SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 31, 1996
Date of report (Date of earliest event reported)
MASCOTECH, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-12068 38-2513957
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
21001 Van Born Road, Taylor, Michigan 48180
(Address of Principal Executive Offices) (Zip Code)
(313) 274-7405
Registrant's telephone number, including area code
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 31, 1996, the Registrant purchased 17 million shares of its
common stock and warrants to purchase 10 million shares of its common stock
from Masco Corporation ("Masco") for $266,375,000. The Registrant paid $115
million at closing from borrowings under its existing credit agreement, with the
balance of the consideration due within one year. Subject to obtaining any
necessary approvals, the Registrant may pay a portion of the outstanding balance
by transferring any publicly-traded securities of Emco Limited currently held by
the Registrant.
As part of this transaction, the Registrant also purchased one million
shares of its common stock from Richard A. Manoogian (at the then current market
price) for $13,625,000, of which $6 million was paid in cash at closing from
borrowings under the Registrant's existing credit agreement, with the balance of
the consideration due within one year. Mr. Manoogian is the Chairman and Chief
Executive Officer of both the Registrant and Masco. As a result of the
purchase of Mr. Manoogian's shares, his ownership interest in the Registrant's
common stock continues at approximately 7 percent after giving effect to the
purchase of shares from Masco.
The shares purchased from Masco and Mr. Manoogian, as well as the warrants
purchased from Masco, have been retired.
The purchase price for the common stock and warrants paid by the Regis-
trant was determined through arms-length negotiations by the Registrant's
oversight committee, consisting of independent directors with assistance from
outside investment bankers. As a result of the purchases, Masco's ownership of
the Registrant's outstanding common stock was reduced from approximately 45
percent to approximately 21 percent, and would be approximately 16 percent if
pro forma effect were given to the mandatory conversion of the Registrant's
outstanding convertible preferred stock on July 1, 1997.
As part of this transaction, Masco agreed to grant the Registrant a right
of first refusal, which expires September 30, 2000, to purchase the remaining
shares of the Registrant's common stock held by Masco (approximately 7.8 million
shares). In addition, the Registrant and Masco modified the existing corporate
services, corporate opportunities and financing commitment agreements, princi-
pally to extend the terms thereof. Copies of the amendments to the agreements
are attached hereto as exhibits.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information. The following pro forma financial
information is filed herewith:
(i) MascoTech, Inc. Pro Forma Consolidated Condensed Income
Statement for year ended December 31, 1995 (Unaudited)
(ii) MascoTech, Inc. Pro Forma Consolidated Condensed Income
Statement for the six months ended June 30, 1996 (Unaudited)
(iii) MascoTech, Inc. Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1996 (Unaudited)
<PAGE>
MascoTech, Inc.
Unaudited Pro Forma Consolidated Condensed Financial Statements
The following unaudited pro forma consolidated condensed balance sheet and
income statements give effect to the following transactions which have occurred
or which are assumed to have occurred:
- the assumed disposition for cash, except for known non-cash transac-
tions, of the net assets of businesses held for disposition at June
30, 1996 with the cash proceeds utilized to retire debt.
- the assumed disposition of MascoTech Stamping Technologies, Inc. for
cash, common stock and warrants with the cash (including cash
realized from the subsequent sale of a portion of the common stock)
proceeds utilized to retire debt.
- the assumed purchase and retirement of: 17 million shares of
Company Common Stock and the warrant to purchase 10 million shares
of Company Common Stock from Masco Corporation; and one million
shares of Company Common Stock from Richard A. Manoogian, Chairman
of the Board of both Masco Corporation and MascoTech, Inc.
The pro forma consolidated condensed financial statements reflect these
transactions as if they had been completed with all proceeds (including related
tax benefits) received at the beginning of the period presented for the consoli-
dated condensed income statements and as of June 30, 1996 for the consolidated
condensed balance sheet.
The pro forma data does not purport to be indicative of the results which
would actually have been reported if the transactions had occurred on such dates
or which may be reported in the future. The pro forma data should be read in
conjunction with the historical financial statements of the Company and the
related notes to such financial statements.
Primary earnings per common share for the twelve months ended December 31,
1995 is based on 57.1 million weighted average shares of common stock and common
stock equivalents outstanding. The Company's Dividend Enhanced Convertible
Stock (DECS) was not included as it would be anti-dilutive. Fully diluted
earnings per share is only presented when the assumed conversion of convertible
securities is dilutive. Convertible securities did not have a dilutive effect
on earnings per common share in 1995.
Pro forma primary earnings per common share for the twelve months ended
December 31, 1995 is based on 49.9 million shares outstanding including approxi-
mately .9 million of common stock equivalents and 10.8 million common shares
from the assumed conversion of the DECS. Fully diluted earnings per common
share after adjustments is based on 59.9 million shares outstanding including
the assumed conversion of convertible securities into 10.0 million common
shares.
Primary earnings per common share for the six months ended June 30, 1996
is calculated based on 56.6 million weighted average common and common equiva-
lent shares outstanding. The DECS were not included as they would be anti-
dilutive. Fully diluted earnings per common share is only presented when the
assumed conversion of convertible securities is dilutive.
Pro forma primary earnings per common share for the six months ended June
30, 1996 is based on 49.0 million shares outstanding including approximately .8
million of common stock equivalents and 10.8 million common shares from the
assumed conversion of the DECS. Fully diluted earnings per common share after
adjustments is based on 59.1 million shares outstanding including the assumed
conversion of convertible securities into 10.0 million common shares.
<PAGE>
<TABLE>
<CAPTION>
MascoTech, Inc.
Proforma Consolidated Condensed Income Statement
for the year ended December 31, 1995
(unaudited)
(amounts are in thousands except per share amounts)
Assumed
Company Assumed Disposition of Assumed
Historical Disposition MascoTech Stamping Stock/Warrant Pro Forma Pro Forma
12/31/95 of Operations Technologies, Inc. Purchase Adjustments Adjusted
(A) (B) (C) (D)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 1,678,210 $ 468,280 $ 193,790 $1,016,140
Cost of sales (1,397,880) (422,690) (175,070) (800,120)
Selling, general and
administrative expenses (176,810) (57,020) (11,650) (108,140)
Gains on disposition of
businesses, net 5,290 5,290 ---
Operating profit (loss) 108,810 (6,140) 7,070 107,880
Other income (expense), net:
Interest expense (49,900) (10) --- $ (19,010) $ 26,140 (42,760)
Equity and interest income from
affiliates 31,420 (280) --- 31,700
Gain from change in investment
of an equity affiliate 5,100 --- --- 5,100
Other, net 4,850 (880) (280) 350 6,360
Other income (expense), net (8,530) (1,170) (280) (19,010) 26,490 400
Income (loss) before income
taxes (credit) 100,280 (7,310) 6,790 (19,010) 26,490 108,280
Income taxes (credit) 41,090 (2,190) 2,640 (7,600) 10,600 43,640
Net income (loss) $ 59,190 $ (5,120) $ 4,150 $ (11,410) $ 15,890 $ 64,640
Preferred stock dividends $ 12,960 $ 12,960
Earnings attributable to
common stock $ 46,230 $ 51,680
Per common share data:
Primary $ .81 $ 1.30
Fully diluted $ .81 $ 1.24
Primary shares outstanding 57,050 49,850
Fully diluted shares outstanding 57,070
59,850
</TABLE>
<PAGE>
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Income Statement
for the year ended December 31, 1995
(A) To reflect the following:
- elimination of the sales and directly allocable expenses related
to the Company's businesses held for disposition;
- the related tax credit at appropriate U.S. Statutory tax rate
including state tax provision, net of federal tax benefit.
(B) To reflect the following:
- elimination of the sales and directly allocable expenses related
to MascoTech Stamping Technologies, Inc.;
- the related tax provision at appropriate U.S. statutory tax
rate including state tax provision, net of federal tax benefit.
(C) To reflect the following:
- interest expense from the assumed notes due Masco Corporation -
$151.4 million; Mr. Manoogian - $7.6 million; and borrowings
under the Company's Revolving Credit Agreement - $121.0 million; to
purchase 17 million shares of Company Common Stock and the warrant
to purchase 10 million shares of Company Common Stock from Masco
Corporation and one million shares of Company Common Stock from
Mr. Manoogian, all of which were retired;
- the related tax credit at appropriate U.S. statutory tax rate
including state tax provision, net of federal tax benefit.
(D) To reflect the following:
- interest savings from the use of assumed proceeds, excluding
common equity and notes received, of $357 million from the sale
of the businesses described in (A) and (B) above (including related
cash tax benefits ($74 million) on the loss) to retire outstanding
bank debt;
- the related net tax provision of the pro forma adjustments at
appropriate U.S. statutory rates including state tax provision,
net of federal tax benefit.
<PAGE>
<TABLE>
MascoTech, Inc.
Proforma Consolidated Condensed Income Statement
for the six months ended June 30, 1996
(unaudited)
(amounts are in thousands except per share amounts)
<CAPTION>
Assumed
Company Assumed Disposition of Assumed
Historical Disposition MascoTech Stamping Stock/Warrant Pro Forma Pro Forma
06/30/96 of Operations Technologies, Inc. Purchase Adjustments Adjusted
(A) (B) (C) (D)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 718,980 $ 67,380 $ 95,050 $ 556,550
Cost of sales (599,610) (66,640) (91,390) (441,580)
Selling, general and
administrative expenses (71,360) (9,410) (4,110) (57,840)
Charge on disposition of
businesses, net (31,520) (1,550) (29,970) ---
Operating profit (loss) 16,490 (10,220) (30,420) 57,130
Other income (expense), net:
Interest expense (14,760) $ (9,280) $ 5,690 (18,350)
Equity and interest income
from affiliates 18,340 18,340
Other, net (2,600) 220 350 180 (2,990)
Other income (expense), net 980 220 350 (9,280) 5,870 (3,000)
Income (loss) before income taxes
(credit) 17,470 (10,000) (30,070) (9,280) 5,870 54,130
Income taxes (credit) 13,390 (3,490) (5,510) (3,710) 2,350 21,030
Income (loss) $ 4,080 $ (6,510) $ (24,560) $ (5,570) $ 3,520 $ 33,100
Preferred stock dividends $ 6,480 $ 6,480
Income (loss) attributable to
common stock $ (2,400) $ 26,620
Per common share data:
Primary $ (.04) $ .68
Fully diluted $ (.04) $ .64
Primary shares outstanding 56,570 48,970
Fully diluted shares outstanding 56,990 59,060
</TABLE>
<PAGE>
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Income Statement
for the six months ended June 30, 1996
(A) To reflect the following:
- elimination of the sales and directly allocable expenses related to
the Company's businesses held for disposition;
- the related tax credit at appropriate U.S. Statutory tax rate
including state tax provision, net of federal tax benefit.
(B) To reflect the following:
- elimination of the sales and directly allocable expenses related to
MascoTech Stamping Technologies, Inc.;
- the related tax provision at appropriate U.S. statutory tax rate
including state tax provision, net of federal tax benefit.
(C) To reflect the following:
- interest expense from the assumed notes due Masco Corporation -
$151.4 million; Mr. Manoogian - $7.6 million; and borrowings under
the Company's Revolving Credit Agreement - $121.0 million; to
purchase 17 million shares of Company Common Stock and the warrant
to purchase 10 million shares of Company Common Stock from Masco
Corporation and one million shares of Company Common Stock from Mr.
Manoogian, all of which were retired;
- the related tax credit at appropriate U.S. statutory tax rate
including state tax provision, net of federal tax benefit.
(D) To reflect the following:
- interest savings from the use of assumed proceeds, excluding common
equity and notes received, of $111 million from the sale of the
businesses described in (A) and (B) above (including related cash
tax benefits ($53 million) on the loss) to retire outstanding bank
debt;
- the related net tax provision of the pro forma adjustments at
appropriate U.S. statutory rates including state tax provision, net
of federal tax benefit.
<PAGE>
<TABLE>
MascoTech, Inc.
Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1996
(unaudited)
(amounts are in thousands)
<CAPTION>
Assumed
Company Assumed Disposition of Assumed
Historical Disposition MascoTech Stamping Stock/Warrant Pro Forma Pro Forma
06/30/96 of Operations Technologies, Inc. Purchase Adjustments Adjusted
(A) (B) (C)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash investments $ 17,450 $ (230) $ 17,220
Receivables 191,900 (6,420) 185,480
Inventories 81,280 (5,210) 76,070
Deferred and refundable
income taxes 11,050 --- 11,050
Prepaid expenses and other assets 24,690 (2,790) 21,900
Net current assets of businesses
held for disposition 39,190 $ (39,190)
Total current assets 365,560 (39,190) (14,650) 311,720
Equity and other investments in
affiliates 256,510 256,510
Property and equipment, net 405,300 (2,000) 403,300
Goodwill 70,020 --- 70,020
Notes receivable and other assets 47,890 --- 47,890
Net non-current assets of businesses
held for disposition 20,720 (20,720)
Total assets $1,166,000 $ (59,910) $ (16,650) $1,089,440
LIABILITIES and SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 73,160 $ (4,190) $ 68,970
Accrued liabilities 94,220 $ 27,130 3,840 125,190
Current portion of long-term
debt 2,550 2,550
Total current liabilities 169,930 27,130 (350) 196,710
Long-term debt 448,740 (95,060) (16,300) $ 280,000 617,380
Deferred income taxes and other
long-term liabilities 135,600 8,020 --- 143,620
Total liabilities 754,270 (59,910) (16,650) 280,000 957,710
Shareholders' Equity
Preferred Stock 10,800 10,800
Common Stock 55,390 (18,000) 37,390
Paid-In Capital 304,850 (262,000) 42,850
Retained Earnings 37,250 37,250
Cumulative Translation Adjustments 3,440 3,440
Total shareholders' equity 411,730 $ (280,000) 131,730
Total liabilities and
shareholders' equity $1,166,000 $ (59,910) $ (16,650) $1,089,440
</TABLE>
<PAGE>
MascoTech, Inc.
Footnote to Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1996
(A) To reflect the following:
- the disposition of net current and non-current assets of businesses
held for disposition;
- the reduction of debt with the estimated cash proceeds (including
related tax benefits) from the disposition of businesses.
(B) To reflect the following:
- the disposition of a MascoTech Stamping Technologies' plant not
included in the transaction to divest of MascoTech Stamping Technol-
ogies, Inc. in the second quarter of 1996;
- the reduction of debt with the estimated proceeds (including related
tax benefits) from the disposition of businesses.
(C) To reflect the following:
- assumed notes due Masco Corporation - $151.4 million; Mr. Manoogian
- $7.6 million; and borrowings under the Company's Revolving Credit
Agreement - $121.0 million; to purchase 17 million shares of Company
Common Stock and the warrant to purchase 10 million shares of Compa-
ny Common Stock from Masco Corporation and 1 million shares of
Company Common Stock from Mr. Manoogian, all of which were retired;
- the related tax credit at appropriate U.S. statutory rate including
state tax provision, net of federal tax benefit;
<PAGE>
(c) Exhibits. The following Exhibits are filed herewith:
99.a Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.
99.b Stock Purchase Agreement dated as of October 15, 1996
between Richard A. Manoogian and MascoTech, Inc.
99.c Amendment No. 1 to Corporate Services Agreement made as
of October 31, 1996 between Masco Corporation and Masco-
Tech, Inc.
99.d Amendment No. 1 to Corporate Opportunities Agreement
made as of October 31, 1996 between Masco Corporation
and MascoTech, Inc.
99.e Amendment No. 1 to Amended and Restated Securities
Purchase Agreement made as of October 31, 1996 between
Masco Corporation and MascoTech, Inc.
99.f Press Release dated October 16, 1996
99.g Fourth Amendment to Credit Agreement, dated as of Octo-
ber 30, 1996, by and among MascoTech, Inc., the banks
party thereto, NBD, Bank, as Agent for the Banks, and
Comerica Bank, The Bank of New York, Morgan Guaranty
Trust Company of New York, and Nationsbank of North
Carolina, N.A., as Co-Agents
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MASCOTECH, INC.
By/s/ Timothy Wadhams
Timothy Wadhams
Vice President -
Controller and Treasurer
Date: November 13, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
99.a Stock Purchase Agreement dated as of October 15, 1996 between
Masco Corporation and MascoTech, Inc.
99.b Stock Purchase Agreement dated as of October 15, 1996 between
Richard A. Manoogian and MascoTech, Inc.
99.c Amendment No. 1 to Corporate Services Agreement made as of
October 31, 1996 between Masco Corporation and MascoTech, Inc.
99.d Amendment No. 1 to Corporate Opportunities Agreement made as
of October 31, 1996 between Masco Corporation and MascoTech,
Inc.
99.e Amendment No. 1 to Amended and Restated Securities Purchase
Agreement made as of October 31, 1996 between Masco Corpora-
tion and MascoTech, Inc.
99.f Press Release dated October 16, 1996
99.g Fourth Amendment to Credit Agreement, dated as of October 30,
1996, by and among MascoTech, Inc., the banks party thereto,
NBD, Bank, as Agent for the Banks, and Comerica Bank, The Bank
of New York, Morgan Guaranty Trust Company of New York, and
Nationsbank of North Carolina, N.A., as Co-Agents
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of October 15, 1996 (the
"Agreement"), is between MASCO CORPORATION, a Delaware corporation ("Masco"),
and MASCOTECH, INC., a Delaware corporation (the "Company").
WHEREAS, Masco is the record holder of 24,824,690 shares of the Company's
Common Stock, par value $1.00 per share (the "Common Stock") and warrants to
purchase 10,000,000 shares of Common Stock (the "Warrants"); and
WHEREAS, Masco desires to sell and the Company desires to purchase
17,000,000 shares of Common Stock (the "Repurchased Stock") and all of the
Warrants owned by Masco upon the terms and conditions hereinafter provided; and
WHEREAS, Masco will own 7,824,690 shares of the Common Stock following the
sale of the Repurchased Stock and Warrants (the "Remaining Common Stock"); and
WHEREAS, Masco and the Company desire to provide the Company with a right
of first refusal to repurchase the Remaining Common Stock upon the terms and
conditions hereinafter provided; and
WHEREAS, simultaneously herewith, the Company has entered into a stock
purchase agreement with Richard A. Manoogian (the "Manoogian Agreement")
providing for the Company to repurchase 1,000,000 shares of the Common Stock;
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF REPURCHASED STOCK AND WARRANTS: CLOSING.
(a) Subject to the satisfaction or waiver of the conditions set forth in
Section 5 hereof, Masco hereby agrees to sell, convey, transfer and deliver to
the Company, and the Company hereby agrees to purchase from Masco, the
Repurchased Stock and Warrants in consideration for the Purchase Price (as
defined below). The "Purchase Price" for the Repurchased Stock and the Warrants
shall be $266,375,000. Masco and the Company each hereby covenant and agree
that they will discuss in good faith an appropriate allocation for tax purposes
of the Purchase Price between the Repurchased Stock and the Warrants and will
not take a position on any income tax return, before any governmental agency
charged with the collection of any income tax, or in any judicial proceeding
that is in any way inconsistent with such agreement.
(b) The Purchase Price with respect to the Repurchased Stock shall be
subject to adjustment as specified in this Section 1(b).
<PAGE>
(i) If, within six months after the Closing Date,
(A) the Company enters into an agreement with respect to any
merger, consolidation, tender offer or similar transaction (provided
that this clause shall not apply to a transaction in which the
Company is the surviving company in any merger or consolidation and
in which the stock issued in such a transaction is less than 40% of
the issued and outstanding Common Stock of the Company after the
transaction), or to issue more than 40% of the Common Stock to any
third party (and its affiliates);
(B) the Company undertakes a recapitalization, extraordinary
dividend, self-tender, spin-off or similar extraordinary
transaction; or
(C) any third party commences a tender or exchange offer for
any capital stock of the Company as a result of which such third
party (and its affiliates) acquires "beneficial ownership" (as such
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of more than 40% of the shares of the Common
Stock,
(any of the transactions referred to above in clauses (A), (B) and (C)
being referred to as a "Transaction") and, in any such case referred to in
clauses (A), (B) and (C) above, the price per share of Common Stock paid
in such Transaction (or in the case of a recapitalization, extraordinary
dividend, self-tender, spin-off or similar Transaction, the aggregate
"price" of the amount distributed to holders of the Common Stock in such
Transaction plus the "price" of any Common Stock paid calculated as
provided below), exceeds $14.00, the Company shall pay to Masco, within
two business days after the closing of the Transaction (or such later date
as the "price" of the consideration has been determined as provided
below), an amount in cash equal to 17,000,000 times the excess, if any,
of such price over $14.00.
(ii) In the event a Transaction shall involve consideration other
than cash, then the "price" of such consideration for purposes of the
foregoing formula shall be determined as follows:
(A) If the consideration shall consist of securities traded
on the New York Stock Exchange, the American Stock Exchange or on
NASDAQ, then such securities shall be valued at an amount equal to
the average closing prices (or, in the case of NASDAQ, the last sale
prices) for such securities during the ten trading days preceding
the completion of the Transaction.
(B) In all other events, Masco and the Company shall engage
in good faith discussion for not less than ten business days after
the closing of the Transaction in an effort to agree upon a
valuation. At the end of such period, if Masco and the Company have
not agreed on a valuation, Masco and the Company shall mutually
select an investment banker who shall determine and appropriate
valuation and whose
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<PAGE>
fees and expenses shall be paid 50% by Masco and 50% by the
Company. In such event the amount payable to Masco shall be
paid promptly upon such valuation being determined.
(iii) In the event that, after the date hereof, the Company is
party to any transaction or takes any action that has a materially
dilutive or anti-dilutive effect on the per share value of the shares of
the Common Stock (e.g., a stock split) prior to a Transaction, Masco and
the Company shall make such adjustments to the amounts payable to Masco
under clause (i) above as shall be equitable to preserve the economic
results intended by the parties as of the date hereof.
(c) The closing of the purchase and sale of the Repurchased Stock and
Warrants (the "Closing") shall take place at the offices of the Company at 21001
Van Born Road, Taylor, Michigan 48180 at 10:00 a.m. Detroit time not later than
three business days following the satisfaction of the conditions set forth in
Section 5 hereof, or at such other time as shall be agreed to in writing by the
Company and Masco (the "Closing Date").
(d) At the Closing,
(i) Masco will deliver to the Company (aa) a certificate or
certificates evidencing the Repurchased Stock and (bb) the Warrants, being
purchased by the Company hereby, free and clear of any claim, lien,
pledge, option, charge, security interest or encumbrance of any nature
whatsoever (collectively "Encumbrances"), duly endorsed for transfer to
the Company's order or accompanied by stock powers with respect to the
Repurchased Stock and such documentation with respect to the termination
of the Warrants as may be reasonably requested, duly executed to the
Company's order and with all requisite documentary or stock transfer tax
stamps affixed as applicable; and
(ii) the Company will pay to Masco the Purchase Price for the
Repurchased Stock and Warrants by (aa) the wire transfer of $115,000,000
in immediately available funds to such bank account as Masco shall have
designated in writing to the Company at least three days prior to the
Closing, and (bb) the delivery to Masco of an unsecured Promissory Note in
the principal amount of $151,375,000 substantially in the form attached as
Exhibit A.
2. REPRESENTATIONS AND COVENANTS OF MASCO. Masco hereby represents,
warrants and covenants to the Company as follows:
(a) Organization and Good Standing. Masco is a corporation duly
organized and validly existing under the laws of the State of Delaware.
(b) Title to Common Stock. Masco is the record holder and sole
beneficial owner of the Repurchased Stock and Warrants being sold pursuant to
this Agreement and such Repurchased Stock and Warrants are free and clear of any
Encumbrances.
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<PAGE>
(c) Authority, Execution and Delivery, Etc.. Masco has full corporate
power and authority to enter into this Agreement and Masco has full corporate
power to sell the Repurchased Stock and Warrants in accordance with the terms
hereof. The execution, delivery and performance of this Agreement have been
duly authorized by Masco and no other actions on the part of Masco are required.
This Agreement has been duly executed and delivered by Masco and constitutes the
valid and binding obligation of Masco, enforceable against Masco in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the rights of
creditors generally and except as rights to specific enforcement may be limited
by the application of equitable principles (whether such equitable principles
are applied in a proceeding at law or in equity).
(d) Consents, No Conflicts, Etc.. Neither the execution and delivery of
this Agreement, the consummation by Masco of the transactions contemplated by
this Agreement nor compliance by Masco with any of the provisions hereof will
(with or without the giving of notice or the passage of time) (i) violate or
conflict with any provision of the organizational documents of Masco or any
agreement, instrument, judgment, decree, statute or regulation applicable to
Masco or any assets or properties of Masco, (ii) violate any material order,
writ, injunction, decree, statute, rule or regulation applicable to Masco or any
material assets or properties of Masco or (iii) require Masco to obtain any
material consent, approval, permission or other authorization of or by, or to
make any material designation, declaration, filing, registration or
qualification with, any court, arbitrator or governmental, administrative or
self-regulatory authority or any other third party whatsoever, other than any
disclosure of the transactions contemplated hereby that may be required in
Masco's filings pursuant to the federal securities laws.
(e) No Brokers. Masco has not entered into, and will not enter into, any
agreement, arrangement or understanding with any person or firm with respect to
the Repurchased Stock and Warrants which will result in the obligation of the
Company to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby. Masco will pay the fees
and expenses of Merrill Lynch incurred in connection with the transactions
contemplated by this Agreement and agrees to indemnify and hold the Company
harmless from and against any and all claims, liabilities and obligations with
respect to any finder's fees, brokerage commissions or similar payments asserted
by any person on the basis of any act or statement alleged to have been made by
Masco.
(f) Access to Information. Masco acknowledges that it has been offered
access to the business records of the Company and such additional information as
it has requested in order that it may make an informed decision regarding the
transactions contemplated hereby and has been given the opportunity to meet with
Company officials and to have representatives of the Company answer questions
regarding the Company's affairs and condition. Masco is an experienced and
sophisticated participant in transactions of the kind contemplated hereby, is
capable of evaluating the merits and risks of transactions of the kind
contemplated hereby, is experienced in the evaluation of enterprises such as the
Company and has undertaken such investigation and evaluated such information
regarding
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<PAGE>
the Company as it has deemed necessary to make an informed and intelligent
decision with respect to the execution and performance of this Agreement.
(g) Disclosure. Masco has made all disclosures to the Company
concerning the Common Stock and the Warrants as required by applicable law.
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company hereby
represents, warrants and covenants to Masco as follows:
(a) Organization and Good Standing. The Company is a corporation duly,
validly existing and in good standing under the laws of the State of Delaware.
(b) Authority, Execution and Delivery, Etc. The Company has full
corporate power and authority to enter into this Agreement and to purchase the
Repurchased Stock and Warrants in accordance with the terms hereof. The
execution, delivery and performance of this Agreement have been duly authorized
by the Company and no other actions on the part of the Company are required.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and except as rights to
specific enforcement may be limited by the application of equitable principles
(whether such equitable principles are applied in a proceeding at law or in
equity).
(c) Consents, No Conflicts, Etc. Neither the execution and delivery of
this Agreement, the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof will
(with or without the giving of notice or the passage of time) (i) violate or
conflict with any provision of the Certificate of Incorporation or By-Laws of
the Company or any agreement, instrument, judgment, decree, statute or
regulation applicable to the Company or any assets or properties of the Company,
(ii) violate any material order, writ, injunction, decree, statute rule or
regulation applicable to the Company or any material assets or properties of the
Company or (iii) except as set forth in the Credit Agreement, dated as of
September 2, 1993, as amended, among the Company, the banks signatory thereto,
and NBD Bank (formerly, NBD Bank, N.A.), as Agent (the "Credit Agreement")
require any material consent, approval, permission or other authorization of or
by, or any material designation, declaration, filing, registration or
qualification with, any court, arbitrator or governmental, administrative or
self-regulatory authority or any other third party whatsoever, other than any
disclosure of the transactions contemplated hereby that may be required in the
Company's filings pursuant to the federal securities laws and the rules of the
New York Stock Exchange.
(d) After giving effect to the repurchase of the Repurchased Stock and
Warrants and the transactions contemplated by the Manoogian Agreement, the
Company will not be insolvent and will not have unreasonably small capital with
which to engage in its businesses. The completion of the transactions
contemplated hereby and thereby will comply with the Delaware General
Corporation
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<PAGE>
Law. The Company is not a party to, and is not engaged in discussions with any
third person with respect to any agreement other than the Manoogian Agreement
pursuant to which the Company would repurchase any material amount of its shares
of its capital stock and, except as previously disclosed in its public filings
with the Securities and Exchange Commission (the "Commission"), the Company is
not a party to, and is not engaged in any discussions with any third person with
respect to any agreement to issue any material amount of its securities.
(e) No Material Changes. The Company has filed all required forms,
reports and documents with the Commission required to be filed by it since
December 31, 1994 pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder
(collectively, the "Company SEC Documents"), all of which have complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and such rules and regulations. As of their respective dates, the
Company SEC Documents did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Other than as disclosed in the documents referred to in
this Section 3(e), since the filing of the Quarterly Report on Form 10-Q for the
period ended June 30, 1996, there has been no material adverse change in the
results of operations or financial condition of the Company.
(f) No Brokers. The Company has not entered into and will not enter
into any agreement, arrangement or understanding with any person or firm which
will result in the obligation of Masco to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions contemplated
hereby. The Company will pay the fees and expenses of Smith Barney Inc.
incurred in connection with the transactions contemplated by this Agreement and
agrees to indemnify and hold Masco harmless from and against any and all claims,
liabilities and obligations with respect to any such fees and expenses and
finder's fees, brokerage commissions or similar payments asserted by any person
on the basis of any act or statement alleged to have been made by the Company.
(g) Adequacy of Capital and Surplus. As of the date hereof the
transactions contemplated hereby and under the Manoogian Agreement could be
consummated without the capital of the Company being impaired under the Delaware
General Corporation Law.
4. OTHER AGREEMENTS.
(a) Right of First Refusal Upon Receipt of Offer.
(i) If prior to September 30, 2000 Masco receives a bona fide offer
from another person or entity to purchase any of the Remaining Common
Stock (other than a sale which is intended to comply with Rule 144 under
the Securities Act of 1933) (the "Offer"), and Masco desires to accept
the Offer, Masco shall first give written notice to the Company of the
transfer (the "Transfer Notice"). In addition to stating the intention to
accept the Offer, the Transfer Notice shall state the name and address of
the proposed transferee, the number
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<PAGE>
of shares of Remaining Common Stock to be transferred, the price per
share, the terms of payment and any other material terms of the sale. The
Transfer Notice shall not be effective unless accompanied by a copy of the
Offer. For 15 days after receipt of the Transfer Notice and Offer, the
Company shall have a first option to purchase all of the Remaining Common
Stock proposed to be transferred, at the price and on the terms of the
proposed transfer. The Company may exercise the option by the personal
delivery or mailing within the option period of written notice to Masco,
which notice shall specify the number of shares to be purchased, the
purchase price and the terms of the purchase. If the Company fails to
exercise its option to purchase the shares of the Remaining Common Stock
proposed to be transferred, such shares may be transferred to the
transferee designated in the written notice given by Masco, at the price
and on the terms described in the notice, within 60 days after the
Company's option period expires. After the expiration of such 60 day
period, no Remaining Common Stock may be transferred to any person without
again complying with this Section 4(a). The 60-day period for the
consummation of the closing shall be extended with respect to a
transaction requiring the consent or approval of any government regulatory
authority; provided, however, that any such extension shall be conditioned
upon the following: (aa) Masco shall make all necessary applications for
such consents and approvals within the 60-day period and shall thereafter
diligently seek to obtain same, and (bb) in the event any necessary
consent or approval is finally denied or an application for any necessary
consent or approval withdrawn, the period for consummation of the
transaction shall terminate without liability on the part of the Company
to Masco or to the proposed purchaser of the shares of the Remaining
Common Stock.
(ii) If the Company exercises an option to purchase any of the
Remaining Common Stock pursuant to Section 4(a)(i), the closing shall
occur on the date which is 15 days following the Company's exercise of the
option, or if such day is a Saturday, Sunday or holiday, on the first
business day thereafter. Masco shall at closing endorse in blank and
deliver to the Company all instruments evidencing the purchased shares.
The Company shall deliver payment to Masco for the purchased shares of the
Remaining Common Stock at the closing and shall have the option to deliver
debt to the extent and on the same terms as those specified in the Offer.
(b) Right of First Refusal Upon Request for Secondary Registration. If
prior to September 30, 2000 Masco requests that the Company register under the
Securities Act of 1933 or otherwise any of the Remaining Common Stock in
accordance with the terms of the Registration Agreement, dated as of March 31,
1993, between the Company and Masco, the Company shall have a first option to
purchase all of the Remaining Common Stock proposed to be registered (the
"Registrable Stock") for a period of 15 days after receipt of the request. The
per share price to be paid by the Company to purchase the Registrable Stock
shall be an amount equal to 97% of the average closing prices (or, in the case
of NASDAQ, the last sale prices) of the Common Stock on the New York Stock
Exchange (or such other national securities exchange or NASDAQ upon which the
Common Stock is then traded) during the 20 trading days preceding the date of
receipt of the request for registration of the Registrable Stock. If the
Company exercises an option to purchase the Registrable Stock, the
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<PAGE>
closing shall occur within 15 days following the Company's exercise of the
option. Masco and the Company agree that the Registration Agreement is amended
hereby to the extent provided in this Section 4 (b).
(c) Masco Standstill Period. During the period (the "Standstill
Period") commencing on the date hereof and ending on the second anniversary of
the Closing Date, Masco shall not, and shall cause each of its subsidiaries not
to, singly or as part of any group (as this term is defined in Section 13(d)(3)
of the Exchange Act), directly or indirectly, take any of the following actions,
provided that nothing in this Section 4(c) shall restrict or limit the free
exercise by Masco of any of its voting rights in respect of the Remaining Common
Stock:
(i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase, gift or otherwise, any shares of Common Stock of
the Company or any direct or indirect rights or options to acquire any
such Common Stock or any securities convertible or exercisable into or
exchangeable for Common Stock, if such acquisition would increase the
beneficial ownership by Masco and its subsidiaries of the Common Stock
outstanding by more than 1% as compared with its ownership immediately
after completion of the transactions contemplated hereby;
(ii) agree with any person or participate with any person in any
effort or attempt to do or seek to do any of the foregoing; or
(iii) publicly request the Company (or its directors, officers,
employees or agents), directly or indirectly, to amend or waive any
provision of this Section 4(c) or otherwise publicly seek any modification
to or wavier of any of Masco's agreements or obligations under this
Section 4(c).
(d) Company Standstill Period. During the Standstill Period, the
Company shall not, and shall cause each of its subsidiaries not to, singly or as
part of any group (as this term is defined in Section 13(d)(3) of the Exchange
Act), directly or indirectly, take any of the following actions:
(i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase, gift or otherwise, any shares of Common Stock of
Masco or any direct or indirect rights or options to acquire any such
Common Stock or any securities convertible or exercisable into or
exchangeable for such Common Stock, if as a result of such acquisition,
the Company and its subsidiaries would beneficially own 5% or more of such
Common Stock outstanding;
(ii) agree with any person or participate with any person in any
effort or attempt to do or seek to do any of the foregoing; or
(iii) publicly request Masco (or its directors, officers, employees
or agents), directly or indirectly, to amend or waive any provision of
this Section 4(d) or otherwise publicly seek
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<PAGE>
any modification to or wavier of any of the Company's agreements or
obligations under this Section 4(d).
(e) Best Efforts by the Company. The Company agrees to use its best
efforts to obtain the waivers and consents referred to in Section 5(a)(iii)
below and, if necessary, the substitute financing referred to therein.
(f) Cooperation. Masco and the Company will each cooperate with the
other and use reasonable efforts to cause the fulfillment of the conditions to
the other's obligations hereunder. Without limiting the generality of the
foregoing, if any order, decree, preliminary or permanent injunction or
restraining order shall have been enacted, entered, promulgated or enforced by
any court or other governmental authority having jurisdiction which prohibits or
restricts the consummation of the transactions contemplated hereby, or if any
action, suit, claim or proceeding before any court or governmental authority
shall be threatened or shall have been commenced and be pending which seeks to
prohibit or restrict the consummation of the transactions contemplated hereby,
each of Masco and the Company shall use reasonable efforts and take such actions
as may be necessary, at its own expense, to have any such order, stay, judgment
or decree lifted or dismissed and any such suit, action or proceeding dismissed
or terminated.
5. CONDITIONS TO THE CLOSING.
(a) It shall be a condition to the Company's obligation to purchase the
Repurchased Stock and Warrants at the Closing that:
(i) the representations and warranties of Masco shall be true and
correct in all material respects (and by the tendering of the Repurchased
Stock and Warrants by Masco at the Closing Masco shall be deemed to have
represented and warranted that this is so) and Masco shall have complied
in all material respects with all covenants required to be performed prior
to the Closing Date;
(ii) there is not in effect at the time any preliminary or
permanent injunction or other order by any court or governmental authority
having jurisdiction which prevents or restrains the purchase or sale and
delivery of the Repurchased Stock and Warrants;
(iii) the Company shall have obtained any waiver or consent
required under the Credit Agreement or shall have obtained substitute
financing on terms reasonably acceptable to the Company in order to
repurchase the Repurchased Stock and Warrants;
(iv) Masco shall have delivered to the Company duly executed
amendments to the Corporate Services Agreement, dated as of January 1,
1987, the Corporate Opportunities Agreement, dated as of May 1, 1984, and
the Amended and Restated Securities Purchase Agreement, dated as of
November 23, 1993, substantially in the forms attached hereto as Exhibits
B, C, and D, respectively;
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<PAGE>
(v) Masco shall have delivered to the Company a duly executed
termination of the Warrant Agreement, dated as of March 31, 1993, between
Masco and the Company;
(vi) there shall be a simultaneous closing of the Company's
repurchase of 1,000,000 shares of Common Stock from Mr. Manoogian; and
(vii) the purchase of the Repurchased Stock and Warrants shall not
result in the capital of the Company being impaired under the Delaware
General Corporation Law.
(b) It shall be a condition to the obligations of Masco to sell the
Repurchased Stock and Warrants at the Closing that:
(i) the representations and warranties of the Company shall be
true and correct in all material respects (and by tendering the Purchase
Price at the Closing the Company shall be deemed to have represented and
warranted that this is so) and the Company shall have complied in all
material respects with all covenants required to be performed prior to the
Closing Date;
(ii) there is not in effect at the time any preliminary or
permanent injunction or other order by any court or governmental authority
having jurisdiction which prevents or restrains the purchase or sale and
delivery of the Repurchased Stock and Warrants;
(iii) the Company shall have delivered to Masco duly executed
amendments to the Corporate Services Agreement, the Corporate
Opportunities Agreement, and the Amended and Restated Securities Purchase
Agreement, substantially in the forms attached hereto as Exhibits B, C,
and D, respectively; and
(iv) there shall be a simultaneous closing of the Company's
repurchase of 1,000,000 shares of Common Stock from Mr. Manoogian.
6. SPECIFIC PERFORMANCE.
(a) Masco acknowledges that money damages are an inadequate remedy for a
breach of this Agreement which would prevent consummation of the sale of the
Repurchased Stock and Warrants to the Company because of the difficulty of
ascertaining the amount of damage that would be suffered by the Company in such
event. Therefore, Masco agrees that the Company may obtain specific performance
to mandate the sale of the Repurchased Stock and Warrants to the Company in
accordance with this Agreement in the event Masco's breach would otherwise
prevent consummation of the sale of the Repurchased Stock and Warrants to the
Company as set forth in this Agreement.
(b) The Company acknowledges that money damages are an inadequate remedy
for a breach of this Agreement which would prevent consummation of the purchase
of the Repurchased Stock and Warrants by the Company because of the difficulty
of ascertaining the amount of damage that would
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<PAGE>
be suffered by Masco in such event. Therefore, the Company agrees that Masco
may obtain specific performance to mandate the purchase of the Repurchased Stock
and Warrants by the Company in accordance with this Agreement in the event the
Company's breach would otherwise prevent consummation of the purchase of the
Repurchased Stock and Warrants by the Company as set forth in this Agreement.
7. MISCELLANEOUS.
(a) Expenses. Each party shall be liable for its own expenses in
connection with the transactions contemplated by this Agreement.
(b) Amendments, Etc. All amendments or waivers of any provisions of
this Agreement may only be made pursuant to a written instrument executed by the
parties hereto or their successors and assigns.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns; nothing in this Agreement is intended to confer on any person or entity
other than the parties hereto and their respective successors and assigns any
rights, remedies, obligations or liabilities by reason of this Agreement.
(d) Notices. All notices, requests and other communications provided for
hereunder shall be effective upon receipt, shall be in writing and shall be
deemed to have been duly given if delivered in person or by courier, telegraph,
telex or by facsimile transmission with electromechanical report of delivery:
If to the Company:
MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
Attention: Lee M. Gardner
With a copy to:
Dykema Gossett PLLC
1577 North Woodward Avenue
Bloomfield Hills, Michigan 48304-2820
Attention: Rex E. Schlaybaugh, Jr., Esq.
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<PAGE>
If to Masco:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Attention: Frank M. Hennessey
With a copy to:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Attention: John R. Leekley, Esq.
or to such other address with respect to any party as such party shall notify
the others in writing.
(e) Governing Law and Jurisdiction. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of Michigan (without regard to the choice of law
provisions thereof).
(f) Headings. The descriptive headings of the several paragraphs of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
(h) Public Announcements. Without prior consultation with the other
party, neither Masco nor the Company will issue any press release or public
announcement of the transactions contemplated hereby.
(i) Complete Agreement. This Agreement and the Exhibits attached hereto
contain the entire agreement between the parties with respect to the subject
matter hereof and, except as provided herein, supersedes all previous
negotiations, commitments and writings.
(j) Termination. This Agreement shall terminate if the Closing
contemplated hereby shall not have occurred on or prior to December 31, 1996.
Notwithstanding the foregoing, the provisions of Section 7(a) and 7(h) shall
survive termination of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
MASCO CORPORATION
By: /s/ John R. Leekley
John R. Leekley
Senior Vice President and General Counsel
MASCOTECH, INC.
By: /s/ Timothy Wadhams
Timothy Wadhams
Vice President, Controller and Treasurer
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of October 15, 1996 (the
"Agreement"), is between Richard A. Manoogian ("Manoogian"), and MASCOTECH,
INC., a Delaware corporation (the "Company").
WHEREAS, Manoogian is the beneficial owner of shares of the Company's
Common Stock, par value $1.00 per share (the "Common Stock"); and
WHEREAS, Manoogian desires to sell and the Company desires to purchase
1,000,000 shares of Common Stock (the "Repurchased Stock") owned beneficially by
Manoogian upon the terms and conditions hereinafter provided; and
WHEREAS, simultaneously herewith the Company has entered into a stock
purchase agreement with Masco Corporation (the "Company Agreement") providing
for the Company to repurchase 17,000,000 shares of Common Stock and warrants to
purchase 10,000,000 shares of Common Stock;
NOW, THEREFORE, it is hereby agreed as follows:
1. PURCHASE AND SALE OF REPURCHASED STOCK; CLOSING.
(a) Subject to the satisfaction or waiver of the conditions set forth in
Section 5 hereof, Manoogian hereby agrees to sell, convey, transfer and deliver
to the Company, and the Company hereby agrees to purchase from Manoogian, the
Repurchased Stock in consideration for $13,625,000 (the "Purchase Price").
(b) The closing of the purchase and sale of the Repurchased Stock (the
"Closing") shall take place at the offices of the Company at 21001 Van Born
Road, Taylor Michigan 48180 at 10:00 a.m. Detroit time not later than three
business days following the satisfaction of the conditions set forth in Section
5 hereof, or at such other time as shall be agreed to in writing by the Company
and Manoogian (the "Closing Date").
(c) At the Closing,
(i) Manoogian will deliver to the Company a certificate or
certificates evidencing the Repurchased Stock being purchased by the
Company hereby, free and clear of any claim, lien, pledge, option, charge,
security interest or encumbrance of any nature whatsoever (collectively
"Encumbrances"), duly endorsed for transfer to the Company's order or
accompanied by stock powers duly executed to the Company's order and with
all requisite documentary or stock transfer tax stamps affixed; and
(ii) the Company will pay to Manoogian the Purchase Price for the
Repurchased Stock by (aa) the wire transfer of $6,000,000 in immediately
available funds to such bank
<PAGE>
account as Manoogian shall have designated in writing to the Company at
least three days prior to the Closing, and (bb) the delivery to Manoogian
of an unsecured Promissory Note in the principal amount of $7,625,000
substantially in the form attached as Exhibit A.
2. REPRESENTATIONS AND COVENANTS OF MANOOGIAN. Manoogian hereby
represents, warrants and covenants to the Company as follows:
(a) Title to Common Stock. Manoogian is the record holder and sole
beneficial owner of the Repurchased Stock being sold pursuant to this Agreement
and such Repurchased Stock will be delivered free and clear of any Encumbrances.
(b) Authority: Execution and Delivery, Etc. Manoogian has full power
and authority to enter into this Agreement and Manoogian has full power to sell
the Repurchased Stock in accordance with the terms hereof. This Agreement has
been duly executed and delivered by Manoogian and constitutes the valid and
binding obligation of Manoogian, enforceable against Manoogian in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the rights of
creditors generally and except as rights to specific enforcement may be limited
by the application of equitable principles (whether such equitable principles
are applied in a proceeding at law or in equity).
(c) Consents, No Conflicts, Etc. Neither the execution and delivery of
this Agreement, the consummation by Manoogian of the transactions contemplated
by this Agreement nor compliance by Manoogian with any of the provisions hereof
will (with or without the giving of notice or the passage of time) at the time
of delivery of the Repurchased Stock (i) violate or conflict with any agreement,
instrument, judgment or decree applicable to Manoogian or any assets or
properties of Manoogian, (ii) violate any material order, writ, injunction,
decree, statute, rule or regulation applicable to Manoogian or any material
assets or properties of Manoogian or (iii) require Manoogian to obtain any
material consent, approval, permission or other authorization of or by, or to
make any material designation, declaration, filing, registration or
qualification with, any court, arbitrator or governmental, administrative or
self-regulatory authority or any other third party whatsoever, other than any
disclosure of the transactions contemplated hereby that may be required in
Manoogian's filings pursuant to the federal securities laws.
(d) No Brokers. Manoogian has not entered into, and will not enter
into, any agreement, arrangement or understanding with any person or firm with
respect to the Repurchased Stock which will result in the obligation of the
Company to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby. Manoogian agrees to
indemnify and hold the Company harmless from and against any and all claims,
liabilities and obligations with respect to any finder's fees, brokerage
commissions or similar payments asserted by any person on the basis of any act
or statement alleged to have been made by Manoogian.
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<PAGE>
(e) Access to Information. Manoogian acknowledges that he has been
offered access to the business records of the Company and such additional
information as he has requested in order that he may make an informed decision
regarding the transactions contemplated hereby and has been given the
opportunity to meet with Company officials and to have representatives of the
Company answer questions regarding the Company's affairs and condition.
Manoogian is an experienced and sophisticated participant in transactions of the
kind contemplated hereby, is capable of evaluating the merits and risks of
transactions of the kind contemplated hereby, is experienced in the evaluation
of enterprises such as the Company and has undertaken such investigation and
evaluated such information regarding the Company as he has deemed necessary to
make an informed and intelligent decision with respect to the execution and
performance of this Agreement.
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company hereby
represents, warrants and covenants to Manoogian as follows:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authority, Execution and Delivery, Etc. The Company has full
corporate power and authority to enter into this Agreement and to purchase the
Repurchased Stock in accordance with the terms hereof. The execution, delivery
and performance of this Agreement have been duly authorized by the Company and
no other actions on the part of the Company are required. This Agreement has
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and except as rights to specific enforcement
may be limited by the application of equitable principles (whether such
equitable principles are applied in a proceeding at law or in equity).
(c) Consents, No Conflicts, Etc. Neither the execution and delivery of
this Agreement, the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof will
(with or without the giving of notice or the passage of time) (i) violate or
conflict with any provision of the Certificate of Incorporation or By-Laws of
the Company or any agreement, instrument, judgment, decree, statute or
regulation applicable to the Company or any assets or properties of the Company,
(ii) violate any material order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any material assets or properties of the
Company or (iii) except as set forth in the Credit Agreement, dated as of
September 2, 1993, as amended, among the Company, the banks signatory thereto,
and NBD Bank (formerly, NBD Bank, N.A.), as Agent (the "Credit Agreement"),
require any material consent, approval, permission or other authorization of or
by, or to make any material designation, declaration, filing, registration or
qualification with, any court, arbitrator or governmental, administrative or
self-regulatory authority or any other third party whatsoever, other than any
disclosure of the transactions contemplated hereby that may be required in the
Company's filings pursuant to the federal securities laws and the rules of the
New York Stock Exchange.
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(d) After giving effect to the repurchase of the Repurchased Stock and
the transactions contemplated by the Company Agreement, the Company will not be
insolvent and will not have unreasonably small capital with which to engage in
its businesses. The completion of the transactions contemplated hereby and
thereby will comply with the Delaware General Corporation Law. The Company is
not a party to, and is not engaged in any discussions with any third person with
respect to any agreement other than the Company Agreement pursuant to which the
Company would repurchase any material amount of its shares of its capital stock
and, except as previously disclosed in its public filing with the Securities and
Exchange Commission (the "Commission"), the Company is not a party to, and is
not engaged in any discussions with any third person with respect to any
agreement to issue any material amount of its securities.
(e) No Material Changes. The Company has filed all required forms,
reports and documents with the Commission required to be filed by it since
December 31, 1994 pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder
(collectively, the "Company SEC Documents"), all of which have complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and such rules and regulations. As of their respective dates, the
Company SEC Documents did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Other than as disclosed in the documents referred to in
this Section 3(e), since the filing of the Quarterly Report on Form 10-Q for the
period ended June 30, 1996, there has been no material adverse change in the
results of operations or financial condition of the Company.
(f) No Brokers. The Company has not entered into and will not enter
into any agreement, arrangement or understanding with any person or firm which
will result in the obligation of Manoogian to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions contemplated
hereby. The Company will pay the fees and expenses of Smith Barney Inc.
incurred in connection with the transactions contemplated by this Agreement and
agrees to indemnify and hold Manoogian harmless from and against any and all
claims, liabilities and obligations with respect to any such fees and expenses
and finder's fees, brokerage commissions or similar payments asserted by any
person on the basis of any act or statement alleged to have been made by the
Company.
(g) Adequacy of Capital and Surplus. As of the date hereof the
transactions contemplated hereby and under the Company Agreement could be
consummated without the capital of the Company being impaired under the Delaware
General Corporation Law.
4. OTHER AGREEMENTS.
(a) Cooperation. Manoogian and the Company will each cooperate with the
other and use reasonable efforts to cause the fulfillment of the conditions to
the other's obligations hereunder. Without limiting the generality of the
foregoing, if any order, decree, preliminary or permanent
4
<PAGE>
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court or other governmental authority having jurisdiction which
prohibits or restricts the consummation of the transactions contemplated hereby,
or if any action, suit, claim or proceeding before any court or governmental
authority shall be threatened or shall have been commenced and be pending which
seeks to prohibit or restrict the consummation of the transactions contemplated
hereby, each of Manoogian and the Company shall use reasonable efforts and take
such actions as may be necessary, at his or its own expense, as the case may be,
to have any such order, stay, judgment or decree lifted or dismissed and any
such suit, action or proceeding dismissed or terminated.
5. CONDITIONS TO THE CLOSING.
(a) It shall be a condition to the Company's obligation to purchase the
Repurchased Stock at the Closing that:
(i) the representations and warranties of Manoogian shall be true
and correct in all material respects (and by the tendering of the
Repurchased Stock by Manoogian at the Closing Manoogian shall be deemed to
have represented and warranted that this is so) and Manoogian shall have
complied in all material respects with all covenants required to be
performed prior to the Closing Date;
(ii) there is not in effect at the time any preliminary or
permanent injunction or other order by any court or governmental authority
having jurisdiction which prevents or restrains the purchase or sale and
delivery of the Repurchased Stock;
(iii) the Company shall have obtained any waiver or consent required
under the Credit Agreement or shall have obtained substitute financing on
terms reasonably acceptable to the Company in order to repurchase the
Repurchased Stock;
(iv) Masco Corporation ("Masco") shall have delivered to the
Company duly executed amendments to the following agreements with Masco:
Corporate Services Agreement, dated as of January 1, 1987, the Corporate
Opportunities Agreement, dated as of May 1, 1984, and the Amended and
Restated Securities Purchase Agreement, dated as of November 23, 1993;
(v) Masco shall have delivered to the Company a duly executed
termination of the Warrant Agreement, dated as of March 31, 1993, between
Masco and the Company;
(vi) there shall be a simultaneous closing under the Company
Agreement; and
(vii) the purchase of the Repurchased Stock shall not result in the
capital of the Company being impaired under the Delaware General
Corporation Law.
5
<PAGE>
(b) It shall be a condition to the obligations of Manoogian to sell the
Repurchased Stock at the Closing that:
(i) the representations and warranties of the Company shall be
true and correct in all material respects (and by tendering the Purchase
Price at the Closing the Company shall be deemed to have represented and
warranted that this is so) and the Company shall have complied in all
material respects with all covenants required to be performed prior to the
Closing Date;
(ii) there is not in effect at the time any preliminary or
permanent injunction or other order by any court or governmental authority
having jurisdiction which prevents or restrains the purchase or sale and
delivery of the Repurchased Stock; and
(iii) there shall be a simultaneous closing under the Company
Agreement.
6. SPECIFIC PERFORMANCE.
(a) Manoogian acknowledges that money damages are an inadequate remedy
for a breach of this Agreement which would prevent consummation of the sale of
the Repurchased Stock to the Company because of the difficulty of ascertaining
the amount of damage that would be suffered by the Company in such event.
Therefore, Manoogian agrees that the Company may obtain specific performance to
mandate the sale of the Repurchased Stock to the Company in accordance with this
Agreement in the event Manoogian's breach would otherwise prevent consummation
of the sale of the Repurchased Stock to the Company as set forth in this
Agreement.
(b) The Company acknowledges that money damages are an inadequate remedy
for a breach of this Agreement which would prevent consummation of the purchase
of the Repurchased Stock by the Company because of the difficulty of
ascertaining the amount of damage that would be suffered by Manoogian in such
event. Therefore, the Company agrees that Manoogian may obtain specific
performance to mandate the purchase of the Repurchased Stock by the Company in
accordance with this Agreement in the event the Company's breach would otherwise
prevent consummation of the purchase of the Repurchased Stock by the Company as
set forth in this Agreement.
7. MISCELLANEOUS.
(a) Expenses. Each party shall be liable for his or its own expenses,
as the case may be, in connection with the transactions contemplated by this
Agreement.
(b) Amendments, Etc. All amendments or waivers of any provisions of
this Agreement may only be made pursuant to a written instrument executed by the
parties hereto or their successors and assigns.
6
<PAGE>
(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns; nothing in this Agreement is intended to confer on any person or entity
other than the parties hereto and their respective successors and assigns any
rights, remedies, obligations or liabilities by reason of this Agreement.
(d) Notices. All notices, requests and other communications provided
for hereunder shall be effective upon receipt, shall be in writing and shall be
deemed to have been duly given if delivered in person or by courier, telegraph,
telex or by facsimile transmission with electromechanical report of delivery:
If to the Company:
MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
Attention: Lee M. Gardner
With a copy to:
Dykema Gossett PLLC
1577 North Woodward Avenue
Bloomfield Hills, Michigan 48304-2820
Attention: Rex E. Schlaybaugh, Jr., Esq.
If to Manoogian:
c/o Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Attention: Richard A. Manoogian
With a copy to:
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Attention: John R. Leekley, Esq.
or to such other address with respect to any party as such party shall notify
the others in writing.
(e) Governing Law and Jurisdiction. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of Michigan (without regard to the choice of law
provisions thereof).
7
<PAGE>
(f) Headings. The descriptive headings of the several paragraphs of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
(h) Complete Agreement. This Agreement and the Exhibits attached hereto
contain the entire agreement between the parties with respect to the subject
matter hereof and, except as provided herein, supersedes all previous
negotiations, commitments and writings.
(i) Termination. This Agreement shall terminate if the Closing
contemplated hereby shall not have occurred on or prior to December 31, 1996.
Notwithstanding the foregoing, the provisions of Section 7(a) shall survive
termination of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
/s/ Richard A. Manoogian
RICHARD A. MANOOGIAN
MASCOTECH, INC.
By:/s/ Timothy Wadhams
Timothy Wadhams
Vice President, Controller and Treasurer
8
AMENDMENT NO. 1 TO
CORPORATE SERVICES AGREEMENT
This Amendment is made as of October 31, 1996 between Masco
Corporation, a Delaware corporation ("Masco"), and MascoTech, Inc., f/k/a Masco
Industries, Inc., a Delaware corporation ("Tech"), concerning that certain
Corporate Services Agreement (the "Services Agreement"), dated as of January 1,
1987, between Masco and Tech. All capitalized terms not otherwise defined in
this Amendment shall have the meanings given them in the Services Agreement.
A. Masco holds 24,824,690 shares of the Common Stock, par
value $1.00 per share, of Tech (the "Tech Common Stock");
B. Concurrently herewith, Tech has, among other things,
repurchased from Masco 17,000,000 shares of the Tech Common Stock;
C. In connection therewith, Masco and Tech desire to amend
certain provisions of the Services Agreement as set forth herein.
IN CONSIDERATION of the mutual covenants and agreements
contained in this Amendment, the parties agree to amend the Services Agreement
as follows:
1. All references to "Industries" are hereby revised to be
references to "Tech".
2. Paragraph 5 is hereby amended to read in its entirety as
follows:
5. The term of this Agreement shall expire on September
30, 1998; provided however, that the term shall be
extended automatically for a period of one year each
October 1 thereafter, subject to either party's right to
terminate this Agreement by written notice to the other
received at least 90 days prior to any such October 1.
Termination of this Agreement shall not relieve either
party of its obligations accruing hereunder through the
effective date of termination.
3. All other terms and conditions of the Services Agreement
are hereby ratified and confirmed and remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Amendment as of the date first above written.
MASCO CORPORATION
By: /s/ John R. Leekley
Name: John R. Leekley
Title:Senior Vice President and General Counsel
MASCOTECH, INC.
By: /s/ Timothy Wadhams
Name: Timothy Wadhams
Title: Vice President-Controller and Treasurer
BH\ 85378
ID\ DRM
2
AMENDMENT NO. 1 TO
CORPORATE OPPORTUNITIES AGREEMENT
This Amendment is made as of October 31, 1996 between Masco
Corporation, a Delaware corporation ("Masco"), and MascoTech, Inc., f/k/a Masco
Industries, Inc., a Delaware corporation ("Tech"), concerning that certain
Corporate Opportunities Agreement (the "Opportunities Agreement"), dated as of
May 1, 1987, between Masco and Tech. All capitalized terms not otherwise
defined in this Amendment shall have the meaning given them in the Opportunities
Agreement.
A. Masco holds 24,824,690 shares of the Common Stock, par
value $1.00 per share, of Tech (the "Tech Common Stock");
B. Concurrently herewith, Tech has, among other things,
repurchased from Masco 17,000,000 shares of the Tech Common Stock;
C. In connection therewith, Masco and Tech desire to amend
certain provisions of the Opportunities Agreement as set forth herein.
IN CONSIDERATION of the mutual covenants and agreements
contained in this Amendment, the parties agree to amend the Opportunities
Agreement as follows:
1. All references to "Industries" are hereby revised to be
references to "Tech."
2. Paragraph 1 is hereby amended to read in its entirety as
follows:
1. Business Opportunities for Tech. Neither Masco nor
any of its subsidiaries shall consider undertaking any
Third-Party Transaction (as hereinafter defined) which comes to
the attention of Masco, Tech or any of their respective
subsidiaries if such transaction involves metal-worked
components, engineering or technical support services or
aftermarket products in each case for the automotive industry
and is not an Excluded Transaction (as hereinafter defined)
unless Tech has first been provided with the opportunity to
consider undertaking such transaction and thereafter either
declines or fails, within a reasonable period, to conclude such
transaction.
3. Paragraph 2 is hereby amended to read in its entirety as
follows:
2. Business Opportunities for Masco. Neither Tech nor
any of its subsidiaries shall consider undertaking any
Third-Party Transaction which comes to the attention of Tech,
Masco or any of their respective subsidiaries if such
transaction involves home improvement or building products or
services unless Masco has first been provided with the
opportunity to consider undertaking such transaction and
thereafter either declines or fails, within a reasonable
period, to conclude such transaction, except that a transaction
by or with Emco Limited shall not be subject to the prohibition
in this paragraph 2.
<PAGE>
4. Subparagraph 4(i) is hereby amended to read in its
entirety as follows:
(i) A "Third-Party Transaction" shall mean any
acquisition, merger, consolidation or joint venture with,
investment (other than investments solely in marketable
securities or other noncontrolling minority investments)
in or any similar transaction involving a party other
than Tech, Masco, any of their respective subsidiaries or
any other entities in which on the date hereof any of
such corporations has investments not consisting solely
of marketable securities.
5. Subparagraph 4(ii) is hereby amended to read in its
entirety as follows:
(ii) An "Excluded Transaction" shall mean any
Third-Party Transaction with respect to a business which
is not primarily involved in offering products or
services to the automotive industry, including the
automotive aftermarket.
6. Paragraph 5 is hereby amended to read in its entirety as
follows:
5. Duration. The term of this Agreement shall expire on
September 30, 1998; provided, however, that the term shall be
extended automatically for a period of one year each October 1
thereafter, subject to either party's right to terminate this
Agreement by written notice to the other received at least 90
days prior to any such October 1. Termination of this
Agreement shall not relieve either party of its obligations
accruing hereunder through the effective date of such
termination.
7. All other terms and conditions of the Opportunities
Agreement are hereby ratified and confirmed and remain in full force and effect.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Amendment as of the date first above written.
MASCO CORPORATION
By: /s/John R. Leekley
Name: John R. Leekley
Title: Senior Vice President and
General Counsel
MASCOTECH, INC.
By: /s/ Timothy Wadhams
Name: Timothy Wadhams
Title: Vice President-Controller and
Treasurer
2
AMENDMENT NO. 1 TO AMENDED AND
RESTATED SECURITIES PURCHASE AGREEMENT
This Amendment is made as of October 31, 1996, between Masco Corporation,
a Delaware corporation ("Masco"), and MascoTech, Inc., f/k/a Masco Industries,
Inc., a Delaware corporation (the "Company" or the "Issuer"), concerning that
certain Amended and Restated Securities Purchase Agreement (the "Securities
Purchase Agreement"), dated as of November 23, 1993, between Masco and the
Company. All capitalized terms not otherwise defined in this Amendment shall
have the meanings given them in the Securities Purchase Agreement.
A. Masco holds 24,824,690 shares of the Common Stock, par value $1.00
per share, of the Company (the "Tech Common Stock");
B. Concurrently herewith, the Company has, among other things,
repurchased from Masco 17,000,000 shares of Tech Common Stock;
C. In connection therewith, Masco and the Company desire to amend
certain provisions of the Securities Purchase Agreement as set forth herein.
IN CONSIDERATION of the mutual covenants and agreements contained in
this Amendment, the parties agree to amend the Securities Purchase Agreement as
follows:
1. Paragraph 1(b) is hereby amended to read in its entirety as follows:
(b) The Securities shall be issued in separate series with the
interest rate on each such series being a rate per annum that is the
higher of: (I) 400 basis points over the average Treasury Rate (as
hereinafter defined) for the week preceding the week in which the
notice of purchase referred to in Paragraph 2 is given to Masco; or
(ii) 75 basis points over the Comparable Debt Issuance Rate (as
hereinafter defined).
"Treasury Rate" means the rate for noncallable direct
obligations of the United States ("Treasury Notes") having a
remaining maturity of five years, as published in the Federal
Reserve Statistical Release H.15(519) (or any successor publication
provided by the Board of Governors of the Federal Reserve System)
under the heading "Treasury Constant Maturities." If a rate for
Treasury Notes having a remaining maturity of five years has not
been so published or reported for the preceding week as provided
above by 1:00 P.M., New York City time, on the day such notice is
given to Masco, then the Treasury Rate shall be calculated by the
Company and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of
the secondary market bid rates, as of approximately 1:30 P.M., New
York City time, on the date of such notice, of three leading primary
United
<PAGE>
States government securities dealers selected by the Company for the
purchase of Treasury Notes with a remaining maturity of five years.
The "Comparable Debt Issuance Rate" means a per annum rate of
interest determined as follows:
Each of the Company and Masco shall select an investment
banker within 3 business days from the date the notice of
purchase referred to in Paragraph 2 is given to Masco, and
those two investment bankers shall have 3 business days to
select a third investment banker. Each of the three
investment bankers shall have qualifications with respect to
the sale of debt instruments of manufacturing and industrial
companies. Each of the three investment bankers shall have 3
business days to determine, in its good faith opinion, the per
annum rate of interest that the Company would be required to
pay if it were to issue the relevant series of Securities to
third party investors in a transaction negotiated at
arms'-length and priced as of the date the notice of purchase
referred to in Paragraph 2 is given to Masco, and each banker
shall set forth its conclusion in a letter addressed to each
of Masco and the Company and delivered to each of them by
12:00 noon EST on the 10th day from the date of the notice of
purchase given to Masco. The arithmetic mean of the interest
rates determined by each of the three investment bankers shall
be the Comparable Debt Issuance Rate.
2. Paragraph 2(a) is hereby amended to read in its entirety as follows:
(a) Subject to the terms and conditions set forth herein, Masco
agrees to purchase, at par, at any time or from time to time on or
before March 31, 2002, upon the Company's written notice, up to $200
million aggregate principal amount of Securities (the "Commitment").
The Company's written notice shall specify the principal amount of
Securities that Masco is required to purchase (which for each
respective issuance of Securities shall be $10 million or any larger
multiple of $1,000,000). The interest rate for such Securities
shall be determined in accordance with the provisions of Paragraph
1(b).
3. The first sentence of Paragraph 3(a) is hereby amended to read in
its entirety as follows:
(a) Any closing of a sale of Securities to Masco hereunder shall
occur at Masco's offices on the 10th Business Day (as hereinafter
defined) after the Company gives Masco the written notice referred
to in Paragraph 2.
2
<PAGE>
4. Section 5.2(b) of the Form of Subordinated Note attached as Exhibit
A to the Securities Purchase Agreement is hereby amended to read in its entirety
as follows:
(b) The holder's right to tender under clause (a) above shall be
triggered upon the occurrence of either of the following events:
(I) Any person or group (an "other entity"), within the
meaning of Section 13 (d) (3) of the Securities Exchange Act
of 1934, shall attain beneficial ownership, within the meaning
of Rule 13d-3 adopted under the Securities Exchange Act of
1934, or at least 50% of the voting power for election of the
Directors of the Issuer, or,
(ii) The Issuer, directly or indirectly, consolidates or
merges with any other entity or sells or leases its properties
and assets substantially as an entirety to any other entity,
provided that this clause shall not apply to a transaction in
which the Company is the surviving company in any merger or
consolidation and in which the stock issued in such a
transaction is less than 40% of the common stock of the
Company issued and outstanding after the transaction.
5. A new Section 2 (c) is hereby added to read in its entirety as
follows:
(c) The Commitment shall terminate upon the occurrence of either
of the following events:
(i) Any person or group (an "other entity"), within the
meaning of Section 13 (d) (3) of the Securities Exchange Act
of 1934, shall attain beneficial ownership, within the meaning
of Rule 13d-3 adopted under the Securities Exchange Act of
1934, or at least 50% of the voting power for election of the
Directors of the Issuer, or,
(ii) The Issuer, directly or indirectly, consolidates or
merges with any other entity or sells or leases its properties
and assets substantially as an entirety to any other entity,
provided that this clause shall not apply to a transaction in
which the Company is the surviving company in any merger or
consolidation and in which the stock issued in such a
transaction is less than 40% of the common stock of the
Company issued and outstanding after the transaction.
6. All other terms and conditions of the Securities Purchase Agreement
are hereby ratified and confirmed and remain in full force and effect.
3
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Amendment as of the date first above written.
MASCO CORPORATION
By:/s/ John R. Leekley
Name: John R. Leekley
Title: Senior Vice President and
General Counsel
MASCOTECH, INC.
By: /s/ Timothy Wadhams
Name: Timothy Wadhams
Title: Vice President-Controller and
Treasurer
BH\ 85379
ID\ DRM
4
FOR IMMEDIATE RELEASE
October 16, 1996
MASCOTECH, INC. ANNOUNCES THE PURCHASE
OF A MAJOR PORTION OF MASCO CORPORATION'S
HOLDINGS IN MASCOTECH
MascoTech, Inc. announced that it has reached an agreement for the
purchase from Masco Corporation of 17 million shares of MascoTech common stock
and warrants to purchase 10 million shares of MascoTech common stock, both of
which are currently owned by Masco Corporation, for approximately $266 million.
Under the agreement, $115 million cash is to be paid at closing with the
balance of the consideration due within one year. The agreement also provides
for the extension of the existing corporate services and financing commitment
agreements between the two companies and is subject to MascoTech obtaining
necessary approvals under its bank credit agreement. As part of this
transaction, Richard A. Manoogian, Chairman of Masco Corporation, has also
agreed to sell to MascoTech one million shares of MascoTech common stock at the
current market price. His present 7 percent ownership in MascoTech common stock
would remain approximately the same after the purchase from Masco Corporation is
completed. Mr. Manoogian is also the Chairman of MascoTech.
Masco Corporation has previously stated its intent to reduce its equity
ownership interest in MascoTech from the present 45 percent to under 20 percent.
This transaction, taking into account the mandatory conversion in 1997 of
MascoTech's outstanding preferred stock into common stock, will result in Masco
Corporation owning approximately 16 percent of MascoTech's common stock.
Although this transaction will result in additional leverage of
MascoTech's balance sheet in the near term, MascoTech believes that the
substantial reduction in MascoTech common shares outstanding should enhance the
long-term financial returns to MascoTech's shareholders.
Headquartered in Taylor, Michigan, MascoTech's transportation-related
businesses include metalworked components primarily for vehicle powertrain and
drivetrain applications, engineering and other technical support services and
automotive aftermarket products.
Execution Copy
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of October 30, 1996
(this "Amendment") is by and among MASCOTECH, INC., a Delaware corporation, the
Banks, NBD BANK, a Michigan banking corporation, as Agent for the Banks, and
COMERICA BANK, a Michigan banking corporation, THE BANK OF NEW YORK, a New York
banking corporation, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York
banking association, and NATIONSBANK OF NORTH CAROLINA, N.A., a national banking
association, as Co-Agents.
RECITALS
A. The Company, the Banks, the Agent and the Co-Agents are parties to a
Credit Agreement dated as of September 2, 1993, as amended by a First Amendment
to Credit Agreement dated as of June 29, 1994, a Second Amendment to Credit
Agreement dated as of December 21, 1994 and a Third Amendment to Credit
Agreement dated as of September 28, 1995. Capitalized terms used but not
defined in this Amendment shall have the respective meanings ascribed thereto in
such Agreement.
B. The Company, the Banks, the Agent and the Co-Agents are willing to
amend the Agreement as set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties hereby agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in
Article III hereof, the Agreement shall be amended as follows:
1.1 The definition of "Available Masco Corporation Funding
Commitment" contained in Section 1.1 is amended by adding the
following to the end thereof: "provided that such "Commitment"
relates only to the purchase by Masco Corporation of equity
securities of the Company or of Subordinated Debt of the Company."
1.2 The definition of "Current Liabilities" contained in
Section 1.1 is
<PAGE>
amended by adding the following to the end thereof: "and shall not
include up to $151,375,000 of Debt of the Company to Masco Corporation
incurred in connection with the Company redeeming shares of its
outstanding common stock from Masco Corporation after October 15, 1996 but
prior to December 31, 1996."
Section 7.5 is hereby restated in its entirety as follows:
Total Leverage Ratio. The Company will not permit or suffer
the Total Leverage Ratio to be greater than (a) 1.75 to 1.0 as of
the last day of any fiscal quarter of the Company occurring during
the period from January 1, 1994 through December 30, 1994, (b) 1.75
to 1.0 as of the last day of any fiscal quarter of the Company
during the period from December 31, 1994 through March 31, 1995, (c)
1.65 to 1.0 as of the last day of any fiscal quarter of the Company
occurring during the period from April 1, 1995 through December 30,
1995, (d) 1.40 to 1.0 as of December 31, 1995, (e) 1.65 to 1.0 as of
the last day of any fiscal quarter of the Company occurring during
the period from January 1, 1996 through September 30, 1996, (f) 2.95
to 1.0 as of the last day of any fiscal quarter of the Company
occurring during the period from October 1, 1996 through June 30,
1997, (g) 1.5 to 1.0 as of the last day of any fiscal quarter of the
Company occurring during the period from July 1, 1997 through
December 30, 1997, (h) 1.0 to 1.0 as of December 31, 1997, (i) 1.25
to 1.0 as of the last day of any fiscal quarter of the Company
occurring during the period from January 1, 1998 through December
30, 1998, (j) 1.0 to 1.0 as of December 31, 1998, and (k) 1.25 to
1.0 as of the last day of any fiscal quarter of the Company
thereafter.
1.4 The definition of "Applicable Margin" contained in Section 1.1
is amended by adding the following to the end thereof: "Notwithstanding anything
in this definition of Applicable Margin to the contrary, during the period
commencing on the date the Fourth Amendment to Credit Agreement dated October
30,1996 among the Company, the Banks, the Co-Agents and the Agent is effective
until February 28, 1997, the Applicable Margin shall be the greater of: (a)
0.75% and (b) the percentage otherwise determined pursuant to this definition of
Applicable Margin."
ARTICLE II. REPRESENTATIONS. The Company represents and warrants that:
2.1 The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate action and do not
and will not violate the provisions of any applicable law or regulation or of
the certificate of incorporation or bylaws of the Company or any Subsidiary or
any order of any court, regulatory body or arbitral tribunal and do not and will
not result in the breach of, or constitute a default or require any consent
under, or create any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary pursuant to, any indenture or other agreement or
instrument to which the Company or any
Page 2
<PAGE>
Subsidiary is a party or by which the Company or any Subsidiary or its property
may be bound or affected. The execution, delivery and performance of this
Amendment do not require, for the validity thereof, nor does the enforceability
of this Amendment require, any filing with, or consent, authorization or
approval of, any state or federal agency or regulatory authority, other than
filings, consents or approvals which have been made or obtained.
2.2 This Amendment constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Article VI of the Agreement are true
on and as of the date hereof with the same force and effect as if made on and as
of the date hereof.
2.4 As of the date hereof, there is no Default.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until the following shall have been delivered to the Agent:
3.1 This Amendment duly executed on behalf of the Company and the
Required Banks.
3.2 A copy of the resolutions adopted by the Board of Directors of the
Company, certified by an officer of the Company as being true and correct and in
full force and effect without amendment as of the date hereof, authorizing the
Company to enter into this Amendment.
3.3 An opinion of counsel for the Company in the form of Schedule 3.3
hereto.
3.4 The Company shall have redeemed at least 17,000,000 shares of its
outstanding common stock during the period commencing after the date hereof and
ending December 31, 1996. This Section 3.4 shall be deemed satisfied
simultaneously with the redemption of such shares.
ARTICLE IV. MISCELLANEOUS.
4.1 The Company shall pay to the Agent, for the benefit of each
Consenting Bank, on or within two Business Days after the date of this
Amendment, an amendment fee in the amount of 5 basis points of the Commitment of
such Consenting Bank. As used herein, a "Consenting Bank" shall be a Bank which
executes this Amendment on or before October 30, 1996.
4.2 References in the Agreement or in any note, certificate, instrument
or other document to the Agreement shall be deemed to be references to the
Agreement as amended from time to time.
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4.3 The Company agrees to pay and to save the Agent harmless for the
payment of all costs and expenses arising in connection with this Amendment,
including the reasonable fees of counsel to the Agent in connection with
preparing this Amendment and the related documents.
4.4 The Company agrees that the Agreement and other documents and
agreements executed by the Company in connection with the Agreement in favor of
the Agent, the Co-Agents and/or the Banks are ratified and confirmed and shall
remain in full force and effect, except as expressly amended hereby.
4.5 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be effective.
4.6 This Amendment is a contract made under, and shall be governed by
and construed in accordance with, the law of the State of Michigan applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the day and year first above written.
NBD BANK MASCOTECH, INC.
By:/s/ Richard H. Huttenlocher By:/s/Timothy Wadhams
Richard H. Huttenlocher Timothy Wadhams
Its: First Vice President Its: Vice President,
Controller and Treasurer
THE BANK OF NEW YORK COMERICA BANK
By: /s/ By:/s/
Its: Assistant Vice President Its: Vice President
NationsBank, N.A.
MORGAN GUARANTY TRUST (F/K/A NATIONSBANK OF NORTH
COMPANY OF NEW YORK CAROLINA, N.A.)
By:/s/ By:/s/Wallace Harris Jr.
Its: Vice President Its: Vice President
BANK OF AMERICA ILLINOIS
By:/s/
Its: Vice President
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PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ By: /s/
Its: Assistant Vice President Its: Vice President
MICHIGAN NATIONAL BANK ROYAL BANK OF CANADA
By:/s/Joseph M. Redouty By:/s/Patrick K. Shields
Its:Commercial Relationship Manager Its: Manager, Corporate Banking
NATIONAL CITY BANK THE FUJI BANK, LTD.
By: /s/ By:/s/Peter L. Chinnici
Its: Vice President Its: Joint General Manager
KEYBANK NATIONAL ASSOCIATION fka
FIRST BANK NATIONAL SOCIETY NATIONAL BANK
ASSOCIATION
By:/s/ By:/s/ Thomas A. Crandell
Its: Vice President Its: Assistant Vice President
CIBC INC. WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ By: /s/
Its: Authorized Signatory Its: Vice President
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CORESTATES PHILADELPHIA FLEET NATIONAL BANK, f/k/a
NATIONAL BANK SHAWMUT BANK CONNECTICUT, N.A.
By: /s/ By: /s/
Its: Vice President Its: Vice President
THE FIRST NATIONAL BANK SANWA BANK, LIMITED,
OF BOSTON CHICAGO BRANCH
By: /s/Elizabeth W. Clarke By:/s/Kenneth C. Fichwald
Its: Vice President Its: First Vice President and
Assistant General Manager
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