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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 COMMISSION FILE NUMBER 1-12068
MASCOTECH, INC.
(FORMERLY MASCO INDUSTRIES, INC.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 38-2513957
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------------------------- ----------------------------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
$1.20 CONVERTIBLE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ No / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 15, 1994 (BASED ON THE CLOSING SALE
PRICE OF $23 3/4 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE
COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $742,800,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 15, 1994:
60,650,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1994
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS FORM 10-K.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<S> <C> <C>
PART I
1. Business........................................................................ 2
2. Properties...................................................................... 7
3. Legal Proceedings............................................................... 8
4. Submission of Matters to a Vote of Security Holders............................. 9
Supplementary Item. Executive Officers of Registrant............................ 9
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters........... 10
6. Selected Financial Data......................................................... 10
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................... 12
8. Financial Statements and Supplementary Data..................................... 17
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.................................................................... 41
PART III
10. Directors and Executive Officers of the Registrant.............................. 41
11. Executive Compensation.......................................................... 41
12. Security Ownership of Certain Beneficial Owners and Management.................. 41
13. Certain Relationships and Related Transactions.................................. 41
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................ 42
Signatures...................................................................... 46
FINANCIAL STATEMENT SCHEDULES
MascoTech, Inc. Financial Statement Schedules................................... F-1
TriMas Corporation and Subsidiaries Consolidated Financial Statements and
Financial Statement Schedules................................................. F-7
</TABLE>
1
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PART I
ITEM 1. BUSINESS.
MascoTech, Inc. (formerly Masco Industries, Inc.) is a diversified
manufacturer of original equipment and aftermarket parts for the transportation
industry; commercial, institutional and residential building products for the
construction industry; and other diversified products principally for the
defense industry. Sophisticated technology plays a significant role in the
Company's businesses and in the design, engineering and manufacturing of many of
its products. Transportation-Related Products are manufactured utilizing a
variety of metalworking and other process technologies. Although published
industry statistics are not available, the Company believes that it is a leading
independent producer of many of the industrial component parts that it produces
using cold, warm or hot forming processes. In addition to its manufacturing
activities, the Company provides design and engineering services primarily for
the automotive, heavy truck and aerospace industries.
MascoTech was incorporated under the laws of Delaware in 1984 as a
wholly-owned subsidiary of Masco Corporation, which in May, 1984 transferred to
MascoTech its industrial businesses. The Company became a separate public
company in July, 1984 when Masco Corporation distributed shares of Company
Common Stock as a special dividend to its stockholders. Masco Corporation
currently owns approximately 42 percent of the Company's outstanding Common
Stock. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Corporate Development," included in Item 7 of this
Report.
Except as the context otherwise indicates, the terms "MascoTech" and the
"Company" refer to MascoTech, Inc. and its consolidated subsidiaries.
RECENT DEVELOPMENTS
The Company has undertaken the planned disposition of its energy-related
business segment, which consisted of seven business units, as part of its
long-term strategic plan to de-leverage its balance sheet and increase the focus
on its core operating capabilities. As a result, the Company's financial
statements have been reclassified to present such businesses as discontinued
operations. These businesses manufactured specialized tools, equipment and other
products for energy-related industries. Two of the businesses were sold in late
1993, including one business to the Company's affiliate, TriMas Corporation, and
the Company expects to divest the remaining businesses in 1994. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Discontinued Operations," included in Item 7 of this Report.
Except as the context otherwise indicates, all information contained herein has
been reclassified for these discontinued operations.
In July, 1993, the Company issued $216 million (liquidation value) of
Dividend Enhanced Convertible StockSM. In late 1993, the Company redeemed for
cash its outstanding $100 million of 10% Exchangeable Preferred Stock and,
following a call for redemption, the outstanding $187 million of the Company's
6% Convertible Subordinated Debentures due 2011 were converted into 10.4 million
shares of Company Common Stock (including approximately 7 million shares issued
to Masco Corporation). In early 1994, the Company issued, in a public offering,
$345 million of 4 1/2% Convertible Subordinated Debentures due 2003 which are
convertible into Company Common Stock at $31.00 per share. The net proceeds from
this offering were used to redeem, on February 1, 1994, the outstanding $250
million of the Company's 10 1/4% Senior Subordinated Notes due 1997 and reduce
outstanding bank debt.
2
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INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1993,
the contribution of the Company's continuing industry segments to net sales and
operating profit:
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES(1)
--------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products.......................... $1,195,000 $1,058,000 $ 874,000
Specialty Products:
Architectural.......................................... 289,000 291,000 273,000
Other.................................................. 99,000 106,000 119,000
---------- ---------- ----------
$1,583,000 $1,455,000 $1,266,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT (LOSS)(1)(2)
--------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products.......................... $ 160,000 $ 124,000 $ 74,000
Specialty Products:
Architectural.......................................... (4,000) 2,000 (16,000)
Other.................................................. 5,000 3,000 1,000
---------- ---------- ----------
$ 161,000 $ 129,000 $ 59,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- -------------------------
(1) Results in 1992 and 1991 have been reclassified to conform with the
presentation adopted in 1993 (including amounts for discontinued operations
-- see the Note to the Company's Consolidated Financial Statements
captioned "Discontinued Operations" included in Item 8 of this Report).
(2) Amounts are before general corporate expense.
Additional financial information concerning the Company's operations by
industry segments as of and for the three years ended December 31, 1993, is set
forth in Item 8 of this Report in the Note to the Company's Consolidated
Financial Statements captioned "Segment Information."
TRANSPORTATION-RELATED PRODUCTS
The Company manufactures a broad range of semi-finished components,
subassemblies and assemblies for the transportation industry.
Transportation-Related Products represented 76 percent of 1993 sales from
continuing operations and primarily consist of original equipment products for
the automotive and truck industries. The Company's products include a number of
high-performance products for which reliability, quality and certainty of supply
are major factors in customers' selection of suppliers. Over half of the
products are used for engine and drivetrain applications (such as semi-finished
transmission shafts, drive gears, engine connecting rods, wheel spindles and
front wheel drive and exhaust system components) and for chassis and suspension
functions (including electromechanical solenoids and relays and suspension
components). Products manufactured for exterior body trim applications include
automotive trim, luggage racks and accessories, and metal stampings. Aftermarket
products include fuel and emission systems components, windshield wiper blades,
constant-velocity joints, brake hardware repair kits, and luggage racks and
accessories. In addition to its manufacturing activities, the Company provides
engineering services primarily for the automotive and heavy-duty truck
industries, and is engaged in specialty vehicle development and conversion
programs.
Products are manufactured using various metalworking technologies,
including cold, warm and hot forming, powdered metal forming and stamping.
Approximately one-quarter of the Company's sales of Transportation-Related
Products resulted from using cold, warm or hot metal forming technologies. The
Company believes that its metalworking technologies provide cost-competitive,
3
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high-performance, quality components that are required in order to meet the
increasing demands of the automotive and truck markets it serves.
Approximately 85 percent of the Company's Transportation-Related Products
sales in 1993 were original equipment automotive products and services. Sales to
original equipment manufacturers are made through factory sales personnel and
independent sales representatives. During 1993, sales to various divisions and
subsidiaries of Ford Motor Company, General Motors Corporation and Chrysler
Corporation accounted for approximately 20 percent, 14 percent and 12 percent,
respectively, of the Company's net sales. Sales to the automotive aftermarket
are made primarily to distributors utilizing factory sales and service
personnel.
SPECIALTY PRODUCTS
Architectural Products
The Company manufactures a variety of Architectural Products for
commercial, institutional and residential markets. Products include steel doors
and frames; stainable and low maintenance steel doors; wood windows and
aluminum-clad wood windows; leaded, etched and beveled glass for decorative
windows and entryways; residential entry systems; garage doors; sectional and
rolling doors; security grilles; and modular metal partitions. The Company's
commercial and institutional markets include office buildings, factories,
hotels, schools, hospitals, retail stores and malls, warehouses and
mini-warehouses. Residential markets include single family new construction as
well as repair and remodeling. Architectural Products are sold principally to
wholesale distributors who sell the products to builders, developers, dealers,
retailers (such as do-it-yourself home centers) and residential, commercial,
industrial and institutional end users. Security grilles are sold directly to
builders, developers and end users.
Other Specialty Products
The Company's Other Specialty Products consist primarily of Defense
Products, including large diameter cold formed cartridge cases, projectiles and
casings for rocket motors and missiles for the United States government and its
suppliers. Changes in government procurement practices and requirements have
adversely affected orders, sales and profits of such products in recent years
and are expected to continue to do so in the future. As a result, the Company is
pursuing other commercial applications for the resources related to the
manufacturing of Defense Products, including its metal forging capability and
waste-water treatment capability. Since obtaining the necessary permits in 1990,
the Company has marketed waste-water treatment services to other industrial
companies principally in southern California.
The Company's government contracts contain standard clauses providing for
termination at the convenience of the government which, in such cases, would
provide the Company with compensation for work performed and costs of
termination. Defense Products are sold both directly to the federal government
and to other prime contractors to the federal government.
GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
No material portion of the Company's business is seasonal or has special
working capital requirements. The Company does not consider backlog orders to be
a material factor in its industry segments, and, except as noted above, no
material portion of its business in its other industry segments is dependent
upon any one customer or subject to renegotiation of profits or termination of
contracts at the election of the federal government. Compliance with federal,
state and local regulations relating to the discharge of materials into the
environment, or otherwise relating to the protection of the environment, is not
expected to result in material capital expenditures by the Company or to have a
material effect on the Company's earnings or competitive position. See, however,
"Legal Proceedings," included as Item 3 of this Report, for a discussion of
certain pending proceedings concerning environmental matters. In general, raw
materials required by the Company are obtainable from various sources and in the
quantities desired.
4
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INTERNATIONAL OPERATIONS
The Company, through its subsidiaries, has businesses located in Canada,
Germany, Italy and the United Kingdom. Products manufactured by the Company
outside of the United States include forged automotive component parts,
constant-velocity joints and extruded urethane lineals. In addition, the Company
provides engineering services outside of the United States, primarily serving
automotive manufacturers in the United Kingdom and Germany. For 1991 through
1993, the Company's annual net export sales from the United States to other
countries, as a percentage of annual consolidated net sales from continuing
operations, approximated five percent.
The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
EQUITY INVESTMENTS
TriMas Corporation
The Company owns approximately 43 percent of the outstanding common stock
of TriMas Corporation ("TriMas"). The Company's common equity interest in TriMas
increased from 28 percent as a result of the late 1993 conversion of TriMas
convertible preferred stock held by the Company into 7.8 million shares of
TriMas common stock. TriMas manufactures a number of industrial products,
including a variety of steel, stainless steel, aluminum and other non-ferrous
fasteners for the building construction, farm implement, medium and heavy-duty
truck, appliance, aerospace, electronics and other industries. TriMas also
provides metal treating services for manufacturers of fasteners and comparable
products. TriMas manufactures towing systems products, including vehicle
hitches, jacks, winches, couplers and related accessories for the passenger car,
light truck, recreational vehicle, marine, agricultural and industrial markets.
TriMas also manufactures specialty container products, including industrial
container closures, sealing caps and dispensing spigots primarily for the
chemical, agricultural, food, petroleum and health care industries, as well as
high-pressure seamless compressed gas cylinders used for shipping, storing and
dispensing oxygen, nitrogen, argon and helium, specialty industrial gaskets for
refining, petrochemical and other industrial applications, and a complete line
of low-pressure welded cylinders used to contain and dispense acetylene gas for
the welding and cutting industries. In addition, TriMas manufactures
flame-retardant facings and jacketings used in conjunction with fiberglass
insulation, principally for commercial and industrial construction applications,
pressure-sensitive specialty tape products and a variety of specialty precision
tools such as center drills, cutters, end mills, reamers, master gears, gages
and punches.
Emco Limited
The Company owns approximately 43 percent of the outstanding common stock
and convertible debentures of Emco Limited ("Emco"), as a result of the
transactions described under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Corporate Development," included in Item
7 of this Report. Emco is a major, publicly traded, Canadian-based manufacturer
and distributor of building and home improvement products, including roofing
materials, wood fiber products, vinyl siding, stainless steel sinks and vinyl
windows, and a distributor of plumbing and related products. In addition, Emco
manufactures and distributes worldwide fluid handling equipment for the
petroleum and petrochemical and other industries, and produces custom
components, brass and aluminum forgings, plastic components, tools, dies and
molds. Emco also provides other services on a contract basis for original
equipment manufacturers and others.
5
<PAGE> 7
Titan Wheel International, Inc.
The Company owns approximately 21 percent of the outstanding common stock
of Titan Wheel International, Inc. ("Titan"), as a result of the transactions
described in the Note to the Company's Consolidated Financial Statements
captioned "Equity and Other Investments in Affiliates," included in Item 8 of
this Report. Titan is a manufacturer of wheels and other products for
agricultural, construction and other off-highway equipment.
Other Equity Investments
The Company has equity investments in several other companies which are
engaged in activities related to the Company's businesses, including the
manufacture of plastic component parts utilizing the reaction injection molding
process, primarily for the automotive and truck industries, and the manufacture
of electrical and electronic components, primarily for the automotive and truck
industries.
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable, but does not
believe that there is any reasonable likelihood of a loss of such rights which
would have a material adverse effect on the Company's industry segments or its
present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products in its
industry segments are highly competitive. Competition is based primarily on
price, performance, quality and service, with the relative importance of such
factors varying among products. Government procurement practices are an
additional factor in the case of Defense Products. In the case of
Transportation-Related Products, the Company's competitors include a large
number of other well-established independent manufacturers as well as certain
customers who have their own metalworking and engineering capabilities. Although
a number of companies of varying size compete with the Company in its industry
segments, no single competitor is in substantial competition with the Company
with respect to more than a few of its product lines and services.
EMPLOYEES
At December 31, 1993, the Company employed approximately 12,200 people.
Satisfactory relations have generally prevailed between the Company and its
employees.
6
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ITEM 2. PROPERTIES.
The following list includes the Company's principal manufacturing
facilities by location and the industry segments utilizing such facilities:
Arizona..............Chandler (2)
California...........Santa Fe Springs (4), Vernon (3) and Yuba City (1)
Florida..............Auburndale (2), Deerfield Beach (1) and Orlando (2)
Georgia..............Adel (1), Lawrenceville (1) and Valdosta (1)
Indiana..............Kendallville (1)
Iowa.................Dubuque (2)
Kentucky.............Nicholasville (1)
Michigan.............Auburn Hills (1)(1), Brighton (1), Burton (1),
Coopersville (1), Detroit (1)(1)(1), Farmington Hills
(1), Fraser (1), Green Oak Township (1 and 3), Hamburg
(1 and 3), Holland (1), Livonia (1), Mesick (1), Mt.
Clemens (1), Oxford (1) (1) (1), Port Huron (1), Redford
(1), Roseville (1), Royal Oak (1), Shelby Township (1),
St. Clair (1), St. Clair Shores (1), Sterling Heights
(1), Traverse City (1) (1) (1) (1) (1), Troy (1)(1),
Warren (1) (1), West Branch (2) and Ypsilanti (1)
Mississippi..........Nesbit (2)
New York.............Brooklyn (2) and Maspeth (2)
Ohio.................Blue Ash (2), Bluffton (1), Canal Fulton (1), Columbus
(2), Lima (1), Minerva (1), Perrysburg (2), Port Clinton
(1) and Upper Sandusky (1)
Oklahoma.............Tulsa (4)
Pennsylvania.........Ridgway (1)
Texas................Bryan (4), Dallas (4), Greenville (4) and Houston (4)
(4) (4)
Virginia.............Duffield (1)
Germany..............Riedstadt (2) and Zell am Harmersbach (1 and 3)
Italy................Poggio Rusco (1)
United Kingdom.......Wednesfield, England (1)
Note: Multiple footnotes within the same parenthesis indicate the
facility is engaged in significant activities relating to more than one
segment. Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table are
identified as follows: (1) Transportation-Related Products; (2) Specialty
Products -- Architectural; (3) Specialty Products -- Other; and (4)
Discontinued Operations.
The Company's largest manufacturing facility is located in Vernon,
California and is a multi-plant facility of approximately 920,000 square feet.
The Company owns the largest plant, comprising approximately 540,000 square feet
and operates the remaining portions of this facility under leases, the earliest
of which expires at the end of 1994. Except for the foregoing facility and an
additional manufacturing facility covering approximately 605,000 square feet,
the Company's manufacturing facilities range in size from approximately 25,000
square feet to 325,000 square feet, are owned by the Company or leased, and are
not subject to significant encumbrances. The Company's executive offices
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are located in Taylor, Michigan, and are provided by Masco Corporation to the
Company under a corporate services agreement.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
The following list identifies the manufacturing facilities of TriMas by
location and the industry segments utilizing such facilities:
California.................... Commerce(a)
Illinois...................... Wood Dale(a)
Indiana....................... Auburn(c), Elkhart(b), Frankfort(a) and
Mongo(b)
Louisiana..................... Baton Rouge(c)
Massachusetts................. Plymouth(d)
Michigan...................... Canton(b), Detroit(a) and Warren(d)(d)(d)(d)
New Jersey.................... Edison(d), Netcong(d) and North Bergen(d)
Ohio.......................... Lakewood(a)
Texas......................... Houston(c) and Longview(c)
Wisconsin..................... Mosinee(b)
Australia..................... Dandenong South, Victoria(b)
Canada........................ Brampton, Ontario(c), Fort Erie, Ontario(c)
and Oakville, Ontario(b)
Mexico........................ Mexico City(c)
Note: Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table are
identified as follows: (a) Specialty Fasteners; (b) Towing Systems; (c)
Specialty Container Products; and (d) Corporate Companies.
TriMas' buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
ITEM 3. LEGAL PROCEEDINGS.
A civil suit was filed in the United States District Court for the Central
District of California in April, 1983 by the United States of America and the
State of California against 30 defendants, including the Company's NI
Industries, Inc. subsidiary ("NI"), for alleged release into the environment of
hazardous waste disposed of at the Stringfellow Disposal Site in California. The
plaintiffs have requested, among other things, that the defendants clean up the
contamination at that site. A consent decree has been entered into by the
plaintiffs and the defendants, including NI, providing that the consenting
parties perform partial remediation at the site. Another civil suit was filed in
the United States District Court for the Central District of California in
December, 1988 by the United States of America and the State of California
against more than 180 defendants, including NI, for alleged release into the
environment of hazardous waste disposed of at the Operating Industries, Inc.
site in California. This site served for many years as a depository for
municipal and industrial waste. The plaintiffs have requested, among other
things, that the defendants clean up the contamination at that site. Two partial
consent decrees have been entered into by the plaintiffs and a group of the
defendants, including NI, providing that the consenting parties perform certain
interim remedial work at the site and reimburse the plaintiffs for certain past
costs incurred by the plaintiffs at the site. Based upon its present knowledge,
and subject to future legal and factual developments, the Company does not
believe that any of this litigation will have a material adverse effect on its
consolidated financial position.
In November, 1993 the California Environmental Protection Agency issued a
proposed enforcement order and a tentative civil penalty in the amount of
$180,000 against the Company's subsidiary, NI Industries, Inc., principally on
account of alleged past violations of certain California environmental laws and
regulations relating to the subsidiary's handling of waste material and relating
to its permit
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allowing it to treat industrial waste. The proposed enforcement order is under
negotiation and is not yet final.
During the fourth quarter of 1991, a division of the Company was assessed a
civil penalty in excess of $100,000 by a municipal sewer authority for alleged
past violations of limitations of waste-water discharges into the authority's
sanitary sewer system. This assessment was appealed by the division, and the
appeal is pending. The division is now in compliance with all applicable
waste-water discharge requirements and the Company believes that the costs of
penalties, if paid, would be immaterial to the Company.
The Company is subject to other claims and litigation in the ordinary
course of its business, but does not believe that any such claim or litigation
will have a material adverse effect on its consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
- ------------------------------ ------------------------------------------------ --- -------
<S> <C> <C> <C>
Richard A. Manoogian.......... Chairman of the Board and Chief Executive 57 1984
Officer
Lee M. Gardner................ President and Chief Operating Officer 46 1992
Timothy Wadhams............... Vice President -- Controller and Treasurer 45 1984
</TABLE>
Each of the executive officers is elected to a term of one year or less and
serves at the discretion of the Board of Directors. Mr. Manoogian is and has
been for over five years a Director, Chairman of the Board and the Chief
Executive Officer of Masco Corporation, an affiliate of the Company that is a
manufacturer of building and home improvement and home furnishings products for
the home and family. Mr. Manoogian also is a Director and Chairman of the Board
of TriMas Corporation. Mr. Gardner was appointed President and Chief Operating
Officer of the Company in October, 1992. Prior to his appointment, Mr. Gardner
was President -- Automotive. He joined the Company in 1987, and in 1990 assumed
responsibility for all of the Company's businesses serving the transportation
industry.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock commenced trading on the New York Stock Exchange
("NYSE") on June 23, 1993 under the symbol "MSX." The Company's Common Stock was
previously traded over-the-counter and quoted on the National Association of
Securities Dealers Automated Quotation System -- National Market System
("NASDAQ-NMS") under the symbol "MASX." The following table sets forth for the
periods indicated the high and low sales prices of the Company's Common Stock as
reported on the NASDAQ-NMS for the periods prior to June 23, 1993 and as
reported on the NYSE Composite Tape commencing June 23, 1993:
<TABLE>
<CAPTION>
MARKET PRICE
-----------------------------------
1993 1992
------------- -------------
QUARTER HIGH LOW HIGH LOW
------------------------------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
First..................................... $17 1/4 $11 3/8 $ 11 $4 3/4
Second.................................... 21 15 3/4 13 7/8 8 5/8
Third..................................... 22 5/8 19 1/2 13 5/8 10 3/8
Fourth.................................... 28 1/8 18 3/4 12 1/8 8 3/8
</TABLE>
On March 15, 1994 there were approximately 5,600 holders of record of the
Company's Common Stock.
The Company commenced paying cash dividends on its Common Stock in August,
1993 and to date has declared four and paid three quarterly dividends, each in
the amount of $.02 per share. Future declarations of dividends on the Common
Stock are discretionary with the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition and other factors.
Dividends may not be paid on Company Common Stock if there are any dividend
arrearages on the Company's outstanding Preferred Stock. In addition, certain of
the Company's long-term debt instruments contain provisions that restrict the
dividends that it may pay on its capital stock. See the Note to the Company's
Consolidated Financial Statements captioned "Long-Term Debt," included in Item 8
of this Report.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, for the years and dates indicated (information related to the
statements of income and, in 1993, the balance sheet, have been reclassified for
discontinued operations):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $1,582,880 $1,455,320 $1,266,210 $1,373,060 $1,528,940
Operating profit................... $ 145,720 $ 111,840 $ 43,590 $ 70,560 $ 130,260
From continuing operations before
extraordinary items:
Income (loss).................... $ 70,890 $ 39,040 $ (10,350) $ (26,840) $ 52,730
Earnings (loss) per common
share......................... $.91 $.49 $(.33) $(.36) $.65
Per share of common stock:
Dividends declared............... $.06 -- -- -- --
Dividends paid................... $.04 -- -- -- --
At December 31:
Total assets..................... $1,789,910 $1,807,310 $1,973,280 $2,080,470 $2,235,900
Long-term debt................... $ 788,360 $1,065,390 $1,224,990 $1,349,510 $1,435,860
Shareholders' equity............. $ 667,630 $ 353,400 $ 326,690 $ 356,010 $ 389,380
</TABLE>
10
<PAGE> 12
Results for 1993 and 1992 include pre-tax income of approximately $9
million and $25 million, respectively, as a result of gains associated with the
sale of common stock through public offerings by equity affiliates and, in 1992,
a prepayment premium related to the redemption of debentures held by the
Company. This income was largely offset by costs and expenses related to
cost-reduction initiatives, the restructuring of certain operations and product
lines, adjustments to the carrying value of certain long-term assets, and other
costs and expenses.
Results for 1993 were reduced by a charge of approximately $.03 per common
share reflecting the increased 1993 federal corporate income tax rate related to
adjusting deferred tax balances as of December 31, 1992 for the higher income
tax rate.
Results for 1993 are before the effect of a $5.8 million pre-tax
extraordinary charge ($3.7 million after-tax or $.06 per common share) related
to the early extinguishment of subordinated debt (see the Note to the Company's
Consolidated Financial Statements captioned "Long-Term Debt," included in Item 8
of this Report). 1993 results are also before an after-tax charge of
approximately $22 million ($.39 per common share) related to the disposition of
a segment of the Company's business (see the Note to the Company's Consolidated
Financial Statements captioned "Discontinued Operations," included in Item 8 of
this Report). Net income for 1993 before preferred stock dividends was $47.6
million or $.57 per common share.
Income from continuing operations per common share in 1993 is presented on
a fully diluted basis. Primary earnings from continuing operations per common
share were $.97 in 1993. For years 1989 through 1992, the assumed conversion of
dilutive securities is anti-dilutive.
Income from continuing operations before extraordinary loss attributable to
common stock was $56.0 million and $29.7 million after preferred stock dividends
in 1993 and 1992, respectively.
Results for 1991 include the effect of charges for restructurings and other
costs, aggregating approximately $41 million pre-tax, which reduced operating
profit by $27 million, income from continuing operations before extraordinary
income by $27 million and earnings per common share by $.45.
Loss from continuing operations attributable to common stock in 1991 was
$20.0 million after preferred stock dividends.
Results for 1990 include the effect of charges for restructurings and other
costs, aggregating approximately $40 million pre-tax, which reduced operating
profit by $38 million, income from continuing operations before extraordinary
income by $26 million and earnings per common share by $.35.
Net loss in 1990 was $18.6 million or $.25 per common share after inclusion
of extraordinary income of $8.2 million or $.11 per common share related to the
early extinguishment of debt.
Results for 1989 include the effect of charges for restructurings and other
costs, aggregating approximately $54 million pre-tax, which reduced operating
profit by $39 million, income from continuing operations before extraordinary
income by $36 million and earnings per common share by $.45.
11
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
MASCOTECH
Masco Corporation undertook a major corporate restructuring during 1984,
transferring its Products for Industry businesses to the Company at their
historical net book value. MascoTech became a separate public company in
mid-1984, when Masco Corporation distributed common shares of MascoTech as a
special dividend to its shareholders. At December 31, 1993, Masco Corporation
owned approximately 42 percent of MascoTech Common Stock.
In 1993 the Company changed its name to MascoTech, Inc. from Masco
Industries, Inc. to reflect the significance of technology in the design,
engineering and manufacturing of many of the Company's products.
CORPORATE DEVELOPMENT
Since mid-1984, the Company has acquired a number of businesses for
approximately $650 million in cash and Company Common Stock. These acquisitions
have contributed significantly to the more than tripling of the sales volume of
the Company during this time. The Company has invested more than $1.2 billion in
capital expenditures and acquisitions combined to build up the Company's
technological positions in its industrial markets.
Since late 1988 the Company has divested several operations as part of its
long-term strategic plan to de-leverage its balance sheet and focus on its core
operating capabilities. The Company's divestiture activity included several
businesses transferred to its equity affiliate, TriMas Corporation ("TriMas"),
and in late 1993 the announcement of the Company's plan to dispose of its
energy-related business segment. In addition to its continuing common equity
ownership interest in TriMas (43 percent at December 31, 1993), the Company has
realized cash proceeds of approximately $400 million through December 31, 1993
from its divestiture activity which has been applied to reduce the Company's
indebtedness.
In early 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, $77.5 million of the Company's 12% Exchangeable
Preferred Stock held by Masco Corporation, and Masco Corporation's holdings of
Emco Limited ("Emco") common stock and convertible debentures. In exchange,
Masco Corporation received from the Company $87.5 million in cash, $100 million
of the Company's 10% Exchangeable Preferred Stock (subsequently redeemed in
1993) and seven-year warrants to purchase 10 million shares of Company Common
Stock at $13 per share. As part of this transaction, as modified in late 1993,
Masco Corporation agreed to purchase from the Company, at the Company's option
through March, 1997, up to $200 million of subordinated debentures. As a result
of these transactions, the Company owns approximately 43 percent of the
outstanding common stock and convertible debentures of Emco, a major, publicly
traded, Canadian-based manufacturer and distributor principally of building and
other industrial products with annual sales of approximately $800 million in
1993.
DISCONTINUED OPERATIONS
In late November, 1993, the Company adopted a formal plan to divest its
energy-related business segment which consisted of seven business units.
Accordingly, the applicable financial statements and related notes have been
reclassified to present such energy-related segment as discontinued operations
and include a 1993 fourth quarter charge of approximately $22 million after-tax
to reflect the estimated loss from the disposition of this segment. During 1993,
two energy-related business units were sold for approximately $93 million,
including the sale of one business unit to the Company's equity affiliate,
TriMas, for $60 million. The remaining five energy-related business units had
net assets at December 31, 1993 of approximately $68 million (adjusted to
reflect the anticipated loss upon disposition, net of tax benefit) and are
expected to be disposed of during 1994.
12
<PAGE> 14
Net sales attributable to the discontinued operations during 1993 (through
the decision to discontinue), 1992 and 1991 were $192 million, $202 million and
$201 million, respectively. The discontinued operations had operating profit of
approximately $6 million, $3 million and $1 million in 1993, 1992 and 1991,
respectively.
PROFIT MARGINS -- CONTINUING OPERATIONS
Operating profit margin from continuing operations was nine percent in
1993, eight percent in 1992 and three percent in 1991. The increase in the
operating profit margin from continuing operations in 1993 compared with the
previous two years is primarily attributable to increased sales volumes in the
Transportation-Related Products segment, and from the benefits of internal cost
reductions and restructuring initiatives undertaken in recent years. Margins in
1993 related to the Company's Specialty Products segment continue to be hampered
by the depressed industry conditions affecting the construction and defense
markets that the Company serves. Operating profit from continuing operations was
reduced by significant charges aggregating approximately $27 million in 1991.
These charges reflect expenses related to the discontinuance of product lines,
costs related to the restructuring of several businesses and other expenses. Of
these charges, approximately $15 million in 1991 relate to the Company's
automotive vehicle conversion business, which has been restructured and returned
to profitability. In addition, margins from continuing operations were
negatively impacted in 1991 as a result of reduced sales volumes in certain of
the Company's Transportation-Related Products operations, due to production
cutbacks by automotive customers, and in virtually all of the Company's other
product groups due to recessionary market conditions.
CASH FLOWS AND CAPITAL EXPENDITURES
Net cash flow from operating activities, including discontinued operations,
increased to $100 million in 1993 from $58 million in 1992 principally as a
result of improved operating performance. In 1993, the Company received
approximately $210 million from the issuance of equity (6% Dividend Enhanced
Convertible StockSM -- the "DECS") and $93 million from the sale of two
energy-related businesses. These proceeds were applied to reduce the Company's
indebtedness. The Company redeemed $100 million of non-convertible preferred
stock for cash and, in early 1993, the Company invested $87.5 million as
described in Corporate Development.
During 1991 and 1992, the Company received approximately $260 million in
cash from the disposition of its investment in Masco Capital (during 1991 the
Company had advanced Masco Capital approximately $44 million to fund debt
repayment obligations and working capital requirements) and from the early
redemption by TriMas, including a prepayment premium, of TriMas' subordinated
debentures held by the Company. These proceeds were applied to reduce the
Company's indebtedness in late 1991 and 1992.
From January 1, 1991 to December 31, 1993, the Company repaid or
repurchased over $380 million, net, of its outstanding debt, and an additional
$187 million of convertible debt was converted to Company Common Stock.
The Company has substantial new business opportunities over the next few
years in its Transportation-Related Products segment which are anticipated to
require an increase from the recent level of capital expenditures and increased
working capital needs.
INVENTORIES
The Company's investment in inventories decreased to $140 million at
December 31, 1993. This decrease was the result of the sale during 1993 of a
portion of the Company's energy-related segment and the reclassification of the
remaining inventories in the energy-related segment at December 31, 1993 into
net assets of discontinued operations. The Company's continued emphasis on
inventory management, utilizing Just-In-Time (JIT) and other inventory
management techniques has contributed to higher inventory turnover rates in
recent years.
13
<PAGE> 15
FINANCIAL POSITION AND LIQUIDITY
During 1993, the Company's financial position was substantially improved as
the Company's equity increased by approximately $314 million while its total
indebtedness decreased by approximately $339 million. This improvement in
financial position resulted from the Company's positive operating performance,
the issuance of the DECS, the conversion of the Company's previously outstanding
convertible debt into Company Common Stock and from the collection of $93
million of proceeds related to the sale of two of the Company's energy-related
businesses. The Company also redeemed its $100 million of 10% Exchangeable
Preferred Stock with significantly lower cost bank borrowings, and invested
$87.5 million as part of the transactions whereby it acquired the Emco holdings.
The Company's financial flexibility and liquidity were also substantially
improved during 1993. In September, 1993, the Company entered into a new $675
million revolving credit agreement, replacing a prior bank agreement which
required principal payments commencing September 30, 1993. Amounts outstanding
under this new agreement are due in January, 1997; however, under certain
circumstances the due date may be extended until July, 1998. In addition, the
Company in early 1994 sold $345 million of 4 1/2% Convertible Subordinated
Debentures due 2003. The proceeds from this offering were used to redeem $250
million of 10 1/4% Subordinated Notes (called in late 1993 for redemption on
February 1, 1994) and to retire other indebtedness. The Company at December 31,
1993 had cash and cash investments of $83 million.
As a result of the above mentioned transactions, the Company's debt as a
percent of debt plus equity was reduced to 54 percent at December 31, 1993 from
76 percent at December 31, 1992. In addition, the Company's annual financing
costs have been reduced by approximately $20 million after-tax. As of December
31, 1993, adjusted on a pro forma basis for the issuance in early 1994 of the
4 1/2% Convertible Debentures, the Company had floating rate debt of
approximately $213 million (at a current interest rate of approximately 4%) and
$578 million of fixed rate debt (at a weighted average interest rate of under
7%).
At December 31, 1993 current assets, which aggregated approximately $556
million, were approximately three times current liabilities. In addition, the
Company has significant financial assets, including 20 percent or more ownership
positions in the securities of three publicly traded companies with an aggregate
carrying value of approximately $137 million. This compares with an aggregate
quoted market value at December 31, 1993 (which may differ from the amounts that
would have been realized upon disposition) of approximately $524 million.
The Company's cash, additional borrowings available under the Company's new
revolving credit agreement and anticipated internal cash flow are expected to
provide sufficient liquidity to fund its near-term working capital and other
investment needs. The Company believes that its longer-term working capital and
other general corporate requirements, including the retirement of Senior
Subordinated Notes maturing in 1995, will be satisfied through its internal cash
flow, proceeds from the early 1994 issuance of the 4 1/2% Convertible
Debentures, divestiture of the remaining businesses in the energy-related
segment, other nonstrategic operating assets and certain additional financial
assets and, to the extent necessary, future financings in the financial markets.
GENERAL FINANCIAL ANALYSIS
1993 versus 1992 -- Continuing Operations
In 1993, net sales from continuing operations increased nine percent to
$1.58 billion from $1.46 billion in 1992. Income from continuing operations in
1993, after preferred stock dividends, was $56.0 million or $.91 per common
share, assuming full dilution, compared with income from continuing operations,
after preferred stock dividends, of $29.7 million or $.49 per common share in
1992.
Including the results of discontinued operations and the loss upon
disposition of those businesses, and an extraordinary loss ($3.7 million
after-tax) related to the early extinguishment of debt, earnings
14
<PAGE> 16
for 1993 after preferred stock dividends were $.57 per common share, compared
with earnings, after preferred stock dividends, of $.48 per common share in
1992.
Sales of Transportation-Related Products increased 13 percent, principally
due to increased levels of automotive production. Sales also benefitted from new
product introductions which were partially offset by the phase-out of existing
programs, including the mid-1993 completion of the Company's conversion program
for the Ford Mustang convertible. Operating profit in 1993 for Transportation-
Related Products increased to $160 million from $124 million in 1992. Operating
margins, in 1993, continued to be favorably impacted by higher sales volumes for
most of the Company's Transportation-Related Products. Margins in both 1993 and
1992 have benefitted from the internal cost reductions and restructuring
initiatives that the Company has undertaken in recent years.
Sales of Specialty Products in 1993 decreased approximately two percent
from 1992 levels reflecting the continued unfavorable market conditions for the
Company's Architectural and Defense Products. Operating profit declined to $1
million in 1993 from $5 million in 1992 as the result of the $4 million
operating loss for Architectural Products in 1993. This loss was principally the
result of costs and expenses related to the consolidation of certain operating
activities, start-up costs associated with a new manufacturing process and the
unfavorable conditions existing in the markets served by these products.
Other expense, net decreased to $25 million in 1993 from $44 million in
1992. Other expense, net in 1993 benefitted from reduced interest expense
resulting from a reduction in debt and lower interest rates; and from increased
equity and interest income from affiliates related primarily to the Company's
Emco holdings. Additionally, 1993 and 1992 results benefitted from gains from
sales of marketable securities of approximately $11.5 million and $4.0 million,
respectively.
Other expense, net for 1993 and 1992 include gains aggregating
approximately $13 million and $25 million pre-tax, respectively. These gains
resulted from the sale of stock through public offerings by equity affiliates
(including in 1993, affiliate shares held by the Company) and, in 1992, a
prepayment premium related to the redemption of debentures held by the Company.
The Company's equity affiliates may, from time to time, issue additional common
equity depending upon their financing requirements. This income was largely
offset by costs and expenses related to cost reduction initiatives, the
restructuring of certain operations and product lines, adjustments to the
carrying values of certain long-term assets and other costs and expenses.
Earnings in 1993 were reduced by an extraordinary charge of $3.7 million
after-tax related to the early extinguishment of debt. Although the federal
statutory corporate tax rate increased in 1993, the Company's effective tax rate
on income from continuing operations declined slightly in 1993 as compared with
1992. This decrease was the result of the relationship of substantially higher
pre-tax income in 1993 to certain book expenses that are not deductible for tax
purposes and to the Company's foreign and state tax expenses. In addition, the
application of the increased tax rate to deferred tax balances at December 31,
1992 resulted in a 1993 third quarter one-time charge of approximately $.03 per
common share.
1992 versus 1991 -- Continuing Operations
In 1992, net sales from continuing operations increased 15 percent to $1.46
billion from $1.27 billion in 1991. Income from continuing operations in 1992,
after preferred stock dividends, was $29.7 million or $.49 per common share,
compared with a loss from continuing operations, after preferred stock
dividends, of $20.0 million or $.33 per common share in 1991.
Sales of Transportation-Related Products increased 21 percent due to a
modest improvement in levels of automotive production, increased market
penetration and the inclusion of a full year of Creative Industries Group sales.
Excluding the acquisition of Creative Industries Group, 1992
Transportation-Related Products sales would have increased 16 percent. Operating
profit in 1992 for Transportation-Related Products increased 68 percent to $124
million from $74 million in 1991.
15
<PAGE> 17
Operating margins, in 1992, were favorably impacted by higher sales volumes for
most of the Company's Transportation-Related Products. In addition, 1992 margins
have benefitted from the internal cost reductions and restructuring initiatives
that the Company has undertaken in recent years.
Sales of Specialty Products were generally unchanged from 1991, as a seven
percent increase in sales of Architectural Products was substantially offset by
reduced sales of Other Specialty Products. Operating profit for Specialty
Products in 1992 was $5 million compared with an operating loss of $15 million
in 1991. This improvement resulted principally from improved operating
performance of the Architectural Products group which had operating profit of $2
million in 1992 compared with a loss of $16 million in 1991. The 1991
Architectural Products group results were impacted by $8 million of charges
related to discontinuance of product lines, restructuring costs and other
expenses.
Other expense, net decreased to $44 million in 1992 from $56 million in
1991. Other expense, net in 1992 benefitted from reduced interest expense
resulting from a reduction in debt and lower interest rates. This was partially
offset by reduced interest income as a result of the redemptions of TriMas
subordinated debentures previously held by the Company and lower income from
sales of marketable securities.
Other expense, net for 1992 benefitted from the inclusion of income
aggregating approximately $25 million pre-tax in the second quarter resulting
from a prepayment premium related to the redemption by TriMas of the
subordinated debentures held by the Company, and from the change in the
Company's common equity ownership interest in TriMas. This income was
substantially offset by costs and expenses aggregating approximately $21 million
pre-tax in the second quarter (of which $15 million is included in other
expense) related to the restructuring of certain operations, and for adjustments
to the carrying values of certain long-term assets. Other expense, net in 1991
benefitted from the inclusion of an approximate $22 million gain related to the
disposition of certain operations and reduced interest expense, principally as a
result of lower interest rates. Additionally, net gains from sales of marketable
securities, including the effect of valuation allowances, aggregated
approximately $12 million in 1991.
The Company's effective tax rate exceeds the statutory rate primarily as a
result of the impact of state taxes and nondeductible amortization.
16
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of MascoTech, Inc.:
We have audited the accompanying consolidated balance sheet of MascoTech,
Inc. and subsidiaries (formerly Masco Industries, Inc.) as of December 31, 1993
and 1992, and the related consolidated statements of income and cash flows for
each of the three years in the period ended December 31, 1993, and the financial
statement schedules as listed in Item 14(a)(2)(i) of this Form 10-K. These
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MascoTech, Inc.
and subsidiaries as of December 31, 1993 and 1992, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND
Detroit, Michigan
February 24, 1994
17
<PAGE> 19
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash investments................................... $ 83,200,000 $ 76,000,000
Receivables................................................. 238,820,000 272,920,000
Inventories................................................. 140,040,000 222,280,000
Deferred and refundable income taxes........................ 41,780,000 13,990,000
Prepaid expenses and other assets........................... 52,000,000 47,250,000
-------------- --------------
Total current assets................................... 555,840,000 632,440,000
Equity and other investments in affiliates.................... 170,510,000 81,460,000
Property and equipment, net................................... 490,190,000 537,420,000
Excess of cost over net assets of acquired companies.......... 439,760,000 479,400,000
Notes receivable and other assets............................. 66,100,000 76,590,000
Net assets of discontinued operations......................... 67,510,000 --
-------------- --------------
Total assets........................................... $1,789,910,000 $1,807,310,000
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 95,520,000 $ 103,620,000
Accrued liabilities......................................... 103,260,000 117,430,000
Current portion of long-term debt........................... 2,830,000 64,430,000
-------------- --------------
Total current liabilities.............................. 201,610,000 285,480,000
Long-term debt................................................ 788,360,000 1,065,390,000
Deferred income taxes and other long-term liabilities......... 132,310,000 103,040,000
-------------- --------------
Total liabilities...................................... 1,122,280,000 1,453,910,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par: Authorized: 25,000,000;
Outstanding: 10.8 million in 1993 (liquidation value-$216
million) and .8 million in 1992 (liquidation value-$77.5
million)................................................. 10,800,000 780,000
Common stock, $1 par: Authorized: 250,000,000; Outstanding:
60,510,000 and 59,520,000................................ 60,510,000 59,520,000
Paid-in capital............................................. 367,290,000 84,390,000
Retained earnings........................................... 232,120,000 202,660,000
Cumulative translation adjustments.......................... (3,090,000) 6,050,000
-------------- --------------
Total shareholders' equity............................. 667,630,000 353,400,000
-------------- --------------
Total liabilities and shareholders' equity............. $1,789,910,000 $1,807,310,000
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 20
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
--------------- --------------- ---------------
<S> <C> <C> <C>
Net sales................................... $ 1,582,880,000 $ 1,455,320,000 $ 1,266,210,000
Cost of sales............................... (1,257,480,000) (1,159,050,000) (1,054,520,000)
--------------- --------------- ---------------
Gross profit......................... 325,400,000 296,270,000 211,690,000
Selling, general and administrative
expenses.................................. (179,680,000) (184,430,000) (168,100,000)
--------------- --------------- ---------------
Operating profit..................... 145,720,000 111,840,000 43,590,000
--------------- --------------- ---------------
Other income (expense), net:
Interest expense, Masco Corporation....... (6,990,000) (7,800,000) (7,800,000)
Other interest expense.................... (74,370,000) (78,190,000) (104,680,000)
Equity and interest income from
affiliates............................. 21,000,000 15,750,000 29,390,000
Gain from change in investment of equity
affiliates............................. 9,490,000 16,700,000 --
Gain from disposition of operations....... -- -- 21,500,000
Other, net................................ 26,330,000 9,950,000 5,530,000
--------------- --------------- ---------------
(24,540,000) (43,590,000) (56,060,000)
--------------- --------------- ---------------
Income (loss) from continuing
operations before income taxes
(credit) and extraordinary loss... 121,180,000 68,250,000 (12,470,000)
Income taxes (credit)................ 50,290,000 29,210,000 (2,120,000)
--------------- --------------- ---------------
Income (loss) from continuing
operations before extraordinary
loss.............................. 70,890,000 39,040,000 (10,350,000)
Discontinued operations (net of income
taxes):
Income (loss) from operations of
discontinued
segment................................ 2,630,000 (610,000) 1,380,000
Loss on disposition....................... (22,270,000) -- --
--------------- --------------- ---------------
Income (loss) before extraordinary loss..... 51,250,000 38,430,000 (8,970,000)
Extraordinary loss (net of income taxes).... (3,650,000) -- --
--------------- --------------- ---------------
Net income (loss).................... $ 47,600,000 $ 38,430,000 $ (8,970,000)
--------------- --------------- ---------------
--------------- --------------- ---------------
Preferred stock dividends................... $ 14,930,000 $ 9,300,000 $ 9,600,000
--------------- --------------- ---------------
--------------- --------------- ---------------
Earnings (loss) attributable to
common stock...................... $ 32,670,000 $ 29,130,000 $ (18,570,000)
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
1993
-------------------
ASSUMING
FULL 1992 1991
PRIMARY DILUTION PRIMARY PRIMARY
------- -------- ------- -------
<S> <C> <C> <C> <C>
Earnings (loss) per common and common equivalent share:
Continuing operations................................... $ .97 $ .91 $ .49 $(.33)
Discontinued operations:
Income (loss) from operations of discontinued
segment............................................ .05 .04 (.01) .02
Loss on disposition.................................. (.39) * -- --
------- -------- ------- -------
Income (loss) before extraordinary loss................. .63 .63 .48 (.31)
Extraordinary loss...................................... (.06) * -- --
------- -------- ------- -------
Earnings (loss) attributable to common stock............ $ .57 $ .57 $ .48 $(.31)
------- -------- ------- -------
------- -------- ------- -------
</TABLE>
- -------------------------
* Anti-dilutive
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 21
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
------------- ------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income (loss)............................... $ 47,600,000 $ 38,430,000 $ (8,970,000)
Gain, sale of assets............................ -- -- (21,500,000)
Gain from change in investment.................. (9,490,000) (16,700,000) --
Depreciation and amortization................... 59,810,000 59,920,000 59,040,000
Equity earnings, net of dividends............... (12,000,000) (5,250,000) (4,460,000)
Deferred taxes.................................. 15,590,000 3,130,000 3,270,000
(Decrease) in valuation allowance for marketable
securities.................................... -- -- (13,730,000)
(Increase) decrease in receivables.............. (5,900,000) (23,930,000) 9,780,000
(Increase) decrease in inventories.............. (2,990,000) (2,920,000) 25,120,000
(Increase) decrease in prepaid expenses......... (11,650,000) 4,010,000 (4,470,000)
(Decrease) in accounts payable and accrued
liabilities................................... (5,900,000) (12,930,000) (530,000)
Other, net, including extraordinary loss........ 8,180,000 13,540,000 2,950,000
Discontinued operations, net.................... 16,700,000 830,000 (3,340,000)
------------- ------------- -------------
Net cash from operating activities............ 99,950,000 58,130,000 43,160,000
------------- ------------- -------------
FINANCING:
Increase in debt................................ -- 11,670,000 14,720,000
Payment or repurchase of debt................... (150,020,000) (135,490,000) (122,430,000)
Issuance of preferred stock..................... 209,520,000 -- --
Retirement of preferred stock................... (100,000,000) -- --
Payment of dividends............................ (16,020,000) (9,300,000) (7,280,000)
Other, net...................................... 3,770,000 (2,240,000) --
------------- ------------- -------------
Net cash used for financing activities........ (52,750,000) (135,360,000) (114,990,000)
------------- ------------- -------------
INVESTMENTS:
Cash received from redemption of TriMas
subordinated debentures....................... -- 88,000,000 40,000,000
Cash paid Masco Corporation..................... (87,500,000) -- --
Cash received from dispositions:
Energy-related segment........................ 93,450,000 -- --
Masco Capital................................. -- -- 49,450,000
Other operations.............................. -- -- 52,110,000
Masco Capital distributions, net................ -- -- 21,220,000
Capital expenditures............................ (59,540,000) (60,000,000) (48,630,000)
Decrease in marketable securities, net.......... 2,980,000 3,150,000 26,190,000
Other, net...................................... 10,610,000 4,130,000 7,050,000
------------- ------------- -------------
Net cash (used for) from investing
activities................................. (40,000,000) 35,280,000 147,390,000
------------- ------------- -------------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year................ 7,200,000 (41,950,000) 75,560,000
At January 1.................................... 76,000,000 117,950,000 42,390,000
------------- ------------- -------------
At December 31................................ $ 83,200,000 $ 76,000,000 $ 117,950,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 22
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting. Capital
transactions by equity affiliates at amounts differing from the Company's
carrying amount are reflected in other income or expense and the investment in
affiliates account.
Certain amounts for the years ended December 31, 1992 and 1991 have been
reclassified to conform to the presentation adopted in 1993. The statements of
income and cash flows for 1993, 1992 and 1991 and related notes have been
reclassified to present the Energy-related segment as discontinued operations.
In addition, the balance sheet as of December 31, 1993 reflects the
Energy-related segment as discontinued operations (see "Discontinued Operations"
note). The balance sheet as of December 31, 1992 has not been reclassified for
discontinued operations. Effective June 23, 1993 the Company changed its name to
MascoTech, Inc. from Masco Industries, Inc.
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1993 owned approximately 42 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees, which are determined
principally as a percentage of net sales, including net sales related to
discontinued operations, aggregated approximately $11 million in each of 1993,
1992 and 1991.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments. The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value. At December 31, 1993, the Company has $33
million on deposit with a German bank that is subject to currency exchange rate
fluctuations.
Receivables. Receivables are presented net of allowances for doubtful
accounts of $5.1 million and $7.2 million at December 31, 1993 and 1992,
respectively.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10
percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred
financing costs are amortized over the lives of the related debt securities. The
excess of cost over net assets of acquired companies is amortized using the
straight-line method over the period estimated to be benefitted, not exceeding
40 years. At each balance sheet date management assesses whether there has been
a permanent impairment of the excess of cost over net assets of acquired
companies by comparing anticipated undiscounted future cash flows from operating
activities with the carrying amount of the excess of cost over net assets of
acquired companies. The factors considered by management in performing this
assessment include current operating results, business prospects, market trends,
potential product obsolescence, competitive activities and other economic
factors. Based on this assessment there was no permanent impairment related to
excess of cost over net assets of acquired companies at December 31, 1993.
21
<PAGE> 23
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1993 and 1992, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $98.4 million and
$105.1 million, respectively. Amortization expense was $22.2 million, $22.8
million and $21.2 million in 1993, 1992 and 1991, respectively, including
amortization expense of approximately $1.6 million in each year related to
discontinued operations.
Income Taxes. In January, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income Taxes."
SFAS No. 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, SFAS No. 109 generally allows
consideration of all expected future events other than enactments of changes in
the tax law or tax rates. Previously, the Company used the SFAS No. 96 asset and
liability approach that gave no recognition to future events other than the
recovery of assets and settlement of liabilities at their carrying amounts.
There was no income statement impact from the adoption of SFAS No. 109 and the
required balance sheet reclassification was immaterial. Provision is made for
U.S. income taxes on the undistributed earnings of foreign subsidiaries unless
such earnings are considered permanently reinvested.
Earnings (Loss) Per Common Share. Primary earnings (loss) per common share
are based on the weighted average number of shares of common stock and common
stock equivalents outstanding (including the dilutive effect of options and
warrants, utilizing the treasury stock method) of 57.4 million, 60.9 million and
59.7 million in 1993, 1992 and 1991, respectively, and earnings (loss) after
deducting preferred stock dividends of $14.9 million, $9.3 million and $9.6
million in 1993, 1992 and 1991, respectively.
Fully diluted earnings (loss) per common share are only presented when the
assumed conversion of convertible debentures is dilutive. Fully diluted earnings
per share in 1993 were calculated based on 68.8 million weighted average common
shares outstanding. Convertible securities did not have a dilutive effect on
earnings (loss) in 1992 or 1991. The shares of Dividend Enhanced Convertible
Stock DECSSM (the "DECS") issued in 1993 (see "Shareholders' Equity" note) are
common stock equivalents, but are not included in the calculation of primary or
fully diluted shares outstanding as such inclusion would be anti-dilutive.
In late 1993, approximately 10.4 million shares were issued as a result of
the conversion of the 6% Convertible Subordinated Debentures (see "Shareholders'
Equity" note). If such conversion had taken place at the beginning of 1993, the
primary earnings per common and common equivalent share amounts would have
approximated the amounts presented for earnings per common and common equivalent
share, assuming full dilution, for the year ended December 31, 1993.
Adoption of Statements of Financial Accounting Standards. The Company
expects that the adoption of Statements of Financial Accounting Standards
("SFAS") No. 112 "Employers' Accounting for Postemployment Benefits", SFAS No.
114 "Accounting by Creditors for Impairment of a Loan" and SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities" will not have
a material impact on the financial position or the results of operations of the
Company when adopted in 1994 and 1995.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1993: in addition to
the payment by the Company of $87.5 million, the non-cash portion of the
issuance of Company Preferred Stock and warrants in exchange for Company Common
Stock, Company Preferred Stock and Masco Corporation's holdings of Emco Limited
common stock and convertible debentures (see "Shareholders' Equity" note);
conversion of $187 million of convertible debentures into Company Common Stock
22
<PAGE> 24
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(see "Shareholders' Equity" note); and conversion of the Company's TriMas
Corporation ("TriMas") convertible preferred stock holdings into TriMas common
stock (see "Equity and Other Investments in Affiliates" note); and in 1991: an
exchange of certain operating assets (see "Dispositions of Other Operations"
note); and the assumption of liabilities of $18 million in partial exchange for
the acquisition of Creative Industries Group (see "Equity and Other Investments
in Affiliates" note).
Income taxes paid were $32 million in 1993 and $23 million in 1992. Income
tax refunds of $8 million were received in 1991. Interest paid was $82 million,
$91 million and $115 million in 1993, 1992 and 1991, respectively.
DISCONTINUED OPERATIONS:
In late November, 1993, the Company adopted a formal plan to divest its
Energy-related business segment, which consisted of seven business units.
Accordingly, the consolidated statements of income and cash flows and related
notes have been reclassified to present such Energy-related segment as
discontinued operations. During 1993, two such business units were sold for
approximately $93 million, including the sale of one business unit to the
Company's equity affiliate, TriMas for $60 million cash. The expected loss from
the planned disposition of the Company's Energy-related segment resulted in a
fourth quarter 1993 pre-tax charge of approximately $41 million (approximately
$22 million after-tax), including a provision for the businesses not yet sold
and the deferral of a portion of the gain (approximately $6 million after-tax)
related to the sale of the business to TriMas. The Company expects to sell the
remaining business units in privately negotiated transactions in 1994.
Selected financial information for discontinued operations is as follows as
at December 31, 1993 and for the period up to the decision to discontinue in
1993 and for the years ended December 31, 1992 and 1991:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------------ -------- --------
<S> <C> <C> <C>
Net sales.................................... $191,930 $201,520 $200,780
------------ -------- --------
------------ -------- --------
Operating income............................. $ 5,540 $ 3,050 $ 1,070
Other income (expense)....................... (480) (960) 910
------------ -------- --------
Pre-tax income............................... 5,060 2,090 1,980
Income taxes................................. 2,430 2,700 600
------------ -------- --------
Income (loss) from discontinued operations... $ 2,630 $ (610) $ 1,380
------------ -------- --------
------------ -------- --------
</TABLE>
<TABLE>
<CAPTION>
AT
DECEMBER 31,
1993
------------
<S> <C>
Receivables.................................. $ 34,890
Inventories.................................. 39,320
Non-current assets........................... 40,690
Current liabilities.......................... (14,550)
Other, principally provision for disposition
costs...................................... (32,840)
------------
Net assets of discontinued operations........ $ 67,510
------------
------------
</TABLE>
The unusual relationship of income taxes to pre-tax income in 1992 results
principally from foreign losses for which no tax benefit was recorded. Operating
and pre-tax income include charges of $6 million in 1991, principally related to
the discontinuance of product lines and the cost of restructuring several
businesses.
23
<PAGE> 25
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DISPOSITIONS OF OTHER OPERATIONS:
In separate transactions from late 1989 to early 1991, the Company divested
itself of three subsidiaries and received consideration of approximately $160
million, of which $108 million was received in 1990. The remaining $52 million
was received in 1991. In addition, in 1991 the Company disposed of certain
equity affiliates, and exchanged operating assets aggregating approximately $27
million.
These transactions, including the disposition of Masco Capital Corporation
(see "Equity and Other Investments in Affiliates" note), resulted in an
approximate $22 million pre-tax gain in 1991.
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Finished goods........................................... $ 39,400 $ 80,220
Work in process.......................................... 38,240 49,970
Raw material............................................. 62,400 92,090
-------- --------
$140,040 $222,280
-------- --------
-------- --------
</TABLE>
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist primarily of the
following common stock interests in publicly traded affiliates:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation.......................................... 43% 28% 41%
Emco Limited................................................ 43% -- --
Titan Wheel International, Inc. ............................ 21% 47% 20%
</TABLE>
24
<PAGE> 26
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The carrying amount of investments in affiliates at December 31, 1993 and
1992 and quoted market values at December 31, 1993 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
QUOTED 1993 1992
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
<S> <C> <C> <C>
Common stock:
TriMas Corporation.............................. $387,830 $ 40,550 $ 42,630
Emco Limited.................................... 65,190 50,470 --
Titan Wheel International, Inc. ................ 37,580 15,500 4,130
-------- -------- --------
Common stock holdings............................. 490,600 106,520 46,760
-------- -------- --------
Convertible debt:
Emco Limited.................................... 33,520 30,700 --
-------- -------- --------
Convertible debt holdings......................... 33,520 30,700 --
-------- -------- --------
Investments in publicly traded affiliates......... $524,120 137,220 46,760
--------
--------
Other non public affiliates....................... 33,290 34,700
-------- --------
Total............................................. $170,510 $ 81,460
-------- --------
-------- --------
</TABLE>
In 1988, the Company transferred several businesses to TriMas, a publicly
traded, diversified manufacturer of commercial, industrial and consumer
products. In exchange, the Company received $128 million principal amount of 14%
Subordinated Debentures (which were subsequently redeemed resulting in
prepayment premium income to the Company of $9 million in 1992 and $4 million in
1991), $70 million (liquidation value) of 10% Convertible Participating
Preferred Stock and 9.3 million shares of TriMas common stock.
During the second quarter of 1992, TriMas sold 9.2 million shares of newly
issued common stock at $9.75 per share in a public offering, which reduced the
Company's common equity ownership interest in TriMas to 28 percent from 41
percent. As a result, the Company recognized a pre-tax gain of $16.7 million
from the change in the Company's common equity ownership interest in TriMas. In
late 1993, the TriMas 10% Convertible Participating Preferred Stock held by the
Company was converted at a conversion price of $9 per share into 7.8 million
shares of TriMas common stock, increasing the Company's common equity ownership
interest in TriMas to 43 percent.
In 1993, the Company sold a business unit to TriMas for $60 million cash
(see "Discontinued Operations" note).
Included in notes receivable are approximately $10.7 million of notes which
resulted from the sale by the Company of one million shares of its TriMas common
stock holdings to members of the Company's executive management group in
mid-1989. The notes have an effective interest rate of nine percent, payable at
maturity in mid-1994. Ownership and resale of certain of such shares is
restricted and subject to the continuing employment of these executives.
TriMas' Board of Directors declared a 100 percent stock distribution (one
additional share for every share held) to its shareholders effective July 19,
1993. TriMas share amounts and per share prices have been restated to reflect
this distribution.
The Company's holdings in Emco Limited ("Emco") were acquired from Masco
Corporation in 1993 (see "Shareholders' Equity" note). Emco is a major, publicly
traded, Canadian-based
25
<PAGE> 27
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
manufacturer and distributor of building and other industrial products with
annual sales of approximately $800 million.
At December 31, 1992, the Company had an approximate 47 percent common
equity ownership interest in Titan Wheel International, Inc. ("Titan"), a
manufacturer of wheels and other products for agricultural, construction and
other off-highway equipment markets. In May, 1993, Titan completed an initial
public offering of three million shares of common stock at $15 per share
(including 292,000 shares held by the Company), reducing the Company's common
equity ownership interest in Titan to 24 percent. The Company's ownership
interest was further reduced in late 1993 to 21 percent as a result of the
issuance of additional common shares by Titan in connection with an acquisition
by Titan. These transactions resulted in 1993 gains aggregating approximately
$12.8 million pre-tax (principally in the second quarter) as a result of the
sale of shares held by the Company and from the change in the Company's common
equity ownership interest in Titan.
During the second quarter of 1991, the Company acquired the remaining 50
percent equity ownership interest of Creative Industries Group, which had sales
in 1990 of approximately $150 million.
In 1991, Masco Capital Corporation ("Masco Capital") sold its principal
asset and used the proceeds to repay its outstanding bank borrowings and to make
loan repayments and distributions to its shareholders, whereby the Company
received approximately $65 million (including repayment of $44 million advanced
during 1991). In addition, the Company subsequently sold its 50 percent equity
ownership interest in Masco Capital to the other shareholder, Masco Corporation,
for approximately $50 million (which resulted in a pre-tax gain of approximately
$5 million) and contingent amounts based on the future value of certain assets
held by Masco Capital.
In addition to its equity and other investments in publicly traded
affiliates, the Company retains interests in privately held manufacturers of
automotive components, including the Company's 50 percent common equity
ownership interests in Autostyle, Inc., a manufacturer of reaction injection
molded automotive components, and Elbi-Hi Ram, Inc., a manufacturer of
electrical and electronic automotive components.
Approximate combined condensed financial data of the Company's equity
affiliates (including Emco after date of investment, Creative Industries Group
through date of acquisition (second quarter 1991) and Masco Capital through date
of disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1993 1992
--------- ---------
<S> <C> <C>
Current assets......................................... $ 657,680 $ 261,730
Current liabilities.................................... (222,580) (128,300)
--------- ---------
Working capital...................................... 435,100 133,430
Property and equipment, net............................ 349,740 214,760
Excess of cost over net assets of acquired companies... 170,760 113,660
Other assets........................................... 69,540 33,210
Long-term debt......................................... (628,520) (271,220)
Deferred income taxes and other long-term
liabilities.......................................... (34,950) (24,900)
--------- ---------
Shareholders' equity................................. $ 361,670 $ 198,940
--------- ---------
--------- ---------
</TABLE>
26
<PAGE> 28
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1993 1992 1991
---------- -------- --------
<S> <C> <C> <C>
Net sales..................................... $1,412,620 $655,120 $684,990
---------- -------- --------
---------- -------- --------
Operating profit.............................. $ 119,780 $ 77,860 $ 82,000
---------- -------- --------
---------- -------- --------
Net income before preferred stock dividends... $ 57,280 $ 30,200 $ 24,300
---------- -------- --------
---------- -------- --------
</TABLE>
Equity and interest income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1993 1992 1991
---------- -------- --------
<S> <C> <C> <C>
The Company's equity in affiliates' earnings
available for common shareholders........... $ 12,890 $ 5,250 $ 4,470
Dividends on TriMas preferred stock........... 5,250 7,000 7,000
Interest income............................... 2,860 3,500 17,920
---------- -------- --------
Equity and interest income from affiliates.... $ 21,000 $ 15,750 $ 29,390
---------- -------- --------
---------- -------- --------
</TABLE>
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................. $ 33,720 $ 39,740
Buildings.............................................. 158,750 182,460
Machinery and equipment................................ 605,600 669,800
-------- --------
798,070 892,000
Less accumulated depreciation............................ 307,880 354,580
-------- --------
$490,190 $537,420
-------- --------
-------- --------
</TABLE>
Depreciation expense totalled $48 million, $46 million and $47 million in
1993, 1992 and 1991, respectively. These amounts include depreciation expense of
approximately $8 million in each year related to discontinued operations.
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Salaries, wages and commissions.......................... $ 22,970 $ 23,800
Income taxes............................................. 5,930 5,370
Interest................................................. 20,420 20,760
Insurance................................................ 11,010 12,150
Property, payroll and other taxes........................ 9,360 10,340
Other.................................................... 33,570 45,010
-------- --------
$103,260 $117,430
-------- --------
-------- --------
</TABLE>
27
<PAGE> 29
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1993 1992
-------- ----------
<S> <C> <C>
Held by Masco Corporation:
6% Convertible Subordinated Debentures, due 2011...... -- $ 130,000
Held by Banks and Others:
Bank revolving credit agreement, due 1997............. $295,000 410,000
10% Senior Subordinated Notes, due
March, 1995 (noncallable).......................... 233,150 233,150
10 1/4% Senior Subordinated Notes, due 1997........... 250,000 250,000
6% Convertible Subordinated Debentures, due 2011...... -- 56,890
Bank term loan, due 1996.............................. -- 31,090
Other................................................. 13,040 18,690
-------- ----------
791,190 1,129,820
Less current portion of long-term debt.................. 2,830 64,430
-------- ----------
Long-term debt.......................................... $788,360 $1,065,390
-------- ----------
-------- ----------
</TABLE>
In 1993, the Company entered into a new $675 million revolving credit
agreement with a group of banks, replacing its prior bank credit agreement
(which had consisted of a revolving credit facility and a bank term loan at
December 31, 1992). Amounts outstanding under the revolving credit agreement are
due in January, 1997; however, under certain circumstances, the due date may be
extended to July, 1998. The interest rates applicable to the revolving credit
agreement are principally at alternative floating rates provided for in the
agreement (approximately four percent at December 31, 1993).
The revolving credit agreement requires the maintenance of a specified
level of shareholders' equity, with limitations on the ratio of senior debt to
earnings, long-term debt (at December 31, 1993 additional borrowing capacity of
approximately $380 million was available under this agreement), intangible
assets and the acquisition of Company Capital Stock. Under the most restrictive
of these provisions, $120 million of retained earnings was available at December
31, 1993 for the payment of cash dividends and the acquisition of Company
Capital Stock.
The 6% Convertible Subordinated Debentures were converted into Company
Common Stock in late 1993 (see "Shareholders' Equity" note).
The senior subordinated notes contain limitations on the payment of cash
dividends and the acquisition of Company Capital Stock. In late 1993, the
Company called for redemption, on February 1, 1994, the $250 million of 10 1/4%
Senior Subordinated Notes. During 1992, the Company repurchased, in open-market
transactions, approximately $67 million of its 10% Senior Subordinated Notes at
prices approximating face value.
In early 1994, the Company issued, in a public offering, $345 million of
4 1/2% Convertible Subordinated Debentures due December 15, 2003. These
debentures are convertible into Company Common Stock at $31 per share. The net
proceeds were used to redeem the $250 million of 10 1/4% Subordinated Notes
(called in late 1993 for redemption on February 1, 1994) and to reduce other
indebtedness. In the fourth quarter of 1993, the Company recognized a $5.8
million pre-tax extraordinary charge ($3.7 million after-tax) related to the
call premium (1.25%) and unamortized prepaid debenture expense associated with
the call for early extinguishment of the $250 million of 10 1/4% Subordinated
Notes. The 10 1/4% Subordinated Notes are classified as non-current as the
Company had the intent and the ability to maintain these borrowings on a
long-term basis (due to the issuance of the 4 1/2% Convertible Subordinated
Debentures). The maturities of long-term debt during the next five years are as
follows (in millions): 1994 -- $3; 1995 -- $234; 1996 -- $1; 1997 -- $303; and
1998 -- $0.
28
<PAGE> 30
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
PREFERRED COMMON PAID-IN RETAINED TRANSLATION SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS EQUITY
--------- -------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991...... $ 780 $ 59,450 $ 83,800 $192,100 $19,880 $ 356,010
Net (loss).................. -- -- -- (8,970) -- (8,970)
Preferred stock dividends... -- -- -- (9,600) -- (9,600)
Adjustment related to sale
of foreign operations.... -- -- -- -- (5,130) (5,130)
Translation adjustments,
net...................... -- -- -- -- (5,620) (5,620)
--------- -------- -------- -------- --------- ------------
Balance, December 31, 1991.... 780 59,450 83,800 173,530 9,130 326,690
Net income.................. -- -- -- 38,430 -- 38,430
Preferred stock dividends... -- -- -- (9,300) -- (9,300)
Translation adjustments,
net...................... -- -- -- -- (3,080) (3,080)
Exercise of stock options... -- 70 590 -- -- 660
--------- -------- -------- -------- --------- ------------
Balance, December 31, 1992.... 780 59,520 84,390 202,660 6,050 353,400
Net income.................. -- -- -- 47,600 -- 47,600
Preferred stock dividends... -- -- -- (14,930) -- (14,930)
Common stock dividends...... -- -- -- (3,210) -- (3,210)
Retirement of 12%
Preferred................ (780) -- (76,720) -- -- (77,500)
Issuance of 10% Preferred... 1,000 -- 99,000 -- -- 100,000
Issuance of warrants........ -- -- 70,800 -- -- 70,800
Issuance of DECS............ 10,800 -- 198,720 -- -- 209,520
Retirement of common stock.. -- (10,000) (90,000) -- -- (100,000)
Retirement of 10%
Preferred................ (1,000) -- (99,000) -- -- (100,000)
Conversion of convertible
debentures............... -- 10,370 174,120 -- -- 184,490
Translation adjustments,
net...................... -- -- -- -- (9,140) (9,140)
Exercise of stock options... -- 620 5,980 -- -- 6,600
--------- -------- -------- -------- --------- ------------
Balance, December 31, 1993.... $10,800 $ 60,510 $367,290 $232,120 $(3,090) $ 667,630
--------- -------- -------- -------- --------- ------------
--------- -------- -------- -------- --------- ------------
</TABLE>
On March 31, 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, recorded at $100 million, $77.5 million of the
Company's previously outstanding 12% Exchangeable Preferred Stock, and Masco
Corporation's holdings of Emco Limited common stock and convertible debentures,
recorded at $80.8 million. In exchange, Masco Corporation received $100 million
(liquidation value) of the Company's 10% Exchangeable Preferred Stock,
seven-year warrants to purchase 10 million shares of Company Common Stock at $13
per share, recorded at $70.8 million, and $87.5 million in cash. The
transferable warrants are not exercisable by Masco Corporation if an exercise
would increase Masco Corporation's common equity ownership interest in the
Company above 35 percent. The cash portion of this transaction is included in
the accompanying statement of cash flows as cash used for investing activities
of $87.5 million. As part of this transaction, as modified in late 1993, Masco
Corporation agreed to purchase from the Company, at the Company's option through
March, 1997, up to $200 million of subordinated debentures. In late 1993, the
Company redeemed the 10% Exchangeable Preferred Stock for its $100 million
liquidation value.
In July, 1993, the Company issued 10.8 million shares of 6% Dividend
Enhanced Convertible Stock (DECS) at $20 per share ($216 million aggregate
liquidation amount) in a public offering (classified as
29
<PAGE> 31
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Convertible Preferred Stock). The net proceeds from this issuance were used to
reduce the Company's indebtedness. On July 1, 1997, each of the then outstanding
shares of the DECS will convert into one share of Company Common Stock, if not
previously redeemed by the Company or converted at the option of the holder, in
both cases for Company Common Stock.
Each share of the DECS is convertible at the option of the holder anytime
prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent
to a conversion price of $24.81 per share of Company Common Stock. Dividends are
cumulative and each share of the DECS has 4/5 of a vote, voting together as one
class with holders of Company Common Stock.
Beginning July 1, 1996, the Company, at its option, may redeem the DECS at
a call price payable in shares of Company Common Stock principally determined by
a formula based on the then current market price of Company Common Stock.
Redemption by the Company, as a practical matter, will generally not result in a
call price that exceeds one share of Company Common Stock or is less than .806
of a share of Company Common Stock (resulting from the holder's conversion
option).
The Company's 6% Convertible Subordinated Debentures were called for
redemption in late 1993. Substantially all holders, including Masco Corporation,
exercised their right to convert these debentures into Company Common Stock (at
a conversion price of $18 per share), resulting in the issuance of approximately
10.4 million shares of Company Common Stock.
The Company's consideration for a 1987 acquisition included two million
shares of Company Common Stock which were subject to a stock value guarantee
agreement. During the second quarter of 1993, the Company's stock value
guarantee obligation was settled, resulting in no material financial impact to
the Company.
The Company commenced paying cash dividends on its Common Stock in August,
1993 and declared three and paid two quarterly dividends in 1993, each in the
amount of $.02 per common share.
STOCK OPTIONS AND AWARDS:
For the three years ended December 31, 1993, stock option data pertaining
to stock option plans for key employees of the Company and affiliated companies
are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1993 1992 1991
------ ------- ------
<S> <C> <C> <C>
Options outstanding, January 1....................... 4,540 3,770 2,220
Options granted...................................... 30 900 1,730
Option price per share.......................... $13-26 $6 1/8-10 3/4 $4 1/2
Options cancelled.................................... -- 60 180
Option price per share.......................... -- $4 1/2 $4 1/2-9 1/8
Options exercised.................................... 760 70 --
Option price per share.......................... $4 1/2-9 1/8 $9 1/8 --
------ ------- ------
Options outstanding, December 31..................... 3,810 4,540 3,770
------ ------- ------
------ ------- ------
Options exercisable, December 31..................... 680 880 740
------ ------- ------
------ ------- ------
</TABLE>
As of December 31, 1993, options have been granted and are outstanding with
exercise prices ranging from $4 1/2 to $26 per share, the fair market value at
the dates of grant.
Pursuant to restricted stock incentive plans, the Company granted long-term
incentive awards, net, for 202,000, 251,000 and 675,000 shares of Company Common
Stock during 1993, 1992 and 1991, respectively, to key employees of the Company
and affiliated companies. The unamortized costs of
30
<PAGE> 32
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
incentive awards, aggregating approximately $20 million at December 31, 1993,
are being amortized over the ten-year vesting periods.
At December 31, 1993 and 1992, a combined total of 5,631,000 and 5,759,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Directors. Aggregate charges to income under these
plans were $10.9 million in 1993, $10.3 million in 1992 and $8.3 million in
1991, including approximately $.9 million in each year related to discontinued
operations.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 4,110 $ 4,150 $ 4,140
Interest cost on projected benefit obligations..... 5,540 5,090 4,590
Actual return on assets............................ (7,730) (3,820) (5,450)
Net amortization and deferral...................... 1,600 (1,800) 430
------- ------- -------
Net periodic pension cost.......................... $ 3,520 $ 3,620 $ 3,710
------- ------- -------
------- ------- -------
</TABLE>
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
----- ------ ------
<S> <C> <C> <C>
Discount rate for obligations........................ 7.0% 8.25% 8.25%
Rate of increase in compensation levels.............. 5.0% 6.0% 6.0%
Expected long-term rate of return on plan assets..... 13.0% 13.0% 13.0%
</TABLE>
31
<PAGE> 33
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the Company's defined-benefit pension plans at
December 31, 1993 and 1992 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992
-------------------------- --------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
RECONCILIATION OF FUNDED STATUS BENEFITS ASSETS BENEFITS ASSETS
- -------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation.............. $23,040 $ 34,280 $20,780 $24,160
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Accumulated benefit obligation......... $24,450 $ 38,650 $22,120 $31,200
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Projected benefit obligation........... $35,270 $ 39,920 $32,020 $33,030
Assets at fair value........................ 29,550 26,560 27,530 23,570
----------- ----------- ----------- -----------
Projected benefit obligation in excess
of plan assets....................... (5,720) (13,360) (4,490) (9,460)
Reconciling items:
Unrecognized net loss.................. 7,140 8,810 5,920 5,140
Unrecognized prior service cost........ 460 3,250 1,240 3,400
Unrecognized net (asset) obligation at
transition........................... (1,340) (160) (1,940) 70
Adjustment required to recognize
minimum liability.................... -- (10,840) -- (6,900)
----------- ----------- ----------- -----------
(Accrued) prepaid pension cost......... $ 540 $ (12,300) $ 730 $(7,750)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("SFAS 106") for its postretirement benefit plans. This
statement requires the accrual method of accounting for postretirement health
care and life insurance based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of employees
who are expected to qualify for such benefits. In conjunction with the adoption
of SFAS 106, the Company elected to recognize the transition obligation on a
prospective basis and accordingly, the net transition obligation is being
amortized over 20 years. Net periodic postretirement benefit cost includes the
following components for the year ended December 31, 1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
--------------
<S> <C>
Service cost.......................................................... $ 300
Interest cost......................................................... 1,900
Net amortization...................................................... 1,200
-------
Net periodic postretirement benefit cost.............................. $3,400
-------
-------
</TABLE>
The incremental cost in 1993 of accounting for postretirement health care
and life insurance benefits under SFAS 106 amounted to approximately $1.7
million.
32
<PAGE> 34
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit obligations, none of which are funded, are
summarized as follows for the year ended December 31, 1993:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
------------
<S> <C>
Accumulated postretirement benefit obligations:
Retirees.............................................................. $ 19,400
Fully eligible active plan participants............................... 1,400
Other active participants............................................. 6,400
------------
Total accumulated postretirement benefit obligation..................... 27,200
Unrecognized net loss................................................. (2,900)
Unamortized transition obligation..................................... (22,500)
------------
Accrued postretirement benefits......................................... $ 1,800
------------
------------
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was seven percent. The assumed health care cost trend rate in
1993 was 12 percent, decreasing to an ultimate rate in the year 2000 of seven
percent. If the assumed medical cost trend rates were increased by one percent,
the accumulated postretirement benefit obligation would increase by $2.6 million
and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost would increase by $.2 million.
SEGMENT INFORMATION:
The Company's business segments involve the production and sale of the
following:
Transportation-Related Products:
Precision products, generally produced using advanced
metalworking technologies with significant proprietary content,
and aftermarket products for the transportation industry.
Specialty Products:
Architectural -- Doors, windows, security grilles and office
panels and partitions for commercial and
residential markets.
Other -- Products manufactured principally for the defense
industry.
Amounts related to the Company's Energy-related segment have been presented
as discontinued operations.
Corporate assets consist primarily of cash and cash investments, equity and
other investments in affiliates and notes receivable.
33
<PAGE> 35
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
ASSETS EMPLOYED
NET SALES OPERATING PROFIT (B) AT DECEMBER 31
---------------------------------- ---------------------------- ----------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company's operations
by industry segment are:
Transportation-Related
Products (A)............ $1,195,000 $1,058,000 $ 874,000 $160,000 $124,000 $ 74,000 $ 883,000 $ 851,000 $ 808,000
Specialty Products:
Architectural........... 289,000 291,000 273,000 (4,000) 2,000 (16,000) 313,000 321,000 322,000
Other................... 99,000 106,000 119,000 5,000 3,000 1,000 104,000 109,000 114,000
---------- ---------- ---------- -------- -------- -------- ---------- ---------- ----------
Total............. $1,583,000 $1,455,000 $1,266,000 161,000 129,000 59,000 1,300,000 1,281,000 1,244,000
---------- ---------- ----------
---------- ---------- ----------
Other expense, net........ (25,000) (44,000) (56,000)
General corporate
expense................. (15,000) (17,000) (15,000)
-------- -------- --------
Income (loss) from
continuing operations
before income taxes
(credit) and
extraordinary loss...... $121,000 $ 68,000 $(12,000)
-------- -------- --------
-------- -------- --------
Corporate assets.......... 422,000 318,000 449,000
Discontinued operations... 68,000 208,000 210,000
---------- ---------- ----------
Total assets...... $1,790,000 $1,807,000 $1,903,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS AMORTIZATION
---------------------------- ----------------------------------------
1993 1992 1991 1993 1992 1991
-------- -------- -------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by industry segment are:
Transportation-Related Products...................... $52,000 $47,000 $37,000 $42,000 $42,000 $41,000
Specialty Products:
Architectural...................................... 5,000 8,000 8,000 12,000 13,000 12,000
Other.............................................. 3,000 5,000 4,000 6,000 5,000 6,000
------- ------- ------- ------- ------- -------
Total........................................ $60,000 $60,000 $49,000 $60,000 $60,000 $59,000
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
- ---------------
(A) Included within this segment are sales to one customer of $324 million, $268
million and $217 million in 1993, 1992 and 1991, respectively; sales to
another customer of $222 million, $216 million and $201 million in 1993,
1992 and 1991, respectively; and sales to a third customer of $186 million,
$184 million and $126 million in 1993, 1992 and 1991, respectively.
(B) Included in 1991 operating profit (principally Transportation-Related
Products and Architectural Products) are charges of $27 million to reflect
the expenses related to the discontinuance of product lines, and the costs
of restructuring several businesses. Other expense, net in 1992 and 1991,
includes approximately $15 million and $14 million, respectively, to reflect
disposition costs related to idle facilities and other long-term assets.
34
<PAGE> 36
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------- ------- --------
<S> <C> <C> <C>
Other, net:
Gains from sales of marketable securities
(including the effect of valuation
allowances).................................. $11,550 $ 4,020 $ 12,010
Interest income................................. 9,570 9,260 7,890
Dividend income................................. 3,150 1,750 1,910
Other, net...................................... 2,060 (5,080) (16,280)
------- ------- --------
$26,330 $ 9,950 $ 5,530
------- ------- --------
------- ------- --------
</TABLE>
Gains realized from sales of marketable securities are determined on a
specific identification basis at the time of sale.
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Income (loss) from continuing operations before
income taxes (credit) and extraordinary loss:
Domestic...................................... $105,470 $ 57,880 $(34,780)
Foreign....................................... 15,710 10,370 22,310
-------- -------- --------
$121,180 $ 68,250 $(12,470)
-------- -------- --------
-------- -------- --------
Provision for income taxes:
Federal, current.............................. $ 17,940 $ 12,750 $(19,410)
State and local............................... 8,350 5,170 4,560
Foreign....................................... 8,410 8,160 9,460
Deferred, principally federal................. 15,590 3,130 3,270
-------- -------- --------
Income taxes (credit) on income (loss) from
continuing operations before income taxes
(credit) and extraordinary loss.......... $ 50,290 $ 29,210 $ (2,120)
-------- -------- --------
-------- -------- --------
</TABLE>
35
<PAGE> 37
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the net deferred taxes as at December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993
--------
<S> <C>
Deferred tax assets:
Charges for restructuring and other costs, net................... $ 7,450
Inventory........................................................ 8,430
Other, principally deductions reported in different periods for
financial reporting and tax purposes.......................... 18,330
--------
34,210
--------
Deferred tax liabilities:
Depreciation and amortization.................................... 90,350
Other, principally equity in undistributed earnings of
affiliates.................................................... 18,450
--------
108,800
--------
Net deferred tax liability....................................... $ 74,590
--------
--------
</TABLE>
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes (credit) allocated to income
(loss) from continuing operations before income taxes (credit) and extraordinary
loss:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
U.S. federal statutory rate........................ 35% 34% 34%
Tax (credit) at U.S. federal statutory rate........ $42,410 $23,210 $(4,240)
State and local taxes, net of federal tax
benefit.......................................... 5,430 3,390 3,030
Higher effective foreign tax rate.................. 2,910 4,670 1,870
U.S. tax benefit relating to foreign operations.... (90) (190) (2,000)
Dividends-received deduction....................... (2,290) (2,320) (2,360)
Amortization in excess of tax, net................. 3,820 4,780 4,210
Other, net......................................... (1,900) (4,330) (2,630)
------- ------- -------
Income taxes (credit) on income (loss) from
continuing operations before income taxes
(credit) and extraordinary loss............... $50,290 $29,210 $(2,120)
------- ------- -------
------- ------- -------
</TABLE>
Provisions for deferred income taxes by temporary difference components for
the years ended December 31, 1992 and 1991 were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1992 1991
------- -------
<S> <C> <C>
Accelerated depreciation and amortization.................. $ 4,060 $ 550
Marketable securities valuation............................ (970) 4,660
Charges for restructuring and other costs, net............. (2,350) (1,300)
Deductions reported in different periods for financial
reporting and tax purposes............................... 60 (5,770)
Alternative minimum tax.................................... 680 5,180
Other, net................................................. 1,650 (50)
------- -------
$ 3,130 $ 3,270
------- -------
------- -------
</TABLE>
36
<PAGE> 38
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
Notes Receivable and Other Assets. Fair values of financial instruments
included in notes receivable and other assets were estimated using various
methods including quoted market prices and discounted future cash flows based on
the incremental borrowing rates for similar types of investments. In addition,
for variable-rate notes receivable that fluctuate with the prime rate, the
carrying amounts approximate fair value.
Long-Term Debt. The carrying amount of bank debt and certain other
long-term debt instruments approximate fair value as the floating rates inherent
in this debt reflect changes in overall market interest rates. The fair values
of the Company's subordinated debt instruments are based on quoted market
prices. The fair values of certain other debt instruments are estimated by
discounting future cash flows based on the Company's incremental borrowing rate
for similar types of debt instruments.
The carrying amounts and fair values of the Company's financial instruments
as at December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1993 1992
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash investments............. $ 83,200 $ 83,200 $ 76,000 $ 76,000
Notes receivable and other assets..... $ 72,650 $ 80,220 $ 60,150 $ 68,050
Long-term debt:
Bank debt........................... $295,000 $295,000 $441,090 $441,090
6% Convertible Subordinated -- -- $186,890 $160,730
Debentures.......................
10% Senior Subordinated Notes....... $233,150 $243,640 $233,150 $237,230
10 1/4% Senior Subordinated Notes... $250,000 $254,380 $250,000 $251,880
Other long-term debt................ $ 9,120 $ 9,150 $ 10,780 $ 10,780
</TABLE>
37
<PAGE> 39
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
----------------------------------------------------------
DECEMBER 31ST SEPTEMBER 30TH JUNE 30TH MARCH 31ST
------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
1993:
Net sales..................... $ 392,600 $373,680 $ 412,530 $404,070
Gross profit.................. $ 76,440 $ 78,600 $ 85,610 $ 84,750
Income from continuing
operations before
extraordinary loss:
Income...................... $ 18,510 $ 15,000 $ 21,310 $ 16,070
Per common and common
equivalent share:
Primary.................. $.23 $.17 $.34 $.22
Assuming full dilution... $.22 $.17 $.31 $.22
Net income (loss):
Income (loss)............... $ (6,980) $ 15,320 $ 21,740 $ 17,520
Income (loss) attributable
to common stock.......... $ (11,660) $ 9,900 $ 19,240 $ 15,190
Per common and common
equivalent share:
Primary.................. $(.20) $.18 $.35 $.25
Assuming full dilution... $(.15) $.18 $.32 $.24
Market price per common share:
High........................ $28 1/8 $22 5/8 $21 $17 1/4
Low......................... $18 3/4 $19 1/2 $15 3/4 $11 3/8
1992:
Net sales..................... $ 377,790 $358,240 $ 381,470 $337,820
Gross profit.................. $ 70,560 $ 76,320 $ 79,340 $ 70,050
Income from continuing
operations:
Income...................... $ 7,190 $ 10,300 $ 13,510 $ 8,040
Per common and common
equivalent share......... $.08 $.13 $.18 $.10
Net income:
Income...................... $ 8,480 $ 9,640 $ 12,020 $ 8,290
Income attributable to
common stock............. $ 6,160 $ 7,310 $ 9,700 $ 5,960
Per common and common
equivalent share......... $.10 $.12 $.16 $.10
Market price per common share:
High........................ $12 1/8 $13 5/8 $13 7/8 $11
Low......................... $ 8 3/8 $10 3/8 $ 8 5/8 $ 4 3/4
</TABLE>
38
<PAGE> 40
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Certain amounts presented above have been reclassified to present a segment
of the Company's business as discontinued operations (see "Discontinued
Operations" note).
Results for the second quarters of 1993 and 1992 include pre-tax income of
approximately $9 million and $25 million, respectively, as a result of gains
associated with the sale of common stock through public offerings by equity
affiliates and, in 1992, a prepayment premium related to the redemption of
debentures held by the Company. This income was largely offset by costs and
expenses related to cost reduction initiatives, the restructuring of certain
operations and product lines, adjustments to the carrying value of certain
long-term assets, and other costs and expenses.
Results for the third quarter of 1993 were reduced by a charge of
approximately $.04 per common share reflecting the recently increased 1993
federal corporate income tax rate.
The fourth quarter of 1993 net loss includes the effect of a $5.8 million
pre-tax extraordinary charge ($3.7 million after-tax or $.06 per common share)
related to the early extinguishment of subordinated debt (see "Long-Term Debt"
note). The fourth quarter of 1993 net loss also includes an after-tax charge of
approximately $22 million ($.38 per common share) related to the disposition of
a segment of the Company's business (see "Discontinued Operations" note).
The 1993 results include the benefit of approximately $11.5 million pre-tax
income ($6.7 million after-tax or $.12 per common share), primarily in the third
and fourth quarters, resulting from net gains from sales of marketable
securities.
The 1992 results include the benefit of approximately $4 million pre-tax
income ($2 million after-tax or $.04 per common share), primarily in the fourth
quarter, resulting from net gains from sales of marketable securities.
The 1993 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the changes in the number of common shares
outstanding during the year and the dilutive effect of first, second and third
quarter 1993 results.
The calculation of earnings per common and common equivalent share for the
fourth quarter of 1993 results in dilution for income from continuing
operations, assuming full dilution. Therefore, the fully diluted earnings per
share computation is used for all computations, even though the result is
anti-dilutive for one of the per share amounts.
39
<PAGE> 41
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
The following supplemental unaudited financial data combine the Company
with Masco Capital Corporation (through date of disposition) and TriMas and have
been presented for analytical purposes. The Company had a common equity
ownership interest in TriMas of approximately 43 percent at December 31, 1993
and 28 percent at December 31, 1992. The interests of the other common
shareholders are reflected below as "Equity of other shareholders of TriMas."
All significant intercompany transactions have been eliminated.
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
--------------------------
1993 1992
----------- -----------
<S> <C> <C>
Current assets...................................... $ 770,810 $ 813,570
Current liabilities................................. (252,810) (334,790)
----------- -----------
Working capital................................... 518,000 478,780
Property and equipment, net......................... 652,420 682,310
Excess of cost over net assets of acquired
companies......................................... 526,260 591,330
Other assets........................................ 298,290 145,710
Bank and other debt................................. (1,027,250) (1,243,880)
Deferred income taxes and other long-term
liabilities....................................... (161,500) (196,420)
Equity of other shareholders of TriMas.............. (138,590) (104,430)
----------- -----------
Equity of shareholders of MascoTech............... $ 667,630 $ 353,400
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------------
1993 1992 1991
---------- ----------- -----------
<S> <C> <C> <C>
Net sales................................ $2,022,240 $ 1,841,570 $ 1,604,180
---------- ----------- -----------
---------- ----------- -----------
Operating profit......................... $ 215,740 $ 170,460 $ 86,260
---------- ----------- -----------
---------- ----------- -----------
Income (loss) from continuing operations
before extraordinary loss.............. $ 70,890 $ 39,040 $ (10,350)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
40
<PAGE> 42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1994 Annual
Meeting of Stockholders, to be filed on or before April 30, 1994, and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders, to be
filed on or before April 30, 1994, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders, to be
filed on or before April 30, 1994, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1994 Annual Meeting of Stockholders, to be
filed on or before April 30, 1994, and such information is incorporated herein
by reference.
41
<PAGE> 43
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31,
1993 and 1992, and for the years ended December 31, 1993, 1992 and
1991, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedules of the Company appended
hereto, as required for the years ended December 31,
1993, 1992 and 1991, consist of the following:
II. Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other than
Related Parties
V. Property, Plant and Equipment
VI. Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment
VIII. Valuation and Qualifying Accounts
X. Supplementary Income Statement Information
(ii) (A) TriMas Corporation and Subsidiaries Consolidated
Financial Statements appended hereto, as required
at December 31, 1993 and 1992, and for the years
ended December 31, 1993, 1992 and 1991, consist
of the following:
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(ii) (B) TriMas Corporation and Subsidiaries Financial
Statement Schedules appended hereto, as required
for the years ended December 31, 1993, 1992 and
1991, consist of the following:
V. Property, Plant and Equipment
VI. Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment
VIII. Valuation and Qualifying Accounts
X. Supplementary Income Statement Information
(3) Exhibits.
3.i Restated Certificate of Incorporation of MascoTech,
Inc. and amendments thereto.
3.ii Bylaws of MascoTech, Inc., as amended.(3)
4.a Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and
Morgan Guaranty Trust Company of New York, as Trustee,
and Directors' resolutions establishing the Company's
4 1/2% Convertible Subordinated Debentures Due 2003.
42
<PAGE> 44
<TABLE>
<S> <C> <C>
4.b Indenture dated as of February 1, 1987 between Masco Industries,
Inc. (now known as MascoTech, Inc.) and Chemical Bank (successor
by merger to Manufacturers Hanover Trust Company), as Trustee, and
Directors' resolutions establishing the Company's 10% Senior
Subordinated Notes Due 1995.(4)
4.c Credit Agreement dated as of September 2, 1993 by and among Masco-
Tech, Inc., the banks party thereto, NBD Bank, N.A., as Agent, and
Comerica Bank, The Bank of New York, The First National Bank of
Chicago, Morgan Guaranty Trust Company of New York and NationsBank
of North Carolina, N.A., as Co-Agents.(2)
Note: Other instruments, notes or extracts from agreements defining the
rights of holders of long-term debt of MascoTech, Inc. or its
subsidiaries have not been filed since (i) in each case the total
amount of long-term debt permitted thereunder does not exceed 10%
of MascoTech, Inc.'s consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by MascoTech,
Inc. to the Securities and Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984
between Masco Industries, Inc. (now known as MascoTech, Inc.) and
Masco Corporation.(8)
10.b Corporate Services Agreement dated as of January 1, 1987 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(6)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(8)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation and related forfeiture letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of December
20, 1990 and Agreement dated as of November 23, 1993 including an
amendment to Stock Repurchase Agreement.
Note: Exhibits 10.e through 10.o constitute the management contracts and
executive compensatory plans or arrangements in which certain of
the Directors and executive officers of the Company participate.
10.e MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated Sep-
tember 14, 1993).
10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated
September 14, 1993).
10.g MascoTech, Inc. 1984 Stock Option Plan (Restated September 14,
1993).
10.h Masco Corporation 1991 Long Term Stock Incentive Plan.(7)
10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated
September 11, 1990).(8)
10.j Masco Corporation 1988 Stock Option Plan (Restated September 11,
1990).(8)
10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive
Plan (Restated September 11, 1990).(8)
10.1 Masco Corporation 1984 Stock Option Plan (Restated September 11,
1990).(8)
</TABLE>
43
<PAGE> 45
<TABLE>
<S> <C> <C>
10.m Masco Corporation Restricted Stock Incentive Plan (Restated
September 11, 1990).(8)
10.n Supplemental Executive Retirement and Disability Plan.(6)
10.o Form of Agreement dated June 29, 1989 between Masco Industries,
Inc. (now known as MascoTech, Inc.) and certain of its
officers.(9)
10.p Assumption and Indemnification Agreement dated as of December 27,
1988 between Masco Industries, Inc. (now known as MascoTech, Inc.)
and TriMas Corporation.(6)
10.q Corporate Opportunities Agreement dated as of December 27, 1988
among Masco Industries, Inc. (now known as MascoTech, Inc.), Masco
Corporation and TriMas Corporation.(6)
10.r Stock Repurchase Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco
Corporation and TriMas Corporation.(6)
10.s Registration Agreement dated as of December 27, 1988 among Masco
Industries, Inc.(now known as MascoTech, Inc.), Masco Corporation
and TriMas Corporation together with Amendment to Registration
Agreement dated as of January 5, 1993 (which also relates to the
Form of Agreement filed as Exhibit 10.o).(6)
10.t Credit Agreement dated February 1, 1993 among TriMas Corporation,
certain banks and NationsBank of North Carolina, N.A., as
agent.(6)
10.u Stock Purchase Agreement between Masco Corporation and Masco In-
dustries, Inc. (now known as MascoTech, Inc.) dated as of December
23, 1991 (regarding Masco Capital Corporation).(7)
10.v Exchange Agreement dated December 18, 1990 between Masco Indus-
tries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(8)
10.w Amended and Restated Securities Purchase Agreement dated as of No-
vember 23, 1993 between MascoTech, Inc. and Masco Corporation,
including form of Note.(1)
10.x Registration Agreement dated as of March 31, 1993 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corpora-
tion.(5)
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand relating to MascoTech, Inc.'s
Financial Statements and Financial Statement Schedules.
23.b Consent of Coopers & Lybrand relating to TriMas Corporation's
Financial Statements and Financial Statement Schedules.
</TABLE>
- -------------------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
44
<PAGE> 46
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Registration Statement on Form S-3 dated March 9, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated February 1, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1991.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1990.
(9) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1989.
(B) REPORTS ON FORM 8-K.
The following Current Reports on Form 8-K were filed by MascoTech, Inc. in
the calendar quarters ended December 31, 1993 and March 31, 1994:
1. Report on Form 8-K dated November 22, 1993 reporting under Item 2
"Acquisition or Disposition of Assets" the Company's plan to dispose of its
energy-related businesses and to treat such businesses as discontinued
operations for financial reporting purposes. The following financial statements
and financial information were filed with such report:
(i) MascoTech, Inc. and Subsidiaries unaudited pro forma consolidated
condensed balance sheet as of September 30, 1993, and unaudited pro
forma consolidated condensed statements of income for the year
ended December 31, 1992 and the nine-month period ended September
30, 1993.
2. Report on Form 8-K dated January 11, 1994 reporting under Item 5 "Other
Events" the reclassification of certain of the Company's financial statements
and financial information to reflect the treatment of the Company's
energy-related businesses as discontinued operations in connection with the
Company's previously reported plan to dispose of such businesses. The following
financial statements and financial information were filed with such report:
(i) Selected Financial Data;
(ii) MascoTech, Inc. and Subsidiaries Audited Consolidated Financial
Statements as of December 31, 1992 and 1991 and for the three
years in the period ended December 31, 1992 and notes thereto; and
(iii) MascoTech, Inc. and Subsidiaries Unaudited Consolidated Condensed
Financial Statements as of September 30, 1993 and December 31,
1992 and for the three month and nine month periods ended
September 30, 1993 and 1992 and notes thereto.
3. Report on Form 8-K dated March 2, 1994 reporting under Item 5 "Other
Events" certain financial information related to 1993. The following financial
statements were filed with such report:
(i) MascoTech, Inc. and Subsidiaries Audited Consolidated Financial
Statements as of December 31, 1993 and 1992 and for the three years
in the period ended December 31, 1993 and notes thereto.
45
<PAGE> 47
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.
MASCOTECH, INC.
By /s/ TIMOTHY WADHAMS
--------------------------------------
TIMOTHY WADHAMS
Vice President -- Controller
and Treasurer
March 22, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board and Chief
- ------------------------------------- Executive Officer
RICHARD A. MANOOGIAN
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER:
/s/ TIMOTHY WADHAMS Vice President -- Controller
- ------------------------------------- and Treasurer
TIMOTHY WADHAMS
/s/ ERWIN H. BILLIG Director
- -------------------------------------
ERWIN H. BILLIG
March 22, 1994
/s/ PETER A. DOW Director
- -------------------------------------
PETER A. DOW
/s/ EUGENE A. GARGARO, JR. Director
- -------------------------------------
EUGENE A. GARGARO, JR.
/s/ JOHN A. MORGAN Director
- -------------------------------------
JOHN A. MORGAN
/s/ RICHARD G. MOSTELLER Director
- -------------------------------------
RICHARD G. MOSTELLER
</TABLE>
46
<PAGE> 48
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1993
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
Schedules, as required for the years ended December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
II. Amounts Receivable from Related Parties and Underwriters, Promoters, and
Employees Other than Related Parties........................................... F-2
V. Property, Plant and Equipment.................................................... F-3
VI. Accumulated Depreciation, Depletion and Amortization of Property, Plant and
Equipment...................................................................... F-4
VIII. Valuation and Qualifying Accounts................................................ F-5
X. Supplementary Income Statement Information....................................... F-6
TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedules.................................................................... F-7
</TABLE>
F-1
<PAGE> 49
MASCOTECH, INC.
SCHEDULE II. AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------- ----------- ---------- ------------------------- -------------------------
DEDUCTIONS BALANCE AT END OF PERIOD
------------------------- --------------------------
BALANCE AT
BEGINNING AMOUNTS AMOUNTS
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT NOT CURRENT
- ----------------------- ----------- ---------- ---------- ----------- ----------- -----------
(A) (B)
<S> <C> <C> <C> <C> <C> <C>
Erwin H. Billig........ $2,800,000 $160,000 $900,000 -- $2,060,000 --
Lee M. Gardner......... 840,000 50,000 890,000 -- -- --
James W. Hook.......... 280,000 20,000 -- -- 300,000 --
Richard A. Manoogian... 11,210,000 630,000 -- -- 11,840,000 --
Timothy Wadhams........ 1,680,000 90,000 1,770,000 -- -- --
----------- ---------- ---------- ----------- ----------- -----------
16,810,000 950,000 3,560,000 -- 14,200,000 --
Discount on Notes
Receivable(C)........ (890,000) 750,000 -- -- (140,000) --
----------- ---------- ---------- ----------- ----------- -----------
$15,920,000 $1,700,000 $3,560,000 -- $14,060,000 --
----------- ---------- ---------- ----------- ----------- -----------
----------- ---------- ---------- ----------- ----------- -----------
</TABLE>
All amounts receivable are related to an incentive program of the Company
that has been disclosed in previous proxy statements of the Company and that
will be described in the Company's definitive Proxy Statement for its 1994
Annual Meeting of Stockholders to be filed on or before April 30, 1994.
NOTES:
(A) Represents accrual of interest.
(B) Amounts receivable (including interest of $3,400,000) from employees are due
June 30, 1994. The stated rate of interest is 7%.
(C) Represents the discount pertaining to the difference between the stated rate
of interest of 7% and the effective rate of interest of approximately 9%.
Activity in 1992 includes discount amortization of $550,000, interest of
$710,000 and the cancellation of the receivable balance of $1,350,000 for an
ex-employee.
Activity in 1991 includes discount amortization of $340,000 and interest of
$1,040,000.
F-2
<PAGE> 50
MASCOTECH, INC.
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
------------ ------------ ----------- ------------ ------------- ------------
BALANCE AT OTHER BALANCE
BEGINNING ADDITIONS CHANGES AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD (DEDUCT) OF PERIOD
- ---------------------------------- ------------ ----------- ------------ ------------- ------------
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
1993:
Land and land improvements...... $ 39,740,000 $ 250,000 $ 1,830,000 $ (4,440,000) $ 33,720,000
Buildings....................... 182,460,000 4,690,000 4,170,000 (24,230,000) 158,750,000
Machinery and equipment......... 580,030,000 12,460,000 13,590,000 (67,790,000) 511,110,000
Office, delivery and other
equipment.................... 57,200,000 2,890,000 2,650,000 (12,390,000) 45,050,000
Construction in progress........ 32,570,000 39,250,000 420,000 (21,960,000) 49,440,000
------------ ----------- ------------ ------------- ------------
$892,000,000 $59,540,000 $ 22,660,000 $(130,810,000) $798,070,000
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
1992:
Land and land improvements...... $ 39,470,000 $ 250,000 $ 80,000 $ 100,000 $ 39,740,000
Buildings....................... 180,580,000 3,170,000 1,380,000 90,000 182,460,000
Machinery and equipment......... 557,620,000 26,140,000 17,610,000 13,880,000 580,030,000
Office, delivery and other
equipment.................... 54,160,000 5,150,000 4,700,000 2,590,000 57,200,000
Construction in progress........ 21,170,000 33,750,000 600,000 (21,750,000) 32,570,000
------------ ----------- ------------ ------------- ------------
$853,000,000 $68,460,000 $ 24,370,000 $ (5,090,000) $892,000,000
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
1991:
Land and land improvements...... $ 41,190,000 $ 460,000 $ 5,470,000 $ 3,290,000 $ 39,470,000
Buildings....................... 189,250,000 11,140,000 25,360,000 5,550,000 180,580,000
Machinery and equipment......... 560,550,000 46,360,000 69,770,000 20,480,000 557,620,000
Office, delivery and other
equipment.................... 55,860,000 7,310,000 8,920,000 (90,000) 54,160,000
Construction in progress........ 24,560,000 19,370,000 1,540,000 (21,220,000) 21,170,000
------------ ----------- ------------ ------------- ------------
$871,410,000 $84,640,000 $111,060,000 $ 8,010,000 $853,000,000
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
</TABLE>
NOTES:
(A) Includes property, plant and equipment additions of $20 million in 1991
obtained through the acquisition of companies.
(B) Includes property, plant and equipment from the disposition of certain
operations in 1991.
(C) Adjustments and reclassifications to present the Energy-related segment as
discontinued operations in 1993, and the effect of foreign currency
translation.
F-3
<PAGE> 51
MASCOTECH, INC.
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
------------ ----------- ----------- ----------- ----------- -----------
ADDITIONS
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COSTS AND CHANGES AT END
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS ADD (DEDUCT) OF PERIOD
- ------------------------------ ------------ ----------- ----------- ------------ ------------
(A) (B)
<S> <C> <C> <C> <C> <C>
1993:
Land improvements........... $ 2,520,000 $ 250,000 $ 10,000 $ (200,000) $ 2,560,000
Buildings................... 43,970,000 4,620,000 940,000 (9,230,000) 38,420,000
Machinery and equipment..... 275,960,000 29,450,000 8,440,000 (56,500,000) 240,470,000
Office, delivery and other
equipment................ 32,130,000 4,990,000 2,140,000 (8,550,000) 26,430,000
------------ ----------- ----------- ------------ ------------
$354,580,000 $39,310,000 $11,530,000 $(74,480,000) $307,880,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
1992:
Land improvements........... $ 2,310,000 $ 250,000 $ 20,000 $ (20,000) $ 2,520,000
Buildings................... 39,280,000 5,490,000 150,000 (650,000) 43,970,000
Machinery and equipment..... 255,500,000 34,810,000 11,100,000 (3,250,000) 275,960,000
Office, delivery and other
equipment................ 29,680,000 5,770,000 4,170,000 850,000 32,130,000
------------ ----------- ----------- ------------ ------------
$326,770,000 $46,320,000 $15,440,000 $ (3,070,000) $354,580,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
1991:
Land improvements........... $ 2,430,000 $ 280,000 $ 350,000 $ (50,000) $ 2,310,000
Buildings................... 38,410,000 4,890,000 6,910,000 2,890,000 39,280,000
Machinery and equipment..... 246,200,000 35,090,000 32,350,000 6,560,000 255,500,000
Office, delivery and other
equipment................ 28,370,000 7,210,000 6,170,000 270,000 29,680,000
------------ ----------- ----------- ------------ ------------
$315,410,000 $47,470,000 $45,780,000 $ 9,670,000 $326,770,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
Notes:
(A) Includes accumulated depreciation of property, plant and equipment from
the disposition of operations in 1991.
(B) Adjustments and reclassifications to present the Energy-related segment as
discontinued operations in 1993, and the effect of foreign currency
translation.
F-4
<PAGE> 52
MASCOTECH, INC.
SCHEDULE VIII. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
---------------------------- ---------- --------------------------- ----------- ------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED TO (CREDITED)
BEGINNING COSTS AND TO OTHER BALANCE AT
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
---------------------------- ---------- ------------ ----------- ---------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, deducted from
accounts receivable in the
balance sheet:
1993........................ $7,190,000 $2,470,000 $(1,820,000) $2,710,000 $ 5,130,000
---------- ------------ ----------- ---------- -------------
---------- ------------ ----------- ---------- -------------
1992........................ $7,810,000 $3,040,000 -- $3,660,000 $ 7,190,000
---------- ------------ ----------- ---------- -------------
---------- ------------ ----------- ---------- -------------
1991........................ $8,220,000 $7,730,000 $(2,800,000) $5,340,000 $ 7,810,000
---------- ------------ ----------- ---------- -------------
---------- ------------ ----------- ---------- -------------
</TABLE>
Notes:
(A) Allowance of companies reclassified for discontinuance of
Energy-related segment in 1993, and other adjustments, net in 1991.
(B) Deductions, representing uncollectible accounts written off, less
recoveries of accounts written off in prior years.
F-5
<PAGE> 53
MASCOTECH, INC.
SCHEDULE X. SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B
- ------------------------------------------------------ -----------------------------------------
CHARGED TO COSTS AND EXPENSES
-----------------------------------------
ITEM 1993 1992 1991
- ------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs............................... $46,070,000 $44,000,000 $41,100,000
----------- ----------- -----------
----------- ----------- -----------
Depreciation and amortization of intangible assets,
preoperating costs and similar deferrals:
Amortization of patents.......................... $ 180,000 $ 180,000 $ 260,000
----------- ----------- -----------
----------- ----------- -----------
Amortization of deferred charges................. $ 5,880,000 $ 6,600,000 $ 4,800,000
----------- ----------- -----------
----------- ----------- -----------
Amortization of excess of cost over net assets of
acquired companies............................. $14,540,000 $14,260,000 $14,500,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Notes:
Other captions provided for under this schedule are excluded, as the
amounts related to such captions are not material.
Amounts reflect the reclassification of the Company's Energy-related
segment as discontinued operations.
F-6
<PAGE> 54
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholders of TriMas Corporation:
We have audited the consolidated financial statements and the financial
statement schedules of TriMas Corporation and subsidiaries listed in Item
14(a)(2)(ii) of this Form 10-K. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TriMas
Corporation and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND
Detroit, Michigan
February 8, 1994
F-7
<PAGE> 55
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1993 1992 1991
------------- ------------- -------------
<S> <C> <C> <C>
Net sales....................................... $ 443,230,000 $ 388,230,000 $ 339,440,000
Cost of sales................................... (301,130,000) (266,110,000) (231,190,000)
Selling, general and administrative expenses.... (72,080,000) (63,500,000) (54,270,000)
------------- ------------- -------------
Operating profit........................... 70,020,000 58,620,000 53,980,000
Interest expense:
MascoTech, Inc............................. (3,490,000) (17,920,000)
Other...................................... (9,420,000) (9,400,000) (9,690,000)
Other income (expense), net..................... 3,270,000 4,070,000 7,740,000
------------- ------------- -------------
Income before income taxes and
extraordinary charge..................... 63,870,000 49,800,000 34,110,000
Income taxes.................................... 25,870,000 20,020,000 13,850,000
------------- ------------- -------------
Income before extraordinary charge......... 38,000,000 29,780,000 20,260,000
Extraordinary charge related to the early
extinguishment of debt, net of income taxes... (5,740,000) (2,510,000)
------------- ------------- -------------
Net income................................. $ 38,000,000 $ 24,040,000 $ 17,750,000
------------- ------------- -------------
------------- ------------- -------------
Preferred stock dividends, MascoTech, Inc....... $ 5,250,000 $ 7,000,000 $ 7,000,000
------------- ------------- -------------
------------- ------------- -------------
Earnings available for common stock............. $ 32,750,000 $ 17,040,000 $ 10,750,000
------------- ------------- -------------
------------- ------------- -------------
Primary earnings per common share:
Before extraordinary charge................ $1.05 $.87 $.67
----- ---- ----
----- ---- ----
Earnings per common share.................. $1.05 $.65 $.54
----- ---- ----
----- ---- ----
Fully diluted earnings per common share:
Before extraordinary charge................ $1.01 $.87 $.67
----- ---- ----
----- ---- ----
Earnings per common share.................. $1.01 $.65 $.54
----- ---- ----
----- ---- ----
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE> 56
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1993 1992
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 69,770,000 $ 64,770,000
Receivables.................................................... 58,710,000 46,550,000
Inventories.................................................... 76,700,000 60,800,000
Prepaid expenses............................................... 9,790,000 9,010,000
------------ ------------
Total current assets...................................... 214,970,000 181,130,000
Property and equipment........................................... 162,230,000 144,890,000
Excess of cost over net assets of acquired companies............. 152,210,000 110,310,000
Notes receivable................................................. 8,160,000 10,220,000
Other assets..................................................... 26,560,000 20,070,000
------------ ------------
Total assets.............................................. $564,130,000 $466,620,000
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 20,330,000 $ 16,850,000
Amounts payable to affiliates.................................. 1,150,000 7,110,000
Accrued liabilities............................................ 29,400,000 25,240,000
Current portion of long-term debt.............................. 320,000 110,000
------------ ------------
Total current liabilities................................. 51,200,000 49,310,000
Deferred income taxes and other.................................. 29,190,000 23,380,000
Long-term debt................................................... 238,890,000 178,490,000
------------ ------------
Total liabilities......................................... 319,280,000 251,180,000
------------ ------------
Shareholders' equity:
Preferred stock, $1 par value, authorized 5 million shares,
outstanding 70,000 shares in 1992........................... 70,000
Common stock, $.01 par value, authorized 100 million shares,
outstanding 36.6 million shares in 1993; 14.4 million shares
in 1992..................................................... 370,000 140,000
Paid-in capital.................................................. 154,190,000 153,740,000
Retained earnings................................................ 91,700,000 62,500,000
Cumulative translation adjustments............................... (1,410,000) (1,010,000)
------------ ------------
Total shareholders' equity................................ 244,850,000 215,440,000
------------ ------------
Total liabilities and shareholders' equity................ $564,130,000 $466,620,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
<PAGE> 57
TRIMAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1993 1992 1991
------------- ------------ ------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income................................... $ 38,000,000 $ 24,040,000 $ 17,750,000
Adjustments to reconcile net income to net
cash from operations:
Extraordinary charge.................... 5,740,000 2,510,000
Depreciation and amortization........... 18,470,000 16,920,000 14,010,000
Deferred income taxes................... 500,000 1,140,000 2,260,000
(Increase) decrease in receivables...... (4,250,000) 1,040,000 2,100,000
(Increase) decrease in inventories...... (8,120,000) 1,470,000 (1,790,000)
Increase (decrease) in accounts payable
and accrued liabilities............... 3,770,000 3,470,000 3,150,000
Other, net.............................. 1,730,000 3,980,000 (4,200,000)
------------- ------------ ------------
Net cash from operations.............. 50,100,000 57,800,000 35,790,000
------------- ------------ ------------
INVESTMENTS:
Capital expenditures......................... (26,280,000) (20,480,000) (15,330,000)
Acquisitions, net of cash acquired........... (60,280,000) (50,190,000)
------------- ------------ ------------
Net cash from (used for)
investments........................ (86,560,000) (20,480,000) (65,520,000)
------------- ------------ ------------
FINANCING:
Long-term debt:
Issuance................................ 60,000,000 50,000,000
Retirement.............................. (115,150,000) (140,000) (160,000)
Issuance of convertible subordinated debt,
net........................................ 112,030,000
Issuance of common shares, net............... 85,150,000
Retirement of subordinated debt, MascoTech,
Inc., including redemption premium......... (96,970,000) (43,920,000)
Preferred stock dividends paid to
MascoTech, Inc............................. (12,250,000) (7,000,000) (7,000,000)
Common stock dividends paid.................. (3,170,000) (720,000)
------------- ------------ ------------
Net cash from (used for) financing.... 41,460,000 (19,680,000) (1,080,000)
------------- ------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year................ 5,000,000 17,640,000 (30,810,000)
At beginning of the year........................ 64,770,000 47,130,000 77,940,000
------------- ------------ ------------
At end of the year........................... $ 69,770,000 $ 64,770,000 $ 47,130,000
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-10
<PAGE> 58
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its majority owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated.
AFFILIATES
As of December 31, 1993 MascoTech, Inc.'s common stock ownership in the
Company approximated 43 percent, and Masco Corporation's common stock ownership
approximated 5 percent. The Company has a corporate services agreement with
Masco Corporation. Under the terms of the agreement, the Company pays a fee to
Masco Corporation for various corporate support staff, administrative services,
and research and development services. Such fee equals .8 percent of the
Company's net sales, subject to certain adjustments.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment additions, including significant betterments, are
recorded at cost. Upon retirement or disposal of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in income. Maintenance and repair costs are charged to expense
as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Annual depreciation rates are as
follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is being amortized using the straight-line method over the
periods estimated to be benefitted, not exceeding 40 years. At December 31, 1993
and 1992 accumulated amortization of the excess of cost over net assets of
acquired companies and other intangible assets was $21.5 million and $17.0
million, respectively. Amortization expense was $4.5 million, $4.2 million, and
$3.4 million in 1993, 1992 and 1991, respectively.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1993.
F-11
<PAGE> 59
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company uses the liability method of accounting for income taxes.
Deferred income taxes result from temporary differences between the tax basis of
assets and liabilities and the basis as reported in the consolidated financial
statements. The Company has not provided for taxes on $9.4 million of
undistributed earnings of foreign subsidiaries at December 31, 1993, because
such earnings are considered permanently reinvested.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues and expenses are translated at the average rates
of exchange during the period.
EARNINGS PER COMMON SHARE
On June 7, 1993 the Company's Board of Directors adopted a resolution for a
stock split, effected in the form of a 100 percent stock distribution, with
issuance to shareholders on July 6, 1993. Accordingly, information in the
consolidated financial statements and related notes, including the number of
common shares and per common share amounts, has been adjusted to reflect this
distribution.
Primary earnings per common share in 1993, 1992 and 1991 were calculated on
the basis of 31.1 million, 26.0 million and 19.8 million weighted average common
and common equivalent shares outstanding. Fully diluted earnings per common
share in 1993, 1992 and 1991 were calculated on the basis of 39.1 million, 33.9
million and 27.6 million weighted average common and common equivalent shares
outstanding.
On December 15, 1993 MascoTech, Inc. converted all of the $100 Convertible
Participating Preferred Stock into 7.8 million shares of Company common stock.
On a pro forma basis, as if the conversion had occurred on January 1, 1993,
primary and fully diluted earnings per common share for 1993 would have been
$1.03 and $1.01, respectively.
NOTE 2. ACQUISITIONS
In 1993 the Company acquired all of the capital stock of Lamons Metal
Gasket Co. ("Lamons") from MascoTech, Inc. for $60.3 million cash and the
assumption of certain liabilities. The acquisition was accounted for as a
purchase. The excess of cost over net assets acquired of approximately $45.4
million is being amortized on a straight-line basis over 40 years. The results
of operations of Lamons have been included in the consolidated financial
statements from the effective date of the transaction. Additional purchase price
amounts, contingent upon the achievement of specified levels of future
profitability by Lamons, may be payable to MascoTech, Inc. beginning in 1997.
These payments, if required, will be recorded as additional excess of cost over
net assets of acquired businesses.
Lamons is engaged in the manufacture of specialty metallic and non-metallic
gaskets used in the refinery, chemical and petrochemical industries. The
acquisition was financed through partial use of the Company's bank credit
facility.
F-12
<PAGE> 60
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. ACQUISITIONS (CONTINUED)
On a pro forma, unaudited basis, as if the Lamons acquisition had occurred
as of January 1, 1992, net sales, net income, earnings available for common
stock, primary earnings per common share and fully diluted earnings per common
share for 1993 would have been $475.6 million, $40.6 million, $35.4 million,
$1.14 and $1.08, respectively, and net sales, income before extraordinary
charge, net income, earnings available for common stock, primary earnings per
common share before extraordinary charge, fully diluted earnings per common
share before extraordinary charge, primary earnings per common share and fully
diluted earnings per common share for 1992 would have been $437.8 million, $33.7
million, $27.9 million, $20.9 million, $1.02, $.99, $.80 and $.80, respectively.
During 1991 the Company acquired all of the capital stock of Monogram
Aerospace Fasteners, Inc. for $50.2 million cash and the assumption of certain
operating liabilities. The acquisition was accounted for as a purchase. The
excess of cost over net assets acquired of $13.4 million is being amortized on a
straight-line basis over 40 years. The results of operations of Monogram
Aerospace Fasteners, Inc. have been included in the consolidated financial
statements from the date of acquisition.
NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Interest paid................................................ $ 7,470 $13,770 $27,490
------- ------- -------
------- ------- -------
Income taxes paid............................................ $21,540 $13,620 $ 7,940
------- ------- -------
------- ------- -------
Significant noncash transactions:
Preferred stock dividends declared, payable to MascoTech,
Inc. in subsequent year................................. $ 7,000 $ 7,000
------- -------
------- -------
Common stock dividends declared, payable in
subsequent year......................................... $ 1,100 $ 720
------- -------
------- -------
Assumption of liabilities as partial consideration for the
assets of companies acquired............................ $ 7,310 $ 4,590
------- -------
------- -------
</TABLE>
NOTE 4. RECEIVABLES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1993 1992
------- -------
<S> <C> <C>
Accounts receivable....................................................... $54,320 $41,440
Current portion of notes receivable....................................... 4,390 5,110
------- -------
$58,710 $46,550
------- -------
------- -------
</TABLE>
Accounts receivable are presented net of an allowance for doubtful accounts
of $1.8 million and $1.4 million at December 31, 1993 and 1992, respectively.
Accounts receivable at December 31, 1993 include approximately $3.2 million due
from MascoTech, Inc. relating to the acquisition of Lamons Metal Gasket Co.
F-13
<PAGE> 61
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1993 1992
------- -------
<S> <C> <C>
Finished goods............................................................ $41,950 $33,230
Work in process........................................................... 12,230 11,600
Raw material.............................................................. 22,520 15,970
------- -------
$76,700 $60,800
------- -------
------- -------
</TABLE>
NOTE 6. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1993 1992
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................................ $ 13,170 $ 12,380
Buildings............................................................. 58,250 50,840
Machinery and equipment............................................... 183,090 161,430
-------- --------
254,510 224,650
Less accumulated depreciation........................................... 92,280 79,760
-------- --------
$162,230 $144,890
-------- --------
-------- --------
</TABLE>
Depreciation expense was $13.9 million, $12.7 million and $10.6 million in
1993, 1992 and 1991, respectively.
NOTE 7. NOTES RECEIVABLE
Notes receivable are net of an allowance for doubtful accounts of $.7
million at both December 31, 1993 and 1992, and consist principally of the
long-term portion of notes receivable arising from the sale of certain products
in the normal course of business. These notes bear various fixed interest rates
and mature through 2000. At December 31, 1993 the carrying value of these notes
receivable approximated their estimated fair value as calculated using the
interest rates in effect on that date.
NOTE 8. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1993 1992
------- -------
<S> <C> <C>
Employee wages and benefits............................................... $ 9,830 $ 6,530
Property taxes............................................................ 2,630 2,740
Interest.................................................................. 2,620 970
Current income taxes...................................................... 2,050 2,130
Other..................................................................... 12,270 12,870
------- -------
$29,400 $25,240
------- -------
------- -------
</TABLE>
F-14
<PAGE> 62
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1993 1992
-------- --------
<S> <C> <C>
Borrowings from banks................................................... $122,000 $177,000
5% Convertible Subordinated Debentures.................................. 115,000
Other................................................................... 2,210 1,600
-------- --------
239,210 178,600
Less current maturities................................................. 320 110
-------- --------
$238,890 $178,490
-------- --------
-------- --------
</TABLE>
In August, 1993 the Company issued $115.0 million of 5% Convertible
Subordinated Debentures Due 2003. The Debentures are convertible into Company
common stock at $22 5/8 per share, subject to adjustment in certain events. The
Debentures are redeemable, at a premium, at the Company's option after August 1,
1996.
The Company has a $350.0 million revolving credit facility maturing in 1998
with a group of domestic and international banks. The facility permits the
Company to borrow under several different interest rate options. The facility
contains certain restrictive covenants, the most restrictive of which, at
December 31, 1993, requires $186.4 million of shareholders' equity.
Borrowings from banks at December 31, 1993 and 1992 include $122.0 million
and $147.0 million, respectively, owing under the Company's revolving credit
facilities. At December 31, 1993 the blended interest rate on borrowings
equalled 3.5 percent. The Company had available credit of $228.0 million under
the credit facility at December 31, 1993.
At December 31, 1992 the Company had borrowed $30.0 million from several
banks under short term, uncommitted credit facilities. As the Company had the
ability and the intent to maintain these borrowings on a long-term basis,
borrowings under these short term facilities were classified as long-term debt.
NOTE 10. SUBORDINATED DEBT HELD BY AFFILIATE
On December 31, 1991 the Company utilized available cash to retire $40.0
million of the $128.0 million 14 percent Subordinated Debentures due 2008, held
by MascoTech, Inc., and recognized a $3.9 million pre-tax extraordinary charge
($2.5 million after tax, or $.13 per common share) relative to the payment of
the redemption premium associated with the early extinguishment.
Effective January 1, 1992 the Company exchanged the remaining $88.0 million
of 14 percent Subordinated Debentures for a new issue of $88.0 million 12
percent Subordinated Debentures due 1999.
In April, 1992 the Company retired the $88.0 million 12 percent
Subordinated Debentures and recognized a $9.0 million pre-tax extraordinary
charge ($5.7 million after tax, or $.22 per common share) relative to the
payment of the redemption premium associated with the early extinguishment.
At December 31, 1993 there were no outstanding Subordinated Debentures held
by MascoTech, Inc.
F-15
<PAGE> 63
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
PREFERRED COMMON PAID-IN RETAINED TRANSLATION
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
--------- ------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991......... $ 70 $100 $ 68,600 $ 36,150 $ 80 $105,000
Net income..................... 17,750 17,750
Preferred stock dividends...... (7,000) (7,000)
Other.......................... (350) 170 (180)
--------- ------ -------- -------- ----------- --------
Balance, December 31, 1991....... 70 100 68,250 46,900 250 115,570
Net income..................... 24,040 24,040
Common shares issued........... 40 85,110 85,150
Common stock dividends......... (1,440) (1,440)
Preferred stock dividends...... (7,000) (7,000)
Other.......................... 380 (1,260) (880)
--------- ------ -------- -------- ----------- --------
Balance, December 31, 1992....... 70 140 153,740 62,500 (1,010) 215,440
Net income..................... 38,000 38,000
Common stock distribution...... 150 (150)
Common stock dividends......... (3,550) (3,550)
Preferred stock dividends...... (5,250) (5,250)
Preferred stock conversion..... (70) 80 (10)
Other.......................... 610 (400) 210
--------- ------ -------- -------- ----------- --------
Balance, December 31, 1993....... $-0- $370 $154,190 $ 91,700 $(1,410) $244,850
--------- ------ -------- -------- ----------- --------
--------- ------ -------- -------- ----------- --------
</TABLE>
During 1993, dividends on the $100 Convertible Participating Preferred
Stock, held by MascoTech, Inc., converted from an annual to a quarterly payment
schedule. Therefore, the Company paid $12.3 million in preferred stock dividends
in 1993 representing dividends accrued through the first three quarters of 1993
and the full year 1992. On December 15, 1993 MascoTech, Inc. converted all of
the preferred stock into 7.8 million shares of Company common stock.
On the basis of amounts paid (declared), cash dividends per common share
were $.11 ($.11 1/2) in 1993 and $.02 1/2 ($.05) in 1992.
NOTE 12. STOCK OPTIONS AND AWARDS
The Company has a Stock Option Plan and a Restricted Stock Incentive Plan
which permit the grant of up to a combined total of 2,000,000 shares of Company
common stock for stock options or awards to key employees of the Company and its
affiliates. Shares available for grant through these two plans were 419,944 and
549,156 at December 31, 1993 and December 31, 1992, respectively.
F-16
<PAGE> 64
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. STOCK OPTIONS AND AWARDS (CONTINUED)
Stock option data are as follows (option prices are the fair market value
at the dates of grant):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Options outstanding, January 1............................... 606,000 622,000 160,000
Options granted.............................................. 462,000
Option price per share..................................... $8 7/8
Options cancelled............................................ 16,000
Option price per share..................................... $8 7/8
Options exercised............................................ 2,000
Option price per share..................................... $8 7/8
Options outstanding, December 31............................. 604,000 606,000 622,000
Option price per share..................................... $7 1/2-$8 7/8 $7 1/2-$8 7/8 $7 1/2-$8 7/8
Exercisable, December 31..................................... 167,200 64,000 48,000
</TABLE>
Restricted long-term incentive stock awards of a net total of 974,056
shares have been granted as of December 31, 1993, with the related costs being
expensed over the ten year vesting period. At December 31, 1993 non-vested
incentive stock awards had an aggregate carrying value of $7.8 million.
NOTE 13. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit plans and profit-sharing and other defined contribution plans, for most
of its employees. At December 31, 1993 the combined assets of the Company's
defined benefit plans exceeded the combined accumulated benefit obligation by
$5.7 million.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans.................................... $2,300 $2,210 $1,630
Defined benefit plans......................................... 500 200 320
------ ------ ------
$2,800 $2,410 $1,950
------ ------ ------
------ ------ ------
</TABLE>
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
F-17
<PAGE> 65
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. RETIREMENT PLANS (CONTINUED)
Net periodic pension cost of defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Service cost................................................. $ 2,030 $ 1,710 $ 1,510
Interest cost................................................ 2,920 2,680 2,440
Actual return on assets...................................... (5,900) (2,920) (4,740)
Net amortization and deferral................................ 1,450 (1,270) 1,110
------- ------- -------
$ 500 $ 200 $ 320
------- ------- -------
------- ------- -------
</TABLE>
Net amortization and deferral consists of amortization of the net asset or
overfunded position at the date of adoption and deferral and amortization of
subsequent net gains and losses caused by the actual plan and investment
experience differing from that assumed.
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Discount rate..................................................... 7.0% 8.2% 8.2%
Rate of increase in compensation levels........................... 5.1% 6.0% 6.0%
Expected long-term rate of return on plan assets.................. 12.5% 12.1% 12.0%
</TABLE>
The following table sets forth the funded status of the defined benefit
plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1993 1992
-------------------------- --------------------------
PLANS WHERE PLANS WHERE PLANS WHERE PLANS WHERE
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation................. $27,450 $ 6,870 $21,720 $ 5,480
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Accumulated benefit obligation............ $27,970 $ 7,580 $22,180 $ 5,750
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Projected benefit obligation.............. $37,110 $ 7,580 $28,430 $ 6,600
Plan assets at fair value................... 35,440 5,790 30,680 4,930
----------- ----------- ----------- -----------
Projected benefit obligation (in excess of)
or less than plan assets.................. (1,670) (1,790) 2,250 (1,670)
Unrecognized net (asset) or obligation...... (1,870) (360) (2,350) (130)
Unrecognized prior service cost............. 590 740 540 380
Unrecognized net (gain) or loss............. 4,580 1,500 2,170 410
----------- ----------- ----------- -----------
Prepaid pension cost or (pension
liability)........................... $ 1,630 $ 90 $ 2,610 $(1,010)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Several of the Company's subsidiaries and divisions provide certain
postretirement health care and life insurance benefits for eligible retired
employees under unfunded plans. Some of the plans have cost-sharing provisions.
Prior to 1993, the expense recognized for postretirement health care and life
insurance benefits was based on actual expenditures. Effective January 1, 1993
the estimated costs
F-18
<PAGE> 66
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13. RETIREMENT PLANS (CONTINUED)
of these postretirement benefits are being accrued in accordance with the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions. The new accounting method has no effect on the Company's cash flows
related to these retiree benefits.
The Company has decided to amortize the unrecognized accumulated
postretirement benefit obligation existing at January 1, 1993 over 20 years as
permitted by the new Standard.
Net periodic postretirement benefit cost for 1993 includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Service cost.................................................................. $210
Interest cost................................................................. 520
Amortization of transition obligation......................................... 240
------
$970
------
------
</TABLE>
Rate assumptions used were as follows:
<TABLE>
<CAPTION>
<S> <C>
Discount rate................................................................. 7.0%
Rate of increase in health care costs (1993-2000)............................. 12.0%
Long-term rate of increase in health care costs subsequent to the year 2000... 7.0%
</TABLE>
The following sets forth the plans' status reconciled with the amount
recognized in the Company's balance sheet as of December 31, 1993:
Accumulated postretirement benefit obligation:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Retirees............................................................ $ (2,270)
Fully eligible active plan participants............................. (920)
Other active plan participants...................................... (3,100)
--------------
(6,290)
Unrecognized transition obligation....................................... 4,560
Unrecognized net (gain) or loss.......................................... (560)
--------------
Accrued postretirement benefit obligation at December 31, 1993...... $ (2,290)
--------------
--------------
</TABLE>
A one percentage point increase each year in the assumed rate of increase
in health care costs would have increased the aggregate of the service and
interest cost components of net periodic postretirement benefit cost by
approximately $.1 million during 1993, and would have increased the accumulated
postretirement benefit obligation at December 31, 1993 by approximately $.8
million.
NOTE 14. OTHER INCOME (EXPENSE), NET
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Interest income................................................ $3,570 $3,600 $7,140
Other, net..................................................... (300) 470 600
------ ------ ------
$3,270 $4,070 $7,740
------ ------ ------
------ ------ ------
</TABLE>
F-19
<PAGE> 67
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15. BUSINESS SEGMENT INFORMATION
The Company's operations in its business segments consist principally
of the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures, pressurized
gas cylinders and metallic and non-metallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
Corporate assets consist primarily of cash and cash equivalents and
notes receivable.
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners............................................... $122,740 $113,020 $ 84,860
Towing Systems.................................................... 139,790 122,960 105,530
Specialty Container Products...................................... 118,970 94,090 97,530
Corporate Companies............................................... 61,730 58,160 51,520
-------- -------- --------
Total net sales................................................. $443,230 $388,230 $339,440
-------- -------- --------
-------- -------- --------
OPERATING PROFIT
Specialty Fasteners............................................... $ 19,250 $ 17,340 $ 12,930
Towing Systems.................................................... 22,150 17,670 13,940
Specialty Container Products...................................... 28,820 22,830 25,920
Corporate Companies............................................... 7,110 6,670 5,990
-------- -------- --------
Total operating profit.......................................... 77,330 64,510 58,780
Other income (expense), net......................................... (6,150) (8,820) (19,870)
General corporate expense........................................... (7,310) (5,890) (4,800)
-------- -------- --------
Income before income taxes and extraordinary charge............. $ 63,870 $ 49,800 $ 34,110
-------- -------- --------
-------- -------- --------
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners............................................... $131,110 $127,570 $131,870
Towing Systems.................................................... 142,340 133,240 126,670
Specialty Container Products...................................... 144,890 73,240 72,730
Corporate Companies............................................... 53,060 52,710 51,850
-------- -------- --------
471,400 386,760 383,120
Corporate......................................................... 92,730 79,860 65,640
-------- -------- --------
Total assets.................................................... $564,130 $466,620 $448,760
-------- -------- --------
-------- -------- --------
CAPITAL EXPENDITURES
Specialty Fasteners............................................... $ 9,170 $ 3,830 $ 21,810
Towing Systems.................................................... 7,930 10,240 4,400
Specialty Container Products...................................... 16,050 3,480 6,420
Corporate Companies............................................... 1,320 2,900 1,690
-------- -------- --------
34,470 20,450 34,320
Corporate......................................................... 20 30
-------- -------- --------
Total capital expenditures...................................... $ 34,490(A) $ 20,480 $ 34,320(B)
-------- -------- --------
-------- -------- --------
DEPRECIATION AND AMORTIZATION
Specialty Fasteners............................................... $ 6,490 $ 6,230 $ 3,970
Towing Systems.................................................... 5,250 4,950 4,650
Specialty Container Products...................................... 4,410 3,530 3,370
Corporate Companies............................................... 2,240 2,130 1,950
-------- -------- --------
18,390 16,840 13,940
Corporate......................................................... 80 80 70
-------- -------- --------
Total depreciation and amortization............................. $ 18,470 $ 16,920 $ 14,010
-------- -------- --------
-------- -------- --------
</TABLE>
Operations are located principally in the United States.
(A) Includes $8.2 million from business acquired.
(B) Includes $19.0 million from business acquired.
F-20
<PAGE> 68
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16. INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
-----------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Income before taxes and extraordinary charge:
Domestic..................................................... $60,630 $46,340 $30,400
Foreign...................................................... 3,240 3,460 3,710
------- ------- -------
$63,870 $49,800 $34,110
------- ------- -------
------- ------- -------
Provision for income taxes:
Federal...................................................... $20,980 $15,160 $ 8,340
State and local.............................................. 2,870 2,280 1,830
Foreign...................................................... 1,520 1,440 1,420
Deferred, principally federal................................ 500 1,140 2,260
------- ------- -------
Income taxes on income before income taxes and
extraordinary charge.................................... 25,870 20,020 13,850
Tax (credit) related to extraordinary charge................. (3,230) (1,410)
------- ------- -------
Net income taxes.......................................... $25,870 $16,790 $12,440
------- ------- -------
------- ------- -------
Provision for deferred income taxes by temporary difference
components:
Depreciation.............................................. $ 1,130 $ 1,790 $ 2,130
Inventory................................................. 100 (50) (1,080)
Other, net................................................ (730) (600) 1,210
------- ------- -------
$ 500 $ 1,140 $ 2,260
------- ------- -------
------- ------- -------
</TABLE>
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate applicable to income before income taxes and
extraordinary charge:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory tax rate...................................... 35.0% 34.0% 34.0%
State and local taxes, net of federal tax benefit.................... 2.9 3.0 3.4
Foreign taxes in excess of U.S. federal tax rate..................... .6 .9 .6
Nondeductible amortization of excess of cost over net assets of
acquired companies................................................. 1.7 2.1 2.7
Other, net........................................................... .3 .2 (.1)
---- ---- ----
Effective tax rate before extraordinary charge.................. 40.5% 40.2% 40.6%
---- ---- ----
---- ---- ----
</TABLE>
F-21
<PAGE> 69
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16. INCOME TAXES (CONTINUED)
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------
1993 1992
----------------------- -----------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX TAX TAX TAX
ASSETS LIABILITIES ASSETS LIABILITIES
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Property and equipment.................................. $18,040 $16,280
Inventory............................................... $ 170 $ 470
Accrued liabilities..................................... 3,260 2,450
Other................................................... 4,200 3,550 2,320 2,420
-------- ----------- -------- -----------
$7,630 $21,590 $5,240 $18,700
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
At December 31, 1993 capital loss carryforwards, for tax purposes only,
equalled $3.2 million and expire in 1995.
NOTE 17. INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1993:
Net sales..................................... $108,000 $109,710 $118,600 $106,920
Gross profit.................................. $36,070 $ 35,020 $ 38,240 $ 32,770
Net income.................................... $ 8,480 $ 9,450 $ 11,650 $ 8,420
Earnings available for common stock........... $ 8,480 $ 7,700 $ 9,900 $ 6,670
Primary earnings per common share............. $.23 $.26 $.34 $.23
Fully diluted earnings per common share....... $.22 $.25 $.32 $.23
Weighted average common and common equivalent
shares outstanding:
Primary.................................. 37,004 29,189 29,171 29,131
Fully diluted............................ 42,120 40,016 36,974 36,926
1992:
Net sales..................................... $84,860 $100,600 $106,950 $ 95,820
Gross profit.................................. $27,010 $ 30,730 $ 34,870 $ 29,510
Before extraordinary charge:
Income..................................... $ 6,340 $ 8,280 $ 9,550 $ 5,610
Earnings available for common stock........ $ 4,590 $ 6,530 $ 7,800 $ 3,860
Primary earnings per common share.......... $.16 $.22 $.30 $.19
Fully diluted earnings per common share.... $.16 $.22 $.28 $.19
After extraordinary charge:
Net income................................. $ 6,340 $ 8,280 $ 3,810 $ 5,610
Earnings available for common stock........ $ 4,590 $ 6,530 $ 2,060 $ 3,860
Primary earnings per common share.......... $.16 $.22 $.08 $.19
Fully diluted earnings per common share.... $.16 $.22 $.08 $.19
Weighted average common and common equivalent
shares outstanding:
Primary.................................. 29,073 29,027 26,161 19,810
Fully diluted............................ 36,895 36,832 33,951 27,640
</TABLE>
F-22
<PAGE> 70
TRIMAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 17. INTERIM FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
Quarterly earnings per common share amounts for 1993 do not total to the
full year amount due to the change in the number of common shares outstanding
occurring during the year.
Earnings per common share in the fourth quarter of 1993 and 1992 were
improved by $.04 and $.03, net, respectively, resulting from various year-end
adjustments to accrual estimates recorded earlier in each year.
QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
<TABLE>
<CAPTION>
MARKET PRICE
1993 ---------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
---------------------------------------- ----- ----- ---------
<S> <C> <C> <C>
Fourth.................................. $24 5/8 $18 1/4 $ .03
Third................................... 20 17 .03
Second.................................. 18 3/4 15 5/8 .03
First................................... 16 1/2 14 1/4 .025
</TABLE>
<TABLE>
<CAPTION>
MARKET PRICE
1992 -------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
---------------------------------------- ----- ----- ---------
<S> <C> <C> <C>
Fourth.................................. $14 7/8 $11 1/4 $.025
Third................................... 12 1/4 10 5/8 .025
Second.................................. 12 1/4 9 3/4 --
First................................... 12 5/8 8 7/8 --
</TABLE>
F-23
<PAGE> 71
TRIMAS CORPORATION AND SUBSIDIARIES
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------- ------------ ----------- ----------- ------------ ------------
OTHER
BALANCE AT CHANGES BALANCE
BEGINNING ADDITIONS ADD AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS (DEDUCT) OF PERIOD
- ---------------------------------------------- ------------ ----------- ----------- ------------ ------------
(A) (B)
<S> <C> <C> <C> <C> <C>
1993:
Land and land improvements.................. $ 12,380,000 $ 820,000 $ 480,000 $ 450,000 $ 13,170,000
Buildings................................... 50,840,000 3,500,000 1,830,000 5,740,000 58,250,000
Machinery and equipment..................... 135,040,000 13,310,000 1,120,000 6,330,000 153,560,000
Office, delivery and other equipment........ 15,140,000 3,040,000 620,000 540,000 18,100,000
Construction in progress.................... 11,250,000 13,820,000 (13,640,000) 11,430,000
------------ ----------- ----------- ------------ ------------
$224,650,000 $34,490,000 $4,050,000 $ (580,000) $254,510,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
1992:
Land and land improvements.................. $ 12,490,000 $ 60,000 $ 120,000 $ (50,000) $ 12,380,000
Buildings................................... 47,750,000 2,880,000 400,000 610,000 50,840,000
Machinery and equipment..................... 127,030,000 5,040,000 960,000 3,930,000 135,040,000
Office, delivery and other equipment........ 14,360,000 1,210,000 580,000 150,000 15,140,000
Construction in progress.................... 5,690,000 11,290,000 10,000 (5,720,000) 11,250,000
------------ ----------- ----------- ------------ ------------
$207,320,000 $20,480,000 $2,070,000 $ (1,080,000) $224,650,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
1991:
Land and land improvements.................. $ 9,000,000 $ 3,040,000 $ 10,000 $ 460,000 $ 12,490,000
Buildings................................... 44,890,000 2,990,000 10,000 (120,000) 47,750,000
Machinery and equipment..................... 106,560,000 17,900,000 1,080,000 3,650,000 127,030,000
Office, delivery and other equipment........ 11,490,000 3,730,000 1,670,000 810,000 14,360,000
Construction in progress.................... 2,870,000 6,660,000 (3,840,000) 5,690,000
------------ ----------- ----------- ------------ ------------
$174,810,000 $34,320,000 $2,770,000 $ 960,000 $207,320,000
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
Notes:
(A) Including fixed asset additions of $8,210,000 in 1993 and $18,990,000 in
1991 obtained through the acquisition of companies.
(B) Adjustments and reclassifications between accounts.
F-24
<PAGE> 72
TRIMAS CORPORATION AND SUBSIDIARIES
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
---------- ---------- ----------- ----------- ---------- ----------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES BALANCE
BEGINNING COST AND ADD AT END
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) OF PERIOD
- ------------------------------------------------- ----------- ----------- ----------- --------- -----------
(A)
<S> <C> <C> <C> <C> <C>
1993:
Land improvements.............................. $ 600,000 $ 20,000 $ 10,000 $ (10,000) $ 600,000
Buildings...................................... 10,530,000 2,170,000 180,000 180,000 12,700,000
Machinery and equipment........................ 62,180,000 9,420,000 520,000 (460,000) 70,620,000
Office, delivery and other equipment........... 6,450,000 2,320,000 530,000 120,000 8,360,000
----------- ----------- ----------- --------- -----------
$79,760,000 $13,930,000 $ 1,240,000 $(170,000) $92,280,000
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
1992:
Land improvements.............................. $ 410,000 $ 100,000 $ 90,000 $ 600,000
Buildings...................................... 9,010,000 1,860,000 $ 60,000 (280,000) 10,530,000
Machinery and equipment........................ 54,640,000 8,670,000 700,000 (430,000) 62,180,000
Office, delivery and other equipment........... 4,880,000 2,120,000 500,000 (50,000) 6,450,000
----------- ----------- ----------- --------- -----------
$68,940,000 $12,750,000 $1,260,000 $(670,000) $79,760,000
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
1991:
Land improvements.............................. $ 290,000 $ 100,000 $ 20,000 $ 410,000
Buildings...................................... 7,280,000 1,760,000 $ 10,000 (20,000) 9,010,000
Machinery and equipment........................ 48,410,000 6,920,000 820,000 130,000 54,640,000
Office, delivery and other equipment........... 4,420,000 1,820,000 1,340,000 (20,000) 4,880,000
----------- ----------- ----------- --------- -----------
$60,400,000 $10,600,000 $2,170,000 $110,000 $68,940,000
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
</TABLE>
Note:
(A) Adjustments and reclassifications between accounts.
F-25
<PAGE> 73
TRIMAS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
--------- --------- ------------------------ ---------- ----------
ADDITIONS
--------------------------
CHARGED CHARGED
BALANCE AT (CREDITED) (CREDITED) BALANCE
BEGINNING TO COST TO OTHER AT END
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ----------------------------- ---------- ------------ ---------- ---------- ----------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, deducted from
accounts receivable in the
balance sheet:
1993.................... $1,430,000 $ 800,000 $ 160,000 $590,000 $1,800,000
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
1992.................... $1,750,000 $ 440,000 $(310,000) $450,000 $1,430,000
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
1991.................... $1,560,000 $ 420,000 $ 410,000 $640,000 $1,750,000
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
Allowance for doubtful
accounts, deducted from
notes receivable in the
balance sheet:
1993.................... $ 650,000 $ -- $ -- $ -- $ 650,000
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
1992.................... $ 650,000 $ -- $ -- $ -- $ 650,000
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
1991.................... $1,220,000 $ (350,000) $(220,000) $ -- $ 650,000
---------- ------------ ---------- ---------- ----------
---------- ------------ ---------- ---------- ----------
</TABLE>
Notes:
(A) Allowance of companies acquired, and other adjustments, net.
(B) Doubtful accounts charged off, less recoveries.
F-26
<PAGE> 74
TRIMAS CORPORATION AND SUBSIDIARIES
SCHEDULE X. SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
COLUMN A COLUMN B
-------- ------------------------------------------
CHARGED TO COSTS AND EXPENSES
------------------------------------------
ITEM 1993 1992 1991
---- ----------- ----------- ----------
<S> <C> <C> <C>
Maintenance and repairs............................. $11,780,000 $10,470,000 $9,730,000
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
Other captions provided under this schedule are excluded as the amounts
related to such captions are not material, or they are disclosed in the notes to
the financial statements.
F-27
<PAGE> 75
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments thereto.
3.ii Bylaws of MascoTech, Inc., as amended.(3)
4.a Indenture dated as of November 1, 1986 between Masco Industries, Inc. (now known as
MascoTech, Inc.) and Morgan Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing the Company's 4 1/2% Convertible Subordinated
Debentures Due 2003.
4.b Indenture dated as of February 1, 1987 between Masco Industries, Inc. (now known as
MascoTech, Inc.) and Chemical Bank (successor by merger to Manufacturers Hanover
Trust Company), as Trustee, and Directors' resolutions establishing the Company's
10% Senior Subordinated Notes Due 1995.(4)
4.c Credit Agreement dated as of September 2, 1993 by and among MascoTech, Inc., the
banks party thereto, NBD Bank, N.A., as Agent, and Comerica Bank, The Bank of New
York, The First National Bank of Chicago, Morgan Guaranty Trust Company of New York
and NationsBank of North Carolina, N.A., as Co-Agents.(2)
Note: Other instruments, notes or extracts from agreements defining the rights of holders
of long-term debt of MascoTech, Inc. or its subsidiaries have not been filed since
(i) in each case the total amount of long-term debt permitted thereunder does not
exceed 10% of MascoTech, Inc.'s consolidated assets, and (ii) such instruments,
notes and extracts will be furnished by MascoTech, Inc. to the Securities and
Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.(8)
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco Industries,
Inc. (now known as MascoTech, Inc.) and Masco Corporation.(6)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco Industries,
Inc. (now known as MascoTech, Inc.) and Masco Corporation.(8)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and Masco Corporation and related forfeiture letter
dated September 20, 1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 and Agreement dated as of November 23, 1993 including an
amendment to Stock Repurchase Agreement.
Note: Exhibits 10.e through 10.o constitute the management contracts and executive
compensatory plans or arrangements in which certain of the Directors and executive
officers of the Company participate.
10.e MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated September 14, 1993).
10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated September 14, 1993).
10.g MascoTech, Inc. 1984 Stock Option Plan (Restated September 14, 1993).
10.h Masco Corporation 1991 Long Term Stock Incentive Plan.(7)
10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated September 11,
1990).(8)
10.j Masco Corporation 1988 Stock Option Plan (Restated September 11, 1990).(8)
10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan (Restated
September 11, 1990).(8)
10.1 Masco Corporation 1984 Stock Option Plan (Restated September 11, 1990).(8)
10.m Masco Corporation Restricted Stock Incentive Plan (Restated September 11, 1990).(8)
10.n Supplemental Executive Retirement and Disability Plan.(6)
10.o Form of Agreement dated June 29, 1989 between Masco Industries, Inc. (now known as
MascoTech, Inc.) and certain of its officers.(9)
10.p Assumption and Indemnification Agreement dated as of December 27, 1988 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas Corporation.(6)
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<S> <C>
10.q Corporate Opportunities Agreement dated as of December 27, 1988 among Masco
Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas
Corporation.(6)
10.r Stock Repurchase Agreement dated as of December 27, 1988 among Masco Industries,
Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation.(6)
10.s Registration Agreement dated as of December 27, 1988 among Masco Industries,
Inc.(now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation
together with Amendment to Registration Agreement dated as of January 5, 1993
(which also relates to the Form of Agreement filed as Exhibit 10.o).(6)
10.t Credit Agreement dated February 1, 1993 among TriMas Corporation, certain banks and
NationsBank of North Carolina, N.A., as agent.(6)
10.u Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.) dated as of December 23, 1991 (regarding Masco Capital
Corporation).(7)
10.v Exchange Agreement dated December 18, 1990 between Masco Industries, Inc. (now
known as MascoTech, Inc.) and Masco Corporation.(8)
10.w Amended and Restated Securities Purchase Agreement dated as of November 23, 1993
between MascoTech, Inc. and Masco Corporation, including form of Note.(1)
10.x Registration Agreement dated as of March 31, 1993 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and Masco Corporation.(5)
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand relating to MascoTech, Inc.'s Financial Statements and
Financial Statement Schedules.
23.b Consent of Coopers & Lybrand relating to TriMas Corporation's Financial Statements
and Financial Statement Schedules.
</TABLE>
- -------------------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Registration Statement on Form S-3 dated March 9, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated February 1, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1991.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1990.
(9) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1989.
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
MASCO INDUSTRIES, INC.
* * * * *
MASCO INDUSTRIES, INC., a corporation organized and existing under the
Laws of the State of Delaware (the "Company"), hereby certifies as follows:
FIRST: The name of the Company is MASCO INDUSTRIES, INC. The date of
filing its original Certificate of Incorporation with the Secretary of State was
March 15, 1984.
SECOND: This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
THIRD: The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or changes
to read as herein set forth in full:
1. The name of the corporation is:
MASCO INDUSTRIES, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock the corporation shall have
authority to issue is two hundred seventy-five million (275,000,000) shares.
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Two hundred fifty million (250,000,000) of such shares shall consist of
common shares, par value one dollar ($1.00) per share, and twenty-five million
(25,000,000) of such shares shall consist of preferred shares, par value one
dollar ($1.00) per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
A. Each share of common stock shall be equal in all respects to all
other shares of such stock, and each share of outstanding common stock is
entitled to one vote.
B. Each share of preferred stock shall have or not have voting
rights as determined by the Board of Directors prior to issuance.
Dividends on all outstanding shares of preferred stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of common stock
with respect to the same dividend period.
In the event of any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, the holders of
the preferred stock shall be entitled, before any assets of the Company
shall be distributed among or paid over to the holders of the common
stock, to an amount per share to be determined before issuance by the
Board of Directors, together with a sum of money equivalent to the amount
of any dividends declared thereon and remaining unpaid at the date of such
liquidation, dissolution or winding up of the Company. After the making
of such payments to the holders of the preferred stock, the remaining
assets of the Company shall be distributed among the holders of the common
stock alone, according to the number of shares held by each. If, upon
such liquidation, dissolution or winding up, the assets of the Company
distributable as aforesaid among the holders of the preferred stock shall
be insufficient to permit the payment to them of said amount, the entire
assets shall be distributed ratably among the holders of the preferred
stock.
The Board of Directors shall have authority to divide the shares of
preferred stock into series and fix, from time to time before issuance,
the number of shares to be included in any series and the designation,
relative rights, preferences and limitations of all shares of such
series. The authority of the Board of Directors with respect to each
series shall include the determination of any or all of the following, and
the shares of each series may vary from the shares of any other in the
following respects: (a) the number of shares
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constituting such series and the designation thereof to distinguish the
shares of such series from the shares of all other series; (b) the rate of
dividend, cumulative or noncumulative, and the extent of further
participation in dividend distribution, if any; (c) the prices at which
issued (at not less than par) and the terms and conditions upon which the
shares may be redeemable by the Company; (d) sinking fund provisions for
the redemption or purchase of shares; (e) the voting rights; and (f) the
terms and conditions upon which the shares are convertible into other
classes of stock of the Company, if such shares are to be convertible.
C. No holder of any class of stock issued by this Company shall be
entitled to pre-emptive rights.
D. The number of authorized shares of each class of stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the
stock of the Company entitled to vote, voting together as a single class.
5. (a) The business and affairs of the Company shall be managed by or
under the direction of a Board of Directors consisting of not less than five nor
more than twelve directors, the exact number of directors to be determined from
time to time by resolution adopted by affirmative vote of a majority of the
entire Board of Directors. The directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as nearly
as may be possible, of one-third of the total number of directors constituting
the entire Board of Directors. At the 1988 Annual Meeting of stockholders,
Class I directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each succeeding
Annual Meeting of stockholders beginning in 1989, successors to the class of
directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number
of directors in each class as nearly equal as possible, and any additional
director of any class elected to fill a vacancy resulting from an increase
in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall
hold office until the annual meeting for the year in which his term expires
and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement or removal from office.
Except as otherwise required by law, any vacancy on the Board of
Directors that results from an increase in the number of directors
shall be filled only by a majority of the Board of Directors then in
office, provided that a quorum is present, and any other vacancy occurring in
the Board of Directors shall be filled only by a
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majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall serve for the remaining term
of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Company shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Designation with respect to such
stock, such directors so elected shall not be divided into classes pursuant to
this Article 5, and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the foregoing
provisions of this Article 5, in each case unless expressly provided by such
terms.
(b) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote in the election of directors.
Any stockholder entitled to vote in the election of directors, however, may
nominate one or more persons for election as director only if written notice of
such stock- holder's intent to make such nomination or nominations has been
given either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Company not later than (i) with respect to an election to
be held at an Annual Meeting of stock- holders, 45 days in advance of the date
on which the Company's proxy statement was released to stockholders in
connection with the previous year's Annual Meeting of stockholders and (ii) with
respect to an election to be held at a special meeting of stock- holders for the
election of directors, the close of business on the seventh day following the
day on which notice of such meeting is first given to stockholders. Each such
notice shall include: (A) the name and address of the stockholder who intends
to make the nomination or nominations and of the person or persons to be
nominated; (B) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; (C) a description of all arrangements or understanding between such
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations is or are to be made
by the stockholder; (D) such other information regarding each nominee proposed
by such stockholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission if the nominee had been nominated by the Board of Directors; and (E)
the written consent of each nominee to serve as a director of the Company if
elected. The chairman of any
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meeting of stockholders may refuse to acknowledge the nomination of any person
if not made in compliance with the foregoing procedure.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the by-
laws), and in addition to any affirmative vote required by law, the affirmative
vote of the holders of at least 80% of the voting power of the outstanding
capital stock of the Company entitled to vote, voting together as a single
class, shall be required to amend, adopt in this Certificate of Incorporation or
in the by-laws any provision inconsistent with, or repeal this Article 5.
6. Any action required or permitted to be taken by the stockholders of
the Company must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by any such holders.
Except as otherwise required by law, special meetings of stockholders of the
Company may be called only by the Chairman of the Board, the President or a
majority of the Board of Directors, subject to the rights of holders of any one
or more classes or series of preferred stock or any other class of stock issued
by the Company which shall have the right, voting separately by class or series,
to elect directors. Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding that a lesser percentage may
be specified by law, this Certificate of Incorporation or the by-laws), and in
addition to any affirmative vote required by law, the affirmative vote of the
holders of at least 80% of the voting power of the outstanding capital stock of
the Company entitled to vote, voting together as single class, shall be required
to amend, adopt in this Certificate of Incorporation or in the by-laws any
provision inconsistent with, or repeal this Article 6.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Company.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Company.
To set apart out of any of the funds of the Company available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets
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of the Company, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as its Board of Directors shall deem expedient and for the best
interests of the Company.
8. The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
9. Whenever a compromise or arrangement is proposed between the Company
and its creditors or any class of them and/or between the Company and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the Company or
of any creditor or stockholder thereof, or on the application of any receiver or
receivers appointed for the Company under the provisions of Section 279 of Title
8 of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Company, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the Company,
as the case may be, agree to any compromise or arrangement and to any
reorganization of the Company as consequence of such compromise or arrangement,
the said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of the Company, as the case may be, and also on the
Company.
10. Meetings of stockholders may be held outside the State of Delaware,
if the bylaws so provide. The books of the Company may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in
the bylaws of the Company. Elections of Directors need not be by ballot unless
the bylaws of the Company shall so provide.
11. The Company reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
12. A. The affirmative vote of the holders of 95% of all shares of
stock of the Company entitled to vote in elections of directors, considered for
the purposes of this Article 12 as one class, shall be required for the adoption
or authorization of a business combination (as hereinafter defined) with any
other entity (as hereinafter defined) if, as of the record date for the
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determination of stockholders entitled to notice thereof and to vote thereon,
such other entity is the beneficial owner, directly or indirectly, of 30% or
more of the outstanding shares of stock of the Company entitled to vote in
elections of directors considered for the purposes of this Article 12 as one
class; provided that such 95% voting requirement shall not be applicable if:
(a) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Company in such business
combination bears the same or a greater percentage relationship to
the market price of the Company's common stock immediately prior to the
announcement of such business combination as the highest per share price
(including brokerage commissions and soliciting dealers' fees) which such other
entity has theretofore paid for any of the shares of the Company's common stock
already owned by it bears to the market price of the common stock of the
Company immediately prior to the commencement of acquisition of the Company's
common stock by such other entity;
(b) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Company in such business
combination: (i) is not less than the highest per share price (including
brokerage commissions and soliciting dealers' fees) paid by such other entity
in acquiring any of its holdings of the Company's common stock, and (ii) is
not less than the earnings per share of common stock of the Company for the
four full consecutive fiscal quarters immediately preceding the record date for
solicitation of votes on such business combination, multiplied by the then
price/earnings multiple (if any) of such other entity as customarily computed
and reported in the financial community;
(c) After such other entity has acquired a 30% interest and prior
to the consummation of such business combination: (i) such other entity shall
have taken steps to ensure that the Company's Board of Directors included at all
times representation by continuing director(s) (as hereinafter defined)
proportionate to the stockholdings of the Company's public common stockholders
not affiliated with such other entity (with a continuing director to occupy any
resulting fractional board position); (ii) there shall have been no reduction in
the rate of dividends payable on the Company's common stock except as necessary
to insure that a quarterly dividend payment does not exceed 5% of the net income
of the Company for the four full consecutive fiscal quarters immediately
preceding the declaration date of such dividend, or except as may have been
approved by a unanimous vote of the directors; (iii) such other entity shall not
have acquired any newly issued shares of stock, directly or indirectly, from the
Company (except upon conversion of convertible securities
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acquired by it prior to obtaining a 30% interest or as a result of a pro rata
stock dividend or stock split); and (iv) such other entity shall not have
acquired any additional shares of the Company's outstanding common stock or
securities convertible into common stock except as a part of the transaction
which results in such other entity acquiring its 30% interest;
(d) Such other entity shall not have (i) received the benefit,
directly or indirectly (except proportionately as a stockholder) of
any loans, advances, guarantees, pledges or other financial
assistance or tax credits of or provided by the Company, or (ii)
made any major change in the Company's business or equity capital
structure without the unanimous approval of the directors, in either
case prior to the consummation of such business combination; and
(e) A proxy statement responsive to the requirements of the United
States securities laws shall be mailed to all common stockholders of the
Company for the purpose of soliciting stockholder approval of such
business combination and shall contain on its first page thereof, in
a prominent place, any recommendations as to the advisability (or
inadvisability) of the business combination which the continuing
directors, or any of them, may choose to state and, if deemed
advisable by a majority of the continuing directors, an opinion
of a reputable investment banking firm as to the fairness (or not)
of the terms of such business combination, from the point of view
of the remaining public stockholders of the Company (such investment
banking firm to be selected by a majority of the continuing directors
and to be paid a reasonable fee for their services by the Company
upon receipt of such opinion).
The provisions of this Article 12 shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of 30% or more the outstanding shares of stock of
the Company entitled to vote in elections of directors considered for the
purposes of this Article 12 as one class, notwithstanding the fact that such
other entity has reduced its shareholdings below 30% if, as of the record date
for the determination of stockholders entitled to notice of and to vote on the
business combination, such other entity is an "affiliate" of the Company (as
hereinafter defined).
B. As used in this Article 12, (a) the term "other entity" shall
include any corporation, person or other entity and any other entity with which
it or its "affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of acquir-
ing, holding, voting or disposing of stock of the Company, or which is its
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General
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Rules and Regulations under the Securities Exchange Act of 1934 as in effect on
March 31, 1984, together with the successors and assigns of such persons in any
transaction or series of transactions not involving a public offering of the
Company's stock within the meaning of the Securities Act of 1933; provided,
however, that an "other entity" shall not in any event include any entity
owning 30% or more of the outstanding shares of stock of the Company entitled
to vote in the elections of directors considered for purposes of this Article
12 as one class at the time of the adoption of this Article 12, any subsidiary
of such entity, or any corporation succeeding to the business of such entity if
(i) such business as conducted immediately prior to such succession
is, immediately after such succession, the sole business of such successor, and
(ii) the stockholders of the corporation conducting such business immediately
prior to such succession are, immediately after such succession, the sole
stockholders of the successor corporation or of a corporation owning all of the
capital stock of such successor corporation; (b) an other entity shall be deemed
to be the beneficial owner of any shares of stock of the Company which the other
entity (as defined above) has the right to acquire pursuant to any agreement,
arrangement or understanding or upon exercise of conversion rights, warrants or
options, or otherwise; (c) the outstanding shares of any class of stock of the
Company shall include shares deemed owned through application of clause; (b)
above but shall not include any other shares which may be issuable pursuant to
any agreement, or upon exercise of conversion rights, warrants or options, or
otherwise; (d) the term "business combination" shall include any merger or
consolidation of the Company with or into any other entity, or the sale or lease
of all or any substantial part of the assets of the Company to, or any sale or
lease to the Company or any subsidiary thereof in exchange for securities of the
Company of any assets (except assets having an aggregate fair market value of
less than $5,000,000) of, any other entity; (e) the term "continuing director"
shall mean a person who was a member of the Board of Directors of the Company
elected by stockholders prior to the time that such other entity acquired in
excess of 10% of the stock of the Company entitled to vote in the election of
directors, or a person recommended to succeed a continuing director by a
majority of continuing directors; and (f) for the purposes of subparagraphs A(a)
and (b) of this Article 12 the term "other consideration to be received" shall
mean, in addition to other consideration received, if any, capital stock of the
Company retained by its existing public stockholders in the event of a business
combination with such other entity in which the Company is the surviving
corporation; and (g) the exclusion of an entity from constituting an "other
entity" under subparagraph B(a) of this Article 12 shall only continue to be
effective if such entity does not thereafter decrease such ownership percentage
to less than 30% (other than through the Company's issuance of its capital
stock) and subsequently reacquire such a 30% interest and provided that, upon
any such decrease and subsequent reacquisition, such entity shall be deemed for
purposes
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of this Article 12 to have first become an "other entity" and to first have
acquired capital stock of the Company on the date of such reacquisition.
C. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article 12 on the basis of information
known to them whether (a) such other entity beneficially owns 30% or more of the
outstanding shares of stock of the Company entitled to vote in elections of
directors; (b) an other entity is an "affiliate" or "associate" (as defined
above) of another; (c) an other entity has an agreement, arrangement or under-
standing with another; or (d) the assets being acquired by the Company, or any
subsidiary thereof, have an aggregate fair market value of less than $5,000,000.
D. No amendment to the Certificate of Incorporation of the Company
shall amend or repeal any of the provisions of this Article 12, unless the
amendment effecting such amendment or repeal shall receive the affirmative vote
of the holders of 95% of all shares of stock of the corporation entitled to vote
in elections of directors, considered for the purposes of this Article 12 as one
class; provided that this paragraph D shall not apply to, and such 95% vote
shall not be required for, any amendment or repeal unanimously recommended to
the stockholders by the Board of Directors of the Company if all of such
directors are persons who would be eligible to serve as "continuing directors"
within the meaning of paragraph B of this Article 12.
E. Nothing contained in this Article 12 shall be construed to relieve
any other entity from any fiduciary obligation imposed by law.
13. A director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (a) for any breach of the director's duty of
loyalty to the Company or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the Delaware General Corporation Law, or (d) for
any transaction from which the director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to authorize the
further limitation or elimination of the liability of directors, then the
liability of a director of the Company, in addition to the limitation on
liability provided herein, shall be limited to the fullest extent permitted by
the Delaware General Corporation Law, as amended. Any repeal or modification of
this Article 13 shall not increase the liability of any director of the Company
for any act or occurrence taking place prior to such repeal or modification, or
otherwise adversely affect any right or protection of a director of the Company
existing at the time of such repeal or modification.
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14. A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer or employee of the Company,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or employee or in any other capacity while serving as a
director, officer, or employee, shall be indemnified and held harmless by the
Company to the fullest extent permitted by the Delaware General Corporation Law,
as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than such law permitted the company to provide
prior to such amendment), against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines and amounts paid in
settlement) reasonably incurred or suffered by such person in connection there-
with, and such indemnification shall continue as to a person who has ceased to
be a director, officer or employee and shall inure to the benefit of such
person's heirs, executors and administrators. The Company shall indemnify a
director, officer or employee in connection with an action, suit or proceeding
(other than an action, suit or proceeding to enforce indemnification rights
provided for herein or elsewhere) initiated by such Director, officer or
employee only if such action, suit or proceeding was authorized by the Board of
Directors. The right to indemnification conferred in this Paragraph A shall
be a contract right and shall include the right to be paid by the Company the
expenses incurred in defending any action, suit or proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person) in advance of the final
disposition of an action, suit or proceeding shall be made only upon delivery to
the Company of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
director or officer is not entitled to be indemnified for such expenses under
this Article 14 or otherwise.
B. The Company may, to the extent authorized from time to time by the
Board of Directors, provide indemnification and the advancement of expenses, to
any agent of the Company and to any person who is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, to such extent
and to such effect as the Board of Directors shall determine to be appropriate
and permitted by applicable law, as the same exists or may hereafter be amended.
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C. The rights to indemnification and to the advancement of expenses
conferred in this Article 14 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation or bylaws of the Company, agreement, vote of
stockholders or disinterested directors or otherwise.
FOURTH: This Restated Certificate of Incorporation was duly adopted by
the Board of Directors in accordance with Section 245 of the General Corporation
Law of Delaware.
IN WITNESS WHEREOF, said MASCO INDUSTRIES, INC. has caused its
corporate seal to be affixed and this Certificate to be signed by Richard A.
Manoogian, its Chairman of the Board, and attested by Timothy Wadhams, its
Assistant Secretary, this 31st day of May, 1988.
MASCO INDUSTRIES, INC.
BY/s/ Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board
ATTEST:
/s/ Timothy Wadhams
Timothy Wadhams
Assistant Secretary
STATE OF MICHIGAN )
)
COUNTY OF WAYNE )
I, , a notary public, do hereby certify that on this
day of May, 1988, personally appeared before me Richard A. Manoogian, who,
being by me first duly sworn, declared that he is the Chairman of the Board that
he signed the foregoing document as the act and deed of said corporation, and
that the statements therein contained are true.
/s/ Terry Lynn Przybylo
Notary Public
Wayne County, Michigan
My commission expires _______
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MASCO INDUSTRIES, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
12% EXCHANGEABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $100 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of Masco
Industries, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY
that the following resolutions have been duly adopted by the Board of Directors
of the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Restated
Certificate of Incorporation of the Company, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the Preferred Stock of
the Company (the "Preferred Stock") which shall consist of 775,000 shares, and
this Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications, limita-
tions or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock) as
follows:
(i) Designation. The designation of this Series shall be 12%
Exchangeable Preferred Stock. The number of shares of this Series shall be
775,000. The liquidation value of shares of this Series shall be $100 per
share.
(ii) Dividends. (a) The dividend rate on shares of this Series shall be
$12.00 per share per annum. Dividends on shares of this Series shall be fully
cumulative and shall accrue, without interest, from the date of issuance of such
shares, and shall be payable, when and as declared by the Board of Directors out
of funds legally available therefor, in arrears on April 1, 1991 and quarterly
in arrears thereafter on July 1, October 1, January 1 and April 1 of each year.
Holders of shares of this Series shall be entitled to receive such dividends in
preference to and in priority over dividends upon the Common Shares (hereinafter
defined) and all Junior Shares (hereinafter defined), but subject to the rights
of holders of Preference Shares (hereinafter defined) having a preference and a
priority over the payment of dividends on the
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<PAGE>
shares of this Series. Shares of this Series shall be on a parity as to
dividends with all Parity Shares (hereinafter defined). The holders of shares
of this Series shall not be entitled to any dividends other than the dividends
provided in this Clause (ii).
(b) If at any time the Company has failed to pay accrued dividends
on any shares of this Series or any Parity Shares at the time outstanding at the
times such dividends are payable, the Company shall not
(1) declare or pay any dividend on the Common Shares or on any
Junior Shares or make any payment on account of, or set apart money for a
sinking or other analogous fund for, the purchase, redemption or other
retirement of, any Common Shares or any Junior Shares or make any
distribution in respect thereof, either directly or indirectly and whether
in cash or property or in obligations or shares of the Company (other than
in Common Shares or Junior Shares),
(2) purchase any shares of this Series or Parity Shares (except for
a consideration payable in Common Shares or Junior Shares) or redeem fewer
than all of the shares of this Series and all of the Parity Shares then
out-standing, or
(3) permit any corporation or other entity directly or indirectly
controlled by the Company to purchase any Common Shares, Junior Shares,
shares of this Series or Parity Shares,
unless, in the case of any such dividend, payment, setting apart, distribution,
purchase, redemption or other retirement, all dividends accrued and payable but
unpaid on shares of this Series and all Parity Shares have been or contemporane-
ously are declared and paid in full or declared and a sum sufficient for the
payment thereof set aside for such payment. Unless and until all dividends
accrued and payable but unpaid on shares of this Series and all Parity Shares at
the time outstanding have been paid in full, all dividends declared by the
Company upon shares of this Series or Parity Shares shall be declared pro rate
with respect to all shares of this Series and all Parity Shares then
outstanding, so that the amounts of any dividends declared on shares of this
Series and such Parity Shares shall in all cases bear to each other the same
ratio that, at the time of such declaration, all accrued and payable but unpaid
dividends on shares of this Series and such Parity Shares, respectively, bear to
each other.
(iii) Optional Redemptions for Cash. Subject to the restrictions in
Clause (ii) above, shares of this Series shall be redeemable at the option of
the Company in whole or from time to time in part, on any April 1, July 1,
October 1 or January 1, commencing April 1, 1991 in cash at $100 per share, plus
an amount equal to the dividends accrued and unpaid thereon to the redemption
date.
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<PAGE>
Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Clause (iii), a notice
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series to be redeemed at their respective addresses as the
same shall appear on the books of the Company, specifying the certificate
numbers of such shares, the effective date of the redemption and the place where
certificates for shares of this Series are to be surrendered for redemption and
stating that dividends on such shares of this Series will cease to accrue on and
after the redemption date, but neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
If notice of redemption has been given pursuant to this Clause (iii) and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for
cancellation, dividends shall cease to accrue on the shares of this Series to be
redeemed and the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Company by virtue thereof and shall have no voting or other rights with respect
to such shares, except the right to receive the moneys payable upon such redemp-
tion, without interest thereon, upon surrender (and endorsement, if required by
the Company) of their certificates, and the shares evidenced thereby shall no
longer be outstanding. Subject to applicable escheat laws, any moneys so set
aside by the Company and unclaimed at the end of one year from the redemption
date shall revert to the general funds of the Company after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Company for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Company from time to tome.
Any holder of record of the shares of this Series to be redeemed pursuant to
this Clause (iii) may waive its right to notice hereunder.
In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iii), the shares to be redeemed shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) in accordance with the Exchange
Agreement as amended from time to time (the "Exchange Agreement") dated as of
December 18, 1990 between the Company and Masco Corporation, a Delaware corpora-
tion ("Masco"), a copy of which Exchange Agreement
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<PAGE>
shall be kept on file with the Secretary of the Company, provided that only
whole shares shall be selected for redemption.
(iv) Optional Redemption through Debenture Exchange.
(a) Subject to the restrictions in subclauses (b) and (d) of this Clause
(iv), shares of this Series shall be redeemable at the option of the Company, in
whole or from time to time in part, on any April 1, July 1, October 1 or
April 1, commencing April 1, 1991 through the issuance, in redemption of and in
exchange for shares of this Series, of the Company's Junior Subordinated Deben-
tures Due 2006 (hereinafter referred to as the "Junior Debentures") in the
manner provided in this Clause (iv). The Junior Debentures shall be issued in
substantially the form of Exhibit B to the Exchange Agreement subject to any
changes that may be made to such Junior Debentures pursuant to the Exchange
Agreement to qualify an indenture with respect to such Junior Debentures. The
Junior Debentures shall be issued in series with the interest rate on such
series being a rate per annum that is the lower of 12% or 400 basis points over
the Treasury Rate (as hereinafter defined) for the week preceding the week in
which the notice of redemption and exchange is given to holders of shares of
this Series as provided in subclause (iv)(c) below. "Treasury Rate" means, the
rate for direct obligations of the United States ("Treasury Notes") having a 10-
year maturity, as published in the Federal Reserve Statistical Release H.15(519)
(or any successor publication provided by the Board of Governors of the Federal
Reserve Board) under the heading "Treasury Constant Maturities." In the event
that a rate for Treasury Notes having a 10-year maturity is not published or
reported for the prior week as provided above by 1:00 p.m., New York City time,
on the third business day preceding the day such notice of redemption and
exchange is given to such holders, then the Treasury Rate shall be calculated by
the Company and shall be a yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of approxi-
mately 1:30 P.M., New York City time, on the date of such notice of redemption
and exchange, of three leading primary United States government securities
dealers selected by the Company for the issue of Treasury Notes with a remaining
maturity of 10 years.
(b) The Junior Debentures will be issued solely in redemption of and in
exchange for shares of this Series at the rate of $100 principal amount of
Junior Debentures for each share of this Series redeemed and exchanged on the
applicable Exchange Date (as defined below). An amount equal to all accrued but
unpaid dividends on such shares to the dividend payment date which coincides
with the date of redemption and exchange shall be paid in cash on the date of
such redemption and exchange. No redemption and exchange shall be for an
aggregate principal amount of Junior Debentures less than $5 million, and no
Junior Debentures in amounts other than $1,000 (and integral multiples thereof)
shall be issued in any redemption
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<PAGE>
and exchange. Cash will be paid in lieu of any such fraction of a Junior
Debenture which would otherwise have been issued.
(c) Not less than 30 nor more than 60 days prior to the date fixed for
the issue of Junior Debentures in redemption of and in exchange for shares of
this Series pursuant to this Clause (iv), a notice shall be given by first class
mail, postage prepaid, to the holders of record of the shares of this Series to
be redeemed and exchanged at their respective addresses as the same shall appear
on the books of the Company, specifying the certificate numbers of such shares,
the effective date of the redemption and exchange (the "Exchange Date") and the
place where certificates for shares of this Series are to be surrendered for
Junior Debentures and stating that dividends on such shares of this Series will
cease to accrue on and after the Exchange Date, but neither failure to mail such
notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption and exchange with respect to the other holders. Any
notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the notice.
Any holder of record of the shares of this Series to be redeemed and exchanged
pursuant to this Clause (iv) may waive its right to notice hereunder.
If notice of redemption and exchange has been given pursuant to this
Clause (iv), then on or after the Exchange Date (unless the Company shall
default in issuing Junior Debentures in redemption of and in exchange for shares
of this Series to be redeemed and exchanged on such Exchange Date or shall fail
to pay or set aside accrued and unpaid dividends on such shares of this Series
and notwithstanding that any certificates for such shares of this Series have
not been surrendered for exchange), dividends shall cease to accrue on such
shares of this Series and the holders of such shares shall cease to be
stockholders with respect to such shares (provided, that the persons entitled to
receive Junior Debentures in exchange for such shares shall be treated for all
purposes as the registered holders of such Junior Debentures) and shall have no
interest in or claims against the Company by virtue thereof (except the right to
receive Junior Debentures) and shall have no voting or other rights with respect
to such shares and such shares of this Series shall no longer be outstanding.
Upon the surrender (and endorsement, if required by the Company) in accordance
with such notice of the certificates for such shares of this Series, such
certificates shall be redeemed and exchanged for Junior Debentures in accordance
with this Clause (iv).
(d) The Company may not redeem and exchange less than all shares of this
Series (1) if, at the time of such redemption and exchange, there are accrued
and unpaid dividends on any shares of this Series and (2) unless, immediately
after such redemption and exchange, at least 50,000 shares of this Series will
be outstanding. In every case of redemption of less than all of the outstand
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ing shares of this Series pursuant to this Clause (iv), the shares shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) in accordance with the
Exchange Agreement, provided that only whole shares shall be selected for
redemption.
(v) Liquidation.
(a) The liquidation price of shares of this Series, in case of the
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
shall be $100 per share, plus the amount per share of any dividends accrued
thereon and remaining unpaid at the date of such liquidation, dissolution or
winding-up.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the holders of shares of this Series shall be
entitled to receive the liquidation price of such shares held by them in prefer-
ence to and in priority over any distributions upon the Common Shares and all
Junior Shares, but subject to the rights of holders of Preference Shares having
a preference to and priority over the payment of distributions on the shares of
this Series. Upon payment in full of the liquidation price to which the holders
of shares of this Series are entitled, the holders of shares of this Series will
not be entitled to any further participation in any distribution of assets by
the Company. If the assets of the Company are not sufficient to pay in full the
liquidation price payable to the holders of shares of this Series and the
liquidation price payable to the holders of all Parity Shares, the holders of
all such shares shall share ratably in such distribution of assets in accordance
with the amounts which would be payable on such distribution if the amounts to
which the holders of shares of this Series and the holders of Parity Shares are
entitled were paid in full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash, securities or other property shall be considered a liquidation,
dissolution or winding-up of the Company within the meaning of this Clause (v).
(vi) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Clause (iii) or redeemed and exchanged pursuant to Clause
(iv) above and all shares of this Series which are otherwise reacquired by the
Company and subsequently cancelled by the Board of Directors of the Company
shall have the status of authorized but unissued Preferred Stock, without
designation as to series, subject to reissuance by the Board of Directors of the
Company as shares of this Series or shares of any one or more other series.
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(vii) Voting Rights. Except as otherwise provided in this Clause (vii)
or as otherwise provided by law or the Restated Certificate of Incorporation of
the Company, holders of shares of this Series have no voting rights.
If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preference Shares as to which dividends are in arrears and unpaid in
an aggregate amount equal to or exceeding the aggregate amount of dividends
payable for six quarterly dividend periods (but only if the holders of the
shares of such other series would otherwise have a right to elect Directors as a
result of a dividend arrearage), will have the exclusive right (superseding the
separate right of such other series to elect Directors so long as shares of this
Series remain outstanding, except as otherwise expressly provided in the
certificate of designation establishing such other series), voting separately as
a class with any such other series, to elect two Directors of the Company, such
Directors to be in addition to the number of Directors constituting the Board of
Directors of the Company immediately prior to the accrual of such right. Such
right of the holders of shares of this Series to elect two Directors shall, when
vested, continue until all dividends in default on the shares of this Series
shall have been paid in full and, when so paid, such right of the holders of
shares of this Series to elect two Directors separately as a class shall cease,
subject, always, to the same provisions for the vesting of such right of the
holders of the shares of this Series to elect two Directors in the case of
future dividend defaults. At any time when such right to elect such Directors
separately as a class shall have so vested, the Company may, and upon the
written request of the holders of record of not less than 20% of the total
number of shares of this Series and such other series of Preference Shares then
outstanding shall, call a special meeting of the holders of such shares to fill
such newly-created directorships for the election of Directors. In the case of
such a written request, such special meeting shall be held within 90 days after
the delivery of such request and, in either case, at the place and upon the
notice provided by law and in the Bylaws of the Company, provided that the
Company shall not be required to call such a special meeting if such request is
received less than 120 days before the date fixed for the next ensuing annual
meeting of stockholders of the Company, in which case such newly-created
directorships shall be filled by the holders of such shares of this Series and
such other series of Preference Shares at such meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (x) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (y)
the termination of the right of the
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holders of shares of this Series and such other series of Preference Shares to
vote for Directors pursuant to the preceding paragraph. If, prior to the end
of the term of any Director elected as aforesaid, a vacancy in the office of
such Director shall occur, such vacancy shall be filled for the unexpired term
by the appointment by the remaining Director elected as aforesaid of a new
Director for the unexpired term of such former Director. If both Directors so
elected by the holders of shares of this Series and such other series of Prefer-
ence Shares shall cease to serve as Directors before their terms shall expire,
the holders of the shares of this Series, together with the holders of such
other series of Preference Shares may, at a special meeting of the holders
called as provided above, elect successors to hold office for the unexpired
terms of such Directors whose places shall be vacant.
The voting rights provided in this Clause (vii) shall be in addition to
any other right to vote provided to the holders of shares of this Series by law
or the Restated Certificate of Incorporation of the Company.
(viii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(ix) Certain Definitions. As used in this Certificate, the following
terms shall have the following respective meanings:
"Common Shares" shall mean any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"Junior Shares" shall mean Preference Shares of any series or class of the
Company which are by their terms expressly made junior to shares of this Series
at the time outstanding as to dividends or as to the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company or as to both dividends and distributions.
"Parity Shares" shall mean Preference Shares which are by their terms on a
parity with the shares of this Series at the time outstanding both as to
dividends and as to the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
"Preference Shares" shall mean any class or series of shares of the
Company ranking prior to at lease one other class or series of shares of the
Company as to the payment of dividends or the
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distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding-up of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned Chairman of the Board of Directors and
attested to by its Assistant Secretary this 18th day of December, 1990.
/s/Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board
of Directors
ATTEST:
/s/James Tompkins
James Tompkins
Assistant Secretary
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<PAGE>
MASCO INDUSTRIES, INC.
CERTIFICATE OF THE POWERS DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
10% EXCHANGEABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $100 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of Masco
Industries, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY
that the following resolutions have been duly adopted by the Board of Directors
of the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Restated
Certificate of Incorporation of the Company, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the Preferred Stock of
the Company (the "Preferred Stock") which shall consist of 1,000,000 shares, and
this Board of Directors hereby fixes the powers, designations, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock) as
follows:
(i) Designation. The designation of this Series shall be 10% Exchange-
able Preferred Stock. The number of shares of this Series shall be 1,000,000.
The liquidation value of shares of this Series shall be $100 per share.
(ii) Dividends. (a) The dividend rate on shares of this Series shall be
$10.00 per share per annum. Dividends on shares of this Series shall be fully
cumulative and shall accrue, without interest, from the date of issuance of such
shares, and shall be payable, when and as declared by the Board of Directors out
of funds legally available therefor, in arrears on July 1, 1993 and quarterly in
arrears thereafter on October 1, January 1, April 1
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and July 1 of each year. The amount of dividends payable for the initial
dividend period or any period shorter than a full dividend period shall be
calculated on the basis of a 360-day year of twelve 30-day months. Holders of
shares of this Series shall be entitled to receive such dividends in preference
to and in priority over dividends upon the Common Shares (hereinafter defined)
and all Junior Shares (hereinafter defined), but subject to the rights of
holders of Preference Shares (hereinafter defined) having a preference and a
priority over the payment of dividends on the shares of this Series. Shares of
this Series shall be on a parity as to dividends with all Parity Shares
(hereinafter defined). The holders of shares of this Series shall not be
entitled to any dividends other than the dividends provided in this Clause
(ii).
(b) If at any time the Company has failed to pay accrued dividends on any
shares of this Series or any Parity Shares at the time outstanding at the times
such dividends are payable, the Company shall not
(1) declare or pay any dividend on the Common Shares or on any
Junior Shares or make any payment on account of, or set apart money for a
sinking or other analogous fund for, the purchase, redemption or other retire-
ment of, any Common Shares or any Junior Shares or make any distribution in
respect thereof, either directly or indirectly and whether in cash or property
or in obligations or shares of the Company (other than in Common Shares or
Junior Shares),
(2) purchase any shares of this Series or Parity Shares (except for
a consideration payable in Common Shares or Junior Shares) or redeem (or redeem
and exchange for subordinated Debentures as hereinafter provided) fewer than all
of the shares of this Series and all of the Parity Shares then outstanding, or
(3) permit any corporation or other entity directly or indirectly
controlled by the Company to purchase any Common Shares, Junior Shares, shares
of this Series or Parity Shares, unless, in the case of any such dividend,
payment, setting apart, distribution, purchase, redemption or other retirement,
all dividends accrued and payable but unpaid on shares of this Series and all
Parity Shares have been or contemporaneously are declared and paid in full or
declared and a sum sufficient for the payment thereof set aside for such
payment. Unless and until all dividends accrued and payable but unpaid on
shares of this Series and all Parity Shares at the time outstanding have been
paid in full, all dividends declared by the Company upon shares of this
Series or Parity Shares shall be declared pro rata with respect to all shares
of this Series and all Parity Shares then outstanding, so that the amounts of
any dividends declared on shares of this Series and such Parity Shares shall
in all cases bear to each other the same ratio that, at the time of such
declaration, all accrued and payable but
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unpaid dividends on shares of this Series and such Parity Shares, respec-
tively, bear to each other.
(iii) Optional Redemptions for Cash. Subject to the restrictions in
Clause (ii) above, shares of this Series shall be redeemable at the option of
the Company in whole or from time to time in part in cash at $100 per share,
plus an amount equal to the dividends accrued and unpaid thereon to the
redemption date.
Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Clause (iii), a notice
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series to be redeemed at their respective addresses as the
same shall appear on the books of the Company, specifying the certificate
numbers of such shares, the effective date of the redemption and the place where
certificates for shares of this Series are to be surrendered for redemption and
stating that dividends on such shares of this Series will cease to accrue on and
after the redemption date, but neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
If notice of redemption has been given pursuant to this Clause (iii) and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for
cancellation, dividends shall cease to accrue on the shares of this Series to be
redeemed and the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Company by virtue thereof and shall have no voting or other rights with respect
to such shares, except the right to receive the moneys payable upon such redemp-
tion, without interest thereon, upon surrender (and endorsement, if required by
the Company) of their certificates, and the shares evidenced thereby shall no
longer be outstanding. Subject to applicable escheat laws, any moneys so set
aside by the Company and unclaimed at the end of one year from the redemption
date shall revert to the general funds of the Company after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Company for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Company from time to time.
Any holder of record of the shares of this Series to be redeemed pursuant to
this Clause (iii) may waive its right to notice hereunder.
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In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iii), the shares to be redeemed shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) to the extent Masco
Corporation, a Delaware corporation ("Masco"), or any subsidiary thereof, holds
shares of this Series, the Company shall allow Masco to select, in its sole
discretion, the specific shares of this Series then owned by Masco to be
redeemed, provided that Masco informs the Company no later than the day prior to
the date of such redemption of the specific shares Masco has selected for
redemption.
(iv) Optional Redemption through Debenture Exchange.
(a) Subject to the restrictions in clause (ii) above and subclauses (b)
and (d) of this Clause (iv), shares of this Series shall be redeemable at the
option of the Company, in whole or from time to time in part through the
issuance, in redemption of and in exchange for shares of this Series, of the
Company's Subordinated Debentures due the earlier of ten years from the date of
issuance or March 31, 2008 (hereinafter referred to as the "Subordinated Deben-
tures"), in the manner provided in this Clause (iv). The Subordinated
Debentures shall be issued in substantially the form on file with the Secretary
of the Company and identified to this Series, subject to any changes that may be
made to such Subordinated Debentures in order to qualify an indenture with
respect to such Subordinated Debentures. The Subordinated Debentures shall be
issued in series with the interest rate on each series being a rate per annum
that is 400 basis points over the Treasury Rate (as hereinafter defined) for the
week preceding the week in which the notice of redemption and exchange is given
to holders of shares of this Series as provided in subclause (c) of this clause
(iv) below. "Treasury Rate" means, the rate for direct obligations of the
United States ("Treasury Notes") having a remaining maturity of 10 years, as
published in the Federal Reserve Statistical Release H.15 (519) (or any
successor publication provided by the Board of Governors of the Federal Reserve
System) under the heading "Treasury Constant Maturities." In the event that a
rate for Treasury Notes having a remaining maturity of 10 years is not published
or reported for the prior week as provided above by 1:00 P.M., New York City
time, on the third business day preceding the day such notice of redemption and
exchange is given to such holders, then the Treasury Rate shall be calculated by
the Company and shall be a yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of approxi-
mately 1:30 P.M., New York City time, on the date of such notice of redemption
and exchange, of three leading primary United States government securities
dealers selected by the Company for the purchase of Treasury Notes with a
remaining maturity of 10 years.
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(b) The Subordinated Debentures will be issued solely in redemption of
and in exchange for shares of this Series at the rate of $100 principal amount
of Subordinated Debentures for each share of this Series redeemed and exchanged
on the applicable Exchange Date (as defined below). An amount equal to all
accrued but unpaid dividends on such shares to the dividend payment date which
coincides with the date of redemption and exchange shall be paid in cash on the
date of such redemption and exchange. No redemption and exchange shall be for
an aggregate principal amount of Subordinated Debentures less than $5 million,
and no Subordinated Debentures in amounts other than $1,000 (and integral
multiples thereof) shall be issued in any redemption and exchange. Cash will be
paid in lieu of any such fraction of a Subordinated Debenture which would
otherwise have been issued.
(c) Not less than 30 nor more than 60 days prior to the date fixed for
the issue of Subordinated Debentures in redemption of and in exchange for shares
of this Series pursuant to this Clause (iv), a notice shall be given by first
class mail, postage prepaid, to the holders of record of the shares of this
Series to be redeemed and exchanged at their respective addresses as the same
shall appear on the books of the Company, specifying the certificate numbers of
such shares, the effective date of the redemption and exchange (the "Exchange
Date") and the place where certificates for shares of this Series are to be
surrendered for Subordinated Debentures and stating that dividends on such
shares of this Series will cease to accrue on and after the Exchange Date, but
neither failure to mail such notice, nor any defect therein or in the mailing
thereof, to any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings for redemption and exchange with respect to the
other holders. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given whether or not the holder
receives the notice. Any holder of record of the shares of this Series to be
redeemed and exchanged pursuant to this Clause (iv) may waive its right to
notice hereunder.
If notice of redemption and exchange has been give pursuant to this Clause
(iv), then on or after the Exchange Date (unless the Company shall default in
issuing Subordinated Debentures in redemption of and in exchange for shares of
this Series to be redeemed and exchanged on such Exchange Date or shall fail to
pay or set aside accrued and unpaid dividends on such shares of this Series and
notwithstanding that any certificates for such shares of this Series have not
been surrendered for exchange), dividends shall cease to accrue on such shares
of this Series and the holders of such shares shall cease to be stockholders
with respect to such shares (provided, that the persons entitled to receive
Subordinated Debentures in exchange for such shares shall be treated for all
purposes as the registered holders of such Subordinated Debentures) and shall
have no interest in or claims against the Company by virtue thereof (except the
right to receive Subordinated Debentures
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and accrued dividends through the Exchange Date) and shall have no voting or
other rights with respect to such shares and such shares of this Series shall
no longer be outstanding. Upon the surrender (and endorsement, if required by
the Company) in accordance with such notice of the certificates for such shares
of this Series, such certificates shall be redeemed and exchanged for
Subordinated Debentures in accordance with this Clause (iv).
(d) In every case of redemption of less than all of the outstanding
shares of this Series pursuant to this Clause (iv), the shares shall be selected
(a) by lot or by such other manner as may be prescribed by resolution of the
Board of Directors of the Company and (b) to the extent Masco, or any subsidiary
thereof, holds shares of this Series, the Company shall allow Masco to select,
in its sole discretion, the specific shares of this Series then owned by Masco
to be redeemed, provided that Masco informs the Company no later than the day
prior to the date of such redemption of the specific shares Masco has selected
for redemption.
(v) Liquidation.
(a) The liquidation price of shares of this Series, in case of the
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
shall be $100 per share, plus the amount per share of any dividends accrued
thereon and remaining unpaid at the date of such liquidation, dissolution or
winding-up.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the holders of shares of this Series shall be
entitled to receive the liquidation price of such shares held by them in prefer-
ence to and in priority over any distributions upon the Common Shares and all
Junior Shares, but subject to the rights of holders of Preference Shares having
a preference to and priority over the payment of distributions on the shares of
this Series. Upon payment in full of the liquidation price to which the holders
of shares of this Series are entitled, the holders of shares of this Series will
not be entitled to any further participation in any distribution of assets by
the Company. If the assets of the Company are not sufficient to pay in full the
liquidation price payable to the holders of shares of this Series and the
liquidation price payable to the holders of all Parity Shares, the holders of
all such shares shall share ratably in such distribution of assets in accordance
with the amounts which would be payable on such distribution if the amounts to
which the holders of shares of this Series and the holders of Parity Shares are
entitled were paid in full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash, securities or other property
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shall be considered a liquidation, dissolution or winding-up of the Company
within the meaning of this Clause (v).
(vi) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Clause (iii) above or redeemed and exchanged pursuant to
Clause (iv) above and all shares of this Series which are otherwise reacquired
by the Company and subsequently cancelled by the Board of Directors of the
Company shall have the status of authorized but unissued Preferred Stock,
without designation as to series, subject to reissuance by the Board of
Directors of the Company as shares of this Series or shares of any one or more
other series.
(viii) Voting Rights. Except as otherwise provided in this Clause (vii)
or as otherwise provided by law or the Restated Certificate of Incorporation of
the Company, holders of shares of this Series have not voting rights.
If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preference Shares then having a right to elect Directors as a result
of a dividend arrearage, will have the exclusive right (superseding the separate
right of such other series to elect Directors so long as shares of this Series
remain outstanding, except as otherwise expressly provided in the certificate of
designation establishing such other series), voting separately as a class with
any such other series, to elect two Directors of the Company, such Directors to
be in addition to the number of Directors constituting the Board of Directors of
the Company immediately prior to the accrual of such right. Such right of the
holders of shares of this Series to elect two Directors shall, when vested,
continue until all dividends in default on the shares of this Series shall have
been paid in full and, when so paid, such right of the holders of shares of this
Series to elect two Directors separately as a class shall cease, subject,
always, to the same provisions for the vesting of such right of the holders of
the shares of this Series to elect two Directors in the case of future dividend
defaults. At any time when such right to elect such Directors separately as a
class shall have so vested, the Company may, and upon the written request of the
holders of record of not less than 20% of the total number of shares of this
Series and such other series of Preference Shares then outstanding shall, call a
special meeting of the holders of such shares to fill such newly-created
directorships for the election of Directors. In the case of such a written
request, such special meeting shall be held within 90 days after the delivery of
such request and, in either case, at the place and upon the notice provided by
law and in the Bylaws of the Company, provided that the Company shall not be
required to call such a special meeting if such request is received less than
120 days before the date fixed
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for the next ensuing annual meeting of stockholders of the Company, in which
case such newly-created directorships shall be filled by the holders of such
shares of this Series and such other series of Preference Shares at such
meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (x) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (y)
the termination of the right of the holders of shares of this Series and such
other series of Preference Shares to vote for Directors pursuant to the
preceding paragraph. If, prior to the end of the term of any Director elected
as aforesaid, a vacancy in the office of such Director shall occur, such vacancy
shall be filled for the unexpired term by the appointment by the remaining
Director elected as aforesaid of a new Director for the unexpired term of such
former Director. If both Directors so elected by the holders of shares of this
Series and such other series of Preference Shares shall cease to serve as
Directors before their terms shall expire, the holders of the shares of this
Series, together with the holders of such other series of Preference Shares may,
at a special meeting of the holders called as provided above, elect successors
to hold office for the unexpired terms of such Directors whose places shall be
vacant.
The voting rights provided in this Clause (vii) shall be in addition to
any other right to vote provided to the holders of Shares of this Series by law
or the Restated Certificate of Incorporation of the Company.
(viii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(ix) Certain Definitions. As used in this Certificate, the following
terms shall have the following respective meanings:
"Common Shares" shall mean any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"Junior Shares" shall mean Preference Shares of any series or class of the
Company which are by their terms expressly made junior to shares of this Series
at the time outstanding as to dividends or as to the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company or as to both dividends and distributions.
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"Parity Shares" shall mean Preference Shares which are by their terms on a
parity with the shares of this Series at the time outstanding both as to
dividends and as to the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
"Preference Shares" shall mean any class or series of shares of the
Company ranking prior to at least one other class or series of shares of the
Company as to the payment of dividends or the distribution of assets on any
voluntary or involuntary liquidation, dissolution or winding-up of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned Chairman of the Board of Directors and
attested to by its Assistant Secretary this 23rd day of March, 1993.
/s/Lee M. Gardner
Lee M. Gardner
President
ATTEST:
/s/James Tompkins
James Tompkins
Assistant Secretary
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
Masco Industries, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Company a
resolution was duly adopted setting forth a proposed amendment to the Restated
Certificate of Incorporation of the Company. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that Article 1 of the text of the Restated Certificate of
Incorporation, be amended to read as follows:
"The name of the corporation is MascoTech, Inc."
SECOND: That thereafter, at the annual meeting of the stockholders of the
Company, duly called and held on May 18, 1993, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware at which
meeting the necessary number of shares as required by statute were voted in
favor of the amendment.
THIRD: The said amendment was duly adopted in accordance with the
applicable provisions of Sections 242 of the General Corporation law of the
State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be signed
by Lee Gardner, its President and attested to by Eugene A. Gargaro, Jr., its
Secretary, this 17th day of June, 1993.
MASCO INDUSTRIES, INC.
By/s/Lee Gardner
Lee Gardner - President
ATTEST:
By/s/Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr. - Secretary
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<PAGE>
MASCOTECH, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
$1.20 CONVERTIBLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $20.00 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of MascoTech,
Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that the
following resolutions were duly adopted by the Pricing Committee of the Board of
Directors of the Company (pursuant to the authority conferred upon it by the
Board of Directors) and by the Board of Directors (pursuant to the authority
granted and vested in it by the provisions of the Restated Certificate of
Incorporation of the Company), respectively.
A. On June 30, 1993, the Pricing Committee of the Board of Directors
adopted the following resolution:
RESOLVED, that pursuant to the authority conferred upon the Pricing
Committee of the Board of Directors of the Company, this Pricing Committee
hereby authorizes the issuance of a series (this "Series"), of the Preferred
Stock of the Company ( the "Preferred Stock") which shall consist of 11,500,000
shares, and this Pricing Committee hereby fixes the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications, limita-
tions, or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock and in
addition to the voting rights established by the resolutions of the Board of
Directors of the Company adopted June 26, 1993) as follows:
(1) Designation. The designation of this Series shall be $1.20 Convert-
ible Preferred Stock. The number of shares of this Series shall be 11,500,000.
The liquidation value of shares of this Series shall be $20.00 per share.
(2) Dividends. (a) The holders of shares of this Series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Company out of funds legally available therefor, cumulative preferential
dividends from the issue date of such shares, at the rate per share of $1.20 per
annum, and no more, payable quarterly for each share of this Series, payable in
arrears on the first day of each January, April, July and October, respectively
(each such date being hereinafter referred to as a "Dividend Payment Date") or,
if any Dividend Payment
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Date is not a business day, then the Dividend Payment Date shall be the next
succeeding business day; provided, however, that with respect to any dividend
period during which a redemption occurs, the Company may, at its option,
declare accrued dividends to, and pay such dividends on, the redemption date,
in which case such dividends would be payable on the redemption date in cash to
the holders of the shares of this Series as of the record date for such
dividend payment and such accrued dividends would not be included in
the calculation of the related Call Price (as hereinafter defined). Each
dividend on the shares of this Series shall be payable to holders of record as
they appear on the stock books of the Company on such record dates, not less
than 10 nor more than 60 days preceding the payment dates thereof, as shall be
fixed by the Board of Directors. The first dividend payment shall be for the
period from the issue date of the shares of this Series to and including
September 30, 1993 and shall be payable on October 1, 1993. Dividends (or
amounts equal to accrued and unpaid dividends) payable on shares of this Series
for any period shorter than a quarterly dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months.
Dividends on the shares of this Series shall accrue (whether or not the
Company has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared) on a
daily basis from the previous Dividend Payment Date, except that the first
dividend shall accrue from the date of issuance of the shares of this Series.
Dividends accumulate to the extent they are not paid on the Dividend Payment
Date for the quarter for which they accrue. Accumulated unpaid dividends shall
not bear interest.
(b) Unless full cumulative dividends, if any, accrued on the shares of
this Series which are payable in cash have been paid or contemporaneously are
declared and paid and a sum set aside sufficient for such payment through the
most recent Dividend Payment Date, then, whether or not the Mandatory Conversion
Date (as hereinafter defined) has occurred:
(i) No full cash dividend shall be declared by the Board of Directors
or paid or set aside for payment by the Company or other distri-
bution declared or made on any shares of the Company ranking on a
parity with the shares of this Series as to dividends;
(ii) No dividend (other than a dividend or distribution paid in shares
of, or warrants, rights or options exercisable for or convertible
into shares of, Common Stock or in any other shares of the
Company ranking junior to the shares of this Series as to
dividends and upon liquidation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the
Common Stock or upon any other shares of the Company ranking
junior to the shares of this Series as to dividends; and
(iii) No Common Stock or any other shares of the Company ranking junior
to or on a parity with the shares of this Series as to dividends
or upon liquidation
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shall be redeemed, purchased or otherwise acquired for any con-
sideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such series
or class) by the Company, except by conversion into or exchange
for shares of the Company ranking junior to the shares of this
Series as to dividends and upon liquidation.
When dividends which are payable in cash have not been paid or set aside in full
with respect to the shares of this Series and any other shares of the Company
ranking on a parity with the shares of this Series as to dividends, all
dividends declared with respect to the shares of this Series and any other
shares of the Company ranking on a parity with the shares of this Series as to
dividends shall be declared pro rata so that the amount of dividends declared
per share on this Series and such other shares shall in all cases bear to each
other the same ratio that, at the time of declaration, accrued and payable but
unpaid dividends per share on the shares of this Series and such other shares
bear to each other. Holders of the shares of this Series shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein described.
(c) Subject to the foregoing provisions of this paragraph (2) and
paragraph (3)(d), the Board of Directors may declare and the Company may pay or
set aside for payment dividends and other distributions on any shares of the
Company ranking on a parity with or junior to the shares of this Series as to
dividends or upon liquidation, and may redeem, purchase or otherwise acquire any
shares of the Company ranking on a parity with or junior to the shares of this
Series as to dividends or upon liquidation, and the holders of the shares of
this Series shall not be entitled to share therein.
(d) Any dividend payment made on the shares of this Series shall
first be credited against the earliest accrued but unpaid dividend due with
respect to the shares of this Series.
(e) All dividends paid with respect to the shares of this Series
shall be paid pro rata to the holders entitled thereto.
(f) Holders of the shares of this Series shall be entitled to receive
dividends in preference to and in priority over any dividends upon any shares of
the Company ranking junior to the shares of this Series as to dividends, but
subject to the rights of holders of shares of the Company having a preference
and a priority over the payment of dividends on the shares of this Series.
(3) Redemptions and Conversions.
(a) Mandatory Conversion. On July 1, 1997 (the "Mandatory Conversion
Date"), each outstanding share of this Series shall convert automatically (the
"Mandatory Conversion") into shares of Common Stock at the Common Equivalent
Rate (as hereinafter defined) in effect on the Mandatory Conversion Date and the
right to receive an amount in cash equal to all accrued and unpaid dividends on
such share of this Series (other than dividends payable to a holder of
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record on a prior date) to the Mandatory Conversion Date, whether or not
declared, out of funds legally available for the payment of dividends, subject
to the right of the Company to redeem the shares of this Series on or after the
Initial Redemption Date (as hereinafter defined) and prior to the Mandatory
Conversion Date, as described below, and subject to the conversion of the
shares of this Series at the option of the holder at any time prior to the
Mandatory Conversion Date. The Common Equivalent Rate is initially one share
of Common Stock for each share of this Series and is subject to adjustment as
set forth below. Dividends on the shares of this Series shall cease to accrue
and such shares shall cease to be outstanding on the Mandatory Conversion Date.
The Company shall make such arrangements as it deems appropriate for the
issuance of certificates representing shares of Common Stock and for the
payment of cash in respect of such accrued and unpaid dividends, if any, or
cash in lieu of fractional shares, if any, in exchange for and contingent upon
surrender of certificates representing the shares of this Series, and the
Company may defer the payment of dividends on such shares of Common Stock and
the voting thereof until, and make such payment and voting contingent upon, the
surrender of such certificates representing the shares of this Series, provided
that the Company shall give the holders of the shares of this Series such
notice of any such actions as the Company deems appropriate and upon such
surrender such holders shall be entitled to receive such dividends declared and
paid on such shares of Common Stock subsequent to the Mandatory Conversion
Date. Amounts payable in cash in respect of the shares of this series or in
respect of such shares of Common Stock shall not bear interest.
(b) Redemption by the Company.
(i) Right to Redeem. Shares of this Series are not redeemable by the
Company prior to July 1, 1996 (the "Initial Redemption Date"). At any time and
from time to time on or after the Initial Redemption Date and prior to the
Mandatory Conversion Date, the Company shall have the right to redeem, in whole
or in part, the outstanding shares of this Series. Upon any such redemption,
the Company shall deliver to the holders of shares of this Series, in accordance
with the provisions of this Certificate, in exchange for each share so redeemed,
a number of shares of Common Stock equal to (A) the Call Price (as hereinafter
defined) in effect on the redemption date, divided by (B) the Current Market
Price (as hereinafter defined) of the Common Stock determined as of the date
which is one trading day prior to the public announcement of the redemption.
The Call Price of each share of this Series is the sum of (X) $20.30 on and
after the Initial Redemption Date through September 30, 1996, $20.225 on and
after October 1, 1996 through December 31, 1996, $20.15 on and after January 1,
1997 through March 31, 1997, $20.075 on and after April 1, 1997 through May 31,
1997 and $20.00 on and after June 1, 1997 until the Mandatory Conversion Date
and (Y) all accrued and unpaid dividends thereon to the redemption date (other
than dividends payable to a holder of record as of a prior date), subject to the
right of the Company pursuant to paragraph (2) to pay such accrued and unpaid
dividends in cash. The public announcement of any call for redemption shall be
made prior to the mailing of the notice of such call to holders of shares of
this Series as described below. If fewer than all the outstanding shares of this
Series are to be redeemed, shares to be redeemed shall be selected by the
Company from outstanding shares of this Series not previously redeemed by lot or
pro rata (as nearly as may be practicable) or by any other
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method determined by the Board of Directors of the Company in its sole
discretion to be equitable.
(ii) Current Market Price. As used in this subparagraph (b), the term
"Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (X) the average of the Closing Prices (as
hereinafter defined) of the Common Stock for the fifteen consecutive Trading
Dates (as hereinafter defined) ending on and including such date of
determination, and (Y) the Closing Price of the Common Stock for such date of
determination; provided, however, that, with respect to any redemption of shares
of this Series, if any event that results in an adjustment of the Common Equiva-
lent Rate occurs during the period beginning on the first day of such
fifteen-day period and ending on the applicable redemption date, the Current
Market Price as determined pursuant to the foregoing shall be appropriately
adjusted to reflect the occurrence of such event.
(iii) Notice of Redemption. The Company shall provide notice of any
redemption of the shares of this Series to holders of record of this Series to
be called for redemption not less than 15 nor more than 60 days prior to the
date fixed for such redemption. Such notice shall be provided by mailing notice
of such redemption first class postage prepaid, to each holder of record of
shares of this Series to be redeemed, at such holder's address as it appears on
the stock register of the Company; provided, however, that neither failure to
give such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of this Series to be redeemed.
Each such notice shall state, as appropriate, the following and may
contain such other information as the Company deems advisable:
(A) the redemption date;
(B) that all outstanding shares of this Series are to be redeemed or,
in the case of a call for redemption of fewer than all
outstanding shares of this Series, the number of such shares held
by such holder to be redeemed;
(C) the Call Price, the number of shares of Common Stock deliverable
upon redemption of each share of this Series to be redeemed and
the Current Market Price used to calculate such number of shares
of Common Stock;
(D) the place or places where certificates for such shares are to be
surrendered for redemption; and
(E) that dividends on the shares of this Series to be redeemed shall
cease to accrue on such redemption date (except as otherwise
provided herein).
(iv) Deposit of Shares and Funds. The Company's obligation to deliver
shares of Common Stock and provide funds upon redemption in
accordance with this paragraph (3) shall
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<PAGE>
be deemed fulfilled if, on or before a redemption date, the Company shall
irrevocably deposit, with a bank or trust company, or an affiliate of a bank or
trust company, having an office or agency in New York City and having a capital
and surplus of at least $50,000,000, or shall set aside or make other reasonable
provision for the issuance of such number of shares of Common Stock as are
required to be delivered by the Company pursuant to this paragraph (3) upon the
occurrence of the related redemption (and for the payment of cash
in lieu of the issuance of fractional share amounts and accrued and unpaid divi-
dends payable in cash on the shares to be redeemed as and to the extent provided
by this paragraph (3)). Any interest accrued on such funds shall be paid to the
Company from time to time. Any shares of Common Stock or funds so deposited and
unclaimed at the end of two years from such redemption date shall be repaid and
released to the Company, after which the holder or holders of such shares of
this Series so called for redemption shall look only to the Company for delivery
of such shares of Common Stock or funds.
(v) Surrender of Certificates; Status. Each holder of shares of this
Series to be redeemed shall surrender the certificates evidencing such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state) to the Company at the
place designated in the notice of such redemption and shall thereupon be
entitled to receive certificates evidencing shares of Common Stock and to
receive any funds payable pursuant to this paragraph (3) following such
surrender and following the date of such redemption. In case fewer than all the
shares represented by any such surrendered certificate are called for
redemption, a new certificate shall be issued at the expense of the Company
representing the unredeemed shares. If such notice of redemption shall have
been given, and if on the date fixed for redemption shares of Common Stock and
funds necessary for the redemption shall have been irrevocably either set aside
by the Company separate and apart from its other funds or assets in trust for
the account of the holders of the shares to be redeemed or converted (and so as
to be and continue to be available therefor) or deposited with a bank or a
trust company or an affiliate thereof as provided herein or the Company shall
have made other reasonable provision therefor, then, notwithstanding that the
certificates evidencing any shares of this Series so called for redemption or
subject to conversion shall not have been surrendered, the shares represented
thereby so called for redemption shall be deemed no longer outstanding,
dividends with respect to the shares so called for redemption shall cease to
accrue on the date fixed for redemption (except that holders of shares of this
Series at the close of business on a record date for any payment of dividends
shall be entitled to receive the dividend payable on such shares on the corre-
sponding Dividend Payment Date notwithstanding the redemption of such shares
following such record date and prior to such Dividend Payment Date) and all
rights with respect to the shares so called for redemption shall forthwith after
such date cease and terminate, except for the rights of the holders to receive
the shares of Common Stock and funds, if any, payable pursuant to this paragraph
(3) without interest upon surrender of their certificates therefor. Holders of
shares of this Series that are redeemed shall not be entitled to receive
dividends declared and paid on such shares of Common Stock, and such shares of
Common Stock shall not be entitled to vote, until such shares of Common Stock
are issued upon the surrender of the certificates representing such shares of
this Series and upon such surrender
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such holders shall be entitled to receive such dividends declared and paid on
such shares of Common Stock subsequent to such redemption date.
(c) Conversion at Option of Holder. Shares of this Series are
convertible, in whole or in part, at the option of the holders thereof, at any
time prior to the Mandatory Conversion Date, unless previously redeemed, into
shares of Common Stock at a rate of .806 of a share of Common Stock for each
share of this Series (the "Optional Conversion Rate") (equivalent to a
conversion price of $24.81 per share of Common Stock), subject to adjustment as
set forth below. The right to convert shares of this Series called for
redemption shall terminate at the close of business on the redemption date.
Conversion of shares of this Series may be effected by delivering certifi-
cates evidencing such shares, together with written notice of conversion and a
proper assignment of such certificates to the Company or in blank, to the office
or agency to be maintained by the Company for that purpose (and, if applicable,
payment of an amount equal to the dividend payable on such shares), and
otherwise in accordance with conversion procedures established by the Company.
Each conversion shall be deemed to have been effected immediately prior to the
close of business on the date on which the foregoing requirements shall have
been satisfied. The conversion shall be at the Optional Conversion Rate in
effect at such time and on such date.
Holders of shares of this Series at the close of business on a record date
for any payment of dividends shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such record date and prior to such Dividend
Payment Date. However, shares of this Series surrendered for conversion after
the close of business on a record date for any payment of dividends and before
the opening of business on the next succeeding Dividend Payment Date must be
accompanied by payment in cash of an amount equal to the dividend thereon which
is to be paid on such Dividend Payment Date (unless such shares are subject to
redemption on a redemption date in that period). Except as provided above, the
Company shall make no payment or allowance for unpaid dividends whether or not
in arrears, on converted shares of this Series or for dividends or distributions
on the shares of Common Stock issued upon such conversion.
(d) Common Equivalent Rate and Optional Conversion Rate Adjustments. The
Common Equivalent Rate and the Optional Conversion Rate shall be subject to
adjustment from time to time as provided below in this paragraph.
(i) If the Company shall:
(A) pay a dividend or make a distribution with respect to its
Common Stock in shares of such stock,
(B) subdivide or split its outstanding Common Stock into a
greater number of shares,
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(C) combine its outstanding shares of Common Stock into a
smaller number of shares, or
(D) issue by reclassification of its shares of Common Stock
any shares of common stock of the Company,
then, in any such event, the Common Equivalent Rate and the
Optional Conversion Rate in effect immediately prior to such event shall each be
adjusted so that the holder of any shares of this Series shall thereafter be
entitled to receive, upon Mandatory Conversion or upon conversion at the option
of the holder, the number of shares of Common Stock of the Company which such
holder would have owned or been entitled to receive immediately following any
event described above had such shares of this Series been converted immediately
prior to such event or any record date with respect thereto. Such adjustment
shall become effective at the opening of business on the business day next
following the record date for determination of stockholders entitled to receive
such dividend or distribution in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of a
subdivision, split, combination or reclassification. Such adjustment shall be
made successively.
(ii) If the Company shall, after the date hereof, issue rights or
warrants to all holders of its Common Stock entitling them (for a
period not exceeding forty-five days from the date of such issu-
ance) to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price of the Common
Stock, then in each case the Common Equivalent Rate and Optional
Conversion Rate shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate, in effect
immediately prior to the date of issuance of such rights or war-
rants, by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on the date of issuance of
such rights or warrants, immediately prior to such issuance, plus
the number of additional shares of Common Stock offered for sub-
scription or purchase pursuant to such rights or warrants, and of
which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or war-
rants, immediately prior to such issuance, plus the number of
additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered
for subscription or purchase pursuant to such rights or warrants
would purchase at such current market price (determined by multi-
plying such total number of shares by the exercise price of such
rights or warrants and dividing the product so obtained by such
current market price). Such adjustment shall become effective at
the opening of business on the business day next following the
record date for the determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of
Common Stock are not delivered
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after the expiration of such rights or warrants, the Common
Equivalent Rate shall be readjusted to the Common Equivalent Rate
which would then be in effect had the adjustments been made upon
the issuance of such rights or warrants been made upon the basis
of delivery of only the number of shares of Common Stock actually
delivered. Such adjustment shall be made successively.
(iii) If the Company shall pay a dividend or make a distribution to all
holders of its Common Stock of evidences of its indebtedness or
other assets (excluding any dividends or distributions referred
to in subparagraph (i) above or any cash dividends) or shall
issue to all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than those
referred to in subparagraph (ii) above), then in each such case,
the Common Equivalent Rate and the Optional Conversion Rate shall
each be adjusted by multiplying the Common Equivalent Rate and
the Optional Conversation Rate in effect on the record date men-
tioned below, by a fraction of which the numerator shall be the
current market price per share of the Common Stock on the record
date for the determination of stockholders entitled to receive
such dividend or distribution, and of which the denominator shall
be such current market price per share of Common Stock less the
fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described
in a resolution adopted with respect thereto) as of such record
date of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants applicable
to one share of Common Stock. Such adjustment shall become
effective on the opening of business on the business day next
following the record date for the determination of stockholders
entitled to receive such dividend or distribution. Such
adjustment shall be made successively.
(iv) Any shares of Common Stock issuable in payment of a dividend
shall be deemed to have been issued immediately prior to the
close of business on the record date for such dividend for
purposes of calculating the number of outstanding shares of
Common Stock under subparagraph (ii) above. For purposes of any
computation under subparagraphs (ii) and (iii) above, the current
market price per share of Common Stock at any date shall be
deemed to be the average of the daily Closing Prices for the
thirty consecutive Trading Dates preceding the date in question;
provided, however, if any event that results in an adjustment of
the Common Equivalent Rate occurs during such thirty-day period,
the current market price as determined pursuant to the foregoing
shall be appropriately adjusted to reflect the occurrence of such
event.
(v) The Company shall also be entitled to make upward adjustments in
the Common Equivalent Rate, the Optional Conversion Rate and the
Call Price,
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as it in its discretion shall determine to be advisable, in order
that any stock dividends, subdivisions of shares, distribution of
rights to purchase stock or securities, or distribution of secu-
rities convertible into or exchangeable for stock (or any
transaction which could be treated as any of the foregoing trans-
actions pursuant to Section 305 of the Internal Revenue Code of
1986, as amended) hereafter made by the Company to its
stockholders shall not be taxable.
(vi) In any case in which subparagraph (3)(d) shall require that an
adjustment as a result of any event become effective at the
opening of business on the business day next following a record
date and the date fixed for conversion pursuant to subparagraph
(3)(a) or redemption pursuant to subparagraph (3)(b) occurs after
such record date, but before the occurrence of such event, the
Company may in its sole discretion, elect to defer the following
until after the occurrence of such event: (A) issuing to the
holder of any converted or redeemed shares of this Series the
additional shares of Common Stock issuable upon such conversion
or redemption over the shares of Common Stock issuable before
giving effect to such adjustment and (B) paying to such holder
any amount in cash in lieu of a fractional share of Common Stock
pursuant to subparagraph (3)(g).
(vii) All adjustments to the Common Equivalent Rate and the Optional
Conversion Rate shall be calculated to the nearest 1/1000th of a
share of Common Stock (or if there is not a nearest 1/1000th of a
share to the next lower 1/1000th of a share). No adjustment in
the Common Equivalent Rate and the Optional Conversion Rate shall
be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(e) Adjustment for Consolidation or Merger. In case of any consolidation
or merger to which the Company is a party (other than a merger or consolidation
in which the Company is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation remains unchanged),
or in case of any sale or transfer to another corporation of the property of the
Company as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation (other than in connec-
tion with a merger or acquisition), proper provision shall be made so that each
share of this Series shall, after consummation of such transaction, be subject
to (i) conversion at the option of the holder into the kind and amount of
securities, cash or other property receivable upon consummation of such transac-
tion by a holder of the number of shares of Common Stock into which such share
of this Series might have been converted immediately prior to consummation of
such transaction, (ii) conversion on the Mandatory Conversion Date into the kind
and amount of securities, cash or other property receivable upon consummation of
such transaction by a
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holder of the number of shares of Common Stock into which such share of this
Series would have converted if the conversion on the Mandatory Conversion Date
had occurred immediately prior to the date of consummation of such transaction,
and (iii) redemption on any redemption date in exchange for the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock that would have
been issuable at the Call Price in effect on such redemption date upon a redemp-
tion of such share immediately prior to consummation of such transaction,
assuming that the public announcement of such redemption had been made on the
last possible date permitted by the terms of this Series and applicable law;
assuming in each case that such holder of Common Stock failed to exercise
rights of election, if any, as to the kind or amount of securities, cash or
other property receivable upon consummation of such transaction (provided that
if the kind or amount of securities, cash or other property receivable upon
consummation of such transaction is not the same for each non-electing share,
then the kind and amount of securities, cash or other property receivable upon
consummation of such transaction for each non-electing share shall be deemed
to be the kind and amount so receivable per share by a plurality of the non-
electing shares). The kind and amount of securities into which the shares
of this Series shall be convertible after consummation of such transaction
shall be subject to adjustment as described in the immediately preceding
paragraph following the date of consummation of such transaction. The Company
may not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
(f) Notice of Adjustments. Whenever the Common Equivalent Rate and
Optional Conversion Rate are adjusted as herein provided, the Company shall:
(i) forthwith compute the adjusted Common Equivalent Rate and
Optional Conversion Rate in accordance herewith and prepare a
certificate signed by an officer of the Company setting forth the
adjusted Common Equivalent Rate and the Optional Conversion Rate,
the method of calculation thereof in reasonable detail and the
facts requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and file such
certificate forthwith with the transfer agent for the shares of
this Series and the Common Stock; and
(ii) mail a notice to the holders of the outstanding shares of this
Series stating that the Common Equivalent Rate and the Optional
Conversion Rate have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting
forth the adjusted Common Equivalent Rate and Optional Conversion
Rate, such notice to be mailed at or prior to the time the
Company mails an interim statement to its stockholders covering
the fiscal quarter during which the facts requiring such
adjustment occurred, but in any event within 45 days of the end
of such fiscal quarter.
(g) Notices. In case, at any time while any of the shares of this
Series are outstanding,
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(i) the Company shall declare a dividend (or any other distribution)
on its Common Stock, excluding any cash dividends; or
(ii) the Company shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase
shares of its Common Stock or of any other subscription rights or
warrants; or
(iii) of any reclassification of Common Stock of the Company (other
than a subdivision or combination thereof) or of any
consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required
(except for a merger of the Company into one of its subsidiaries
solely for the purpose of changing the corporate domicile of the
Company to another state of the United States and in connection
with which there is no substantive change in the rights or privi-
leges of any securities of the Company other than changes
resulting from differences in the corporate statutes of the then
existing and the new state of domicile), or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of this Series, and shall cause to be
mailed to the holders of shares of this Series at their last addresses as they
shall appear on the stock register, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (B) the date on which any such reclassifi-
cation, consolidation, merger, sale, transfer, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property (including cash), if any,
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. The failure to give or receive the
notice required by this paragraph (g) or any defect therein shall not affect the
legality or validity of any such dividend, distribution, right or warrant or
other action.
(h) Effect of Conversions and Redemptions. The person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon any conversion or redemption shall be deemed to have
become on the date of any such conversion or redemption the holder or holders of
record of the shares represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the person or persons in whose name or names the
certificate or certificates for such shares are to be issued as the record
holder or holders thereof for all
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purposes at the opening of business on the next succeeding day on which such
stock transfer books are open.
(i) No Fractional Shares. No fractional shares or script representing
fractional shares of Common Stock shall be issued upon the redemption or conver-
sion of any shares of this Series. In lieu of any fractional share otherwise
issuable in respect of all the shares of this Series of any holder which are
redeemed or converted on any redemption date or upon Mandatory Conversion or any
optional conversion, such holder shall be entitled to receive an amount in cash
(computed to the nearest cent) equal to the same fraction of the (i) Current
Market Price in the case of redemption, or (ii) Closing Price of the Common
Stock determined (A) as of the fifth Trading Date immediately preceding the
Mandatory Conversion Date, in the case of Mandatory Conversion, (B) as of the
second Trading Date immediately preceding the effective date of conversion, in
the case of an optional conversion by a holder. If more than one share shall be
surrendered for conversion or redemption at one time by or for the same holder,
the number of full shares of Common Stock issuable upon conversion thereof shall
be computed on the basis of the aggregate number of shares of this Series so
surrendered or redeemed.
(j) Reissuance. Shares of this Series that have been issued and
reacquired in any manner, including shares purchased, exchanged, redeemed or
converted, shall not be reissued as part of this Series and shall (upon
compliance with any applicable provisions of the laws of the State of Delaware)
have the status of authorized and unissued shares of the Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock.
(k) Definitions. As used in this Certificate:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions
in the State of New York or the State of Michigan are
authorized or obligated by law or executive order to close
or are closed because of a banking moratorium or
otherwise;
(ii) the term "Closing Price" on any day shall mean the closing
sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in each case on
the New York Stock Exchange or, if the Common Stock is not
listed or admitted to trading on such Exchange, then on
the principal national securities exchange on which the
Common Stock is listed or admitted to trading (which shall
be the national securities exchange on which the greatest
number of shares of Common Stock has been traded during
the five consecutive Trading Dates ending on and including
the date of determination), or, if not quoted or listed or
admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and
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asked prices of the Common Stock on the over-the-counter
market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally ac-
cepted reporting service, or if not so available as deter-
mined in good faith by the Board of Directors, on the
basis of such relevant factors as it in good faith
considers appropriate;
(iii) the term "Trading Date" shall mean a date on which the New
York Stock Exchange (or any successor thereto) is open for
the transaction of business.
(l) Payment of Taxes. The Company shall pay any and all documentary,
stamp or similar issue or transfer taxes payable in respect of the issue or
deliver of shares of Common Stock on the redemption or conversion of shares of
this Series pursuant to this paragraph (3); provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
registration of transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the registered holder of shares of this
Series redeemed or converted or to be redeemed or converted, and no such issue
or delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax or has established, to the
satisfaction of the Company, that such tax has been paid.
(m) Reservation of Common Stock. The Company shall at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock and/or its issued Common Stock held in its
treasury, for the purpose of effecting any Mandatory Conversion of the shares of
this Series or any conversion of the shares of this Series at the option of the
holder, the full number of shares of Common Stock then deliverable upon any such
conversion of all outstanding shares of this Series.
(4) Liquidation Rights. (a) In the event of the liquidation,
dissolution, or winding up of the business of the Company, whether voluntary or
involuntary, the holders of shares of this Series then outstanding, after
payment or provision for payment of the debts and other liabilities of the
Company and the payment or provision for payment of any distribution on any
shares of the Company having a preference and a priority over the shares of this
Series on liquidation, and before any distribution to the holders of the Common
Stock or any other stock ranking junior to the shares of this Series with
respect to distribution upon liquidation, dissolution or winding up, shall be
entitled to be paid out of the assets of the Company available for distribution
to its stockholders, an amount per share of this Series in cash equal to the sum
of (i) the liquidation value set forth in paragraph (1) above plus (ii) all
accrued and unpaid dividends thereon to the date of liquidation, dissolution or
winding up, before any payment shall be made or any assets distributed to the
holders of any of shares of the Company ranking junior to the shares of this
Series upon liquidation. In the event the assets of the Company available for
distribution to the holders of the shares of this Series upon any dissolution,
liquidation or winding up of the Company shall be insufficient to pay in full
the liquidation payments payable to the holders of outstanding shares of this
Series and any shares of the Company ranking on a
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parity with the shares of this Series upon liquidation, then the holders of all
such shares shall share ratably in such distribution of assets in accordance
with the amount which would be payable on such distribution if the amounts to
which the holders of outstanding shares of this Series and the holders of
outstanding shares of such shares of the Company ranking on a parity with the
shares of this Series upon liquidation are entitled were paid in full. Except
as provided in this paragraph (4), holders of this Series shall not be entitled
to any distribution in the event of liquidation, dissolution or winding up of
the affairs of the Company.
(b) For the purposes of this paragraph (4), none of the following shall
be deemed to be a voluntary or involuntary liquidation, dissolution or winding
up of the Company:
(i) the voluntary sale, conveyance, lease, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property
or assets of the Company;
(ii) the consolidation or merger of the Company with or into
one or more other corporations, or other associations;
(iii) the consolidation or merger of one or more corporations or
other associations with or into the Company; or
(iv) the participation by the Company in a share exchange.
(5) Definition. As used in this Certificate, the term "Common Stock"
shall mean any stock of any class of the Company which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which is
not subject to redemption by the Company. However, shares of Common Stock
issuable upon conversion of shares of this Series shall include only shares of
the class designated as Common Stock as of the original date of issuance of
shares of this Series, or shares of the Company of any class or classes
resulting from any reclassification or reclassification thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from such reclassification bears to the
total number of shares of all classes resulting from all such reclassification.
(6) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
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B. On June 26, 1993, the Board of Directors adopted certain resolu-
tions with respect to the authority of the Pricing Committee of the Board of
Directors and fixing the voting rights of the $1.20 Convertible Preferred Stock
as follows:
RESOLVED, that pursuant to the authority granted and vested in the Board
of Directors, this Board of Directors empowers the Pricing Committee of the
Board of Directors to authorize the issuance of a series (this "Series"), of the
Preferred Stock of the Company (the "Preferred Stock"), which shall consist of
11,500,000 shares, and to fix the powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, other than voting rights,
of the shares of this Series.
RESOLVED, that this Board of Directors fixes the voting rights of the
shares of this Series as follows:
(1) Voting Rights. (a) The holders of shares of this Series shall have
the right with the holders of Common Stock to vote in the election of directors
and upon each other matter coming before any meeting of the stockholders on the
basis of 4/5 of a vote for each share held. The holders of shares of this Series
and the holders of Common Stock shall vote together as one class except as
otherwise set forth herein or as otherwise provided by law or by the Restated
Certificate of Incorporation of the Company.
(b) If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preferred Stock then having a right to elect Directors as a result
of a dividend arrearage, shall have the exclusive right (superseding the
separate right of such other series to elect Directors so long as shares of
this Series remain outstanding, except as otherwise expressly provided in the
certificate of designation establishing such other series), voting separately
as a class with any such other series, to elect two Directors of the Company,
such Directors to be in addition to the number of Directors constituting the
Board of Directors of the Company immediately prior to the accrual of such
right. Such right of the holders of shares of this Series to elect two
Directors shall, when vested, continue until all dividends in default on the
shares of this Series shall have been paid in full and, when so paid, such
right of the holders of shares of this Series to elect two Directors separately
as a class shall cease, subject, always, to the same provisions for the vesting
of such right of the holders of the shares of this Series to elect two
Directors in the case of future dividend defaults. At any time when such right
to elect such Directors separately as a class shall have so vested, the Company
may, and upon the written request of the holders of record of not less than 20
percent of the total number of shares of this Series and such other series of
Preferred Stock then outstanding shall, call a special meeting of the holders
of such shares for the election of Directors to fill such newly-created
directorships. In the case of such a written request, such special meeting
shall be held within 90 days after the delivery of such request and, in either
case, at the place and upon the notice provided by law and in the Bylaws of the
Company, provided that the Company shall not be required to call such a special
meeting if such request is received less than 120 days
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before the date fixed for the next ensuing annual meeting of stockholders of
the Company, in which case such newly-created directorships shall be filled by
the holders of such shares of this Series and such other series of Preferred
Stock at such meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (i) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (ii)
the termination of the right of the holders of shares of this Series and such
other series of Preferred Stock to vote for Directors pursuant to the preceding
paragraph. If, prior to the end of the term of any Director elected as
aforesaid, a vacancy in the office of such Director shall occur, such vacancy
shall be filled for the unexpired term by the appointment by the remaining
Director elected as aforesaid of a new Director for the unexpired term of such
former Director. If both Directors so elected by the holders of shares of this
Series and such other series of Preferred Stock shall cease to serve as
Directors before their terms shall expire, the holders of the shares of this
Series, together with the holders of such other series of Preferred Stock may,
at a special meeting of the holders called as provided above, elect successors
to hold office for the unexpired terms of such Directors whose places shall be
vacant.
(c) So long as any shares of this Series remain outstanding, the consent
of the holders of at least two-thirds thereof (voting separately as a class)
given in person or by proxy, at any annual meeting or special meeting called
for such purpose, shall be necessary to amend, alter or repeal any of the provi-
sions of the Restated Certificate of Incorporation of the Company which would
materially and adversely affect any right, preference, privilege or voting
power of the shares of this Series; provided, however, that any such amendment,
alteration or repeal, that would authorize, create or issue any additional
shares of Preferred Stock or any other shares of stock (whether or not already
authorized) ranking senior to, on a parity with or junior to the shares of this
Series as to dividends or on the distribution of assets upon liquidation,
dissolution or winding up of the affairs of the Company, shall be deemed not to
materially and adversely affect such right, preference, privilege or voting
power and shall not be subject to approval by the holders of shares of this
Series.
MASCOTECH, INC.
By:/s/ Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ James Tompkins
James Tompkins
Assistant Secretary
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CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE 12% EXCHANGEABLE PREFERRED STOCK
OF MASCOTECH, INC.
_____________________________________
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
_____________________________________
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of
the State of Delaware and authority granted in the Restated Certificate of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
resolution duly adopted on December 12, 1990, authorized the issuance of a
series of 775,000 shares of 12% Exchangeable Preferred Stock, par value $1.00
per share (this "Series"), and established the voting powers, designations,
preferences and relative, participating and other rights, and the
qualifications, limitations or restrictions thereof, and, on December 19, 1990,
filed a Certificate of Designations with respect to this Series in the office
of the Secretary of State of Delaware.
2. That no shares of such Series are outstanding and no shares
thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of the
Corporation, the following resolution was adopted:
"WHEREAS, by resolution of the Board
of Directors of the Corporation,
dated December 12, 1990, and by a
Certificate of Designations with
respect to the 12% Exchangeable Pre-
ferred Stock filed in the office of
the Secretary of State of Delaware
on December 19, 1990, this Corpora-
tion authorized the issuance of a
series of 775,000 shares of 12% Ex-
changeable Preferred Stock of the
Corporation (this "Series") and es-
tablished the voting pow
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<PAGE>
ers, designations, preferences and relative,
participating and other rights, and the
qualifications, limitations or restrictions
thereof; and
WHEREAS, as of the date hereof no
shares of this Series are outstand-
ing and no shares of this Series
will be issued; and
WHEREAS, it is desirable that all
reference to this Series be elimi-
nated from the Corporation's Restat-
ed Certificate of Incorporation, as
amended;
IT IS HEREBY RESOLVED, that the Ch-
airman of the Board, the President
or any Vice President and the Secre-
tary or any Assistant Secretary of
the Corporation are authorized and
directed in the name and on behalf
of the Corporation to execute and
file a Certificate with the Secre-
tary of State of the State of Dela-
ware setting forth a copy of this
resolution whereupon all reference
to such Series shall be eliminated
from the Corporation's Restated Cer-
tificate of Incorporation, as
amended."
4. That, accordingly, all reference to the 12% Exchangeable
Preferred Stock, par value $1.00 per share, of the Corporation is eliminated
from the Corporation's Restated Certificate of Incorporation, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by an Assistant Secretary, as of this
1st day of October, 1993.
MASCOTECH, INC.
[Corporate Seal] By:/s/Timothy Wadhams
Attest:
By:/s/Barry J. Silverman
Assistant Secretary
- 2 -
<PAGE>
<PAGE>
CERTIFICATE OF DECREASE OF THE NUMBER OF SHARES
OF $1.20 CONVERTIBLE PREFERRED STOCK OF MASCOTECH, INC.
DESIGNATED AS $1.20 CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The Restated Certificate of Incorporation, as amended to date, of
MascoTech, Inc., a Delaware corporation (the "Corporation"), authorizes
275,000,000 shares of capital stock, which consists of 250,000,000 shares of
Common Stock and 25,000,000 shares of Preferred Stock.
The Corporation, pursuant to authority conferred on the Board of Directors
of the Corporation by its Restated Certificate of Incorporation and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, certifies that the Board of Directors of the Corporation,
at a meeting thereof duly called and held on September 14, 1993, at which a
quorum was present and acting throughout, duly adopted the following resolution:
"RESOLVED: That pursuant to the authority
expressly granted and vested in the Board of Direc-
tors of the Corporation in accordance with the
provisions of its Restated Certificate of Incorpo-
ration, the number of shares of the series of the
$1.20 Convertible Preferred Stock of the Corpora-
tion designated as "$1.20 Convertible Preferred
Stock" is reduced from 11,500,000 shares to 10,800-
,000 shares and that the Chairman of the Board, the
President or any Vice President and the Secretary
or any Assistant Secretary of the Corporation are
authorized and directed in the name and on behalf
of the Corporation to execute and file a Certif-
icate of Decrease with the Secretary of State of
the State of Delaware and to take any other actions
deemed necessary or appropriate to effectuate this
resolution."
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Decrease to be signed by a Vice President
and attested by an Assistant Secretary this 1st day of October, 1993.
MASCOTECH, INC.
ATTEST:
By: /s/ Timothy Wadhams
/s/ Barry J. Silverman
Assistant Secretary
[Corporate Seal]
<PAGE>
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
OF
MASCOTECH BRAUN CO.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware, certifies that:
FIRST: That this corporation was incorporated on the 15th day of March,
1984, pursuant to the General Corporation Law of the State of Delaware (the
"GCL").
SECOND: That this company owns all of the outstanding shares of stock
MascoTech Braun Co., a corporation incorporated on the 8th day of January, 1947,
pursuant to the Business Corporation Law of the State of Michigan.
THIRD: That this corporation, by the following resolutions of its Board
of Directors, duly adopted at a meeting held on the 22nd day of November, 1993,
determined to and approve the did merger into itself of said MascoTech Braun Co.
RESOLVED, that the company is authorized to execute a Certificate
of Ownership and Merger, Certificate of Merger and Agreement of Merger in
substantially the form attached hereto as Attachment A (collectively the
"Merger Agreement"), pursuant to which MascoTech Braun Co., a Michigan
corporation and wholly-owned subsidiary of the company, will be merged
with and into the company, and that the transactions contemplated in the
Merger Agreement are approved in all respects;
FURTHER RESOLVED, that the merger shall become effective on
January 1, 1994;
FURTHER RESOLVED, that the officers of the company are authorized to take
any and all actions and to execute, deliver and file any and all instruments,
agreements, certificates, and other documents as such officer may deem necessary
or appropriate to effectuate the foregoing resolutions or to carry out the
purpose of intent thereof, the taking of any such action and the execution,
delivery or filing of any such instrument, agreement, certificate or documents,
as the case may be, conclusively to evidence the due authorization thereof by
the company.
FOURTH: This Certificate of Ownership and Merger shall be effective on
January 1, 1994.
<PAGE>
<PAGE>
FIFTH: Anything herein or elsewhere to the contrary notwithstanding, this
merger may be amended or terminated and abandoned by the Board of Directors of
MascoTech, Inc. at any time prior to the date of filing the merger with the
Secretary of State.
MASCOTECH, INC.
By /s/Timothy Wadhams
Timothy Wadhams
Vice President
ATTEST:
By /s/Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr.
Secretary
-2-
<PAGE>
<PAGE>
CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE 10% EXCHANGEABLE PREFERRED STOCK
OF MASCOTECH, INC.
______________________________________________
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
______________________________________________
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of
the State of Delaware and authority granted in the Restated
Certificate of Incorporation of the Corporation, the Board of
Directors of the resolution duly adopted on January 27, 1993,
authorized the issuance of a series of 1,000,000 shares of 10%
Exchangeable Preferred Stock, par value $1.00 per share (this
"Series"), and established the voting powers, designation,
preferences and relative, participating and other rights, and
the qualifications, limitations or restrictions thereof, and, on
March 26, 1993, filed a Certificate of Designations with
respect to this Series in the office of the Secretary of
State of Delaware.
2. That no shares of such Series are outstanding and no shares
thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of
Directors of the Corporation, the following resolution was adopt-
ed:
"WHEREAS, by resolution of the Board of
Directors of the Corporation, dated January
27, 1993, and by a Certificate of Designa-
tions with respect to the 10% Exchangeable
Preferred Stock filed in the office of the
Secretary of State of Delaware on March 26,
1993, this Corporation authorized the issu-
ance of a series of 1,000,000 shares of 10%
Exchangeable Preferred Stock of the Corpora-
tion (this "Series") and established the
voting powers, designations, preferences and
relative, participating and other rights,
and the qualifications, limitations or re-
strictions thereof; and
<PAGE>
<PAGE>
WHEREAS, as of the date hereof no shares of
this Series are outstanding and no shares of
this Series will be issued; and
WHEREAS, it is desirable that all reference
to this Series be eliminated from the Corpo-
ration's Restated Certificate of Incorpora-
tion, as amended;
IT IS HEREBY RESOLVED, that the Chairman of
the Board, the President or any Vice Presi-
dent and the Secretary or any Assistant
Secretary of the Corporation are authorized
and directed in the name and on behalf of
the Corporation to execute and file a Cer-
tificate with the Secretary of State of the
State of Delaware setting forth a copy of
this resolution whereupon all reference to
such Series shall be eliminated from the
Corporation's Restated Certificate of Incor-
poration, as amended."
4. That, accordingly, all reference to the 10% Exchangeable
Preferred Stock, par value $1.00 per share, of the Corporation is eliminated
from the Corporation's Restated Certificate of Incorporation, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by the Secretary, as of this 15th day of
December, 1993.
MASCOTECH, INC.
[Corporate Seal] By: /s/ Timothy Wadhams
Vice President
Attest:
By: /s/ Eugene A. Gargaro, Jr.
Secretary
- 2 -
<PAGE>
<PAGE>
Exhibit 4.a
[CONFORMED COPY]
MASCO INDUSTRIES, INC.
AND
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
TRUSTEE
___________________
INDENTURE
Dated as of November 1, 1986
____________________
<PAGE>
<PAGE>
TABLE OF CONTENTS*
________________
Page
Parties 1
Recitals 1
Authorization of Indenture 1
Compliance with Legal Requirements 1
ARTICLE ONE.
Definitions.
SECTION 1.01. Definitions 1
Authenticating Agent 2
Board of Directors 2
Common Stock 2
Company 2
Consolidated Net Earnings 2
Convertible Security or
Convertible Securities 3
Event of Default 3
Indenture 3
Officers' Certificate 3
Opinion of Counsel 4
Original Issue Date 4
Person 4
Principal Office of the Trustee 4
Responsible Officer 4
Security or Securities; Outstanding 4
Securityholder 5
Senior Indebtedness 5
Subsidiary 6
Trustee 7
Trust Indenture Act of 1939 7
_________________
*This table of contents shall not, for any purpose, be deemed to be part
of the Indenture.
<PAGE>
<PAGE>
TIE-SHEET*
of provisions of Trust Indenture Act of 1939 with Indenture dated as of November
1, 1986 between Masco Industries, Inc. and Morgan Guaranty Trust Company of New
York, Trustee:
Section of Act Section of Indenture
310(a)(1) and (2) 8.09
310(a)(3) and (4) Not applicable
310(b) 8.08 and 8.10 (a)(b)
and (d)
310(c) Not applicable
311(a) and (b) 8.13
311(c) Not applicable
312(a) 6.01 and 6.02(a)
312(b) and (c) 6.02(b) and (c)
313(a) 6.04(a)
313(b)(1) Not applicable
313(b)(2) 6.04(b)
313(c) 6.04(c)
313(d) 6.04(d)
314(a) 6.03
314(b) Not applicable
314(c)(1) and (2) 15.05
314(c)(3) Not applicable
314(d) Not applicable
314(e) 15.05
314(f) Not applicable
315(a)(c) and (d) 8.01
315(b) 7.08
315(e) 7.09
316(a)(1) 7.01 and 7.07
316(a)(2) Omitted
316(a) last sentence 9.04
316(b) 7.04
317(a) 7.02
317(b) 5.04(a)
318(a) 15.07
___________________
*This tie-sheet is not part of the Indenture as executed.
<PAGE>
<PAGE>
ii
ARTICLE TWO.
SECURITIES.
Page
SECTION 2.01. Forms Generally 7
SECTION 2.02. Form of Trustee's Certificate
of Authentication 7
SECTION 2.03. Amount Unlimited; Issuable in Series 8
SECTION 2.04. Authentication and Delivery 9
SECTION 2.05. Date and Denomination of Securities 11
SECTION 2.06. Execution of Securities 12
SECTION 2.07. Exchange and Registration of Transfer
of Securities 12
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Securities 13
SECTION 2.09. Temporary Securities 15
SECTION 2.10. Cancellation of Securities Paid, etc. 15
ARTICLE THREE.
CONVERSION OF SECURITIES.
SECTION 3.01. Conversion Privilege 16
SECTION 3.02. Manner of Exercise of Conversion Privilege 16
SECTION 3.03. Fractional Shares 17
SECTION 3.04. Conversion Price 18
SECTION 3.05. Adjustment of Conversion Price 18
SECTION 3.06. Merger, Consolidation, etc. 22
SECTION 3.07. Notices 22
SECTION 3.08. Taxes on Conversions 23
SECTION 3.09. Company to Provide Stock 24
SECTION 3.10. Disclaimer of Responsibility for Certain
Matters 24
SECTION 3.11. Return of Funds Deposited for Redemption of
Converted Securities 25
SECTION 3.12. Disposition of Converted Securities 25
ARTICLE FOUR.
SUBORDINATION OF SECURITIES.
SECTION 4.01. Agreement to Subordinate 25
SECTION 4.02. No Payment on Securities if Senior
Indebtedness in Default 26
SECTION 4.03. Priority of Senior Indebtedness 26
SECTION 4.04. Company to Give Notice of Certain Events;
Reliance by Trustee 28
<PAGE>
<PAGE>
iii
Page
SECTION 4.05. Subrogation of Securities 29
SECTION 4.06. Company Obligation to Pay Unconditional 29
SECTION 4.07. Authorization of Holders of Securities to
Trustee to Effect Subordination 30
SECTION 4.08. Notice to Trustee of Facts Prohibiting
Payments 30
SECTION 4.09. Trustee May Hold Senior Indebtedness 30
SECTION 4.10. All Indenture Provisions Subject to this
Article 30
ARTICLE FIVE.
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.01. Payment of Principal, Premium and Interest 31
SECTION 5.02. Offices for Notices and Payments, etc. 31
SECTION 5.03. Appointments to Fill Vacancies in Trustee's
Office 32
SECTION 5.04. Provision as to Paying Agent 32
SECTION 5.05. Certificate to Trustee 33
ARTICLE SIX.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
THE TRUSTEE.
SECTION 6.01. Securityholders' Lists 33
SECTION 6.02. Preservation and Disclosure of Lists 34
SECTION 6.03. Reports by Company 35
SECTION 6.04. Reports by Trustee 36
ARTICLE SEVEN.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT.
SECTION 7.01. Events of Default 38
SECTION 7.02. Payment of Securities on Default;
Suit Therefor 41
SECTION 7.03. Application of Moneys Collected by Trustee 43
SECTION 7.04. Proceedings by Securityholders 44
SECTION 7.05. Proceedings by Trustee 45
SECTION 7.06. Remedies Cumulative and Continuing 45
SECTION 7.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders 46
SECTION 7.08. Notice of Defaults 47
SECTION 7.09. Undertaking to Pay Costs 47
<PAGE>
<PAGE>
iv
ARTICLE EIGHT.
CONCERNING THE TRUSTEE.
Page
SECTION 8.01. Duties and Responsibilities of Trustee 48
SECTION 8.02. Reliance on Documents, Opinions, etc. 49
SECTION 8.03. No Responsibility for Recitals, etc. 50
SECTION 8.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents, Conversion Agents or
Registrar May Own Securities 51
SECTION 8.05. Moneys to Be Held in Trust 51
SECTION 8.06. Compensation and Expenses of Trustee 51
SECTION 8.07. Officers' Certificate as Evidence 52
SECTION 8.08. Conflicting Interest of Trustee 52
SECTION 8.09. Eligibility of Trustee 59
SECTION 8.10. Resignation or Removal of Trustee 59
SECTION 8.11. Acceptance by Successor Trustee 61
SECTION 8.12. Succession by Merger, etc. 62
SECTION 8.13. Limitation on Rights of Trustee as a Creditor 63
SECTION 8.14. Authenticating Agents 67
ARTICLE NINE.
CONCERNING THE SECURITYHOLDERS.
SECTION 9.01. Action by Securityholders 70
SECTION 9.02. Proof of Execution by Securityholders 70
SECTION 9.03. Who Are Deemed Absolute Owners 70
SECTION 9.04. Securities Owned by Company Deemed
Not Outstanding 71
SECTION 9.05 Revocation of Consents; Future Holders Bound 71
ARTICLE TEN.
SECURITYHOLDERS' MEETING.
SECTION 10.01. Purposes of Meetings 72
SECTION 10.02. Call of Meetings by Trustee 72
SECTION 10.03. Call of Meetings by Company or
Securityholders 73
SECTION 10.04. Qualifications for Voting 73
SECTION 10.05. Regulations 73
SECTION 10.06. Voting 74
<PAGE>
<PAGE>
v
ARTICLE ELEVEN.
SUPPLEMENTAL INDENTURE.
Page
SECTION 11.01. Supplemental Indentures without Consent of
Securityholders 75
SECTION 11.02. Supplemental Indentures with Consent of
Securityholders 77
SECTION 11.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures 78
SECTION 11.04. Notation on Securities 78
SECTION 11.05. Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee 79
SECTION 11.06. Effect on Senior Indebtedness 79
ARTICLE TWELVE.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 12.01. Consolidation, Merger or Sale of Assets
Permitted 79
SECTION 12.02. Successor Corporation to be Substituted
for Company 80
SECTION 12.03. Evidence to be Furnished Trustee 80
ARTICLE THIRTEEN.
SATISFACTION AND DISCHARGE OF INDENTURE.
SECTION 13.01. Discharge of Indenture 81
SECTION 13.02. Deposited Moneys to Be Held in Trust
by Trustee 82
SECTION 13.03. Paying Agent to Repay Moneys Held 83
SECTION 13.04. Return of Unclaimed Moneys 83
ARTICLE FOURTEEN.
IMMUNITY OF INCORPORATION, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 14.01. Indenture and Securities Solely Corporate
Obligations 83
ARTICLE FIFTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 15.01. Successor 84
SECTION 15.02. Official Acts by Successor Corporation 84
SECTION 15.03. Addresses for Notices, Inc. 84
<PAGE>
<PAGE>
vi
Page
SECTION 15.04. New York Contract 84
SECTION 15.05. Evidence of Compliance with Conditions
Precedent 85
SECTION 15.06 Legal Holidays 85
SECTION 15.07. Trust Indenture Act to Control 85
SECTION 15.08. Table of Contents, Headings, etc. 85
SECTION 15.09. Execution in Counterparts 86
SECTION 15.10. No Security Interest Created 86
ARTICLE SIXTEEN.
REDEMPTION OF SECURITIES - MANDATORY AND
OPTIONAL SINKING FUND.
SECTION 16.01. Applicability of Article 86
SECTION 16.02. Notice of Redemption; Selection of Securities 86
SECTION 16.03. Payment of Securities Called for Redemption 87
SECTION 16.04. Mandatory and Optional Sinking Fund 88
TESTIMONIUM 91
SIGNATURES 91
ACKNOWLEDGEMENTS 92
<PAGE>
<PAGE>
THIS INDENTURE, dated as of November 1, 1986, between MASCO INDUSTRIES,
INC., a Delaware corporation (hereinafter sometimes called the "Company"), and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, trustee (hereinafter sometimes called
the "Trustee").
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue from time to time of its convertible and non-convertible
subordinated debentures, notes or other evidence of indebtedness to be issued in
one or more series (the "Securities") up to such principal amount or amounts as
may from time to time be authorized in accordance with the terms of this
Indenture and, to provide the terms and conditions upon which the Securities are
to be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In consideration of the premises, and the purchase of the Securities by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Securities or of a series thereof, as follows:
ARTICLE ONE.
DEFINITIONS.
SECTION 1.01 Definitions. The terms defined in this Section 1.01 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective means specified in this Section 1.01. all others
terms used in this Indenture which are defined in the Trust Indenture Act of
1939, as amended, or which are by reference therein defined in the Securities
Act of 1933, as amended, shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture as originally executed. All accounting terms used herein and
not expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles and the term "generally
accepted accounting principles" means such accounting principles as are
generally accepted at the time of any computation. The words "herein", "hereof"
and "hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
<PAGE>
<PAGE>
2
Authenticating Agent:
The term "Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
8.14.
Board of Directors:
The term "Board of Directors" shall mean the Board of Directors of the
Company or any committee of such Board duly authorized to act for it hereunder.
Common Stock:
The term "Common Stock" shall mean the Common Stock of the Company, $1 par
value, at the date of this Indenture, as such Common Stock may be changed or
reclassified from time to time.
Company:
The term "Company" shall mean Masco Industries, Inc., a Delaware
corporation, and, subject to the provisions of Article Twelve, shall include its
successors and assigns.
Consolidated Net Earnings:
The term "Consolidated Net Earnings" shall mean the consolidate net
earnings (or loss) of the Company and its consolidated Subsidiaries determined
on a consolidated basis in accordance with generally accepted accounting
principles, after deduction of all charges, including, without limitation,
operating expenses, interest amortization of deferred charges, depreciation and
taxes (including income and other profits taxes).
Convertible Security or Convertible Securities:
The terms "Convertible Security" or "Convertible Securities" shall mean
any series of Securities designated convertible by the resolutions or
supplemental indentures referred to in Section 2.03.
Event of Default:
The term "Event of Default" shall mean any event specified in Section
7.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
Indenture:
The term "Indenture" shall mean this instrument as originally executed or,
if amended or supplemented as herein provided, as so amended or supplemented, or
both, and shall include the form and
<PAGE>
<PAGE>
3
terms of particular series of Securities established as contemplated hereunder;
provided, however, that if at any time more than one Person is acting as Trustee
under this instrument, "Indenture" shall mean with respect to any one or more
series of Securities for which such Person is Trustee, this instrument as
originally executed or as it may from time to time be supplemented or amended by
one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of particular series of
Securities for which such Person is Trustee established as contemplated by
Section 2.03, exclusive, however, of any provisions or terms which relate solely
to other series of Securities for which such Person is not Trustee, regardless
of when such terms or provisions were adopted, and exclusive any provisions or
terms adopted by means of one or more indentures supplemental hereto executed
and delivered after such Person had become such Trustee but to which such
Person, as such Trustee, was not a party.
Officers' Certificate:
The term "Officers' Certificate" shall mean a certificate signed by the
Chairman of the Board, the President or any Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary of an Assistant Secretary of
the Company and delivered to the Trustee. Each such certificate shall include
the statements provided for in Section 15.05 if and to the extent required by
the provisions of such Section.
Opinion of Counsel:
The term "Opinion of Counsel" shall mean an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company, or may be
other counsel acceptable to the Trustee. Each such opinion shall include the
statements provided for in Section 15.05 if an to the extent required by the
provisions of such Section.
Original Issue Date:
The term "Original Issue Date" or "original issue date" of any Security
(or any portion thereof) shall mean the earlier of (a) the date of such Security
or (b) the date of any Security (or portion thereof) for which such Security was
issued (directly or indirectly) on registration of transfer, exchange or
substitution.
Person:
The term "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
<PAGE>
<PAGE>
4
Principal Office of the Trustee:
The term "principal office of the Trustee", or other similar term, shall
mean the principal office of the Trustee at which at any particular time its
corporate trust business shall principally be administered, which office may be
in more than one location within the same city.
Responsible Officer:
The term "Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee authorized to administer its corporate trust
matters.
Security or Securities; Outstanding:
The terms "Security" or "Securities" shall have the meaning stated in the
first recital of this Indenture and more particularly means any security or
securities, as the case may be, authenticated and delivered under this
Indenture, whether reconvertible or non-convertible into shares of Common Stock;
provided, however, that if at any time there is more than one Person acting as
Trustee under this instrument, "Security" or "Securities" with respect to the
Indenture as to which such Person is Trustee shall have the meaning stated in
the first recital of this instrument and shall more particularly mean any
securities, as the case may be, authenticated and delivered under this
instrument, whether convertible or non-convertible into shares of Common Stock,
exclusive, however, of securities of any series as to which such Person is not
Trustee.
The term "outstanding" (except as otherwise provided in Section 8.08),
when used with reference to Securities, shall, subject to the provisions of
Section 9.04, mean, as of any particular time, all Securities authenticated and
delivered by the Trustee or the authenticating Agent under this Indenture,
except
(a) Securities theretofore cancelled by the Trustee or the Authenticating
Agent or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of
which moneys is in the necessary amount shall have been deposited in trust with
the Trustee or with any paying agent (other than the Company) or shall have been
set aside and segregated in trust by the Company (if the Company shall act as
its own paying agent); provided that, if such Securities, or portions thereof,
are to be redeemed prior to maturity thereof, notice of such redemption shall
have been given as in Article Sixteen provided or provisions satisfactory to the
Trustee shall have been made for giving such notice; and
<PAGE>
<PAGE>
5
(c) Securities paid or in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to the terms of
Section 2.08 unless proof satisfactory to the Company and the Trustee is
presented that any such Securities are held by bona fide holders in due course.
Securityholder:
The terms "Securityholder", "holder of Securities" or "Holder", or other
similar terms, shall mean any person in whose name at the time a particular
Security is registered on the register kept by the Company or the Trustee for
that purpose in accordance with the terms hereof.
Senior Indebtedness:
The term "Senior Indebtedness" shall mean (a) all indebtedness of the
Company for money borrowed (including without limitation obligations of the
Company in respect of overdrafts, foreign exchange contracts, letters of credit,
bankers' acceptance, or any loan or advance from a bank whether or not evidenced
by promissory notes or other instruments) or incurred in connection with the
acquisition of property, whether outstanding on the date of execution of this
Indenture or thereafter created, assumed or incurred, except such indebtedness
as is by its terms expressly stated to be not superior in right of payment to
the Securities or to rank pari passu with the Securities and (b) any deferrals,
renewals or extensions of any such Senior Indebtedness, or debentures, notes or
other evidences of indebtedness issued in exchange for such Senior Indebtedness.
The term "indebtedness of the Company for money borrowed" as used in the
foregoing sentence shall mean any obligation of the Company (and any guaranty,
endorsement or other contingent obligation of the Company in respect of, or to
purchase or otherwise acquire, any obligation of another) for borrowed money
evidenced by notes or other written obligations, and any indebtedness of the
Company evidenced by bonds, notes or debentures or other similar instruments.
The term "indebtedness of the Company incurred in connection with the
acquisition of property" as used in the first sentence of this definition shall
mean any purchase money obligation (whether or not secured by any lien or other
security interest) created or assumed as all or part of the consideration for
the acquisition of property whether by purchase, merger, consolidation or
otherwise (but not including any account payable or any other obligation created
or assumed by the Company in the ordinary course of business in connection with
the obtaining materials or services).
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Subsidiary:
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(excluding in the computation of such percentage stock of any class or classes
of such corporation which has or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Company, or by one or more Subsidiaries, or by the Company and
one or more Subsidiaries.
Trustee:
The term "Trustee" shall mean the Person identified as "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
Trust Indenture Act of 1939:
The term "Trust Indenture Act of 1939" shall mean the Trust Indenture of
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Sections 2.03 and 11.03.
ARTICLE TWO.
SECURITIES.
SECTION 2.01. Forms Generally. The Securities of each series shall be in
substantially the form as shall be established by or pursuant to a resolution of
the Board of Directors or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rules made pursuant thereto or with any rules of any securities exchange or
all as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
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The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 2.02 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Trustee
By
Authorized Officer
SECTION 2.03. Amount Unlimited; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities shall rank equally and pari passu and may be issued in one
or more series. There shall be established in or pursuant to a resolution of
the Board of Directors or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Section 2.07, 2.08, 2.09, 11.04 or 16.03);
(3) the date or dates on which the principal of an premium, if any, on
the Securities of the series is payable;
(4) the rate or rates at which the Securities of the series shall bear
interest, or the method by which such interest may be determined, the date or
dates from which such interest shall accrue, the interest payment dates on which
such interest shall be payable and the record dates for the determination of
holders to whom interest is payable;
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8
(5) the place or places where the principal of, and premium, if any, and
interest on Securities of the series shall be payable;
(6) the price or prices at which, the period or periods within which and
the terms and conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company, pursuant to any Sinking Fund or
otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Securityholder thereof and the price or prices at which and
the period or periods within which and the terms and conditions upon which
Securities of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(8) the right, if any, of the Company to discharge the Indenture as to
the Securities of the series pursuant to Section 13.01(c) or to limit the
Indenture as to the Securities of the series pursuant to the last sentence of
Section 13.01 (and if any sinking fund is applicable to such series, the
obligations of such sinking fund shall survive and be provided for upon the
discharge of the Indenture pursuant to Section 13.01(c) or the limitation of the
Indenture pursuant to the last sentence of Section 13.01);
(9) if other than denominations of $1,000 and any multiple thereof, the
denominations in which Securities of the series shall be issuable;
(10) any Events of Default with respect to the Securities of a particular
series, in addition to or in lieu of those set forth herein;
(11) any trustees, authenticating or paying agents, warrant agents,
transfer agents, conversion agents (if such Securities are Convertible
Securities) or registrar with respect to the Securities of such series;
(12) the applicable initial conversion price if such Securities are
Convertible Securities, the dates on or subsequent to which such Securities are
convertible and the date such Securities cease to be convertible; and
(13) any other terms of the series (which terms shall conform to the
requirements of the Trust Indenture Act of 1939 as then in effect, shall not
adversely affect the rights of the Securityholders of any other Securities then
outstanding and shall not be inconsistent with the provisions of this
Indenture).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be
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9
provided in or pursuant to such resolution of the Board of Directors or in any
such indenture supplemental hereto.
SECTION 2.04. Authentication and Delivery. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Securities to or upon the written order of the Company, signed by its Chairman
of the Board of Directors, President, any Vice President, its Treasurer or
Assistant Treasurer or its Secretary or an Assistant Secretary without any
further action by the Company hereunder. In authenticating such Securities, the
Trustee shall be entitled to receive, and (subject to Sections 8.01 and 8.02)
shall be fully protected in relying upon:
(1) a copy of any resolution or resolutions of the Board of Directors
relating thereto and, if applicable, an appropriate record of any action taken
pursuant to such resolution, in each case certified by the Secretary or an
Assistant Secretary of the Company;
(2) an executed supplemental indenture, if any;
(3) an Officers' Certificate prepared in accordance with Section 15.05
setting forth the form and terms of the Securities as required pursuant to
Sections 2.01 and 2.03, respectively; and
(4) an Opinion of Counsel prepared in accordance with Section 15.05 which
shall also state
(a) that the form of such Securities has been established by or
pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.01 in conformity
with the provisions of this Indenture;
(b) that the terms of such Securities have been established by or
pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.03 in conformity
with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute
valid and legally binding obligations of the Company;
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10
(d) that all laws and requirements in respect of the execution and
delivery by the Company of the Securities have been complied with
and that authentication and delivery of the Securities by the
Trustee will not violate the terms of this Indenture; and
(e) such other matters as the Trustee may reasonably request.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith by its board of directors or trustees, executive committee, or a trust
committee of directors or trustees and/or vice presidents shall determine that
such action would expose the Trustee to personal liability to existing holders.
SECTION 2.05. Date and Denomination of Securities. The Securities shall
be issuable as registered Securities without coupons and in such denominations
as shall be specified as contemplated by Section 2.03. In the absence of any
such specification with respect to the Securities of any series, the Securities
of such series shall be issuable in the denominations of $1,000 and any multiple
thereof. The Securities shall be numbered, lettered, or otherwise distinguished
in such manner or in accordance with such plans as the officers of the Company
executing the same may determine with the approval of the Trustee as evidenced
by the execution and authentication thereof.
Every Security shall be dated the date of its authentication, shall bear
interest from such date and shall be payable on such dates, in each case, as
contemplated by Section 2.03.
The person in whose name any Security of any series is registered at the
close of business on any record date (as hereinafter defined) with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date notwithstanding the cancellation of such Security
upon any transfer, exchange or conversion subsequent to the record date and
prior to such interest payment date; provided, however, that if and to the
extent the Company shall default in the payment of the interest due on such
interest payment date, such defaulted interest shall be paid to the persons in
whose names outstanding Securities are registered on a subsequent record date
established by notice given by mail by or on behalf of the Company to the
holders of Securities and the Trustee not less than 15 days preceding such
subsequent record date, such subsequent record date to be not less than ten days
preceding the date of payment of such defaulted interest. The term "record
date" as used in this Section with respect to any interest payment date shall
mean if such interest payment date is the first day of a calendar month, the
fifteenth day of the next preceding calendar month and shall mean, if such
interest payment date is the fifteenth
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11
day of a calendar month, the first day of such calendar month, whether or not
such record date is a business day.
SECTION 2.06. Execution of Securities. The Securities shall be signed in
the name and on behalf of the Company by the facsimile signature of its Chairman
of the Board or its President and imprinted with a facsimile of its corporate
seal, and attested by the facsimile signature of its Secretary or an Assistant
Secretary. Each such signature upon the Securities may be in the form of a
facsimile signature of any such officer and may be imprinted or otherwise
reproduced on the Securities and for that purpose the Company may adopt and use
the facsimile signature of any person who has been or is such officer, and in
case any such officer of the Company signing any of the Securities shall cease
to be such officer before the Securities so signed shall have been authenticated
and delivered by the Trustee, or disposed of by the Company, such securities
nevertheless may be authenticated and delivered or disposed of as though such
person had not ceased to be such officer of the Company. Only such Securities
as shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee or the Authenticating Agent, shall
be entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee or the Authenticating Agent upon any
Security executed by the Company shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the holder is entitled to the benefits of this Indenture.
SECTION 2.07. Exchange and Registration of Transfer of Securities.
Securities of any series may be exchanged for a like aggregate principal amount
of Securities of the same series of other authorized denominations. Securities
to be exchanged may be surrendered at the principal office of the Trustee or at
any office or agency to be maintained by the Company for such purpose as
provided in Section 5.02, and the Company or the Trustee shall execute and
register and the Trustee or the Authenticating Agent shall authenticate and
deliver in exchange therefor the Security or Securities which the Securityholder
making the exchange shall be entitled to receive. Upon due presentment for
registration of transfer of any Security of any series at the principal office
of the Trustee or at any office or agency of the Company maintained for such
purpose as provided in Section 5.02, the Company or the Trustee shall execute
and register and the Trustee or the Authenticating Agent shall authenticate and
deliver in the name of the transferee or transferees a new Security or
Securities of the same series for a like aggregate principal amount.
Registration or registration of transfer of any Security by the Trustee or by
any agent of the Company appointed pursuant to Section 5.02, and delivery of
such Security, shall be deemed to complete the registration or registration of
transfer of such Security.
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12
The Company or the Trustee shall keep, at the principal office of the
Trustee, a register for each series of Securities issued hereunder in which,
subject to such reasonable regulations as it may prescribe, the Company or the
Trustee shall register all Securities and shall register the transfer of all
Securities as in this Article Two provided. Such register shall be in written
form or in any other form capable of being converted into written form within a
reasonable time.
All Securities presented for registration of transfer or for exchange or
payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Securities, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
The Company or the Trustee shall not be required to exchange or register a
transfer of (a) any Security of a series for a period of 15 days next preceding
the date of selection of Securities of such series for redemption, or (b) any
Securities of any series selected, called or being called for redemption in
whole or in part, except, in the case of any Securities of any series to be
redeemed in part, the portion thereof not so to be redeemed.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities. In case
any temporary or definitive Security shall become mutilated or be destroyed,
lost or stolen, the Company in the case of a mutilated Security shall, and in
the case of a lost, stolen or destroyed Security may in its discretion, execute,
and upon its request the Trustee shall authenticate and deliver, a new Security
of the same series bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen. In every case the
applicant for a substituted Security shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company and the Trustee evidence to their satisfaction
of the destruction, loss or theft of such Security and of the ownership thereof.
The Trustee may authenticate any such substituted Security and deliver the
same upon the written request or authorization of any officer of the Company.
Upon the issuance of any substituted Security, the Company may require the
payment of a sum sufficient
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13
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith an in additional further sum
not exceeding two dollars for each Security so issued in substitution. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Security, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Security) if the applicant for such payment shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless and, in case of destruction, loss or theft, evidence satisfactory
to the Company and to the Trustee of the destruction, loss or theft of such
Security and of the ownership thereof.
Every substituted Security of any series issued pursuant to the provisions
of this Section 2.08 by virtue of the fact that any such Security is destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be found at
any time, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of the same series duly
issued hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.09. Temporary Securities. Pending the preparation of
definitive Securities of any series the Company may execute and the Trustee
shall authenticate and deliver temporary Securities (printed or lithographed).
Temporary Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company. Every such temporary Security shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Securities. Without unreasonable delay the Company will execute
and deliver to the Trustee or the Authenticating Agent definitive Securities and
thereupon any or all temporary Securities of such series may be surrendered in
exchange therefor, at the principal office of the Trustee or at any office or
agency maintained by the Company for such purpose as provided in Section 5.02,
and the Trustee or the Authenticating Agent shall authenticate and deliver in
exchange for such temporary Securities a like aggregate principal amount of such
definitive Securities. Such exchange shall be made by the Company
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14
at its own expense and without any charge therefor except that in case of any
such exchange involving a registration of transfer the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series authenticated
and delivered hereunder.
Section 2.10. Cancellation of Securities Paid, etc. All Securities
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be
surrendered to the Trustee and promptly cancelled by it, or, if surrendered to
the Trustee or any Authenticating Agent, shall be promptly cancelled by it, and
no Securities shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. All Securities cancelled by any
Authenticating Agent shall be delivered to the Trustee. The Trustee shall
destroy cancelled Securities and shall deliver a certificate of such destruction
to the Company. If the Company shall acquire any of the Securities, however,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation.
ARTICLE THREE.
Conversion of Securities.
SECTION 3.01. Conversion Privilege. Subject to and upon compliance with
the provisions of this Article Three, the holder of any Convertible Security
shall have the right, at his option, at any date on or subsequent to which such
Convertible Security is convertible up to the date on which such Convertible
Security ceases to be convertible (or if such Convertible Security is called for
redemption prior to such date such Convertible Security ceases to be convertible
then, in respect of such Convertible Security, to and including but not after
the close of business on the last business day preceding the date fixed for such
redemption, unless the Company shall default in the payment due upon redemption
thereof) as set forth in the resolutions or supplemental indenture relating to
such series of Convertible Securities referred to in Section 2.03 to convert the
principal amount of such Convertible Security into the whole number of fully
paid and non-assessable shares of Common Stock obtained by dividing the
principal amount of the Convertible Security to be converted by the Conversion
Price for such series.
SECTION 3.02. Manner of Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the holder of any Convertible Security to be
converted shall surrender such Convertible Security at the office or agency to
be maintained by
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15
the Company pursuant to Section 5.02 for the conversion of Convertible
Securities, and shall give written notice to the Company in the form provided on
the Security at such office or agency that the holder elects to convert such
Convertible Security and, if so required by the Company, accompanied by
instruments of transfer, in form satisfactory to the Company and to the Trustee,
duly executed by the Holder or his duly authorized attorney in writing.
Convertible Securities, of any series, surrendered for conversion during the
period from the close of business on any record date (as defined in Section
2.05) for the payment of interest on such series of Convertible Securities to
the opening of business on the interest payment date (as defined in Section
2.05) of such series for such interest shall (except in the case of Convertible
Securities which have been called for redemption on a redemption date within
such period) be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount equal to the interest payable on
such interest payment date on the principal amount of Convertible Securities
being surrendered for conversion. Said notice shall state the name or names
(with addresses) in which the certificate or certificates for shares of Common
Stock which shall be issuable on such conversion shall be issued. As promptly
as practicable after the surrender of such Convertible Security and the receipt
of such notice, as aforesaid, the Company shall, subject to the provisions of
Section 3.08, issue and deliver at such office or agency to such holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable on such conversion of Convertible Securities in
accordance with the provisions of this Article and cash, as provided in Section
3.03, in respect of any fraction of a share of Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date (herein called the "Date
of Conversion") on which such notice shall have been received by the Company and
such Convertible Security shall have been surrendered as aforesaid, and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on the Date of Conversion the holder or holders of record of the
shares represented thereby; provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
constitute the person or persons in whose name or names the certificate or
certificates for such shares are to be issued as the record holder or holders
thereof for all purposes at the opening of business on the next succeeding day
on which such stock transfer books are open but such conversion shall
nevertheless be at the conversion price in effect at the close of business on
the date when such Convertible Security shall have been so surrendered with the
conversion notice, and such Convertible Security shall cease to bear interest on
such date. Subject to the foregoing and to the last paragraph of Section 2.05,
no payment or adjustment shall be made upon conversion on account of any
interest accrued on any
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16
Convertible Security converted or for dividends or distributions on any shares
of Common Stock issued upon conversion of any Convertible Security.
SECTION 3.03. Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversions of Convertible Securities. If more than one
Convertible Security shall be surrendered for conversion at one time by the same
holder, the number of full shares which shall be issuable upon conversion shall
be computed on the basis of the aggregate principal amount of the Convertible
Securities so surrendered. Instead of any fractional interest in a share of
Common Stock which would otherwise be issuable upon conversion of any
Convertible Security or Convertible Securities, the Company shall pay a cash
adjustment in respect of such fractional interest to the nearest one-hundredth
of a share in an amount equal to the market value of such fractional interest on
the Date of Conversion. In such event, the market value of a share of Common
Stock shall be (i) if the Common Stock is listed or admitted to trading on a
national securities exchange, the closing price on the NYSE-Consolidated Tape
(or any successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not report
transactions in the Common Stock, the last reported sales price regular way on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading (which shall be the national securities exchange on which
the greatest number of shares of the Common Stock has been traded during the
preceding 30 consecutive trading days), or, if there is no transaction on any
such day in any such situation, the mean of the bid and asked prices on such day
or (ii), if the Common Stock is not listed or admitted to trading on any such
exchange, the last reported sale price, if reported, or, if no sale occurs on
such date or the last reported sale price is not available, the average of the
closing bid and asked prices as reported by the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or a similar source
selected from time to time by the Company for the purpose.
SECTION 3.04. Conversion Price. The Conversion Price for such series
of Convertible Securities shall be as specified in the resolution or
supplemental indenture or indentures pursuant to which such series is created
referred to in Section 2.03, subject to adjustment as provided in this Article
Three.
SECTION 3.05. Adjustment of Conversion Price. The Conversion Price for
each series shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the Convertible
Securities are outstanding, (i) pay a dividend or make a distribution with
respect to its Common Stock in shares of its capital stock (whether shares
of Common Stock or of capital stock of any other class), (ii) subdivide
its
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outstanding shares of Common Stock, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock
of the Company, the conversion privilege and the Conversion Price for each
series of Convertible Securities in effect immediately prior to such
action shall be adjusted so that the holder of any Convertible Security
thereafter surrendered for conversion shall be entitled to receive the
number of shares of capital stock of the Company which he would have owned
immediately following such action had such Convertible Security been
converted immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately after
the record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision,
combination or reclassification. If, as a result of an adjustment made
pursuant to this subsection (a), the holder of any Convertible Security
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board
of Directors (whose determination shall be conclusive and shall be
described in a resolution filed with the Trustee) shall determine the
allocation of the adjusted Conversion Price for each series of Convertible
Securities between or among shares of such classes of capital stock.
(b) In case the Company shall, while any of the Convertible
Securities are outstanding, issue rights or warrants to all holders of
its Common Stock entitling them (for a period expiring within forty-five
days after the record date mentioned below) to subscribe for or purchase
shares of Common Stock at a price per share less than the current market
price per share (as determined pursuant to subsection (d) below) on the
record date mentioned below, the Conversion Price for each series of
Convertible Securities of the Common Stock shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion Price
for such series in effect immediately prior to the date of issuance of
such rights or warrants by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase at
such current market price, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase. Such adjustment shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants.
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(c) In case the Company shall, while any of the Convertible
Securities are outstanding, distribute to all holders of its Common Stock
evidences of its indebtedness or assets (excluding any cash dividends) or
rights to subscribe or warrants (excluding those referred to in subsection
(b) above), then in each such case the Conversion Price for each series of
Convertible Securities of the Common Stock shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion Price
for such series in effect immediately prior to the date of such
distribution by a fraction of which the numerator shall be the current
market price per share (determined as provided in subsection (d) below) of
the Common Stock on he record date mentioned below less the then fair
market value (as determined by the Board of Directors of the Company,
whose determination shall be conclusive, and described in a resolution
filed with the Trustee) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights or warrants
applicable to one share of Common Stock, and the denominator shall be such
current market price per share of the Common Stock. Such adjustment shall
become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution.
(d) For the purpose of any computation under Subdivisions (b) and
(c) above, the current market price per share of Common Stock at any date
shall be deemed to be the average of the daily closing prices for the
thirty consecutive trading days commencing forty-five trading days before
the date in question. The closing price for each day shall be (i) if the
Common Stock is listed or admitted to trading on a national securities
exchange, the closing price on the NYSE-Consolidated Tape (or any
successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not
report transactions in the Common Stock, the last reported sales price
regular way on the principal national securities exchange on which the
Common Stock is listed or admitted to trading (which shall be the national
securities exchange on which the greatest number of shares of the Common
Stock has been traded during such 30 consecutive trading days), or, if
there is no transaction on any such day in any such situation, the mean of
the bid and asked prices on such day or (ii) if the Common Stock is not
listed or admitted to trading on any such exchange, the last reported sale
price, if reported, or, if no sale occurs on such date or the last
reported sale price is not available, the average of the closing bid and
asked prices as reported by the National Association of Securities Dealers
Automated Quotation System (NASDAQ) or a similar source selected from time
to time by the Company for the purpose.
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(e) In any case in which this Section 3.05 shall require that an
adjustment be made immediately following a record date, the Company may
elect to defer (but only until five business days following the filing by
the Company with the Trustee of the Officer's Certificate described in
subsection (g) below) issuing to the holder of any Convertible Security
converted after such record date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above
the shares of Common Stock and other capital stock of the Company issuable
upon such conversion only on the basis of the Conversion Price for the
series of Convertible Securities which such Convertible Security is a part
prior to such adjustment; and, in lieu of the shares the issuance of which
is so deferred, the Company shall issue or cause its transfer agents to
issue due bills or other appropriate evidence of the right to receive such
shares.
(f) No adjustment in the Conversion Price for any series of
Convertible Securities shall be required unless such adjustment would
require in increase or decrease of at least 1% in such price; provided,
however, that any adjustments which be reason of this subsection (f) are
not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 3.05 shall
be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(g) Whenever the Conversion Price for any series of Convertible
Securities is adjusted as herein provided, the Company shall promptly file
with the Trustee and each conversion agent an Officers' Certificate
setting forth the Conversion Price for such series after such adjustment
and setting forth a brief statement of the facts and calculation requiring
such adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment and cause a notice stating that such
adjustment has been effected and the adjusted Conversion Price to be
mailed to the holders of Convertible Securities of such series at their
last addresses as they shall appear on the Securities register.
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by this Section 3.05, as it considers to be
advisable in order to avoid or diminish any income tax to any holder of
its Common Stock resulting from any dividend distribution of stock or
issuance or rights or warrants to purchase or subscribe for stock or from
any event treated as such for income tax purposes or for any other
reasons.
(i) In the event that at any time as a result of an adjustment made
pursuant to subsection (a) above, the holder of any Convertible Security
thereafter surrendered
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20
for conversion shall become entitled to receive any shares of capital
stock of the Company other than shares of its Common Stock, thereafter the
Conversion Price for such series of such other shares so receivable upon
conversion of any convertible Securities shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subsections (a) through (h) above, and the provisions of Sections 3.01
through 3.04 and of Sections 3.06 through 3.10 with respect to the Common
Stock shall apply on like terms to any such other shares.
SECTION 3.06. Merger, Consolidation, etc. If either of the following
shall occur, namely: (a) any consolidation or merger to which the Company is a
party, other than a consolidation or a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in par value or from par value to no par value or
from no par value to par value, or as a result of a subdivision or combination)
in, outstanding shares of the Common Stock, or (b) any sale or conveyance to
another corporation of the assets of the Company as an entirety or substantially
as an entirety, then the Company, or such successor or purchasing corporation,
as the case may be, shall execute and deliver to the Trustee a supplemental
indenture providing that the holder of each Convertible Security then
outstanding shall have the right to convert such Convertible Security into the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon such reclassification, change, consolidation, merger, sale
or conveyance by a holder of the number of shares of Common Stock issuable upon
conversion of such Convertible Security immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article. The provisions of this Section 3.06 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
SECTION 3.07. Notices. In case, at any time while any of the Convertible
Securities are outstanding,
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock, excluding any cash dividends; or
(b) the Company shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase shares of
its Common Stock or of any other subscription rights or warrants; or
(c) of any reclassification of Common Stock of the Company (other
than a subdivision or combination thereof) or
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21
of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required (except for
a merger of the Company into one of its Subsidiaries solely for the
purpose of changing the corporate domicile of the Company to another state
of the United States and in connection with which there is no substantive
change in the rights or privileges of any securities of the Company other
than changes resulting from differences in the corporate statutes of the
then existing and the new state of domicile), or of the sale or transfer
of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Convertible Securities pursuant to Section
5.02, and shall cause to be mailed to the holders of Convertible Securities at
their last addresses as they shall appear on the Securities register, at least
10 days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating (i) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined, or (ii)
the date on which any such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property (including cash), if any, deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
The failure to give or receive the notice required by this Section 3.07 or any
defect therein shall not affect the legality or validity of any such dividend,
distribution, right or warrant or other action.
SECTION 3.08. Taxes on Conversions. The Company will pay any and all
documentary, stamp or similar taxes payable to the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
the issue or delivery of shares of Common Stock on conversion of Convertible
Securities pursuant hereto; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock in a name other than that of
the holder of the Convertible Securities to be converted and no such issue or
delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Company the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been paid.
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22
SECTION 3.09. Company to Provide Stock. The Company covenants that there
shall be reserved, free from pre-emptive rights, out of authorized but unissued
shares of Common Stock, sufficient shares to provide for the conversion of the
Convertible Securities from time to time as such Convertible Securities are
presented for conversion.
If any shares of Common Stock to be reserved for the purpose of conversion
of Convertible Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be.
Before any action which would cause an adjustment reducing the Conversion
Price for any series of Convertible Securities below the then par value, if any,
of the Common Stock, the Company covenants that there will be taken all
corporate action which may, in the opinion of its counsel, be necessary in order
that there may be validly and legally issued fully paid and non-assessable
shares of such Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Convertible Securities will upon issue be validly issued,
fully paid and non-assessable and free from all liens and charges with respect
to the issue or delivery thereof.
SECTION 3.10. Disclaimer of Responsibility for Certain Matters. Neither
the Trustee nor any conversion agent shall at any time be under any duty or
responsibility to any holder of Convertible Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price for any
series of Convertible Securities, or with respect to the Officer's Certificate
referred to in Section 3.05(g), or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any conversion agent shall be accountable with respect
to the registration, validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Convertible Security; and neither the
Trustee nor any conversion agent makes any representation with respect thereto.
Neither the Trustee nor any conversion agent shall be responsible for any
failure of the Company to issue or deliver any shares of Common Stock or stock
certificates or other securities, cash or property upon the surrender of any
Convertible Security for the purpose of conversion, or, subject to Section 8.01,
to comply with any of the covenants of the Company contained in this Article
Three.
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23
SECTION 3.11. Return of Funds Deposited for Redemption of Converted
Securities. Any funds which at any time shall have been deposited by the
Company or on its behalf with the Trustee or any other paying agent for the
purpose of paying the principal of, premium, if any, and interest on any of the
Convertible Securities and which shall not be required for such purposes because
of the conversion of such Convertible Securities, as provided in this Article
Three, shall forthwith after such conversion be repaid to the Company by the
Trustee or such other paying agent.
SECTION 3.12. Disposition of Converted Securities. All Convertible
Securities delivered to the Company or any conversion agent upon conversion
pursuant to this Article Three shall be delivered to the Trustee for
cancellation.
ARTICLE FOUR.
Subordination of Securities.
SECTION 4.01. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Securities issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Securities issued hereunder shall be
issued subject to the provisions of this Article; and each person holding any
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The provisions of this
Article are made for the benefit of the holders of Senior Indebtedness, and such
holders shall, at any time, be entitled to enforce such provisions against the
Company or any Securityholders.
All Securities issued hereafter shall, to the extent and in the manner
hereinafter in this Article set forth, be subordinate and junior in the right of
payment to the prior payment in full of all Senior Indebtedness.
SECTION 4.02. No Payment on Securities if Senior Indebtedness in
Default. No payment on account of principal, premium, if any, sinking funds or
interest on the Securities shall be made unless full payment of amounts then due
for principal, premium, if any, sinking funds and interest on all Senior
Indebtedness has been made or duly provided for. No payment (including the
making of any deposit in trust with the Trustee in accordance with Section
13.01) on account of principal, premium, if any, sinking funds or interest on
the Securities shall be made if, at the time of such payment or immediately
after giving effect thereto, (i) there shall exist a default in the payment of
principal, premium, if any, sinking funds or interest with respect to any Senior
Indebtedness, or (ii) there shall have occurred an event of default (other than
a default in the payment of principal, premium, if any, sinking funds or
interest) with respect to any Senior Indebtedness, as defined therein or in the
instrument under which the same is outstanding, permitting the holders thereof
to accelerate the maturity thereof,
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24
and such event of default shall not have been cured or waived or shall not have
ceased to exist. The foregoing provision shall not prevent the Trustee from
making payments on the Securities from monies or securities deposited with the
Trustee pursuant to the terms of Section 13.01 if at the time such deposit was
made or immediately after giving effect thereto the conditions in (i) or (ii) of
this Section did not exist.
SECTION 4.03. Priority of Senior Indebtedness. In the event of any
insolvency or bankruptcy proceedings, and any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or state law, or other similar proceedings in connection therewith,
relative to the Company or to its creditors, as such, or to its property, and in
the event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company or assignment for the benefit of creditors or any
other marshalling of assets of the Company, whether or not involving insolvency
or bankruptcy, then the holders of Senior Indebtedness shall be entitled to
receive payment in full of all principal of and premium, if any, and interest on
all Senior Indebtedness including interest on such Senior Indebtedness after the
date of filing of a petition or other action commencing such proceeding before
the holders of the Securities are entitled to receive any payment on account of
the principal of or premium, if any, or interest on the Securities (except that
holders of Securities shall be entitled to receive such payments from monies or
securities deposited with the Trustee pursuant to the terms of Section 13.01 if
at the time such deposit was made or immediately after giving effect thereto the
conditions in (i) or (ii) of Section 4.02 did not exist), and any payment or
distribution of any kind or character which may be payable or deliverable in any
such proceedings in respect of the Securities, except securities which are
subordinate and junior in right of payment to the payment of all Senior
Indebtedness then outstanding, shall be paid by the person making such payment
or distribution directly to the holders of Senior Indebtedness to the extent
necessary to make payment in full of all Senior Indebtedness, after giving
effect to any concurrent payment or distribution to the holders of Senior
Indebtedness. In the event that any payment or distribution of cash, property
or securities shall be received by the Trustee or the holders of the Securities
in contravention of this Section before all Senior Indebtedness is paid in full,
or provision made for the payment thereof, such payment or distribution shall be
held in trust for the benefit of and shall be paid over to the holders of such
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture under which any instrument evidencing
any of such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay in full all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
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25
In the event that any Security is declared due and payable before its
expressed maturity because of the occurrence of an Event of Default (under
circumstances when the provisions of the first paragraph of this Section shall
not be applicable), the holders of the Senior Indebtedness outstanding at the
time the Securities of such series so become due and payable because of such
occurrence of such an Event of Default shall be entitled to receive payment in
full of all principal of and premium, if any, interest on all Senior
Indebtedness before the holders of the Securities of such series are entitled to
receive any payment on account of the principal of or premium, if any, or
interest on the Securities of such series except that holders of Securities of
such series shall be entitled to receive payments from monies or securities
deposited with the Trustee pursuant to the terms of Section 13.01, if at the
time of such deposit no Security of such series had been declared due and
payable before its expressed maturity because of the occurrence of an Event of
Default.
Nothing in this Section shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.06.
SECTION 4.04. Company to Give Notice of Certain Events; Reliance by
Trustee. The Company shall give prompt written notice to the Trustee of any
insolvency or bankruptcy proceedings, any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or state law, or similar proceedings and any proceedings for voluntary
liquidation, dissolution or winding up of the Company within the meaning of this
Article. The Trustee shall be entitled to assume that no such event has
occurred unless the Company or any one or more holders of Senior Indebtedness or
any trustee therefor has given such notice together with proof satisfactory to
the Trustee of such holding of Senior Indebtedness or the authority of such
Trustee. Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, in the absence of its negligence or bad faith and
any holder of a Security shall be entitled to rely upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the holders
of Securities, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article. In the event that the Trustee determines, in good
faith, that further evidence is required with respect to the right of any person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such person, as to the extent to which such person
is entitled to participate in such payment or distribution and as to
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26
other facts pertinent to the rights of such person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such covenants and obligations as are specifically
set forth in this Indenture and no implied covenants or obligations with respect
to holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.
Nothing in this Section shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.06.
SECTION 4.05. Subrogation of Securities. Subject to the payment in full
of all Senior Indebtedness, the holders of the Securities shall be subrogate to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company made on the Senior Indebtedness until the
principal of and premium, if any, and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no payments or distributions
to the holders of Senior Indebtedness of any cash, property or securities to
which the holders of the Securities or the Trustee would be entitled except for
the provisions of this Article, an no payment over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by holders of the Securities
or by the Trustee, shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holders of Securities, be deemed to be a
payment by the Company to or on account of Senior Indebtedness, and no payments
or distributions to the Trustee or the holders of the Securities of cash,
property or securities payable or distributable to the holders of the Senior
Indebtedness to which the Trustee or the holders of the Securities shall become
entitled pursuant to the provisions of this Section, shall, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
holders of the Securities, be deemed to be a payment by the Company to the
holders of or on account of the Securities.
SECTION 4.06. Company Obligation to Pay Unconditional. The provisions of
this Article are solely for the purpose of defining the relative rights of the
holders of Senior Indebtedness on the one hand, and the holders of the
Securities on the other hand, and nothing herein shall impair, as between the
Company and the holders of the Securities, the obligation of the Company, which
is unconditional and absolute, to pay to the holders thereof the principal
thereof and premium, if any, and interest thereon in accordance with the terms
of the Securities and this Indenture nor shall anything herein prevent the
holders of the Securities or the Trustee from exercising all remedies otherwise
permitted by applicable law or under the Securities and this Indenture upon
default under the Securities and this Indenture, subject to the
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27
rights of holders of Senior Indebtedness under the provisions of this Article to
receive cash, property or securities otherwise payable or deliverable to the
holders of the Securities.
SECTION 4.07. Authorization of Holders of Securities to Trustee to Effect
Subordination. Each holder of Securities by his acceptance thereof authorizes
the Trustee in his behalf to take such action as may be necessary to appropriate
to effectuate the subordination as provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 4.08. Notice to Trustee of Facts Prohibiting Payments.
Notwithstanding any of the provisions of this Article or any other provision of
this Indenture, the Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
moneys to or by the Trustee, unless and until the Principal Corporate Trust
Office of the Trustee shall have received written notice thereof from the
Company or from one or more holders of Senior Indebtedness or from any trustee
therefor, together with proof satisfactory to the Trustee of such holding of
Senior Indebtedness or the authority of such Trustee, and, prior to the receipt
of any such written notice, the Trustee, subject to the provisions of Section
8.01, shall be entitled in all respects to assume that no such facts exist;
provided, that, if prior to the second business day preceding the date upon
which by the terms hereof any such moneys may become payable for any purpose
(including, without limitation, the payment of the principal of or premium, if
an, or interest on any Security), the Trustee shall have not received with
respect to such moneys the notice provided for in this Section, then, anything
herein contained to the contrary notwithstanding, the Trustee and any paying
agent shall have full power and authority to receive such moneys and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such day,
and provided, further, that nothing contained herein shall prevent conversions
of the Securities in accordance with the provisions of this Indenture.
SECTION 4.09. Trustee May Hold Senior Indebtedness. The Trustee, shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness at the time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder.
SECTION 4.10. All Indenture Provisions Subject to this Article.
Notwithstanding anything herein contained to the contrary, all the provisions of
this Indenture shall be subject to the provisions of this Article, so far as the
same may be applicable thereto.
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ARTICLE FIVE.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 5.01. Payment of Principal, Premium and Interest. The Company
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of an premium, if any,
and interest on each of the Securities of that series at the place, at the
respective times and in the manner provided in such Securities. Each instalment
of interest on the Securities of any series may be paid by mailing checks for
such interest payable to the order of the holders of Securities entitled thereto
as they appear on the registry books of the Company.
SECTION 5.02. Offices for Notices and Payments, etc. So long as any of
the Securities remains outstanding, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Securities of
each series may be presented for payment, an office or agency where the
Securities of that series may be presented for registration of transfer and for
exchange as in this Indenture provided, an office or agency where the Securities
of that series, if convertible, may be presented for conversion and an office or
agency where notices and demands to or upon the Company in respect of the
Securities of that series or of this Indenture may be served. The Company will
give to the Trustee written notice of the location of any such office or agency
and of any change of location thereof. The Company hereby initially appoints
the corporate trust office of MORGAN GUARANTY TRUST COMPANY OF NEW YORK in the
Borough of Manhattan, The City of New York as the Company's conversion agent.
Until otherwise designated from time to time by the Company in a notice to the
Trustee, or specified as contemplated by Section 2.03, such office or agency for
all of the above purposes shall be the principal office of the Trustee. In case
the Company shall fail to maintain any such office or agency in the Borough of
Manhattan, The City of New York, or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the principal office of the Trustee.
In addition to such office or agency, the Company may from time to time
designate one or more offices or agencies outside the Borough of Manhattan, The
City of New York, where the Securities may be presented for registration of
transfer and for exchange in manner provided in this Indenture, and the Company
may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such designation rescission
shall in any manner relieve the Company of its obligation to maintain such
office or agency in the Borough of Manhattan, The City of New York, for the
purposes above mentioned. The Company will give to the Trustee prompt written
notice of any such designation or rescission thereof.
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29
SECTION 5.03. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 5.04. Provision as to Paying Agent. (a) If the Company shall
appoint a paying agent or conversion agent other than the Trustee with respect
to the Securities of any series, it will cause such paying agent or conversion
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 5.04:
(1) that it will hold all sums held by it as such agent for the payment
of the principal of and premium, if any, or interest on the Securities of such
series (whether such sums have been paid to it by the Company or by any other
obligor on the Securities of such series) in trust for the benefit of the
holders of the Securities of such series;
(2) that it will give the Trustee notice of any failure by the Company
(or by any other obligor on the Securities of such series) to make any payment
of the principal of and premium, if any, or interest on the Securities of such
series when the same shall be due and payable; and
(b) If the Company shall act as its own paying agent, it will, on or not
more than seven days before each due date of the principal of and premium, if
any, or interest on the Securities of any series, set aside, segregate and hold
in trust for the benefit of the holders of the Securities of such series a sum
sufficient to pay such principal, premium or interest so becoming due and will
notify the Trustee of any failure to take such action and of any failure by the
Company (or by any other obligor under the Securities of such series) to make
any payment of the principal of and premium, if any, or interest on the
Securities of such series when the same shall become due and payable.
(c) Anything in this Section 5.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining satisfaction and
discharge with respect to one or more or all series of Securities hereunder, or
for any other reason, pay or cause to be paid to the Trustee all sums held in
trust for any such series by the Trustee or any paying agent hereunder, as
required by this Section 5.04, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 5.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.04 is subject to
Sections 13.03 and 13.04.
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30
SECTION 5.05. Certificate to Trustee. The Company will deliver to the
Trustee on or before April 1 in each year (beginning with April 1, 1987), so
long as Securities of any series are outstanding hereunder, an Officers'
Certificate stating that in the course of the performance by the signers of
their duties as officers of the Company they would normally have knowledge of
any default by the Company in the performance of any covenants contained in
Article Three and Section 12.01, stating whether or not they have knowledge of
any such default and, if so, specifying each such default of which the signers
have knowledge and the nature thereof.
ARTICLE SIX.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE.
SECTION 6.01. Securityholders' Lists. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each record date for each
series of Securities, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Securityholders of such series of
Securities as of such record date; and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company, of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, except that no such lists need be furnished so long as the Trustee
is in possession thereof by reason of its acting as Securities registrar for
such series.
SECTION 6.02. Preservation and Disclosure of Lists. (a) The Trustee
shall preserve, in as current as form as is reasonably practicable, all
information as to the names and addresses of the holders of each series of
Securities (1) contained in the most recent list furnished to it as provided in
Section 6.01 or (2) received by it in the capacity of Securities registrar (if
so acting) hereunder. The Trustee may destroy any list furnished to it as
provided in Section 6.01 upon receipt of a new list so furnished.
(b) In case three or more holders of Securities of any series
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Security of such series for a period of at least six months preceding the date
of such application, and such
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31
application states that the applicants desire to communicate with other holders
of Securities of such series or with holders of all Securities with respect to
their rights under this Indenture or under such Securities and is accompanied
by a copy of the form of proxy or other communication which such applicants
propose to transmit, then the Trustee shall within five business days after the
receipt of such application, at its election, either:
(1) afford such applicants access to the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a) of this
Section 6.02, or
(2) inform such applicants as to the approximate number of holders of
such series or all Securities, as the case may be, whose names and addresses
appear in the information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 6.02, and as to the
approximate cost of mailing to such Securityholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Securityholder of such series or all Securities, as the case may
be, whose name and address appear in the information preserved at the time by
the Trustee in accordance with the provisions of subsection (a) of this Section
6.02 a copy of the form of proxy or other communication which is specified in
such request with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender, the
Trustee shall mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the holders of Securities of such series or
all Securities, as the case may be, or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If said
Commission, after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, said Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
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32
(c) Each and every holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Securities in accordance with the provisions of subsection (b) of this
Section 6.02, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
SECTION 6.03. Reports by Company. (a) The Company covenants and agrees
to file with the Trustee, within 15 days after the Company is required to file
the same with the Securities and Exchange Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as said Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
said Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and said Commission, in accordance with rules and regulations prescribed
from time to time by said Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Securities and Exchange Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all holders
of Securities, as the names and addresses of such holders appear upon the
Securities register, within 30 days after the filing thereof with the Trustee,
such summaries of any information, documents and reports required to be filed by
the Company pursuant to subsections (a) and (b) of this Section 6.03 as may be
required by rules and regulations prescribed from time to time by the Securities
and Exchange Commission.
SECTION 6.04. Reports by the Trustee. (a) On or before June 15, 1987,
and on or before June 15 in every year thereafter, so long as any Securities are
outstanding for which the Trustee is appointed hereunder, the Trustee shall
transmit to the
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33
Securityholders of each series of Securities for which such Trustee is appointed
as hereinafter in this Section 6.04 provided, a brief report dated as of April
15 of the appropriate year with respect to:
(1) its eligibility under Section 8.09, and its qualification under
Section 8.08, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under such Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities, on any property or funds hold or
collected by it as Trustee, except that the Trustee shall not be required
(but may elect) to state such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of the
Securities for any series outstanding on the date of such report.
(3) the amount, interest rate, and maturity date of all other
indebtedness owing by the Company (or by any other obligator on the
Securities) to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except any indebtedness based upon a creditor
relationship arising in any manner described in paragraph (2), (3), (4) or
(6) of subsection (b) of Section 8.13;
(4) the property and funds, if any, physically in the possession of
the Trustee, as such, on the date of such report;
(5) any additional issue of Securities which the Trustee has not
previously reported; and
(6) any action taken by the Trustee in the performance of its duties
under this Indenture which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of a
default, notice of which has been or is to be withheld by it in accordance
with the provisions of Section 7.08.
(b) The Trustee shall transmit to the Securityholders for each series, as
hereinafter provided, a brief report with respect to the character and amount of
any advances (and if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as such), since the date of
the last report transmitted pursuant to the provisions of subsection (a) of this
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34
Section 6.04 (or, if no such report has yet been so transmitted, since the date
of execution of this Indenture), for the reimbursement of which it claims or may
claim a lien or charge prior to that of the Securities of such series on
property or funds held or collected by it as Trustee, and which it has not
previously reported pursuant to this subsection, except that the Trustee shall
not be required (but may elect) to report such advances if such advances
remaining unpaid at any time aggregate 10% or less of the principal amount of
Securities for such series outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section 6.04 shall be transmitted by mail to
all holders of Securities as the names and addresses of such holders appear upon
the Securities register.
(d) A copy of each such report shall, at the time of such transmission to
Securityholders, be filed by the Trustee with each stock exchange upon which the
Securities of any applicable series are listed and also with the Securities and
Exchange Commission. The Company will notify the Trustee when and as the
Securities of any series become listed on or delisted by any stock exchange.
ARTICLE SEVEN.
Remedies of the Trustee and Securityholders
on Event of Default.
SECTION 7.01. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one of the following
events and such other events as may be established with respect to the
Securities of that series as contemplated by Section 2.03 hereof:
(a) default in the payment of interest upon any Securities of that
series when it becomes due and payable, and continuance of such default
for a period of 30 days; or
(b) default in the payment of all or any part of the principal or
(or premium, if any, on) any Securities of that series as and when the
same shall become due and payable either at maturity, upon redemption
(including redemption for the sinking fund), by declaration or otherwise;
or
(c) default in the performance, or breach, of any covenant of the
Company in this Indenture (other than a covenant a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with and other than those set forth exclusively in terms of any
particular series of Securities established as contemplated in this
Indenture), and continuance of such default or breach for a period of 90
days after there has been given, by registered or
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35
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in principal amount of the
outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or
for any substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or shall make any general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due.
If an Event of Default described in clause (a) or (b) or established
pursuant to Section 2.03 occurs and is continuing, then, and in each and every
such case, unless the principal of all of the Securities of such series shall
have already become due and payable, either the Trustee or the holders of not
less than 25% in aggregate principal amount of the Securities of such series
then outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by Securityholders), may declare the entire principal of all
the Securities of such series and the interest accrued thereon to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (c),
(d) or (e) occurs and is continuing, then and in each and every such case,
unless the principal of all the Securities shall have already become due and
payable, either the Trustee of the holders of not less than 25% in aggregate
principal amount of all the Securities then outstanding hereunder (treated as
one class), by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal of all the Securities then
outstanding and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable.
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36
The foregoing provisions, however, are subject to the condition that if,
at any time after the principal of the Securities of any series (or of all the
Securities, as the case may be) shall have been so declared due and payable, and
before any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all the Securities of any series (or all the Securities, as the
case may be) and the principal of and premium, if any, on any and all Securities
of such series (or of all the Securities, as the case may be) which shall have
become due otherwise than by acceleration (with interest upon such principal and
premium, if any, and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest at the same rate as
the rate of interest specified in the Securities of such series, or at the
respective rates of interest of the Securities, as the case may be, to the date
of such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, as provided in Section 8.06, and if
any and all Events of Default under this Indenture, other than the non-payment
of the principal of or premium, if any, on Securities which shall have become
due by acceleration, shall have been cured, waived or otherwise remedied as
provided herein--then and in every such case the holders of a majority in
aggregate principal amount of the Securities of such series (or of all the
Securities, as the case may be) then outstanding, by written notice to the
Company and to the Trustee, may waive all defaults with respect to that series
(or with respect to all Securities, as the case may be, in such case, treated as
a single class), and rescind and annul such declaration and its consequences,
but no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Trustee and the holders of the Securities shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the Trustee and the holders of the Securities shall
continue as though no such proceeding had been taken.
SECTION 7.02. Payment of Securities on Default; Suit Therefor. The
Company covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Securities of any series as and when the
same shall become due and payable, and such default shall have continued for a
period of 30 days, or (b) in case default shall be made in the payment of the
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37
principal of or premium, if any, on any of the Securities of any series as and
when the same shall have become due and payable, whether at maturity of the
Securities of that series or upon redemption or by declaration or otherwise--
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Securities of that series, the whole amount that
then shall have become due and payable on all such Securities of that series for
principal and premium, if any, or interest, or both, as the case may be, with
interest upon the overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law) upon the overdue
installments of interest at the rate of interest borne by the Securities of that
series; and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including a reasonable compensation
to the Trustee, its agents, attorneys and counsel, as provided in Section 8.06.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name as trustee of an express trust, shall be
entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on such
Securities and collect in the manner provided by law out of the property of the
Company or any other obligor on such Securities wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Securities of any
series under Title 11, United States Code, or any other applicable law, or in
case a receiver or trustee (or similar official) shall have been appointed for
the property of the Company or such other obligor, or in the case of any other
similar judicial proceedings relative to the Company or other obligor upon the
Securities of any series, or to the creditors or property of the Company or such
other obligor, the Trustee, irrespective of whether the principal of the
Securities of any series shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 7.02, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Securities of such series and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, as
provide in Section 8.06) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities of
any series, or to the creditors
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38
or property of the Company or such other obligor, unless prohibited by
applicable law and regulations, to vote on behalf of the holders of the
Securities of any series in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, as provided in Section 8.06.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof on any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable benefit of the holders of all
the Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities of the series affected thereby and it shall not be necessary
to make any such holders of the Securities parties to any such proceedings.
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Section 7.03 Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee shall be applied in the order following, at the date or
dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of any series in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection
applicable to each such series and reasonable compensation to the Trustee,
its agents, attorneys and counsel, as provided in Section 8.06;
SECOND: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and
be unpaid, to the payment of interest on the Securities of each such
series in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the respective rates
borne by the Securities of each such series, such payments to be made
ratably to the persons entitled thereto;
THIRD: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing
and unpaid upon the Securities of each such series for principal and
premium, if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been collected
by the Trustee) upon overdue installments of interest at the respective
rates specified in the Securities of each such series: and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Securities of each such series, then to the payment of
such principal and premium, if any, and interest without preference or
priority of principal and premium, if any, over interest, or of interest
over principal and premium, if any, or of any installment of interest over
any other installment of interest, or of any Security of each such series
over any other Security of each such series, ratably to the aggregate of
such principal and premium, if any, and accrued and unpaid interest.
Any surplus then remaining shall be paid to the Company or to such other
person as shall be entitled to receive it.
Section 7.04. Proceedings by Securityholders. No holder of any Security
of any series shall have any right by virtue of or by availing of any provision
of this Indenture to institute any suit,
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40
action or proceeding in equity or at law upon or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Securities of that series then outstanding, or, in the case of any Event of
Default described in clause (c), (d) or (e) of Section 7.01, 25% in aggregate
principal amount of all Securities then outstanding, shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonably
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action, suite or proceeding, it being understood and intended, and being
expressly covenanted by the taker and holder of every Security with every other
taker and holder and the Trustee, that no one or more holders of Securities of
any series shall have any right in any manner whatever by virtue of or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other holder of Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all holders of Securities of the applicable
series.
Notwithstanding any other provisions in this Indenture, however, the right
of any holder of any Security to receive payment of the principal of, premium,
if any, and interest on such Security, on or after the same shall have become
due and payable, or to institute suit for the enforcement of any such payment,
shall not be impaired or affected without the consent of such holder.
SECTION 7.05. Proceedings by Trustee. In case of an Event of Default
hereunder the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suite in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 7.06. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Seven to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any thereof or of any other powers and remedies available to the Trustee or the
holders of the
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41
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture, and no
delay or omission of the Trustee or of any holder of any of the Securities to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 7.04, every power and remedy given by this Article Seven
or by law to the trustee or to the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 7.07. Direction of Proceedings and Waiver of Defaults by Majority
of Securityholders. The holders of a majority in aggregate principal amount of
the Securities of any or all series at the time outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee; provided, however, that (subject to the provisions of Section 8.01)
the Trustee shall have the right to decline to follow any such direction if the
Trustee shall determine that the action so directed would be unjustly
prejudicial to the holders not taking part in such direction or if the Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith by its board of
directors or trustees, executive committee, or a trust committee of directors or
trustees and/or Responsible Officers shall determine that the action or
proceedings so directed would involve the Trustee in personal liability.
Subject to Sections 7.01 and 7.02, the holders of a majority in aggregate
principal amount of the Securities of that series at the time outstanding may on
behalf of the holders of all the Securities of such series waive any past
default or Event of Default including any default or Event of Default
established pursuant to Section 2.03 (or, in the case of an event specified in
clause (c), (d) or (e) of Section 7.01, the holders of a majority in aggregate
principal amount of all the Securities then outstanding (voting as one class))
may waive such default or Event of Default, and its consequences except a
default (a) in the payment of principal of, premium, if any, or interest on any
of the Securities or (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each Security
affected. Upon any such waiver the Company, the Trustee and the holders of the
Securities of that series (or of all Securities, as the case may be) shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon. Whenever any default or Event of
Default hereunder shall have been waived as permitted by this Section 7.07, said
default or Event of Default shall for all purposes of the Securities of that
series (or of all Securities, as the case may
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42
be) and this Indenture be deemed to have been cured and to be not continuing.
Section 7.08. Notice of Defaults. The Trustee shall, within 90 days
after the occurrence of a default with respect to any of the Securities of any
series mail to all Securityholders of that series, as the names and addresses of
such holders appear upon the Securities register, notice of all defaults with
respect to that series known to the Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the purpose
of this Section 7.08 being hereby defined to be the events specified in clauses
(a), (b), (c), (d) and (e) of Section 7.01, not including periods of grace, if
any, provided for therein, and irrespective of the giving of written notice
specified in clause (c) of Section 7.01); and provided that, except in the case
of default in the payment of the principal of, premium, if any, or interest on
any of the Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Securityholders of such series; and provided further, that in
the case of any default of the character specified in Section 7.01(c) no such
notice to Securityholders shall be given until at least 90 days after the
occurrence thereof but shall be given within 120 days after such occurrence.
Section 7.09. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 7.09 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders of any series, holding in the
aggregate more than 10% in principal amount of the Securities of that series (or
in the case of any suit relating to or arising under clause (c), (d) or (e) of
Section 7.01, 10% in aggregate principal amount of all Securities) outstanding,
or to any suit instituted by any Securityholder for the enforcement of the
payment of the principal of or premium, if any, or interest on any Security
against the Company on or after the same shall have become due and payable.
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ARTICLE EIGHT
Concerning the Trustee
Section 8.01. Duties and Responsibilities of Trustee. With respect to
any series of Securities issued hereunder, the Trustee, prior to the occurrence
of an Event of Default with respect to Securities of that series and after the
curing or waiving of all Events of Default which may have occurred with respect
to Securities of that series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture with respect to such
series. In case an Event of Default with respect to the Securities of a series
has occurred (which has not been cured or waived) the Trustee shall exercise
such of the rights and powers vested in it by this Indenture with respect to
such series, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
the Securities of a series and after the curing or waiving of all Events
of Default with respect to that series which may have occurred
(1) the duties and obligations of the Trustee with respect to
the Securities of a series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with
respect to such series as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the trust of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture; but, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the Trustee, unless
it shall be proved that the
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Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 7.07, relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it.
Section 8.02. Reliance on Documents, Opinions, etc. Except as otherwise
provided in Section 8.01
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors may
be evidenced to the Trustee by a copy thereof certified by the Secretary
or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be
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45
authorized or within the discretion or rights or powers conferred upon it
by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, debenture, coupon or
other paper or document, unless requested in writing to do so by the
holders of not less than a majority in principal amount of the Securities
of all series affected then outstanding; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed by it with due care.
SECTION 8.03. No Responsibility for Recitals, etc. The recitals
contained herein and in the Securities (except in the certificate of
authentication of the Trustee or the Authenticating Agent) shall be taken as the
statements of the Company, and the Trustee and the Authenticating Agent assume
no responsibility for the correctness of the same. The Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Securities. The Trustee and the Authenticating
Agent shall not be accountable for the use or application by the Company of any
Securities or the proceeds of any Securities authenticated an delivered by the
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
SECTION 8.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents, Conversion Agents or Registrar May Own Securities. The Trustee or any
Authenticating Agent or any paying agent or any transfer agent or any conversion
agent or any Securities registrar, in its individual or any other capacity, may
become the owner or pledgee of Securities with the same rights it would have if
it were not Trustee, Authenticating Agent, paying agent, transfer agent,
conversion agent or Securities registrar.
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SECTION 8.05. Moneys to Be Held in Trust. Subject to the provisions of
Section 13.04, all moneys received by the trustee or any paying agent shall,
until used or applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company. So long as no Event of Default shall have occurred and
be continuing, all interest allowed, if any, on any such moneys shall be paid
from time to time upon the written order of the Company, signed by the Chairman
of the Board of Directors, the President, any Vice President, the Treasurer or
any Assistant Treasurer of the Company.
SECTION 8.06. Compensation and Expenses of Trustee. The Company
covenants and agrees to pay to the trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ and any amounts paid by the
Trustee to any Authenticating Agent pursuant to Section 8.14) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
If any property other than cash shall at any time be subject to the lien of this
Indenture, the Trustee, if and to the extent authorized by a receivership or
bankruptcy court of competent jurisdiction or by the supplemental instrument
subjecting such property to such lien, shall be entitled to make advances for
the purpose of preserving such property or of discharging tax liens or other
prior liens or encumbrances thereon. The Company also covenants to indemnify
each of the Trustee, and any predecessor Trustee for, and to hold each of them
harmless against, any loss, liability or expense arising out of or in connection
with the acceptance or administration of this trust and the performance of its
duties hereunder including the costs and expenses of defending itself against
any claim of liability in the premises, except to the extent such loss,
liability or expense results from its own negligence or bad faith. The
obligations of the Company under this Section 8.06 to compensate the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a claim prior to that of the Securities upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Securities.
SECTION 8.07 Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.01 and 8.02, whenever in the
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47
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a mater be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
Certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 8.08. Conflicting Interest of Trustee. (a) If the Trustee has or
shall acquire any conflicting interest, as defined in this Section 8.08 with
respect to the Securities of any series, it shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign with respect to the Securities of that series in
the manner and with the effect specified in Section 8.10.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section 8.08 with respect to the Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit notice of such failure to all holders of Securities of
that series, as the names and addresses of such holders appear upon the
Securities register.
(c) For the purposes of this Section 8.08 the Trustee shall be deemed to
have a conflicting interest with respect to Securities of any series if
(1) the Trustee is trustee under this Indenture with respect to the
Securities of any other series or under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the Company or other
obligor on the Securities of such series (each of which is hereafter
in this Section called a "Security party") are outstanding, unless
such other indenture is a collateral trust indenture under which the
only collateral consists of Securities issued under this Indenture;
provided that there shall be excluded from the operation of this
paragraph this Indenture with respect to the Securities of any other
series and any other indenture or indentures under which other
securities, or certificates of interest or participation in other
securities, of a Security party (as defined in Section 8.13), are
outstanding if (i) this Indenture is and, if applicable, this
Indenture and such other indenture or indentures are wholly
unsecured and such other indenture or indentures are hereafter
qualified under the Trust Indenture Act of 1939, unless the
Securities and Exchange Commission shall have found
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48
and declared by order pursuant to subsection (b) of Section 305 or
subsection (c) of Section 307 of the Trust Indenture Act of 1939
that differences exist between the provisions of this Indenture with
respect to Securities of such series and one or more other series
or, if applicable, this Indenture and the provisions of such other
indenture or indentures which are so likely to involve a material
conflict of interest as to make it necessary in the public interest
or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture and such other indenture or
indentures, or (ii) the Company shall have sustained the burden of
proving, on application to the Securities and Exchange Commission
and after opportunity for hearing thereon, that trusteeship under
this Indenture with respect to Securities of such series and one or
more other series or, if applicable, this Indenture and such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest
or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture with respect to Securities of
such series and one or more other series or, if applicable, this
Indenture and one of such indentures;
(2) the Trustee or any of its directors or executive
officers is an obligor upon the Securities of any series issued
under this Indenture or an underwriter for a Security party;
(3) the Trustee directly or indirectly controls or is
directly or indirectly controlled by or is under direct or indirect
common Control with a Security party or an underwriter for a
Security party;
(4) the Trustee or any of its directors or executive
officers is a director, officer, partner, employee, appointee, or
representative of a Security party, or of an underwriter (other than
the Trustee itself) for a Security party who is currently engaged in
the business of underwriting, except that (A) one individual may be
a director and/or an executive officer of the Trustee and a director
and/or an executive officer of a Security party, but may not be at
the same time an executive officer of both the Trustee and a
Security party; (B) if and so long as the number of directors of the
Trustee in office is more than nine, one additional individual may
be a director and/or an executive officer of the Trustee and a
director of a Security party; and (C) the Trustee may be designated
by a Security party or by an underwriter for a Security party to act
in the capacity of transfer agent, registrar, custodian, paying
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49
agent, fiscal agent, escrow agent, or depositary, or in any other
similar capacity, or, subject to the provisions of paragraph (1) of
this subsection (c), to act as trustee whether under an indenture or
otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by a Security party or by any director,
partner, or executive officer thereof, or 20% or more of such voting
securities is beneficially owned, collectively, by any two or more
of such persons; or 10% or more of the voting securities of the
Trustee is beneficially owned either by an underwriter for a
Security party or by any director, partner, or executive officer
thereof, or is beneficially owned, collectively, by any two or more
such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, (A) 5% or
more of the voting securities, or 10% or more of any other class of
security, of a Security party, not including the Securities issued
under this Indenture and securities issued under any other indenture
under which the Trustee is also trustee, or (B) 10% or more of any
class of security of an underwriter for a Security party;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, 5% or
more of the voting securities of any person who, to the knowledge of
the Trustee, owns 10% or more of the voting securities of, or
controls directly or indirectly or is under direct or indirect
common control with, a Security party;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default, 10% or
more of any class of security of any person who, to the knowledge of
the Trustee, owns 50% or more of the voting securities of a Security
party; or
(9) the Trustee owns on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or
of any class of security, of any person, the beneficial ownership of
a specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this subsection (c). As
to any such securities of which the Trustee acquired ownership
through becoming executor, administrator or testamentary trustee of
an estate which included them, the provisions of the preceding
sentence
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shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such
estate do not exceed 25% of such voting securities or 25% of any
such class of security. Promptly after May 15, in each calendar
year, the Trustee shall make a check of its holdings of such
securities in any of the above-mentioned capacities as of such May
15. If the Company fails to make payment in full of principal of or
interest on any of the Securities when and as the same become due
and payable, and such failure continues for 30 days thereafter, the
Trustee shall make a prompt check of its holdings of such securities
in any of the above-mentioned capacities as of the date of the
expiration of such 30-day period and, after such date,
notwithstanding the foregoing provisions of this paragraph (9), all
such securities so held by the Trustee, with sole or joint control
over such securities vested in it, shall, but only so long as such
failure shall continue, be considered as though beneficially owned
by the Trustee for the purposes of paragraphs (6), (7), and (8) of
this subsection (c).
The specifications of percentages in paragraphs (5) to (9), inclusive, of
this subsection (c) shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), and (9) of this subsection (c)
only, (A) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (B) an obligation shall be deemed to be in default
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (C) the Trustee shall not be deemed to be the
owner or holder of (i) any security which it holds as collateral security (as
trustee or otherwise) for any obligation which is not in default as defined in
clause (B) above, or (ii) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (iii) any
security which it holds as agent for collection, or as custodian, escrow agent,
or depositary, or in any similar representative capacity.
Except as provided in the next preceding paragraph hereof, the work
"security" or "securities" as used in this Indenture shall mean any note, stock,
treasury stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any
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51
profit-sharing agreement, collateral-trust certificate, pre-organization
certificate or subscription, transferable share, investment contract, voting-
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas or other mineral rights, or, in general, any interest or
instrument commonly known as a "security" or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase any of the foregoing.
(d) For the purposes of this Section 8.08:
(1) The term "underwriter" when used with reference to a
Security party shall mean every person who, within three years prior
to the time as of which the determination is made, has purchased
from such Security party with a view to, or has offered or sold for
such Security party in connection with, the distribution of any
security of such Security party outstanding at such time, or has
participated or has had a direct or indirect participation in any
such undertaking, or has participated or has had a participation in
the direct or indirect underwriting of any such undertaking, but
such term shall not include a person whose interest was limited to a
commission from an underwriter or dealer not in excess of the usual
and customary distributors' or sellers' commission.
(2) The term "director" shall mean any director of a
corporation or any individual performing similar functions with
respect to any organization whether incorporated or unincorporated.
(3) The term "person" shall mean an individual, a
corporation, a partnership, an association, a joint-stock company, a
trust, an unincorporated organization, or a government or political
subdivision thereof. As used in this paragraph, the term "trust"
shall include only a trust where the interest or interests of the
beneficiary or beneficiaries are evidenced by a security.
(4) The term "voting security" shall mean any security
presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any security
issued under or pursuant to any trust, agreement or arrangement
whereby a trustee or trustees or agent or agents for the owner or
holder of such security are presently entitled to vote in the
direction or management of the affairs of a person.
(5) The term "executive officer" shall mean the president,
every vice president, every trust officer, the
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cashier, the secretary, and the treasurer of a corporation, and any
individual customarily performing similar functions with respect to
any organization whether incorporated or unincorporated, but shall
not include the chairman of the board of directors.
The percentages of voting securities and other securities specified in
this Section 8.08 shall be calculated in accordance with the following
provisions:
(A) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section 8.08
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitles the holder or holders to cast such specified percentage of
the aggregate votes which the holders of all the outstanding voting
securities of such person are entitled to cast in the direction or
management of the affairs of such person.
(B) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of the
class outstanding.
(C) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the
number of shares if relating to capital shares, and the number of
units if relating to any other kind of security.
(D) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating
to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the
obligations evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal
or interest or otherwise;
(iv) securities held in escrow if placed in escrow by the
issuer thereof; provided, however, that any
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voting securities of an issuer shall be deemed outstanding if
any person other than the issuer is entitled to exercise the
voting rights thereof.
(E) A security shall be deemed to be of the same class as another
security if both securities confer upon the holders or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all
of which are issued under a single indenture, differences in the
interest rates or maturity dates of various series thereof shall not
be deemed sufficient to constitute such series different classes,
and provided, further, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities
of different classes, whether or not they are issued under a single
indenture.
SECTION 8.09. Eligibility of Trustee. The Trustee hereunder shall at all
times be a corporation organized and doing business under the laws of the United
States or any State or Territory thereof or of the District of Columbia
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $5,000,000, subject to supervision or
examination by Federal, State, Territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.09 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 8.09, the Trustee shall resign immediately
in the manner and with the effect specified in Section 8.10.
SECTION 8.10. Resignation or Removal of Trustee. (a) The Trustee, or
any trustee or trustees hereafter appointed, may at any time resign with respect
to one or more or all series of Securities by giving written notice of such
resignation to the Company and by mailing notice thereof to the holders of the
applicable series of Securities at their addresses as they shall appear on the
Securities register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees with respect to the
applicable series by written instrument, in duplicate, executed by order of its
Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy the successor trustee. If no successor trustee
shall have been so appointed with respect to any series of Securities and have
accepted appointment within 60 days after the mailing of such
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notice of resignation to the affected Securityholders, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona fide holder of a Security or
Securities of the applicable series for at least six months may, subject to the
provisions of Section 7.09, on behalf of himself and all other similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur--
(1) the Trustee shall fail to comply with the provisions of
subjection (a) of Section 8.08 after written request therefor by the
Company or by any Securityholder who has been a bona fide holder of
a Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee with respect to all
Securities and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 7.09, any Securityholder who has been a
bona fide holder of a Security or Securities of the applicable series for at
least six months may, on behalf of himself and all other similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities of one or more series (each series voting as a class) or all series
(voting as one class) at the time outstanding may at any time remove the Trustee
with respect to the applicable series of Securities or all series, as the case
may be, and nominate a successor trustee with respect to the applicable series
of Securities or all series, as the case may be, which shall be
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55
deemed appointed as successor trustee with respect to the applicable series
unless within ten days after such nomination the Company objects thereto, in
which case the Trustee so removed or any Securityholder of the applicable
series, upon the terms and conditions and otherwise as in subdivision (a) of
this Section 8.10 provided, may petition any court of competent jurisdiction for
an appointment of a successor trustee with respect to such series.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
SECTION 8.11. Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with like
effect as if originally named as trustee herein; but, nevertheless, on the
written request of the Company or of the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of Section 8.06, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to act.
Upon request of any such successor trustee, the Company shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers. Any trustee
ceasing to act shall, nevertheless, retain a claim upon all property or funds
held or collected by such trustee to secure any amounts then due it pursuant to
the provisions of Section 8.06.
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If a successor trustee is appointed with respect to the Securities of one
or more (but not all) series, the Company, the predecessor Trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities of any series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trust hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and that
each such trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such trustee.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.08 and eligible under the provisions
of Section 8.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, the Company shall mail notice of the succession of such trustee
hereunder to the holders of Securities of any applicable series at their
addresses as they shall appear on the Securities register. If the Company fails
to mail such notice within ten days after the acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.
SECTION 8.12. Succession by Merger, etc. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee, and deliver
such Securities so authenticated; and in case at that time any of the Securities
of any series shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor hereunder
or in the name of the successor trustee; and in all such cases such
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certificates shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities of any
series in the name of any predecessor Trustee shall apply only to its successor
or successors by merger, conversion or consolidation.
SECTION 8.13. Limitation on Rights of Trustee as a Creditor. (a) Subject
to the provisions of subsection (b) of this Section 8.13, if the Trustee shall
be or shall become a creditor, directly or indirectly, secured or unsecured, of
the Company or of any other obligor on the Securities (each of which is
hereafter in this Section 8.13 called a "Security party") within four months
prior to a default, as defined in paragraph (1) of subsection (c) of this
Section 8.13, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the holders of the
Securities, and the holders of other indenture securities (as defined in
paragraph (2) of subsection (c) of this Section 8.13):
(1) an amount equal to any and all reductions in the amount due and
owning upon any claim as such creditor in respect of principal or
interest, effected after the beginning of such four-month period and valid
as against such Security party and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this subsection, or from the exercise of any
right of set-off which the Trustee could have exercised if a petition in
bankruptcy had been filed by or against such Security party upon the date
of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of such Security
party and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of
any such claim by any person (other than such Security party) who is
liable thereon, and (ii) the proceeds of the bona fide sale of any such
claim by the Trustee to a third person, and (iii) distributions made in
case, securities, or other property in respect of claims filed
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against such Security party in bankruptcy or receivership or in
proceedings for reorganization pursuant to Title 11, United States Code or
applicable state law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
four-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
subsection (c) of this Section 8.13, would occur within four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim
as provided in such paragraph (B) or (C), as the case may be, to the
extent of the fair value of such property.
For the purposes of paragraphs (B), (C), and (D), property substituted
after the beginning of such four-month period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned between
the Trustee, the Securityholders and the holders of other indenture securities
in such manner that the Trustee, the Securityholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against such Security party in
bankruptcy or receivership or in proceedings for reorganization pursuant to
Title 11, United States Code, or applicable state law, the same percentage of
their respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from such Security party of the funds
and property in such special account and before crediting to the respective
claims of the Trustee, the Securityholders, and the holders of other indenture
securities dividends on claims filed against such Security party in bankruptcy
or receivership or in proceedings for reorganization pursuant to
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Title 11, United States Code or applicable state law, but after crediting
thereon receipts on account of the indebtedness represented by their respective
claims from all sources other than from such dividends and from the funds and
property so held in such special account. As used in this paragraph, with
respect to any claim, the term "dividends" shall include any distribution with
respect to such claim, in bankruptcy or receivership or in proceedings for
reorganization pursuant to Title 11, United States Code, or applicable state
law, whether such distribution is made in cash, securities, or other property,
but shall not include any such distribution with respect to the secured portion,
if any, of such claim. The court in which such bankruptcy, receivership, or
proceeding for reorganization is pending shall have jurisdiction (i) to
apportion among the Trustee, the Securityholders, and the holders of other
indenture securities, in accordance with the provisions of this paragraph, the
funds and property held in such special account and the proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give the provisions
of this paragraph due consideration in determining the fairness of the
distributions to be made to the Trustee, the Securityholders and the holders of
other indenture securities with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such
four-month period shall be subject to the provisions of this subsection (a) as
though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such four-month period, it
shall be subject to the provisions of this subsection (a) if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim which would have
given rise to the obligation to account, if such Trustee had continued as
trustee, occurred after the beginning of such four-month period; and
(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section 8.13 a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
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(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien of
this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advance and of the circumstances
surrounding the making thereof is given to the Securityholders at the time
and in the manner provided in Section 6.04 with respect to reports
pursuant to the subsections (a) and (b) thereof, respectively;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section 8.13;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of a Security
party; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper as defined in subsection (c)
of this Section 8.13.
(c) As used in this Section 8.13:
(1) The term "default" shall mean any failure to make payment in
full of the principal of or interest upon any of the Securities or upon
the other indenture securities when and as such principal or interest
becomes due and payable;
(2) The term "other indenture securities" shall mean securities upon
which a Security party is an obligor (as defined in the Trust Indenture
Act of 1939) outstanding under any other indenture (A) under which the
Trustee is also trustee, (B) which contains provisions substantially
similar to the provisions of subsection (a) of this Section 8.13, and (C)
under which a default exists at the time of the apportionment of the funds
and property held in said special account;
(3) The term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
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(4) The term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by a Security party for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security; provided that the
security is received by the Trustee simultaneously with the creation of
the creditor relationship with such Security party arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 8.14. Authenticating Agents. There may be one or more
Authenticating Agents appointed by the Trustee upon the request of the Company
with power to act on the Trustee's behalf and subject to its direction in the
authentication and delivery of Securities of any series issued upon exchange or
transfer thereof as fully to all intents and purposes as though any such
Authenticating Agent had been expressly authorized to authenticate and deliver
Securities of such series; provided, that the Trustee shall have no liability to
the Company for any acts or omissions of the Authenticating Agent with respect
to the authentication and delivery of Securities of any series. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any State or Territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the purposes of this Section 8.14 the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 8.14, without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
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Any Authenticating Agent may at any time resign with respect to one or
more or all series of Securities by giving written notice of resignation to the
Trustee and to the Company. The Trustee may at any time terminate the agency of
any Authenticating Agent with respect to one or more or all series of Securities
by giving written notice of termination to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 8.14, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent with respect to
the applicable series eligible under this Section 8.14, shall give written
notice of such appointment to the Company and shall mail notice of such
appointment to all holders of the applicable series of Securities as the names
and addresses of such holders appear on the Securities register. Any successor
Authenticating Agent with respect to all or any series upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities with respect to such series of its predecessor hereunder, with
like effect as if originally named as Authenticating Agent herein.
The Trustee agrees to pay to any Authenticating Agent from time to time
reasonable compensation for its services, and the Trustee shall be entitled to
be reimbursed for such payments, subject to Section 8.06. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
as Trustee
By
as Authenticating Agent
for the Trustee
By
Authorized Officer
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ARTICLE NINE
Concerning the Securityholders
SECTION 9.01. Action by Securityholders. Whenever in this Indenture it
is provided that the holders of a specified percentage in aggregate principal
amount of the Securities of any or all series may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action) the fact that at the time of taking any such
action the holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by such Securityholders in person or by agent or proxy appointed in
writing, or (b) by the record of such holders of Securities voting in favor
thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article Ten, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
SECTION 9.02. Proof of Execution by Securityholders. Subject to the
provisions of Sections 8.01, 8.02 and 10.05, proof of the execution of any
instrument by a Securityholder or his agent or proxy shall be sufficient if made
in accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
ownership of Securities shall be proved by the Securities register or by a
certificate of the Securities registrar.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 10.06.
SECTION 9.03. Who Are Deemed Absolute Owners. The Company, the Trustee,
any Authenticating Agent, any paying agent, any transfer agent, any conversion
agent and any Securities registrar may deem the person in whose name such
Security shall be registered upon the Securities register to be, and may treat
him as, the absolute owner of such Security (whether or not such Security shall
be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purposes of conversion and of receiving payment of or on
account of the principal of, premium, if any, and interest on such Security and
for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
conversion agent nor any Securities registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or
upon his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Security.
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SECTION 9.04. Securities Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver, only Securities which a Responsible Officer knows are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as outstanding for the purposes of this Section 9.04 if the
pledgee shall establish to the satisfaction of the Trustee the pledgee's right
to vote such Securities and that the pledgee is not the Company or any such
other obligor or person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any such other
obligor. Upon request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of any of
the above-described person; and, subject to the provisions of Section 8.01, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are outstanding for the purpose of any such determination.
SECTION 9.05. Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action, any holder of a Security (or any Security issued in whole or
in part in exchange or substitution therefor) who consented to such action may,
by filing written notice with the Trustee at its principal office and upon proof
of holding as provided in Section 9.02, revoke such action so far as concerns
such Security (or so far as concerns the principal amount represented by any
exchanged or substituted Security). Except as aforesaid any such action taken
by the holder of any Security shall be conclusive and binding upon such holder
and upon all future holders and owners of such Security, and of any Security
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Security or any Security issued in
exchange or substitution therefor. Any action taken by the holders of the
percentage in aggregate principal amount of the Securities specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the holders of such Securities.
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ARTICLE TEN
Securityholders' Meetings
SECTION 10.01. Purposes of Meetings. A meeting of Securityholders of any
or all series may be called at any time and from time to time pursuant to the
provisions of this Article Ten for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to
be taken by Securityholders pursuant to any of the provisions of Article
Seven;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article Eight;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.02; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such
Securities under any other provisions of this Indenture or under
applicable law.
SECTION 10.02. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Securityholders of any or all series to take any action
specified in Section 10.01, to be held at such time and at such place in the
Borough of Manhattan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Securityholders of any or all series, setting
forth the record date, time and place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Securities of each series affected at their addresses as they shall appear on
the Securities register of each series affected. Such notice shall be mailed
not less than 20 nor more than 90 days prior to the date fixed for the meeting.
SECTION 10.03. Call of Meetings by Company or Securityholders. In case
at any time the Company pursuant to a resolution of the Board of Directors, or
the holders of at least 10% in aggregate principal amount of the Securities of
any or all series, as the case may be, then outstanding, shall have requested
the Trustee to call a meeting of Securityholders of any or all series, as the
case may be, by written request setting forth in reasonable detail action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such request, then the
Company or such
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Securityholders may determine the time and the place in said Borough of
Manhattan for such meeting and may call such meeting to take any action
authorized in Section 10.01, by mailing notice thereof as provided in Section
10.02.
SECTION 10.04. Qualifications for Voting. To be entitled to vote at any
meeting of Securityholders a person shall (a) be a holder of one or more
Securities with respect to which the meeting is being held or (b) a person
appointed by an instrument in writing as proxy by such a holder of one or more
such Securities. The only persons who shall be entitled to be present or to
speak at any meeting of Securityholders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
SECTION 10.05. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 10.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 9.04, at any meeting each holder of
Securities with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000 principal amount of Securities
held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Securities held
by him or instruments in writing as aforesaid duly designating him as the person
to vote on behalf of other Securityholders. At any meeting of Securityholders,
the presence of persons holding or representing Securities in an aggregate
principal amount sufficient to take action on the business for the transaction
of which such meeting was called shall constitute a quorum, but, if less than a
quorum is present, the persons holding or representing a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
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vote may adjourn such meeting with the same effect, for all intents and
purposes, as though a quorum had been present. Any meeting of Securityholders
duly called pursuant to the provisions of Section 10.02 or 10.03 may be
adjourned from time to time by a majority of those present, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
SECTION 10.06. Voting. The vote upon any resolution submitted to any
meeting of holders of Securities with respect to which such meeting is being
held shall be by written ballots on which shall be subscribed the signatures of
such holders or of their representatives by proxy and the serial number or
numbers of the Securities held or represented by them. The permanent chairman
of the meeting shall appoint two inspectors of votes who shall count all votes
cast at the meeting for or against any resolution and who shall make and file
with the secretary of the meeting their verified written reports in triplicate
of all votes cast at the meeting. A record in duplicate of the proceedings of
each meeting of Securityholders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was mailed as provided in Section
10.02. The record shall show the serial numbers of the Securities voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE ELEVEN.
Supplemental Indentures.
SECTION 11.01. Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a resolution of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to evidence the succession of another corporation to the
Company, or successive succession, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Twelve hereof;
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(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the holders of all or any
series of Securities (and if such covenants are to be for the benefit of
less than all series of Securities stating that such covenants are
expressly being included for the benefit of such series) as the Board of
Directors and the Trustee shall consider to be for the protection of the
holders of such Securities, and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, however, that in respect of any
such additional covenant, restriction or condition such supplemental
indenture may provide for a particular period of grace after default
(which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such
default;
(c) to provide for the issuance under this Indenture of Securities
in coupon form (including Securities registrable as to principal only) and
to provide for exchangeability of such Securities with the Securities
issued hereunder in fully registered form and to make all appropriate
changes for such purpose;
(d) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.03;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, pursuant
to the requirements of Section 8.11;
(f) to make provision with respect to the conversion rights of
holders of Convertible Securities pursuant to the requirements of Section
3.06; and
(g) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective
or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture; provided that any such
action shall not materially adversely affect the interests of the holders
of the Securities.
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The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Securities at the time outstanding, notwithstanding any of
the provisions of Section 11.02.
SECTION 11.02. Supplemental Indentures with Consent of Securityholders.
With the consent (evidenced as provided in Section 9.01) of the holders of not
less than 66 2/3% in aggregate principal amount of the Securities at the time
outstanding of all series affected by such supplemental indenture (voting as a
class), the Company, when authorized by a resolution of the Board of Directors,
and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
holders of the Securities of each series so affected; provided, however, that no
such supplemental indenture shall (i) extend the final maturity of any Security,
or reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or any premium thereon, or reduce any amount
payable on redemption thereof or make the principal thereof or any interest or
premium thereon payable in any coin or currency other than that provided in the
Securities, or impair the right to convert Convertible Securities into Common
Stock on the terms set forth herein, or impair or affect the right of any
Securityholder to institute suit for payment thereof or the right of repayment,
if any, at the option of the holder, or modify any of the provisions of this
Indenture relating to the subordination of the Securities in a manner adverse to
the holders thereof without the consent of the holder of each Security so
affected, or (ii) reduce the aforesaid percentage of Securities the holders of
which are required to act pursuant to Section 7.07 or to consent to any such
supplemental indenture, without the consent of the holders of each Security then
affected.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of Securityholders of such series with respect to such covenant or
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provision, shall be deemed not to affect the rights under this Indenture of the
Securityholders of any other series.
Upon the request of the Company accompanied by a copy of a resolution of
the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 11.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures. Any supplemental indenture executed pursuant to the
provisions of this Article Eleven shall comply with the Trust Indenture Act of
1939, as then in effect. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article Eleven, this Indenture shall be and
be deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Securities of each
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications an amendments and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 11.04. Notation on Securities. Securities of any series
authenticated and delivered after the execution of any supplemental indenture
affecting such series pursuant to the provisions of this Article Eleven may bear
a notation in the form approved by the trustee as to any matter provided for in
such supplemental indenture. If the Company or the Trustee shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee or the Authenticating Agent and delivered
in exchange for the Securities of any series then outstanding.
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SECTION 11.05. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.01 and
8.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Eleven.
SECTION 11.06. Effect on Senior Indebtedness. No supplemental indenture
shall adversely affect the rights of any holder of Senior Indebtedness under
Article Four without the consent of such holder.
ARTICLE TWELVE.
Consolidation, Merger and Sale by the Company.
SECTION 12.01. Consolidation, Merger and Sale of Assets Permitted. The
Company covenants and agrees that it will not consolidate with, merge into, or
sell or otherwise dispose of all or substantially all its property as an
entirety to, any person other than a corporation organized under the laws of the
United States of America or any State or Territory thereof or of the District of
Columbia, lawfully entitled to acquire the same. The Company will not so
consolidate or merge, or make any such sale or other disposition, unless, and
the Company covenants and agrees that any such consolidation, merger, sale or
other disposition shall be on the condition that, (1) the provisions of Section
3.06 are complied with and (2) such corporation shall expressly assume the due
and punctual payment of the principal of and premium, if any, and interest on
all the Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by the Company, by supplemental indenture satisfactory
to the Trustee, executed and delivered to the Trustee by such corporation. The
Company covenants and agrees that it will not so consolidate or merge or make
any such sale or other disposition, or permit any corporation to merge into the
Company, if immediately thereafter the Company or such successor corporation, as
the case may be, shall be in default in the performance or observance of any of
the covenants or conditions of this Indenture.
SECTION 12.02. Successor Corporation to Be Substituted for Company. In
case of any such merger, consolidation, sale or conveyance and upon any such
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part, and, in case of such a sale or
conveyance other than a lease, the Company thereupon shall be relieved of any
further obligation or liability hereunder or upon the Securities, and may
thereupon or at any time thereafter
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be dissolved, wound up or liquidated. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in the name of Masco
Industries, Inc. any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor
corporation (instead of the Company) and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Securities which previously shall have
been signed and delivered by the officers of the Company to the Trustee or the
Authenticating Agent for authentication, and any Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee or
the Authenticating Agent for that purpose. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 12.03. Evidence to Be Furnished Trustee. The Trustee, subject to
the provisions of Sections 8.01 and 8.02, may receive and rely upon an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale or conveyance, and any such assumption complies with
the provisions of this Article Twelve.
ARTICLE THIRTEEN.
Satisfaction and Discharge of Indenture.
SECTION 13.01. Discharge of Indenture. When (a) the Company shall have
paid or caused to be paid the principal of and interest on all Securities of any
series outstanding hereunder, as and when the same shall have become due and
payable, (b) the Company shall deliver to the Trustee for cancellation all
Securities of any series theretofore authenticated (other than any Securities of
such series which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.08 or converted) and not
theretofore cancelled, or (c) with respect to any series of Securities which,
under the terms specified in the resolution or supplemental indenture or
indentures referred to in Section 2.03, pursuant to which such series is
created, can be discharged prior to maturity, the Company shall deposit with the
Trustee, in trust, cash and/or a principal amount of obligations of or directly
guaranteed by the United States of America maturing or redeemable at the option
of the holder thereof not later than the
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73
date fixed for payment or redemption of all outstanding Securities of such
series which, together with the income to be earned on such obligations prior to
such date, equals the principal amount of (and any applicable premium on), all
such Securities of such series not theretofore cancelled or delivered to the
Trustee for cancellation, with interest to the date of their maturity or
redemption, as the case may be, but excluding, however, the amount of any moneys
for the payment of principal of, or premium, if any, or interest on the
Securities of such series (1) theretofore repaid to the Company in accordance
with the provisions of Section 13.04, or (2) paid to any State or to the
District of Columbia pursuant to its unclaimed property or similar laws, and if
in any such case the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then (except in the case of (c) above as to
(i) rights of registration of transfer and exchange and any right of the Company
of optional redemption and to deliver Securities of such series to the Trustee
for cancellation, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) any remaining rights of conversion of Convertible
Securities, (iv) the rights, obligations and immunities of the Trustee hereunder
and (v) the rights of the Securityholders as beneficiaries hereof with respect
to the property so deposited with the Trustee, all of which shall continue in
full force and effect) all of the Company's liability with respect to principal,
premium, if any, and interest on the Securities of such series shall be
discharged, this Indenture shall cease to be of further effect as to such
series, and the Trustee, on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture as to such series, the Company, however, hereby
agreeing to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection with this
Indenture or the Securities; provided, however, that the rights of
Securityholders to receive amounts in respect of principal of and interest on
the Securities held by them shall not be delayed longer than required by then-
applicable mandatory rules or policies of any securities exchange if the
Securities of such series continue to be listed. Notwithstanding the foregoing,
if the Company makes a deposit of cash and/or obligations described in clause
(c) above with respect to any series of Securities which, under the terms
specified in the resolution or supplemental indenture or indentures referred to
in Section 2.03, pursuant to which such series is created, is subject to the
provisions of this sentence (whether or not such resolution or supplemental
indenture provides that such series can be discharged prior to maturity under
clause (c) above), and, concurrently with such deposit, notifies the Trustee
that such series shall no longer have the benefit of all or any portion of the
provisions of Article Seven of this Indenture and such other provisions of this
Indenture or the resolution or supplemental indenture, pursuant to which such
series is created, as are specifically permitted in such resolution or
supplemental indenture
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to be made inapplicable under this sentence with respect to such series, this
Indenture and such supplemental indenture or resolution shall thereupon be
deemed amended with respect to such series solely by the deletion in their
entirety of such provisions and this Indenture and such supplemental indenture
or resolution shall in all other respects be unaffected thereby.
SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee. Subject
to the provisions of Section 13.04, all moneys and obligations deposited with
the Trustee pursuant to Section 13.01 shall be held in trust and applied by it
to the payment, either directly or through any paying agent (including the
Company if acting as its own paying agent), to the holders of the particular
Securities for the payment of which such moneys and obligations have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest; provided, however, that the Company
shall be entitled from time to time to withdraw cash and/or obligations
deposited under clause (c) or the last sentence of Section 13.01 provided that
the cash and obligations thereafter on deposit and after giving effect to such
withdrawal would, if then deposited under such clause, satisfy in all respects
the requirements of such clause or the last sentence of Section 13.01. At the
time of any such withdrawal, the Company shall deliver to the Trustee an
Officers' Certificate demonstrating compliance with the provisions of such
clause or sentence.
SECTION 13.03. Paying Agent to Repay Moneys Held. Upon the satisfaction
and discharge of this Indenture all moneys then held by any paying agent of the
Securities (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such moneys.
SECTION 13.04. Return of Unclaimed Moneys. Except as may be required
under applicable law, any moneys deposited with or paid to the Trustee or any
paying agent for payment of the principal of, and premium, if any, or interest
on Securities and not applied but remaining unclaimed by the holders of
Securities for three years after the date upon which the principal of, and
premium, if any, or interest on such Securities, as the case may be, shall have
become due and payable, shall be repaid to the Company by the Trustee or such
paying agent on written demand; and the holder of any of the Securities shall
thereafter look only to the Company for any payment which such holder may be
entitled to collect and all liability of the Trustee or such paying agent with
respect to such moneys shall thereupon cease.
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ARTICLE FOURTEEN.
Immunity of Incorporators, Stockholders, Officers and Directors.
SECTION 14.01. Indenture and Securities Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Security, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in this Indenture or in any supplemental indenture, or in any Security,
or because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation of the
Company, either directly or through the Company or any successor corporation of
the Company, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
ARTICLE FIFTEEN.
Miscellaneous Provisions.
SECTION 15.01. Successors. All the covenants, stipulations, promises and
agreements in this Indenture contained by the Company shall bind its successors
and assigns whether so expressed or not.
SECTION 15.02. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
SECTION 15.03. Addresses for Notices, etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Securities on the Company may be given of
served by being deposited postage prepaid by registered or certified mail in a
post office letter box addressed (until another address is filed by the Company
with the Trustee for the purpose) to Masco Industries Inc., 21001 Van Born Road,
Taylor, Michigan 48180, Attention: President. Any notice, direction, request or
demand by any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of the Trustee, 30 West Broadway, New York, New York 10015, Attention:
Corporate Trust Administration.
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SECTION 15.04. New York Contract. This Indenture and each Security shall
be deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance with the laws of
said State.
SECTION 15.05. Evidence of Compliance with Conditions Precedent. Upon
any application or demand by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that in the opinion of the signers all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture (other than the Officers' Certificate called for by
Section 5.05) shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 15.06. Legal Holidays. In any case where the date of payment of
interest on or principal of or premium, if any, on the Securities will be in The
City of New York, New York a legal holiday or a day on which banking
institutions are authorized by law to close, the payment of such interest on or
principal of or premium, if any, on the Securities need not be made on such date
but may be made on the next succeeding day not in such City a legal holiday or a
day on which banking institutions are authorized by law to close, with the same
force and effect as if made on the date of payment and no interest shall accrue
for the period from and after such date.
SECTION 15.07. Trust Indenture Act to Control. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with another
provision included in this Indenture which is required to be included in this
Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act
of 1939, such required provision shall control.
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SECTION 15.08. Table of Contents, Headings, etc. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall no way modify or restrict any of the terms of provisions
hereof.
SECTION 15.09. Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
SECTION 15.10. No Security Interest Created. Nothing in this Indenture
or in the Securities, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its Subsidiaries is located.
ARTICLE SIXTEEN.
Redemption of Securities--Mandatory and
Optional Sinking Fund.
SECTION 16.01. Applicability of Article. The provisions of this Article
shall be applicable to the Securities of any series which are redeemable at the
option of the Company before their maturity or to any sinking fund for the
retirement of Securities of a series except as otherwise specified as
contemplated by Section 2.03 for Securities of such series.
SECTION 16.02. Notice of Redemption; Selection of Securities. In case
the Company shall desire to exercise the right to redeem all, or, as the case
may be, any part of the Securities of any series in accordance with their terms,
it shall fix a date for redemption and shall mail a notice of such redemption at
lease 30 and not more than 60 days prior to the date fixed for redemption to the
holders of Securities of such series so to be redeemed as a whole or in part at
their last address as the same appear on the Securities register. Such mailing
shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security of a series
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security of such series.
Each such notice of redemption shall specify the date fixed for
redemption, the redemption price at which Securities of such series are to be
redeemed, the place or places of payment, that
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payment will be made upon presentation and surrender of such Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Securities of
such series are to be redeemed the notice of redemption shall specify the
numbers of the Securities of that series to be redeemed. In case any Security
of a series is to be redeemed in part only, the notice of redemption shall state
the portion of the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of such Security, a
new Security or Securities of that series in principal amount equal to the
unredeemed portion thereof will be issued.
Not more than seven days prior to the redemption date specified in the
notice of redemption given as provided in this Section, the Company will deposit
with the Trustee or with one or more paying agents an amount of money sufficient
to redeem on the redemption date all the Securities so called for redemption at
the appropriate redemption price, together with accrued interest to the date
fixed for redemption.
If less than all the Securities of a series are to be redeemed the Company
will give the Trustee notice not less than 60 days prior to the redemption date
as to the aggregate principal amount of Securities of that series to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Securities of that series or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in the applicable
form of Security) to be redeemed.
SECTION 16.03. Payment of Securities Called for Redemption. If notice of
redemption has been given as provided in Section 16.02 or Section 16.04, the
Securities or portions of Securities of the series with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption, and on and after said
date (unless the Company shall default in the payment of such Securities at the
redemption price, together with interest accrued to said date) interest on the
Securities or portions of Securities of any series so called for redemption
shall cease to accrue. On presentation and surrender of such Securities at a
place of payment specified in said notice, the said Securities or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with interest accrued thereon to the date fixed for
redemption.
Upon presentation of any Security of any series redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
holder thereof, at the expense of
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the Company, a new Security or Securities of such series of authorized
denominations, in principal amount equal to the unredeemed portion or the
Security so presented.
SECTION 16.04. Mandatory and Optional Sinking Fund. The minimum amount
of any sinking fund payment provided for by the terms of Securities of any
series determined pursuant to Section 2.03 is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". The last date on which any such payment may be
made is herein referred to as a "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company may at its
option (a) deliver to the Trustee Securities of that series (other than any
previously called for redemption) theretofore purchased or otherwise acquired by
the Company and (b) may apply as a credit Securities of that series which have
been previously delivered to the Trustee by the Company or Securities of that
series which have been converted or redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
optional sinking fund payments pursuant to the next succeeding paragraph, in
each case in satisfaction of all or any part of any mandatory sinking fund
payment, provided that such Securities have not been previously so credited.
Each such Security so delivered or applied as a credit shall be credited at the
sinking fund redemption price for such Securities and the amount of any
mandatory sinking fund shall be reduced accordingly. If the Company intends so
to deliver or credit such Securities with respect to any mandatory sinking fund
payment it shall deliver to the Trustee at least 60 days prior to the next
succeeding sinking fund payment date for such series (a) a certificate signed by
the Treasurer or an Assistant Treasurer of the Company specifying the portion of
such sinking fund payment, if any, to be satisfied by payment of cash and the
portion of such sinking fund payment, if any, which is to be satisfied by
delivering and crediting such Securities and (b) any Securities to be so
delivered, if not previously delivered. All Securities so delivered to the
Trustee shall be cancelled by the Trustee and no Securities shall be
authenticated in lieu thereof. If the Company fails to deliver such certificate
and Securities at or before the time provided above, the Company shall not be
permitted to satisfy any portion of such mandatory sinking fund payment by
delivery or credit of Securities.
At its option the Company may pay into the sinking fund for the retirement
of Securities of any particular series, on or not more than seven days before
each sinking fund payment date for such series, any additional sum in cash as
specified by the terms of such series of Securities. If the Company intends to
exercise its
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right to make any such optional sinking fund payment, it shall deliver to the
Trustee at least 60 days prior to the next succeeding sinking fund payment date
for such Series a certificate signed by the Treasurer or an Assistant Treasurer
of the Company stating that the Company intends to exercise such optional right
and specifying the amount which the Company intends to pay on such sinking fund
payment date. If the Company fails to deliver such certificate at or before the
time provided above, the Company shall not be permitted to make any optional
sinking fund payment with respect to such sinking fund payment date. To the
extent that such right is not exercised in any year it shall not be cumulative
or carried forward to any subsequent year.
If the sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 (or a lesser sum if the Company shall so request) with
respect to the Securities of any particular series, it shall be applied by the
Trustee or one or more paying agents on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the sinking fund
redemption price together with accrued interest to the date fixed for
redemption. The Trustee shall select, in the manner provided in Section 16.02,
for redemption on such sinking fund payment date a sufficient principal amount
of Securities of such series to absorb said cash, as nearly as may be, and the
Trustee shall, at the expense and in the name of the Company, thereupon cause
notice of redemption of Securities of such series to be given in substantially
the manner and with the effect provided in Sections 16.02 and 16.03 for the
redemption of Securities of that series in part at the option of the Company,
except that the notice of redemption shall also state that the Securities of
such series are being redeemed for the sinking fund. Any sinking fund moneys
not so applied or allocated by the Trustee or any paying agent to the redemption
of Securities of that series shall be added to the next cash sinking fund
payment received by the Trustee or such paying agent and, together with such
payment, shall be applied in accordance with the provisions of this Section
16.04. Any and all sinking fund moneys held by the Trustee or any paying agent
on the maturity date of the securities of any particular series, and not held
for the payment or redemption of particular Securities of such series, shall be
applied by the trustee or such paying agent, together with other moneys, if
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of Securities at maturity.
On or not more than seven days before each sinking fund payment date, the
Company shall pay to the Trustee or to one or more paying agents in cash sum
equal to all interest accrued to the date fixed for redemption on Securities to
be redeemed on the next following sinking fund payment date pursuant to this
Section.
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Neither the Trustee nor any paying agent shall redeem any Securities of a
series with sinking fund moneys, and the Trustee shall not mail any notice of
redemption of Securities of such series by operation of the sinking fund, during
the continuance of a default in payment of interest on such Securities or of any
Event of Default (other than an Event of Default occurring as a consequence of
this paragraph) with respect to such Securities, except that if the notice of
redemption of any Securities shall theretofore have been mailed in accordance
with the provisions hereof, the Trustee or any paying agent shall redeem such
Securities if cash sufficient for that purpose shall be deposited with the
Trustee or such paying agent for that purpose in accordance with the terms of
this Article Sixteen. Except as aforesaid, any moneys in the sinking fund for
such series at the time when any such default or Event of Default shall occur
and any moneys thereafter paid into the sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of all Securities of such series; provided, however, that in case such
Event of Default or default shall have been cured or waived as provided herein,
such moneys shall thereafter be applied on the next succeeding sinking fund
payment date on which such moneys may be applied pursuant to the provisions of
this Section 16.04
MORGAN GUARANTY TRUST COMPANY OF NEW YORK hereby accepts the trusts in
this Indenture declared and provided, upon the terms and conditions hereinabove
set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto duly affixed and attested, all as of
the day and year first above written.
MASCO INDUSTRIES, INC.
Company
By /s/JAMES J. SIGOUIN
Vice President
[CORPORATE SEAL]
Attest:
/s/TIMOTHY WADHAMS
Assistant Secretary
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82
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Trustee
By /s/J. N. CREAN
Trust Officer
[CORPORATE SEAL]
Attest:
/s/G. J. CASTELLANO
Assistant Trust Officer
<PAGE>
<PAGE>
83
State of Michigan)
) ss.:
County of Wayne )
On the 2nd of February, 1987, before me personally came JAMES J. SIGOUIN,
to me known, who, being by me duly sworn, did depose and say that he resides at
570 Oxford, Grosse Pointe Woods, MI; that he is Vice President of MASCO
INDUSTRIES, INC., the corporation described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
/s/DIANE G. KIRKENDALL
Notary Public
DIANE G. KIRKENDALL
Notary Public, Wayne County, MI
My Commission Expires 7-15-90
[NOTARIAL SEAL]
State of New York)
) ss.:
County of Kings )
On the 4th day of February, 1987, before me personally came J. N. CREAN,
to me known, who, being by me duly sworn, did depose and say that he resides at
Allendale, N. J. 07401; that he is Trust Officer of MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
/s/WILLIAM P. MIFSUD, JR.
Notary Public
WILLIAM P. MIFSUD, JR.
Notary Public, State of New York
No. 4785483
Qualified in Kings County
Commission Expires Mar. 30, 1987
[NOTARIAL SEAL]
<PAGE>
<PAGE>
RESOLUTIONS
OF THE
PRICING COMMITTEE
OF THE
BOARD OF DIRECTORS
OF MASCOTECH, INC.
January 13, 1994
WHEREAS, the Company has filed a Registration Statement on Form S-3 (file
no. 33-59222) with the Securities and Exchange Commission, which currently
remains in effect.
WHEREAS, the Company desires to create and make provision for a series of
securities under the Indenture dated as of November 1, 1986 (the "Indenture")
with Morgan Guaranty Trust Company of New York, as trustee (the "Trustee"),
which was filed as an exhibit to the Registration Statement, providing for the
issuance from time to time of convertible or non-convertible unsecured
subordinated debentures, notes or other evidences of indebtedness of the Company
("Securities") in one or more series under such Indenture; and
WHEREAS, capitalized terms used in these resolutions and not otherwise
defined are used with the same meaning ascribed to such terms in the Indenture;
NOW, THEREFORE, BE IT RESOLVED, that there hereby is approved and
established a series of Securities under the Indenture whose terms shall be as
follows:
1. The Securities of such series shall be known and designated as
the "4 1/2% Convertible Subordinated Debentures Due 2003" of the Company.
2. The aggregate principal amount of Securities of such series
which may be authenticated and delivered under the Indenture is limited to
Three Hundred Forty-Five Million Dollars ($345,000,000), except for
Securities of such series authenticated and delivered upon registration
of, transfer of, or in exchange for, or in lieu of, other Securities of
such series pursuant to Sections 2.07, 2.08, 2.09, 11.04 or 16.03 of the
Indenture.
3. The date on which the principal of the Securities of such series
shall be payable is December 15, 2003.
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<PAGE>
4. The Securities of such series shall bear interest from January
21, 1994, at the annual rate of 4 1/2 percent, payable semi-annually on
June 15 and December 15 of each year commencing on June 15, 1994
(calculated on a standard 360 day year of 12 thirty-day months) until
the principal thereof is paid or made available for payment. The June 1
or December 1 (whether or not a Business Day), as the case may be, next
preceding each such interest payment date shall be the "record date" for
the determination of holders to whom interest is payable.
5. The principal of, and premium, if any, and interest on the
Securities of such series shall be payable at the office or agency of the
Company maintained for such purpose under Section 5.02 of the Indenture in
the Borough of Manhattan, The City of New York, or at any other office or
agency designated by the Company for such purpose pursuant to the
Indenture; provided, however, that, at the option of the Company, payment
of interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear on the registry books of the
Company.
6. The Securities of such series shall be subject to redemption at
any time on or after December 22, 1996, in whole or in part, at the option
of the Company, at a redemption price equal to the percentage of the
principal amount set forth below if redeemed during the twelve-month
period beginning December 15 in each of the following years, in each case
together with interest accrued to the date fixed for redemption (subject
to the right, if any, of the registered holder on the record date for an
interest payment to receive such interest):
Year Percentage
1996. . . . . . . 103.00%
1997. . . . . . . 102.50%
1998. . . . . . . 102.00%
1999 . . . . . . . 101.50%
2000 . . . . . . . 101.00%
2001 . . . . . . . 100.50%
2002 . . . . . . . 100.00%
7. The Company shall have the right to discharge or limit the
Indenture as to the Securities of such series prior to maturity pursuant
to the provisions of Section 13.01 of the Indenture.
8. The Securities of such series shall be convertible at any time
on or after March 22, 1994 and prior to maturity, unless previously
redeemed, into an aggregate maximum amount
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<PAGE>
of 11,129,032 fully paid and non-assessable shares of Company Common
Stock, par value $1.00 per share, at a conversion price of $31.00 per
share, such number of shares of Common Stock and conversion price being
subject to adjustment as provided in the Indenture.
9. The Securities of such series shall be subordinated in right of
payment to the prior payment in full of Senior Indebtedness (as defined in
the Indenture) and so long as the Securities of such series are
outstanding, the Company shall not create or incur "indebtedness of the
Company for money borrowed" or "indebtedness of the Company incurred in
connection with the acquisition of property" that is subordinate and
junior in right of payment to the prior payment of Senior Indebtedness,
except such indebtedness that ranks pari passu with, or is subordinate and
junior in right of payment to, the Securities of such series.
10. The Securities of such series shall be issuable in denomina-
tions of One Thousand Dollars ($1,000) and any integral multiple thereof.
11. The Company shall receive 97.75 percent of the price of such
Securities sold to the public after discount of 2.25 percent.
FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions thereof;
FURTHER RESOLVED, that the Chairman of the Board, the President or any
Vice President and the Secretary or any Assistant Secretary is authorized in the
name and on behalf of the Company and under its corporate seal (which may be in
the form of a facsimile of the seal of the Company) to execute $345,000,000
aggregate principal amount of the Securities of such series (and in addition
Securities to replace lost, stolen, mutilated or destroyed Securities and
Securities required for exchange, substitution or transfer, all as provided in
the Indenture) in fully registered form, substantially in the form of the
subordinated debenture filed as an exhibit to the Company's Registration
Statement, with such changes and insertions therein as are appropriate to
conform such debentures to the terms set forth herein or otherwise as the
respective officers executing such Securities shall approve and as are not
inconsistent with these resolutions, such approval to be conclusively evidenced
by such officer's execution and delivery of such Securities, and to deliver such
Securities to the Trustee for authentication and delivery in accordance with the
terms of the Indenture, and the Trustee is authorized and directed thereupon to
authenticate and deliver the same to or upon the written order of the Company as
provided in the Indenture;
- 3 -
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<PAGE>
FURTHER RESOLVED, that the signatures of the officers of the Company so
authorized to execute the Securities of such series may be the manual or
facsimile signatures of the present or any future such authorized officers and
may be imprinted or otherwise reproduced thereon, the Company for such purpose
hereby adopting each such facsimile signature as binding upon it notwithstanding
the fact that at the time the respective Securities shall be authenticated and
delivered or disposed of, the officer so signing shall have ceased to be such
officer;
FURTHER RESOLVED, that Smith Barney Shearson Inc., PaineWebber
Incorporated, Prudential Securities Incorporated and Salomon Brothers Inc are
appointed as underwriters for the issuance and sale of the Securities of such
series, and the Chairman of the Board, the President or any Vice President of
the Company is authorized, in the name and on behalf of the Company, to execute
and deliver an Underwriting Agreement, substantially in the form heretofore
approved by the Board of Directors of the Company, with such underwriters and
with such changes and insertions therein as are appropriate to conform such
Underwriting Agreement to the terms set forth herein or otherwise as the
respective officers executing such Underwriting Agreement shall approve and as
are not inconsistent with these resolutions, such approval to be conclusively
evidenced by such officer's execution and delivery of such Underwriting
Agreement;
FURTHER RESOLVED, that Morgan Guaranty Trust Company of New York, the
Trustee under the Indenture, is appointed trustee for Securities of such series,
and as Agent of the Company for the purpose of effecting the registration,
transfer, exchange and conversion of the Securities of such series as provided
in the Indenture, and the corporate trust office of Morgan Guaranty Trust
Company of New York, in the Borough of Manhattan, The City of New York is
designated pursuant to the Indenture as the office or agency of the Company
where such Securities may be presented for registration, transfer, exchange and
conversion and where notices and demands to or upon the Company in respect of
the Securities of such series and of the Indenture may be served;
FURTHER RESOLVED, that Morgan Guaranty Trust Company of New York, is
appointed Paying Agent of the Company for the payment of principal of and
premium, if any, and interest on the Securities of such series, and the
corporate trust office of Morgan Guaranty Trust Company of New York, is
designated, pursuant to the Indenture, as the office or agency of the Company
where such Securities may be presented for payment; and
FURTHER RESOLVED, that each of the officers of the Company is authorized
and directed in the name and on behalf of the Company to do or cause to be done
all such acts and things as they or he may deem necessary or advisable, to
effect the sale and delivery of the Securities of such series pursuant to the
Underwriting Agreement
- 4 -
<PAGE>
<PAGE>
and otherwise to carry out the obligations of the Company under the Underwriting
Agreement, and to do or cause to be done all such acts and things and to execute
and deliver all such documents as they or he deem necessary or advisable in
connection with the execution and delivery of the Underwriting Agreement, the
execution, authentication and delivery of such Securities (including, without
limiting the generality of the foregoing, delivery to the Trustee of such
Securities for authentication and of requests or orders for the authentication
and delivery of Securities) and the listing of the Securities on The New York
Stock Exchange.
- 5 -
<PAGE>
<PAGE>
EXHIBIT 10(d)
STOCK REPURCHASE AGREEMENT
This Agreement is made as of May 1, 1984 between Masco Corporation, a
Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco is transferring to Industries certain assets pursuant to
the Masco Corporation Corporate Restructuring Plan (the "Plan") dated as of
May 1, 1984 and proposes thereafter, pursuant to the Plan, to distribute as a
dividend (the "Distribution") in excess of 40% of Industries' Common Stock,
$1.00 par value (the "Common Stock"), to the stockholders of Masco;
WHEREAS, as a result of the Distribution, Industries will become a
publicly held corporation and Masco will initially own approximately 50% of the
Common Stock;
WHEREAS, employees of and consultants to Masco and Industries and their
respective subsidiaries may on the date of the Distribution possess share awards
of Common Stock under the Masco Corporation 1984 Restricted Stock (Industries)
Incentive Plan (the "Masco Plan") which are forfeitable to Masco upon the
occurrence of the events specified therein, Industries has established its own
Restricted Stock Incentive Plan and may in the future establish additional plans
(the "Industries Plans") under which shares of Common Stock of Industries could
be awarded to employees of and consultants to Industries and its subsidiaries
and affiliated companies subject to forfeiture to Industries, and Industries may
in the future desire to repurchase shares of its outstanding Common Stock; and
WHEREAS, Masco desires to prevent any of the foregoing events, without the
concurrence of Masco, from resulting in an increase in Masco's percentage
ownership of the outstanding Common Stock as it exists immediately prior to
occurrence of such event;
NOW, THEREFORE, the parties hereby agree as follows:
1. If at any time prior to May 1, 1994, (a) Industries or any of its
subsidiaries shall repurchase any Common Stock or (b) any shares of Common
Stock, which have been awarded to any employees of or consultants to Industries
or its subsidiaries or affiliated companies pursuant to the Industries Plans, or
which have been awarded to any employees of or consultants to Industries or its
subsidiaries or affiliated companies or Masco or its subsidiaries or affiliated
companies pursuant to the Masco Plan, shall be forfeited to Industries or Masco
pursuant to the terms thereof, Industries shall offer to Masco the opportunity
to sell to Industries on the terms and conditions hereinafter set forth, the
number of shares of Common Stock (the "Offered Shares") necessary to prevent any
increase in the percentage of outstanding shares of
<PAGE>
<PAGE>
Common Stock owned by Masco immediately prior to such repurchase or forfeiture.
2. Promptly after any forfeiture pursuant to the Masco plan should Masco
desire to sell shares of Common Stock to Industries, Masco shall notify
Industries thereof, specifying the number of shares of Common Stock so
forfeited. Promptly after any such repurchase by Industries or forfeiture
pursuant to the Industries Plans, Industries shall notify Masco thereof in
writing, specifying the number of shares of Common Stock so repurchased or
forfeited and the number of shares of Common Stock required to be sold by Masco
to Industries to prevent the increase in percentage ownership as provided in
Paragraph 1. Industries shall thereafter offer Masco the opportunity for 30
days from the date of either of such notices to sell to Industries all (or such
lesser number as is specified by Masco in its acceptance referred to in
Paragraph 3) of the Offered Shares for a purchase price (the "Purchase Price")
equal to (a) in the case of a repurchase of Common Stock by Industries, the
highest repurchase price paid by Industries to a third party during the 30-day
period ending on the date of such repurchase or (b) in the case of the
forfeiture of shares of Common Stock pursuant to the Industries Plans or the
Masco Plan, as the case may be, the fair market value of shares of the Common
Stock at the close of trading on the date of such forfeiture.
3. If Masco shall accept Industries' offer within the 30-day period
specified in Paragraph 2 above by written notice to Industries, then on the date
5 days after the date of Masco's acceptance, Masco shall deliver to Industries
duly executed certificates representing the Offered Shares as to which
Industries' offer has been accepted against receipt from Industries of the
amount of the Purchase Price for such Offered Shares.
4. This agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
5. This Agreement shall not be assigned by either party, except to a
successor to substantially all of the business of a party, without the express
written consent of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ Wayne B. Lyon By /s/ Richard A. Manoogian
Vice President President
<PAGE>
<PAGE>
September 20, 1985
Mr. Richard G. Mosteller
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Re: Restricted Stock Incentive Plans
Dear Mr. Mosteller:
This will confirm (i) our arrangements regarding reimbursement of costs
relating to unvested incentive award shares of Masco Corporation ("Masco")
common stock and Masco Industries, Inc. ("Industries") common stock upon
transfers of employment and consulting relationships between Masco and
Industries, (ii) our arrangements regarding reimbursement upon forfeitures of
such shares, and (iii) our prior understandings on the implementation of the
Stock Repurchase Agreement dated May 1, 1984 between Masco and Industries with
respect to Industries' repurchases of its common stock from Masco following the
forfeiture of shares of Industries common stock granted under either Masco's or
Industries' restricted stock incentive plan (the "Industries Stock Incentive
Plans") and following open market repurchases of such stock by Industries.
These procedures have been established in order to attribute the cost of such
incentive shares in respect of the employees of and consultants to Masco and
Industries and to permit Masco, among other things, to achieve its expressed
objective of maintaining its equity ownership in Industries at not more than 50%
after any forfeiture of Industries incentive award shares. These procedures are
not intended to alter the rights of the parties under the Corporate
Restructuring Plan or the Stock Repurchase Agreement except as expressly
provided herein, and may be terminated by Masco or Industries at any time
without cause, effective ten days after notice of termination.
1. Transfers.
If a person changes employment or a consulting relationship from Masco to
Industries or from Industries to Masco, the new employer will reimburse the
former employer for the cost on the books of the former employer which is
associated with unvested shares of Masco common stock or Industries common stock
awarded under a Masco or Industries incentive plan, to the extent such shares
may continue to vest while the person is engaged by the new employer.
<PAGE>
<PAGE>
2. Forfeitures By Industries Employees and Consultants.
A. Shares of Industries common stock forfeited by an Industries employee
or consultant which were granted pursuant to either of the Industries Stock
Incentive Plans are deemed automatically acquired by Industries from the
employee or consultant as of the date of the forfeiture notwithstanding any
contrary provision in either of the Industries Stock Incentive Plans.
Industries waives its right under Paragraph 4.02 of the Corporate Restructuring
Plan to require Masco to pay Industries an amount equal to the unamortized cost
of Industries shares forfeited by Industries employees which were granted under
Masco's Industries Stock Incentive Plan and no amount is payable by Industries
to Masco on account of Industries' acquisition of such forfeited shares.
B. Shares of Masco common stock that were granted under the Masco
Restricted Stock Incentive Plan are forfeited by Industries employees and
consultants to Masco upon termination of employment or the consulting
relationship. Masco will reimburse Industries for the cost on Industries' books
which is associated with such forfeited Masco shares.
3. Forfeitures By Masco Employees and Consultants.
If Masco's equity ownership in Industries would exceed 50% at the end of
any month, shares of Industries common stock forfeited by Masco employees and
consultants during such month are deemed automatically acquired by Industries
from those employees and consultants (notwithstanding any contrary provision in
Masco's Industries Stock Incentive Plan) on the last day of such month to the
extent necessary so that Masco's ownership will not exceed 50% as of such date.
Industries will reimburse Masco for its loss arising from such forfeiture by
paying to Masco an amount equal to the fair market value of such shares (as
determined under Paragraph 4 hereof) on the last trading day of such month.
4. Repurchase of Industries Shares on Account Of Forfeitures.
If Masco's equity ownership in Industries would exceed 50% at the end of
any month in which forfeited Industries shares are deemed automatically acquired
by Industries, Industries is deemed to repurchase from Masco, on the last day of
such month, additional shares of Industries common stock to the extent necessary
so that Masco's ownership of Industries common stock does not exceed 50% as of
the last day of such month. Pursuant to Paragraph 2(b) of the Stock Repurchase
Agreement, the price for the Industries shares so repurchased from Masco is the
fair market value of such shares at the close of trading on the last trading day
of such month (which is determined by the last sale price for Industries shares
as reported in the NASDAQ National Market System).
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<PAGE>
5. Repurchase of Industries Shares on Account Of Open Market Purchases.
If Masco's equity ownership in Industries would exceed 50% at the end of
any month in which Industries makes open market purchases of its common stock in
connection with awards of shares under its Industries Stock Incentive Plan or in
connection with employee stock options, Industries is deemed to repurchase from
Masco, on the last day of such month, shares of Industries common stock to the
extent necessary so that Masco's ownership of Industries common stock does not
exceed 50% as of the last day of such month. Notwithstanding Paragraph 2(a) of
the Stock Repurchase Agreement, the price for the Industries shares so
repurchased from Masco is the weighted average price paid by Industries for its
open market share purchases during such month. If Masco's equity ownership of
Industries would exceed 50% at the end of any month in which forfeited
Industries shares are deemed automatically acquired by Industries and in which
Industries makes open market purchases of the types contemplated under Paragraph
5 hereof, shares shall be deemed to be repurchased by Industries first pursuant
to Paragraph 4. If, after such repurchases pursuant to Paragraph 4, Masco's
equity ownership would still exceed 50%, shares shall then be deemed to be
repurchased by Industries pursuant to this Paragraph 5.
6. Quarterly Settlement.
Masco and Industries will effect a quarterly settlement of the amounts
required hereunder to be (i) reimbursed upon the transfer of employment or a
consulting relationship between Masco and Industries, (ii) reimbursed to Masco
upon the forfeiture of Industries shares by Masco employees and consultants,
(iii) reimbursed to Industries upon the forfeiture of Masco shares by
Industries employees and consultants, and (iv) paid to Masco for any repurchase
of Industries shares pursuant to Paragraphs 4 and 5 hereof.
7. Additional Provisions.
A. Appropriate instructions will be given to Industries' transfer agent
to reflect Industries' ownership of forfeited Industries shares and repurchase
of additional Industries shares.
B. Masco and Industries will promptly notify each other of forfeitures of
shares which are subject to these procedures.
C. These procedures are deemed to be effective as of May 1, 1984,
notwithstanding the fact that certain reports prepared prior to the date hereof
are inconsistent herewith, and this letter supersedes any prior arrangements
with respect to such procedures.
<PAGE>
<PAGE>
Please confirm your agreement with the foregoing procedures.
Sincerely,
/s/ James J. Sigouin
James J. Sigouin
Vice President - Finance
Confirmed by
Masco Corporation:
By /s/ Richard G. Mosteller
Richard G. Mosteller
Senior Vice President
- Finance
<PAGE>
<PAGE>
AMENDMENT TO STOCK REPURCHASE AGREEMENT
AMENDMENT dated as of December 20, 1990 between Masco Corporation, a
Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco and Industries are parties to a Stock Repurchase Agreement
dated as of May 1, 1984 and a related letter agreement dated September 20, 1985;
and
WHEREAS, Masco and Industries desire to amend the Stock Repurchase
Agreement in connection with the transactions contemplated by the Exchange
Agreement dated as of December 18, 1990 between Masco and Industries;
NOW, THEREFORE, the parties agree that Paragraph 1 of the Stock Repurchase
Agreement dated as of May 1, 1984 is amended to read as follows:
"1. If at any time prior to May 1, 1994, (a) Industries or any of its
subsidiaries shall repurchase any Common Stock or (b) any shares of Common
Stock, which have been awarded to any employees of or consultants to Industries
or its subsidiaries or affiliated companies pursuant to the Industries Plans, or
which have been awarded to any employees of or consultants to Industries or its
subsidiaries or affiliated companies or Masco or its subsidiaries or affiliated
companies pursuant to the Masco Plan, shall be forfeited to Industries or Masco
pursuant to the terms thereof, and as a result of such repurchase or forfeiture
the percentage of outstanding shares of Common Stock owned by Masco would
increase to an amount in excess of 49%, Industries shall offer to Masco the
opportunity to sell to Industries on the terms and conditions hereinafter set
forth, the number of shares of Common Stock (the "Offered Shares") necessary to
reduce the percentage of outstanding shares of Common Stock owned by Masco to
49%."
Except as specifically amended hereby, the Stock Repurchase Agreement and
related letter agreement referred to above remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By /s/ Gerald Bright By /s/ Erwin H. Billig
Vice President and Secretary President and Chief Operating
Officer
<PAGE>
<PAGE>
AGREEMENT
This Agreement is dated as of November 23, 1993 between MascoTech, Inc., a
Delaware corporation (the "Company"), and Masco Corporation, a Delaware
corporation ("Masco").
WHEREAS, in addition to certain shares of Company common stock, par value
$1.00 per share (the "Common Stock"), and warrants to purchase Common Stock,
Masco holds (i) $130 million (the "Masco Debentures") of the Company's 6%
Convertible Subordinated Debentures Due 2011 (the "Debentures"), which are
redeemable at any time by the Company and convertible at any time into Common
Stock at $18 per share of Common Stock, and (ii) the one million outstanding
shares of the Company's 10% Exchangeable Preferred Stock (the "Preferred
Stock").
WHEREAS, the Company has been contemplating calling for redemption all of
the Debentures (including the Masco Debentures), and Masco is willing to refrain
from selling or otherwise disposing of Common Stock or other Company securities
for a period of time in order to facilitate the call for redemption of all of
the Debentures.
WHEREAS, it is in the interest of the Company to repurchase the Preferred
Stock for cash in order to reduce its financing costs and such repurchase is not
inconsistent with Masco's previously stated intention to reduce its investment
in the Company.
WHEREAS, the Company and Masco have entered into a Securities Purchase
Agreement dated as of March 31, 1993 (the "Securities Purchase Agreement")
pursuant to which Masco has agreed to purchase from the Company at its request
on or before March 31, 1995 additional preferred stock or subordinated debt
securities for an aggregate purchase price of up to $200 million, and the
parties desire to amend and restate the Securities Purchase Agreement in certain
respects.
WHEREAS, the Company and Masco have entered into a Stock Repurchase
Agreement dated as of May 1, 1984, as amended (the "Stock Repurchase
Agreement"), pursuant to which the Company has agreed to repurchase from Masco,
until May 1, 1994, such number of shares of Common Stock as may be necessary to
prevent Masco's Common Stock ownership interest in the Company from exceeding
49%, and the parties are agreeable to extending the term thereof.
NOW, THEREFORE, the parties agree as follows:
1. Conversion of Debentures. Masco agrees that (a) on or before
December 31, 1993 it will surrender for conversion the Masco Debentures, and (b)
it will not sell or otherwise dispose of any Common Stock, warrants to purchase
Common Stock or Debentures (whether now held or acquired on conversion) on or
before December 31, 1993. If Masco surrenders the Masco Debentures for
conversion
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<PAGE>
prior to December 15, 1993, the Company will pay Masco an amount equal to the
interest accrued on the Masco Debentures from the last regular semi-annual
interest payment date to the date of conversion.
2. Repurchase of Preferred Stock. The Company shall repurchase the
Preferred Stock for $100 per share, plus an amount equal to accrued and unpaid
dividends from October 1, 1993 to the date of repurchase, payable in cash on the
date of such repurchase. Such repurchase shall occur as soon as practicable
after the execution of this Agreement.
3. Amendment to Securities Purchase Agreement. Concurrently herewith
the parties are entering into an Amended and Restated Securities Purchase
Agreement. The parties hereby confirm that all securities issuable pursuant to
the Amended and Restated Securities Purchase Agreement will be "Registrable
Securities" under the Registration Agreement between them dated as of March 31,
1993.
4. Amendment to Stock Repurchase Agreement. The parties hereby amend
Paragraph 1 of the Stock Repurchase Agreement by deleting the date "May 1, 1994"
and substituting therefor the date "May 1, 2004". Except as otherwise
specifically set forth herein, the Stock Repurchase Agreement shall continue in
full force and effect.
5. Representations and Warranties. (a) Each party represents and
warrants to the other that the following statements are true and correct as of
the date hereof and will be true and correct at the time Masco surrenders the
Masco Debentures for conversion and at the time of the repurchase of the
Preferred Stock:
(i) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is authorized by
its certificate of incorporation to carry on its business as now
conducted.
(ii) The execution, delivery and performance of this Agreement by
such party and the consummation by such party of the transactions
contemplated hereby are within the corporate powers of such party and
have been duly authorized by all necessary corporate action on its
part. This Agreement constitutes a valid and binding agreement of
such party.
(iii) No authorization, consent or approval of, or registration or
filing with, any governmental or public body or regulatory authority is
required and which has not been obtained on the part of such party for the
execution, delivery and performance of this Agreement by such party.
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(iv) The execution, delivery and performance of this Agreement by
such party do not result in any violation by it of any of the terms or
provisions of its certificate of incorporation or by-laws or of any
indenture, mortgage or other agreement or instrument by which it or any of
its Subsidiaries (as hereinafter defined) is bound.
(b) Masco represents and warrants to the Company that Masco has, and at
the time of the repurchase of the Preferred Stock will have, unencumbered title
to the Preferred Stock, free and clear of any Liens (as hereinafter defined),
and delivery by Masco of the Preferred Stock will pass unencumbered title to the
Company, free and clear of any Liens .
(c) The Company represents and warrants to Masco that the repurchase of
the Preferred Stock from Masco will be effected in compliance with the Delaware
General Corporation Law.
6. Legal Opinions. Concurrently with the execution hereof, Masco is
delivering to the Company an opinion of John R. Leekley, counsel to Masco, and
the Company is delivering to Masco an opinion of Dykema Gossett, counsel to the
Company, in each case dated the date hereof and to the effect of certain of the
matters specified in Paragraph 5 hereof.
7. Definitions. The following terms, as used herein, have the
following meanings:
(a) "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(b) "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
(c) "Subsidiary" means, with respect to any Person, any corporation
or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are
at the time directly or indirectly owned by such Person.
8. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
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WHEREFORE, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
MASCO CORPORATION
By /s/Richard G. Mosteller
Its Senior Vice President -
Finance
MASCOTECH, INC.
By /s/Timothy Wadhams
Its Vice President - Controller
PAGE
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Exhibit 10.e
MASCOTECH, INC.
1991 LONG TERM STOCK INCENTIVE PLAN
(Restated September 14, 1993)
Section 1. Purposes
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are
to encourage selected employees of and consultants to MascoTech, Inc. (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's future
success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest, whether
more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of not
less than two directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
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(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company
or any Affiliate designated to be granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(n) "Restricted Period" shall mean the period of time during which Awards
of Restricted Stock or Restricted Stock Units are subject to restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules and
regulations promulgated by the Securities and Exchange Commission thereunder, or
any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(b) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
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Section 3. Administration
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without limita-
tion the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and any
payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property
and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof or of the
Committee;
(vii) determine the methods or procedures for establishing the fair
market value of any property (including, without limitation, any Shares or
other securities) transferred, exchanged, given or received with respect
to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards and
any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan;
(xii) decide all questions and settle all controversies and disputes
which may arise in connection with the Plan, Award Agreements and Awards;
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(xiii) delegate to directors of the Company who need not be
"disinterested persons" within the meaning of Rule 16b-3 the authority to
designate Participants and grant Awards, provided such Participants are
not directors or officers of the Company for purposes of Section 16;
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and Awards.
All designations, determinations, interpretations and other decisions
under or with respect to the Plan, Award Agreements or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon all persons, including the Company,
Affiliates, Participants, beneficiaries of Awards and stockholders of the
Company.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Initial Authorization. There shall be 6,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above,
up to 6,000,000 Shares acquired by the Company subsequent to the
effectiveness of the Plan as full or partial payment for the exercise
price for an Option or any other stock option granted by the Company, or
acquired by the Company, in open market transactions or otherwise, in
connection with the Plan or any Award hereunder or any other employee
stock option or restricted stock issued by the Company may thereafter be
included in the Shares available for Awards. If any Shares covered by an
Award or to which an Award relates are forfeited, or if an Award expires,
terminates or is cancelled, then the Shares covered by such Award, or to
which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares available under the Plan by reason
of such Award, to the extent of any such forfeiture, expiration,
termination or cancellation, may thereafter be available for further
granting of Awards and included as acquired Shares for purposes of the
preceding sentence.
(iii) Additional Shares. Shares acquired by the Company in the
circumstances set forth in (ii) above in excess of the amount set forth
therein may thereafter be included in the Shares available for Awards to
the extent permissible for
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purposes of allowing the Plan to continue to satisfy the conditions of
Rule 16b-3.
(iv) Shares Under Prior Plans. In addition to the amount set forth
above, shares remaining available for issuance upon any termination of
authority to make further awards under both the Company's 1984 Restricted
Stock Incentive Plan and its 1984 Stock Option Plan shall thereafter be
available for issuance hereunder.
(v) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of
grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan to the extent determinable on
such date and insofar as the number of Shares is not then
determinable under procedures adopted by the Committee consistent
with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares available
for granting Awards under the Plan in such amount and at such time
as the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards or restricted stock awards or stock options granted under any other
plan of the Company may be counted or not counted under procedures adopted by
the Committee in order to avoid double counting. Any Shares that are delivered
by the Company or its Affiliates, and any Awards that are granted by, or become
obligations of, the Company, through the assumption by the Company of, or in
substitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case of
Awards granted to Participants who are directors or officers of the Company for
purposes of Section 16, be counted against the Shares available for granting
Awards under the Plan.
(vi) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized but unissued Shares or of Shares reacquired by the Company,
including but not limited to Shares purchased on the open market.
(b) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization,
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merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company or extraordinary
transaction or event which affects the Shares, then the Committee shall have the
authority to make such adjustment, if any, in such manner as it deems appropri-
ate, in (i) the number and type of Shares (or other securities or property)
which thereafter may be made the subject of Awards, (ii) outstanding Awards
including without limitation the number and type of Shares (or other securities
or property) subject thereto, and (iii) the grant, purchase or exercise price
with respect to outstanding Awards and, if deemed appropriate, make provision
for cash payments to the holders of outstanding Awards; provided, however, that
the number of Shares subject to any Award denominated in Shares shall always be
a whole number.
Section 5. Eligibility
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, but excluding a member
of the Committee, any person who serves only as a director of the Company and
any consultant to the Company or an Affiliate who is also a director of the
Company and who is not rendering services pursuant to a written agreement with
the entity in question), as may be selected from time to time by the Committee
or by the directors to whom authority may be delegated pursuant to Section 3
hereof in its or their discretion, is eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is authorized to grant Options to
Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option;
(B) the term of each Option; and
(C) the time or times at which an Option may be exercised, in
whole or in part, the method or methods by which and the form or
forms (including, without limitation, cash, Shares, other Awards or
other property, or any combination thereof, having a fair market
value on the exercise date equal to the relevant exercise price) in
which payment of the exercise price with respect thereto may be made
or deemed to have been made. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or
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any successor provision thereto, and any regulations promulgated
thereunder.
Subject to the terms of the Plan, the Committee may impose such conditions
or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the Committee,
of exercise of the Option and the number of Shares elected for
exercise, such notice to be accompanied by such instruments or
documents as may be required by the Committee, and shall tender the
purchase price of the Shares elected for exercise.
(B) At the time of exercise of an Option payment in full in
cash shall be made for all Shares then being purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
(I) if the class of Shares at the time is listed upon
any stock exchange, the Shares to be issued have been listed,
or authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(II) in the opinion of the Company's counsel there has
been compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company
may require from the Participant such investment representation or
such agreement, if any, as the Company's counsel may consider
necessary in order to comply with the Securities Act of 1933 as then
in effect, and may require that the Participant agree that any sale
of the Shares will be made only in such manner as shall be in accor-
dance with law and that the Participant will notify the Company of
any intent to make any disposition of the Shares whether by sale,
gift or otherwise. The Participant shall take any action reasonably
requested by the Company in such connection. A Participant shall
have the rights of a stockholder only as and when Shares have been
actually issued to the Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer
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an Affiliate) other than the Participant's death, the Participant
may thereafter exercise the Option as provided below, except that
the Committee may terminate the unexercised portion of the Option
concurrently with or at any time following termination of the
employment or consulting arrangement (including termination of
employment upon a change of status from employee to consultant) if
it shall determine that the Participant has engaged in any activity
detrimental to the interests of the Company or an Affiliate. If such
termination is voluntary on the part of the Participant, the option
may be exercised only within ten days after the date of termination.
If such termination is involuntary on the part of the Participant,
if an employee retires on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of
permanent and total disability, the Option may be exercised within
three months after the date of termination or retirement. For
purposes of this Paragraph (D), a Participant's employment or
consulting arrangement shall not be considered terminated (i) in the
case of approved sick leave or other bona fide leave of absence (not
to exceed one year), (ii) in the case of a transfer of employment or
the consulting arrangement among the Company and Affiliates, or
(iii) by virtue of a change of status from employee to consultant or
from consultant to employee, except as provided above.
(E) If a Participant dies at a time when entitled to exercise
an Option, then at any time or times within one year after death
such Option may be exercised, as to all or any of the Shares which
the Participant was entitled to purchase immediately prior to death.
The Company may decline to deliver Shares to a designated
beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company. Except as so exercised such
Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent such
Option was exercisable at the date of termination of employment or
the consulting arrangement, and an Option may not be exercised at a
time when the Option would not have been exercisable had the
employment or consulting arrangement continued.
(iii) Restoration Options. The Committee may grant a Participant
the right to receive a restoration Option with respect to an Option or any
other option granted by the Company. Unless the Committee shall otherwise
determine, a restoration Option shall provide that the underlying option
must be exercised while the Participant is an employee of or consultant to
the Company or an Affiliate and the number of Shares which are subject to
a
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restoration Option shall not exceed the number of whole Shares exchanged
in payment of the original option.
(b) Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the fair
market value of one Share on the date of exercise or, if the Committee shall so
determine in the case of any such right other than one related to any Incentive
Stock Option, at any time during a specified period before or after the date of
exercise over (ii) the grant price of the right as specified by the Committee.
Subject to the terms of the Plan, the Committee shall determine the grant price,
term, methods of exercise and settlement and any other terms and conditions of
any Stock Appreciation Right and may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to Participants
Awards of Restricted Stock, which shall consist of Shares, and Restricted
Stock Units which shall give the Participant the right to receive cash,
other securities, other Awards or other property, in each case subject to
the termination of the Restricted Period determined by the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of the
Plan, Awards of Restricted Stock and Restricted Stock Units shall have
such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right
to receive any dividend or other right or property), which restrictions
may lapse separately or in combination at such time or times, in
installments or otherwise. Unless the Committee shall otherwise determine,
any Shares or other securities distributed with respect to Restricted
Stock or which a Participant is otherwise entitled to receive by reason of
such Shares shall be subject to the restrictions contained in the
applicable Award Agreement. Subject to the aforementioned restrictions and
the provisions of the Plan, Participants shall have all of the rights of a
stockholder with respect to Shares of Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate, including,
without limitation, book-entry registration or issuance of stock certifi-
cates.
(iv) Forfeiture. Except as otherwise determined by the Committee:
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(A) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate), other
than the Participant's death or permanent and total disability or,
in the case of an employee, retirement on or after normal retirement
date, all Shares of Restricted Stock theretofore awarded to the
Participant which are still subject to restrictions shall upon such
termination of employment or the consulting relationship be
forfeited and transferred back to the Company. Notwithstanding the
foregoing or Paragraph (C) below, if a Participant continues to hold
an Award of Restricted Stock following termination of the employment
or consulting arrangement (including retirement and termination of
employment upon a change of status from employee to consultant), the
Shares of Restricted Stock which remain subject to restrictions
shall nonetheless be forfeited and transferred back to the Company
if the Committee at any time thereafter determines that the
Participant has engaged in any activity detrimental to the interests
of the Company or an Affiliate. For purposes of this Paragraph (A),
a Participant's employment or consulting arrangement shall not be
considered terminated (i) in the case of approved sick leave or
other bona fide leave of absence (not to exceed one year), (ii) in
the case of a transfer of employment or the consulting arrangement
among the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
(B) If a Participant ceases to be employed or retained by the
Company or an Affiliate by reason of death or permanent and total
disability or if following retirement a Participant continues to
have rights under an Award of Restricted Stock and thereafter dies,
the restrictions contained in the Award shall lapse with respect to
such Restricted Stock.
(C) If an employee ceases to be employed by the Company or an
Affiliate by reason of retirement on or after normal retirement
date, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment had
not terminated.
(D) At the expiration of the Restricted Period as to Shares
covered by an Award of Restricted Stock, the Company shall deliver
the Shares as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in
accordance with Section 6(g)(iv)(B)(2)(c), to such trust; or
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(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in form approved
by the Company, to the beneficiary so designated; or
(3) in all other cases, to the Participant or the legal
representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant Performance
Awards to Participants. Subject to the terms of the Plan, a Performance Award
granted under the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock), other securities, other
Awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee and payable to, or exercisable by, the
holder of the Performance Award, in whole or in part, upon the achievement of
such performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan, the performance goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and other terms and
conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to receive
payments equivalent to dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have such terms
and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan,
the Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof, as the Committee shall determine.
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(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for no
cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under another plan of the Company or any
Affiliate, may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, and may be
made in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures established by
the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no Award
or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A) above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the Participant
in writing on a form approved by the Committee; or
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate.
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(2) A Participant may assign or transfer rights under an
Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the Participant
in writing on a form approved by the Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate; or
(c) to a revocable grantor trust established by the
Participant for the sole benefit of the Participant
during the Participant's life, and under the terms of
which the Participant is and remains the sole trustee
until death or physical or mental incapacity. Such
assignment shall be effected by a written instrument in
form and content satisfactory to the Committee, and the
Participant shall deliver to the Committee a true copy
of the agreement or other document evidencing such
trust. If in the judgment of the Committee the trust to
which a Participant may attempt to assign rights under
such an Award does not meet the criteria of a trust to
which an assignment is permitted by the terms hereof, or
if after assignment, because of amendment, by force of
law or any other reason such trust no longer meets such
criteria, such attempted assignment shall be void and
may be disregarded by the Committee and the Company and
all rights to any such Awards shall revert to and remain
solely in the Participant. Notwithstanding a qualified
assignment, the Participant, and not the trust to which
rights under such an Award may be assigned, for the
purpose of determining compensation arising by reason of
the Award shall continue to be considered an employee or
consultant, as the case may be, of the Company or an
Affiliate, but such trust and the Participant shall be
bound by all of the terms and conditions of the Award
Agreement and this Plan. Shares issued in the name of
and delivered to such trust shall be conclusively
considered issuance and delivery to the Participant.
(3) The Committee shall not permit directors or officers
of the Company for purposes of Section 16 to transfer or
assign Awards except as permitted under Rule 16b-3.
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(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or
other instrument of transfer, copies of trust agreements and any
other documents delivered to them by or on behalf of the Participant
which they believe genuine and any action taken by them in reliance
thereon shall be conclusive and binding upon the Participant, the
personal representatives of the Participant's estate and all persons
asserting a claim based on an Award. The delivery by a Participant
of a beneficiary designation, or an assignment of rights under an
Award as permitted hereunder, shall constitute the Participant's
irrevocable undertaking to hold the Committee, the Company and its
officers, agents and employees harmless against claims, including
any cost or expense incurred in defending against claims, of any
person (including the Participant) which may be asserted or alleged
to be based on an Award subject to a beneficiary designation or an
assignment. In addition, the Company may decline to deliver Shares
to a beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company.
(v) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restric-
tions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities
are then listed and any applicable Federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(vi) Change in Control. (A) Notwithstanding any of the provisions
of this Plan or instruments evidencing Awards granted hereunder, upon a
Change in Control of the Company (as hereinafter defined) the vesting of
all rights of Participants under outstanding Awards shall be accelerated
and all restrictions thereon shall terminate in order that Participants
may fully realize the benefits thereunder. Such acceleration shall
include, without limitation, the immediate exercisability in full of all
Options and the termination of restrictions on Restricted Stock and
Restricted Stock Units. Further, in addition to the Committee's authority
set forth in Section 4(b), the Committee, as constituted before such
Change in Control, is authorized, and has sole discretion, as to any
Award, either at the time such Award is made hereunder or any time
thereafter, to take any one or more of the following actions: (i) provide
for the purchase of any such Award, upon the Participant's request, for an
amount of cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Participant's rights had such
Award been currently exercisable or payable; (ii) make such adjustment to
any such Award then outstanding as the Committee
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deems appropriate to reflect such Change in Control; and (iii) cause any
such Award then outstanding to be assumed, or new rights substituted
therefor, by the acquiring or surviving corporation after such Change in
Control.
(B) A Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, other than pursuant
to a transaction or agreement previously approved by the Board of
Directors of the Company, directly or indirectly purchases or
otherwise becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) or has the right to acquire such beneficial
ownership (whether or not such right is exercisable immediately,
with the passage of time, or subject to any condition) of voting
securities representing 25 percent or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
of Masco Corporation, a Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any new
directors whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at the
beginning of the period or whose election or nomination for election
as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
(vii) Cash Settlement. Notwithstanding any provision of this Plan
or of any Award Agreement to the contrary, any Award outstanding hereunder
may at any time be cancelled in the Committee's sole discretion upon
payment of the value of such Award to the holder thereof in cash or in
another Award hereunder, such value to be determined by the Committee in
its sole discretion.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any
outstanding Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as stockholder
approval thereof is required in order for the Plan to continue to satisfy the
conditions of Rule 16b-3, and
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(ii) without the consent of affected Participants no amendment of the Plan or of
any Award may impair the rights of Participants under outstanding Awards.
(b) Waivers. The Committee may waive any conditions or rights under any
Award theretofore granted, prospectively or retroactively, without the consent
of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits to be made available under the
Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
effectuate the Plan.
Section 8. General Provisions
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, including the grant of
options and other stock-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.
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(d) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement
or other written agreement with the Participant.
(e) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable Federal law.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any person or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, person or Award, and the remainder of the Plan and any
such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other person. To the extent that any person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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Exhibit 10.f
MASCOTECH, INC.
1984 RESTRICTED STOCK INCENTIVE PLAN
(Restated September 14, 1993)
l. Purpose of the Plan
The purpose of the 1984 Restricted Stock Incentive Plan (the "Plan") is to
aid MascoTech, Inc. (the "Company") and its subsidiaries and affiliated
companies in securing and retaining key employees and consultants of outstanding
ability and to motivate such individuals to exert their best efforts on behalf
of the Company and its subsidiaries and affiliated companies. In addition, the
Company expects that it will benefit from the added interest which such
individuals will have in its welfare as a result of their ownership or increased
ownership of the Company's Common Stock. For purposes of the Plan a
"subsidiary" is any corporation in which the Company owns, directly or
indirectly, stock possessing more than fifty percent of the total combined
voting power of all classes of stock. For purposes of Paragraph 4 of the Plan,
an "affiliated company" is any other corporation (and its subsidiaries) in which
the Company or its subsidiaries own stock possessing at least twenty percent of
the total combined voting power of all classes of stock, and for all other
purposes of the Plan, an "affiliated company" is any other corporation, at least
twenty percent of the total combined voting power of all classes of stock of
which is owned by the Company or by one or more other corporations in a chain of
corporations, at least twenty percent of the stock of each of which is held by
the Company or a subsidiary or another corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of the Company's Common Stock that may be
awarded under the Plan shall not exceed in the aggregate 8,160,000 shares;
provided, however, that such total amount shall be reduced by the aggregate
number of shares of the Company's Common Stock as to which options have been
granted under the Company's 1984 Stock Option Plan since the original adoption
thereof (other than shares which are available for further grants under Article
IV of such Plan notwithstanding the prior grant of options with respect to such
shares). Such stock may be authorized but unissued shares or shares of Common
Stock reacquired by the Company, including but not limited to shares purchased
on the open market. Shares of stock awarded under the Plan which are later
reacquired by the Company as a result of forfeiture pursuant to the Plan shall
again become available for awards under the Plan.
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3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of three or more members of the Board of Directors who
shall administer the Plan. No director shall become or remain a member of the
Committee unless at the time of his exercise of any discretionary function as a
Committee member such director is not and has not at any time within one year
prior to the exercise of such discretion been eligible for selection as a person
to whom stock may be allocated or to whom stock options or stock appreciation
rights may be granted pursuant to the Plan or any other plan of the Company or
any of its affiliates entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or any of its affiliates.
The Committee shall have the authority, consistent with the Plan, to determine
the terms and conditions of each award, to interpret the Plan and the agreements
under the Plan, to adopt, amend and rescind rules and regulations for the admin-
istration of the Plan and the awards, and generally to conduct and administer
the Plan and to make all determinations in connection therewith which may be
necessary or advisable, and all such actions of the Committee shall be binding
upon all participants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or as a non-employee officer of the Company and
any consultant to the Company or any of its subsidiaries or affiliated companies
who is also a director of the Company or who is not rendering services pursuant
to a written agreement with the corporation in question), as may be selected
from time to time by the Committee in its discretion, are eligible to receive
awards under the Plan. The Committee shall determine in its sole discretion the
number of shares to be awarded to each such participant.
5. Terms and Conditions of Awards
All shares of Common Stock awarded to participants under the Plan shall be
subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as shall be contained in each Award
Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" which shall be not less
than 90 days. Such Restricted Period may
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differ among participants and may have different expiration dates with
respect to portions of shares covered by the same award. The Committee
may also determine that the expiration of any Restricted Period shall be
subject to such additional terms and conditions as it decides in its sole
discretion and as set forth in the participant's Agreement.
(b) Shares of stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer and the restrictions applicable to non-cash dis-
tributions, the participant shall have all the rights of a stockholder
including but not limited to the right to receive all dividends paid on
such shares (subject to the provisions of Paragraph 6) and the right to
vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any reason
(including termination by reason of the fact that such corporation is no
longer a subsidiary or affiliated company) other than death, permanent and
total disability, or, in the case of an employee, retirement on or after
normal retirement date, all shares of stock theretofore awarded to the
participant which are still subject to the restrictions imposed by
Paragraph 5(b) shall upon such termination be forfeited and transferred
back to the Company, provided, however, that in the event such employment
or consulting relationship is terminated by action of the Company or any
of its subsidiaries or affiliated companies without cause or by agreement
of the Company or any of its subsidiaries or affiliated companies and the
participant, the Committee may, but need not, determine that some or all
of the shares shall be free of restrictions. For purposes of this
Paragraph 5(c), a participant's employment or consulting agreement shall
not be considered terminated (i) in the case of transfers of employment or
the consulting arrangement among the Company, its subsidiaries and af-
filiated companies, (ii) by virtue of a change of status from employee to
consultant or from consultant to employee, or (iii) in the case of
interruption in service, not exceeding one year in duration unless
otherwise approved by the Committee, for approved sick leave or other bona
fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if an employee ceases to be
employed by the Company or any of its subsidiaries or affiliated companies
by reason of retirement on or after normal retirement date, the
restrictions imposed by Paragraph 5(b) shall lapse with
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respect to the shares then subject to restrictions, except to the extent
provided to the contrary in the Agreement.
(e) Each certificate issued in respect of shares awarded under the
Plan shall be registered in the name of the participant and deposited by
the participant with the Company, together with a stock power endorsed in
blank, and shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Industries, Inc. 1984 Restricted Stock Incentive Plan and an Award
Agreement entered into between the registered owner and MascoTech, Inc.
Copies of such Plan and Award Agreement are on file in the office of the
Secretary of MascoTech, Inc., Taylor, Michigan."
(f) The participant shall enter into an Agreement with the Company
in a form specified by the Committee agreeing to the terms and conditions
of the award, the expiration of the Restricted Period as to the shares
covered by the award, and such other matters, including compliance with
applicable federal and state securities laws and methods of withholding or
providing for the payment of required taxes, as the Committee shall in its
sole discretion determine. The Committee may at any time amend the terms
of any Agreement consistent with the terms of the Plan, except that
without the participant's written consent no such amendment shall
adversely affect the rights of the participant who is a party to such
Agreement.
(g) At the expiration of the Restricted Period as to shares covered
by any award, the Company shall redeliver the stock certificates deposited
with it pursuant to Paragraph 5(e) and as to which the Restricted Period
has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
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(h) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each award theretofore
granted shall immediately become fully vested and non-forfeitable and
shall thereupon be distributed to participants as soon as practicable,
free of all restrictions. A Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
of Masco Corporation, a Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any new
directors whose election by either such Board or nomination for
election by stockholders was approved by a vote of at least two-
thirds of the members of such Board who were either directors on
such Board at the beginning of the period or whose election or
nomination for election as directors was previously so approved, for
any reason cease to constitute at least a majority of the members
thereof.
(i) Notwithstanding any other provision of the Plan, a participant
may assign all rights under any award to a revocable grantor trust
established by the participant for the sole benefit of the participant
during the life of the participant, and under the terms of which the
participant is and remains the sole trustee until death or physical or
mental incapacity. Such assignment shall be effected by a written
instrument in form and content satisfactory to the Committee and the
participant shall deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment of the Committee
the trust to which a participant may attempt to assign rights under an
award does not meet the criteria of a trust to which an assignment is
permitted by the terms of this Paragraph 5(i) or if after assignment,
because of amendment, by force of law or any other reason such trust no
longer meets such criteria, such attempted assignment shall be void and
may be disregarded by the
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Committee and the Company and all rights to any awards shall revert to and
remain solely in the participant. Notwithstanding a qualified assignment,
the participant, and not the trust to which rights under an award may be
assigned, for the purpose of determining compensation arising by reason of
the award, shall continue to be considered an employee or consultant, as
the case may be, of the Company, a subsidiary or affiliated company, but
such trust and the participant shall be bound by all of the terms and
conditions of the Agreement and the Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other instrument
of transfer, copies of trust agreements and any other documents delivered
to them by or on behalf of the participant which they believe genuine and
any action taken by them in reliance thereon shall be conclusive and
binding upon the participant, his personal representatives and all persons
asserting a claim based on an award granted pursuant to the Plan. The
delivery by a participant of a beneficiary designation, or an assignment
of rights under an award as permitted by this Paragraph 5(i), shall
constitute the participant's irrevocable undertaking to hold the Commit-
tee, the Company and its officers, agents and employees harmless against
claims, including any cost or expense incurred in defending against
claims, of any person (including the participant) which may be asserted or
alleged to be based upon an award subject to a beneficiary designation or
an assignment. In addition, the Company may decline to deliver shares to
a beneficiary until it receives indemnity against claims of third parties
satisfactory to the Company. Issuance of shares as to which restrictions
have lapsed in the name of, and delivery to, the trust to which rights may
be assigned shall be conclusively considered issuance and delivery to the
participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to
satisfy, in whole or in part, the applicable income tax withholding
obligations when the restrictions imposed by Paragraph 5(b) lapse by
having withheld from the shares as to which the Restricted Period has
expired or by delivering from shares of Common Stock of the Company owned
by the participant such number of shares having a fair market value equal
to the amount needed to satisfy such obligations.
(k) In its sole discretion the Committee may also provide the
participant with the right to receive cash payments in connection with
shares of Common Stock awarded under the Plan (including shares previously
awarded), the amount of which payments are based, in whole or only in
part,
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on the value of such Common Stock. The right to receive such payments
shall be subject to such other terms and conditions not inconsistent with
the Plan as the Committee may determine.
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by the Company for the
outstanding Common Stock of the Company, the maximum aggregate number and class
of shares as to which awards may be granted under the Plan may be appropriately
adjusted by the Committee whose determination thereof shall be conclusive.
Unless the Committee shall otherwise determine, any shares of stock or other
securities received by a participant with respect to shares still subject to the
restrictions imposed by Paragraph 5(b) will be subject to the same restrictions
and shall be deposited with the Company.
If the Company shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) will be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise at that
time.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of stockholders of the Company, no
amendment shall increase the total number of shares which may be awarded under
the Plan, extend the date for awards of shares under the Plan beyond December
31, 1999 or change the standards of eligibility to participate in the Plan. The
total number of shares which may be awarded under the Plan may, however, be
adjusted without stockholder approval, pursuant to the adjustment provisions
described in Paragraph 6.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1999.
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Exhibit 10.g
MASCOTECH, INC.
1984 STOCK OPTION PLAN
(Restated September 14, 1993)
Article I. Purpose
The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for
MascoTech, Inc. (the "Company") and its stockholders the benefits inherent in
stock ownership by selected key employees of and consultants to the Company and
its subsidiaries and affiliated companies who in the judgment of the committee
responsible for the administration of the Plan are largely responsible for the
Company's growth and success. The Plan is designed to accomplish this purpose
by offering such employees and consultants an opportunity to purchase shares of
the Common Stock of the Company. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock possessing
more than fifty percent of the total combined voting power of all classes of
stock. For purposes of Articles III and VII of the Plan, an "affiliated
company" is any other corporation (and its subsidiaries) in which the Company or
its subsidiaries own stock possessing at least twenty percent of the total
combined voting power of all classes of stock, and for all other purposes of the
Plan, an "affiliated company" is any other corporation, at least twenty percent
of the total combined voting power of all classes of stock of which is owned by
the Company or by one or more other corporations in a chain of corporations, at
least twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
Article II. Administration
The Plan shall be administered by a committee (the "Committee") consisting
of three or more of the Company's directors to be appointed by the Board of
Directors. No director shall become or remain a member of the Committee unless
at the time of his exercise of any discretionary function as a Committee member
such director is not eligible, and has not at any time within one year prior to
the exercise of such discretion been eligible for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights may
be granted pursuant to the Plan or any other plan of the Company or any of its
affiliates entitling the participants therein to acquire stock, stock options or
stock appreciation rights of the Company or any of its affiliates. The
Committee shall have authority, consistent with the Plan:
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(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be granted and
the number of shares of Common Stock to be subject to each option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments evidencing any
options granted under the Plan and of any other instruments required under
the Plan, and to change such forms from time to time;
(f) to designate options granted to key employees of the Company or
its "subsidiaries" under the Plan as "incentive stock options" ("ISOs"),
as such terms are defined under the Internal Revenue Code;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee shall
be binding on all parties concerned.
Article III. Participants
Key employees of and consultants to the Company, its subsidiaries or
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or a non-employee officer of the Company and any
consultant to the Company or any of its subsidiaries or affiliated companies who
is not rendering services pursuant to a written agreement with the corporation
in question), as may be selected from time to time by the Committee in its
discretion, are eligible to receive options under the Plan. The grant of an
option to an employee or consultant shall not entitle such individual to other
grants or options, nor shall such grant disqualify such individual from further
participation.
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Article IV. Limitations
No options shall be granted under the Plan after December 31, 1999, but
options theretofore granted may extend beyond that date. Subject to adjustment
as provided in Article IX, the number of shares of Common Stock of the Company
which may be issued under the Plan shall not exceed in the aggregate 8,160,000
shares; provided, however, that such total amount shall be reduced by the
aggregate number of shares of the Company's Common Stock awarded under the
Company's 1984 Restricted Stock Incentive Plan since the original adoption
thereof (other than shares forfeited to the Company which are thereby available
for further awards under Paragraph 2 of such Plan). To the extent that any
option granted under the Plan shall expire or terminate unexercised or for any
reason become unexercisable as to any stock subject thereto, such stock shall
thereafter be available for further grants under the Plan, within the limit
specified above. If an option granted under the Plan shall be accepted for
surrender pursuant to Article VIII, any stock covered by options so accepted
shall not thereafter be available for the granting of other options under the
Plan.
Notwithstanding any provision to the contrary in the Plan, no option may
be designated an ISO unless all of the following conditions are satisfied with
respect to such option:
(a) Such option must be granted on or prior to May 1, 1994, and such
option by its terms is not exercisable after the expiration of ten years
from the date such option is granted;
(b) Either (i) the employee to whom such option is granted does not,
determined at the time such option is granted, own capital stock
representing more than ten percent of the voting power of all classes of
stock of the Company, its parent or any of its subsidiaries, or (ii)
the option price is at least 110 percent of the fair market value,
determined at the time such option is granted, of the stock subject to
such option and such option by its terms is not exercisable more than five
years from the date it is granted;
(c) Such option by its terms is not exercisable while there is
outstanding an ISO which was granted to the same employee at an earlier
time. For purposes of this clause (c), an ISO which has not been
exercised in full shall be deemed to be outstanding, notwithstanding any
cancellation or termination thereof, until the expiration of the period
during which it could have been exercised under its original terms; and
- 3 -
<PAGE>
<PAGE>
(d) The aggregate fair market value of the Common Stock subject to
such option plus the aggregate fair market value of Common Stock subject
to ISOs previously or concurrently granted to the same employee in the
same calendar year (all determined at the respective dates of grant of
such options) must not exceed $100,000 (the "Basic Amount") plus the sum
of the "Carry-Over Amounts" for each of the three calendar years
immediately preceding the year in which such option is granted. The
"Carry-Over Amount", as used in this clause (d) for any calendar year,
shall mean (i) fifty percent of the amount by which $100,000 exceeds the
fair market value, determined at the time of grant, of Common Stock
subject to ISOs which were granted during such calendar year to the
employee for whom the Carry-Over Amount is being determined, or (ii)
$50,000 in the case such employee has not in such calendar year been
granted any ISO. No amount shall be included in a Carry-Over Amount for
any year to the extent such amount was theretofore necessarily included as
a Carry-Over Amount to permit the qualification of an ISO under this
clause (d), and Carry-Over Amounts shall only be utilized to permit the
qualification of an ISO under this clause (d) in the order in which they
first arose and then only if the Basic Amount has not theretofore been
utilized to permit such qualification.
Article V. Stock to be Issued
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such Stock may be authorized but unissued shares or
shares of Common Stock reacquired by the Company, including but not limited to
shares purchased on the open market. The Board of Directors and the officers
of the Company shall take any appropriate action required for such issuance.
Article VI. Terms and Conditions of Options
All options granted under the Plan shall be subject to the following terms
and conditions (except as otherwise provided in Article VII) and to such other
terms and condition as the Committee shall deem appropriate.
(a) Option Price. Each option granted hereunder shall have such per
share option price as the Committee may determine, but not less than the fair
market value of Common Stock of the Company on the date the option is granted.
(b) Terms of Options. The term of an option shall not exceed eleven years
from the date of grant. The date of grant shall be the date on which the option
is awarded by the Committee.
- 4 -
<PAGE>
<PAGE>
(c) Exercise of Options.
(i) Each option shall be made exercisable not less than six months
from the date of grant and at such time or times, whether or not in
installments, as the Committee shall prescribe at the time the option is
granted.
(ii) A person electing to exercise an option shall give written
notice to the Company, as may be specified by the Committee, of exercise
of the option and of the number of shares of stock elected for exercise,
such notice to be accompanied by such instruments or documents as may be
required by the Committee, and such person shall at the time of such
exercise tender the purchase price of the stock elected for exercise
unless otherwise directed by the Committee.
(iii) Notwithstanding any of the provisions of this Plan or
instruments evidencing options heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each Option then
outstanding shall immediately become exercisable in full. A Change in
Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
of Masco Corporation, a Delaware corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's or Masco's Board of Directors, and any new
directors whose election by either such Board or nomination for
election by stockholders was approved by a vote of at least two-
thirds of the members of such Board who were either directors on
such Board at the beginning of the period or whose election or
nomination for election as directors was previously so approved, for
any reason cease to constitute at least a majority of the members
thereof.
- 5 -
<PAGE>
<PAGE>
(d) Payment for Issuance of Stock. Upon and at the time of exercise of
any option granted pursuant to the Plan, payment in full shall be made for all
such stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its then
fair market value. Notwithstanding the foregoing, the Committee may in its
discretion permit the issuance of stock upon such other plan of payment as it
deems reasonable, provided that the then unpaid portion of the purchase price
shall be evidenced by a promissory note at such rate of interest and upon such
other terms and conditions as the Committee shall deem appropriate. In all
cases where stock is issued for less than present full payment of the purchase
price, there shall be placed upon the certificate or certificates representing
such stock a legend setting forth the amount paid at issuance, and the amount
remaining unpaid thereon, and stating that the stock is subject to call for the
remainder and may not be transferred by the holder until the balance due thereon
shall be fully paid.
The Committee, in its discretion and in accordance with the procedures
established by the Committee, may permit a participant to satisfy, in whole or
in part, the applicable income tax withholding obligations in connection with
the exercise of a non-qualified stock option under the Plan by having withheld
from the shares to be issued upon the exercise of the option or by delivering
from shares of Common Stock of the Company owned by the participant such number
of shares having a fair market value equal to the amount needed to satisfy such
obligations.
(e) Conditions to Issuance. The Company shall not be obligated to issue
any stock unless and until:
(i) in the event of the Company's outstanding Common Stock is at the
time listed upon any stock exchange, the shares of stock to be issued have
been listed, or authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be in
accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or otherwise.
The participant shall take any action
- 6 -
<PAGE>
<PAGE>
reasonably requested by the Company in such connection. A participant shall
have the rights of a stockholder only as and when shares of stock have been
actually issued to the participant pursuant to the Plan.
(f) Nontransferability of Options. No option may be transferred by the
participant other than by designation of beneficiary as provided in subsection
(j) of this Article, or by will or the laws of descent and distribution, and
during the participant's lifetime the option may be exercised only by the
participant.
(g) Consideration for Option. Each person receiving an option must agree
to remain as an employee or consultant upon the terms of employment or the
consulting arrangement then existing (unless different terms are mutually agreed
upon) for at least one year from the date of the granting of the option, subject
to the right of the Company, its subsidiary or affiliated company to terminate
the participant's employment or consulting arrangement at any time.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including termination
by reason of the fact that such corporation is no longer a subsidiary of
affiliated company) other than the participant's death or permanent and total
disability or, in the case of an employee, retirement on or after normal
retirement date, unless discharged for misconduct which in the opinion of the
Committee casts such discredit on the participant as to justify termination of
the option, the participant may thereafter exercise the option as provided
below. If such termination is voluntary on the part of the participant, the
option may be exercised only within ten days after the date of termination
unless a longer period is permitted by the Committee in its discretion. If such
termination is involuntary on the part of the participant, the option may be
exercised within three months after the day of termination. Except as expressly
provided in the Plan, in no event may a participant whose employment or
consulting agreement has been terminated voluntarily or involuntarily exercise
an option at a time when the option would not have been exercisable had the
employment or consulting arrangement continued. Notwithstanding the foregoing,
the Committee may by the express terms of the grant of the option extend the
aforesaid periods of time within which the participant may exercise an option
after the termination of employment or the consulting arrangement. For purposes
of this Article VI(h), a participant's employment or consulting arrangement
shall not be considered terminated (i) in the case of sick leave or other bona
fide leave of absence (not to exceed one year unless otherwise approved by the
Committee), (ii) in the case of a transfer of employment or the consulting
arrangement among the Company, its subsidiaries and affiliated companies, or
(iii) by virtue of a change of status from employee to consultant or from
consultant to employee. Unless otherwise expressly provided in the
- 7 -
<PAGE>
<PAGE>
Plan or the grant of the option, an option may be exercised only to the extent
exercisable on the date of termination of employment or of the consulting
arrangement by reason of death, permanent and total disability, retirement or
otherwise.
(i) Retirement; Disability. If prior to the expiration date of an option
the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable on the
date of retirement or such termination, provided such option shall be exercised
within three months of the date of retirement or such termination. Notwith-
standing the foregoing, in its discretion the Committee may permit the exercise
of an option held by a retired or disabled option holder upon other terms and
conditions as it deems advisable under the circumstances, and if the period
within which an option may be exercised has been extended the Committee may
terminate all unexercised options if it shall determine that the participant has
engaged in any activity detrimental to the Company's interests.
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised, as to all or
any of the shares which the participant was entitled to purchase immediately
prior to death (unless the Committee shall have provided in the instrument
evidencing such option that all shares covered by the option are subject to pur-
chase upon death), by the person or persons designated in writing by the
participant in such form of beneficiary designation as may be approved by the
Company, or failing designation by the participant's personal representative,
executor or administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and distribution. The
Company may decline to deliver shares to a designated beneficiary until it
receives indemnity against claims of third parties satisfactory to the Company.
Except as so exercised such option shall expire at the end of such period.
Article VII. Replacement Options
The Committee may grant options under the Plan on terms differing from
those provided for in Article VI where such options are granted in substitution
for options held by employees of or consultants who have written agreement to
render services to other entities who concurrently become employees of or
consultants to the Company or a subsidiary or an affiliated company as the
result of a merger, consolidation or other reorganization of such other entity
with the Company or a subsidiary or an affiliated company, or the acquisition by
the Company or a subsidiary or an affiliated company of the business, property
or stock of such other entity.
- 8 -
<PAGE>
<PAGE>
The Committee may direct that the substitute options be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
Article VIII. Surrender of Options
The Committee may, in its discretion and under such terms and conditions
as it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or shares
of the Common Stock of the Company valued at fair market value on the date of
such surrender, or partly in such stock and partly in cash, provided that the
Committee determines such settlement is consistent with the purpose of the Plan.
Article IX. Changes in Stock
The Board of Directors is authorized to make such adjustments, if any, as
it shall deem appropriate in the number and kind of shares which may be granted
under the Plan, the number and kind of shares which are subject to options then
outstanding and the purchase price of shares subject to such outstanding
options, in the event of any change in capital or shares of capital stock, any
special distribution to stockholders or any extraordinary transaction (including
a merger, consolidation or dissolution) to which the Company is a party. The
determination of the Board of Directors as to such matters shall be binding on
all persons.
Article X. Employment Rights
The adoption of the Plan does not confer upon any employee of or
consultant to the Company or a subsidiary or an affiliated company any right to
continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any way
impair the right of the Company or a subsidiary or an affiliated company to
terminate the employment of any of its employees or the consulting arrangement
with any of its consultants at any time.
Article XI. Amendments
The Committee may at any time discontinue granting options under the
Plan. The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the requirements
of any changes in applicable
- 9 -
<PAGE>
<PAGE>
laws or regulations or for any other purpose which may at the time be permitted
by law, provided that except to the extent permitted under Article IX, without
the approval of the stockholders of the Company no such amendment shall increase
the maximum number of shares of stock available under the Plan, or alter the
class of persons eligible to receive options under the Plan, or without the
consent of the participant void or diminish options previously granted, nor
increase or accelerate the conditions and actions required for the exercise of
the same, except that nothing herein shall limit the Company's right to call
stock, issued for deferred payment which is evidenced by promissory note where
the participant is in default of the obligations on such note.
- 10 -
PAGE
<PAGE>
<PAGE> 1
EXHIBIT 11
MASCOTECH, INC.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
PRIMARY AND FULLY DILUTED
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------
1993 1992 1991
-------- ------- --------
<S> <C> <C> <C>
PRIMARY:
Income (loss) from continuing operations before extraordinary loss........... $ 70,890 $39,040 $(10,350)
Preferred stock dividends.................................................... 14,930 9,300 9,600
-------- ------- --------
Earnings (loss) for computing primary earnings (loss) from continuing
operations per common share before extraordinary loss...................... 55,960 29,740 (19,950)
Discontinued operations:
Income (loss) from operations of discontinued segment...................... 2,630 (610) 1,380
Loss on disposition........................................................ (22,270) -- --
-------- ------- --------
Earnings (loss) for computing primary earnings (loss) per common share before
extraordinary loss......................................................... 36,320 29,130 (18,570)
Extraordinary loss........................................................... (3,650) -- --
-------- ------- --------
Earnings (loss) attributable to common stock................................. $ 32,670 $29,130 $(18,570)
-------- ------- --------
-------- ------- --------
Weighted average number of common shares outstanding during each period...... 53,140 59,490 59,450
Addition from assumed exercise of stock options and warrants................. 4,300 1,360 240
-------- ------- --------
Weighted average number of common shares and equivalents outstanding during
each period -- without dilution............................................ 57,440 60,850 59,690
-------- ------- --------
-------- ------- --------
Primary earnings (loss) per common share:
Continuing operations...................................................... $ .97 $ .49 $(.33)
Discontinued operations:
Income (loss) from operations of discontinued segment.................... .05 (.01) .02
Loss on disposition...................................................... (.39) -- --
----- ----- -----
Income (loss) before extraordinary loss.................................... .63 .48 (.31)
Extraordinary loss......................................................... (.06) -- --
----- ----- -----
Net income (loss).......................................................... $ .57 $ .48 $(.31)
----- ----- -----
----- ----- -----
FULLY DILUTED:
Income (loss) from continuing operations before extraordinary loss........... $ 70,890 $39,040 $(10,350)
Preferred stock dividends.................................................... 14,930 9,300 9,600
Add after-tax convertible debenture related expenses......................... 6,760 7,480 7,480
-------- ------- --------
Earnings (loss) for computing fully diluted earnings (loss) from continuing
operations per common share before extraordinary loss...................... 62,720 37,220 (12,470)
Discontinued operations:
Income (loss) from operations of discontinued segment...................... 2,630 (610) 1,380
Loss on disposition........................................................ (22,270) -- --
-------- ------- --------
Earnings (loss) for computing fully diluted earnings (loss) per common share
before extraordinary loss.................................................. 43,080 36,610 (11,090)
Extraordinary loss........................................................... (3,650) -- --
-------- ------- --------
Earnings (loss) attributable to common stock, as adjusted.................... $ 39,430 $36,610 $(11,090)
-------- ------- --------
-------- ------- --------
Weighted average number of common shares outstanding during each period...... 53,140 59,490 59,450
Addition from assumed conversion of convertible debentures as of the issue
date....................................................................... 9,680 10,380 10,380
Addition from assumed exercise of stock options and warrants................. 5,940 1,650 290
-------- ------- --------
Weighted average number of common shares and equivalents outstanding during
each period -- fully diluted basis......................................... 68,760 71,520 70,120
-------- ------- --------
-------- ------- --------
Fully diluted earnings (loss) per common share(1):
Continuing operations...................................................... $.91 $ .49 $(.33)
Discontinued operations:
Income (loss) from operations of discontinued segment.................... .04 (.01) .02
Loss on disposition...................................................... * -- --
----- ----- -----
Income (loss) before extraordinary loss.................................... .63 .48 (.31)
Extraordinary loss......................................................... * -- --
----- ----- -----
Net income (loss).......................................................... $.57 $ .48 $(.31)
----- ----- -----
----- ----- -----
</TABLE>
- -------------------------
(1) Amounts for 1992 and 1991 agree to primary earnings (loss) per common share
amounts since the results of assumed conversion of dilutive securities are
anti-dilutive.
* Anti-dilutive
<PAGE> 1
EXHIBIT 12
MASCOTECH, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings Before Income Taxes and Fixed
Charges:
Income (loss) from continuing
operations before income taxes and
extraordinary income............... $121,180 $ 68,250 $(12,470) $(30,240) $ 85,410
Add (deduct) equity in undistributed
(earnings) losses of
less-than-fifty-percent owned
companies.......................... (19,930) (21,760) (3,530) (3,430) (1,980)
Add interest on indebtedness, net..... 83,000 87,830 124,220 139,770 146,570
Add amortization of debt expense...... 4,390 1,930 2,230 2,670 3,510
Estimated interest factor for
rentals............................ 5,550 5,740 5,220 4,520 4,470
-------- -------- -------- -------- --------
Earnings before income taxes and fixed
charges............................ $194,190 $141,990 $115,670 $113,290 $237,980
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fixed Charges:
Interest on indebtedness, net......... $ 83,110 $ 87,980 $124,370 $140,380 $147,320
Amortization of debt expense.......... 4,390 1,930 2,230 2,670 3,510
Estimated interest factor for
rentals............................ 5,550 5,740 5,220 4,520 4,470
-------- -------- -------- -------- --------
Total fixed charges.............. 93,050 95,650 131,820 147,570 155,300
-------- -------- -------- -------- --------
Preferred stock dividend
requirement (a).................... 25,860 17,140 11,350 120 130
-------- -------- -------- -------- --------
Combined fixed charges and preferred
stock dividends.................... $118,910 $112,790 $143,170 $147,690 $155,430
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges...... 2.1 1.5 .9(b) .8(d) 1.5
--- --- ---- ---- ---
--- --- ---- ---- ---
Ratio of earnings to combined fixed
charges and preferred stock
dividends............................. 1.6 1.3 .8(c) .8(e) 1.5
--- --- ---- ---- ---
--- --- ---- ---- ---
</TABLE>
- -------------------------
(a) Represents amount of income before provision for income taxes required to
meet the preferred stock dividend requirements of the Company and its 50%
owned companies.
(b) 1991 earnings are inadequate to cover fixed charges by $16,150.
(c) 1991 earnings are inadequate to cover combined fixed charges and preferred
stock dividends by $27,500.
(d) 1990 earnings are inadequate to cover fixed charges by $34,280.
(e) 1990 earnings are inadequate to cover combined fixed charges and preferred
stock dividends by $34,400.
Exhibit 21
MASCOTECH, INC.
(a Delaware Corporation)
Subsidiaries
Name Jurisdiction of
Incorporation
or Organization
Acme Steel Door Corp. New York
Acme Steel Partition Co., Inc. New York
Architectural Building Components, Inc. Massachusetts
Flush-Metal Partition Corp. New York
Acme Steel Shelving Corp. New York
Acme Office Group, Inc. New York
Arrow Specialty Company Delaware
Atlas Roll-Lite Door Corporation Delaware
Atlas Roll-Lite Co. Ltd. Ontario
BLD Products, Ltd. Michigan
Crossing Metal Spinning & Stamping Co., Inc. New York
Drilex Systems, Inc. Texas
Drilex U.K. Limited United Kingdom
Drilex Overseas Corporation Limited Bahamas
Drilex Systems Limited Scotland
Drilex Systems, S.A. Venezuela
Eagle Window & Door, Inc. Iowa
American Glassmith, Inc. Delaware
Eagle Service Company Delaware
Eagle Window & Door of Colorado, Inc. Delaware
Eagle Window & Door of Bellevue, Inc. Delaware
EW&D of Maine, Inc. Delaware
Foster Valve Corporation Delaware
Glaspie Engineering, Inc. Michigan
Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use tradenames or other assumed names in
the conduct of their business.
<PAGE>
<PAGE>
Name Jurisdiction of
Incorporation
or Organization
Glo SpA Italy
Haas Door Company Ohio
Holman Boiler Works, Inc. Delaware
International Brake Industries, Inc. Delaware
Kendallville Foundry, Inc. Delaware
Longman Enterprises, Inc. Florida
Pylon Manufacturing Corp. Delaware
Masco Industries International Sales, Inc. Barbados
W.C. McCurdy Co. Michigan
McGuane Industries, Inc. Delaware
MascoTech Automotive Systems Group, Inc. Michigan
C & C Performance, Inc. Michigan
Coach Builders of America, Inc. Michigan
G.M. Spoilers, Inc. New York
Spoilers Plus, Inc. New York
MascoTech Engineering - Europe, Inc. Michigan
MascoTech Engineering - Europe Ltd. United Kingdom
MascoTech Coatings, Inc. Michigan
MascoTech Controls, Inc. Delaware
Elbi/Hi-Ram, Inc. - 50% Delaware
MascoTech Europe, Inc. Delaware
MascoTech GmbH Germany
Holzer GmbH & Co. Germany
Holzer Limited United Kingdom
Holzer Verwaltungs - GmbH Germany
Pural GmbH Germany
MascoTech Industrial Components, Inc. Delaware
Huron/St. Clair Manufacturing Company Delaware
Raccessories, Inc. Delaware
MascoTech Accessories, Inc. California
MascoTech Precision Headed Products, Inc. Michigan
MascoTech Services, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Stamping Technologies, Inc. Delaware
MascoTech Tubular Products, Inc. Michigan
<PAGE>
<PAGE>
Name Jurisdiction of
Incorporation
or Organization
MASX Energy Services Group, Inc. Delaware
ND-Tech Corporation Indiana
NI Wheel, Inc. Canada
NI Industries, Inc. Delaware
NI Export, Inc. Virgin Islands
NI Foreign Military Sales, Inc. Delaware
Norris Industries, Inc. California
NI West, Inc. California
S-C Holdings, Inc. Delaware
Flow Touch Corporation New York
Rohrback Cosasco Systems, Inc. California
Rohrback Cosasco Systems Limited United Kingdom
Schmelzer Corporation Michigan
Steelcraft Service Company, Inc. Delaware
Taylor Building Products Company Michigan
Tiex Metals, Inc. Delaware
Trylon Corporation Michigan
CRM, Inc. - 51% Michigan
Walker-McDonald Mfg. Co. Delaware
Exhibit 23.a
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. on Form S-3 (Registration No.
33-59222) and on Form S-8 (Registration Nos. 33-30735 and 33-42230) and
amendments and supplements thereto of our report dated February 24, 1994, on our
audits of the consolidated financial statements and financial statement
schedules of MascoTech, Inc. and subsidiaries as of December 31, 1993 and 1992,
and for each of the three years in the period ended December 31, 1993, which
report is included in this Annual Report on Form 10-K. We also consent to the
reference to our Firm under the caption "Experts" in such prospectuses.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
March 22, 1994
Exhibit 23.b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. on Form S-3 (Registration No.
33-59222) and on Form S-8 (Registration Nos. 33-30735 and 33-42230) and
amendments and supplements thereto of our report dated February 8, 1994, on our
audits of the consolidated financial statements and financial statement
schedules of TriMas Corporation and subsidiaries as of December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993,
which report is included in this Annual Report on Form 10-K. We also consent to
the reference to our Firm under the caption "Experts" in such prospectuses.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Detroit, Michigan
March 22, 1994
