECTED FINANCIAL DATA.
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Fiscal Year ended March 31
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1997 1996 1995 1994 1993
Sales (in
thousands) $999,046 $990,493 $913,010 $669,553 $570,839
Net earnings
(in thousands) 63,763 61,399 68,442 43,990*** 19,987**
Total assets
(in thousands) 694,955 671,836 590,187 509,981 405,187
Long-term debt
(in thousands) 85,197 87,809 62,220 77,646 52,350
Dividends per share* .68 .60 .52 .46 .42
Net earnings per
share* 2.10 2.02 2.24 1.44*** .66**
* Adjusted for stock splits and stock dividends.
<PAGE>
** Includes recognition of an accounting change from the
adoption of FAS 106, resulting in a one-time after-tax
expense of $13,700,000, or $.46 per share.
***Includes recognition of an accounting change from the
adoption of FAS 109, resulting in a one-time after-tax
benefit of $899,000, or $.03 per share.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------ -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
-----------------------------------
Certain information required hereunder is incorporated by
reference from the Company's 1996-97 Annual Report to
Shareholders, pages 4, 7, 8, 11, 12, 13, 14, 15, 16 and 18,
attached as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------ -------------------------------------------
The report of Coopers & Lybrand L.L.P. dated May 1, 1997, the
Consolidated Statements of Earnings, and the related Consolidated
Balance Sheets, Cash Flows, Shareholders' Investment, and Notes
to Consolidated Financial Statements, appearing on pages 15, 17,
19, 20, and 21-29 of the Company's 1996-97 Annual Report to
Shareholders are incorporated herein by reference. With the
exception of the aforementioned information, no other data
appearing in the 1996-97 Annual Report to Shareholders is deemed
to be filed as part of this Annual Report on Form 10-K.
Individual financial statements of the Registrant are omitted
because the Registrant is primarily an operating company, and the
subsidiaries included in the consolidated financial statements
are wholly-owned.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ------ ------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE.
-----------------------------------
There were no disagreements on accounting or financial
disclosures between the Company and its auditors.
PART III
--------
ITEMS 10 and 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE
- --------------- ---------------------------------------
REGISTRANT; EXECUTIVE COMPENSATION.
----------------------------------
The information about directors and executive officers and
executive compensation on pages 2 - 4 and pages 8, 9, 12, and 13,
of the Company's definitive Proxy Statement dated June 6, 1997
under the headings "Election of Directors", "Nominees to be
Elected," "Directors Continuing in Service," and "Executive
<PAGE>
Compensation" attached to this report is incorporated herein by
reference, but excluding the Officer Nomination and Compensation
Committee Report on Executive Compensation and the Performance
Graph on pages 10 - 12.
Executive Officers of Registrant
Officer
Name Age Position Since
- ---- --- -------- -------
R. T. Savage 58 Chairman and Chief Executive 1981
Officer
D. R. Johnson 55 President and Chief Operating 1988
Officer
W. E. Pavlick 63 Senior Vice President, General
Counsel and Secretary 1979
V. S. Frangopoulos 61 Group Vice President, Off-Highway 1981
Products
M. G. Baker 57 Group Vice President, Distributed 1987
Products
L. D. Howard 53 Group Vice President, Europe 1991
D. B. Rayburn 49 Group Vice President, Highway 1991
Products
J. H. Firestone 59 Vice President, Quality & 1990
Environment
J. J. Hankey 47 Vice President and General Manager,
Commercial Products Division 1992
R. L. Hetrick 55 Vice President, Human Resources 1989
R. W. Possehl 52 Vice President, Administration 1985
A. D. Reid 55 Vice President, Finance and Chief
Financial Officer 1985
A. C. De Vuono 48 Vice President, Technical Services 1996
R. S. Bullmore 47 Corporate Controller 1983
R. M. Gunnerson 48 Treasurer 1977
D. R. Zakos 43 Associate General Counsel and
Assistant Secretary 1985
There are no family relationships among the executive officers
and directors. All of the above officers have been employed by
Modine in various capacities during the last five years, except
A. C. DeVuono. Mr. DeVuono joined Modine on March 4, 1996, as
Director, Technical Services. He was promoted to Vice President
Technical Services in October, 1996. Before joining Modine, he
was a staff scientist at the Lawrence Berkeley National
Laboratory of the University of California. Prior to that, he
spent 10 years with Battelle Memorial Institute in Columbus,
Ohio, as a principal research scientist, and also has previous
affiliations with the teaching faculties of Ohio State University
and the University of Illinois. There are no arrangements or
understandings between any of the above officers and any other
person pursuant to which he was elected an officer of Modine.
Officers are elected annually at the first meeting of the Board
of Directors after the Annual Meeting of Shareholders. Mr.
Savage and Mr. Johnson have employment agreements with the
Company.
As of February 26, 1997, the Company entered into change-in-
control agreements (the "Change-in-Control Agreements") with
<PAGE>
other key employees (except with Messrs. Savage and Johnson).
The Change-in-Control Agreements provide a severance payment to
the executive if the Company terminates the executive's
employment or the executive voluntarily terminates the
executive's employment within ninety days after a "Pre-Condition"
has occurred (as that term is defined in the Change-in-Control
Agreements). Each executive officer (except Messrs. Savage and
Johnson) is eligible to receive twenty-four months' annual base
compensation and a bonus amount as defined in the Change-in-
Control Agreements, plus applicable benefits and credited service
for pension purposes for the twenty-four month period.
The Company's stock option and stock award plans contain certain
provisions relating to change-in-control or other specified
transactions that may, if authorized by the Officer Nomination
and Compensation Committee of the board, accelerate or otherwise
release shares granted or awarded under those plans.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- ------- ---------------------------------------------------
MANAGEMENT.
----------
The information relating to stock ownership on pages 5 - 7 of the
Company's definitive Proxy Statement dated June 6, 1997 under the
headings "Principal Shareholders and Share Ownership of Directors
and Executive Officers, "Principal Shareholders," and "Securities
Owned by Management" attached to this report is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ------- ----------------------------------------------
The information required by this item is incorporated by
reference from the Company's definitive Proxy Statement dated
June 6, 1997 on page 15 under the heading "Transactions" attached
to this report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ------- -------------------------------------------------------
FORM 8-K.
--------
(a) The following documents are filed as part of this Report:
Page in
Annual Report*
-------------
(1) Financial Statements:
Consolidated Statements of Earnings for the
years ended March 31, 1997, 1996, and 1995 15
<PAGE>
Page in
Annual Report*
-------------
Consolidated Balance Sheets at March 31, 1997
and 1996 17
Consolidated Statements of Cash Flows for the
years ended March 31, 1997, 1996, and 1995 19
Consolidated Statements of Shareholders'
Investment for the years ended March 31,
1997, 1996, and 1995 20
Notes to Consolidated Financial Statements 21 - 28
Independent Auditors' Report 29
* Incorporated by reference from the indicated
pages of the 1996-97 Annual Report to Shareholders
Page in
Form 10-K
---------
(2) Financial Statement Schedules:
Report of Independent Accountants on
Financial Statement Schedules for the
three years ended March 31, 1997 28
Schedule II - Valuation and Qualifying
Accounts for the years ended March 31,
1997, 1996 and 1995 201
(3) Consent of Independent Accountants 182
(4) Exhibit Index 19
(b) All other schedules have been omitted as they are not
applicable, not required, or because the required information is
included in the financial statements.
The following exhibits are attached for information only unless
specifically incorporated by reference in this Report:
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
2 Not applicable.
3(a) Restated Articles of Incorporation (as
amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1994).
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
3(b) Restated By-Laws (as amended) (filed by
reference to the Registrant's Quarterly
Report on Form 10-Q dated September 26, 1996).
4(a) Specimen Uniform Denomination Stock
Certificate of the Registrant (filed by
reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 1993).
*4(b) Rights Agreement dated as of October 16,
1986 between the Registrant and First
Chicago Trust Company of New York (Rights
Agent) 29
4(b)(i) Rights Agreement Amendment No. 1 dated
as of January 18, 1995 between the
Registrant and First Chicago Trust
Company of New York (Rights Agent)
(filed by reference to the exhibit
contained within the Registrant's
Current Report on Form 8-K dated
January 13, 1995.)
4(b)(ii) Rights Agreement Amendment No. 2 dated
as of January 18, 1995 between the
Registrant and First Chicago Trust
Company of New York (Rights Agent)
(filed by reference to the exhibit
contained within the Registrant's
Current Report on Form 8-K dated
January 13, 1995.)
4(b)(iii) Rights Agreement Amendment No. 3
dated as of October 15, 1996, between
the Registrant and First Chicago Trust
Company of New York (Rights Agent)
(filed by reference to the exhibit
contained within the Registrant's
Quarterly Report on Form 10-Q dated
December 26, 1996.)
Note: The amount of long-term debt authorized
----
under any instrument defining the rights of
holders of long-term debt of the Registrant,
other than as noted above, does not exceed ten
percent of the total assets of the Registrant
and its subsidiaries on a consolidated basis.
Therefore, no such instruments are required to
be filed as exhibits to this Form 10-K. The
Registrant agrees to furnish copies of such
instruments to the Commission upon request.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
9 Not applicable.
*10(a) Director Emeritus Retirement Plan
(effective April 1, 1992). 83
10(b) 1978 Incentive Stock Plan (as amended)
(filed by reference to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended March 31, 1993).
*10(c) Employment agreement between the Registrant
and R. T. Savage. 98
10(c)(i) Employment agreement between the Registrant
and D. R. Johnson (filed by reference to
the Registrant's Quarterly Report on Form
10-Q dated November 1, 1996).
*10(d) 1985 Incentive Stock Plan (as amended). 123
10(e) 1985 Stock Option Plan for Non-Employee
Directors (as amended) (filed by reference
to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 31,
1994).
10(f) Pension and Disability Plan For Salaried
Employees of Modine Manufacturing Company
(as amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1994).
10(g) Executive Supplemental Retirement Plan (as
amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1995).
10(h) Modine Manufacturing Company Executive
Supplemental Stock Plan (as amended)
(filed by reference to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended March 31, 1994).
*10(i) Director Emeritus Agreement between the
Registrant and Bernard H. Regenburg. 128
10(j) 1992 Stock Award Plan [a part of the
1985 Incentive Stock Plan].
Note: The 1992 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
10(k) 1993 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1993 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
10(l) 1994 Stock Award Plan [a part of the
1985 Incentive Stock Plan].
Note: The 1994 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
*10(m) 1994 Incentive Compensation Plan
(as amended). 130
*10(n) 1994 Stock Option Plan for Non-
Employee Directors (as amended). 138
10(o) 1995 Stock Award Plan [a part of the
1994 Incentive Compensation Plan]
(filed by reference to the exhibit
contained within the Registrant's
Annual Report on Form 10-K for the
fiscal year 1995).
10(p) 1995 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained
within the Registrant's Annual Report
on Form 10-K for the fiscal year 1995).
10(q) 1995 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-Employee
Directors] (filed by reference to the
exhibit contained within the Registrant's
Annual Report on Form 10-K for the fiscal
year 1995).
10(r) 1996 Stock Award Plan [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained within
the Registrant's Annual Report on Form 10-K
for the fiscal year 1996).
10(s) 1996 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan] (filed by
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
reference to the exhibit contained within
the Registrant's Annual Report on Form 10-K
for the fiscal year 1996).
10(t) 1996 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors].
Note: The 1996 Stock Option Agreement is
----
not materially different from the 1995 Non-
Employee Directors Stock Option Agreement
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1995.
10(u) 1997 Stock Award Plan [a part of the
1994 Incentive Compensation Plan].
Note: The 1997 Stock Award Plan is not
----
materially different from the 1996 Stock
Award Plan filed with the Registrant's
Annual Report on Form 10-K for the
fiscal year 1996.
10(v) 1997 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1997 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
10(w) 1997 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-Employee
Directors].
Note: The 1997 Stock Option Agreement is
----
not materially different from the 1995
Non-Employee Directors Stock Option
Agreement filed with the Registrant's
Annual Report or Form 10-K for the
fiscal year 1995.
*11 Statement re: computation of per
share earnings. 143
12 Not applicable.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
*13 1996-97 Annual Report to Shareholders.
Except for the portions of the Report
expressly incorporated by reference,
the Report is furnished solely for the
information of the Commission and is
not deemed "filed" as a part hereof. 144
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the
Registrant. 180
22 Not applicable.
*23 Consent of independent accountants. 182
24 Not applicable.
*27 Financial Data Schedule 183
28 Not applicable.
*99 Definitive Proxy Statement of the
Registrant dated June 6, 1997. Except
for the portions of the Proxy Statement
expressly incorporated by reference, the
Proxy Statement is furnished solely for
the information of the Commission and is
not deemed "filed" as a part hereof. 184
None Appendix (filed pursuant to Item
304 of Regulation S-T). 202
Note: All Exhibits filed herewith are current
----
to the end of the reporting period of the Form
10-K (unless otherwise noted).
* Filed herewith.
Current Reports on Form 8-K:
- ---------------------------
A Current Report on Form 8-K, dated June 6, 1997, was filed by
the Company. This report, filed in connection with the Company's
mailing of its Annual Report to Shareholders and its sales
forecast for the upcoming year contained therein, includes as
exhibits (1) the news release containing the sales forecast and
(2) a statement of the important factors and assumptions
regarding forward-looking statements.
<PAGE>
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.
Modine Manufacturing Company
Date: June 18, 1997 By: R. T. SAVAGE
-------------------------------
R. T. Savage, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated.
R. T. SAVAGE June 18, 1997
- ------------------------------------ -------------
R. T. Savage, Chairman, Chief Date
Executive Officer and Director
D. R. JOHNSON June 18, 1997
- ------------------------------------ -------------
D. R. Johnson, President and Date
Chief Operating Officer
A. D. REID June 18, 1997
- ------------------------------------ -------------
A. D. Reid, Vice President, Finance Date
and Chief Financial Officer
W. E. PAVLICK June 18, 1997
- ------------------------------------- -------------
W. E. Pavlick, Senior Vice President, Date
General Counsel and Secretary
R. J. DOYLE June 18, 1997
- ------------------------------------- -------------
R. J. Doyle, Director Date
T. J. GUENDEL June 18, 1997
- ------------------------------------- -------------
T. J. Guendel, Director Date
F. W. JONES June 18, 1997
- ------------------------------------- -------------
F. W. Jones, Director Date
D. J. KUESTER June 18, 1997
- ------------------------------------- -------------
D. J. Kuester, Director Date
V. L. MARTIN June 18, 1997
- ------------------------------------- -------------
V. L. Martin, Director Date
<PAGE>
G. L. NEALE June 18, 1997
- ------------------------------------- -------------
G. L. Neale, Director Date
S. W. TISDALE June 18, 1997
- ------------------------------------- -------------
S. W. Tisdale, Director Date
M. T. YONKER June 18, 1997
- ------------------------------------- -------------
M. T. Yonker, Director Date
<PAGE>
Coopers
& Lybrand L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Modine Manufacturing Company
Our report on the consolidated financial statements of Modine
Manufacturing Company and Subsidiaries has been incorporated by
reference in this Form 10-K from the 1997 annual report to
shareholders of Modine Manufacturing Company and Subsidiaries on
page 29 herein. In connection with our audits of such financial
statements, we have also audited the related financial statement
schedules listed in the index on page 19 of this Form 10-K.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND LLP
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
May 1, 1997
<PAGE>
EXHIBIT 4(b)
MODINE MANUFACTURING COMPANY
AND
THE FIRST NATIONAL BANK OF CHICAGO
Rights Agent
Rights Agreement
Dated as of October 15, 1986
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . 4
Section 3. Issue of Right Certificates . . . . . 5
Section 4. Form of Right Certificates. . . . . . 7
Section 5. Countersignature and Registration . . 7
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates . . . . . . 8
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . 9
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . 10
Section 9. Reservation and Availability of
Preferred Shares. . . . . . . . . . . 11
Section 10. Preferred Shares Record Date. . . . . 12
Section 11. Adjustment of Purchase Price,
Number of Shares or Number of
Rights. . . . . . . . . . . . . . . . 12
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . 24
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power . 25
Section 14. Fractional Rights and Fractional
Shares. . . . . . . . . . . . . . . . 26
Section 15. Rights of Action. . . . . . . . . . . 28
Section 16. Agreement of Right Holders. . . . . . 28
Section 17. Right Certificate Holder Not
Deemed a Shareholder. . . . . . . . . 29
-i-
<PAGE>
Page
Section 18. Concerning the Rights Agent . . . . . 29
Section 19. Merger or Consolidation or Change
of Name of Rights Agent . . . . . . . 30
Section 20. Duties of Rights Agent. . . . . . . . 31
Section 21. Change of Rights Agent. . . . . . . . 34
Section 22. Issuance of New Right Certificates. . 35
Section 23. Redemption. . . . . . . . . . . . . . 35
Section 24. Notice of Certain Events. . . . . . . 36
Section 25. Notices . . . . . . . . . . . . . . . 37
Section 26. Supplements and Amendments. . . . . . 38
Section 27. Successors. . . . . . . . . . . . . . 38
Section 28. Benefits of This Agreement. . . . . . 38
Section 29. Severability. . . . . . . . . . . . . 39
Section 30. Governing Law . . . . . . . . . . . . 39
Section 31. Counterparts. . . . . . . . . . . . . 39
Section 32. Descriptive Headings. . . . . . . . . 39
Signatures . . . . . . . . . . . . . . . . . . . 39
Exhibit A - Form of Resolution Establishing
Series A Participating Preferred
Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase
Preferred Shares
-ii-
<PAGE>
RIGHTS AGREEMENT
----------------
THIS AGREEMENT, dated as of October 15, 1986, between
Modine Manufacturing Company, a Wisconsin corporation (the
"Company"), and The First National Bank of Chicago, a national
banking association (the "Rights Agent");
WITNESSETH THAT:
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend of one purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding as of the close of business on October 27,
1986 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a share of Series A Participating
Preferred Stock, par value 5 cents per share, of the Company having
the rights and preferences set forth in the form of the
Resolution attached hereto as Exhibit A, upon the terms and
subject to the conditions herein set forth, and further
contemplates the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date (as such terms are defined in
Sections 3 and 7 hereof);
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
-------------------
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the
Common Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit
plan of the Company or any Subsidiary of the Company or any
entity holding Common Shares of the Company for or pursuant
to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings assigned to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "beneficial owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates directly or
indirectly has the right to vote or dispose of or
"beneficial ownership" of (as defined in Rule 13d-3 of
<PAGE>
the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement)
(except to the extent contemplated by the proviso to
Section 1(c)(ii)(B) hereof);
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not
-------- -------
be deemed the Beneficial Owner of, or to beneficially
own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
--------
however, that a Person shall not be deemed the
-------
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act
and the rules and regulations thereunder and (2) is not
also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person with which such
Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section
1(c)(ii)(B) hereof) or disposing of any securities of
the Company.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of Illinois are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall mean
5:00 P.M., Chicago time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00
P.M., Chicago time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean shares of common stock, par value $1.25
per share, of the Company. "Common Shares" when used with
reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person
<PAGE>
is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(g) "Continuing Director" shall have the meaning
assigned to it in Section 23(a) hereof.
(h) the phrase "current per share market price" shall
have the meaning assigned to it in Section 11(d) hereof.
(i) "Distribution Date" shall have the meaning
assigned to it in Section 3 hereof.
(j) The phrase "equivalent preferred shares" shall
have the meaning assigned to it in Section 11(b) hereof.
(k) "Final Expiration Date" shall have the meaning
assigned to it in Section 7 hereof.
(l) "NASDAQ" shall have the meaning assigned to it in
Section 11(d) hereof.
(m) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any successor
(by merger or otherwise) of such entity.
(n) "Preferred Shares" shall mean shares of Series A
Participating Preferred Stock, par value 5 cents per share, of
the Company.
(o) "Purchase Price" shall have the meaning assigned
to it in Section 4 hereof.
(p) "Redemption Date" shall have the meaning assigned
to it in Section 7 hereof.
(q) "Redemption Price" shall have the meaning assigned
to it in Section 23 hereof.
(r) "Right Certificate" shall have the meaning
assigned to it in Section 3 hereof.
(s) "Share Exchange" shall have the meaning assigned
to it in Section 11(a)(ii)(A) hereof.
(t) "Shares Acquisition Date" shall mean the first
date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such.
(u) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the
voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
(v) "Summary of Rights" shall have the meaning
assigned to it in Section 3(b) hereof.
(w) "Trading Day" shall have the meaning assigned to
it in Section 11(d) hereof.
<PAGE>
Section 2. Appointment of Rights Agent. The Company
---------------------------
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of the Common Shares of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-
Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
---------------------------
(a) Until the earlier of the close of business on (i)
the tenth day after the Shares Acquisition Date or (ii) the tenth
day after the date of the commencement of, or first public
announcement of the intent of any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which
would result in beneficial ownership by a Person of 30% or more
of the outstanding Common Shares of the Company (including any
such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earliest of such dates being
herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Shares of the
Company registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the Rights will be
transferable only in connection with the transfer of such Common
Shares. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign for the purposes of authentication only, and the
Company will send or cause to be sent (and the Rights Agent will,
if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares of the Company as of
the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each Common Share
of the Company so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
to Purchase Preferred Shares, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of its Common Shares
as of the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common
Shares of the Company outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof.
Until the Distribution Date (or the earlier of the Redemption
Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Shares of the Company outstanding on the
Record Date, with or without a copy of the Summary of Rights
<PAGE>
attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby and
certificates newly issued pursuant to such transfer shall have
printed onto them the legend set forth in Section 3(c) hereof.
(c) Unless the Board of Directors of the Company by
resolution adopted at the time of issuance of any Common Shares
of the Company specifies to the contrary, Rights shall be issued
in respect of all Common Shares of the Company which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date, but prior to the earliest of the
Distribution Date or the Redemption Date or the Final Expiration
Date. Certificates for such Common Shares shall also be deemed
to evidence such Rights, and shall have printed on them the
following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement between Modine Manufacturing Company
and The First National Bank of Chicago, dated as of
October 15, 1986 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive
offices of Modine Manufacturing Company. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Modine Manufacturing Company will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances, Rights beneficially owned
by Acquiring Persons (as defined in the Rights
Agreement), whether currently held by or on behalf of
such person or by a subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or
acquires any of its Common Shares after the Record Date, but
prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associates
with such Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right
--------------------------
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B hereto and may have
such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any
<PAGE>
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed or of the
National Association of Securities Dealers, Inc. or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such
number of Preferred Shares as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such Preferred
Shares and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf
of the Company by its President or any Vice Presidents and by the
Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof. The Right Certificates
shall not be valid for any purpose unless countersigned by the
Rights Agent. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same
force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept for the Company, at the Rights
Agent's principal offices in Chicago, Illinois, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
-----------------------------------
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
- -------------------------------------------------------------
Stolen Right Certificates.
- -------------------------
(a) Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like
<PAGE>
number of Preferred Shares as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender at the
principal offices of the Rights Agent in Chicago, Illinois the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange
of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
-----------------------------------
Expiration Date of Rights.
- -------------------------
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the principal offices of the
Rights Agent in Chicago, Illinois, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share as
to which the Rights are exercised, at or prior to the earlier of
(i) the close of business on October 27, 1996 (the "Final
Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption
Date").
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall
initially be $85.00, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
<PAGE>
Certificate in accordance with Section 9 hereof in cash or by
certified check or cashier's check payable to the order of the
Company or the Rights Agent, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B)
requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred
Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) promptly after
receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or
names as may be designated by such holder and, (iv) when
appropriate, after receipt, promptly deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section
14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the beneficial owner (or
former beneficial owner) thereof and of such beneficial owner's
Affiliates and Associates as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Right
-------------------------------------
Certificates. All Right Certificates surrendered for the purpose
- ------------
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
<PAGE>
Agent shall deliver all cancelled Right Certificates to the
Company, or shall, at the written request of the Company, destroy
such cancelled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred
-----------------------------------------
Shares.
- ------
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Preferred
Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject
to payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and non-assessable shares.
(c) The Company covenants and agrees that it shall
take all necessary action (or use its best efforts to cause all
necessary action to be taken) in connection with the issuance of
the Preferred Shares (or other securities that may be issuable)
upon exercise of the Rights to comply with any applicable
requirements of the Securities Act of 1933, as amended, and the
Exchange Act and to comply with any other applicable laws of any
state or other jurisdiction.
(d) The Company covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates for the
Preferred Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for Preferred
Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person
----------------------------
in whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
-------- -------
such surrender and payment is a date upon which the Preferred
<PAGE>
Shares transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of
---------------------------------------
Shares or Number of Rights. The Purchase Price, the number of
- --------------------------
Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If
an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after
the date of this Agreement, directly or indirectly, (1)
shall merge into the Company or otherwise combine with
the Company and the Company shall be the continuing or
surviving corporation of such merger or combination,
and the Common Shares of the Company shall remain
outstanding and not be changed into or exchanged for
<PAGE>
stock or other securities of any other Person or the
Company or cash or any other property, (2) shall
participate in a statutory share exchange with the
Company pursuant to such provision therefor as may
hereafter be made in the Wisconsin Business Corporation
Law (a "Share Exchange") immediately following which
the Company is not a Subsidiary of any Acquiring Person
or any Associate or Affiliate of any Acquiring Person,
(3) shall, in one or more transactions, (i) other than
in connection with the exercise of Rights or in
connection with the exercise or conversion of
securities exchangeable for or convertible into capital
stock of the Company or any of its Subsidiaries, or
(ii) other than as part of a pro rata distribution to
all holders of such shares of any class of capital
stock of the Company or any of its Subsidiaries,
transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for
shares of any class of capital stock of the Company or
any of its Subsidiaries or for securities exercisable
for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class
of capital stock of the Company or any of its
Subsidiaries, (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
dispose of (in one or more transactions) to, from or
with, as the case may be, the Company or any of its
Subsidiaries, assets (including securities) on terms
and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (5) shall
receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-
time employment as a regular employee or director at
rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) shall receive the
benefit, directly or indirectly (except proportionately
as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantage provided by the Company
or any of its Subsidiaries, or
(B) during such time as there is an
Acquiring Person, (1) there shall be any failure to
declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) on any
outstanding preferred stock (including the Preferred
Shares) of the Company (except to the extent such
declaration or payment would be prohibited under the
laws of the Company's jurisdiction of incorporation),
(2) there shall be any reduction in the annual rate of
dividends paid on the Common Shares (except as
necessary for valid business reasons or to reflect any
subdivision of the Common Shares or as required under
<PAGE>
the laws of the Company's jurisdiction of
incorporation), (3) there shall be a failure to
increase the annual rate of dividends as necessary to
reflect any reclassification (including any reverse
stock split), recapitalization, reorganization or any
similar transaction which has the effect of reducing
the number of outstanding Common Shares of the Company
(except to the extent such increase in the rate of
dividends would be prohibited under the laws of the
Company's jurisdiction of incorporation), or (4) there
shall be any reclassification of securities (including
any reverse stock split) or recapitalization of the
Company, or any merger or consolidation or Share
Exchange of the Company with any of its Subsidiaries or
any other transaction or series of transactions
involving the Company or any Subsidiaries of the
Company (whether or not with or into or otherwise
involving an Acquiring Person) which has the effect,
directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of
any class of equity securities or of securities
exercisable for or convertible into securities of the
Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person,
then, and in each such case, proper provision shall be made
so that each holder of a Right, except as provided below,
shall thereafter have a right to receive, upon exercise
thereof, in accordance with the terms of this Agreement, in
lieu of Preferred Shares, such number of Common Shares of
the Company as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right
was exercisable immediately prior to the event described in
Section 11(a)(ii) necessitating such adjustment, and
dividing that product by (y) 50% of the current per share
market price of the Common Shares of the Company (determined
pursuant to Section 11(d) hereof) on the fifth day after the
earlier of the date of the occurrence or the date of the
first public announcement of any one of the events listed
above in this subparagraph (ii); provided, however, that if
-------- -------
the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant
to this Section 11(a)(ii). Notwithstanding the foregoing,
upon the occurrence of any of the events listed above in
this subparagraph (ii), any Rights that are or were on or
after the earlier of the Distribution Date or Shares
Acquisition Date beneficially owned by an Acquiring Person
(or any Associate or Affiliate of such Acquiring Person)
shall become void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any
provision of this Agreement. The Company shall not enter
into any transaction of the kind listed in this subparagraph
(ii) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or
<PAGE>
any agreements or arrangements which, as a result of the
consummation of such transaction, would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Any Right Certificate issued
pursuant to Section 3 that represents Rights beneficially
owned by an Acquiring Person or any Associate or Affiliate
thereof and any Right Certificate issued at any time upon
the transfer of any Rights to an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate, and any Right
Certificate issued pursuant to Section 6, Section 7(d) or
Section 22 hereof, or this Section 11, upon transfer,
exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the
following legend:
The Rights represented by this Right Certificate
were issued to a Person who was an Acquiring Person or
an Affiliate or an Associate of an Acquiring Person (as
such terms are described in the Rights Agreement).
This Right Certificate and the Rights represented
hereby may become void in the circumstances specified
in Section 11(a)(ii) of the Rights Agreement.
(iii) In the event that the Common Shares of the
Company issued but not outstanding and the Common Shares of
the Company authorized but unissued in the aggregate shall
not be sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii),
the Company shall take all such action as may be necessary
to authorize additional Common Shares of the Company for
issuance upon exercise of the Rights.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders
of Preferred Shares entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe
for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred
shares) less than the current per share market price of the
Preferred Shares (as defined in Section 11(d) hereof) on
such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares
and/or equivalent preferred shares so to be offered (and/or
the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current
market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or
<PAGE>
equivalent preferred shares to be offered for subscription
or purchase (or into which the convertible securities so to
be offered are initially convertible). In case such
subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose
determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights. Preferred Shares owned by or
held for the account of any Subsidiary of the Company shall
not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be
the current per share market price of the Preferred Shares
(as defined in Section 11(d) hereof) on such record date,
less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and holders
of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market
price of the Preferred Shares. Such adjustments shall be
made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had
not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of Common Shares on any
date shall be deemed to be the average of the daily closing
prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however,
-------- -------
that in the event that the current per share market price of
the Common Shares is determined during a period following
the announcement by the issuer of such Common Shares of (x)
a dividend or distribution on such Common Shares payable in
such Common Shares or securities convertible into such
<PAGE>
Common Shares, or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the
expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current market price shall be
appropriately adjusted to reflect the current market price
per Common Share equivalent. The closing price for each day
shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Common Shares are listed or admitted to trading
or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system
then in use, or, if on any such date the Common Shares are
not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Common Shares selected
by the Board of Directors of the Company. The term "Trading
Day" shall mean a day on which the principal national
securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares
shall be determined in the same manner as set forth above
for Common Shares in clause (i) of this Section 11(d). If
the current per share market price of the Preferred Shares
cannot be determined in the manner provided above, the
"current per share market price" of the Preferred Shares
shall be conclusively deemed to be the current per share
market price of the Common Shares of the Company
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof), multiplied by one hundred.
(iii) If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value
per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
<PAGE>
decrease of at least 1% in the Purchase Price; provided,
--------
however, that any adjustments which by reason of this
-------
Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a Common
Share or other share or one-millionth of a Preferred Share
as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section
11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right
to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to
the shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13
hereof with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c) hereof, each
Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one one-
hundredths of a Preferred Share (calculated to the nearest
one one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of
Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one
<PAGE>
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to
the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preferred Shares issuable
upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth of a share and the
number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-
hundredth of the then par value, if any, of the Preferred
Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable
Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective
as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the
issuing, to the holder of any Right exercised after such
record date, of the Preferred Shares and other capital stock
or securities of the Company, if any, issuable upon such
<PAGE>
exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
-------- -------
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision
of the Preferred Shares, issuance wholly for cash of any of
Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable
for Preferred Shares, dividends on Preferred Shares payable
in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in subsection (b) of this
Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the date of
this Agreement and prior to the Distribution Date, the
Company shall (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of
dividends in Common shares) into a greater or lesser number
of Common shares, then in any such case (i) the number of
one one-hundredths of a Preferred Share purchasable after
such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths
of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such
event and the denominator of which is the number of Common
Shares outstanding immediately after such event and (ii)
each Common Share outstanding immediately after such event
shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to
such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is
effected. If an event occurs which would require an
adjustment under Section 11(a)(ii) hereof and this Section
11(n), the adjustments provided for in this Section 11(n)
shall be in addition and prior to any adjustment required
pursuant to Section 11(a)(ii) hereof.
Section 12. Certificate of Adjusted Purchase Price or
-----------------------------------------
Number of Shares. Whenever an adjustment is made as provided in
- ----------------
<PAGE>
Sections 11 and 13 hereof, the Company shall (a) promptly prepare
a certificate setting forth such adjustment, with a brief
statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer agent
for the Common Shares and the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on the terms of
any such certificate.
Section 13. Consolidation, Merger or Sale or Transfer
-----------------------------------------
of Assets or Earning Power. In the event, directly or
- --------------------------
indirectly, (a) the Company shall consolidate with or merge with
and into any other Person (other than a corporation wholly owned
by any employee benefit plan of the Company or any entity holding
Common Shares of the Company for or pursuant to the terms of any
such plan), (b) any Person (other than a corporation wholly owned
by any employee benefit plan of the Company, or any entity
holding Common Shares of the Company for or pursuant to the terms
of any such plan) shall merge with and into the Company and the
Company shall be the continuing or surviving corporation of such
merger and, in connection with such merger, all or part of the
Common Shares of the Company shall be changed into or exchanged
for stock or other securities of any other Person (or other
securities of the Company) or cash or any other property, (c) the
Company shall be a party to a Share Exchange immediately
following which the Company is a Subsidiary of any other Person,
or (d) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in
one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned Subsidiaries,
then, and in each such case, proper provision shall be made so
that (i) each holder of a Right shall thereafter have the right
to receive, upon the exercise thereof, in accordance with the
terms of this Agreement, such number of Common Shares of such
other Person (including the Company as successor thereto or as
the surviving corporation), or, if such Person is a Subsidiary of
or controlled by another Person, then the Person which ultimately
controls the first-mentioned Person, as shall be equal to the
result obtained by (X) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section
11(a)(ii) hereof) and dividing that product by (Y) 50% of the
current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date
of consummation of such consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such
<PAGE>
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights; and the Company shall not
consummate any such consolidation, merger, Share Exchange, sale
or transfer unless prior thereto the Company and such issuer
shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter
into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share)
upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
<PAGE>
are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares. In lieu of fractional
Preferred Shares that are not integral multiples of one one-
hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share
(as determined pursuant to the second sentence of clause (i) of
Section 11(d) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in
----------------
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares of the Company in respect of which Rights have been
issued); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of such Common Shares), without
the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of such
Common Shares), may, on his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder
--------------------------
of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Shares;
<PAGE>
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal offices of
the Rights Agent in Chicago, Illinois, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) any restriction on transfer deemed to be imposed
by this Agreement is valid and enforceable against the
holder and any transferee of the holder.
Section 17. Right Certificate Holder Not Deemed a
-------------------------------------
Shareholder. No holder, as such, of any Right Certificate shall
- -----------
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 24 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense,
incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
<PAGE>
(b) The Rights Agent shall be protected and shall
incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its administration
of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the
proper person or persons, or otherwise upon the advice of counsel
as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name
-----------------------------------------
of Rights Agent.
- ---------------
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates
shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
----------------------
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
<PAGE>
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the President, a Vice
President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability
of the Rights (including the Rights becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms
of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23, or the
ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
<PAGE>
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of
its duties hereunder from any one of the President, a Vice
President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.
(j) In the event that any Person becomes an Acquiring
Person, the Company shall notify the Rights Agent of such
event and of the identity of such Person. The Rights Agent
thereupon shall undertake a reasonable investigation to
ascertain which Common Shares are held beneficially by such
Acquiring Person, including Common Shares of the Company
held by nominees of such Acquiring Person. If the Rights
Agent undertakes such reasonable investigation on a
continuing basis after notification by the Company as
provided herein, the Rights Agent shall not be liable for
its failure in good faith to insert the legend provided for
in Section 11(a)(ii) hereof into Right Certificates owned by
or transferred to such Acquiring Person or its nominees.
(k) The Rights Agent shall only be required to perform
the duties expressly set forth herein and no implied duties
or obligations shall be read into this Agreement against the
Rights Agent.
Section 21. Change of Rights Agent. The Rights Agent
----------------------
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
<PAGE>
mailed to the Company and to each transfer agent of the Common
Shares of the Company and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Shares of the Company
and Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then
the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the
State of Illinois (or of any other state of the United States so
long as such corporation is authorized to do business as a
banking institution in the State of Illinois), in good standing,
having its principal offices in the State of Illinois, which is
authorized under such laws to exercise corporate trust powers and
is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million.
After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares of the
Company and Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind or
class of shares or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of
this Agreement.
<PAGE>
Section 23. Redemption.
----------
(a) The Board of Directors of the Company may, at its
option, at any time prior to 5:00 P.M., Chicago time, on the
earlier of (x) the thirtieth day following the Shares Acquisition
Date or (y) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of 5 cents
per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as
the "Redemption Price"); provided, however, that in connection
with a transaction to be accounted for as a pooling of interests,
the Board of Directors shall have the option to pay the
Redemption Price in securities or other property, and provided
further, however, that for the purposes hereof the Board of
Directors of the Company shall be entitled to so redeem the
Rights only if such Board consists of a majority of Continuing
Directors (as hereinafter defined). "Continuing Director" shall
mean a director who either was a member of the Board of Directors
of the Company prior to the Record Date, or who subsequently
became a director of the Company and whose initial election or
initial nomination for election by the Company's shareholders
subsequent to such date was approved by a vote of a majority of
the Continuing Directors then on the Board of Directors of the
Company.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights,
and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the action of the Board
of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at
their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares of the
Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be
made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23, and other than in connection with the
repurchase of Common Shares prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the
------------------------
Company shall propose (a) to pay any dividend payable in stock of
any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend), or (b) to offer to the
holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights or options, or
(c) to effect any reclassification of its Preferred Shares (other
<PAGE>
than a reclassification involving only the subdivision of
outstanding Preferred Shares), or (d) to effect any consolidation
or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, or (e) to
effect the liquidation, dissolution or winding up of the Company,
or (f) to declare or pay any dividend on the Common Shares of the
Company payable in Common Shares of the Company or to effect a
subdivision, combination or consolidation of the Common Shares of
the Company (by reclassification or otherwise than by payment of
dividends in such Common Shares) then, in each such case, the
Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders
of the Common Shares of the Company and/or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (a) or (b) above at
least 20 days prior to the record date for determining holders of
the Preferred Shares for purposes of such action, and in the case
of any such other action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation
therein by the holders of the Common Shares of the Company and/or
Preferred Shares, whichever shall be the earlier.
In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 25 hereof, a notice
of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by
-------
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Modine Manufacturing Co.
1500 DeKoven Avenue
Racine, Wisconsin 53401
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
<PAGE>
The First National Bank of Chicago
One First National Plaza - Suite 0126
Chicago, Illinois 60670
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. The Company
--------------------------
and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, to extend the
period for redemption provided for in Section 23 hereof, or to
make any other provisions in regard to matters or questions
arising hereunder which the Company and the Rights Agent may deem
necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates, including but
not limited to extending the Final Expiration Date, provided,
however, that this Agreement shall not be supplemented or amended
in any way after the Distribution Date unless the majority of the
members of the Company's Board of Directors approving such
supplement or amendment are Continuing Directors.
Section 27. Successors. All the covenants and
----------
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Benefits of This Agreement. Nothing in
--------------------------
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).
Section 29. Severability. If any term, provision,
------------
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each
-------------
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Wisconsin and for
<PAGE>
all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 31. Counterparts. This Agreement may be
------------
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive
--------------------
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
(SEAL)
MODINE MANUFACTURING COMPANY
Attest:
By: s/W. E. Pavlick By: s/F. W. Jones
------------------ --------------------------------
Title: Secretary Title: Executive Vice President,
Administration
(SEAL)
THE FIRST NATIONAL BANK OF CHICAGO
Attest:
By: s/M. Phalen By: s/A. E. Grinton
------------------- -------------------------------
Title: Ast. Secty. Title: Vice President
<PAGE>
Exhibit A
---------
FORM OF
RESOLUTION ESTABLISHING
SERIES A PARTICIPATING PREFERRED STOCK
of
MODINE MANUFACTURING COMPANY
RESOLVED, by the Board of directors of Modine
Manufacturing Company (the "Corporation"), that pursuant to the
authority granted to and vested in this Board (hereinafter called
the "Board of Directors" the "Board") in accordance with the
provisions of the Restated Articles of Incorporation, as amended,
of the Corporation, there is hereby authorized the creation and
establishment of a separate series of the Preferred Stock, par
value 5 cents per share, of the Corporation (such class of Preferred
Stock being hereinafter called the "Preferred Stock"), and the
issuance of the shares constituting such series, with such series
to have the designation, to be comprised of the number of shares,
and to have the preferences, limitations and relative rights (in
addition to the provisions set forth in the Restated Articles of
Incorporation of the Corporation, as amended, which are
applicable to the Preferred Stock of all series, and subject to
the limitations prescribed by law) as follows:
A. Designation and Amount. The shares of such series
----------------------
shall be designated as "Series A Participating Preferred Stock"
(the "Series A Preferred Stock") and the number of shares of
Preferred Stock constituting such series shall be 76,000. Such
number of shares 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 of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by
the Corporation. All shares removed from the Series A Preferred
Stock by any such decrease shall become authorized but unissued
shares of Preferred Stock and may be reissued by the Corporation
as part of a new series of the Preferred Stock, subject to the
restrictions and conditions set forth herein.
B. Dividends and Distribution.
--------------------------
(i) Subject to the prior and superior rights of the
holders of any shares of any class or series of stock of the
Corporation ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference
<PAGE>
to the holders of the Common Stock of the Corporation and of
any other junior stock of the Corporation, 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 the first day of March, June,
September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date
after the first issuance of a 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) $8.50
(payable in cash) or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate
per share amount (payable in cash) of all cash dividends,
and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock of
the Corporation or a subdivision of the outstanding shares
of such Common Stock (by reclassification or otherwise),
declared on the Common Stock of the Corporation 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. In the event the Corporation
shall at any time after the date hereof declare or pay any
dividend on its Common Stock payable in shares of such
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of its Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of such Common Stock) 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
of the Corporation 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.
(ii) The Corporation shall not declare and set aside
for payment a dividend or distribution on its Common Stock
(other than a dividend payable in shares of such Common
Stock) until it shall declare and set aside for payment a
dividend or distribution on the Series A Preferred Stock as
provided in paragraph (i) of this Section. In the event no
dividend or distribution shall have been declared on the
Common Stock of the Corporation during the period between
any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $8.50 per
share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(iii) 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 prior to the
<PAGE>
record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue
is a Quarterly Dividend Payment Date or 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 before such Quarterly Dividend Payment Date, in
either of which events such 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 the 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 be not
more than 50 days prior to the date fixed for the payment thereof.
C. Voting Rights. The holders of shares of Series A
-------------
Preferred Stock shall have the following voting rights:
(i) Each share of Series A Preferred Stock shall
entitle the holder thereof to one vote on all matters
submitted to a vote of the stockholders of the Corporation.
(ii) 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 and any other capital
stock of the Corporation having general voting rights shall
vote together as one voting group on all matters submitted
to a vote of stockholders of the Corporation.
(iii) The Restated Articles of Incorporation of the
Corporation, as heretofore amended, shall not be amended in
any manner which would materially alter or change the
powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series A Preferred Stock, voting
together as a single voting group.
(iv) Except as set forth herein or as otherwise
provided by law or by the Restated Articles of Incorporation
of the Corporation, holders of Series A Preferred Stock
shall have no voting rights.
D. Certain Restrictions.
--------------------
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section B in this resolution are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
<PAGE>
(a) declare or pay, or set apart for
payment, dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(b) 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 parity stock on which
dividends are payable or in arrears in proportion to the
aggregate amounts of the deficiencies in payments due
to the respective series and classes of parity stock;
(c) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock,
or any shares of stock ranking on a parity 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
such shares 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.
(ii) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (i) of this Section
D, purchase or otherwise acquire such shares at such time
and in such manner,
E. Reacquired Shares, Any shares of Series A
-----------------
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock of the Corporation and may be
reissued as part of a new series of Preferred Stock, subject to
the conditions and restrictions on issuance set forth herein.
F. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
voluntary or involuntary 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 an amount equal to
accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment plus an amount equal
<PAGE>
to the greater of (a) $85.00 per share and (b) an aggregate
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of Common Stock of the
Corporation, 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 other such parity stock in proportion to the full
preferential amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time declare or pay any
dividend on Common Stock of the Corporation payable in shares of
such Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock of the
Corporation (by reclassification or otherwise than by payment of
a dividend in shares of such Common Stock) into a greater or
lesser number of shares of Common Stock, then for 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 provisions 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 of the
Corporation outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock of
the Corporation that were outstanding immediately prior to such
event.
G. Consolidation, Merger, etc. In case the
--------------------------
Corporation shall enter into any consolidation, merger, share
exchange, combination or other transaction in which the shares of
Common Stock of the Corporation are exchanged for or changed into
other stock or securities, cash and/or any other property, then
in any such case the shares of Series A Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per
share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock of the Corporation is changed or exchanged. In the event
the Corporation shall at any time declare or pay any dividend on
Common Stock of the Corporation payable in shares of such Common
Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock of the Corporation (by
reclassification or otherwise) into a greater or lesser number of
shares of such 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 of the Corporation
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock of the Corporation
that were outstanding immediately prior to such event.
H. Redemption; Repurchase. The outstanding shares of
----------------------
Series A Preferred Stock may be redeemed at the option of the
Board of Directors, in whole, but not in part, at any time, or
<PAGE>
from time to time, at a cash price per share equal to (i) the
greater of (a) $85.00 or, (b) subject to the provision for
adjustment hereinafter set forth, the product of 100 times the
Current Market Price, as such term is hereinafter defined, of the
Common Stock of the Corporation, plus (ii) all dividends which on
the redemption date have accrued on the shares to be redeemed and
have neither been paid nor declared with a sum sufficient for the
payment thereof set apart in trust for such purpose, without
interest. The Corporation may, from time to time and to the
extent allowed by law, purchase or otherwise acquire shares of
Series A Preferred Stock provided, however, that if and whenever
any quarterly dividend shall have accrued on the Series A
Preferred Stock which has neither been paid nor declared with a
sum sufficient for the payment thereof set apart in trust for
such purpose, the Corporation may not purchase or otherwise
acquire any shares of Series A Preferred Stock unless all shares
of such stock at the time outstanding are so purchased or
otherwise acquired. In the event the Corporation shall at any
time after October 27, 1986 pay any dividend on Common Stock of
the Corporation payable in shares of such Common Stock, or effect
a subdivision or combination or consolidation of the outstanding
shares of Common Stock of the Corporation (by reclassification or
otherwise than by payment of a dividend in shares of such Common
Stock) into a greater or lesser number of shares of Common Stock
of the Corporation, 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 subsection (i) 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 of the Corporation outstanding immediately after
such event and the denominator of which is the number of shares
of Common Stock of the Corporation that were outstanding
immediately prior to such event.
The "Current Market Price" shall be deemed to be the
average of the daily closing prices per share of the Common Stock
of the Corporation for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior to the
day before the redemption date; provided, however, that in the
--------
event that the Current Market Price per share of the Common Stock
of the Corporation is determined during a period in whole or in
part following the announcement by the Corporation of (A) a
dividend or distribution on such Common Stock payable in shares
of such Common Stock or securities convertible into shares of
such Common Stock, or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the ex-
dividend date or record date (whichever first occurs) for such
dividend, distribution, subdivision, combination or
reclassification, then, and in each such case, the Current Market
Price shall be properly adjusted to take into account ex-dividend
trading prices. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock of the Corporation are
not listed or admitted to trading on the New York Stock Exchange,
<PAGE>
as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the shares of such Common
Stock are listed or admitted to trading or, if the shares of
Common Stock of the Corporation are not listed or admitted to
trading on any national securities exchange, the average of the
last quoted high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the shares of
Common Stock of the Corporation are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Stock of the Corporation selected by the Board of
Directors. If on any such date no market maker is making a
market in the Common Stock of the Corporation, the fair value of
such shares on such date as determined in good faith by the Board
of Directors shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the shares of Common Stock of the Corporation are listed or
admitted to trading is open for the transaction of business or,
if the shares of the Common Stock of the Corporation are not
listed or admitted to trading on any national securities
exchange, a business day.
I. Fractional Shares. The 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 shares of Series A Preferred Stock.
J. Rank. Nothing herein shall preclude the
----
Corporation from creating or authorizing, in a manner and by
proceedings required by applicable law and the Restated Articles
of Incorporation, as amended, of the Corporation, any class or
series of stock ranking on a parity with or prior to the Series A
Preferred Stock as to the payment of dividends or the
distribution of assets.
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R- Rights
-----------
NOT EXERCISABLE AFTER OCTOBER 27, 1996
OR EARLIER IF REDEMPTION HAS TAKEN PLACE.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT 5 CENTS PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS (AS DESCRIBED IN SECTION 11(a)(ii)
OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE WERE ISSUED TO A PERSON
WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE
OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DESCRIBED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.]*
Right Certificate
Modine Manufacturing Company
This certifies that , or registered
----------------
assigns, is the registered owner of the number of Rights set
forth above, each of which entitled the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement
dated as of October , 1986 (the "Rights Agreement") between
---
Modine Manufacturing Company, a Wisconsin corporation (the
"Company"), and The First National Bank of Chicago, a national
banking association (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (Chicago
time) on October 27, 1996 at the principal office of the Rights
Agent in Chicago, Illinois, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Participating Preferred Stock, par value 5 cents
per share (the "Preferred Shares"), of the Company, at a purchase
[FN]
* The portion of the legend in brackets shall be inserted only
if applicable.
<PAGE>
price of $ per one one-hundredth of a Preferred Share (the
---
"Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of Preferred Shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set
forth above, are the number and Purchase Price as of October 27,
1986, based on the Rights and the Preferred Shares as constituted
at such date.
As provided in the Rights Agreement, the Purchase Price
and the number of Preferred Shares which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file
at the principal executive offices of the Company and at the
principal office of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may, but are not required
to, be redeemed by the Company at a redemption price of 5 cents
per Right.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for
<PAGE>
the election of directors or upon any matter submitted to
shareholders of the Company at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders of the Company
(except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent for purposes of authentication only.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of ,
------------- ---
19 .
---
ATTEST Modine Manufacturing Company
- ----------------------- --------------------------------------
Title: Title:
Countersigned (for purposes of
authentication):
- -------------------------------
By
-----------------------------
Authorized Signature
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED
-------------------------------------
hereby sells, assigns and transfers unto
--------------------------
- ------------------------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------------------------
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within Right
------------------
Certificate on the books of the within-named Company, with full
power of substitution.
Dated: , 19
----------------------- --
-----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- -------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
------------------------------------------
Signature
- --------------------------------------------------------------------
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if the registered holder
desires to exercise the Right Certificate)
To: Modine Manufacturing Company
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate
- ------------------
to purchase the Series A Participating Preferred Stock issuable
upon the exercise of such Rights and requests that certificates
for such Series A Participating Preferred Stock be issued in the
name of:
Please insert social Security
or other identifying number
- -----------------------------------------------------------------
(Please print name and address)
- -----------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
- ------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------
Dated: , 19
---------------------- --
------------------------------
Signature
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States
- --------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
----------------------------------
Signature
- --------------------------------------------------------------------
NOTICE
------
The signatures in the foregoing Forms of Assignment and
Election to Purchase must correspond to the name as written upon
the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the
Forms of Assignment and Election to Purchase is not completed,
the Company will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an Assignment, will affix a legend
to that effect on any Right Certificates issued in exchange for
this Right Certificate.
<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On October 15, 1986, the Board of Directors of Modine
Manufacturing Company (the "Company") declared a dividend
distribution of one preferred share purchase right (a "Right")
for each outstanding share of common stock, $1.25 par value per
share, of the Company (the "Common Shares"). The distribution is
payable on October 27, 1986 to the shareholders of record on that
date. The action by the Board of Directors contemplates that one
Right also will be issued with respect to each Common Share that
becomes outstanding between the record date for the dividend
distribution and the Distribution Date (referred to below).
Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A
Participating Preferred Stock, par value 5 cents per share, of the
Company (the "Preferred Shares") at a price of $85.00 per one one-
hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the
Company and The First National Bank of Chicago, as Rights Agent
(the "Rights Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group, other than a
subsidiary of the Company or an employee benefit plan of the
Company or a subsidiary (an "Acquiring Person"), has acquired, or
obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Shares or (ii) 10 days following
the commencement or announcement of an intention to make a tender
offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group, other than a
subsidiary of the Company or an employee benefit plan of the
Company or a subsidiary, of 30% or more of such outstanding
Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by the
certificates for outstanding Common Shares. A copy of this
Summary of Rights to Purchase Preferred Shares should be attached
to the Common Share certificates which are outstanding on October
27, 1986. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares, with or without a
copy of this Summary of Rights to Purchase Preferred Shares
attached, will also constitute the transfer of the Rights
associated with the Common Shares represented by such
certificate. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates
issued after October 27, 1986 upon transfer or new issuance of
the Common Shares will contain a notation incorporating the
Rights Agreement by reference. As soon as practicable following
the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the
<PAGE>
Distribution Date and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on October 27, 1996 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed by the Company, in each
case as described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for Preferred Shares or
convertible securities at less than the current market price of
the Preferred Shares or (iii) upon the distribution to holders of
the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or
retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to
above).
The number of one one-hundredths of a Preferred Share
for which a Right is exercisable and the number of Rights
outstanding are also subject to adjustment in the event of
dividends on the Common Shares payable in Common Shares or
subdivisions, combinations or consolidations of the Common
Shares, occurring, in any such case, before the Distribution
Date.
Preferred Shares purchasable upon exercise of the
Rights will be redeemable in whole (but not in part) at any time
at the option of the Company at a price per share equal to the
greater of (i) $85.00 or (ii) 100 times the Current Market Price
(as defined in the Rights Agreement) of the Common Shares, plus
accrued but unpaid dividends. Such redemption price is subject
to adjustment as provided in the Rights Agreement for the events
referred to in the preceding paragraph. Each Preferred Share
will have a minimum preferential quarterly dividend rate of $8.50
per share, but will be entitled to an aggregate dividend of 100
times the per share dividend declared on the Common Shares. In
the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of
$85.00 per share but will be entitled to an aggregate payment 100
times the payment made per Common Share. Each Preferred Share
will have one vote, voting together with the Common Shares. In
the event of any merger, share exchange, consolidation or other
transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 100 times the amount received
per Common Share. These rights are protected by customary anti-
dilution provisions.
Because of the nature of the dividend and liquidation
rights of the Preferred Shares, the value of a one one-hundredth
interest in a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share.
<PAGE>
In the event that the Company is acquired in a merger
or other business combination transaction or 50% or more of its
consolidated assets or earning power were sold, proper provision
will be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of such
transaction would have a market value of two times the exercise
price of the Right. In the event that the Company were the
surviving corporation in a merger and the Common Shares were not
changed or exchanged, or in the event that an Acquiring Person
engages in one of a number of self-dealing transactions specified
in the Rights Agreement, proper provisions will be made so that
each holder of a Right, other than Rights that were beneficially
owned by the Acquiring Person on the earlier of the Distribution
Date or the date an Acquiring Person acquires 20% or more of the
outstanding Common Shares (which Rights will thereafter be void),
will thereafter have the right to receive upon exercise that
number of Common Shares having a market value of two times the
exercise price of the Right.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share,
which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on
the last trading date prior to the date of exercise.
At any time prior to 5:00 p.m. on the thirtieth day
following a public announcement that a person or group (other
than a subsidiary of the Company or an employee benefit plan of
the Company or a subsidiary) has acquired a beneficial ownership
of 20% or more of the outstanding Common Shares, the Company may
redeem the Rights in whole, but not in part, at a price of 5 cents
per Right (the "Redemption Price"). Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the
right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, including an amendment to extend the Final Expiration
Date, an amendment to extend the period in which the Rights may
be redeemed, and other amendments that may be deemed necessary or
advisable and which do not adversely affect the interests of the
holders of the Rights, provided that no such amendment is
permitted after the Distribution Date unless the majority of the
members of the Company's Board of Directors approving the
amendment are "Continuing Directors" (as defined in the Rights
Agreement).
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
<PAGE>
A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
<PAGE>
EXHIBIT 10(a)
MODINE MANUFACTURING COMPANY
DIRECTOR EMERITUS RETIREMENT PLAN
EFFECTIVE APRIL 1, 1992
<PAGE>
MODINE MANUFACTURING COMPANY
DIRECTOR EMERITUS RETIREMENT PLAN
EFFECTIVE APRIL 1, 1992
WHEREAS, the Board of Directors of Modine Manufacturing
Company has determined it to be in the best interest of the
Company to establish a retirement plan for directors of the
Company.
NOW, THEREFORE, effective as of April 1, 1992, Modine
Manufacturing Company establishes this Modine Manufacturing
Company Director Emeritus Retirement Plan with respect to
directors of Modine who on or after April 1, 1992 retire, die
or otherwise terminate their service as a director of Modine.
ARTICLE I
DEFINITIONS
-----------
For the purposes of this retirement plan, the following
words and phrases shall have the meanings indicated, unless a
different meaning is clearly required by the context:
1.1 The term "Act" means the Employee Retirement Income
Security Act of 1974.
1.2 The term "Actuarial Equivalent" means equality in
value of the aggregate amount expected to be received under
the Plan based on the discount rate and mortality assumptions
applicable, as defined below:
(a) Discount rate/assumption - For purposes of
------------------------
computing any adjustments called for under the
terms of the Plan for any benefit (when such
adjustment is not otherwise provided for in the
Plan), the discount rate assumption shall be the
same discount rate as then utilized for the
calculation of the present value of future benefits
as disclosed in the financial statement pension
plan footnotes of the Modine Manufacturing Company
annual report.
(b) Mortality Assumption - For purposes of
--------------------
computing any adjustments called for under the
terms of the Plan for any benefit (when such
adjustment is not otherwise provided for in the
Plan), the mortality assumption shall be based on
the 1971 Group Annuity Mortality Table.
1.3 The term "Beneficiary" means the person or persons
designated by a Director or former Director as his
beneficiary as provided in Section 3.5.
1.4 The term "Board" or "Board of Directors" means the
current Board of Directors of the Company.
<PAGE>
1.5 The term "Company" or "Modine" means Modine
Manufacturing Company, a Wisconsin corporation, its corporate
successors, and the surviving corporation resulting from any
merger or consolidation of Modine Manufacturing Company with
any other company or companies.
1.6 A "Director" means any person who is or becomes a
director of Modine on or after April 1, 1992 regardless of
whether such person is also an employee of Modine on or after
such date.
1.7 The "Effective Date" means April 1, 1992.
1.8 The "Plan" means this Modine Manufacturing Company
Director Emeritus Retirement Plan with all amendments and
supplements hereafter made.
1.9 The "Plan Year" means the twelve-month period
commencing April 1, 1992 and each April 1 thereafter.
1.10 "Retirement Benefit" means the amount of retirement
benefit payable annually to a retired Director under the
terms of the Plan.
1.11 "Surviving Spouse" shall mean and be limited to the
person who (i) was the Director's or former Director's spouse
at the time of his death, and (ii) was his spouse for at
least one full year immediately prior to the date of his death.
1.12 "Retirement Date" means with respect to any
Director, the last day of the calendar quarter in which he
retires from his service as a Director of Modine.
1.13 "Survivor Benefit" means the amount of survivor
benefit payable annually to the Surviving Spouse or
Beneficiary of a former Director under the terms of the Plan.
1.14 "Termination Date" means with respect to any
Director, the date upon which he terminates his service as a
director of Modine.
ARTICLE II
RETIREMENT BENEFIT
------------------
2.1 Eligibility. Each person who is or becomes a
-----------
Director of Modine on or after April 1, 1992 and whose
service as a Director with Modine ceases on or before his
Retirement Date shall be eligible for a Retirement Benefit.
2.2 Benefit Amount. The amount of the Retirement
--------------
Benefit for a Director shall be an amount equal to the
annualized rate at which Directors are being paid for their
services to the Company as Directors (including any Board
meeting fees but excluding any applicable committee meeting
fees) as in effect at the time such Director ceases his
service as a Director.
<PAGE>
2.3 Benefit Payment. The Retirement Benefit shall be
---------------
paid to a retired Director in four equal quarterly payments
commencing with the first day of the first calendar quarter
following the calendar quarter in which his Retirement Date
occurs and shall be payable on the first day of each
succeeding calendar quarter until the earlier of: (i) his
death; or (ii) the period of time with respect to which a
Retirement Benefit is paid under the Plan equals the period
of time with respect to which the retired Director served as
a Director of the Company.
ARTICLE III
SURVIVOR BENEFIT
----------------
3.1 Eligibility.
-----------
(a) If a deceased Director, at the time of death, had not
commenced receiving Retirement Benefit payments under
the Plan, such deceased Director's Surviving Spouse or
Beneficiary, as determined pursuant to Section 3.5 of
the Plan, shall be eligible to receive a Survivor Benefit
as provided in Sections 3.2(a) and 3.3(a) of the Plan.
(b) If a deceased former Director, prior to the time of
death, had ceased his services as a Director and at
the time of death was receiving or eligible to receive
Retirement Benefit payments under the Plan, such
deceased former Director's Surviving Spouse or
Beneficiary, as determined pursuant to Section 3.5 of
the Plan, shall be eligible to receive a Survivor Benefit
as provided in Sections 3.2(b) and 3.3(b) of the Plan.
3.2 Benefit Amount.
--------------
(a) The amount of Survivor Benefit payable to a deceased
Director's Surviving Spouse or Beneficiary who is
eligible for such benefit pursuant to Section 3.1(a)
of the Plan shall be equal to the amount of Retirement
Benefit that would have been paid to the Director
determined in accordance with Section 2.2 of the Plan
assuming he had not died but his services as a Director
had ceased as of the date of his death.
(b) The amount of Survivor Benefit payable to a deceased
former Director's Surviving Spouse or Beneficiary who
is eligible for such benefit pursuant to Section 3.1(b)
of the Plan shall be equal to the amount of Retirement
Benefit that was being paid, or was due to be paid, to
the deceased former Director at the time of his death.
3.3 Benefit Payments.
----------------
(a) A Surviving Benefit payable to a deceased
Director's Surviving Spouse or Beneficiary pursuant
<PAGE>
to Section 3.1(a) of the Plan shall be paid in four
equal payments commencing with the first day of the
first quarter following the calendar quarter in which
the Director's death occurred and shall be payable on
the first day of each succeeding calendar quarter until
the period of time with respect to which the Surviving
Spouse or Beneficiary is paid a Survivor Benefit under
the Plan equals the period of time with respect to which
the retired Director served as a Director of the Company.
(b) A Survivor benefit payable to a deceased
former Director's Surviving Spouse or Beneficiary
pursuant to Section 3.1(b) of the Plan shall be
paid in four equal payments commencing with the
first day of the first quarter following the
calendar quarter in which the former Director's
death occurred and shall be payable on the first
day of each succeeding calendar quarter until the
period of time with respect to which the Surviving
Spouse or Beneficiary is paid a Survivor Benefit
under the Plan when combined with the period of
time with respect to which the deceased former
Director was paid a retirement benefit pursuant to
Section 2.3 of the Plan equals the period of time
with respect to which the deceased former Director
served as a Director of the Company.
3.4 Death of Surviving Spouse or Beneficiary. In the
----------------------------------------
event a Surviving Spouse or Beneficiary receiving Survivor
Benefit payments under the Plan dies prior to receiving the
last Survivor Benefit payment to which such person is
entitled pursuant to Section 3.3(a) or 3.3(b) of the plan,
the estate of such deceased Surviving Spouse or Beneficiary
shall be paid in a single lump sum payment the actuarial
equivalent present value of an amount equal to the total of
the quarterly payments remaining to be paid at the time of
such Surviving Spouse's or Beneficiary's death. The lump sum
payment provided pursuant to this Section 3.4 shall be paid
on the first day of the first calendar quarter following the
death of such Surviving Spouse or Beneficiary, or as soon
thereafter as administratively practicable.
3.5 Determination of Person Entitled to Receive
-------------------------------------------
Survivor Benefit. In the event of the death of a Director or
- ----------------
former Director under circumstances under which a Survivor
Benefit is payable under Section 3.1(a) or 3.1(b) of the
Plan, if such deceased Director or deceased former Director
is survived by a Surviving Spouse, such Survivor Benefit will
be paid to such Surviving Spouse unless the deceased Director
or deceased former Director not less than 10 days prior to
his death has filed with Modine, as plan administrator, a
designation, in form and substance satisfactory to Modine,
designating a person or persons other than his Surviving
Spouse as his Beneficiary for receiving Survivor Benefit
payments under the Plan.
<PAGE>
In the event a deceased Director or deceased former
Director is not survived by a Surviving Spouse and has not
designated a Beneficiary or no person designated as his
Beneficiary has survived the deceased Director or deceased
former Director, any Survivor Benefit payable pursuant to
Section 3.2(a) or 3.2(b) of the Plan shall be payable to the
estate of such deceased Director or deceased former Director
in a single lump sum on the first day of the first calendar
quarter following the death of such deceased Director or
deceased former Director, or as soon thereafter as
administratively practicable.
ARTICLE IV
GENERAL PROVISIONS REGARDING BENEFITS
-------------------------------------
4.1 Restriction on Alienation of Retirement Benefits.
------------------------------------------------
(a) Except as provided in Section 4.1(b) of the
Plan, the rights and interests of any person under
the Plan shall not be subject in any manner to
sale, transfer, encumbrance, assignment, pledge, or
alienation of any kind; nor may such rights or
interests be resorted to, either voluntarily or
involuntarily, for the satisfaction of the debts
of, or other obligations or claims against, such
person, including claims for alimony, support,
separate maintenance and claims in bankruptcy
proceedings. No such person shall have power in
any manner to sell, transfer, encumber, assign,
pledge or alienate any of his interests or rights
under the Plan and any attempt to do so shall be
void.
(b) Notwithstanding the provisions of Section 4.1(a)
of the Plan, all or any part of the benefit of a
Director under the Plan shall be subject to and
payable in accordance with the applicable
requirements of any Qualified Domestic Relations
Order, as that term is defined in Section 206(d)(3)
of the Employee Retirement Income Security Act of
1974 (hereinafter referred to in the Plan as the
"Act"), and Modine shall provide for payment in
accordance with such order and Section and all
regulations promulgated under such Section. All
such payments pursuant to a Qualified Domestic
Relations Order shall be subject to reasonable
rules and regulations promulgated by Modine;
provided that such rules and regulations are
consistent with Section 206(d)(3) of the Act. If
prior to the commencement of payment of a Director's
Retirement Benefit, any amount attributable to his
Retirement Benefit is allocated for, or paid to, an
alternate payee or payees pursuant to a Qualified
Domestic Relations Order, the amount of his
Retirement Benefit shall be reduced by an amount
equal to the Actuarial Equivalent of the amount so
paid or allocated to an alternate payee or payees.
<PAGE>
4.2 Facility of Payment. In the event that it should
-------------------
be found that any individual to whom an amount is payable
under the Plan is incapable of attending to his financial
affairs because of any mental or physical conditions,
including the infirmities of advanced age, such amount
(unless prior claim therefor shall have been made by a duly
qualified guardian or other legal representative) may, in the
discretion of Modine, be paid to another person for the use
or benefit of the individual found incapable of attending to
his financial affairs or in satisfaction of legal obligations
incurred by or on behalf of such individual. Any such payment
made in accordance with the provisions of this Section 4.2 of
the Plan shall be a complete discharge of liability therefor
under the Plan.
4.3 Nonforfeitability of Benefits. Except as provided
-----------------------------
in Section 8.2 of the Plan, a Director's right to a
retirement benefit under the Plan shall be nonforfeitable
upon and after his Retirement Date.
4.4 Payment of Benefits. The benefits provided under the
-------------------
Plan shall be paid solely from the general assets of Modine and
Modine shall not have any obligation to establish or maintain a
separate fund or funds to provide for the payment of benefits.
4.5 Application of Certain Plan Provisions. For purposes
--------------------------------------
of the general administrative provisions of the Plan, a
Director's former spouse, a former Director's former spouse, a
deceased Director's Surviving Spouse or Beneficiary, or a
deceased former Director's Surviving Spouse or Beneficiary
shall be treated as any other person entitled to receive
benefits under the Plan upon any termination of the plan, and
any such former spouse, Surviving Spouse or Beneficiary who
has an interest under the Plan at the time of such termination,
which does not cease by reason thereof, shall be deemed to be
a retired Director for all purposes of the Plan.
4.6 Service of Process. The General Counsel of Modine
------------------
Manufacturing Company is hereby designated as the agent for
service of legal process on the Plan.
4.7 Governing Law. The Plan shall be interpreted,
-------------
administered and enforced in accordance with the laws of the
State of Wisconsin, and the rights of Directors, former
Directors, former spouses, Surviving Spouses, Beneficiaries
and all other persons shall be determined in accordance
therewith, provided, however, that to the extent federal law
is applicable, such federal law shall apply.
4.8 Titles. Titles are provided in the Plan for
------
convenience of reference only and are not to serve as a basis
for interpretation or construction of the Plan.
<PAGE>
4.9 References. Unless the context clearly indicates
----------
to the contrary, a reference to a Plan provision, statute,
regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed counterpart.
4.10 Pronouns. Use of any form of the masculine pronoun
--------
in this Plan shall, when the circumstances make it
appropriate, be deemed to include the equivalent form of the
female pronoun.
ARTICLE V
ADMINISTRATION
--------------
5.1 Authority of Modine. Modine, which shall be
-------------------
administrator, shall have all the powers, authorities and
responsibilities expressly conferred upon herein and further
shall have the sole right to interpret and construe the Plan,
and to determine any disputes arising thereunder; subject,
however, to the provisions of Section 5.3 and 5.4 of the
Plan. In exercising such powers and authorities and in
fulfilling such responsibilities, Modine shall at all times
exercise good faith, apply standards of uniform application
and refrain from arbitrary action. Modine may employ such
attorneys, agents and accountants as it may deem necessary or
advisable to assist it in carrying out its duties hereunder.
Modine, by action of the Board of Directors, may designate a
person or persons other than Modine to carry out any of such
powers, authorities or responsibilities.
5.2 Action of Modine. Any of Modine's powers,
----------------
authorities or responsibilities for the operation and
administration of the Plan which have not been delegated in
accordance with Section 5.1 of the Plan may be exercised by a
majority of the members of the Board of Directors of Modine,
either by a vote at a meeting, or in writing without a
meeting. All notices, advice, directions, certifications,
approvals and instructions required or authorized to be given
by Modine under the Plan shall be in writing and signed by
either: (i) a majority of the members of the Board of
Directors of Modine, or by such member or members as may be
designated by an instrument in writing, signed by all members
thereof, as having authority to execute such documents on his
behalf; or (ii) a person who becomes authorized to act for
Modine in accordance with the provisions of Section 5.1 of
the Plan. Subject to the provisions of Section 5.3 of the
Plan, any action taken by Modine which is authorized,
permitted or required under the Plan shall be final and
binding upon Modine, and all persons who claim an interest
under the Plan.
5.3 Denial of claims. Whenever Modine denies, whether
----------------
in whole or in part, a claim for benefits filed by any person
<PAGE>
(hereinafter referred to in this Article as "Claimant"), Modine
shall transmit a written notice setting forth, in a manner
calculated to be understood by the Claimant, a statement of
the specific reasons for the denial of the claim, reference
to the specific Plan provisions on which the denial is based,
a description of any additional material or information
necessary to perfect the claim (including an explanation of
why such material or information is necessary) and an
explanation of the Plan's claims review procedure as set
forth in Section 5.4 of the Plan. In addition, the written
notice shall contain the date on which such notice was sent
and a statement advising the Claimant that within 60 days of
the date on which he received such notice, he may have Modine
review its decision denying the Claimant's claim for benefits.
5.4 Claims Review Procedure. Within 60 days of the
-----------------------
date on which the notice of denial of claim is received by
the Claimant, the Claimant or his authorized representative
may request that the claim denial be reviewed by filing with
Modine a written request therefor, which request shall
contain the following information:
(a) The date on which the notice of denial of
claim was received by the Claimant;
(b) The date on which the Claimant's request for
review was filed with Modine; provided, however,
that the date on which the Claimant's request for
review was in fact filed with Modine shall control
in the event the date of actual filing is later
than the date started by the Claimant pursuant to
this Section 5.4;
(c) The specific portions of the denial of his
claim which the Claimant requests Modine to review;
(d) A statement by the Claimant setting forth the
basis upon which he believes Modine should reverse
its previous denial of his claim for benefits and
accept his claim as made; and
(e) Any written material (including as exhibits)
which the Claimant desires Modine to examine in its
consideration of his position as stated pursuant to
Section 5.4(d) of the Plan.
Within 60 days of the date determined pursuant to
Section 5.4(b) of the Plan, Modine shall conduct a full and
fair review of its decision denying the Claimant's claim for
benefits. Within ten days following the date of such review,
Modine shall send to the Claimant its written decision setting
forth, in a manner calculated to be understood by the Claimant,
a statement of the specific reasons for its decision, including
reference to the specific Section of the Plan relied upon.
5.5 Indemnification. In addition to whatever rights of
---------------
indemnification the members of the Board of Directors of
<PAGE>
Modine, or any other person or persons to whom any powers,
authorities or responsibilities of Modine are allocated or
delegated pursuant to Section 5.1(b) of the Plan may be
entitled under the Certificate of Incorporation or by-laws of
Modine, including any amendments thereto, under any provision
of law, or under any other agreement, Modine shall satisfy any
liability actually and reasonably incurred by any such member
or such other person or persons, including expenses, attorney's
fees, judgments, fines and amounts paid in settlement, in
connection with any threatened, pending or completed action
suit or proceeding which is related to the exercise or failure
to exercise by such member or such other person or persons, of
any of the powers, authorities, responsibilities or discretion
of Modine as provided under the Plan, or reasonably believed by
such members or such other person or persons to be provided
thereunder, and any action taken by such member or such person
or persons in connection therewith.
ARTICLE VI
AMENDMENT AND DURATION
----------------------
6.1 Amendment and Termination. Modine reserves the
-------------------------
right to amend the Plan, or to terminate the Plan at any time
and from time to time by resolution of the Board of Directors
of Modine and all persons claiming any interest under the
Plan shall be bound thereby; provided, however, that no
amendment shall be adopted, the effect of which would
directly or indirectly (i) divest the interest of any
Director, or any person entitled to receive a benefit under a
Director, in any amount that any of them would have received
had the Director's services as a Director terminated
immediately prior to the effective date of such amendment, or
(ii) divest the interest of any former Director or any person
entitled to receive a benefit under a former or deceased
former Director, in any amount that any of them would
otherwise have received.
6.2 Termination. In the event of a termination of the
-----------
Plan, the benefit interests of all Directors, former
Directors, deceased former Directors, and each person or
persons entitled to or receiving a benefit under or through
them shall be determined and paid by Modine in accordance
with the provisions of this Section 6.2.
For purposes of this Section 6.2, the amount to be
paid to any individual hereunder shall be the Actuarial
Equivalent of all of the benefits payable under the Plan to
such individual. Following the determination of the amount
to be paid to any individual pursuant to this Section 6.2,
such amount shall be paid in a single lump sum payment within
10 days after such determination.
Notwithstanding anything to the contrary contained
herein, in no event will the amount to be paid pursuant to
this Section 6.2 be determined and paid later than 30 days
after the effective termination date of the Plan.
<PAGE>
6.3 Immediate Vesting Upon Termination. Upon
----------------------------------
termination of the Plan, pursuant to Sections 6.1 and 6.2 of
the Plan, the rights of all affected Directors, former
Directors, deceased former Directors, and persons claiming a
benefit under or through them to benefits accrued to the date
of such termination, shall be fully vested and
nonforfeitable.
ARTICLE VII
CHANGE OF CONTROL
-----------------
7.1 Termination Due to Change in Control. The
------------------------------------
provisions of Article VI notwithstanding, in the event of a
Change in Control, the plan shall automatically terminate
without any further action.
7.2 Lump Sum Payment of Benefits. In the event of the
----------------------------
termination of the Plan pursuant to Section 7.1 of the Plan,
the benefit interest of all Directors, former Directors,
deceased former Directors, and each person or persons
entitled to or receiving a benefit under or through them,
shall be determined and paid by Modine in accordance with the
provisions of this Section 7.2.
For purposes of this Section 7.2, the amount to be
paid to any individual hereunder shall be an amount equal to
the total of all quarterly benefit payments which otherwise
would be payable under the Plan to such individual.
Following the determination of the amount to be paid to any
individual pursuant to this Section 7.2, such amount shall be
paid in a single lump sum payment within 10 days after such
determination.
Notwithstanding anything to the contrary contained
herein, in no event will the amount to be paid pursuant to
this Section 7.2 be determined and paid later than 30 days
after the effective termination date of the Plan pursuant to
Section 7.1 of the Plan.
7.3 Immediate Vesting Upon Termination. Upon
----------------------------------
termination of the Plan, pursuant to Sections 7.1 and 7.2 of
the Plan, the rights of all affected Directors, former
directors, deceased former Directors, and persons claiming a
benefit under or through them, to benefits accrued to the date
of such termination, shall be fully vested and nonforfeitable.
7.4 Change in Control Defined. For purposes of the
-------------------------
Plan, a "Change in Control" shall mean any of the following
events:
(a) The acquisition (other than from the Company)
by any person (as such term is defined in Sections
13(d) or 14(d) of the Securities Exchange Act of
<PAGE>
1934, as amended (the "1934" Act)) of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of thirty-five
percent (35%) or more of the combined voting power
of the Company's then outstanding voting
securities; or
(b) The individuals who, as of April 1, 1992, are
members of the Board of Directors of Modine (the
"Incumbent Board"), cease for any reason to
constitute a majority of the board, unless the
election, or nomination for election by the
Company's stockholders, of any new director was
approved by a vote of a majority of the Incumbent
Board, and such new director shall, for purposes of
this Agreement, be considered as a member of the
Incumbent Board; or
(c) Approval by stockholders of the Company of (i)
a merger or consolidation involving the Company if
the stockholders of the Company, immediately before
such merger or consolidation, do not, as a result
of such merger or consolidation, own, directly or
indirectly, more than sixty-five percent (65%) of
the combined voting power of the then outstanding
voting securities of the Company resulting from
such merger or consolidation in substantially the
same proportion as their ownership of the combined
voting power of the voting securities of the
Company outstanding immediately before such merger
or consolidation, or (ii) a complete liquidation or
dissolution of the Company or an agreement for the
sale or other disposition of all or substantially
all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur pursuant to Section 7.4(a) of
the Plan, solely because thirty-five percent (35%) or more of
the combined voting power of the Company's then outstanding
securities is acquired by (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans
maintained by the Company or any of its subsidiaries or (ii)
any corporation which, immediately prior to such acquisition,
is owned directly or indirectly by the stockholders of the
Company in the same proportion as their ownership of stock in
the Company immediately prior to such acquisition.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Services.
--------
(a) Each former Director who is receiving a
Retirement Benefit under the Plan shall, at
reasonable times and places as requested by any
then current Director of the Company, be available
for consultation concerning the business and
<PAGE>
affairs of the Company. Each such former Director
shall attend such meeting or meetings of the Board
of Directors as any person, who at the time is a
member of the Chief Executive Office of the
Company, requests.
(b) The foregoing notwithstanding, it is
understood that a former Director providing service
pursuant to Section 8.1(a) shall be reimbursed by
the Company for any and all reasonable expenses
which are incurred in providing the requested
services or attending any meeting of the Board as
requested.
(c) It is understood that any former Director
while attending any meeting of the Board, since he
is not a duly elected and qualified Director of the
Company, shall not vote nor be counted in
determining a quorum at any such meeting.
8.2 Non-Competition.
---------------
(a) Notwithstanding anything to the contrary
contained in the Plan, in the event a former
Director irrespective of whether he is receiving
Retirement Benefit payments under the Plan engages
directly or indirectly in activities which compete
in any manner with the business or activities of
the Company, the right of such former Director to
receive any Retirement Benefit payments under the
Plan and the right of any other person to receive
any benefit payments under the Plan shall be
immediately terminated and no Retirement Benefit or
other benefit payments under the Plan shall be paid
thereafter to the former Director or to any person
who claims a benefit under or through him.
(b) For purposes of Section 8.2(a), a former
Director shall not be deemed to have engaged in
competition with the business or activities of the
Company if such former Director's sole relationship
with a competitor of the Company consists of his
holding, directly or indirectly, an equity interest
in such other company not greater than two percent
(2%) of such other company's outstanding
securities.
8.3 Fraud or Other Criminal Activity. Notwithstanding
--------------------------------
anything to the contrary contained in the Plan, in the event
a Director or former Director, irrespective of whether he is
receiving Retirement Benefit payments under the Plan, is
convicted of fraud or of a felony (and with respect to such
conviction such person's right to file an appeal after
conviction has expired, or if such person has filed an appeal
after conviction, the appellate court fails to reverse the
conviction) and such fraud or felony is determined by a
majority of the members of the Board of Directors then in
<PAGE>
office (excluding, if applicable, the Director guilty of such
fraud or felony) to have damaged Modine, the right of such
Director or former Director to receive any Retirement Benefit
payments under the plan and the right of any other person to
receive any benefit payments under the Plan under such
Director or former Director shall be immediately terminated
and no Retirement Benefit or other benefit payments under the
plan shall be paid thereafter to the Director, former
Director or any person who claims a benefit under or through
such Director or former Director. For purposes of this
Section 8.3 of the plan, any determination by the members of
the Board of Directors that any fraud or felony of a Director
or former Director has damaged Modine shall be conclusive and
binding upon the Director or former Director and any person
who claims a benefit under or through him.
<PAGE>
EXHIBIT (10(c)
A G R E E M E N T
between
MODINE MANUFACTURING COMPANY
and
R. T. SAVAGE
dated
January 1, 1984
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
Recitals . . . . . . . . . . . . . . . . . . . 3
I Employment; period of employment . . . . . . . 4
II Position, duties, responsibilities . . . . . . 5
III Compensation, compensation plans, perquisites. 7
IV Employee Benefit Plans . . . . . . . . . . . . 10
V Supplemental Retirement Annuity. . . . . . . . 12
VI Effect of Death or Disability. . . . . . . . . 15
VII Termination. . . . . . . . . . . . . . . . . . 16
VIII No Obligation to Mitigate Damages. . . . . . . 27
IX Confidential Information, Non Compete. . . . . 28
X Withholding. . . . . . . . . . . . . . . . . . 32
XI Notices. . . . . . . . . . . . . . . . . . . . 32
XII General Provisions . . . . . . . . . . . . . . 33
XIII Amendment or Modification; Waiver. . . . . . . 36
XIV Severability . . . . . . . . . . . . . . . . . 37
XV Successors to the Company. . . . . . . . . . . 37
XVI Change in Control. . . . . . . . . . . . . . . 38
XVII Governing Law. . . . . . . . . . . . . . . . . 39
<PAGE>
AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of
January, 1984, by and between Modine Manufacturing Company, a
Wisconsin corporation, having its principal place of business in
Racine, Wisconsin (the "Company"), and R. T. Savage, of Racine,
Wisconsin (the "Executive").
WHEREAS:
A. The Executive has been employed by the Company
for a period of 11 years.
B. The Executive is a principal executive officer
of the Company and is currently a group vice
president.
C. The Executive possesses intimate knowledge of
the business and affairs of the Company, its
policies, methods, potential and operations.
D. The Board of Directors of the Company (the
"Board") recognizes that Executive's contribution
to the growth and success of the Company has been
substantial and desires to assure the Company of
Executive's continued employment in an executive
capacity and to compensate him therefor.
E. Executive is desirous of committing himself to
serve the Company for the period and on the terms
herein provided.
NOW THEREFORE, In consideration of the foregoing and of
the respective covenants and agreements of the parties herein
contained, the parties hereto agree as follows:
I. Employment; period of employment.
1.01 The Company hereby agrees to continue
Executive in its employ, and Executive hereby
agrees to remain in the employ of the corporation
for the period set forth in paragraph 1.02 below
(Period of Employment), in the position and with
the duties and responsibilities set forth in
Section II below and subject to the other terms and
conditions hereinafter stated.
1.02 The Period of Employment shall commence on the
date first above written and shall continue until
the close of business on the third anniversary
thereof; provided, however, that on each
anniversary of the date of this Agreement the
Period of Employment shall be automatically
extended for an additional year unless prior
thereto either party hereto has given written
notice to the other that such party does not wish
to extend the Period of Employment. In the event
the Executive shall continue in the full time
<PAGE>
employment of the Company after the latter date,
such continued employment shall be subject to the
terms and conditions of this Agreement and the
Period of Employment shall include the period
during which the Executive in fact so continues in
such employment.
II. Position, duties, responsibilities.
2.01 (a) It is contemplated that during the
Period of Employment the Executive shall
continue to serve as a principal officer of
the Company and as a member of its Board of
Directors if serving as a member of the Board
of Directors on the date of this Agreement or
if elected to the Board of Directors during
the Period of Employment with the office(s)
and title(s) set forth in Exhibit A attached
to and made part of this Agreement, with
reporting responsibility as set forth in such
Exhibit A and with duties and
responsibilities including those specifically
set forth in such Exhibit A.
(b) At all times during the Period of
Employment Executive shall hold a position of
responsibility and importance and a position
of scope, with the functions, duties and
responsibilities attached thereto, at least
equal in responsibility and importance and in
scope to and commensurate with his position
described in general terms in subparagraph
2.01(a) above and Exhibits A to this
Agreement.
2.02 During the Period of Employment the Executive
shall, without compensation other than that herein
provided, also serve and continue to serve as an
officer or director, or both, of any subsidiary,
division or affiliate of the Company.
2.03 Throughout the Period of Employment the
Executive shall devote his full time and undivided
attention during normal business hours to the
business and affairs of the Company except for
reasonable vacations, approved leaves of absence,
and except for illness or incapacity but nothing in
this Agreement shall preclude the Executive from
devoting reasonable periods required for:
(a) serving as a director or a member
of any organization involving no conflict of
interest with the interests of the Company;
(b) engaging in charitable and community activities
and
(c) managing his personal investments,
<PAGE>
provided that such activities do not materially
interfere with the regular performance of his
duties and responsibilities under this Agreement.
2.04 The office of the Executive shall be located
at the principal office of the Company within the
Racine, Wisconsin area and the Executive shall not
be required to locate his office elsewhere without
his prior written consent, nor shall he be required
to be absent therefrom on travel status or
otherwise more than ninety (90) working days in any
year nor more than twenty (20) consecutive days at
any one time.
III. Compensation, compensation plans, perquisites
3.01 (a) For all services rendered by the Executive in
any capacity during the Period of Employment,
including, without limitation, services as an
executive, officer, director or member of any
committee of the Company or of any subsidiary,
division or affiliate thereof, the Executive
shall be paid as compensation:
(i) A base salary (the Minimum Base Salary),
payable not less often than monthly, at
the rate of no less than $10,417 per month,
with such increases in such rate as shall
be awarded from time to time to reflect
increases in the cost of living and
such increases as shall be awarded
from time to time in accordance with
the Company's regular administrative
practices of other salary increases
applicable to executives of the
Company in effect on the date of this
Agreement (the Minimum Base Salary)
and
(ii) An annual incentive award or bonus under
the Company's Management Incentive Plan,
or such equivalent successor plan as may be
adopted by the Company, upon a basis
that will render total compensation
for any calendar month, consisting of
the Minimum Base Salary provided in
clause (i) of this subparagraph 3.01
(a), plus the annual incentive award
for such month determined by dividing
the annual incentive award required by
this Agreement to be made for the
fiscal year of the Company in which
such month occurred by the number of
months in such fiscal year, equal to
no less than $11,667 per month.
(b) Subject to the provisions of clause
(ii) of subparagraph 3.01(a) above, nothing
in this Agreement shall preclude a change in
<PAGE>
the mix between the base salary and annual
incentive award of the Executive by
increasing the base salary of the Executive,
or the incentive award or both.
(c) Any increase in salary pursuant to
clause (i) of subparagraph 3.01(a) or in
annual incentive award or other compensation
shall in no way diminish any other obligation
of the Company under this Agreement.
3.02 During the Period of Employment the Executive
shall be and continue to be a full participant in
the Incentive Stock Option Plan of the Company and
in any and all other executive incentive plans in
which executives of the Company participate that
are in effect on the date hereof and that may
hereafter be adopted, including, without
limitation, any stock option, stock purchase or
stock appreciation right plans, or equivalent
successor plans that may be adopted by the Company,
with at least the same reward opportunities that
have heretofore been provided. Nothing in this
Agreement shall preclude improvement of reward
opportunities in such plans or other plans in
accordance with the present practice of the
Company.
3.03 During the Period of Employment the Executive
shall be entitled to perquisites, including without
limitation, an office, secretarial and clerical
staff, and to fringe benefits, including, without
limitation, the business and personal use of one or
more automobiles and payment or reimbursement of
country club and luncheon club fees and dues,
executive health programs, paid annual Mayo Clinic
visit, income tax services, estate planning or
other executive perquisites of the Company
established for key employees, in each case at
least equal to those incidental to his office on
the date of this Agreement, as well as to
reimbursement, upon proper accounting, of
reasonable expenses and disbursements incurred by
him in the course of his duties.
3.04 The compensation, perquisites and benefits
provided for in this Section III, together with
other matters therein set forth, are in addition to
the benefits provided for in Sections IV and V of
this Agreement.
IV. Employee Benefit Plans
4.01 The Executive, his dependents and beneficiaries,
including, without limitation, any beneficiary of
a joint and survivor or other optional method of
payment applicable to the payment of benefits under
the Pension and Disability Plan of the Company, as
defined in subparagraph 5.01(c) below, shall be
<PAGE>
entitled to all payments and benefits and service
credit for benefits during the Period of Employment
to which officers of the Company, their dependents
and beneficiaries, are entitled as the result of the
employment of such officers during the Period of
Employment under the terms of employee plans and
practices of the Company, including, without
limitation, the Pension and Disability Plan of the
Company, as defined in subparagraph 5.01(c) below,
the Modine Contributory Employee Stock Ownership
and Investment Plan, the 401(k) plan, its death
benefit plans (consisting of its Group Insurance
Plan for Management Employees providing term life
insurance, accidental death and dismemberment
insurance, and travel accident insurance), its
disability benefit plans (consisting of its Income
Protection Plan providing salary continuation,
sickness and accident and long-term disability
benefits), its medical, dental and health and
welfare plans and other present or equivalent
successor plans and practices of the Company, its
subsidiaries and divisions, for which officers,
their dependents and beneficiaries, are eligible,
and to all payments or other benefits under any
such plan or practice subsequent to the Period of
Employment as a result of participation in such
plan or practice during the Period of Employment.
4.02 Nothing in this Agreement shall preclude the
Company from amending or terminating any employee
benefit plan or practice, but, it being the intent
of the parties that the Executive shall continue to
be entitled during the Period of Employment to
perquisites as set forth in paragraph 3.03 above and
to benefits and service credit for benefits under
paragraph 4.01 above at least equal to those attached
to his position on the date of this Agreement, nothing
in this Agreement shall operate or be construed to
reduce, or authorize a reduction without the
Executive's written consent in the level of such
perquisites, benefits or service credit for benefits;
in the event of any such reduction, by amendment or
termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries, shall
continue to be entitled to perquisites, benefits and
service credit for benefits at least equal to the
perquisites, benefits and service credit for benefits
under such plans or practice that he or his dependents
and beneficiaries would have received if such reduction
had not taken place. If and to the extent that such
perquisites, benefits and service credits are not
payable or provided under any such plans or practices
by reason of such amendment or termination thereof, the
Company itself shall pay or provide therefor.
V. Supplemental Retirement Benefit
5.01 For the purpose of this Section V and any
other provision of this Agreement:
<PAGE>
(a) The term "Average Annual Earnings"
shall mean the arithmetic average of the
Executive's Annual Earnings for the highest
five consecutive calendar years during the
last ten years immediately preceding the
earlier of the calendar year of the
Executive's Normal Retirement Date or
termination of service with the Company;
except that Annual Earnings in the year of
Normal Retirement or termination may also be
considered.
(b) The term "Annual Earnings" shall
mean all compensation paid to the Executive
during the calendar year for services
rendered to the Company (i.e. W-2 earnings,
plus any amount contributed on behalf of the
Executive to a Company sponsored qualified
Salary Reduction Plan).
(c) The term "Pension and Disability
Plan" shall mean the Modine Pension and
Disability Plan for Salaried Employees that
is in effect on the date hereof, and any
amendments thereto which may hereafter be
adopted.
(d) The term "Credited Service" shall
mean the period of the Executive's employment
considered in determining the amount of
benefit payable to or on behalf of the
Executive in accordance with Section 2.3 of
the Pension and Disability Plan, and
including each year of this Employment
Agreement.
5.02 Upon retirement or termination of employment
hereunder, the Executive shall be entitled to the
supplemental retirement benefit provided by this
Section V in addition to all other benefits to
which the Executive may be entitled including,
without limitation, benefits under the Pension and
Disability Plan.
5.03 (a) Subject to the other provisions of
this Section V, the Executive shall be
entitled to a supplemental retirement benefit
on a straight life annuity basis payable by
the Company commencing on the first day of
the month immediately following the month in
which he retires or terminates employment,
and continuing on the first day of each month
thereafter during his lifetime.
(b) The monthly payment provided for in
subparagraph 5.03(a) above shall be equal to
one-twelfth of
<PAGE>
(i) two (2%) percent of the Executive's
Average Annual Earnings for each year
of Credited Service up to a maximum of
twenty (20) years, plus
(ii) one (1%) percent of his Average Annual
Earnings for each year of Credited
Service in excess of twenty (20) years,
minus
(iii) one-half (1/2) of the Primary Social
Security Benefit, as defined by
Section 1.1(w) of the Pension and
Disability Plan, annualized, minus
(iv) his Retirement Pension benefit to which
he is entitled under the Pension and
Disability Plan.
5.04 A joint and survivor or other optional method
of payment applicable to the payment to the
Executive of his Retirement Pension benefit under
the Pension and Disability Plan, shall
automatically be applicable to the payment of the
supplemental retirement benefit provided by this
Section V, upon the same terms and conditions,
including reduction or discount factors, applicable
under the Pension and Disability Plan; except that
the limits of Section 4.7 of the Pension and
Disability Plan shall not apply to this
supplemental retirement benefit.
5.05 In the event that the Company defaults in
payment of all or any part of the supplemental
retirement benefit hereinbefore provided by this
Section V and fails to remedy such default within
thirty days after having received notice from the
Executive or his beneficiary, the Company shall
thereupon pay to the Executive or his beneficiary,
as the case may be, in full discharge of its
obligations under this Section V, (i) a lump sum
amount actuarially equivalent, based on the same
assumption and discount factors as would be
applicable under the Retirement Income Plan for
Salaried Employees as then in effect, to the future
payments otherwise payable under this Section V,
and (ii) an amount equal to any and all past due
payments under this Section V.
VI. Effect of Death or Disability
6.01 In the event of the death of the Executive
during the Period of Employment, the legal
representative of the Executive shall be entitled
to the compensation provided for in paragraph 3.01
above for the month in which death shall have taken
place, at the rate being paid at the time of death,
and the Period of Employment shall be deemed to
have ended as of the close of business on the last
<PAGE>
day of the month in which death shall have occurred
but without prejudice to any payments due in
respect of the Executive's death.
6.02 (a) The term "Disability," as used in
this Agreement, shall mean an illness or
accident occurring during the Period of
Employment which prevents the Executive from
performing his duties under this Agreement.
(b) In the event of the Disability of
the Executive during the Period of
Employment, the Executive shall be entitled
to the benefits provided for in paragraph
4.01 above, at the rate being paid at the
time of the commencement of Disability. In
addition, after a disability period of twelve
(12) months, the Executive shall receive
disability payments of 60% of the monthly
compensation set forth in paragraphs
3.01(a)(i) and 3.01(a)(ii) less the amount of
any Company group insured long-term
disability benefits he receives.
VII. Termination
7.01 The Company may at its option terminate this
Agreement at any time during the term hereof. In
the event of a termination, as defined in paragraph
7.03 below, during the Period of Employment, the
provisions of this Section VII shall apply. Any
provision of this Agreement to the contrary
notwithstanding, the payments, benefits, service
credit for benefits and other matters provided by
this Section VII in the event of such a Termination
are in addition to any payments, benefits, service
credit for benefits and other matters provided by
Section V that may apply in such event.
7.02 In the event of a Termination and subject to
compliance by the Executive with the provisions of
Section IX below, relating to confidential
information, the Company shall, as liquidated
damages or severance pay, or both, or payment for
services rendered in the past, pay to the Executive
and provide him, his dependents, beneficiaries and
estate, with the following:
(a) The Company shall pay the Executive (i) the
compensation provided in paragraph 3.01 above
for the month in which Termination shall have
occurred at the rate being paid at the time of
Termination and (ii) an amount equal to the
Average Annual Earnings of the Executive, as
defined in subparagraph 5.01(a) above, at the
end of each month thereafter commencing with
the month next following the month in which
Termination occurred and continuing during
the remainder of the Period of Employment but
<PAGE>
in no event beyond the month in which the death
of the Executive shall have occurred nor beyond
the last month, if any, for which the Executive
would be entitled to payment in respect of
Disability under paragraphs 6.01 and 6.02(b)
above in the absence of such Termination.
(b) During the period that the payments provided
for in subparagraph (a) of this paragraph 7.02
are required to be made, the Executive, his
dependents and beneficiaries, shall continue
to be entitled to all benefits under employee
benefit plans of the Company as if the Executive
were still employed during such period under
this Agreement and, if and to the extent that
such benefits shall not be payable or provided
under any such plan by reason of the Executive
no longer being an employee of the Company as
the result of Termination, the Company shall
itself pay or provide for payment to the
Executive, his dependents and beneficiaries, of
such benefits and the service credit for benefits
provided for in subparagraph 7.02(c) below.
(c) The period in which the payments provided for
in subparagraph (a) of this paragraph 7.02 are
required to be made shall be considered
(i) service with the Company for the purpose
of continued credits under the employee
benefit plans referred to in paragraph 4.01
above and all other benefit plans of the
Company applicable to the Executive or his
beneficiaries as in effect immediately prior
to Termination but prior to any reduction of
benefits thereunder as the result of amendment
or termination during the Period of Employment;
(ii) service within the meaning of subparagraph
5.01(d) above for purposes of Section V
above; and
(iii) service with the Company for purposes of
determining payments and other rights in
respect of awards made or accrued prior to
Termination under the executive incentive
plans referred to in paragraph 3.02 above
and all other incentive plans of the Company
in which the Executive was a participant
prior to Termination.
7.03 The word "Termination," for the purpose of
this Section 7 and any other provisions of this
Agreement, shall mean:
(a) Termination by the Company of the employment of the
Executive for any reason other than for Cause as
defined in paragraph 7.04 below or for Disability
as defined in subparagraph 6.02(a) above or death.
<PAGE>
(b) Termination by the Executive of his employment with
the Company upon the occurrence of any of the following
events:
(i) Failure to elect or reelect the Executive to
the Board of Directors of the Company, if the
Executive shall have been a member of the Board
of Directors on the date of this Agreement or at
any time thereafter during the Period of
Employment, or failure to elect or reelect the
Executive to, or removal of the Executive from,
the office(s) described in paragraph 2.01(a) above
and Exhibit A to this Agreement.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties attached
to the position described in paragraph 2.01 above
and Exhibit A to this Agreement, or a reduction in
compensation, which is not remedied within 30 days
after receipt by the Company of written notice
from the Executive.
(iii) A determination by the Executive made in good
faith that as a result of a Change in Control of
the Company, as defined in Section XVI below,
and a change in circumstances thereafter and
since the date of this Agreement significantly
affecting his position, he is unable to carry
out the authorities, powers, functions or duties
attached to his position and contemplated by
Section II of this Agreement and the situation
is not remedied within 30 days after receipt by
the Company of written notice from the Executive
of such determination.
(iv) A breach by the Company of any provision of this
Agreement not embraced within the foregoing clauses
(i), (ii), and (iii) of this subparagraph 7.03(b)
which is not remedied within 30 days after receipt
by the Company of written notice from the Executive.
(v) The liquidation, dissolution, consolidation or
merger of the Company or transfer of all or a
significant portion of its assets unless a
successor or successors (by merger, consolidation
or otherwise) to which all or a significant portion
of its assets have been transferred shall have
assumed all duties and obligations of the Company
under this Agreement but without releasing the
company that is the original party to this
Agreement;
provided that in any event set forth in this subparagraph
7.03(b) above, the Executive shall have elected to
terminate his employment under this Agreement upon not
less than forty and not more than ninety days' advance
written notice to the Board of Directors of the Company,
attention of the Secretary, given, except in the case of
a continuing breach, within three calendar months after
<PAGE>
(A) failure to be so elected or reelected, or removal
(B) expiration of the thirty-day cure period with respect
to such event, or (C) the closing date of such liquidation,
dissolution, consolidation, merger or transfer of assets,
as the case may be.
An election by the Executive to terminate his employment given
under the provisions of this paragraph 7.03 shall not be deemed
a voluntary termination of employment by the Executive for the
purpose of this Agreement or any plan or practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to
have been for Cause only
(a) if termination of his employment shall have been
the result of an act or acts of dishonesty on the
part of the Executive constituting a felony and
resulting or intended to result directly or
indirectly in gain or personal enrichment at the
expense of the Company, or
(b) if there has been a breach by the Executive during
the Period of Employment of the provisions of
Section IX relating to confidential information, and
such breach results in demonstrably material injury to
the Company, the Executive shall have either failed to
remedy such alleged breach within thirty days from his
receipt of written notice from the Secretary of the
Company pursuant to resolution duly adopted by the
Board of Directors of the Company after notice to the
Executive and an opportunity to be heard demanding
that he remedy such alleged breach, or shall have
failed to take all reasonable steps to that end
during such thirty-day period and thereafter;
provided that there shall have been delivered to the Executive
a certified copy of a resolution of the Board of Directors of
the Corporation adopted by the affirmative vote of not less than
three-fourths of the entire membership of the Board of Directors
called and held for that purpose and at which the Executive was
given an opportunity to be heard, finding that the Executive was
guilty of conduct set forth in subparagraphs (a) or (b) above,
specifying the particulars thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement
to the contrary notwithstanding, the employment of the Executive
shall in no event be considered to have been terminated by the
Company for Cause if termination of his employment took place
(i) as the result of bad judgment or negligence on the part of
the Executive, or (ii) as the result of an act or omission
without intent of gaining therefrom directly or indirectly a
profit to which the Executive was not legally entitled, or
(iii) because of an act or omission believed by the Executive
in good faith to have been in or not opposed to the interests
of the Company, or (iv) for any act or omission in respect of
which a determination could properly be made that the
Executive met the applicable standard of conduct prescribed
for indemnification or reimbursement or payment of expenses
<PAGE>
under (A) the Bylaws of the Company, or (B) the laws of the
State of Wisconsin or (C) the directors' and officers'
liability insurance of the Company, in each case either as in
effect at the time of this Agreement or in effect at the time
of such act or omission, or (v) as the result of an act or
omission which occurred more than twelve calendar months
prior to the Executive's having been given notice of the
termination of his employment for such act or omission
unless the commission of such act or such omissions could
not at the time of such commission or omission have been
known to a member of the Board of Directors of the Company
(other than the Executive), in which case more than twelve
calendar months from the date that the commission of such
act or such omission was or could reasonably have been so
known, or (vi) as the result of a continuing course of
action which commenced and was or could reasonably have
been known to a member of the Board of Directors of the
Company (other than the Executive) more than twelve
calendar months prior to notice having been given to the
Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be
terminated by the Company during the Period of Employment
and such termination is alleged to be for Cause, or the
Executive's right to terminate his employment under
paragraph 7.01 above shall be questioned by the Company,
or the Company shall withhold payments or provision of
benefits because the Executive is alleged to be
engaged in Competition in breach of the provisions
of paragraph 9.03 below or for any other reason,
the Executive shall have the right, in addition to
all other rights and remedies provided by law, at
his election either to seek arbitration within the
Racine, Wisconsin area or other mutually agreeable
area under the rules of the American Arbitration
Association by serving a notice to arbitrate upon
the Company or to institute a judicial proceeding,
in either case within ninety days after having
received notice of termination of his employment or
notice in any form that the termination of his
employment under paragraph 7.03(b) is subject to
question or that the Company is withholding or
proposes to withhold payments or provision of
benefits or within such longer period as may
reasonably be necessary for the Executive to take
action in the event that his illness or incapacity
should preclude his taking such action within such
ninety-day period.
7.06 (a) In the event that the Company defaults on
any obligation set forth in paragraph 7.02
of this Agreement and shall have failed to
remedy such default within thirty (30) days
after having received written notice of such
default from the Executive, in addition to
all other rights and remedies that the
Executive may have as a result of such default,
the Executive may demand and the Company shall
thereupon be required to deposit, with the
<PAGE>
third-party stakeholder hereinafter described,
an amount equal to the undiscounted value of
any and all undischarged, future obligations
of the Company under paragraph 7.02 of this
Agreement and such amount shall thereafter be
held, paid, applied or distributed by such
third-party stakeholder for the purpose of
satisfying such undischarged, future
obligations of the Company when and to the
extent that they become due and payable. Any
interest or other income on such amount shall
be paid over currently as earned to the
Company. To the extent not theretofore
expended, such amount shall be repaid to the
Company at such time as the third-party
stakeholder, in its sole discretion,
reasonably exercised, determines, upon the
advice of counsel and after consultation with
the Company and the Executive or, in the
event of his death, his beneficiary, that all
obligations of the Company under paragraph
7.02 hereof have been substantially
satisfied.
(b) Such amount under (a) above shall, in the
event of any question, be determined jointly
by the firm of certified public accountants
regularly employed by the Company and a firm
of certified public accountants selected by
the Executive, in each case upon the advice
of actuaries to the extent the certified
public accountants consider necessary, and,
in the event such two firms of accountants
are unable to agree on a resolution of the
question, such amount shall be determined
by an independent firm of certified public
accountants selected jointly by both firms
of accountants.
(c) The third-party stakeholder, the fees and
expenses of which shall be paid by the Company,
shall be a national or state bank or trust
company having a combined capital, surplus
and undivided profits and reserves of not
less than Ten Million Dollars ($10,000,000)
which is duly authorized and qualified to do
business in the state in which the Executive
resides at the time of such default.
VIII. No Obligation to Mitigate Damages
8.01 In the event of a termination, as defined in
paragraph 7.03 above, the Executive shall not be
required to mitigate the amount of compensation and
benefits set forth in paragraph 7.02 above by
seeking employment with others, or otherwise, nor
shall the amount of such compensation and benefits
be reduced or offset in anyway by any income or
<PAGE>
benefits earned by Executive from another employer
or other source after the termination becomes
effective.
IX. Confidential Information, Non Compete
9.01 The Executive agrees not to disclose, (either
while in the Company's employ, while engaged as a
consultant or at any time thereafter, to any person
not employed by the Company, or not engaged to
render services to the Company, except with the
prior written consent of an officer authorized to
act in the matter by the Board of Directors of the
Company), any confidential information obtained by
him while in the employ of the Company, including,
without limitation, information relating to any of
the Company's inventions, processes, formulae,
plans, devices, compilations of information,
methods of distribution, customers, client
relationships, marketing strategies or trade
secrets; provided, however, that this provision
shall not preclude the Executive from use or
disclosure of information known generally to the
public or of information not considered
confidential by persons engaged in the business
conducted by the Company or from disclosure
required by law or Court order. The Agreement
herein made in this paragraph 9.01 shall be in
addition to, and not in limitation or derogation
of, any obligations otherwise imposed by law upon
the Executive in respect of confidential
information and trade secrets of the Company, its
subsidiaries and affiliates.
9.02 The Executive also agrees that upon leaving
the Company's employ he will not take with him,
without the prior written consent of an officer
authorized to act in the matter by the Board of
Directors of the Company, and he will surrender to
the Company any record, list, drawing, blueprint,
specification or other document or property of the
Company, its subsidiaries and affiliates, together
with any copy and reproduction thereof, mechanical
or otherwise, which is of a confidential nature
relating to the Company, its subsidiaries and
affiliates, or, without limitation, relating to its
or their methods of distribution, client
relationships, marketing strategies or any
description of any formulae or secret processes, or
which was obtained by him or entrusted to him
during the course of his employment with the
Company.
9.03 (a) Subject to the provisions of paragraph 7.05 above,
there shall be no obligation on the part of the
Company to make any further payments provided for
in Section VI above or to provide any further
benefits specified in such Section VI if` the
Executive shall, during the period that such
<PAGE>
payments are being made or benefits provided,
engage in Competition with the Company as
hereinafter defined, provided all of the
following shall have taken place:
(i) the Secretary of the Company, pursuant to
resolution of the Board of Directors of the
Company, shall have given written notice to
the Executive that, in the opinion of the
Board of Directors, the Executive is
engaged in such Competition, specifying the
details;
(ii) the Executive shall have been given a
reasonable opportunity upon reasonable notice
to appear before and to be heard by the Board
of Directors prior to the determination of the
Board evidenced by such resolution;
(iii) the Executive shall neither have ceased to
engage in such Competition within thirty days
from his receipt of such notice nor diligently
taken all reasonable steps to that end during
such thirty-day period and thereafter.
(b) The word "Competition" for the purposes of this
paragraph 9.03 and any other provision of this
Agreement shall mean (i) taking a management
position with or control of a business engaged
in the design, development, manufacture, marketing
or distribution of products, which constituted 5%
or more of the sales of the Company and its
subsidiaries and affiliates during the last fiscal
year of the Company preceding the termination of
the Executive's employment, in any geographical
area in which the Company, its subsidiaries or
affiliates is at the time engaging in the design,
development, manufacture, marketing or distribution
of such products; provided, however, that in no event
shall ownership of less than 5% of the outstanding
capital stock entitled to vote for the election of
directors of a corporation with a class of equity
securities held of record by more than 500 persons,
standing alone, be deemed Competition with the
Company within the meaning of this paragraph 9.03,
(ii) soliciting any person who is a customer of the
businesses conducted by the Company, or any business
in which the Executive has been engaged on behalf of
the Company and its subsidiaries or affiliates at
anytime during the term of this Agreement on
behalf of a business described in clause (i) of
this subparagraph 9.03(b) or (iii) inducing or
attempting to persuade any employee of the Company
or any of its subsidiaries or affiliates to
terminate his employment relationship in order
to enter into employment with a business described
in clause (i) of this subparagraph 9.03(b).
<PAGE>
(c) The Executive agrees, in addition to the provisions
relating to Competition set forth in subparagraph
9.03(a) above, that, he will not engage in
Competition as defined in subparagraph 9.03(b) above,
during the Period of Employment, and during the
twenty-four (24) months immediately thereafter;
provided, however, that the competition prohibition
during the twenty-four (24) month following the
Period of Employment shall not be applicable should
there be a "Change in Control of the Company" as
defined in Article XVII.
X. Withholding
Anything to the contrary notwithstanding, all payments
required to be made by the Company under this Agreement
to the Executive or his estate or beneficiaries shall be
subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the
Company may reasonably determine it should withhold
pursuant to any applicable law or regulation. In lieu of
withholding such amounts, the Company may accept other
provisions to the end that it has sufficient funds to pay
all taxes required by law to be withheld in respect of
any or all of such payments.
XI. Notices
All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and
shall be sufficiently given if and when mailed in the
continental United States by registered or certified mail
or personally delivered to the party entitled thereto at
the address given from time to time by the parties to
this Agreement which address shall be such address as the
addressee may have given most recently by a similar
notice. Any such notice delivered in person shall be
deemed to have been received on the date of delivery.
XII. General Provisions
12.01 There shall be no right of set-off or
counterclaim in respect of any claim, debt or
obligation against any payments to the Executive,
his dependents, beneficiaries or estate, provided
for in this Agreement.
12.02 The Company and the Executive recognize that
each party will have no adequate remedy at law for
breach by the other of any of the agreements
contained in this Agreement and, in the event of
any such breach, the Company and the Executive
hereby agree and consent that the other shall be
entitled to a decree of specific performance,
mandamus or other appropriate remedy to enforce
performance of such agreements.
12.03 No right or interest to or in any payments
shall be assignable by the Executive; provided,
<PAGE>
however, that this provision shall not preclude him
from designating one or more beneficiaries to
receive any amount that may be payable after his
death and shall not preclude the legal
representative of his estate from assigning any
right hereunder to the person or persons entitled
thereto under his will or, in the case of
intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to
his estate.
12.04 (a) No right, benefit or interest hereunder, shall
be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any
claim, debt or obligation, or to execution,
attachment, levy or similar process, or
assignment by operation of law. Any attempt,
voluntary or involuntary, to effect any action
specified in the immediately preceding sentence
shall, to the full extent permitted by law, be
null, void and of no effect.
(b) The Executive shall not have any present right,
title, or interest whatsoever in or to any
investments which the Company may make to aid
it in meeting its obligations under this Agreement.
(c) Except for the provisions of paragraph 7.06 above,
nothing contained in this Agreement shall create or
be construed to create a trust of any kind, or a
fiduciary relationship between the Company and the
Executive or any other person.
(d) Except for the provisions of paragraph 7.06 above,
to the extent that any person acquires a right to
receive payments from the Company under this
Agreement, except to the extent provided by law
such right shall be no greater than the right of
an unsecured general creditor of the Company.
(e) Except for the provisions of paragraph 7.06 above,
all payments to be made under this Agreement shall
be paid from the general funds of the Company and
no special or separate fund shall be established
and no segregation of assets shall be made to assure
payment of amounts payable under this Agreement.
12.05 The term "beneficiaries" as used in this Agreement shall,
in the event of the death of the Executive, include any
person, including a corporate or individual beneficiary
designated by the Executive in a written instrument in
form acceptable to and filed with the Company. In the
absence of such designation, or if the designation is
invalid for any reason, the benefits shall then be paid
to the Executive's estate.
12.06 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this
<PAGE>
Agreement to the Executive shall be deemed, where
appropriate, to refer to his legal representative
or, where appropriate, to his beneficiary or
beneficiaries.
12.07 If any event provided for in this Agreement is
scheduled to take place on a legal holiday, such
event shall take place on the next succeeding day
that is not a legal holiday.
12.08 The titles to sections in this Agreement are
intended solely for convenience and no provision of
this Agreement is to be construed by reference to
the title of any section.
12.09 This Agreement shall be binding upon and shall
inure to the benefit of the Executive, his heirs
and legal representatives, and the Company and its
successors as provided in Section XVI hereof.
12.10 This instrument contains the entire agreement
of the parties relating to the subject matter of
this Agreement and supersedes and replaces all
prior agreements and understandings with respect to
such subject matter, and the parties hereto have
made no agreements, representations or warranties
relating to the subject matter of this Agreement
which are not set forth herein.
XIII. Amendment or Modification: Waiver
No provision of this Agreement may be amended, modified
or waived unless such amendment, modification or waiver
shall be authorized by the Board of Directors of the
Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by
the Executive and by an officer of the Company hereunto
duly authorized. Except as otherwise specifically
provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of a
subsequent breach of such condition or provision or a
waiver of a similar or dissimilar provision or condition
at the same time or at any prior or subsequent time.
XIV. Severability
Anything in this Agreement to the contrary
notwithstanding:
(a) In the event that any provision of this
Agreement, or portion thereof, shall be determined
to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this
Agreement and parts of such provision not so
invalid or unenforceable shall be unaffected
thereby and shall remain in full force and effect
to the fullest extent permitted by law:
<PAGE>
(b) Any provision of this Agreement, or portion
thereof, which may be invalid or unenforceable in
any jurisdiction shall be limited by construction
thereof, to the end that such provision, or portion
thereof, shall be valid and enforceable in such
jurisdiction; and
(c) Any provision of this Agreement, or portion
thereof, which may for any reason be invalid or
unenforceable in any jurisdiction shall remain in
effect and be enforceable in any jurisdiction in
which such provision, or portion thereof, shall be
valid and enforceable.
XV. Successors to the Company
Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including,
without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially
all of the assets of the Company whether by merger,
consolidation, sale or otherwise (and such successor
shall thereafter be deemed embraced within the term
"the Company" for the purposes of this Agreement),
but shall not otherwise be assignable by the Company.
XVI. Change in Control
For the purpose of this Agreement, the term "Change in
Control of the Company" shall mean a change in control
of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as
in effect on the date of this Agreement; provided that,
without limitation, such a change in control shall be
deemed to have occurred if and when (a) any "person" (as
such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) is or becomes a
beneficial owner, directly or indirectly, of securities
of the Company representing thirty-five percent (355)
or more of the combined voting power of the Company's
then outstanding securities or (b) during any period of
24 consecutive months, commencing before or after the
date of this Agreement, individuals who at the beginning
of such twenty-four month period were directors of the
Company cease for any reason to constitute at least a
majority of the Board of Directors of the Company.
XVII. Governing Law
The validity, interpretation, construction, performance
and enforcement of this Agreement shall be governed by
the laws of the State of Wisconsin without giving effect
to the principles of conflict of laws thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MODINE MANUFACTURING COMPANY
BY s/E. E. Richter
-----------------------------------
President
(SEAL)
Attest:
s/W. E. Pavlick
- --------------------------
Secretary
s/R. T. Savage
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<PAGE>
EXHIBIT A
Period Title
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<PAGE>
EXHIBIT 10(d)
MODINE MANUFACTURING COMPANY
1985 INCENTIVE STOCK PLAN
(as amended July 19, 1989)
(as amended July 18, 1990)
(as amended January 15, 1997)
1. PURPOSE. The Modine Manufacturing Company 1985 Incentive
Stock Plan (the "Plan") is intended to provide incentives which
will attract and retain highly competent persons as officers and
key employees of Modine Manufacturing Company (the "Company") and
its majority owned subsidiaries, by providing them with
opportunities to acquire Common Stock of the Company ("Common
Stock") or monetary payments based on the value of such shares
pursuant to the Benefits described herein.
2. ADMINISTRATION. The Board of Directors of the Company
shall supervise and administer the Plan. Any questions of
interpretation of the Plan or of any Benefits issued under it
shall be determined by the Board and such determination shall be
final and binding upon all persons. Any or all powers and
discretion vested in the Board under this Plan (except the power
to amend or terminate the Plan) may be exercised by a committee
of at least two directors (the "Committee") authorized by the
Board to do so. Composition of the Committee is intended to
satisfy the requirements of Rule 16 b-3 of the Securities and
Exchange Act of 1934 (the "Exchange Act") and Section 162(m) of
the Internal Revenue Code. A majority of members of the
Committee shall constitute a quorum, and all determinations of
the Committee shall be made by a majority of its members. Any
determination of the Committee under the Plan may be made without
notice or meeting of the Committee, by a writing signed by a
majority of the Committee members.
3. PARTICIPANTS. Participants will consist of such key
employees (including officers) of the Company or any or all of
its present or future majority owned subsidiaries as the Board of
Directors in its sole discretion determines to be mainly
responsible for the success and future growth and profitability
of the Company and whom the Board of Directors may designate from
time to time to receive Benefits under the Plan. Benefits may be
granted under this Plan to persons who have received options or
other Benefits under this or other plans of the Company.
4. TYPES OF BENEFITS. Benefits under the Plan may be
granted in any one or a combination of (a) Stock Purchase
Agreements; (b) Stock Awards or Bonuses; (c) Stock Options
(incentive stock options and non-qualified stock options with or
without tax offset bonuses and discounted stock options); (d)
Stock Appreciation Rights; (e) Restricted Stock; (f) Performance
Unit Plans; (g) Performance Share Plans; and (h) Book Value Stock
Plans; all as generally described hereinafter and all subject to
such features currently utilized in connection with such Benefits
<PAGE>
or as developed hereafter which comply with appropriate Internal
Revenue Service, Securities and Exchange Commission, or other
regulations, and such other terms and conditions all as the Board
of Directors may deem appropriate.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved
for issuance under the Plan an aggregate of 2,250,000 shares of
Common Stock (except as supplemented hereinafter provided in
Paragraph 15), $0.625 par value, which may be authorized but
heretofore unissued shares or shares reacquired by the Company,
including shares purchased on the open market. Any shares
subject to the options, rights, agreements, plans, or awards as
described hereinafter or issued under such options, rights,
agreements, plans or awards may thereafter be subject to new
options, rights, agreements, plans or awards under this Plan if
there is a lapse, expiration or termination of any such options,
rights, agreements, plans or awards prior to issuance of the
shares or payment of the equivalent or if shares are issued under
such options, rights, agreements, plans or awards, and thereafter
are reacquired by the Company pursuant to rights reserved by the
Company upon issuance thereof.
6. STOCK PURCHASE AGREEMENTS. Stock Purchase Agreements
will consist of agreements for the present or future sale of
Common Stock by the Company to a participant at such prices and
on such terms and conditions as the Board of Directors deems
appropriate.
7. STOCK AWARDS. Stock Awards will consist of shares of
Common Stock transferred to participants without other payment
therefor as a bonus for service rendered to the Company and its
majority owned subsidiaries.
8. STOCK OPTIONS. Stock Options will consist of options to
purchase shares of Common Stock at purchase prices determined by
the Committee at the date such option is granted. Except
regarding Incentive Stock Options, such option price may be less
than the fair market value of Modine Common Stock on the date of
grant, but in no event shall the option price be less than the
par value of the shares. Such options will be exercisable not
later than ten years after the date they are granted and will
terminate not later than three years after termination of
employment for any reason other than death.
9. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights,
granted in conjunction with a stock option, will consist of
rights to receive an amount equal to the appreciation in fair
market value since the date of grant in lieu of exercising the
corresponding stock option.
10. RESTRICTED STOCK. Restricted Stock will consist of
shares of Common Stock which are transferred to the employee but
which carry restrictions such as a prohibition against
disposition or an option to repurchase in the event of employment
termination, and may be subject to a substantial risk of
forfeiture. Shares of Restricted Stock may be granted to the
employee at no charge, or they may be sold to him. Restrictions
on the shares of stock may lapse over a period of time. As the
restrictions lapse, the employee has unrestricted shares which
<PAGE>
he may sell or transfer. If, however, the restrictions are
violated prior to their lapse, those shares still subject to such
restrictions are forfeited by the employee, and must be returned
to the Company.
11. PERFORMANCE UNIT PLANS. A Performance Unit Plan will
provide for units, contingently granted, which entitle the
employee to cash payments or their equivalent in shares of stock
valued at the time of the grant (i.e., the unit value remains
constant and does not fluctuate with changes in the market value
of the stock), if predetermined objectives are met.
12. PERFORMANCE SHARE PLANS. A Performance Share Plan will
provide for artificial shares, contingently granted, which
entitle the employee to actual shares of Common Stock or their
cash equivalent at the time of payment (i.e., the unit value may
appreciate or decline depending on future market value of the
stock), if predetermined objectives are achieved.
13. BOOK VALUE STOCK PLANS. A Book Value Stock Plan will
permit the employee to purchase shares of Common Stock at book
value. Such "book value" stock may be required to be resold to
the Company upon termination of the employment relationship, or
at other specified times at the then-book value of the stock.
14. FORM OF PAYMENT. Payments required, if any, upon a
participant's exercise of Benefits under the Plan may be made in
the form of: (a) cash; (b) Company stock; (c) a combination of
Company stock and cash; or (d) such other forms or means which
the Committee shall determine in its discretion and in such
manner as is consistent with the Plan's purpose and applicable
law.
15. ADJUSTMENT PROVISIONS. If the Company shall at any time
change the number of issued shares of Common Stock without new
consideration to the Company (by stock dividends, stock splits,
or similar transactions), the total number of shares reserved for
issuance under this Plan and the number of shares covered by each
outstanding Benefit shall be adjusted so that the aggregate
consideration payable to the Company, if any, and the value of
each such Benefit shall not be changed. Benefits may also
contain provisions for their continuation or for other equitable
adjustments after changes in the Common Stock resulting from
reorganization, sale, merger, consolidation or similar
occurrences. If the Company acquires an entity which has issued
and outstanding stock options or other rights, the Company may
substitute stock options or rights for options or rights of such
entity, including options or other rights to acquire stock at
less than 100% of the fair market price of the stock at grant.
The number and kind of such stock options and other rights shall
be determined by the Committee and the total number of shares
reserved for issuance under this Plan shall be appropriately
adjusted consistent with such determination and in such manner as
the Committee may deem equitable to prevent substantial dilution
or enlargement of the Benefits granted to, or available for,
present or future participants of this Plan, but in no event
shall the total number of shares reserved for issuance under this
Plan be increased by more than an additional, 20% by reason of
this provision.
<PAGE>
16. NONTRANSFERABILITY. Each Benefit granted under the Plan
to an employee shall not be transferable by him otherwise than by
will or the laws of descent and distribution, and shall be
exercisable, during his lifetime, only by him. In the event of
the death of a participant during employment or prior to the
termination of any Benefit held by him hereunder, each Benefit
theretofore granted to him shall be exercisable or payable to the
extent provided therein but not later than one year after his
death (and not beyond the stated duration of the Benefit). Any
such exercise or payment shall be made only:
(a) By or to the executor or administrator of the estate
of the deceased participant or the person or persons to
whom the deceased participant's rights under the Benefit
shall pass by will or the laws of descent and
distribution; and
(b) To the extent, if any, that the deceased participant
was entitled at the date of his death.
17. OTHER PROVISIONS. The award of any Benefit under the
Plan may also be subject to such other provisions (whether or not
applicable to the Benefit awarded to any other participant) as
the Board of Directors determines appropriate, including without
limitation, provisions for the installment purchase of Common
Stock under such Benefits, provisions to assist the participant
in financing the acquisition of Common Stock, provisions for
prepayment at the participant's election of the purchase price of
Common Stock under such Benefits, provisions for the forfeiture
of, or restrictions on resale or other disposition of shares
acquired under such Benefits, provisions giving the Company the
right to repurchase shares acquired under any form of Benefits in
the event the participant elects to dispose of such shares,
provisions to comply with Federal and state securities laws, or
understandings or conditions as to the participant's employment
in addition to those specifically provided for under the Plan.
18. TENURE. A participant's right, if any, to continue to
serve the Company and its subsidiaries as an officer, employee,
or otherwise, shall not be enlarged or otherwise affected by his
designation as a participant under the Plan.
19. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be
granted more than ten years after the date of adoption of this
Plan; provided, however, that the terms and conditions applicable
to any Benefit granted within such period may thereafter be
amended or modified by mutual agreement between the Company and
the participant or such other persons as may then have an
interest therein. Also, by mutual agreement between the Company
and a participant hereunder, or under any future plan of the
Company, Benefits may be granted to such participant in
substitution and exchange for, and in cancellation of, any
Benefits previously granted such participant under this Plan, or
any benefit previously or thereafter granted to him under any
future plan of the Company. The Board of Directors may amend the
Plan from time to time or terminate the Plan at any time.
However, no action authorized by this paragraph shall reduce the
amount of any existing Benefit or change the terms and conditions
thereof without the participant's consent. No amendment of the
<PAGE>
Plan shall, without approval of the stockholders of the Company,
(i) increase the total number of shares which may be issued under
the Plan or increase the amount or type of Benefits that may be
granted under the Plan; (ii) change the minimum purchase price,
if any, of shares of Common stock which may be made subject to
Benefits under the Plan; or (iii) modify the requirements as to
eligibility for Benefits under the Plan.
20. SHAREHOLDER APPROVAL. The Plan has been adopted by the
Board of Directors on January 16, 1985, subject to approval by
the shareholders of the Company. Such adoption shall be null and
void if shareholder approval is not obtained within twelve months
of the adoption of the Plan by the Board of Directors.
21. SECTION 16 COMPLIANCE. With respect to persons subject
to Section 16 of the Exchange Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-
3 or its successors under the Exchange Act. To the extent any
provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee. In addition, to
the extent a participant (who is also a Reporting Person under
Rule 16b-3 or its successors) engages in an opposite-way
transaction within six months that jeopardizes the exemption, it
shall be deemed null and void.
ms 12/10/96
<PAGE>
EXHIBIT 10(i)
EXISTING DIRECTOR EMERITI
DIRECTOR EMERITUS AGREEMENT
This Agreement made and entered into this 19th day
------
of December, 1984 by and between B. H. Regenburg
---------- ------------------------
(hereinafter "DIRECTOR EMERITUS") and MODINE MANUFACTURING
COMPANY (hereinafter "MODINE"), a corporation formed and
existing under the laws of the State of Wisconsin, United
States of America,
WITNESSETH that
WHEREAS, DIRECTOR EMERITUS has served as a Director of
MODINE for a considerable period of time; and
WHEREAS, DIRECTOR EMERITUS has attained such status
pursuant to MODINE By-law 2.12 at the close of the term in
which the DIRECTOR EMERITUS attained the age of seventy (70)
years or has been conferred the status of DIRECTOR EMERITUS
by resolution of the MODINE Board of Directors; and
WHEREAS, compensation for serving as a Director of
MODINE included retirement income in the form of DIRECTOR
EMERITUS compensation (such retirement income being
hereinafter referred to as "DIRECTOR EMERITUS compensation"),
and
WHEREAS, MODINE and DIRECTOR EMERITUS desire to reduce
to writing the understanding between the parties;
NOW THEREFORE, in consideration of the mutual covenants
herein, and other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as
follows:
1. MODINE shall pay and DIRECTOR EMERITUS shall
receive DIRECTOR EMERITUS compensation comprised of retainer
fees and monthly meeting fees.
2. The retainer fees shall consist of a payment of
$1,000 dollars per quarter annual period in the months of
- ----------
March, June, September and December.
3. The meeting fees shall consist of a payment of
$500 dollars each on a monthly basis whether or not a
- -------
Board of Directors meeting is held or whether or not DIRECTOR
EMERITUS is in attendance.
4. DIRECTOR EMERITUS shall receive notice of meetings
of the Board of Directors, shall be invited to and welcomed
to all meetings of the Board of Directors and of the
<PAGE>
stockholders of MODINE, and shall receive such reimbursement
for reasonable expenses, if any, for attendance at meetings
of the Board of Directors as the Board of Directors shall
determine.
5. The DIRECTOR EMERITUS shall not be entitled to a
vote at the Board of Directors meeting and shall not have any
duties or powers of a Director of MODINE.
6. The term of this Agreement shall commence upon the
date hereof and shall continue until death of the DIRECTOR
EMERITUS. The foregoing notwithstanding, this Agreement shall
immediately terminate and be of no further force or effect
and DIRECTOR EMERITUS shall cease to be a DIRECTOR EMERITUS
if DIRECTOR EMERITUS breaches the provisions of Paragraph 7
of this Agreement.
7. DIRECTOR EMERITUS shall consider meetings of the
Board of Directors of MODINE to be confidential and shall not
disclose the contents thereof to any third party without the
express written consent of MODINE; provided, however, this
covenant shall not pertain to such matters as have been
publicly made available or disclosed by MODINE.
IN WITNESS WHEREOF, the parties have executed this
Agreement in duplicate as of the day and year first above
written.
MODINE MANUFACTURING COMPANY
BY s/E. E. Richter
----------------------------------
PRESIDENT
ATTEST:
s/W. E. Pavlick
- ----------------------
Secretary
s/B. H. Regenburg
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Director Emeritus (B. H. Regenburg)
<PAGE>
EXHIBIT 10(m)
MODINE MANUFACTURING COMPANY
1994 INCENTIVE COMPENSATION PLAN
(as amended January 15, 1997)
1. PURPOSE. The Modine Manufacturing Company 1994 Incentive
Compensation Plan (the "Plan") is intended to provide incentives
which will attract and retain highly competent persons as
officers and key employees of Modine Manufacturing Company (the
"Company") and its majority owned subsidiaries by providing them
with opportunities to acquire Common Stock of the Company
("Common Stock") , receive monetary payments based on the value
of such shares pursuant to the stock-based benefits ("Benefits")
described herein, or receive cash or Common Stock bonuses upon
attainment of specified financial goals of the Company.
2. ADMINISTRATION.
(a) Procedure. The Board of Directors of the Company
---------
shall supervise and administer the Plan. Any questions of
interpretation of the Plan or of any Benefits issued under it
shall be determined by the Board and such determination shall be
final and binding upon all persons.
(b) Committee. Any or all powers and discretion vested
---------
in the Board under this Plan may be exercised by a committee of
at least two directors (the "Committee") authorized by the Board
to do so. Composition of the Committee is intended to satisfy
the requirements of Rule 16 b-3 of the Securities and Exchange
Act of 1934 (the "Exchange Act") and Section 162(m) of the
Internal Revenue Code. A majority of members of the Committee
shall constitute a quorum, and all determinations of the
Committee shall be made by a majority of its members. Any
determination of the Committee under the Plan may be made without
notice or meeting of the Committee, by a writing signed by a
majority of the Committee members.
(c) Powers of the Board. Subject to the provisions of
-------------------
the Plan, the Board shall have the authority, in its discretion:
(i) to grant or award Benefits under the Plan; (ii) to determine,
in accordance with the provisions of the Plan, the fair market
value of the Common Stock; (iii) to determine, in accordance with
the provisions of the Plan, the exercise price per share of
options to be granted; (iv) to determine the employees to whom,
and the time or times at which, options or other Benefits shall
be granted and the number of shares to be represented by each
option or other Benefit; (v) to interpret the Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to
the Plan; (vii) to determine the terms and provisions of each
option or other Benefit granted or awarded (which need not be
identical) and, with the consent of the holder thereof, modify or
amend each option or other Benefit; (viii) to reduce the exercise
price per share of outstanding and unexercised options; (ix) to
<PAGE>
accelerate or defer (with the consent of the optionee) the
exercise date of any option; (x) to authorize any person to
execute on behalf of the Company any instrument required to
effectuate the grant or award of an option or other Benefit; and
(xi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) Effect of Decisions. All decisions, determinations,
-------------------
and interpretations of the Board, or the Committee, as the case
may be, shall be final and binding on all participants and any
other holders of any Benefits granted or awarded under the Plan.
(e) Section 16 Compliance. With respect to persons
---------------------
subject to Section 16 of the Exchange Act, transactions under this
Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any
provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee. In addition, to the extent a
participant (who is also a Reporting Person under Rule 16b-3 or its
successors) engages in an opposite-way transaction within six months
that jeopardizes the exemption, it shall be deemed null and void.
3. PARTICIPANTS; GENERAL TERMS AND CONDITIONS.
(a) Employees. Participants will consist of such key employees
---------
(including officers) of the Company or any or all of its present or
future majority owned subsidiaries as the Board of Directors in its sole
discretion determines to be mainly responsible for the success and future
growth and profitability of the Company and whom the Board of Directors
may designate from time to time to receive Benefits under the Plan.
Benefits may be granted under this Plan to persons who have received
options or other Benefits under this or other plans of the Company.
(b) Maximum Number. The maximum number of shares with respect
--------------
to which a Benefit may be granted or awarded to any participant in any
one year of the Company shall not exceed one hundred fifty thousand
(150,000) shares.
(c) General Terms and Conditions. The Committee shall
----------------------------
determine the time or times at which Benefits shall be granted or
awarded, the number of Benefits granted or awarded (subject to
the limitation of this Section 3(b) above), and such other terms
and conditions of the Benefits in addition to those set forth in
this Plan which comply with applicable Internal Revenue Service,
Securities and Exchange Commission, or other laws and
regulations, all as the Committee deems appropriate.
4. BENEFITS.
(a) Types. Benefits under the Plan may be granted in any
-----
one or a combination of:
<PAGE>
(1) Stock Purchase Agreements. Stock Purchase
-------------------------
Agreements will consist of agreements for the present or future
sale of Common Stock by the Company to a participant at such
prices and on such terms and conditions as the Board or Committee
deems appropriate.
(2) Stock Awards or Bonuses. Stock Awards or Bonuses
-----------------------
will consist of shares of Common Stock transferred to
participants with or without other payment therefor as a bonus
for services rendered or to be rendered to the Company and its
majority owned subsidiaries.
(3) Stock Options (incentive stock options and
------------------------------------------
non-qualified stock options with or without tax
-----------------------------------------------
offset bonuses and discounted stock options):
--------------------------------------------
(i) Exercise Price. Stock Options will consist
--------------
of options to purchase shares of Common Stock at purchase prices
determined by the Board or Committee at the date such option is
granted. Except regarding Incentive Stock Options, such option
price may be less than the fair market value of Common Stock on
the date of grant, but in no event shall the option price be less
than the par value of the shares. The fair market value shall be
the closing price per share of Common Stock on the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System on the date of grant. If the Common Stock
ceases to be listed on the NASDAQ National Market System, the
Board or Committee shall designate an alternative method of
determining the fair market value of the Common Stock.
(ii) Term. Such options will be exercisable not
----
later than ten years after the date they are granted and will
terminate not later than three years after termination of
employment for any reason other than death.
(4) Stock Appreciation Rights: Stock Appreciation
-------------------------
Rights, granted in conjunction with a stock option, will consist
of rights to receive an amount equal to the appreciation in fair
market value since the date of grant in lieu of exercising the
corresponding stock option.
(5) Restricted Stock: Restricted Stock will consist
----------------
of shares of Common Stock which are transferred to the
participant but which carry restrictions such as a prohibition
against disposition or an option to repurchase in the event of
employment termination, and may be subject to a substantial risk
of forfeiture. Shares of Restricted Stock may be granted to the
participant at no charge, or they may be sold to the participant.
Restrictions on the shares of stock may lapse over a period of
time. As the restrictions lapse, the participant has
<PAGE>
unrestricted shares which then may be sold or transferred. If,
however, the restrictions are violated prior to their lapse,
those shares still subject to such restrictions are forfeited by
the participant, and must be returned to the Company.
(6) Performance Unit Plans: A Performance Unit Plan
----------------------
will provide for units, contingently granted, which entitle the
participant to cash payments or their equivalent in shares of
stock valued at the time of the grant (i.e., the unit value
remains constant and does not fluctuate with changes in the
market value of the stock), if predetermined objectives are met.
(7) Performance Share Plans: A Performance Share
-----------------------
Plan will provide for artificial shares, contingently granted,
which entitle the participant to actual shares of Common Stock or
their cash equivalent at the time of payment (i.e., the unit
value may appreciate or decline depending on future market value
of the stock), if predetermined objectives are achieved.
(8) Book Value Stock Plans: A Book Value Stock Plan
----------------------
will permit the participant to purchase shares of Common Stock at
book value. Such "book value" stock may be required to be resold
to the Company upon termination of the employment relationship,
or at other specified times at the then book value of the stock.
(9) Annual Stock or Cash Incentive Plans. An annual
------------------------------------
Stock or Cash Incentive Plan will allow the participant to
receive, in addition to the participant's base salary, annual
stock or cash bonuses (portions of which may be paid quarterly
over the course of the fiscal year) based upon the financial
performance of the Company. The performance measurement for the
stock or cash bonus will be based on Company pre-tax profit less
fifteen percent of shareholder equity, subject to a formula
determined by the Board or Committee for payout once this
threshold is met. The maximum annual formula award may be fixed
at up to one hundred percent of the participant's base salary
with the Board or Committee designating the percentage level of
participation and maximum bonus for each officer of the Company
while management designates the percentage level of participation
and maximum bonus for other participants. The Board or Committee
will determine whether the bonuses will be payable to
participants in stock or cash or a combination of stock and cash.
(b) Written Agreement. Each grant or award of a Benefit
-----------------
shall be evidenced by an appropriate written agreement, the form
of which shall be consistent with the terms and conditions of the
Plan and applicable law and shall be signed by an officer of the
Company and the participant.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved
for issuance under the Plan an aggregate of three million
(3,000,000) shares of Common Stock (except as supplemented
hereinafter provided in Section 8), $0.625 par value, which may
be newly-issued shares, authorized but heretofore unissued shares
<PAGE>
or shares reacquired by the Company, including shares purchased
on the open market. Any shares subject to the options, rights,
agreements, plans, or awards as described hereinafter or issued
under such options, rights, agreements, plans, or awards may
thereafter be subject to new options, rights, agreements, plans
or awards under this Plan if there is a lapse, expiration or
termination of any such options, rights, agreements, plans or
awards prior to issuance of the shares or payment of the
equivalent or if shares are issued under such options, rights,
agreements, plans, or awards, and thereafter are reacquired by
the Company pursuant to rights reserved by the Company upon
issuance thereof; provided, however, issued shares reacquired by
the Company may only be subject to new options, rights,
agreements, plans, or awards if the participant received no
benefit of ownership from the shares.
6. FORM OF PAYMENT. Payments required, if any, upon a
participant's exercise of Benefits under the Plan may be made in
the form of: (a) cash; (b) Company stock; (c) a combination of
Company stock and cash; or (d) such other forms or means which
the Committee shall determine in its discretion and in such
manner as is consistent with the Plan's purpose and applicable
Internal Revenue Service, Securities and Exchange Commission, or
other laws or regulations.
7. WITHHOLDING TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the
participant for federal income tax purposes with respect to any
Benefit under the Plan or with respect to any exercise of any
stock option granted under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign
taxes of any kind required by law to be withheld. Such withholding
obligations may be settled with Common Stock, including Common Stock
that is part of the award or that is received upon the exercise of
the stock option that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditional
upon such payment or arrangements, and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the participant. The Company
may establish such procedures as it deems appropriate, including
the making of irrevocable elections or the timing of the use of
Common Stock, for the settlement of its withholding obligations.
8. ADJUSTMENT PROVISIONS.
(a) Changes in Capitalization. If the Company shall at
-------------------------
any time change the number of issued shares of Common Stock
without new consideration to the Company (by stock dividends,
stock splits, or similar transactions), the total number of
shares reserved for issuance under this Plan and the number of
shares covered by each outstanding Benefit shall be adjusted so
that the aggregate consideration payable to the Company, if any,
and the value of each such Benefit shall not be changed.
(b) Reorganization, Sale, etc. Benefits may also contain
-------------------------
provisions for their continuation, acceleration, immediate
<PAGE>
vesting, or for other equitable adjustments after changes in the
Common Stock resulting from reorganization, sale, merger,
consolidation, dissolution, liquidation, or similar occurrences.
(1) Substitutions and Assumptions. If the Company
-----------------------------
acquires an entity which has issued and outstanding stock options
or other rights, the Company may substitute stock options or
rights for options or rights of such entity, including options or
other rights to acquire stock at less than 100% of the fair
market price of the stock at grant. The number and kind of such
stock options and other rights shall be determined by the
Committee and the total number of shares reserved for issuance
under this Plan shall be appropriately adjusted consistent with
such determination and in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the
Benefits granted to, or available for, present or future
participants of this Plan. The number of shares reserved for
issuance pursuant to Section 5 may be increased by the
corresponding number of options or other benefits assumed and, in
the case of a substitution, by the net increase in the number of
shares subject to options or other benefits before and after the
substitution.
9. NONTRANSFERABILITY. Benefits (other than non-qualified
stock options) granted under the Plan to an employee shall not
be transferable by the participant otherwise than by will or the
laws of descent and distribution, or pursuant to a qualified
domestic relations order, and shall be exercisable, during the
participant's lifetime, only by the participant; non-qualified
stock options granted under the Plan to a participant may be
assignable or transferable by the participant to or for the
benefit of a member of the participant's family. In the event of
the death of a participant during employment or prior to the
termination of any Benefit held by the participant hereunder,
each Benefit theretofore granted to the participant shall be
exercisable or payable to the extent provided therein but not
later than one year after the participant's death (and not beyond
the stated duration of the Benefit). Any such exercise or
payment shall be made only:
(a) By or to the executor or administrator of the estate
of the deceased participant or the person or persons to whom the
deceased participant's rights under the Benefit shall pass by
will or the laws of descent and distribution; and
(b) To the extent, if any, that the deceased participant
was entitled at the date of the participant's death.
10. OTHER PROVISIONS. The award of any Benefit under the
Plan may also be subject to such other provisions (whether or not
applicable to the Benefit awarded to any other participant) as
the Board or Committee determines appropriate, including without
limitation, provisions for the installment purchase of Common
Stock under such Benefits, provisions to assist the participant
in financing the acquisition of Common Stock, provisions for
prepayment at the participant's election of the purchase price of
Common Stock under such Benefits, provisions for the forfeiture
of, or restrictions on resale or other disposition of shares
<PAGE>
acquired under such Benefits, provisions giving the Company the
right to repurchase shares acquired under any form of Benefit in
the event the participant elects to dispose of such shares,
provisions to comply with federal and state tax or securities laws,
or understandings or conditions as to the participant's employment
in addition to those specifically provided for under the Plan or
written agreement.
11. TENURE. A participant's right, if any, to continue to
serve the Company and its subsidiaries as an officer, employee,
or otherwise, shall not be enlarged or otherwise affected by
designation as a participant under the Plan.
12. EMPLOYEES IN FOREIGN COUNTRIES. The Board or Committee
shall have the authority to adopt such modifications, procedures,
and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company
or its subsidiaries may operate to assure the viability of the
Benefits granted or awarded to employees employed in such
countries and to meet the objectives of the Plan.
13. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be
granted more than ten years after the date of adoption of this Plan;
provided, however, that the terms and conditions applicable to any
Benefit granted within such period may thereafter be amended or
modified by mutual agreement between the Company and the participant
or such other persons as may then have an interest therein. Also, by
mutual agreement between the Company and a participant hereunder, or
under any future plan of the Company, Benefits may be granted to such
participant in substitution and exchange for, and in cancellation of,
any Benefits previously granted such participant under this Plan, or
any benefit previously or thereafter granted to him under any future
plan of the Company. The Board or Committee may amend the Plan from
time to time or terminate the Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any existing
Benefit or change the terms and conditions thereof without the
participant's consent. No amendment of the Plan shall, without
approval of the stockholders of the Company, (i) increase the total
number of shares which may be issued under the Plan or increase the
amount or type of Benefits that may be granted under the Plan;
(ii) change the minimum purchase price, if any, of shares of Common
stock which may be made subject to Benefits under the Plan; or (iii)
modify the requirements as to eligibility for Benefits under the Plan.
14. UNFUNDED STATUS OF PLAN. It is presently intended that the
Plan constitute an "unfunded" plan for incentive compensation. The
Board or Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver
Common Stock or make payments; provided, however, that, unless the Board
or Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
15. SHAREHOLDER APPROVAL. The Plan has been adopted by the Board of
Directors on March 15, 1994, and shall be effective upon approval by the
shareholders of the Company. Such adoption shall be null and void if
shareholder approval is not obtained within twelve months of the adoption
of the Plan by the Board of Directors.
ms 12/10/96
<PAGE>
EXHIBIT 10(n)
MODINE MANUFACTURING COMPANY
1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended January 15, 1997)
1. PURPOSE. The Modine Manufacturing Company 1994 Stock
Option Plan for Non-Employee Directors (the "Directors' Plan") is
intended to promote the interests of Modine Manufacturing Company
(the "Company") and its stockholders by providing potential
compensation for the non-employee members of the Company's Board
of Directors, thereby assisting the Company in its efforts to
attract and retain well qualified individuals to serve as its
directors. Options granted under the Directors' Plan are
intended to be of a type that does not meet all of the
requirements of Section 422A of the Internal Revenue Code of 1954
as heretofore and hereafter amended, and the Directors' Plan
shall be construed so as to carry out that intention.
2. ADMINISTRATION.
(a) Procedure; Disinterested Directors. The Board will
----------------------------------
administer the Plan; provided, however, that the Board may
appoint a committee (the "Committee") of two (2) or more
directors to administer the Plan if deemed necessary or advisable
in order to comply with the exemptive rules promulgated pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) Powers. Grants of Options under the Plan and the
------
amount, price, and timing of the awards to be granted will be
automatic as described in Section 5. However, all questions of
interpretation of the Plan will be determined by the Board or the
Committee, as applicable, and such determination will be final
and binding upon all parties.
(c) Section 16 Compliance. Transactions under this
---------------------
Directors' Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange
Act. To the extent any provision of the Directors' Plan or
action by the Board or Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Board or Committee. In addition, to the extent
a participant (who is also a Reporting Person under Rule 16b-3 or
its successors) engages in an opposite way transaction that
jeopardizes the exemption, it shall be deemed null and void.
3. PARTICIPANTS. Participants shall consist of all present
or future directors of the Company who are not employees of the
Company.
<PAGE>
4. SHARES RESERVED UNDER THE DIRECTORS' PLAN. There is
hereby reserved for issuance under the Directors' Plan an
aggregate of five hundred thousand (500,000) shares of Common
Stock, $0.625 par value, which may be newly-issued, authorized
but heretofore unissued shares or shares reacquired by the
Company, including shares purchased on the open market. Any
shares subject to Directors' Stock Options or issued under such
options may thereafter be subject to new options under this
Directors' Plan, if there is a lapse, expiration or termination
of any such options prior to issuance of the shares or if shares
are issued under such options, and thereafter are reacquired by
the Company pursuant to rights reserved by the Company upon
issuance thereof.
5. NUMBER OF SHARES TO BE GRANTED EACH ELIGIBLE DIRECTOR;
EXERCISE.
(a) Automatic Grant. Within thirty (30) days after
---------------
election or re-election to the Board of Directors by the
Company's stockholders, each director so elected or re-elected
shall be automatically granted an option for that number of
shares equal to the multiple of five thousand (5000) and the
number of years in the term to which he has been elected to the
Company's Board of Directors.
(b) Exercise. An option may be exercised in whole at any
--------
time or in part from time to time.
(c) Written Agreement. Each option shall be evidenced by
-----------------
an appropriate written agreement, the form of which shall be
consistent with the terms and conditions of the Directors' Plan
and applicable law, and which shall be signed by one or more
designated members of the Board or Committee and the non-employee
director.
6. OPTION PRICE; TERM. Directors' Stock Options shall
consist of options to purchase shares of Common Stock at purchase
prices not less than 100 percent of the fair market value of the
shares on the date the option is granted. The fair market value
per share shall be the closing price per share of the Common
Stock on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System on the date of grant.
If the Common Stock ceases to be listed on the NASDAQ National
Market System, the Board shall designate an alternative method of
determining the fair market value of the Common Stock. Such
options will be exercisable not later than ten years after the
date they are granted and will terminate no later than three
years after termination of director status for any reason other
than death.
7. FORM OF PAYMENT. Payments required upon a particular
exercise of Directors' Stock Options under the Directors' Plan
may be made in the form of (a) cash; (b) Company Stock; (c) a
combination of Company Stock and cash; or (d) such other forms or
means which the Board or Committee shall determine at its
discretion and in such manner as is consistent with the
<PAGE>
Directors' Plan's purpose and applicable Internal Revenue
Service, Securities Exchange Commission, or other laws or
regulations.
8. WITHHOLDING TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the
Participant for federal income tax purposes with respect to any
exercise of any Stock Option granted under the Plan, the
participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by
law to be withheld. Such withholding obligations may be settled
with Common Stock, including Common Stock that is received upon
the exercise of the Stock Option that gives rise to the
withholding requirement. The obligations of the Company under
the Plan shall be conditional upon such payment or arrangements,
and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to
the participant. The Board or Committee may establish such
procedures as it deems appropriate, including the making of
irrevocable elections or the timing of the use of Common Stock,
for the settlement of its withholding obligations.
9. ADJUSTMENT PROVISIONS.
(a) Changes in Capitalization. If the Company shall at
-------------------------
any time change the number of issued shares of Common Stock
without new consideration to the Company (by stock dividends,
stock splits, or similar transactions), the total number of
shares reserved for issuance under this Directors' Plan and the
number of shares covered by each outstanding Director's Stock
Option shall be adjusted so that the aggregate consideration
payable to the Company, if any, and the value of each such option
shall not be changed.
(b) Reorganizations, sale, etc. Directors' Stock Options
---------------------------
may also contain provisions for their continuation, acceleration,
immediate vesting, or for other equitable adjustments after
changes in the Common Stock resulting from reorganization, sale,
merger, consolidation, dissolution, liquidation, or similar
occurrences.
10. NONTRANSFERABILITY. Each Director's Stock Option granted
under the Directors' Plan to a participant shall not be
transferable by him otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic
relations order, and shall be exercisable, during his lifetime,
only by him. In the event of the death of a participant prior to
termination of any Director's Stock Options held by him
hereunder, each Director's Stock Option theretofore granted to
him shall be exercisable to the extent provided therein but not
later than one year after his death (and not beyond the stated
duration of the Director's Stock Option). Any such exercise
shall be made only:
(a) By the executor or administrator of the estate of the
deceased participant or the person or persons to whom the
<PAGE>
deceased participant's rights under the Director's Stock Option
shall pass by will or the laws of descent and distribution; and
(b) To the extent, if any, that the deceased participant
was entitled at the date of his death.
11. OTHER PROVISIONS. The award of any Director's Stock
Option under the Directors' Plan may also be subject to such
other provisions (whether or not applicable to the Director's
Stock Option awarded to any other participant) as the Committee
determines appropriate, including without limitation, provisions
for the installment purchase of Common Stock under Directors'
Stock Options, provisions to assist the participant in financing
the acquisition of Common Stock, provisions for the forfeiture
of, or restriction on resale or other disposition of shares
acquired under Directors' Stock Options, provisions giving the
Company the right to repurchase shares acquired under Directors'
Stock Options in the event the participant elects to dispose of
such shares, provisions to comply with federal and state tax or
securities laws, or understandings or conditions as to the length
of the participant's term as a director in addition to those
specifically provided for under the Directors' Plan.
12. TENURE. A participant's right, if any, to continue to
serve the Company as a director shall not be enlarged or
otherwise affected by his designation as a participant under the
Directors' Plan.
13. TERM; TERMINATION; AMENDMENTS.
(a) Term. No Director's Stock Option shall be granted
----
more than ten years after the date of adoption of this Directors'
Plan; provided, however, that the terms and conditions
applicable to Directors' Stock Options granted within such period
may thereafter be amended or modified by mutual agreement between
the Company and the participant or such other person as may then
have an interest therein. Also, by mutual agreement between the
Company and a participant hereunder, or under any future plan of
the Company, Directors' Stock Options may be granted to such
participant in substitution and exchange for and in cancellation
of, any Directors' Stock Options previously granted such
participant under this Directors' Plan.
(b) Termination. The Plan may be terminated at any time
-----------
by the Board or by the approval by the holders of a majority of
the shares of the Common Stock present, or represented, and
entitled to vote at a meeting held for such purpose.
(c) Amendment. The Plan may be amended by the Board or
---------
Committee; provided however, that (i) no amendment shall be made
that would impair prior grants or rights of a participant without
his consent; (ii) no amendment shall be made more frequently than
once every six months, unless such amendment is required because
of changes in the Internal Revenue Code or the Employee
Retirement Income Security Act; (iii) no such amendment shall be
effective without the approval by the holders of a majority of
<PAGE>
the shares of the Common Stock present, or represented, and
entitled to vote at a meeting held for such purpose, if such
amendment would materially (A) increase the benefits accruing to
participants under the Plan, (B) increase the number of
securities which may be issued under the Plan, or (C) modify the
requirements as to eligibility for participation in the Plan; and
(iv) no amendment shall be made which would prevent a
participant's participation in the Plan from being entitled to an
exemption from Section 16(b) of the Act.
14. SHAREHOLDER APPROVAL; EFFECTIVE DATE. The Directors'
Plan has been adopted by the Board of Directors on March 15,
1994, and shall be effective upon approval by the shareholders of
the Company. Such adoption shall be null and void if shareholder
approval is not obtained within 12 months of the adoption of the
Directors' Plan by the Board of Directors.
ms 12/10/96
<PAGE>
<TABLE>
EXHIBIT 11
Modine Manufacturing Company and Subsidiaries
Statement Re: Computation of Per Share Earnings
<CAPTION>
For The Year Ended March 31
1997 1996 1995
---- ---- ----
Primary
-------
<S> <C> <C> <C>
Weighted Average Shares Outstanding 29,836,300 29,669,997 29,682,441
Net Shares Issuable, Assuming Exercise
of Options Using the Average
Market Price and Employing the
Treasury Stock Method 583,222 746,451 851,894
----------- ----------- -----------
Average Common Share and Common
Share Equivalents 30,419,522 30,416,448 30,534,335
=========== =========== ===========
Net Earnings for the Period $63,763,000 $61,399,000 $68,442,000
=========== =========== ===========
Net Earnings per Share of Common Stock $2.10 $2.02 $2.24
===== ===== =====
Fully Diluted
-------------
Weighted Average Shares Outstanding 29,836,300 29,669,997 29,682,441
Net Shares Issuable, Assuming Exercise
of Options Using the Ending Market
Price (unless antidilutive) and
Employing the Treasury Stock Method 584,004 744,413 938,642
----------- ----------- -----------
Average Common Shares and Common
Share Equivalents 30,420,304 30,414,410 30,621,083
=========== =========== ===========
Net Earnings for the Period $63,763,000 $61,399,000 $68,442,000
=========== =========== ===========
Net Earnings per Share of Common Stock $2.10 $2.02 $2.24
===== ===== =====
</TABLE>
<PAGE>
EXHIBIT 13
Management's discussion and analysis of operations
- --------------------------------------------------
Modine Manufacturing Company finished its fiscal year ended
March 31, 1997, with a 3.9-percent increase in net earnings on
record sales of $999.0 million. Sales grew 0.9 percent over the
previous year.
Expressed in U.S. dollars, which strengthened against most other
currencies last year, 43.5 percent of Modine's fiscal-1997 sales were
outside the United States, almost the same as the prior year's 43.8
percent. U.S. export sales of $117.9 million declined 7.4 percent. Sales
from nondomestic operations largely offset that decrease, rising to 31.7
percent of sales from 30.9 percent in fiscal 1996.
The company's 1996-97 revenues from its top ten customers were
40.7 percent of total sales, compared with 37.7 percent the year before.
The company's largest customer represented less than seven percent of
total revenues in both fiscal 1997 and 1996.
At the end of October 1996, Modine purchased 41.3 percent of
Constructions Mecaniques Mota, S.A. (CMM), based near Marseilles, France,
with another facility in Aubagne. CMM is a manufacturer of tube-bundle
oil coolers and charge-air coolers for truck and marine engine markets,
which complements Modine's other European businesses. Annualized sales of
approximately $20 million from this investment are not consolidated in
Modine's total.
Fiscal-year sales by market
- ---------------------------
OEM passenger-car and light-truck: The largest portion of Modine's
revenues in fiscal 1997, 26.3 percent, was again to worldwide original-
equipment-manufacturer (OEM) customers in the passenger-car and light-truck
market. Sales to this market also had the greatest increase year-over-year,
growing 7.1 percent. Major factors behind the growth were incremental sales
from owning the Signet Systems air-conditioning-systems business for a full
year, plus continuing significant sales increases of air-conditioning
products in Europe. Partially offsetting these increases were lower sales
in the U.S. passenger-car market and in other European automotive markets.
Sales activities at Modine's largest customers in the automotive market are
yielding new programs that will grow this segment in future years.
The new plant in Richland, South Carolina, became fully operational
in the fall, and production from it and another, newly converted plant, in
Uden, Holland, added to 1996-97 revenues. Early in fiscal 1998, another
facility dedicated to this market, in Wackersdorf, Germany, will begin
assembly of automotive cooling modules.
The initial production year of Modine's latent-heat battery was
completed in Europe. This new product stores heat to immediately warm engine
fluids upon startup, resulting in instant heat for passengers, less engine
wear, and fewer emissions. Modine expects that the new product will have a
good long-term growth potential worldwide.
Modine is changing internal processes and developing new products
to take advantage of trends within the original-equipment automotive business.
<PAGE>
These trends include: pressures to improve the recyclability of heat
exchangers; improved temperature control of engines and transmissions to
help fuel economy; the need for diesel-fuel coolers to mitigate fuel hazards
and positively impact exhaust emissions; the requirement for more global
engineering capabilities to meet outsource requirements from customers; and
continued movement for providing complete systems both for underhood cooling
and for climate control in the passenger compartment.
Aftermarket: As in the year before, aftermarket sales constituted
the second-largest category in fiscal 1997, with 23.4 percent of the total.
Sales in North America rebounded to a record level, aided by Modine's
introduction to the industry of a lifetime, limited warranty for aftermarket
radiators. A new marketing program that expanded sales to existing customers
plus the addition of four company sales branches also brought higher revenues.
Reductions in product cost and operational expense, including
consolidation of some facilities, helped to improve operating income from
the North American aftermarket during the just-completed year. In order to
effect additional cost improvements, continued rationalization of these
manufacturing and distribution operations will be implemented during the new
fiscal year.
For the European aftermarket, an aluminum-radiator brazing and
assembly facility at Modine's Mill, Holland, plant site will be constructed.
Production is scheduled to begin in about one year.
OEM heavy- and medium-truck: Sales to OEMs of heavy- and medium-duty
trucks made up 15.5 percent of Modine's total sales in fiscal 1997. Sales
were down 7.8 percent from the previous year, the only major market category
at Modine to show a decrease. The most significant factor was a 22-percent
decline in sales of North American Class-8 trucks during the period.
A complete year of Signet Systems truck sales bolstered total
revenues from this market. In addition, sales of truck air-conditioning
components in Europe showed a year-over-year gain.
Modine also has begun construction of a new, truck-components plant
in Kirchentellinsfurt, Germany, near Stuttgart. The facility will make brazed
aluminum radiators and charge-air coolers. Improved productivity, product
quality, and working environment are expected when the new plant is
operational late n this new fiscal year.
An accelerating trend in the truck market is that OEM customers
are emphasizing the need to have their suppliers take total systems
responsibility. This becomes even more important as major OEMs continue to
consolidate and to expand into new areas around the world. In addition,
emissions regulations in Europe are increasing the need for charge-air
cooling and for improved heat exchangers in general, much as they did
earlier in the North American market.
OEM off-highway equipment: Sales to the off-highway-equipment
market grew to 12.5 percent of Modine's total in 1996-97. Signet Systems'
full year combined with strong sales to U.S. manufacturers of construction
equipment were the major drivers of growth. Much of the construction
market's growth and product-line expansion was in small- and light-sized
equipment.
As in other markets, there is a trend for partnerships with customers
where Modine, because of its product-line breadth and its increasing expertise
<PAGE>
in systems, is asked for complete cooling-system design. Taking on this
larger role gives Modine the opportunity to sell more content per application.
It also helps to solidify long-term relationships with customers.
The phase-in of U.S. off-highway emissions regulations that began in
January 1996 and that become more stringent over the next five years favors
Modine's higher technology product-line strengths. These regulations, as
they did for the heavy-truck industry at the beginning of this decade, are
driving the use in off-highway markets of more charge-air coolers and more-
efficient heat exchangers. Modine is taking advantage of its experience by
offering customers advanced technology and custom-designed products and
systems to meet their needs.
To help serve customers in the off-highway industry with higher
technology, Modine is converting its Camdenton, Missouri, plant to
manufacture brazed-aluminum products such as charge-air coolers. Process
and product manufacturing technologies are being upgraded at the Jefferson
City, Missouri, plant. And, last year, Modine introduced its square-wave
fin technology, which resists clogging on the airside of heat exchangers.
OEM industrial: Fiscal 1997 sales to industrial-market customers
rose to 12.1 percent of total sales. The industrial market consists of a
multitude of different applications and customers worldwide. The largest
sales increases during the last year were to U.S. manufacturers of engines,
refrigeration equipment, and generator sets.
Future growth in the industrial-market category will be helped by
an expansion of product offerings in the marine diesel market, primarily
in pleasurecraft and commercial workboat applications.
Building-HVAC: Building-HVAC (heating, ventilating, air-conditioning)
sales made up 7.8 percent of total revenues in 1996-97. All major parts of
this market saw small increases over the year before. Modine is restructuring
this business for more rapid growth over the next several years. In addition
to product development, an emphasis on marketing is part of a broad effort
to bring increased building-HVAC sales. Modine is focusing on a single brand
name -- Modine -- and has simplified the distribution system. The company is
stressing "indoor air solutions" rather than just products. The entire package
will include moving, filtering, and controlling the temperature and humidity
of air.
Sales by product line in fiscal 1997
- ------------------------------------
Air-conditioning: Repeating the performance of the prior year, fiscal
1997 sales of vehicular air-conditioning components and systems recorded the
highest product-line growth in both dollars and percentage. Again, the
increase was substantially due to the addition of Signet Systems and to
continuing strong growth in Europe. The percentage of cars with air-
conditioning in Europe is still small when compared with North America, but
is growing rapidly.
Radiator: The radiator product category remains Modine's largest, at
39.6 percent of total sales. The decline in the North American truck industry
contributed to a small decrease overall in radiator sales compared with the
year before. However, Modine achieved substantial unit sales increases in
product sold to the North American aftermarket and in sales of radiators in
engine-cooling modules, which package a number of heat exchangers and other
items in a single assembly.
<PAGE>
Oil cooler: Sales of oil coolers comprised 16.1 percent of fiscal
1997 revenues. Major contributors to increased sales were European operations
and product included in various modules. Partially offsetting these increases
were lower sales for some industrial oil coolers and less demand for North
American truck applications. An expansion of Modine's Mez"k"vesd, Hungary,
plant this year will give the company a major increase in capacity at a very
productive facility.
Charge-air cooler: Sales of charge-air coolers dropped 9.6 percent
year-over-year, primarily due to lower sales to North American truck
manufacturers. The product line ended up at 10.7 percent of Modine's total
sales. Future growth is expected due to stricter emissions regulations in
Europe as well as in U.S. off-highway markets.
Building-HVAC: The building-HVAC product line made up 7.8 percent
of total sales on a small sales increase, as discussed earlier in this
report. Modine continues its efforts to bring its patented PF (parallel-
flow) technology to this industry by introducing it to various regulatory
agencies and commissions as well as to OEMs of air-conditioning systems.
The movement to increase energy efficiencies will help to provide a need
for PF products in these applications.
Capital expenditures and R&D
- ----------------------------
In December 1996, Modine announced that it plans to expand its
existing testing capabilities in Racine, Wisconsin. The company will invest
$32 million over 2-1/2 years in this project.
Capital expenditures in fiscal 1997 were $54.5 million. These
investments were made to accommodate future growth, increase Modine's
competitive advantages, reduce costs, and introduce new products.
Significant investments included those for the new Richland plant, the
Racine Technical Center, expansions of Modine's European facilities,
process improvements, tooling for new products, and processing equipment
additions at a number of plants.
Outstanding commitments for capital expenditures at March 31,
1997, were approximately $27.0 million. Most of these commitments relate
to plant expansions and conversions, process improvements, tooling for new
products, and various new equipment. Approximately $9.4 million of the
outstanding commitment amount covers facility expansions, improvements,
equipment upgrades, and new equipment for a number of European plants and
an aftermarket warehouse there. A year earlier, there were total outstanding
commitments of $17.1 million. Capital expenditures were financed primarily
from cash that was generated internally.
Modine's investment in research and development rose 18.4 percent
to $16.9 million in fiscal 1997, following a 30.7-percent increase the year
before. The acquisition of Signet Systems was the most significant factor
in the increase in both years.
Modine relies, in large part, on new products and technological
innovation to help maintain a worldwide leadership in the industry. In
addition to numerous proprietary technologies, Modine owned a total of
921 patents in various countries at the end of fiscal 1997, a 9.5-percent
increase over the year before.
<PAGE>
Employment and quality achievement
- ----------------------------------
Total worldwide employment at Modine was 7,874 on March 31, 1997,
up 4.1 percent from the previous year. Employment increases in Mexico plus
new plants in Uden, Holland, and Richland, South Carolina, accounted for
most of the net increase.
The employees at 13 Modine plants earned 17 awards from customers
during the last fiscal year. Eight plants also received 13 recertifications
from their customers.
Modine plants in Joplin, Missouri, and Logansport, Indiana, were
recommended for registration as ISO 9002 manufacturers March 4, 1997, and
April 4, 1996, respectively, by Lloyd's Register Quality Assurance Ltd.
(LRQA), joining the plant in Grenada, Spain, in the category. Modine's
Signet Systems Division in Harrodsburg, Kentucky, on December 20, 1996,
joined the Mill, Holland, plant as an ISO 9001 producer, based on an LRQA
recommendation. In addition, LRQA recommended on April 25, 1997, that the
Automotive, Truck, and Heavy-Duty & Industrial Divisions at Racine,
Wisconsin, be upgraded to ISO 9001 after originally recommending their
registration to ISO 9002 on October 8, 1996. Other plants worldwide will
be undergoing ISO registration. The International Organization for
Standardization (ISO) develops common manufacturing, trade, and
communications standards to facilitate the worldwide exchange of
goods and services.
Modine plants and the corporate office pursued registration to
ISO 9002 and ISO 9001 to comply with requirements from our major
European customers. Likewise, Modine is pursuing registration to QS 9000
to satisfy major domestic automotive and truck customers. QS 9000 is a
quality-system-requirements document developed by Chrysler, Ford, General
Motors, and four truck manufacturers. QS 9000 contains industry- and
customer-specific requirements. It uses ISO 9001 as its foundation;
therefore, Modine is well-positioned to meet QS 9000 requirements. Two
key benefits of QS 9000 are common requirements from automotive and
truck customers and improved communication within Modine. The North
American Automotive, Truck, and Heavy Duty & Industrial Divisions are
pursuing QS 9000 registration.
Hedging and foreign-currency-exchange contracts
- -----------------------------------------------
On a limited basis, Modine enters into foreign-exchange
options and forward contracts on foreign currencies as hedges against
the impact of currency fluctuations. See Note 14 to the consolidated
financial statements.
Environmental matters
- ---------------------
Modine complies worldwide with laws relating to the protection
of the environment. Expenditures to comply with these increasingly
complex and stringent laws could be significant in future years but
are not expected to have a material impact on the company's competitive
or financial position. If new laws containing more stringent requirements
are enacted, expenditures may be higher than the estimates of future
environmental costs provided below.
<PAGE>
About $0.6 million in capital expenditures related to environmental
projects were made in 1996-97. Modine currently expects expenditures for
environmentally related capital projects to be about $3.5 million in 1997-98.
Environmental expenses charged to current operations, including
remediation costs, totaled about $2.3 million in fiscal 1997. These expenses
include operating and maintenance costs: for solid-waste treatment, storage,
and disposal and for air- and water-pollution-control facilities; for costs
incurred in conducting environmental-compliance activities; and for other
matters.
Modine accrues for environmental remediation activities relating
to past operations -- including those under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), often referred to as
"Superfund," and under the Resource Conservation and Recovery Act (RCRA) --
when it is probable that a liability has been incurred and reasonable
estimates can be made.
Modine from time to time receives notices from the Environmental
Protection Agency and state environmental agencies that the company is a
"potentially responsible party" (PRP) under CERCLA and state law. These
notices claim potential liability for remediation costs of disposal sites
that are not company-owned and allegedly contain wastes attributable to
Modine from past operations. Modine's share of remediation costs at these
sites cannot be accurately predicted due to the large number of PRPs
involved. For the 11 sites currently known, the company's potential
liability will be significantly less than the total site remediation
because the percentage of material attributable to Modine is relatively
low ("de minimus"), there may be insufficient documentation linking
Modine to the site, and the other PRPs have the financial resources
to meet their obligations.
It is likely that Modine will, in the future, incur additional
remediation charges, but such costs are unknown and not determinable at
this time. There are no currently known, unrecorded liabilities that
would have a material effect on the company's consolidated financial
position or results of operations.
Forward-looking statements
- --------------------------
Other than historical matters or comparative results, the matters
discussed in Management's discussion and analysis of operations and in the
Letter to shareholders, particularly the sales forecast and factors
affecting earnings, include forward-looking statements that involve risks
and uncertainties. These cautionary statements are being made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995 and
with the intention of obtaining the benefits of the "safe harbor"
provisions of the Act. Investors are cautioned that any forward-looking
statements made by Modine are not guarantees of future performance and
that actual results may differ materially from those in the forward-
looking statements as a result of various factors, including: customers'
integration of products currently being supplied by the company; the
success of Modine or its competitors in obtaining the business of the
customer base; the ability to pass on increased costs to customers;
variation in currency-exchange rates in view of a large portion of the
company's business being nondomestic; labor relations at Modine, its
customers, and its suppliers, which may affect the continuous supply of
product; and the ability to improve acquisitions' operations.
<PAGE>
In making statements about Modine's fiscal-1998 operating
results, management has assumed relatively stable economic conditions in
the United States and worldwide, no unanticipated swings in the business
cycles affecting customer industries, and a reasonable legislative and
regulatory climate in those countries where Modine does business.
Readers are cautioned not to place undue reliance on Modine's
forward-looking statements, which speak only as of the date of this
report's writing.
Management's discussion and analysis of results from operations
- ---------------------------------------------------------------
Net sales
- ---------
Sales for the year ended March 31, 1997, were $999.0 million,
up $8.6 million or 0.9 percent from the prior year. The presence of
Signet Systems for a full year, compared with eight months in the prior
year, added to sales with a partial offset due to the sale of the
Dowagiac, Michigan, copper-tubing plant in the middle of the previous
year. The most significant negative factor in the year was the
unfavorable impact of exchange rates, which, when compared on an
equivalent basis, caused a reduction in sales of approximately $22
million. Other changes included a reduction in demand for passenger-car
and truck components.
Sales for fiscal 1996 were $990.5 million, up $77.5 million or
8.5 percent. European operations added $54.0 million to sales, with
just over half of that from favorable exchange-rate changes. The
acquisition of Signet Systems as of July 31, 1995, also added $46.7
million. Declines occurred as a result of the sale of the copper-
tubing plant in October 1995, and in passenger-car and residential-HVAC
components.
Sales for fiscal 1995 were $913.0 million, up $243.5 million or
36.4 percent. Full-year impact of the prior year's European acquisitions,
strengthening of European currencies, and generally strong sales growth
across Modine's other operations were the major contributors.
Gross Profit
- ------------
Gross profit was 27.8 percent of sales for fiscal 1997, 2.0
percentage points higher than the previous year, primarily due to
decreased material costs and to cost improvements mainly in Europe.
In the previous year, gross profit was 25.8 percent of sales,
2.7 percentage points lower than in fiscal 1995. The primary cause was
increased material costs, not all of which were recovered by price
increases to customers. Also affecting the percentage were higher sales
by the European operations, and Signet Systems, both of which were earning
lower than company-average gross margins.
Gross profit margin in fiscal 1995, at 28.5 percent, was down 1.2
points. Higher raw material and labor costs in addition to lower margins
at European locations were major factors.
<PAGE>
Selling, general, and administrative (SG&A) expenses
- ----------------------------------------------------
SG&A expense for fiscal 1997 totaled $176.6 million, up $15.5
million or 9.6 percent from the previous year. Major causes for the
increase were the inclusion of Signet Systems for a full year plus
additional sales branches and distribution expenses in the Aftermarket.
SG&A as a percentage of sales increased from 16.3 percent to 17.7 percent.
In fiscal 1996, SG&A expense totaled $161.1 million, up $12.7
million or 8.5 percent from fiscal 1995. Included in the year was the
eight-month effect of the Signet Systems acquisition. Other changes were
not significant.
SG&A expenses for fiscal 1995 totaled $148.4 million, a $26.0-
million or 21.2-percent increase, mostly from the full-year impact of
two European acquisitions in fiscal 1994.
Income from operations
- ----------------------
In fiscal 1997, income from operations was $100.9 million, up
$6.6 million or 7.0 percent. The improvement was primarily due to
reduction in material prices and to cost improvements.
Income from operations in fiscal 1996 was $94.3 million, down
$17.8 million or 15.9 percent, primarily due to increases in material
prices.
Income from operations in the prior year was $112.1 million, up
47.0 percent. Sales volume increases were the main factors.
Interest expense
- ----------------
Fiscal 1997 interest expense was $5.0 million, down $1.8 million
or 27.2 percent from the prior year. Reduced debt and lower interest rates
allowed this decrease to occur.
Interest expense in fiscal 1996, at $6.8 million, was up $0.4
million or 6.9 percent as a result of borrowings related to the Signet
acquisition. Interest rates were lower than the previous year.
Interest expense in fiscal 1995 grew by 6.2 percent, due mainly
to the full-year impact of foreign-denominated borrowing for prior-year
acquisitions.
Other income, net
- -----------------
Other income for fiscal 1997 was $1.9 million, which was $9.8
million less than the prior year, primarily due to a gain of $5.0 million
in fiscal 1996 from the sale of the company's copper- tubing plant and to
gains on the sale of other equipment.
Other income in fiscal 1996, at $11.7 million, was $8.5-million
higher than the previous year, due mainly to the sale of assets referred
to above.
<PAGE>
Other income of $3.2 million in fiscal 1995 was slightly above
earlier years.
Provision for income taxes
- --------------------------
The effective tax rate for fiscal 1997 was 34.8 percent, down
3.3 percentage points from the prior year. The major cause for this
reduction was the utilization of tax losses carried forward from prior
years in Modine's European operations.
The company had a slightly higher effective tax rate in fiscal
1996, at 38.1 percent versus 37.1 percent in the prior year. Higher rates
on certain foreign earnings were the primary factor.
In fiscal 1995, the income-tax rate was 37.1 percent.
Net earnings
- ------------
In fiscal 1997, net earnings were $63.8 million -- 6.4 percent
of sales and a 17.3-percent return on average shareholders' investment
(ROE) -- up 3.9 percent or $2.4 million from the previous fiscal year.
Lower material costs and other cost reductions were the primary causes
of the improvement. The prior fiscal year included $3.1 million, or
approximately 10 cents per share, relating to a gain on the sale of
the copper-tubing business.
Net earnings in fiscal 1996 were $61.4 million -- 6.2 percent
of sales and an 18.7-percent ROE -- down $7.0 million or 10.3 percent
from fiscal 1995. The reduction was primarily due to increased material
costs.
Net earnings in fiscal 1995 were $68.4 million, or 7.5 percent of
sales, up 55.6 percent from the prior-year, which included a change in
accounting for income taxes that added $0.9 million to net earnings. The
increase was mainly due to the significantly higher sales volume.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS
In thousands, except per-share amounts)
<CAPTION>
- ------------------------------------------------------------------------------
For the years ended March 31 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $999,046 $990,493 $913,010
Cost of sales 721,626 735,120 652,541
------------------------------
Gross profit 277,420 255,373 260,469
Selling, general, and administrative expenses 176,552 161,082 148,415
------------------------------
Income from operations 100,868 94,291 112,054
Interest expense (4,972) (6,825) (6,384)
Other income--net 1,887 11,683 3,157
------------------------------
Earnings before income taxes 97,783 99,149 108,827
Provision for income taxes 34,020 37,750 40,385
------------------------------
Net earnings $ 63,763 $ 61,399 $ 68,442
==============================
Net earnings per share of common stock $2.10 $2.02 $2.24
------------------------------
Average common shares and common share
equivalents outstanding 30,420 30,416 30,534
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
Management's discussion of financial position
- ---------------------------------------------
Current assets
- --------------
Cash and cash equivalents increased by $16.9 million to $34.8
million. Refer to the sources and uses of funds detail in the
accompanying statement of cash flows.
Trade receivables, net of allowances for doubtful accounts, at
$149.8 million, were up $1.8 million due to slightly increased sales.
Inventories decreased by $7.9 million to $142.1 million, partly
due to reduction programs at certain locations and partly to strengthening
of the dollar, which had the effect of decreasing the translated value of
European inventories.
Deferred income taxes and other current assets increased by
$4.0 million to $39.4 million due mainly to an increase in deferred
income-tax items in Europe.
The current ratio increased slightly to 2.2 to 1 from 1.9 to 1.
<PAGE>
Noncurrent assets
- -----------------
Property, plant, and equipment increased by $8.8 million to
$210.1 million due to capital expenditures of $54.5 million, primarily for
production-facility expansion and improvements that were in excess of
retirements and depreciation expense.
Investment in affiliates increased by $2.9 million primarly due
to the acquisition during the year of a 41.3-percent joint-venture interest
in a French manufacturer of heat exchangers (CMM).
Intangible assets decreased by $7.5 million to $62.9 million due
mostly to amortization of goodwill and to the effect of foreign-exchange
rates on the European portion of goodwill.
Deferred charges and other noncurrent assets increased by $4.1
million to $46.3 million primarily due to continued recognition of a
surplus in the company's over-funded pension plans.
Current liabilities
- -------------------
Short-term debt and long-term debt, current portion, decreased
in net by $8.0 million due mainly to higher cash flows from operating
activities offset by slightly higher long-term-debt repayments coming due.
Accounts payable decreased by $5.1 million to $72.2 million
primarily from the effect of a stronger dollar on European translation
and from reduction in inventories and material costs.
Noncurrent liabilities
- ----------------------
Long-term debt decreased by $2.6 million to $85.2 million at
year-end due to scheduled repayments offsetting certain new borrowings
for investments in new European facilities and in CMM, a new affiliate.
As a percent of shareholders' investmnet, long-term debt was
22.1 percent. Total debt to equity was 26.5 percent, down 5.8 percentage
points from fiscal-1996 yearend.
Shareholders' investment
- ------------------------
Total shareholders' investment increased by $36.3 million to $385.7
million, the major change being retained earnings, which benefitted from
net earnings of $63.8 million (less dividends paid of $20.3 million).
The foreign-currency translation adjustment decreased by $6.5
million as European currencies weakened against the dollar during the year.
During fiscal 1997, $6.8 million was expended to acquire an
additional 252,000 treasury shares; while 326,000 shares were used to
satisfy requirements for stock options, stock awards, and employee
stock-purchase plans.
During the prior year, $8.7 million was expended to acquire an
additional 278,000 treasury shares; and 337,000 shares were used to satisfy
<PAGE>
requirements for stock options, stock awards, and employee stock-purchase
plans.
During fiscal 1995, $9.9 million was expended to acquire an
additional 336,000 treasury shares. The company used 412,000 shares, as
required, for stock options, stock awards, and employee stock-purchase
plans.
There were no other significant changes in this category.
Book value per share increased by $1.19 during the year to $12.93,
an 11.1-percent compound annual growth rate since fiscal 1987.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(In thousands, except per-share amounts)
<CAPTION>
- -----------------------------------------------------------------------------
March 31 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 34,822 $ 17,958
Trade receivables, less allowance for doubtful
accounts of $4,140 and $5,052 149,800 147,963
Inventories 142,115 150,000
Deferred income taxes and other current assets 39,405 35,414
----------------------
Total current assets 366,142 351,335
----------------------
Noncurrent assets:
Property, plant, and equipment -- net 210,115 201,341
Investment in affiliates 9,497 6,567
Intangible assets -- net 62,948 70,456
Deferred charges and other noncurrent assets 46,253 42,137
----------------------
Total noncurrent assets 328,813 320,501
----------------------
Total assets $694,955 $671,836
======================
Liabilities and shareholders' investment
Current liabilities:
Short-term debt $ 2,962 $ 12,500
Long-term debt -- current portion 14,061 12,552
Accounts payable 72,173 77,277
Accrued compensation and employee benefits 44,497 42,941
Income taxes 7,535 7,598
Accrued expenses and other current liabilities 28,771 28,163
----------------------
Total current liabilities 169,999 181,031
----------------------
Noncurrent liabilities:
Long-term debt 85,197 87,809
Deferred income taxes 13,331 12,220
Other noncurrent liabilities 40,740 41,356
----------------------
Total noncurrent liabilities 139,268 141,385
----------------------
Total liabilities 309,267 322,416
======================
<PAGE>
<S> <C> <C>
Shareholders' investment:
Preferred stock, $0.025 par value, authorized
16,000 shares, issued--none - -
Common stock, $0.625 par value, authorized
80,000 shares, issued 30,342 shares 18,964 18,964
Additional paid-in capital 9,760 9,143
Retained earnings 378,740 339,193
Foreign-currency translation adjustment (3,016) 3,435
Treasury stock at cost: 509 and 583 common shares (14,949) (17,607)
Restricted stock - unamortized value (3,811) (3,708)
----------------------
Total shareholders' investment 385,688 349,420
----------------------
Total liabilities and shareholders'
investment $694,955 $671,836
======================
<FN>
The notes to consolidated financial statements are an integral part of these
statements.
</TABLE>
Management's discussion of cash flows
- -------------------------------------
Net cash provided by operating activities
- -----------------------------------------
Net cash provided by operating activities in fiscal 1997 was $100.2
million, up $15.6 million from the prior year as a result of higher earnings
and of significantly higher noncash adjustments, which were impacted in the
prior year by the gains on sales of a business and other assets. Also,
depreciation was higher in the current year and earnings from affiliates, net
of dividends received, were lower. Working capital demands were small and
lower than the prior year.
Net cash from operating activities in fiscal 1996 was $84.6 million,
up $17.6 million from fiscal 1995. Lower working-capital demands were the
major reasons. A partial offset came from lower earnings and noncash
adjustments (including: gains from sales of the extruded-copper-tubing
business and other fixed assets; and a reduction in allowance for doubtful
accounts).
Cash flows from operating activities in fiscal 1995 were $67.0
million, down $8.3 million. While earnings adjusted for noncash items were
up $33.4 million, working capital items required $36.3 million to cover the
increased business levels.
Capital expenditures
- --------------------
Capital expenditures for fiscal 1997 were $54.5 million, slightly
lower than the prior year, and included significant capital improvements
and expansions, including the new facility in South Carolina and several
projects in Europe.
Capital expenditures for fiscal 1996 were $55.7 million, up $21.6
million from the prior year, reflecting new facilities in South Carolina
and The Netherlands, plus other capacity expansions.
<PAGE>
Capital expenditures in fiscal 1995 were $34.1 million, up $5.0
million from the prior year, reflecting capacity expansions and process
improvements.
Acquisitions, divestiture, sales of assets, and investments in affiliates
- -------------------------------------------------------------------------
During fiscal 1997, Modine acquired a 41.3-percent interest in
Constructions Mecaniques Mota, S.A., an oil-cooler manufacturer, which has
been treated as a non-consolidated affiliate by Modine. The cost of the
investment was $4.2 million. See Note 10 to the consolidated financial
statements for further detail.
During the prior year, Modine acquired 100 percent of the assets of:
Signet Systems, Inc., an air-conditioning systems business located in
Harrodsburg, Kentucky, and Goch, Germany; and Radiadores Montana, a Spanish
aftermarket company. Modine also purchased the remaining 57-percent interest
in Radinam S.A., a joint-venture company in Mexico. The combined net cash
price of these acquisitions was $56.8 million. The company also disposed of
its extruded-copper-tubing plant in Dowagiac, Michigan, for $9.1 million.
See Note 10. Modine also sold other equipment that was no longer required
for $3.9 million.
During fiscal 1995, the company disposed of its 36-percent interest
in McQuay do Brasil for $1.5 million.
Changes in debt: short- and long-term
- -------------------------------------
Overall, company debt increased by $1.9 million during fiscal 1997 and
included borrowings in French francs, for the equity investment during the
year, and some additional borrowings in Germany and The Netherlands relative
to facility expansion. These borrowings were nearly offset by $15.7 million
in repayments of long-term debt and a net $8.3-million repayment of short-
term debt.
In the prior year, the company made $10.6 million in scheduled and
$35.3 million in discretionary repayments of long-term debt. The company
also added $70.0 million to long-term debt, partly due to acquisitions
and partly to replace certain portions of the long-term debt that was
repaid during the year.
During fiscal 1995, Modine made $9.8 million in scheduled and $2.4
million in discretionary repayments of domestic long-term debt.
Treasury stock -- see page 16.
- --------------
Dividends paid
- --------------
Dividends for the 1996-97 fiscal year totaled $20.3 million,
representing a rate of 68 cents per share. An increase of 8 cents per
share was declared, effective in May 1996.
Dividends for the prior fiscal year were $17.8 million, representing
a rate of 60 cents per share. An increase of 8 cents per share was
declared, effective in May 1995.
<PAGE>
Dividends during fiscal 1995 were $15.4 million, representing a
rate of 52 cents per share. An increase of 6 cents per share was effective
in May 1994.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
- -----------------------------------------------------------------------------------
For the years ended March 31 1997 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 63,763 $ 61,399 $ 68,442
Adjustments to reconcile net earnings with
cash provided by operating activities:
Depreciation and amortization 41,504 39,641 34,482
Gain on sale of business -- (5,009) --
Pensions and other postretirement benefits (2,600) (3,124) (2,299)
Loss/(gain) from disposition of property,
plant, and equipment 1,038 (1,852) 487
Deferred income taxes (1,452) (1,759) (241)
Provision for losses on accounts receivable (866) (1,477) 1,375
Undistributed earnings of affiliates, net
of dividends received 51 (1,202) (1,301)
Other -- net 1,184 1,421 2,343
--------------------------------
102,622 88,038 103,288
--------------------------------
Change in operating assets and liabilities
excluding acquisitions:
Trade receivables (7,851) 12,303 (31,519)
Inventories 3,889 (3,706) (26,928)
Deferred income taxes and other current
assets (2,725) (6,286) (4,225)
Accounts payable (1,819) (2,716) 16,895
Accrued compensation and employee benefits 2,611 1,447 2,094
Income taxes (1,000) (1,996) (327)
Accrued expenses and other current
liabilities 4,503 (2,504) 7,685
--------------------------------
Net cash provided by operating activities 100,230 84,580 66,963
--------------------------------
Cash flows from investing activities:
Expenditures for property, plant, and
equipment (54,529) (55,689) (34,101)
Acquisitions, net of cash acquired (1,629) (56,798) (254)
Proceeds from sale of business -- 9,117 --
Proceeds from dispositions of assets 881 3,895 1,118
Investments in affiliates (4,236) -- 1,500
Increase in deferred charges and other
noncurrent assets (1,805) (296) (1,053)
Other -- net (62) 13 (52)
--------------------------------
Net cash (used for) investing activities (61,380) (99,758) (32,842)
--------------------------------
<PAGE>
<S> <C> <C> <C>
Cash flows from financing activities:
Decrease in short-term debt -- net (8,330) (2,007) (499)
Additions to long-term debt 25,925 69,967 3,392
Reductions of long-term debt (15,681) (45,861) (24,053)
Issuance of common stock, including
treasury stock 4,265 5,275 5,607
Purchase of treasury stock (6,832) (8,740) (9,946)
Cash dividends paid (20,292) (17,802) (15,434)
Other -- net (347) (9) (279)
--------------------------------
Net cash (used for)/provided by financing
activities (21,292) 823 (41,212)
--------------------------------
Effect of exchange-rate changes on cash (694) (378) 1,259
--------------------------------
Net increase/(decrease) in cash and cash
equivalents 16,864 (14,733) (5,832)
Cash and cash equivalents at beginning of year 17,958 32,691 38,523
--------------------------------
Cash and cash equivalents at end of year $ 34,822 $ 17,958 $ 32,691
================================
Cash paid during the year for:
Interest, net of amounts capitalized $ 5,035 $ 6,849 $ 6,276
Income taxes $ 34,428 $ 37,716 $ 39,120
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
(In thousands, except per-share amounts)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Foreign- Restricted
For the years Additional currency Treasury stock stock-
ended March 31, Common Stock paid-in Retained translation at cost unamortized
--------------- ----------------
1997, 1996, and 1995 shares amount capital earnings adjustment shares amount value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1994 30,342 $18,964 $6,457 $243,606 $ 186 (718) $(13,598) $(3,870)
- ----------------------------------------------------------------------------------------------------------------------
Net earnings -- -- -- 68,442 -- -- -- --
Cash dividends, $0.52 per
share -- -- -- (15,434) -- -- -- --
Purchase of treasury stock -- -- -- -- -- (336) (9,946) --
Stock options and awards,
including related tax
benefits -- -- (79) -- -- 294 5,211 (851)
Employee stock-purchase
and -ownership plans -- -- 1,519 -- -- 118 1,664 --
Foreign-currency translation
adjustment -- -- -- -- 4,973 -- -- --
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- -- -- 1,028
- ----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1995 30,342 18,964 7,897 296,614 5,159 (642) (16,669) (3,693)
- ----------------------------------------------------------------------------------------------------------------------
Net earnings -- -- -- 61,399 -- -- -- --
Cash dividends, $0.60 per
share -- -- -- (17,802) -- -- -- --
Purchase of treasury stock -- -- -- -- -- (278) (8,740) --
Stock options and awards,
including related tax
benefits -- -- 879 (704) -- 191 4,005 (1,120)
Employee stock-purchase
and -ownership plans -- -- 367 (314) -- 146 3,797 --
Foreign-currency translation
adjustment -- -- -- -- (1,724) -- -- --
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- -- -- 1,105
- ---------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1996 30,342 18,964 9,143 339,193 3,435 (583) (17,607) (3,708)
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net earnings -- -- -- 63,763 -- -- -- --
Cash dividends, $0.68 per
share -- -- -- (20,292) -- -- -- --
Purchase of treasury stock -- -- -- -- -- (252) (6,832) --
Stock options and awards,
including related tax
benefits -- -- 603 (3,627) -- 214 6,299 (1,297)
Employee stock-purchase
and -ownership plans -- -- 14 (297) -- 112 3,191 --
Foreign-currency translation
adjustment -- -- -- -- (6,451) -- -- --
Amortization of deferred
compensation under
restricted stock plans --- -- -- -- -- -- -- 1,194
- ---------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1997 30,342 $18,964 $9,760 $378,740 $(3,016) (509) $(14,949) $(3,811)
- ---------------------------------------------------------------------------------------------------------------------
<FN>
The notes to consolidated financial statements are an intergral
part of these statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINAICIAL STATEMENTS
1. Significant accounting policies
-------------------------------
Basis of presentation: The financial statements are prepared in
---------------------
conformity with generally accepted accounting principles in the United
States. These principles require management to make certain estimates
and assumptions in determining the company's assets, liabilities, revenue,
expenses, and related disclosures. Actual amounts could differ from those
estimates.
Consolidation principles: The consolidated financial statements
------------------------
include the accounts of Modine Manufacturing Company and its majority-
owned subsidiaries. Material intercompany transactions and balances are
eliminated in consolidations. Operations of subsidiaries outside the
United States and Canada are included for periods ending one month
prior to the company's year end in order to ensure timely preparation
of the consolidated financial statements. Investments in affiliated
companies in which ownership exceeds 20 percent are accounted for by
the equity method. The investments are stated at cost plus a
proportionate share of the undistributed net income. The company's
share of undistributed net income is reflected in net earnings.
Translation of foreign currencies: Assets and liabilities of
---------------------------------
foreign subsidiaries and equity investments are translated into U.S.
dollars at year-end exchange rates, and income and expense items are
translated at the average exchange rates for the year. Resulting
translation adjustments are reported as a separate component of
shareholders' investment. Translation adjustments relating to
countries with highly inflationary economies and foreign-currency
transaction gains or losses are included in net earnings.
Financial instruments: Foreign-exchange options and forward
---------------------
contracts on foreign currencies are entered into by the company
as hedges against the impact of currency fluctuations on certain sales
and purchase transactions and are not used to engage in speculation.
Gains and losses are recognized when these instruments are settled.
Income taxes: Deferred tax liabilities and assets are
------------
determined based on the difference between the amounts reported in
the financial statement and the tax bases of assets and liabilities,
using enacted tax rates in effect in the years in which the
differences are expected to reverse.
Cash equivalents: For purposes of the cash flows statement, the
----------------
company considers all highly liquid investments with a maturity
of three months or less to be cash equivalents.
Inventories: Inventories are valued at the lower of cost, on a
-----------
first-in, first-out basis, or market value.
<PAGE>
Property, plant, and equipment: These assets are stated at cost.
------------------------------
Depreciation is provided using, principally, declining-balance methods
for machinery and equipment, and the straight-line method for buildings
and other assets over their expected useful lives. Maintenance and
repair costs are charged to earnings as incurred. Costs of improvements
are capitalized. Upon the sale or other disposition of an asset, the cost
and related accumulated depreciation are removed from the accounts and
the gain or loss is included in net earnings.
The company adopted Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of" at the beginning of fiscal 1997.
This statement requires recognition of impairment losses for long-lived
assets whenever events or changes in circumstances result in the carrying
amount of the assets exceeding the sum of the expected future cash flows
associated with such assets. The measurement of the impairment losses to
be recognized is to be based on the difference between the fair values
and the carrying amounts of the assets. The effect of the adoption of
this policy on April 1, 1996, was immaterial to the consolidated
financial results of the company.
Intangible assets: The excess of cost over fair value of the net
-----------------
assets of businesses acquired is amortized using the straight-line method
over various periods not exceeding forty years. Costs of acquired patents
and product technology are amortized using the straight-line method over
the shorter of their estimated useful life or 15 years.
Environmental expenditures: Environmental expenditures related to
--------------------------
current operations that qualify as property, plant, and equipment or
that substantially increase the economic value or extend the useful life
of an asset are capitalized and all other expenditures are expensed as
incurred. Environmental expenditures that relate to an existing condition
caused by past operations are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated.
Stock-based compensation: The company has elected to account for
------------------------
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations. Accordingly,
compensation cost for stock options is measured at the excess, if any,
of the quoted market price of the company stock at the date of the grant
over the amount an employee must pay to acquire the stock. Also see Note 17.
Accounting principles to be adopted: In February 1997, the Financial
-----------------------------------
Accounting Standards Board (FASB) issued SFAS No. 128, "Earnings per Share."
This statement will be adopted by the company, as required, for periods
ending after December 15, 1997. Implementation of this statement is not
expected tohave a material impact on the earnings-per-share data presented
by the company.
<PAGE>
2. Research and development costs
------------------------------
Research and development costs charged to operations totaled
$16,877,000 in fiscal 1997, $14,256,000 in fiscal 1996, and $10,907,000
in fiscal 1995.
3. Pension plans
-------------
Domestic qualified defined-benefit plans: The company has several
----------------------------------------
noncontributory, defined-benefit, pension plans that cover most of its
domestic employees. The benefits provided are based primarily on years
of service and average compensation for the salaried plans and on
that same basis or a monthly retirement-benefit amount for various
hourly plans. Funding policy for domestic qualified plans is to
contribute annually not less than the minimum required by applicable
law and regulation, nor more than the maximum amount that can be
deducted for federal income-tax purposes. Fiscal-1996 results include
plans of the company's Signet acquisition and the effects of the
Dowagiac divestiture.
Net pension credits, computed using the projected unit credit
method, include the following components:
(In thousands)
- ------------------------------------------------------------------------------
Years ended March 31 1997 1996 1995
- ------------------------------------------------------------------------------
Benefits earned during the year $ 4,162 $ 4,035 $ 3,532
Interest accrued on benefits earned
in prior years 7,317 6,720 5,978
Actual return on assets (12,263) 2,941 (21,470)
Net amortization and deferral (1,793) (16,982) 9,209
- ------------------------------------------------------------------------------
Net pension (credit) $(2,577) $(3,286) $(2,751)
- ------------------------------------------------------------------------------
Actuarial assumptions:
Discount rate (to calculate present
value of future benefits) 7.5% 7.5% 7.5%
Average salary-growth rate 5.5% 5.5% 5.5%
Return on plan assets 9.0% 9.0% 9.0%
- ------------------------------------------------------------------------------
<PAGE>
Funded status of the plans at March 31, 1997 and 1996:
(In thousands)
- ------------------------------------------------------------------------------
Assets exceed Accumulated
accumulated benefits
March 31, 1997 benefits exceed assets
- ------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $(70,136) $(42)
Nonvested (4,808) --
--------------------
Accumulated benefit obligation (74,944) (42)
Effect of projected salary increases (30,351) --
--------------------
Projected benefit obligation (105,295) (42)
Less: Plan assets at fair value 160,290 36
--------------------
Plan assets in excess of/(less than)
projected benefit obligation 54,995 (6)
Adjusted for items not yet recognized
in earnings:
Unrecognized net benefit (asset)/obligation
remaining from initial adoption
of FASB Statement No. 87 (440) --
Effect of benefit changes on
prior years' service cost 1,256 --
Remaining unrecognized net (gain)/loss (12,232) 13
Adjustment to recognize minimum liability -- (13)
- ------------------------------------------------------------------------------
Prepaid/(accrued) pension expense
included in the balance sheets $ 43,579 $ (6)
- ------------------------------------------------------------------------------
<PAGE>
(In thousands)
- ------------------------------------------------------------------------------
Assets exceed Accumulated
accumulated benefits
March 31, 1996 benefits exceed assets
- ------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $(64,865) $(42)
Nonvested (4,532) --
-------------------------
Accumulated benefit obligation (69,397) (42)
Effect of projected salary increases (28,295) --
-------------------------
Projected benefit obligation (97,692) (42)
Less: Plan assets at fair value 150,253 38
-------------------------
Plan assets in excess of/(less than)
projected benefit obligation 52,561 (4)
Adjusted for items not yet recognized
in earnings:
Unrecognized net benefit (asset)/obligation
remaining from initial adoption
of FASB Statement No. 87 (513) --
Effect of benefit changes on
prior years' service cost 1,229 --
Remaining unrecognized net (gain)/loss (13,571) 5
Adjustment to recognize minimum liability -- (5)
- ------------------------------------------------------------------------------
Prepaid/(accrued) pension expense
included in the balance sheets $ 39,706 $ (4)
- ------------------------------------------------------------------------------
As of March 31, 1997 and 1996, the plans held 1,870,000 and
2,137,000 shares, respectively, of Modine common stock.
Defined-benefit plans of foreign subsidiaries: The company's
---------------------------------------------
recently acquired foreign subsidiaries have defined-benefit plans
and/or termination indemnity plans covering substantially all of
their eligible employees. The benefits under these plans are based
on years of service and final average compensation levels. Funding
is limited to statutory requirements.
(In thousands)
- ------------------------------------------------------------------------
Years ended March 31 1997 1996
- ------------------------------------------------------------------------
Expense recognized $ 913 $ 1,148
Accumulated benefit obligation 10,155 11,342
Projected benefit obligation 11,431 12,738
Fair value of plan assets 601 459
- ------------------------------------------------------------------------
Actuarial assumptions:
Discount rate (to calculate present
value of future benefits) 7.5%-12.5% 7.5%-12.5%
Average salary-growth rate 3.0%-8.5% 3.0%-8.5%
- ------------------------------------------------------------------------
<PAGE>
Domestic qualified defined-contribution plans: The company has
---------------------------------------------
several 401(k) and savings plans that cover most of its domestic
employees. These plans provide company matching under various
formulas. The cost of the company's contributions to the plans
(including stock purchase plans detailed in note 17) for fiscal
1997, 1996, and 1995 were $6,424,000, $6,454,000, and $5,871,000,
respectively.
4. Postretirement benefits other than pensions
-------------------------------------------
The company and certain of its domestic subsidiaries, including
its Signet acquisition, provide selected healthcare and life-insurance
benefits for retired employees. Designated employees may become eligible
for those benefits when they retire.
Postretirement benefit expense:
(In thousands)
- ------------------------------------------------------------------------------
Years ended March 31 1997 1996 1995
- ------------------------------------------------------------------------------
Service cost $ 322 $ 293 $ 214
Interest cost 1,653 1,525 1,202
Net amortization (522) (582) (657)
- ------------------------------------------------------------------------------
Net periodic postretirement
benefit cost $1,453 $1,236 $ 759
- ------------------------------------------------------------------------------
Postretirement benefit liability:
(In thousands)
- ------------------------------------------------------------------------------
March 31 1997 1996
- ------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $17,147 $17,199
Fully eligible active plan participants 1,761 2,287
Other active plan participants 4,212 3,547
---------------------
Total accumulated postretirement benefit
obligation 23,120 23,033
Net gains/(losses) 510 845
Unamortized net reduction in obligation 3,509 3,981
- ------------------------------------------------------------------------------
Accrued postretirement benefit obligation $27,139 $27,859
- ------------------------------------------------------------------------------
These plans are unfunded. The company periodically amends the plans
changing the contribution rate of retirees and the amounts and forms of
coverage. An annual limit on the company's liability (a "cap") was
established for most plans between fiscal 1994 and fiscal 1996 after
original recognition of the liability in fiscal 1993. It maximizes
future costs at 200 percent of the company's then-current cost. These
changes reduced the accrued obligation and the reduction is being
amortized as a component of the benefit cost. The Signet acquisition
<PAGE>
added to the fiscal-1996 obligation while the Dowagiac divestiture
reduced it.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5 percent at both March 31, 1997 and 1996. The
projected healthcare costs trend rates used were 9 percent for fiscal 1997,
10-11 percent for fiscal 1996, and 11 percent for fiscal 1995, trending
down gradually to 5 percent over several years. The effects of these
assumption changes on accrued postretirement benefit cost and related
expense are being amortized.
The healthcare-cost trend-rate assumption can have a significant effect
on the amounts reported. Increasing the assumed healthcare-cost trend rates
by one percentage point in each year would have increased the accumulated
postretirement benefit obligation by $1,429,000 as of March 31, 1997, and
the net periodic postretirement benefit cost for fiscal 1997 by $102,000.
5. Leases
------
The company leases various facilities and equipment. Rental expense
under operating leases totaled $11,876,000 in fiscal 1997, $12,211,000
in fiscal 1996, and $10,750,000 in fiscal 1995.
Future minimum rental commitments at March 31, 1997, under
noncancelable leases were:
(In thousands)
- ----------------------------------------------------------------------
Years ended March 31
- ----------------------------------------------------------------------
1998 $6,609 2001 $2,704
1999 5,201 2002 662
2000 3,740 2003 and beyond 2,086
- ----------------------------------------------------------------------
Total future minimum rental commitments $21,002
- ----------------------------------------------------------------------
6. Income taxes
------------
Income-tax expense attributable to income from operations
consists of:
(In thousands)
- ---------------------------------------------------------------------------
Years ended March 31 1997 1996 1995
- ---------------------------------------------------------------------------
Federal:
Current $25,171 $29,497 $32,745
Deferred 265 (930) (471)
State:
Current 3,769 5,646 6,203
Deferred 134 (49) (277)
Foreign:
Current 6,692 4,613 1,678
Deferred (2,011) (1,027) 507
- ---------------------------------------------------------------------------
Totals charged to earnings $34,020 $37,750 $40,385
- ---------------------------------------------------------------------------
<PAGE>
Income-tax expense attributable to income from operations differed from
the amounts computed by applying the statutory U.S. federal income-tax rate
as a result of the following:
- --------------------------------------------------------------------------
Years ended March 31 1997 1996 1995
- --------------------------------------------------------------------------
Statutory federal tax 35.0% 35.0% 35.0%
State taxes, net of federal benefit 2.6 3.6 3.4
Taxes on non-U.S. earnings and losses (2.2) 0.7 (0.6)
Other (0.6) (1.2) (0.7)
- --------------------------------------------------------------------------
Effective tax rate 34.8% 38.1% 37.1%
- --------------------------------------------------------------------------
The significant components of deferred income-tax expense attributable
to income from operations are as follows:
(In thousands)
- --------------------------------------------------------------------------
Years ended March 31 1997 1996 1995
- --------------------------------------------------------------------------
Pensions $ 1,473 $ 1,790 $1,591
Depreciation 627 (260) (754)
Inventories 161 (812) (465)
Employee benefits (994) (727) (976)
Other (2,879) (1,997) 363
- --------------------------------------------------------------------------
Totals charged to earnings $(1,612) $(2,006) $ (241)
- --------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as
follows:
(In thousands)
- --------------------------------------------------------------------------
March 31 1997 1996
- --------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 1,174 $ 1,458
Inventories 3,815 3,998
Plant and equipment 552 712
Employee benefits 18,677 17,730
Net operating-loss and tax-credit
carry-forwards 5,734 4,177
Other 7,590 5,539
------------------
Total gross deferred assets 37,542 33,614
Less valuation allowance 4,127 3,900
------------------
Net deferred tax assets 33,415 29,714
------------------
Deferred tax liabilities:
Pension 17,299 15,735
Plant and equipment 8,722 8,279
Other 1,098 927
------------------
Total gross deferred tax liabilities 27,119 24,941
- --------------------------------------------------------------------------
Net deferred tax asset $ 6,296 $ 4,773
- --------------------------------------------------------------------------
<PAGE>
The valuation allowance for deferred tax assets as of April 1, 1996,
was $3,900,000. The allowance increased by $227,000 during the year and
relates primarily to certain, foreign, net-operating-loss carry-forward
activities.
The undistributed earnings of certain foreign subsidiaries and
joint-venture companies totaled $46,199,000 as of March 31, 1997. The
earnings are considered permanently reinvested in foreign operations and,
therefore, no provision has been made for any U.S. taxes.
7. Cash and cash equivalents
-------------------------
Under the company's cash management system, certain cash balances
reflect credit balances to the extent that checks written have not yet
been presented for payment. These credit balances, included in accounts
payable, were approximately $10,732,000, $10,046,000, and $9,657,000 at
March 31, 1997, 1996, and 1995, respectively.
All the short-term investments at March 31, 1997, 1996, and 1995,
were of a duration of less than three months and were treated as
cash equivalents, which approximate fair value.
8. Inventories
-----------
Inventories include:
(In thousands)
- --------------------------------------------------------------------------
March 31 1997 1996
- --------------------------------------------------------------------------
Raw materials $ 41,592 $ 38,307
Work in process 37,317 47,794
Finished goods 63,206 63,899
- --------------------------------------------------------------------------
Total inventories $142,115 $150,000
- --------------------------------------------------------------------------
9. Property, plant, and equipment
------------------------------
Property, plant, and equipment is composed of
(In thousands)
- --------------------------------------------------------------------------
March 31 Depreciable lives 1997 1996
- --------------------------------------------------------------------------
Land -- $ 7,306 $ 5,217
Buildings and improvements 10-40 years 112,353 104,901
Machinery and equipment 3-12 years 251,655 234,614
Office equipment 5-14 years 37,360 34,375
Transportation equipment 3-7 years 17,007 16,194
Construction in progress -- 33,233 38,580
------------------
458,914 433,881
Less accumulated depreciation 248,799 232,540
- --------------------------------------------------------------------------
Net property, plant, and equipment $210,115 $201,341
- --------------------------------------------------------------------------
<PAGE>
Depreciation expense was $35,288,000, $34,962,000, and $31,410,000
for the fiscal years ended 1997, 1996, and 1995, respectively.
10. Acquisitions and divestiture
----------------------------
Acquisitions: On October 31, 1996, the company, through its wholly
------------
owned subsidiary, Modine GmbH, purchased 41.33 percent of Constructions
Mecaniques Mota, S.A. (CMM), based near Marseilles in Provence, France.
CMM produces tube-bundle oil coolers for truck, industrial, and marine
engines. Major European vehicle manufacturers are among its customers.
The purchase price of $4,236,000 was paid for by using an existing
unsecured revolving credit arrangement. Goodwill recorded as part of the
investment was $2,476,000 and is being amortized on a straight-line basis
over 15 years. The investment is being accounted for under the equity
method. This investment did not have a material effect on the consolidated
results of operations and, accordingly, pro-forma information is not
presented.
In the first quarter of fiscal 1996, the company made two small
acquisitions. Effective April 1, 1995, the company, through its wholly
owned subsidiary NRF Holding B.V., acquired Radiadores Montana S.A. based
in Granada, Spain. Montana is a manufacturer and distributor to the
automotive aftermarket, producing radiators and radiator cores, oil
coolers, heaters, and air-conditioning condensers and evaporators for
on- and off-highway vehicles and for industrial applications. At the
end of May, the company acquired its partner's 57-percent ownership in
the joint-venture company Radinam S.A., which owns Mexpar (Manufacturera
Mexicana de Partes de Automoviles S.A. de C.V.), a radiator manufacturer
in Mexico City. Mexpar produces automotive radiators primarily for the
aftermarket and also serves original-equipment manufacturers of vehicles
in Mexico.
As of July 31, 1995, the company acquired the business, assets,
and certain liabilities of the Signet Systems Division from The Equion
Corporation. The acquisition included the main plant in Harrodsburg,
Kentucky, an operation in Goch, Germany, and a sales and engineering
office in Detroit, Michigan. Signet is a full-service supplier of
climate-control systems and components to the automotive, truck, and
off-highway vehicle markets in North America and Europe.
The combined adjusted purchase price of all the fiscal-1996
acquisitions totaled $64,210,000 and was paid for with cash provided
by operations, with new and existing unsecured revolving credit
arrangements, and promissory notes to Equion Corporation totaling
$5,000,000. Combined goodwill and other intangibles created by the
acquisitions were $41,187,000 and $14,000 respectively. Goodwill is
being amortized on a straight-line basis over 15 years.
The results of operations are included in the consolidated
financial statements since the respective effective dates of
acquisition. The majority-owned foreign operations are reported using a
one-month delay, which is consistent with the company's policy for
reporting operations outside the United States and Canada. All of the
acquisitions made in fiscal 1996 have been accounted for using the
purchase method. The company had used the equity method to account for
its interest in Radinam S.A. prior to majority ownership. The company
<PAGE>
continues to use the plants, machinery and equipment, and other assets
acquired in these acquisitions for the manufacture of heat-transfer
products.
Details of businesses acquired in purchase transactions were as
follows:
(In thousands)
- ------------------------------------------------------------------------
Year ended March 31 1996
- ------------------------------------------------------------------------
Value of assets acquired, including
intangibles, excluding cash acquired
of $2,412 $89,096
Liabilities assumed and created (29,036)
Equity investment in affiliates (3,262)
- ------------------------------------------------------------------------
Net cash paid for acquisitions $56,798
- ------------------------------------------------------------------------
Divestiture: In October 1995, the company completed the sale of
-----------
its copper-extrusion business in Dowagiac, Michigan, to National Tube
Holding Company, Inc., of Birmingham, Alabama. Modine recognized a
pretax gain of $5,009,000, including $1,430,000 from the curtailment
and settlement of certain pension and benefit obligations, negotiated
subsequent to the sale.
On a pro-forma basis, the unaudited consolidated results of
operations would have been as follows had the acquisitions and disposal
made in fiscal 1996, occurred on April 1, 1994:
(Dollars in thousands, except per-share amounts)
- ----------------------------------------------------------------------------
Years ended March 31 (unaudited) 1996 1995
- ----------------------------------------------------------------------------
Net sales $1,001,007 $976,653
Net earnings 59,807 65,588
Net earnings per share:
Primary $1.97 $2.15
Fully diluted 1.97 2.14
- ----------------------------------------------------------------------------
The pro-forma financial information presented above is for informational
purposes only and does not necessarily reflect the results of operations
that would have occurred had the divestiture and acquisitions, completed
in fiscal 1996, taken place on the date assumed above, nor are those
results necessarily indicative of the results of future combined
operations.
<PAGE>
11. Intangible assets
-----------------
Intangibles include:
(In thousands)
- --------------------------------------------------------------------------
March 31 1997 1996
- --------------------------------------------------------------------------
Goodwill $66,644 $69,973
Patents and product technology 8,389 8,389
Other intangibles 800 783
------------------
75,833 79,145
Less accumulated amortization 12,885 8,689
- ---------------------------------------------------------------------------
Net intangible assets $62,948 $70,456
- ---------------------------------------------------------------------------
Amortization expense for intangible assets was $5,022,000, $3,574,000,
and $2,044,000 for the fiscal years ended 1997, 1996, and 1995, respectively.
12. Deferred charges and other noncurrent assets
--------------------------------------------
Deferred charges and other noncurrent assets include:
(In thousands)
- --------------------------------------------------------------------------
March 31 1997 1996
- --------------------------------------------------------------------------
Prepaid pension costs -- qualified and
nonqualified plans $44,539 $40,319
Other noncurrent assets 1,714 1,818
- --------------------------------------------------------------------------
Total deferred charges and other
noncurrent assets $46,253 $42,137
- --------------------------------------------------------------------------
<PAGE>
13. Indebtedness
------------
Long-term debt at March 31, 1997 and 1996, includes:
(Dollars in thousands)
- --------------------------------------------------------------------------
Fiscal
Interest rate at year of
Type of issue March 31, 1997 maturity 1997 1996
- --------------------------------------------------------------------------
Denominated in
U.S. dollars:
Fixed rate --
Notes and other debt 9.25%-9.70% 1998 $ 9,600 $ 19,000
Weighted average
interest rate
March 31, 1997 9.33%
Revenue bonds 7.50% 2003 1,800 2,150
Variable rate --
Notes 6.36-8.50% 1998-1999 4,000 6,000
Weighted average
interest rate
March 31, 1997 7.70%
Revenue bonds 3.30%-3.60% 2008-2016 5,940 5,940
Weighted average
interest rate
March 31, 1997 3.45%
Denominated in
foreign currency:
Fixed rate -- notes
and other debt 3.50%-11.00% 2004-2006 2,051 362
Weighted average
interest rate
March 31, 1997 3.93%
Variable rate _ notes
and other debt 1.04%-6.72% 1999-2001 75,865 66,900
Weighted average
interest rate
March 31, 1997 3.52%
-------------------
99,256 100,352
Capital lease obligation 2 9
-------------------
99,258 100,361
Less current portion 14,061 12,552
- --------------------------------------------------------------------------
Total $85,197 $ 87,809
- --------------------------------------------------------------------------
Certain of the company's loan agreements limit the use of retained
earnings for the payment of cash dividends and the acquisition of treasury
stock. Under the most restrictive, $145,950,000 was available for these
purposes at March 31, 1997. (However, these restricted payments may not
exceed $30,000,000 in any fiscal year.) Other loan agreements give certain
existing unsecured lenders security equal to any future secured borrowing.
<PAGE>
At March 31, 1997, the carrying value of the company's long-term
debt approximates fair value. The estimated fair value of total long-
term debt including current portion was $101,165,000 at March 31, 1996.
Long-term debt matures as follows:
(In thousands)
- ---------------------------------------------------------------------
Years ended March 31
- ---------------------------------------------------------------------
1998 $14,061 2001 $15,617
1999 42,617 2002 2,601
2000 2,655 2003 and beyond 21,707
- ---------------------------------------------------------------------
The company maintains credit agreements with banks in the
United States and abroad. The foreign unused lines of credit at
March 31, 1997, were approximately $6,498,000, while the parent
company had approximately $13,681,000 available under a domestic
multi-currency revolving credit agreement. A maximum of $6,500,000
in short-term bank borrowings were outstanding during the year ended
March 31, 1997. The weighted average interest rate on short-term
borrowings was 3.55 percent at March 31, 1997, and 3.97 percent at
March 31, 1996.
14. Foreign exchange contracts/derivatives
--------------------------------------
The company uses derivative financial instruments in a limited
way as a tool to manage the company's financial risk. Their use
is restricted primarily to hedging assets and obligations already
held by the company and they generally are used to protect cash
of the company rather than generate income or engage in
speculative activity. Leveraged derivatives are prohibited by
company policy.
The company from time to time enters into foreign-currency-
exchange contracts, generally with terms of 90 days or less, to
hedge specific foreign-currency-denominated transactions. The
effect of this practice is to minimize the impact of foreign-
exchange-rate movements on the company's operating income. The
company's foreign-currency-exchange contracts do not subject the
company to risk due to exchange-rate movements because gains and
losses on these contracts offset gains and losses on the assets and
liabilities being hedged.
As of March 31, 1997 and 1996, the parent company had
approximately $3,498,000 and $3,604,000, respectively, in
outstanding forward foreign-exchange contracts denominated in
French francs. The difference between these contracts' values
and the fair value of these instruments in the aggregate was not
material. Certain subsidiaries have transactions in currencies
other than their functional currencies and, from time to time,
enter into forward and option contracts to hedge the purchase of
inventory or to sell nonfunctional currency receipts. Non-U.S.
dollar financing transactions through intercompany loans or
local borrowings in the corresponding currency generally are
effective as hedges of long-term investments. See also note 13.
<PAGE>
15. Other noncurrent liabilities
----------------------------
Other noncurrent liabilities include:
(In thousands)
- -----------------------------------------------------------------------
March 31 1997 1996
- -----------------------------------------------------------------------
Postretirement benefits other than pensions $25,718 $26,263
Pensions 12,558 12,912
Other 2,464 2,181
- -----------------------------------------------------------------------
Total other noncurrent liabilities $40,740 $41,356
- -----------------------------------------------------------------------
16. Shareholder rights plan
-----------------------
The company has a shareholder rights plan to protect against
coercive takeover tactics. Under the plan, each share of the company's
common stock carries one right that entitles the holder to purchase a
unit of 1/100 Preferred Series A Participating Stock. During fiscal 1997,
the company amended the plan increasing the price from $21.25 to $95.00
per unit. The rights are not currently exercisable but will become
exercisable 10 days after a shareholder has acquired 20 percent or more,
or has commenced a tender or exchange offer for 30 percent or more, of
the company's common stock. In the event of certain mergers, sales of
assets, or self-dealing transactions involving a 20-percent-or-more
shareholder, each right not owned by such 20-percent-or-more holder
will be modified so that it will then be exercisable for common stock
having a market value of twice the exercise price of the right. The
rights are redeemable in whole by the company, at a price of $0.0125
per right, at any time before 20 percent or more of the company's
common stock has been acquired. The rights expire on October 27, 2006,
unless previously redeemed.
17. Stock option, award, and purchase plans
---------------------------------------
Stock option and award plans: In July of 1978, 1985, and 1994,
----------------------------
shareholders approved plans providing for the granting of options to
officers, other key employees, and, in 1985 and 1994, to non-employee
directors to purchase common stock of the company. Options granted under
the plans, which vest immediately, are either nonqualified or incentive
stock options and carry a price equal to the market price on the date
of grant. Both incentive stock options and nonqualified stock options
terminate 10 years after date of grant.
The 1978, 1985, and 1994 Incentive Stock Plans also provide for
the granting of stock awards. Restricted stock awards were granted for
52,000, 50,000, and 31,000 shares in fiscal 1997, 1996, and 1995,
respectively. Shares are awarded at o cost to the employee and are
placed in escrow until certain employment restrictions lapse. The
value of shares awarded is amortized over the seven-year restriction
period. The amounts charged to operations in fiscal 1997, 1996, and
1995 were $1,194,000, $1,105,000, and $1,028,000, respectively.
<PAGE>
Following is a summary of option activity under the plans.
- --------------------------------------------------------------------------
Shares Weighted-Average
(in thousands) Exercise Price per Share
- --------------------------------------------------------------------------
Outstanding March 31, 1994 1,781 $13.70
Granted:
Incentive and nonqualified 268 28.42
Exercised (266) 8.72
Expired (17) 3.83
- --------------------------------------------------------------------------
Outstanding March 31, 1995 1,766 16.74
- --------------------------------------------------------------------------
Granted:
Incentive and nonqualified 313 24.28
Exercised (143) 9.93
- --------------------------------------------------------------------------
Outstanding March 31, 1996 1,936 18.46
- --------------------------------------------------------------------------
Granted:
Incentive and nonqualified 312 25.33
Exercised (163) 8.35
- --------------------------------------------------------------------------
Outstanding March 31, 1997 2,085 $20.27
- --------------------------------------------------------------------------
Options outstanding and exercisable as of March 31, 1997:
- ----------------------------------------------------------------------------
Weighted- Weighted-average
average exercise price Shares
Range of exercise prices remaining life per share (in thousands)
- ----------------------------------------------------------------------------
$7.875 - 14.99 3.50 $10.37 630
15.00 - 24.99 7.00 20.15 627
25.00 - 34.99 8.25 27.91 828
- ----------------------------------------------------------------------------
Total outstanding and exercisable $20.27 2,085
- ----------------------------------------------------------------------------
A further 2,519,000 shares were available for the granting of
additional options or awards at March 31, 1997.
The company has elected to continue to measure compensation cost
using the intrinsic value method of accounting prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly, no compensation cost has been recognized related
to its stock option plans. If the fair-value based method of accounting
for the 1997 and 1996 stock option grants had been applied in accordance
with SFAS No. 123, "Accounting for Stock-Based Compensation," the
company's net earnings and net earnings per share would have been
reduced as summarized below:
<PAGE>
(Dollars in thousands, except per-share amounts)
- --------------------------------------------------------------------------
Years ended March 31 1997 1996
- --------------------------------------------------------------------------
Net earnings as reported $63,763 $61,399
Net earnings pro forma 61,375 59,205
Net earnings per share as reported $2.10 $2.02
Net earnings per share pro forma 2.02 1.95
- --------------------------------------------------------------------------
The following assumptions were used to compute the fair value
of the option grants in fiscal 1997 and 1996 using the Black-Scholes
option-pricing model: a risk-free interest rate of 6.26 percent and
5.41 percent, respectively; stock volatility 30.0 percent and 31.0
percent, respectively; dividend yield of 2.2 percent and 2.4 percent
respectively; and, for both years, expected option lives of five years.
Stock purchase plans: The company also has adopted several
--------------------
defined-contribution stock purchase plans. The plans permit
employees to make monthly investments at current market prices
based on a specified percentage of compensation. The company
matches a portion of the employees' contribution.
Activity in the plans for fiscal 1997, 1996, and 1995 resulted
in the purchase of 670,000, 590,000, and 589,000 shares of company
stock, respectively. These purchases were made from the employee
pension plan trusts, private purchases, and treasury shares. It is
anticipated that future purchases will be made from all three
sources at the discretion of the plans' administrative committees.
Costs of the company's contributions to the plans for fiscal 1997,
1996, and 1995 were $5,930,000, $6,110,000, and $5,871,000,
respectively.
18. Segment and geographic area information
---------------------------------------
The company operates predominantly in a single industry,
the production and sale of heat-transfer equipment. Information
<PAGE>
about the company by geographic operating area is presented
below:
(In thousands)
- -------------------------------------------------------------------------
Years ended March 31 1997 1996 1995
- -------------------------------------------------------------------------
Sales to unaffiliated customers from
company facilities located in:
United States $682,533 $684,289 $667,433
Europe 291,945 285,800 227,704
Canada and Latin America 24,568 20,404 17,873
- -------------------------------------------------------------------------
Net sales $999,046 $990,493 $913,010
- -------------------------------------------------------------------------
Sales between geographic areas:
United States $ 8,359 $ 4,615 $ 2,401
Europe 367 125 87
Canada and Latin America 6,208 4,021 2,520
- -------------------------------------------------------------------------
Total inter-area sales $ 14,934 $ 8,761 $ 5,008
- -------------------------------------------------------------------------
Operating profit or loss:
United States $ 90,251 $ 97,113 $115,713
Europe 15,998 8,861 7,861
Canada and Latin America 2,775 917 1,840
Corporate, eliminations, and other (11,241) (7,742) (16,587)
- -------------------------------------------------------------------------
Earnings before income taxes $ 97,783 $ 99,149 $108,827
- -------------------------------------------------------------------------
Identifiable assets:
United States $479,821 $476,390 $411,811
Europe 177,990 169,211 135,239
Canada and Latin America 22,294 24,932 16,067
Corporate, eliminations, and other 14,850 1,303 27,070
- ------------------------------------------------------------------------
Total assets $694,955 $671,836 $590,187
- ------------------------------------------------------------------------
Included in the United States sales to unaffiliated customers
are export sales of $117,906,000, $127,335,000, and $126,409,000, in
fiscal 1997, 1996, and 1995, respectively, the majority to customers
in Europe. During the last three fiscal years, no single customer has
accounted for more than 10 percent of revenues.
19. Contingencies and litigation
----------------------------
In the normal course of business, the company and its subsidiaries
have been named as defendants in various lawsuits and enforcement
proceedings in which claims are asserted against the company by private
parties, the Occupational Safety and Health Administration, the
Environmental Protection Agency, other governmental agencies, and
others. The company is also subject to other liabilities that arise
in the ordinary course of its business. Based on the information
available, the company does not expect that any unrecorded liability
related to these matters would have a material effect on the
consolidated financial statements.
<PAGE>
In November 1991, the company filed a lawsuit against Mitsubishi
Motor Sales of America, Inc., and Showa Aluminum Corporation, alleging
infringement of the company's patent on parallel-flow air-conditioning
condensers. The suit seeks an injunction to prohibit continued
infringement, an accounting for damages, a trebling of such damages for
willful infringement, and reimbursement of attorneys' fees. In December
1991, the company submitted a complaint to the U.S. International Trade
Commission (ITC) requesting that the ITC ban the import and sale of
parallel-flow air-conditioning condensers and systems or vehicles that
contain them, which are the subject of the aforementioned lawsuit. In
July 1993, the ITC reversed an earlier ruling by a hearing officer and
upheld, as valid and enforceable, the company's basic patent on parallel-
flow air-conditioning condensers. The ITC also ruled that specific
condensers from the two Japanese companies did not infringe the company's
patent. Each of the parties appealed, to the U.S. Court of Appeals for the
Federal Circuit, the portion of the ITC opinion adverse to them. In
February 1996, the U.S. Court of Appeals for the Federal Circuit upheld
the patent as valid and enforceable and remanded the case to the ITC for
a determination with respect to Showa infringement. In July of 1994, Showa
filed a lawsuit against the company alleging infringement by the company of
certain Showa patents pertaining to condensers. (In June, 1995, the company
filed a motion for partial summary judgment against such lawsuit.) In
December of 1994, the company filed another lawsuit against Mitsubishi
and Showa pertaining to a newly issued patent on parallel-flow air-
conditioning condensers. Both 1994 suits have been stayed pending the
outcome of re-examination in the U.S. Patent Office of the patents
involved. All legal and court costs associated with these cases have
been expensed as they were incurred.
20. Quarterly financial data (unaudited)
------------------------------------
Quarterly financial data are summarized below:
(In thousands, except per-share amounts)
- --------------------------------------------------------------------------
Fiscal 1997 quarters ended June Sept. Dec. March
- --------------------------------------------------------------------------
Net sales $248,514 $254,224 $252,972 $243,336
Gross profit 67,351 69,115 71,104 69,850
Net earnings 16,390 15,654 15,402 16,317
Net earnings per share
of common stock $0.54 $0.51 $0.51 $0.54
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Fiscal 1996 quarters ended June Sept. Dec. March
- --------------------------------------------------------------------------
Net sales $239,216 $254,292 $252,817 $244,168
Gross profit 60,882 67,937 63,815 62,739
Net earnings 15,983 16,736 14,855 13,825
Net earnings per share
of common stock $0.52 $0.55 $0.49 $0.46
- --------------------------------------------------------------------------
<PAGE>
Independent auditors' report
To the Shareholders and Board of Directors
Modine Manufacturing Company
Racine, Wisconsin
We have audited the accompanying consolidated balance sheets of
Modine Manufacturing Company and Subsidiaries as of March 31,
1997 and 1996, and the related consolidated statements of
earnings, shareholders' investment, and cash flows for each of
the three years in the period ended March 31, 1997. These
financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Modine Manufacturing Company and
Subsidiaries as of March 31, 1997, and 1996, and the
consolidated results of their operations and their cash flows for
each of the three years in the period ended March 31, 1997, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND LLP
Coopers & Lybrand L.L.P.
Chicago, Illinois
May 1, 1997
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant
The table below indicates each of the Registrant's subsidiaries, each
subsidiary's jurisdiction of incorporation, and the percentage of its
voting securities owned by the Registrant or its subsidiaries.
State or
country of Percentage
incorporation of voting
Subsidiaries: or organization securities Owned by
- ------------ --------------- ---------- --------
Modine Aftermarket
Holdings, Inc. North Carolina 100% Registrant
Modine of Puerto Rico, Inc. Delaware 100% Registrant
Modine of Canada, Ltd. Ontario, Canada 100% Registrant
Modine Export Sales Corp. Barbados 100% Registrant
Modine, Inc. Delaware 100% Registrant
Modine Handelsgesellschaft
mbH Austria 100% Registrant
Modine Holding GmbH Germany 100% Modine, Inc.
TRT Heating Products, Inc. Rhode Island 100% Registrant
Industrial Airsystems, Inc. Minnesota 100% Registrant
NRF BV ("NRF") The Netherlands 100% Modine, Inc.
Modine Heat Transfer, Inc. Michigan 100% Registrant
Modine Transferencia de
Calor, SA de CV Mexico 99.6% Modine, Inc.<F1>
Skopimex BV The Netherlands 100% NRF
NRF France SarL France 100% NRF
NRF AS Denmark 100% NRF
NRF BvbA Belgium 100% NRF
NRF Ltd. England 100% NRF
NRF GmbH Austria 100% NRF
NRF GmbH Germany 100% NRF
NRF SP ZOO Poland 100% NRF
Austria Warmetauscher GmbH Austria 100% Registrant
Langerer & Reich GmbH
("L&R") Germany 100% Modine Holding GmbH
Modine GmbH Germany 100% Modine Holding GmbH
Langerer & Reich
Automobiltechnik GmbH Germany 100% Modine Holding GmbH
Hungaro Langerer Gep. Kft. Hungary 100% Modine Holding GmbH
Modine Asia K.K. Japan 100% Registrant
Modine Uden B.V. The Netherlands 100% Modine Holding GmbH
Modine S.r.l. Italy 100% Modine Holding GmbH
Radiadores Montana S.A. Spain 100% NRF
Radman, Inc. Michigan 100% Registrant
Modine Foundation, Inc. Wisconsin 100% Registrant
Signet Systems, Inc. Kentucky 100% Registrant
Modine Manufacturing Company
Foundation, Inc. Wisconsin 100% Registrant
Manufactura Mexicana de
Partes de Automoviles,
S.A. ("Mexpar") Mexico 100% Registrant<F2>
Signet Systems GmbH Germany 100% Signet Systems, Inc.
<F1> Balance of voting securities held by the Registrant.
<F2> One share certificate of Mexpar is held by Modine, Inc.
<PAGE>
EXHIBIT 23
Coopers
& Lybrand L.L.P.
Consent of Independent Accountants
We consent to the incorporation by reference in the registration
statement of Modine Manufacturing Company and Subsidiaries on Form S-8
(File Numbers 2-63714, 2-86984, 2-87299, 2-86985, 33-1764, 33-58544, 2-
55398, 33-66436, 33-66438, 33-66442, 33-66440, 33-54719, 33-54721, 33-
54723 and 33-54725) of our report dated May 1, 1997 on our audits of
the consolidated financial statements and financial statement
schedules of Modine Manufacturing Company and Subsidiaries as of March
31, 1997 and 1996, and for each of the three years in the period ended
March 31, 1997, which report is incorporated by reference in this
Annual Report on Form 10-K.
COOPERS & LYBRAND LLP
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
June 18, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS
FOR PERIOD ENDING 3/31/97 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 34,822
<SECURITIES> 0
<RECEIVABLES> 153,940
<ALLOWANCES> 4,140
<INVENTORY> 142,115
<CURRENT-ASSETS> 366,142
<PP&E> 458,914
<DEPRECIATION> 248,799
<TOTAL-ASSETS> 694,955
<CURRENT-LIABILITIES> 169,999
<BONDS> 85,197
0
0
<COMMON> 18,964
<OTHER-SE> 366,724
<TOTAL-LIABILITY-AND-EQUITY> 694,955
<SALES> 999,046
<TOTAL-REVENUES> 999,046
<CGS> 721,626
<TOTAL-COSTS> 721,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (209)
<INTEREST-EXPENSE> 4,972
<INCOME-PRETAX> 97,783
<INCOME-TAX> 34,020
<INCOME-CONTINUING> 63,763
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,763
<EPS-PRIMARY> 2.10
<EPS-DILUTED> 2.10
</TABLE>
EXHIBIT 99
notice
of meeting
and proxy
statement
annual meeting
1997
of shareholders
M O D I N E
<PAGE>
M O D I N E
- ------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, JULY 16, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Modine Manufacturing Company
will be held at the offices of the Company, 1500 DeKoven Avenue, Racine,
Wisconsin, on Wednesday, July 16, 1997, at 9:30 a.m. for the following
purposes:
1. To elect three directors to serve until the Annual
Meeting in 2000.
2. To transact any other business that may properly
come before the meeting or any adjournment thereof.
The transfer books of the Company will not be closed, but
only shareholders of record at the close of business on May 27,
1997, are entitled to notice of and to vote at this meeting.
In order that your stock may be represented at the meeting,
in case you are not personally present, PLEASE SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
By order of the Board of Directors
W. E. PAVLICK, Secretary
June 6, 1997
YOUR VOTE IS IMPORTANT!
Please date, sign, and return
the enclosed Proxy immediately.
<PAGE>
PROXY STATEMENT
Annual Shareholders' Meeting of Modine Manufacturing Company--1997
- -------------------------------------------------------------------
GENERAL INFORMATION
The solicitation of the enclosed proxy is made by and on
behalf of the Board of Directors of Modine Manufacturing Company,
1500 DeKoven Avenue, Racine, Wisconsin 53403 (hereinafter called
the "Company") for use at the Annual Meeting of Shareholders of
the Company to be held on July 16, 1997, or at any adjournment
thereof.
A person giving the proxy has the power to revoke it at any
time prior to the exercise thereof by giving notice in writing to
the Secretary of the shareholders' meeting or by oral notice to
the presiding officer during the meeting. Unless revoked,
properly executed proxies will be voted in accordance with the
instructions of the shareholder. If no specific instructions are
given, the shares represented by the proxy will be voted FOR the
election of directors.
With regard to the election of directors, votes may be cast
in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect.
In their discretion, the proxies are authorized to vote upon
such other business as may come before the meeting. Holders of
record at the close of business on May 27, 1997, are entitled to
one vote for each share of stock held. It is intended that these
proxy materials will be sent to shareholders on or about June 6,
1997. The total number of shares of Common Stock outstanding and
entitled to vote at the meeting is 29,784,295 shares; no
Preferred Stock is currently outstanding. The holders of Common
Stock of the Company do not have cumulative voting rights.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members.
Each of these nominees has indicated his willingness to
serve if elected. While it is not anticipated that any of the
nominees will be unable to take office, if such is the case,
proxies will be voted in favor of such other person or persons as
the Board of Directors may propose to fill the three
directorships. In accordance with the Restated By-Laws, 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 qualify; subject, however, to prior death,
resignation, retirement, disqualification, or removal from
office. Vacancies may be filled by the remaining directors.
The nominees for the Board of Directors, the directors whose
terms will continue, their ages, other directorships, and their
tenure and expiration dates of their terms are set forth on the
following pages:
<PAGE>
Nominees to be Elected
- ----------------------
FRANK W. JONES Director since 1982
Age 57
Mr. Jones is an independent management consultant, Tucson,
Arizona. He is also a director of Jason Incorporated,
Ingersoll Milling Machine Co., Star Cutter Co., Gardner
Publications, Inc., and General Tool Co. Term to expire
in 2000.
DENNIS J. KUESTER Director since 1993
Age 55
Mr. Kuester is President of Marshall & Ilsley Corporation
and of M&I Marshall & Ilsley Bank, and Chairman and Chief
Executive Officer of M&I Data Services, Inc., a Milwaukee,
Wisconsin, bank holding company, bank, and banking services
company, respectively. He is also a director of M&I Data
Services, Inc., M&I Marshall & Ilsley Bank, M&I Corporation,
Super Steel Products Corp., TYME Corporation, and Krueger
International. Term to expire in 2000.
MICHAEL T. YONKER Director since 1993
Age 54
Mr. Yonker is President and Chief Executive Officer of
Portec, Inc., Lake Forest, Illinois, a manufacturer of
railroad, construction, and material handling equipment. He
is also a director of Woodward Governor Company. Term to
expire in 2000.
Directors Continuing in Service
- -------------------------------
STUART W. TISDALE Director since 1987
Age 68
Mr. Tisdale is the retired Chairman, Chief Executive
Officer, and a director of WICOR, Inc., Milwaukee,
Wisconsin, a holding company whose primary subsidiaries are
Wisconsin Gas Company, a public utility, Sta-Rite
Industries, a manufacturer of pumps and fluid handling
systems, and SHURflow Pump Manufacturing Company, a
manufacturer of small high-performance pumps, valves, motors
and systems. He is also a director of M&I Marshall & Ilsley
Bank, Marshall & Ilsley Corporation, and Twin Disc, Inc.
Term to expire in 1999.
<PAGE>
VINCENT L. MARTIN Director since 1992
Age 57
Mr. Martin is Chairman, Chief Executive Officer, and a
director of Jason Incorporated, a diversified manufacturing
company based in Milwaukee, Wisconsin. He is also a
director of Crane Manufacturing & Service. Term to expire
in 1999.
RICHARD T. SAVAGE Director since 1989
Age 58
Mr. Savage is Chairman of the Board and Chief Executive
Officer of the Company. He is also a director of Twin Disc,
Inc. and M&I Marshall & Ilsley Bank. Term to expire in 1999.
THOMAS J. GUENDEL Director since 1980
Age 69
Mr. Guendel is the retired Chairman of the Board and Chief
Executive Officer of Portec, Inc., Lake Forest, Illinois, a
manufacturer of railroad, construction, and material
handling equipment. He is an Adjunct Professor, Lake Forest
Graduate School of Management. Term to expire in 1998.
GARY L. NEALE Director since 1977
Age 57
Mr. Neale is Chairman, President, Chief Executive Officer,
and a director of NIPSCO Industries, Inc., Hammond, Indiana,
a holding company for gas and electric utilities and other
energy related subsidiaries. Term to expire in 1998.
RICHARD J. DOYLE Director since 1987
Age 65
Mr. Doyle is Chairman, Chief Executive Officer, and a
director of three private electrical contracting
corporations. Prior to his retirement January 1, 1989,
Mr. Doyle was a Vice President of Borg-Warner Corporation,
Chicago, Illinois, a diversified manufacturing and services
company and President and Chief Executive Officer of Borg-
Warner Automotive, Inc., Troy, Michigan, a subsidiary of
Borg-Warner Corporation. Term to expire in 1998.
<PAGE>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Principal Shareholders
- ----------------------
The following table sets forth information based upon the records of
the Company and filings with the Securities and Exchange Commission ("SEC")
as of March 31, 1997*, with respect to each person known to be the beneficial
owner of more than five percent (5%) of any class of the Company's voting
securities.
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership of Class
- -------- -------------------- -------------------- --------
Common Administrative Committee of 5,647,871 Power to vote 18.93%
Modine Contributory Employee Plans' stock
Stock Ownership & Investment not voted by
Plans, 1500 DeKoven Avenue, employees
Racine, WI. Members: R. M. owning it
Gunnerson, R. L. Hetrick,
and D. R. Zakos**
Common Investment Committee of 1,869,673 Power to vote 6.27%
Modine Manufacturing Company and dispose of
Employees' Retirement Trusts, Trusts' stock
1500 DeKoven Avenue, Racine,
WI. Members: R. T. Savage,
A. D. Reid, V. S.
Frangopoulos, D. R. Johnson,
and W. E. Pavlick**
Common J. P. Morgan & Co., 2,012,040 Sole or shared 6.70%
Incorporated voting and/or
60 Wall Street power to dispose
New York, NY 10260*** of stock
Common FMR Corp. 1,664,500 Sole or shared 5.58%
82 Devonshire St. voting and/or
Boston, MA 02109**** power to dispose
of stock
- ------------------------------------------------------------------------------
* Based on a joint Schedule 13D filed April 1, 1997, by Mario T.
Gabelli, GAMCO Investors, Inc., Gabelli & Company, Inc., and
Gabelli Funds, Inc., as of that date, these persons no longer
are known to be the beneficial owner of more than five percent
(5%) of any class of the Company's voting securities.
** M&I Marshall and Ilsley Bank is trustee and holder of record of
the Modine Contributory Employee Stock Ownership and Investment
Plans' and Retirement Trusts' stock and is the escrow agent for
participants' stock under the 1992 through 1997 Stock Award Plans.
D. J. Kuester is president of Marshall & Ilsley Corporation and of
M&I Marshall & Ilsley Bank. M&I Marshall & Ilsley Corporation and
its subsidiaries specifically disclaim beneficial ownership of stock
held by these plans and trusts.
*** Based on a Schedule 13G filed as of January 31, 1997, by
J. P. Morgan & Co., Incorporated.
<PAGE>
**** Based on a Schedule 13G filed as of February 14, 1997, by
FMR Corp.
The Company knows of no other person or group which is a beneficial
owner of five percent (5%) or more of the Company's Common Stock.
Securities Owned by Management
- ------------------------------
The table below reflects, as of March 31, 1997, the number
of shares of Common Stock beneficially owned by each of the
directors of the Company, each of the executive officers named in
the Summary Compensation Table, and the number of shares
beneficially owned by all directors and executive officers of the
Company as a group.
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ---------------- -------------------- --------
Common R. J. Doyle* 37,500(a) **
Common T. J. Guendel* 85,508(b) **
Common F. W. Jones* 79,934(a) **
Common D. J. Kuester* 21,000(c) **
Common V. L. Martin* 37,500(d) **
Common G. L. Neale* 54,215(a) **
Common S. W. Tisdale* 61,082(a) **
Common M. T. Yonker* 21,000(a) **
Common R. T. Savage 483,008(e)(f) 1.62%
Common D. R. Johnson 246,859(e)(f) **
Common V. S. Frangopoulos 343,578(e)(f) 1.15%
Common M. G. Baker 237,697(e) **
Common D. B. Rayburn 105,246(e) **
Common All executive officers
and directors as a
group (24 persons) 2,925,701(g) 9.81%
* Non-employee directors have the right to acquire additional
shares of Common Stock (not listed in the above table) through
the exercise of options automatically granted upon re-election
pursuant to the 1994 Stock Option Plan for Non-Employee Directors
discussed on Page 8.
** Denotes less than one percent of shares outstanding.
<PAGE>
(a) The 37,500 shares listed for Mr. Doyle include options to
acquire 30,000 shares; the 79,934 shares listed for Mr. Jones
include options to acquire 45,000 shares; the 54,215 shares
listed for Mr. Neale include options to acquire 30,000 shares;
the 61,082 shares listed for Mr. Tisdale include options to
acquire 60,000 shares; and the 21,000 shares listed for
Mr. Yonker include options to acquire 20,000 shares.
(b) The 85,508 shares listed for Mr. Guendel include options to
acquire 45,000 shares. This number includes 15,308 shares
held by Mr. Guendel's wife.
(c) The 21,000 shares listed for Mr. Kuester exclude shares held
of record by M&I Marshall & Ilsley Bank. See footnote to
the Five Percent Stock Ownership table on Page 5. This
number includes options to acquire 20,000 shares.
(d) The 37,500 shares listed for Mr. Martin include options to
acquire 35,000 shares and include 500 shares held in trusts
for his children with Mr. Martin as trustee.
(e) The 483,008 shares listed for Mr. Savage include options to
acquire 219,000 shares, and 52,300 restricted shares awarded
to Mr. Savage; the 246,859 shares listed for Mr. Johnson
include 2,288 shares held by Mr. Johnson's wife, options to
acquire 163,000 shares, and 32,100 restricted shares awarded
to Mr. Johnson; the 343,578 shares listed for Mr. Frangopoulos
include 5,533 shares owned by one of his children, options to
acquire 138,000 shares, and 22,200 restricted shares awarded to
Mr. Frangopoulos; the 237,697 shares listed for Mr. Baker include
options to acquire 133,000 shares, and 16,020 restricted shares
awarded to Mr. Baker; the 105,246 shares listed for Mr. Rayburn
include options to acquire 79,000 shares, and 17,620 restricted
shares awarded to Mr. Rayburn.
All awards listed are pursuant to the 1992 through 1997
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the
beginning of the third year from the date of grant.
(f) In addition to the beneficial ownership listed, R. T. Savage,
A. D. Reid, V. S. Frangopoulos, D. R. Johnson, and W. E. Pavlick
comprise the Investment Committee of the Modine Pension Plans
appointed by the Board of Directors. The Committee exercises
investment and voting control over the assets, including Modine
Common Stock, held of record by the Modine Pension Trusts of
which M&I Marshall & Ilsley Bank is trustee as described above.
(g) This number includes 1,111,574 shares held by officers
(other than the five named executive officers) as a group
(11 persons) and includes options to acquire 501,550 shares,
and 41,620 shares awarded pursuant to the 1992 through 1997
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the
beginning of the third year from the date of grant.
Approximately forty-seven percent (47%) of all outstanding
shares are owned or controlled by or for directors, officers,
employees, retired employees, and their families.
<PAGE>
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held nine regular meetings during the
fiscal year ended March 31, 1997. An additional eight meetings
were held by the standing Committees of the Board to assist the
Board in carrying out its responsibilities. A description of
these committees and their functions is set forth below.
The Audit Committee consists of six outside directors. Current
members are R. J. Doyle, Chairman, F. W. Jones, D. J. Kuester, V. L.
Martin, G. L. Neale, and S. W. Tisdale. The Audit Committee recommends
to the Board of Directors the engagement of the independent auditors.
Before the audit, the Committee meets with the independent auditors to
discuss the plan and scope of the audit engagement. At the completion
of the audit, the Committee meets with the independent auditors to
review the results of the audit, the effectiveness of the Company's
internal auditing procedures, and the adequacy of the Company's internal
accounting controls. The Committee also reviews and approves the budget
for each non-audit service, the audit and non-audit fees, and their effect
on the independence of the auditors. The Audit Committee met a total of
three times during the fiscal year ended March 31, 1997.
The Officer Nomination and Compensation Committee consists of five
outside directors. Current members of this Committee are G. L. Neale,
Chairman, T. J. Guendel, V. L. Martin, S. W. Tisdale, and M. T. Yonker.
This Committee reviews candidates for positions as Company officers
and makes recommendations to the Board on such candidates, makes
recommendations to the Board on compensation for the Company's officers,
and administers the Company's 1994 Incentive Compensation Plan. The
Officer Nomination and Compensation Committee met three times during
the last fiscal year.
The Pension Committee consists of five outside directors. Current
members of this Committee are T. J. Guendel, Chairman, R. J. Doyle,
F. W. Jones, D. J. Kuester, and M. T. Yonker. This Committee provides
oversight with respect to the investments of the Company's Pension Plan.
The Pension Committee met two times during the last fiscal year.
The Board of Directors does not have a committee that nominates
directors since nomination and review of director candidates is a
function of the full Board. In addition, shareholders who wish to
nominate candidates for election to the Board may do so.
Generally, if a shareholder intends to propose business or make a
nomination for the election of directors at an annual meeting, or make
a nomination for the election of directors at a special meeting of
shareholders, the Company must receive written notice of such intention.
The deadline for shareholder nominations for directors and proposals at
the 1997 Annual Meeting of Shareholders was February 8, 1997.
Compensation of Directors
- -------------------------
Directors of the Company who are not employees were paid a
retainer fee of $5,250 per quarter. In addition, directors
received a fee of $1,000 for each Board meeting attended and
$1,000 for each Committee meeting attended with the Chairman of
<PAGE>
the Audit Committee eligible for a fee of $2,000. Directors who
are officers do not receive any fees in addition to their
remuneration as officers. The Company also reimburses its
directors for travel, lodging, and related expenses incurred in
attending Board and Committee meetings, and it provides each
director with travel-accident and director and officer liability
insurance.
Directors of the Company who are not employees are eligible
to participate in the 1994 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan") which is authorized to grant
non-qualified stock options through July 20, 2004, on up to
500,000 shares of the Company's Common Stock. These options are
granted at one hundred percent of the fair market value on the
date of the grant and will expire no later than ten years after
the date they are granted and will terminate no later than three
years after termination of director status for any reason other
than death. Within 30 days after election or re-election to the
Board, each director so elected or re-elected is automatically
granted an option for that number of shares equal to the multiple
of 5,000 and the number of years in the term to which such
director has been so elected or re-elected. The Directors' Plan
may be administered by the Board or by a committee of two or more
directors of the Company if deemed necessary or advisable in
order to comply with the exemptive rules promulgated pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended.
The Board or any such committee shall have no authority to
administer the Directors' Plan with respect to the selection of
participants under the plan or the timing, pricing, or amounts of
any grants.
The Board of Directors has adopted the Modine Manufacturing
Company Director Emeritus Retirement Plan (the "Director Emeritus
Retirement Plan") whereby any person (employee or non-employee)
who is or becomes a director of Modine on or after April 1, 1992,
and who retires from the Board will be paid a retirement benefit
equal to the annualized rate at which directors are being paid
for their services to the Company as directors (including Board
meeting attendance fees but excluding any applicable committee
attendance fees) as in effect at the time such director ceases
his service as a director. The retirement benefit will continue
until the period of time the retirement benefit paid equals the
period of time of the director's Board services. If a director
dies before or after retirement, his spouse or other beneficiary
will receive the applicable retirement benefit. In the event of
a change in control (as defined in the Plan) of Modine, each
eligible director, or his spouse or other beneficiary entitled to
receive a retirement benefit through him, would be entitled to
receive a lump-sum payment equal to the present value of the
total of all benefit payments which would otherwise be payable
under the Director Emeritus Retirement Plan. The retirement
benefit is not payable if the director directly or indirectly
competes with the Company or if the director is convicted of
fraud or a felony and such fraud or felony is determined by
disinterested members of the Board of Directors to have damaged
Modine.
One former director (who retired prior to April 1, 1992) has
an agreement with the Company whereby, as a Director Emeritus, he
<PAGE>
is entitled to receive retainer fees and monthly meeting fees
equal to the fees paid at the time he retired from the Board for
a period continuing until his death.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth compensation awarded to,
earned by, or paid to the Company's Chief Executive Officer and
the four most highly compensated executive officers other than
the Chief Executive Officer who were serving as executive
officers at March 31, 1997, for services rendered to the Company
and its subsidiaries during fiscal 1996-1997. Also included is
salary, bonus, restricted Common Stock awards, and stock option
information for fiscal years ended March 31, 1996, and March 31, 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation (1) Long-Term Compensation
----------------------- -------------------------------------
Restricted Stock All Other
Year Name Principal Position Salary Bonus Stock(2) Options(3) Comp. (4)
- ------- ----------------- ------------------ ------ ----- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1996/97 R. T. Savage Chairman & Chief $348,500 $268,345 $378,750 30,000 $26,138
Executive Officer
1995/96 President & Chief 348,500 317,135 398,125 32,000 25,997
1994/95 Executive Officer 334,500 334,500 199,500 25,000 24,958
1996/97 D. R. Johnson President and Chief $282,500 $174,020 $252,500 25,000 $20,969
Operating Officer
1995/96 Executive Vice President, 236,000 171,808 170,625 25,000 17,298
1994/95 Operations 214,000 171,200 156,750 20,000 15,891
1996/97 V. S. Frangopoulos Group Vice President, $202,000 $124,432 $101,000 15,000 $15,128
1995/96 Off-Highway Products 195,000 141,960 91,000 15,000 14,549
1994/95 188,000 150,400 142,500 15,000 14,027
1996/97 M. G. Baker Group Vice President, $192,500 $103,758 $101,000 15,000 $14,392
1995/96 Distributed Products 178,000 113,386 91,000 15,000 13,279
1994/95 166,000 116,200 85,500 11,000 12,357
1996/97 D. B. Rayburn Group Vice President, $192,500 $103,758 $126,250 15,000 $14,370
1995/96 Highway Products 171,000 108,927 113,750 15,000 13,025
1994/95 156,000 93,600 85,500 11,000 11,607
<FN>
(1) Excludes "Other Annual Compensation" under Securities and Exchange
Commission regulations since such does not exceed the lesser of
$50,000 or 10% of each individual's combined salary and bonus.
(2) The total number of restricted shares and the aggregate market
value at March 31, 1997, were: Mr. Savage - 52,300 shares valued
at $1,281,350; Mr. Johnson - 32,100 shares valued at $786,450; Mr.
Frangopoulos - 22,200 shares valued at $543,900; Mr. Baker - 16,020
shares valued at $392,490; and Mr. Rayburn - 17,620 shares valued
<PAGE>
at $431,690. Dividends are paid on the restricted shares at the
same time and the same rate as dividends paid to shareholders of
unrestricted shares. Aggregate market value is based on a fair
market value of $24.50 at March 31, 1997.
Restricted stock is awarded to an employee at no cost and
placed in escrow until the beginning of the third, fourth,
fifth, sixth, and seventh years, respectively, at which time
one-fifth of the shares are released to the employee. In the
event of retirement or a takeover of the Company, the shares
may, if authorized by the Officer Nomination and Compensation
Committee of the Board, be released at an earlier date.
(3) The 1994 Incentive Compensation Plan authorized the Officer
Nomination and Compensation Committee of the Board to grant
stock options (incentive stock options and non-qualified
stock options) and other stock-based rights through July 20,
2004, on up to 3,000,000 shares of the Company's Common
Stock. Incentive stock options and non-qualified stock
options granted are at one hundred percent of the fair market
value on the date of the grant and will expire no later than
ten years after the date of the grant. Grants pursuant to
the Plan may be made to such officers or certain other
employees as shall be determined by the Committee.
Upon the exercise of the option, the optionee may pay the
purchase price in cash, stock, optioned stock, or a
combination thereof. The optionee may also satisfy any tax
withholding obligation by using optioned stock. In the event
of a sale, merger, consolidation, or other specified
transaction involving the Company, the optionee will have the
right to receive (regardless of whether or to what extent the
option would then have been exercisable) the difference between
the exercise price and the fair market value of the stock.
(4) Employer matching contributions to the Company Tax Saver
(401(k)) Plan, Stock Purchase Plan, and Supplemental Executive
Retirement Plan. The Company has a program (the "Executive
Supplemental Stock Plan") to pay, out of general assets, an
amount substantially equal to the difference between the amount
that would have been allocated to a participant's account as
Company matching contributions, in the absence of legislation
limiting such allocations, and the amount actually allocated
under the plans. Payment of this amount and appreciation
thereon is deferred until termination of service or retirement.
</TABLE>
Officer Nomination and Compensation Committee Report on Executive Compensation
- ------------------------------------------------------------------------------
The Officer Nomination and Compensation Committee has provided the
following report on Executive Compensation:
Compensation Philosophy
-----------------------
The Company's executive compensation philosophy is designed to
address the needs of the Company, its executives, and its shareholders.
<PAGE>
The specific factors underlying the Committee's decision with
respect to compensation for each of the named executives for the
last fiscal year are two-fold:
1. The ability to accomplish the Company's goal of preserving
and enhancing the shareholders' investment over the long-
term without bearing undue risk in the process. The
Committee recognizes that there will be short-term
fluctuations in the Company's business and is of the
opinion that incentive compensation should be based
primarily upon attainment of the Company's goals over a
longer period of time. It is the Committee's intention
to compensate its executive officers appropriately for
superior performance; however, inherent in attaining the
Company's goal is the premise that shareholder assets
will not be wasted by the payment of excessive
compensation.
2. The second factor underlying the Committee's compensation
decision is that achieving the foregoing Company goals
can only be accomplished by the retention of competent,
highly skilled people. Accordingly, the design of the
compensation package must include sufficient tools to
assure retention of key individuals.
Numerous other criteria are considered in the compensation
decision, including high ethical standards, concern for employees,
regard for the environment, and commitment to the highest levels
of product quality and customer service. Each of these criteria
is an intrinsic part of attaining the Company's long-term goals.
Total Annual Compensation
-------------------------
The Company's executive compensation program is composed of
an annual cash component, consisting of salary and a bonus based
on the financial performance of the Company, and a long-term
incentive component, currently consisting of stock awards and
stock options.
The compensation package design reflects the Committee's
belief that a larger than typical portion of compensation should
be based upon incentives. This results in the base salary of
Company executives being lower than those executives in
comparable companies and industries and with incentive
compensation being higher. Incentive compensation is established
at a level designed to ensure that, when such payouts are added
to a participant's base salary, the resultant compensation for
above average performance will exceed the average compensation
level for comparable companies. For fiscal 1996-97, the Company
used a formula bonus program that does not commence payout until
a pre-tax return of 15 percent on shareholders' investment is
earned for the shareholders. Thereafter, Company executives can
earn a cash bonus that increases at a linear rate with Company
earnings and is proportional with the executive's level of
management responsibility, including the Chief Executive Officer
("CEO"), who could earn a cash bonus of up to 100% of his base
salary (the maximum payout under the program) in fiscal 1996-97.
All other incentive awards are calculated as a job-slotted
<PAGE>
percentage of the CEO's percent of earned award. By so doing,
the entire management team shares the risks and rewards of
overall Company performance. For fiscal 1996-97, the total
annual compensation provided was in accordance with this
philosophy.
Long-Term Compensation
----------------------
To further align the Company executives' interests with those
of the shareholder, the Compensation Committee utilizes long-term
stock based incentives in the form of stock options and stock
awards. The number of stock options and stock awards granted to
each executive officer is established for each person considering
the survey data described below. Individual awards are
determined based on a subjective assessment of individual
performance, contribution, and potential. The Committee
generally considers previous grant and award amounts when
determining annual grants or awards under its programs.
The stock options currently granted are at market value and
are exercisable within ten years of date of grant. The options
may be rescinded at any time up until two years after exercise
should the individual be terminated for cause, compete in any way
against the Company, not fully comply with applicable laws and
government regulations, fail to maintain high ethical standards,
or breach the Company's policies such as Guidelines for Business
Conduct, Antitrust Compliance, or confidentiality of proprietary
technology and information.
Stock awards are grants of Company stock to a limited number
of top executives, at no cost. These awards vest only at the
rate of 20 percent per year commencing with the third year after
grant, acting thereby as both a retention tool and involving the
executive in a longer-term stake in the Company. Stock awards
not previously vested are terminated should the executive cease
to be employed by the Company for any reason other than
retirement or a takeover.
Consequently, the executive is compensated over the long-term,
through both the stock option and stock award programs, as the
Company stock price increases, which is for the benefit of the
shareholders.
Chief Executive Officer Compensation
------------------------------------
The Committee recognizes that effective management of the
Company is a team effort, led by the CEO. The CEO and the named
officers must possess the difficult to define qualities of
leadership, ability to instill confidence in their actions, and
to inspire others to even greater effort. These qualities can
only be determined through observation over a longer period of
time and through the ultimate results attained. Accordingly, the
CEO's and senior executive officers' team compensation decision
was not based solely on fiscal 1996-97 annual financial results
but was based on the compensation policies referenced above and
the Company's favorable return on shareholders' investment over
the longer term and the Committee's subjective assessment of the
<PAGE>
performance of the management team. In 1997, the CEO was granted
a stock award for 15,000 shares and stock options for 30,000 shares.
Total annual compensation is established by the Compensation
Committee. The CEO's employment agreement (described on page 14)
only specifies minimum termination compensation.
Other Executive Officer Compensation
------------------------------------
Since, as stated above, we believe that corporate management is
a team effort, we also believe that it is appropriate for the CEO
to select his team members and make a substantial contribution to
the compensation decision for each of such team members. Accordingly,
upon detailed consultation with the CEO, assessment of the experience,
capabilities, and performance of each of the named executives toward
attaining Company goals, and the policies referenced above,
compensation decisions were made. As a background for such decisions,
the Compensation Committee reviewed several major compensation
consultant data bases with respect to compensation. The compensation
consultant data bases and the comparator group of companies used in
the performance graph are both large data bases of industrial
companies which the Committee believes appropriately reflect the
broad labor market for Modine executives. Within a range of
acceptable total compensation for each individual, compensation is
determined as described above.
Compliance with Internal Revenue Code Section 162(m)
----------------------------------------------------
Section 162(m) of the Internal Revenue Code, enacted in 1993,
generally disallows a tax deduction to public companies for
compensation over one million dollars paid to the Company's CEO
and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to
the deduction limit if certain requirements are met. The
compensation of the Company's CEO and the four other most highly
compensated executive officers currently does not approach the
disqualifying threshold. In the future, in the event the
disqualifying threshold becomes an issue, the Committee will
weigh all the facts and circumstances in existence at the time.
G. L. Neale, Chairman
T. J. Guendel
V. L. Martin
S. W. Tisdale
M. T. Yonker
Performance Graph
- -----------------
The following graph shows the cumulative total stockholder
return on the Company's Common Stock over the last five fiscal
years as compared with the returns of the Standard & Poor's 500
Stock Index and the NASDAQ Industrials Stock Index (non-financial
index). The NASDAQ Industrials Stock Index consists of
approximately 3,000 industrial companies (including Modine), and
includes a broad range of manufacturers. The Company believes,
because of the diversity of its business, that comparison with
<PAGE>
this broader index is appropriate. The graph assumes $100 was
invested on March 31, 1992, in the Company's Common Stock, the
S&P 500 Stock Index, and the NASDAQ Industrials Stock Index and
assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period
(Fiscal Year Covered) Modine NASDAQ S&P 500
- --------------------- ------ ------ -------
Measurement Pt. 4/1/92 100 100 100
FYE 93 116 108 115
FYE 94 154 118 117
FYE 95 204 130 135
FYE 96 164 175 178
FYE 97 156 189 214
Options Granted
- ---------------
The following table sets forth information about stock
option grants during the last fiscal year for the five executive
officers named in the Summary Compensation Table.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation -
Individual Grants Appreciation for Option Term(1)(2)(3)
-------------------------------------------- -------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted Employees Price Date 0% 5% 10%
---- ------- ---------- -------- ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
R. T. Savage 30,000 10.6% $25.25 1/15/2007 $0 $ 477,225 $ 1,172,625
D. R. Johnson 25,000 8.9% $25.25 1/15/2007 $0 397,688 1,003,688
V. S. Frangopoulos 15,000 5.3% $25.25 1/15/2007 $0 238,613 602,213
M. G. Baker 15,000 5.3% $25.25 1/15/2007 $0 238,613 602,213
D. B. Rayburn 15,000 5.3% $25.25 1/15/2007 $0 238,613 602,213
All Optionees 282,000 100% $25.25 1/15/2007 $0 4,485,915 11,321,595
All Shareholders N/A N/A N/A N/A $0 $460,470,024 $1,162,138,632
<FN>
(1) All options granted are immediately exercisable. Holders may use
shares previously owned or received upon exercise of options to
<PAGE>
exercise options. The Company may accept shares to cover
withholding or other employee taxes.
(2) The dollar amounts under these columns are the result of calculations
at zero percent and at the five-percent and ten-percent rates set by
the Securities and Exchange Commission and, therefore, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price.
(3) No gain to the optionee is possible without an increase in stock price
appreciation, which will benefit all shareholders commensurately. A
zero percent gain in stock price appreciation will result in zero
dollars for the optionee.
</TABLE>
Option Exercises and Fiscal Year-End Values
- -------------------------------------------
The following table sets forth information with respect to
the five executive officers named in the Summary Compensation
Table concerning the number of option exercises and value of
options outstanding at the end of the last fiscal year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Total Value of
Total Number Unexercised
Number of of Unexercised In-the-Money
Shares Options Held Options Held at
Acquired on Value at Fiscal Year End (1) Fiscal Year End (1)
Name Exercise Realized Exercisable (2), Exercisable (2)
---- ----------- --------- ---------------------- -------------------
<S> <C> <C> <C> <C>
R. T. Savage 40,000 $ 712,500 219,000 $1,233,500
D. R. Johnson 6,750 119,203 163,000 857,250
V. S. Frangopoulos 17,302 305,387 138,000 839,750
M. G. Baker 29,800 578,338 133,000 1,077,250
D. B. Rayburn -0- -0- 79,000 270,250
<FN>
(1) All options granted are immediately exercisable.
(2) Granted at fair market value on the date of Grant. Total
value of outstanding options is based on a fair market value
of Company stock of $24.50 as of March 31, 1997.
</TABLE>
Pension Plan Table
- ------------------
The following table sets forth the estimated annual benefits
payable upon retirement at normal retirement age for the years of
<PAGE>
service indicated under the Company's defined pension plan at the
indicated remuneration levels (average of five years' earnings).
- --------------------------------------------------------------------------
Average Annual Representative Years of Service
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
- -------------- -------- -------- -------- -------- --------
$125,000 $ 29,318 $ 39,091 $ 48,864 $ 58,637 $ 68,409
200,000 48,162 64,216 80,270 96,324 112,378
275,000 67,006 89,341 111,676 134,012 156,347
350,000 85,850 114,466 143,083 171,699 200,316
425,000 104,693 139,591 174,489 209,387 244,284
500,000 123,537 164,716 205,895 247,074 288,253
- --------------------------------------------------------------------------
The five executive officers named in the Summary Compensation Table
participate on the same basis as other salaried employees in the non-
contributory Modine Pension and Disability Plan for Salaried Employees.
Because the Company's contributions to the plan are actuarially based on
all eligible salaried employees and are not allocated to individual employee
accounts, expenses for a specific person cannot readily be separately or
individually calculated. Retirement benefits are based on an employee's
earnings for the five highest consecutive of the last ten calendar years
preceding retirement and on years of service. Applicable earnings include
salary, bonuses, and any deferred amount under the Modine Tax Saver (401(k))
Plan. They are approximately the same as cash compensation reported in the
Summary Compensation Table, but on a calendar year rather than a fiscal year
basis. A minimum of five years of service is required for eligibility. The
principal benefit under the plan is a lifetime monthly benefit for the joint
lives of participants and their spouses based on the employee's earnings and
period of employment, and is not subject to offset by Social Security
benefits. Employees can retire with unreduced early retirement benefits at
age sixty-two or may be eligible for disability, deferred, or other early
retirement benefits depending on age and years of service upon retirement
or termination. In addition, an employee who has reached age sixty-two and
who has accumulated thirty or more years of eligible service may request that
the accrued benefit be paid immediately in a lump-sum amount, even if not
retired at the time of election.
Assuming continued employment until age sixty-five, the estimated
credited years of service under the plan for Messrs. Savage, Johnson,
Frangopoulos, Baker, and Rayburn are thirty-one, twenty-eight, twenty-eight,
twenty-five, and twenty-two years, respectively.
Pension benefits under the plan are subject to possible limitations
imposed by the Employee Retirement Income Security Act of 1974 and
subsequent amendments thereto. To the extent that an individual
employee's retirement benefit exceeds these limits, the excess will be
paid from general operating funds of the Company.
Employees, including officers, may also qualify for long-term
disability payments of approximately sixty percent of their base salary,
up to a maximum of $8,000 per month, if they become disabled.
Employment Agreements
- ---------------------
The Company entered into an employment contract effective
October 1, 1983, with Mr. Savage covering his employment for a
<PAGE>
three year term. The contract is automatically extended annually
for an additional year so that the remaining contract term is
between two and three years, unless notice is given by either
party to the contrary. This contract provides for a minimum
annual salary equal to that paid the past fiscal year to Mr.
Savage plus bonus participation. Mr. Savage will continue to
receive all employee benefits, plus supplements to his retirement
pension and 401(k) benefits designed to provide him with benefits
which otherwise are reduced by statutory limitations on qualified
benefit plans. In the event of disability, salary continuation
is provided at a level of one hundred percent for the first
twelve months and up to sixty percent thereafter with no maximum
dollar amount. In the event of termination of the contract by
the Company other than for cause, death, or disability, or by Mr.
Savage upon a failure to be re-elected as an officer and/or a
director, a significant change in authority, a breach of the
contract by the Company, or a liquidation or merger of the
Company where the contract is not assumed, Mr. Savage would
receive annually for the remainder of the contract term,
compensation equal to the average of the five highest of the last
ten years. Mr. Savage agrees to refrain from competition with
the Company during the length of the Agreement and for a period
of two years after such Agreement is terminated, except if such
termination occurs after a change in control of the Company.
D. R. Johnson has a similar agreement on substantially the same
terms and conditions as stated hereinabove but for a two year
term ending October 16, 1998.
Change-in-Control Arrangements
- ------------------------------
As of February 26, 1997, the Company entered into change-in-
control agreements (the "Change-in-Control Agreements") with the
named executive officers (except with Messrs. Savage and Johnson)
and certain other key employees. The Change-in-Control
Agreements provide a severance payment to the executive if the
Company terminates the executive's employment or the executive
voluntarily terminates the executive's employment within ninety
days after a "Pre-Condition" has occurred (as that term is
defined in the Change-in-Control Agreements). Each named
executive officer (except Messrs. Savage and Johnson) is eligible
to receive twenty-four months' annual base compensation and a
bonus amount as defined in the Change-in-Control Agreements, plus
applicable benefits and credited service for pension purposes for
the twenty-four month period. The actual amounts of the named
executive officers' salaries and bonuses are as set forth in the
table on page 9. Messrs. Savage's and Johnson's severance
benefits are set forth in their employment agreements described
above.
The Company's stock option and stock award plans contain
certain provisions relating to change-in-control or other
specified transactions that may, if authorized by the Officer
Nomination and Compensation Committee of the Board, accelerate or
otherwise release shares granted or awarded under those plans.
See footnotes (2) and (3) to the Summary Compensation Table
herein.
<PAGE>
TRANSACTIONS
In the regular course of business since April 1, 1996, the
Company has had transactions with corporations or other firms of
which certain non-employee directors are executive officers or
otherwise principally involved. Such transactions were in the
ordinary course of business and at competitive prices and terms.
The Company does not consider the amounts involved to be
material. The Company anticipates that similar transactions will
occur in fiscal 1997-98.
OTHER INFORMATION
Independent Auditors
- --------------------
Coopers & Lybrand have been the independent certified public
accountants since 1935 and were selected as the Company's
auditors for the fiscal year ended March 31, 1997. They are
appointed by the Board of Directors of the Company and report to
the Audit Committee. A representative of Coopers & Lybrand will
not be attending the 1997 Annual Meeting of Shareholders.
Expenses of Solicitation
- ------------------------
The cost of soliciting proxies is being borne by the
Company. In addition to solicitation by mail, arrangements have
been made with brokerage houses, nominees, and other custodians
and fiduciaries to send proxy material to their principals and
the Company will reimburse them for their expenses in doing so.
Proxies also may be solicited personally or by telephone or other
means of electronic communication by directors, officers, and a
few regular employees of the Company in addition to their usual
duties. They will not be specially compensated for these services.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. Officers,
directors, and greater than ten percent shareholders are required
by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished
to the Company, the Company believes that, during the period
April 1, 1996, to March 31, 1997, all Section 16(a) filing
requirements applicable to its officers, directors, and greater
than ten percent beneficial owners were complied with.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters
that will be presented for action at the 1997 annual meeting.
<PAGE>
Should any additional matters come before the meeting, the
persons named in the enclosed proxy will vote on those matters in
accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1998
If a shareholder wishes to present a proposal for
consideration at next year's Annual Meeting of Shareholders, such
proposal must be received at Modine's offices on or before
February 7, 1998.
ANNUAL REPORT
The Annual Report of the Company, including financial
statements for the fiscal year ended March 31, 1997, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
APPENDIX
<TABLE>
<CAPTION>
Please mark your
/X/ votes as in this
example
<S> <C> <C> <C> <C>
FOR WITHHELD Nominees: Frank W. Jones 2. To consider and act upon such other matters
1. Election of Dennis J. Kuester which may properly come before the meeting
Directors / / / / Michael T. Yonker or any adjournment thereof.
For, except vote withheld from
the following nominee(s): all as more particularly described in the
Proxy Statement dated June 6, 1997, relating
_________________________________________ to such meeting, receipt of which is hereby
acknowledged.
This proxy, when properly executed, will be
voted in the manner directed herein. If no
direction is made, this proxy will be voted
FOR Item 1.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) _______________________________________________ DATE________________ 1997
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
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<PAGE>
MODINE MANUFACTURING COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Richard T. Savage and Walter E. Pavlick,
with full power of substitution, proxies to vote at the Annual Meeting of
Shareholders of Modine Manufacturing Company (the "Company") to be held on
July 16, 1997 at 9:30 a.m., local time, and at any adjournment or adjournments
thereof, hereby revoking any proxies heretofore given, to vote all shares of
common stock of the Company held or owned by the undersigned as directed
on the reverse side of this proxy, and in their discretion upon such other
matters as may come before the meeting.
(To be Signed on Reverse Side)
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY AND SUBSIDIARIES
(A Wisconsin Corporation)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended March 31, 1997, 1996 and 1995
($ In Thousands)
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------
Additions
-----------------------
(1) (2)
Balance at Charged Balance
Beginning to Charged to at
of Costs and Other End of
Description Period Expenses Accounts Deductions Period
- ----------- ---------- --------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
1997:
Intangible Assets -
Accumulated
Amortization $8,689 $4,937 $(741)(B) $ 0(C) $12,885
------ ------ --------- --------- -------
Allowance for
Doubtful Accounts $5,052 $ (117) $(168)(B) $ 627(A) $ 4,140
------ ------- --------- --------- -------
1996:
Intangible Assets-
Accumulated
Amortization $7,564 $3,575 $ 276(B) $2,726(C) $ 8,689
------ ------ -------- --------- -------
Allowance for
Doubtful Accounts $6,424 $ (965) $ 127(B) $ 534(A) $ 5,052
------ ------- -------- --------- -------
1995:
Intangible Assets-
Accumulated
Amortization $5,060 $2,044 $ 730(B) $ 270(C) $ 7,564
------ ------ -------- --------- -------
Allowance for
Doubtful Accounts $4,896 $1,850 $ 139(B) $ 461(A) $ 6,424
------ ------ -------- --------- -------
Notes:
(A) Bad debts charged off during the year.
(B) Balance acquired in acquisitions plus translation and
other adjustments.
(C) Retirement of fully amortized intangibles.
</TABLE>
<PAGE>
APPENDIX
Pursuant to Item 304 of Regulation S-T, the following is a narrative
description of graphic or image material incorporated by reference
from the Company's 1996-97 Annual Report to Shareholders at Item 7.
Management's Discussions and Analysis of Financial Condition and
Results of Operations. All pages contain illustrations of Modine
products and their applications.
Page 14 of Annual Report
<TABLE>
Net earnings by quarter
excluding accounting changes
Dollars in millions
<CAPTION>
Measurement Period
(Fiscal Year Covered) 1ST QTR 2ND QTR 3RD QTR 4TH QTR
<S> <C> <C> <C> <C>
FYE 1993 8,289 8,473 7,432 9,493
FYE 1994 9,875 11,636 10,626 10,954
FYE 1995 14,830 16,801 17,413 19,398
FYE 1996 15,983 16,736 14,855 13,825
FYE 1997 16,390 15,654 15,402 16,317
</TABLE>
<TABLE>
Net sales by quarter
Dollars in millions
<CAPTION>
Measurement Period
(Fiscal Year Covered) 1ST QTR 2ND QTR 3RD QTR 4TH QTR
<S> <C> <C> <C> <C>
FYE 1993 133,817 144,603 146,591 145,828
FYE 1994 147,171 156,964 172,351 193,067
FYE 1995 208,436 221,760 240,505 242,309
FYE 1996 239,216 254,292 252,817 244,168
FYE 1997 248,514 254,224 252,972 243,336
</TABLE>
<PAGE>
Page 7 of Annual Report
<TABLE>
Shipments by market
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket $132 $137 $135 $156 $165 $169 $193 $220 $229 $234
Off-highway equipment 30 48 56 58 48 48 55 94 120 125
Industrial 45 57 58 69 68 77 96 112 117 121
Heavy & med. trucks 44 54 64 50 51 86 107 158 168 155
Cars & light trucks 83 80 63 64 89 93 119 202 245 262
Miscellaneous 29 12 13 18 25 20 26 44 35 24
Building HVAC 32 36 47 67 81 78 74 83 76 78
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket 33% 32% 31% 32% 31% 30% 29% 24% 23% 23%
Off-highway equipment 8 11 13 12 9 8 8 10 12 13
Industrial 11 13 13 14 13 13 14 12 12 12
Heavy & med. trucks 12 13 15 11 10 15 16 18 17 16
Cars & light trucks 21 19 14 13 17 16 18 22 25 26
Miscellaneous 7 3 3 4 5 4 4 5 3 2
Building HVAC 8 9 11 14 15 14 11 9 8 8
</TABLE>
Page 13 of Annual Report
<TABLE>
Sales dollar distribution
<CAPTION>
<S>
FYE 96-97 FYE 95-96
<C> <C>
Material cost 39.5% 41.1%
Employee salaries, wages, and
fringe benefits 30.3% 30.6%
All taxes (except payroll taxes) 3.7% 4.2%
Wear and exhaustion of facilities 3.5% 3.5%
All other costs 16.6% 14.4%
Dividends paid to shareholders 2.0% 1.8%
Earnings retained in the business 4.4% 4.4%
</TABLE>
<PAGE>
Page 8 of Annual Report
<TABLE>
Shipments by product
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Condensers &
Evaporators $ 66 $ 63 $ 48 $ 47 $ 66 $ 67 $ 83 $129 $177 $217
Oil Coolers 46 57 62 65 67 74 99 145 155 161
Radiators 201 214 230 242 238 258 302 383 410 395
Charge-air Coolers 20 21 25 31 39 59 73 107 118 107
Miscellaneous 30 33 24 30 36 35 39 66 54 41
Building HVAC 32 36 47 67 81 78 74 83 76 78
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Condensers &
Evaporators 17% 15% 11% 10% 13% 12% 12% 14% 18% 22%
Oil Coolers 12 13 14 13 13 13 15 16 16 16
Radiators 51 51 53 51 45 45 45 42 41 39
Charge-air Coolers 5 5 6 6 7 10 11 12 12 11
Miscellaneous 7 8 5 6 7 6 6 7 5 4
Building HVAC 8 8 11 14 15 14 11 9 8 8
</TABLE>
Page 16 of Annual Report
<TABLE>
Book value per share
<CAPTION>
Measurement Period
(Fiscal Year Covered) Book value/share
<S> <C>
FYE 93 7.55
FYE 94 8.50
FYE 95 10.38
FYE 96 11.74
FYE 97 12.93
</TABLE>
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