<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 COMMISSION FILE NUMBER 1-12068
MASCOTECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 38-2513957
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
PURCHASE RIGHTS
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [ ]
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 13, 1998 (BASED ON THE CLOSING SALE
PRICE OF $22 11/16 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK
EXCHANGE COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $785,611,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 13, 1998:
47,235,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1998
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS FORM 10-K.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<C> <S> <C>
PART I
1. Business.................................................... 2
2. Properties.................................................. 7
3. Legal Proceedings........................................... 7
4. Submission of Matters to a Vote of Security Holders......... 8
Supplementary Item. Executive Officers of Registrant........ 8
PART II
5. Market for Registrant's Common Equity and Related 9
Stockholder Matters.........................................
6. Selected Financial Data..................................... 10
7. Management's Discussion and Analysis of Financial Condition 11
and Results of Operations...................................
8. Financial Statements and Supplementary Data................. 17
9. Changes in and Disagreements With Accountants on Accounting 42
and Financial Disclosure....................................
PART III
10. Directors and Executive Officers of the Registrant.......... 42
11. Executive Compensation...................................... 42
12. Security Ownership of Certain Beneficial Owners and 42
Management..................................................
13. Certain Relationships and Related Transactions.............. 42
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 43
8-K.........................................................
Signatures.................................................. 47
FINANCIAL STATEMENT SCHEDULES
MascoTech, Inc. Financial Statement Schedule................ F-1
TriMas Corporation and Subsidiaries Consolidated Financial
Statements.................................................. F-3
</TABLE>
1
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PART I
ITEM 1. BUSINESS.
MascoTech, Inc. (the "Company") is a leading supplier of metal formed
components primarily for vehicle engine and drivetrain applications and
automotive aftermarket products. In early 1998, MascoTech acquired TriMas
Corporation, in which it had held a significant equity interest since 1989.
TriMas is a diversified manufacturer of proprietary products, including
specialty fasteners, towing systems, specialty container products and other
industrial products and holds leadership positions in commercial, industrial and
consumer niche markets. The addition of TriMas' businesses, as described below,
significantly diversifies MascoTech's operations.
BACKGROUND
MascoTech was incorporated under the laws of Delaware in 1984 as a
wholly-owned subsidiary of Masco Corporation, which in May, 1984 transferred to
MascoTech its industrial businesses. The Company became a separate public
company in July, 1984 when Masco Corporation distributed shares of Company
Common Stock as a special dividend to its stockholders. In late 1996, the
Company purchased from Masco Corporation 17 million shares of Company Common
Stock and warrants to acquire 10 million shares of Company Common Stock. Masco
Corporation currently owns approximately 17 percent of the Company's outstanding
Common Stock. Except as the context otherwise indicates, the terms "MascoTech"
and the "Company" refer to MascoTech, Inc. and its consolidated subsidiaries.
Once MascoTech became a separate, publicly owned company, it pursued
diversified growth in the transportation-related, architectural and defense
markets. Structural changes in recent years in the markets served by the
Company, combined with the growth opportunities and the capital requirements of
certain of the Company's Transportation-Related businesses, led the Company to
an evaluation of the prospects for all its businesses. In late 1994, the Company
adopted a plan to dispose of its architectural products, defense and certain of
its Transportation-Related businesses. The disposition of these businesses was
completed in 1996. In addition, in 1996, the Company disposed of its heavy-gauge
stamping operations and in early 1997, the Company completed the sale of its
engineering and technical services businesses to MSX International, Inc. As part
of that transaction, the Company purchased an approximate 45 percent common
equity interest in MSX International, Inc. See "Equity Investments -- Other
Equity Investments," elsewhere in Item 1 of this Report. The disposition of
these businesses did not meet the criteria for discontinued operations treatment
for accounting purposes; accordingly, the sales and results of operations of
these businesses are included in the results of continuing operations through
the date of disposition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Disposition of Businesses," included in
Item 7 of this Report.
RECENT DEVELOPMENTS
In January 1998, the Company acquired the remaining 63 percent of the
outstanding shares of common stock of TriMas Corporation it did not previously
own for approximately $920 million in a transaction that will be accounted for
as a purchase. The Company's decision to acquire TriMas was designed to achieve
two primary strategic objectives: to expand its advanced metalworking process
capabilities into additional transportation-related and other diversified
industrial markets and to create additional value from affiliate investments. A
substantial portion of TriMas' industrial products are manufactured with
metalworking technologies that are complementary to MascoTech's advanced
metalworking capabilities. In addition, approximately 50 percent of TriMas'
products are sold to transportation-related markets. For further discussion of
the factors considered in making the acquisition, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Recent
Developments," included in Item 7 of this Report. TriMas had net sales of
approximately $668 million and net income of approximately $66 million for the
twelve months ended December 31, 1997.
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In connection with the TriMas acquisition, the Company entered into a new
$1.3 billion credit facility which is secured by a pledge of the stock of
TriMas. See the Notes to the Company's Consolidated Financial Statements
captioned "Long-Term Debt," included in Item 8 of this Report.
MASCOTECH INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1997,
the net sales and operating profit for MascoTech's industry segments (including
businesses held for sale or sold):
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES
----------------------------------
1997 1996 1995
-------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products............................ $922,000 $1,151,000 $1,340,000
Specialty Products......................................... -- 130,000 338,000
-------- ---------- ----------
$922,000 $1,281,000 $1,678,000
======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT(1)(2)
----------------------------------
1997 1996 1995
-------- ---------- ----------
<S> <C> <C> <C>
Transportation-Related Products............................ $124,000 $ 90,000 $ 144,000
Specialty Products......................................... -- 1,000 (3,000)
-------- ---------- ----------
$124,000 $ 91,000 $ 141,000
======== ========== ==========
</TABLE>
Net sales include the sales of businesses held for sale or sold of $0, $412
million and $874 million in 1997, 1996 and 1995, respectively. Additional
financial information concerning the Company's operations by industry segments
as of and for the three years ended December 31, 1997 is set forth in the Note
to the Company's Consolidated Financial Statements captioned "Segment
Information," included in Item 8 of this Report.
(1) Amounts are before General Corporate Expense.
(2) Operating profit in 1996 includes a $32 million pre-tax loss principally
from the sale of MascoTech Stamping Technologies, Inc. ("MSTI"). Operating
profit in 1997 includes approximately $5 million of additional pre-tax
consideration earned from the sale of MSTI which was sold in 1996. These
items impacted the Company's Transportation-Related Products industry
segment. The Company may receive additional consideration contingent upon
the future earnings of MSTI through May 31, 1999. Operating profit in 1995
includes $25 million in net gains resulting from sales of non-core
businesses. These net gains were substantially offset by reductions in the
estimated proceeds the Company expected to receive from businesses to be
sold, aggregating $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million. The net gains (charge) impact the
Company's industry segments as follows: Transportation-Related Products --
$21 million and Specialty Products -- $(2) million. The remaining $(14)
million of the net gains (charge) was allocated to General Corporate
Expense.
Sophisticated technology plays a significant role in MascoTech's businesses
and in the design, engineering and manufacturing of many of its products.
Products are manufactured utilizing a variety of metalworking and other process
technologies. Although published industry statistics are not available, the
Company believes that it is a leading independent producer of many of the
component parts that it produces using cold, warm or hot forming processes. The
Company manufactures a broad range of semi-finished components, subassemblies
and assembled products for the original equipment and aftermarket segments of
the global transportation industry. The Company provides components and products
for which reliability, quality and certainty of supply are major factors in
customers' selection of suppliers.
The Company manufactures engine, drivetrain and aftermarket products.
Engine and drivetrain products include semi-finished transmission shafts, drive
gears, engine connecting rods, wheel spindles and front wheel drive components.
Aftermarket products include fuel and emission systems components, windshield
wiper blades, constant-velocity joints, brake hardware repair kits and other
automotive accessories.
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The Company's metalworked products are manufactured using various process
technologies, including cold, warm and hot forming, powdered metalworking,
value-added machining, tubular steel fabricating and hydroforming. Approximately
60 percent of the Company's 1997 sales were of products made using cold, warm or
hot metal forming technologies. The Company believes that its metalworking
technologies provide cost-competitive, high-performance, quality components
required to meet the increasing demands of the automotive and truck markets it
serves.
Approximately 72 percent of the Company's 1997 sales were original
equipment automotive products and services. Sales to original equipment
manufacturers are made through factory sales personnel and independent sales
representatives. During 1997, sales to various divisions and subsidiaries of
Ford Motor Company, Chrysler Corporation, General Motors Corporation and New
Venture Gear, Inc. accounted for approximately 15 percent, 9 percent, 7 percent
and 17 percent, respectively, of the Company's net sales. Sales to the
automotive aftermarket are made primarily to distributors utilizing factory
sales personnel. Aftermarket products are sold to companies distributing into
the traditional, retail and heavy-duty segments of the automotive aftermarket.
TRIMAS INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1997,
the net sales and operating profit for TriMas' industry segments:
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Specialty Fasteners......................................... $161,640 $141,510 $141,050
Towing Systems.............................................. 201,410 189,540 175,000
Specialty Container Products................................ 218,920 189,320 165,670
Corporate Companies......................................... 85,940 79,860 71,770
-------- -------- --------
Total net sales........................................... $667,910 $600,230 $553,490
======== ======== ========
OPERATING PROFIT
------------------------------
1997 1996 1995
-------- -------- --------
Specialty Fasteners......................................... $ 29,630 $ 25,740 $ 27,290
Towing Systems.............................................. 31,190 31,480 31,080
Specialty Container Products................................ 46,810 42,890 39,040
Corporate Companies......................................... 14,490 11,980 8,420
-------- -------- --------
Total operating profit (before general corporate
expense)............................................... $122,120 $112,090 $105,830
======== ======== ========
</TABLE>
Additional financial information concerning TriMas' operations by industry
segments as of and for the three years ended December 31, 1997 is set forth in
the note captioned "Business Segment and Geographic Area Information" in the
TriMas Corporation Consolidated Financial Statements, included in the schedules
to the Company's Consolidated Financial Statements.
TriMas' industrial products include standard and custom-designed ferrous,
nonferrous and special alloy fasteners for the building construction, farm
implement, medium and heavy-duty truck, appliance, aerospace, electronics and
other industries. Fasteners are sold through TriMas' own sales personnel and
independent sales representatives to both distributors and manufacturers in
these industries. TriMas manufactures towing systems products for the passenger
car, light truck, recreational vehicle, marine, agricultural and industrial
markets, including vehicle hitches, jacks, winches, couplers and related
accessories. TriMas' towing systems products are marketed to independent
installers, distributors, manufacturers and aftermarket retailers by its own
sales organization and independent sales representatives. TriMas also
manufactures: specialty container products, including industrial and consumer
container closures and dispensing products primarily for the chemical,
agricultural, refining, food, petrochemical and health care industries;
high-pressure seamless compressed gas cylinders primarily used for shipping,
storing and dispensing oxygen, nitrogen, argon and
4
<PAGE> 6
helium and a complete line of low-pressure welded cylinders used to contain and
dispense acetylene gas for the welding and cutting industries; and specialty
industrial gaskets for refining, petrochemical and other industrial
applications. Sales of specialty container products are made by TriMas' own
sales staff primarily to container manufacturers, industrial gas producers and
independent distributors.
In addition, TriMas manufactures flame-retardant facings and jacketings
used in conjunction with fiberglass insulation, principally for commercial and
industrial construction applications, pressure-sensitive specialty tape products
and a variety of specialty precision tools such as center drills, cutters, end
mills, reamers, master gears, gages and punches. TriMas also provides metal
treating services for manufacturers of fasteners and similar products. These
products and services are marketed to manufacturers and distributors by both
TriMas sales personnel and independent sales representatives.
GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
No material portion of MascoTech's business is seasonal or has special
working capital requirements. Sales by the companies which form the TriMas
Towing Systems product group are stronger during the spring and summer of the
year. The Company does not consider backlog orders to be a material factor in
its industry segments. Except as noted above under "Industry Segments," no
material portion of its business is dependent upon any one customer or subject
to renegotiation of profits or termination of contracts at the election of the
federal government. Compliance with federal, state and local regulations
relating to the discharge of materials into the environment, or otherwise
relating to the protection of the environment, is not expected to result in
material capital expenditures by the Company or to have a material effect on the
Company's earnings or competitive position. See, however, "Legal Proceedings,"
included as Item 3 of this Report, for a discussion of certain pending
proceedings concerning environmental matters. In general, raw materials required
by the Company are obtainable from various sources and in the quantities
desired.
INTERNATIONAL OPERATIONS
The Company, through its subsidiaries including TriMas, has businesses
located in Australia, Canada, Czech Republic, England, Germany, Italy and
Mexico. Products manufactured by the Company outside of the United States
include forged automotive component parts, constant-velocity joints, specialty
container products and towing systems products. See the Note to the Company's
Consolidated Financial Statements captioned "Segment Information," included in
Item 8 of this Report and the note captioned "Business Segment and Geographic
Area Information" in the TriMas Corporation Consolidated Financial Statements,
included in the schedules to the Company's Consolidated Financial Statements for
a discussion of the Company's foreign operations and export sales.
The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
EQUITY INVESTMENTS
Information regarding the Company's equity investments is also set forth in
the Note to the Company's Consolidated Financial Statements captioned "Equity
and Other Investments in Affiliates," included in Item 8 of this Report.
TriMas Corporation
At December 31, 1997, the Company owned approximately 37 percent of the
outstanding common stock of TriMas Corporation. As described above, in January
1998 the Company completed the acquisition of TriMas by purchasing all of the
outstanding shares of TriMas not already owned by the Company.
Titan International, Inc.
The Company owns approximately 15 percent of the outstanding common stock
of Titan International, Inc. ("Titan"). Titan is a manufacturer of wheels, tires
and other products for agricultural, construction
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and other off-highway equipment markets. Titan's sales for the year ended
December 31, 1997 were approximately $690 million.
Delco Remy International, Inc.
In December 1997, Delco Remy International, Inc. ("Delco Remy") completed
an initial public offering of its common stock reducing the Company's equity
ownership interest to approximately 12 percent on a fully diluted basis (the
Company owns approximately 18 percent of the voting common stock). Delco Remy is
a manufacturer of automotive electric motors and other components. Delco Remy's
sales for the year ended July 31, 1997 were approximately $690 million.
Other Equity Investments
In addition to its equity investments in the publicly traded affiliates
described in the preceding paragraphs, the Company has investments in privately
held companies, including MSX International, Inc., a transportation-focused
engineering and technical services company formed in 1997 by an investor group
consisting of the Company, Citicorp Venture Capital, Ltd. and senior management
of MSX International to purchase the assets of the Company's engineering and
technical services businesses. The Company also has an investment in Saturn
Electronics & Engineering, Inc., a manufacturer of electromechanical and
electronic automotive components.
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable, but does not
believe that there is any reasonable likelihood of a loss of such rights which
would have a material adverse effect on the Company's industry segments or on
its present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products are
highly competitive. Competition is based primarily on price, product engineering
and performance, technology, quality and overall customer service, with the
relative importance of such factors varying among products. The Company's global
competitors include a large number of other well-established independent
manufacturers as well as certain customers who have their own internal
manufacturing capabilities. Although a number of companies of varying size
compete with the Company, no single competitor is in substantial competition
with the Company with respect to more than a few of its product lines and
services.
EMPLOYEES
The Company employs approximately 9,000 people, which reflects the
acquisition of TriMas Corporation. Satisfactory relations have generally
prevailed between the Company and its employees.
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ITEM 2. PROPERTIES.
The following list sets forth the location of the Company's principal
manufacturing facilities and reflects the acquisition of TriMas.
<TABLE>
<S> <C>
California..................... Commerce (a)
Florida........................ Deerfield Beach and Ocala
Illinois....................... Wood Dale(a)
Indiana........................ Auburn(a), Elkhart, Elkhart (a), Frankfort (a),
Fort Wayne, Goshen(a), and North Vernon
Kentucky....................... Nicholasville
Louisiana...................... Baton Rouge (a)
Massachusetts.................. Plymouth (a)
Michigan....................... Burton, Canton, Canton (a), China Township,
Detroit, Detroit (a), Farmington Hills, Fraser,
Green Oak Township, Hamburg, Holland, Livonia,
Royal Oak, Troy, Warren(a) and Ypsilanti
New Jersey..................... Edison (a) and Netcong (a)
Ohio........................... Bucyrus, Canal Fulton, Lakewood(a), Lima,
Minerva and Port Clinton
Oklahoma....................... Tulsa
Pennsylvania................... Ridgway
Texas.......................... Houston (a) and Longview (a)
Wisconsin...................... Mosinee (a)
Australia...................... Hampton Park, Victoria (a) and Wakerley,
Queensland(a)
Canada......................... Fort Erie, Ontario (a) and Oakville, Ontario (a)
Czech Republic................. Brno
England........................ Leicester(a) and Wolverhampton
Germany........................ Neunkirchen(a), Nurnberg and Zell am Harmersbach
Italy.......................... Poggio Rusco
Mexico......................... Mexico City(a)
</TABLE>
(a) Acquired by the Company in connection with the acquisition of TriMas.
The Company's principal manufacturing facilities range in size from
approximately 10,000 square feet to 420,000 square feet, substantially all of
which are owned by the Company and are not subject to significant encumbrances.
The Company's executive offices are located in Taylor, Michigan, and are
provided by Masco Corporation to the Company under a corporate services
agreement.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
requirements.
ITEM 3. LEGAL PROCEEDINGS.
A civil suit was filed in the United States District Court for the Central
District of California in April, 1983 by the United States of America and the
State of California against over 30 defendants, including the Company's NI
Industries, Inc. subsidiary ("NI"), for alleged release into the environment of
hazardous waste disposed of at the Stringfellow Disposal Site in California. The
plaintiffs have requested, among other things, that the defendants clean up the
contamination at that site. A consent decree has been entered into by the
plaintiffs and the defendants, including NI, providing that the consenting
parties perform partial remediation at the site. Another civil suit was filed in
the United States District Court for the Central District of California in
December, 1988 by the United States of America and the State of California
against more than 180 defendants, including NI, for alleged release into the
environment of hazardous waste disposed of at the Operating Industries, Inc.
site in California. This site served for many years as a depository for
municipal and
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industrial waste. The plaintiffs have requested, among other things, that the
defendants clean up the contamination at that site. Consent decrees have been
entered into by the plaintiffs and a group of the defendants, including NI,
providing that the consenting parties perform certain remedial work at the site
and reimburse the plaintiffs for certain past costs incurred by the plaintiffs
at the site. Based upon its present knowledge and subject to future legal and
factual developments, the Company does not believe that any of this litigation
will have a material adverse effect on its consolidated financial position,
results of operations or cash flow.
The Company is subject to other claims and litigation in the ordinary
course of its business, but does not believe that any such claim or litigation
will have a material adverse effect on its consolidated financial position,
results of operations or cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
---- -------- --- -------
<S> <C> <C> <C>
Richard A. Manoogian................... Chairman of the Board 61 1984
Frank M. Hennessey..................... Vice Chairman and Chief Executive Officer 59 1998
Lee M. Gardner......................... President and Co-Chief Operating Officer 51 1992
Brian P. Campbell...................... President and Co-Chief Operating Officer 57 1998
Timothy Wadhams........................ Senior Vice President -- Finance and Chief
Financial Officer 49 1984
</TABLE>
Each of the executive officers is elected to a term of one year or less and
serves at the discretion of the Board of Directors. Mr. Manoogian has served for
more than five years as Director, Chairman of the Board and the Chief Executive
Officer of Masco Corporation, an affiliate of the Company that is a manufacturer
of home improvement and building products. Prior to joining MascoTech in 1998,
Mr. Hennessey served Masco Corporation for more than five years in various
managerial positions and most recently as Executive Vice President. He will
continue to provide consulting services to Masco Corporation as needed under an
informal arrangement with Masco. Mr. Campbell served as the President of TriMas
Corporation for more than five years. TriMas Corporation, formerly an equity
investment of the Company, became a wholly owned subsidiary in January 1998. See
Item 1 of this Report entitled "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in Item 7
of this Report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "MSX." The following table sets forth for the periods
indicated the high and low sale prices of the Company's Common Stock as reported
on the NYSE Composite Tape and Common Stock dividends declared for the periods
indicated:
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
1996
First Quarter......................................... $13 5/8 $10 3/8 $.04
Second Quarter........................................ $16 1/8 $12 1/2 .04
Third Quarter......................................... $15 1/2 $13 .05
Fourth Quarter........................................ $17 $13 1/2 .05
----
$.18
====
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
1997
First Quarter......................................... $21 1/4 $16 $.05
Second Quarter........................................ $23 1/2 $18 1/2 .05
Third Quarter......................................... $22 1/2 $20 .12(A)
Fourth Quarter........................................ $21 5/16 $16 1/2 .06(A)
----
$.28
====
</TABLE>
(A) In the Third Quarter of 1997, the Company declared and paid a $.06 per share
dividend and declared a $.06 per share dividend which was paid in the Fourth
Quarter of 1997. The dividend declared in the Fourth Quarter of 1997 was
paid in the First Quarter of 1998.
Future declarations of dividends on the Company's Common Stock are
discretionary with the Board of Directors and will depend upon the Company's
earnings, capital requirements, financial condition and other factors. In
addition, certain of the Company's long-term debt instruments contain provisions
that restrict the dividends that it may pay on its capital stock. Under the most
restrictive of these provisions, approximately $40 million would have been
available at December 31, 1997 for the payment of cash dividends and the
acquisition of Company capital stock. See the discussion under "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Financial Position and Liquidity," included in Item 7 of this Report and the
Note to the Company's Consolidated Financial Statements captioned "Long-Term
Debt," included in Item 8 of this Report.
On February 28, 1998, there were approximately 4,000 holders of record of
the Company's Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 922,130 $1,281,220 $1,678,210 $1,702,260 $1,582,880
From continuing operations before
accounting change and
extraordinary items:
Income (loss).................... $ 115,240 $ 39,920 $ 59,190 $ (234,420) $ 70,890
Earnings (loss) per share........ $2.12 $.50 $.81 $(4.38) $.93
Dividends declared per common
share............................ $ .28 $.18 $.11 $ .11 $.06
At December 31:
Total assets..................... $1,144,680 $1,202,840 $1,421,720 $1,511,640 $1,769,960
Long-term debt................... $ 592,000 $ 752,400 $ 701,910 $ 868,240 $ 788,360
</TABLE>
Results in 1997 include pre-tax gains approximating $83 million principally
related to the sale by the Company of its common stock holdings of an equity
affiliate, gains from the Company's marketable securities portfolio and income
resulting from equity transactions by affiliates. These gains were partially
offset by costs and expenses of approximately $24 million pre-tax related to
plant closure costs, the Company's share of special charges recorded by equity
affiliates, write-off of deferred charges, and employee termination and other
expenses.
Results for 1996 include an after-tax charge of approximately $26 million
related to the sale of MascoTech Stamping Technologies, Inc.
Results for 1995 include net gains of approximately $5 million pre-tax
related to the dispositions of businesses held for sale, and a gain of
approximately $5 million pre-tax resulting from the issuance of stock through a
public offering by an equity affiliate.
Results for 1994 include a pre-tax charge of $400 million, reflecting the
estimated loss on the planned disposition of a number of the Company's
businesses (see "Dispositions of Operations" note).
Results for 1994 include pre-tax gains of approximately $17.9 million
related to the sale by the Company of a portion of its common stock holdings of
an equity affiliate.
Results for 1993 include pre-tax income of approximately $9 million as a
result of gains associated with the sale of common stock through public
offerings by an equity affiliate. This income was largely offset by costs and
expenses related to cost-reduction initiatives, the restructuring of certain
operations and product lines, adjustments to the carrying value of certain
long-term assets, and other costs and expenses.
Results for 1993 were reduced by a charge of approximately $.03 per common
share reflecting the application of the increased 1993 federal corporate income
tax rate to adjust deferred tax balances as of December 31, 1992.
Income (loss) from continuing operations before accounting change and
extraordinary income (loss) attributable to common stock was $109.0 million,
$27.0 million, $46.2 million, $(247.4) million and $56.0 million after preferred
stock dividends in 1997, 1996, 1995, 1994 and 1993, respectively.
At December 31, 1997, the Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." Earnings (loss) per share have been
retroactively restated to conform with the earnings per share presentation
required under SFAS No. 128.
Earnings (loss) from continuing operations per common share in 1997, 1996,
1995 and 1993 are presented on a diluted basis. In 1994, basic loss per common
share is presented due to the reported loss from continuing operations. Basic
earnings per share from continuing operations were $2.70, $.54, $.85 and $1.11
in 1997, 1996, 1995 and 1993, respectively.
10
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CORPORATE DEVELOPMENT
RECENT DEVELOPMENTS
In January 1998, the Company completed the acquisition of TriMas
Corporation ("TriMas") by purchasing all the outstanding shares of TriMas not
already owned by the Company for approximately $920 million. TriMas is a
diversified proprietary products company with leadership product positions in
commercial, industrial and consumer markets and had 1997 sales in excess of $660
million. The Company previously owned 37 percent of TriMas. The combined
companies have sales on a pro forma basis of approximately $1.6 billion for
1997.
For some time, MascoTech's key strategic objectives have included the
expansion of its advanced metalworking capabilities into additional
transportation-related and other markets, and the creation of more value for its
shareholders from its affiliate investments. The acquisition of TriMas by
MascoTech is consistent with these objectives.
MascoTech's advanced metalworking products are sold to
transportation-related markets, primarily for automotive light vehicle
applications. A substantial portion of TriMas' diversified industrial products
are manufactured with metalworking technologies that are complementary to
MascoTech's advanced metalworking capabilities. In addition, approximately 50
percent of TriMas' products are sold to transportation-related markets including
off-road vehicle, and aerospace, and for towing systems and accessory products,
automotive light vehicle (non-OEM), recreational vehicle, and marine markets.
The acquisition of TriMas significantly increases MascoTech's sales to
transportation-related markets and to other commercial and industrial markets
while at the same time reduces the dependence of MascoTech's operating results
on the automotive industry, which has historically been more cyclical. MascoTech
also believes that the acquisition of TriMas provides opportunities to expand
sales of certain of its products to TriMas' customers and to expand sales of
certain of TriMas' products to MascoTech's customers. In addition, the
acquisition permits MascoTech and TriMas to share research, technology and
expertise to the benefit of both companies.
MascoTech reviews on an ongoing basis its various affiliate investments
with the objective of maximizing the value of these investments for its
stockholders. In analyzing its alternatives related to its investment in TriMas,
MascoTech concluded that maintaining its current level of investment in TriMas
was not an attractive alternative since MascoTech's ownership of approximately
37 percent of the TriMas shares resulted in the inclusion in MascoTech's
after-tax earnings of 37 percent of TriMas' after-tax earnings, but with
additional taxes on those earnings also accrued by MascoTech. In addition,
TriMas' dividend distributions to MascoTech represented substantially less than
37 percent of TriMas' cash flow. MascoTech also considered the alternatives of a
third party sale of its shares or the distribution to MascoTech's shareholders
of its shares to be unattractive since either transaction would have resulted in
a tax to MascoTech in excess of $180 million (valuing MascoTech's equity
interest in TriMas for this purpose at $34.50 per share which equals the
acquisition price per share).
In addition to the expansion of its metalworking capabilities into
complementary markets, and the avoidance of a substantial tax that would result
from the sale or distribution of TriMas holdings, the acquisition of TriMas by
MascoTech adds high-margin complementary businesses that provide substantial
additional cash flow and human resources. MascoTech believes that the
acquisition should enhance its opportunity to create value for its shareholders
by diversifying its business mix, by improving its cost efficiencies, and by
expanding its growth opportunities.
SHARE REPURCHASE
The Company's major shareholder, Masco Corporation, had a long-standing
stated objective to simplify its corporate structure by reducing its affiliate
investments. More recently, Masco Corporation had committed to its shareholders
that Masco Corporation would reduce its investment in MascoTech to below 20
percent. Given the possible alternatives available to Masco Corporation to
accomplish this objective and the related uncertainty as to what action Masco
Corporation might take, together with the positive long-term outlook for
11
<PAGE> 13
MascoTech, the MascoTech Board of Directors decided to address this issue by
proactively pursuing the purchase of Masco Corporation's holdings in MascoTech.
The MascoTech Board of Directors believed that purchasing and retiring a
substantial number of MascoTech shares (at a reasonable price) would help create
long-term value for the Company's shareholders.
As a result, in late 1996, the Company purchased from Masco Corporation 17
million shares of MascoTech common stock and warrants to acquire 10 million
shares of MascoTech common stock, for approximately $266 million. As part of
this transaction, and given his role as Chairman of both Masco Corporation and
MascoTech, Richard Manoogian also agreed to sell to MascoTech one million shares
of MascoTech common stock at the then current market price of $13 5/8. As a
result, his seven percent ownership in MascoTech common stock remained
approximately the same after the share purchases. At December 31, 1997, Masco
Corporation owned approximately 17 percent of the MascoTech common stock
outstanding.
DISPOSITION OF BUSINESSES
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its architectural products,
defense and certain of its transportation-related products and services
businesses, as part of its long-term strategic plan to increase the focus on its
proprietary metalworking capabilities. The disposition of these businesses did
not meet the criteria for discontinued operations treatment for accounting
purposes; accordingly, the sales and results of operations of these businesses
are included in continuing operations until disposition.
The Company's carrying value of a number of the businesses disposed
exceeded the estimated proceeds expected from such dispositions. To reflect the
estimated loss on the disposition of these businesses, the Company recorded a
non-cash charge in 1994 aggregating $400 million pre-tax for those businesses
for which a loss was anticipated.
In May 1996, the Company sold MascoTech Stamping Technologies, Inc.
("MSTI"), a wholly owned subsidiary, to Tower Automotive, Inc. ("Tower")
resulting in an after-tax loss of approximately $26 million ($.49 per common
share). The Company received initial consideration of approximately $80 million,
consisting principally of $55 million in cash, 785,000 shares of Tower common
stock and warrants to purchase additional Tower common stock. The Company
applied the cash proceeds (including approximately $14 million received from the
subsequent sale of 600,000 shares of Tower common stock) to reduce its
indebtedness. The Company may receive additional consideration, of which
approximately $5 million was earned in 1997, contingent upon the future earnings
of MSTI through May 31, 1999.
In early 1997, the Company completed the sale of its Technical Services
Group ("TSG," comprised of the Company's engineering and technical business
services units) to MSX International, Inc. Also included in this transaction
were the net assets of APX International ("APX") which were acquired by the
Company in November 1996. The sale resulted in total proceeds to the Company of
approximately $145 million, subject to certain adjustments, consisting of cash,
subordinated debentures, preferred stock and an approximate 45 percent common
equity interest in MSX International, Inc. Net proceeds to the Company
approximated $90 million, after taking into account the purchase price for APX
and taxes payable in connection with this transaction. In January 1998, the
Company received $48 million of cash from MSX International, Inc. in payment of
certain amounts due MascoTech, resulting in a realized pre-tax gain in the first
quarter 1998 of approximately $7 million (gain recognition was deferred at the
time of the transaction pending cash receipt).
Businesses sold had sales of $0, $412 million and $874 million in 1997,
1996 and 1995, respectively, and operating income (losses) before gains (charge)
on disposition of businesses, net of $0, $(13) million and $5 million in 1997,
1996 and 1995, respectively.
PROFIT MARGINS
Operating profit margins, excluding net gains in 1997 and 1995, and net
charges in 1996, from the disposition of businesses, were approximately ten
percent in 1997, eight percent in 1996 and six percent in
12
<PAGE> 14
1995. The increase in the operating profit margin in 1997 compared with the
previous two years is attributable to the disposition of businesses which had
margins lower than the Company's remaining operations.
CASH FLOWS AND CAPITAL EXPENDITURES
Net cash flows from operating activities decreased to $79 million in 1997
from $129 million in 1996. In 1996, net cash from operating activities included
approximately $30 million in refundable income taxes.
Reflecting the favorable long-term prospects for MascoTech, the Company's
Board of Directors authorized in 1994 the repurchase of 10 million shares of
Company Common Stock and Convertible Preferred Stock (converted into common
stock in 1997). Pursuant to this authorization, the Company has repurchased and
retired approximately 6.3 million shares of Company Common Stock and .5 million
shares of Convertible Preferred Stock since 1994 at a cost of approximately $90
million. In addition, in October 1996, the Company purchased and retired 18
million shares of Company Common Stock and warrants to purchase 10 million
shares of Company Common Stock for cash and notes approximating $280 million
(see "Corporate Development" above and "Shareholders' Equity" note to the
financial statements).
The Company in 1997 increased the quarterly dividend on its common stock to
$.06 per share from $.05.
Capital expenditures in 1997 were approximately $55 million as compared
with $44 million and $110 million in 1996 and 1995, respectively. During 1995,
the Company made significant expenditures in capital programs to support the
Company's metalworking and aftermarket businesses. These expenditures for new
advanced manufacturing technologies, product line extensions and capacity for
new products were the result of the Company's favorable long-term outlook for
these businesses and to meet increased demand for certain product programs.
INVENTORIES
The Company's investment in inventories for its businesses increased
modestly to approximately $74 million at December 31, 1997 as compared with $70
million in 1996. The Company's continued emphasis on inventory management,
utilizing Just-In-Time and other inventory management techniques, has
contributed to higher inventory turnover rates in recent years.
FINANCIAL POSITION AND LIQUIDITY
In connection with the TriMas acquisition in January 1998, the Company
entered into a new $1.3 billion credit facility. On a pro forma basis at
December 31, 1997 including the borrowings for the TriMas acquisition, debt as a
percent of total debt plus equity would be approximately 87 percent. The
Company's new credit facility includes a $500 million term loan and an $800
million revolver, both of which terminate in 2003. The interest rates applicable
to the new credit facility are principally at alternative floating rates which
would have approximated 6.5 percent at December 31, 1997. The new credit
facility requires the maintenance of a specified level of shareholders' equity
plus subordinated debt, with limitations on the ratios of total debt to cash
flow (as defined) and cash flow less capital expenditures (as defined) to
interest plus scheduled debt payments. In addition, there are limitations on
dividends, share repurchases and subordinated debt repurchases. Under the most
restrictive of these provisions, approximately $40 million would have been
available at December 31, 1997 for the payment of cash dividends and the
acquisition of Company capital stock. In addition, future cash dividends and any
acquisition of Company Common Stock could be further accomplished with internal
cash flows from operations.
Although the Company incurred increased debt with the purchase of TriMas,
the Company's interest coverage ratio and debt to cash flow ratio remain strong.
The Company expects that its ratio of debt to total debt plus equity will
improve from the operating performance of its businesses and from the
disposition of certain financial assets. The Company's financial assets include
equity ownership positions in two additional publicly traded companies with an
aggregate carrying value of approximately $53 million. This compares with an
aggregate quoted market value at December 31, 1997 (which may differ from the
amounts that could have been realized upon disposition) of approximately $104
million. On September 30, 1997, the Company
13
<PAGE> 15
exercised its option and exchanged its equity holdings in Emco Limited and
approximately $46 million in cash to Masco Corporation to satisfy the
indebtedness to Masco incurred in 1996 in connection with the Company's purchase
and retirement of certain of its common shares and warrants held by Masco.
At December 31, 1997 current assets, which aggregated approximately $336
million, were approximately two times current liabilities. Additional borrowings
available under the Company's new revolving credit agreement and otherwise,
anticipated internal cash flows, and to the extent necessary, future financings
in the financial markets are expected to provide sufficient liquidity to fund
the Company's foreseeable working capital, capital expansion programs and other
investment needs.
OTHER MATTERS
The Company is currently working to resolve the potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information and other systems. The year 2000 problem is the result
of computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures. Based on
preliminary information, costs of addressing potential problems are not
currently expected to have a material adverse impact on the Company's financial
position, results of operations or cash flows in future periods. However, if the
Company, its customers or vendors are unable to resolve such processing issues
in a timely manner, the failure to do so could result in a material financial
risk. Accordingly, the Company is devoting the resources believed to be
necessary to resolve all significant year 2000 issues in a timely manner.
The Company's corporate services agreement with Masco Corporation expires
September 30, 1998. Negotiations have commenced to determine the scope of any
services to be acquired in the future and the cost of such services. It is
expected that a new agreement will be executed prior to September 30, 1998.
GENERAL FINANCIAL ANALYSIS
1997 VERSUS 1996
Sales of the Company's metalworking and aftermarket businesses increased
six percent to approximately $922 million from $869 million in 1996. Total sales
for 1997, however, declined to approximately $922 million from $1.3 billion in
1996, reflecting the previously announced disposition of certain businesses.
Income after preferred stock dividends in 1997 was $109 million or $2.12
per common share. Results in 1997 include pre-tax gains approximating $83
million principally related to the disposition of the Company's equity ownership
interest in Emco Limited, gains from the Company's marketable securities
portfolio and income resulting from equity transactions by affiliates. These
gains were partially offset by costs and expenses of approximately $24 million
pre-tax related to plant closure costs, the Company's share of special charges
recorded by equity affiliates, write-off of deferred charges, and employee
termination and other expenses. Excluding the gains and unusual costs, income
after preferred stock dividends in 1997 would have been approximately $73
million, or $1.50 per common share.
Income after preferred stock dividends in 1996 was $38.7 million or $.72
per common share. Results in 1996 include an after-tax loss of approximately $26
million related to the sale of the Company's heavy-gauge stamping operations
(MSTI), which more than offset after-tax income of approximately $11.7 million
related to the cumulative effect of an accounting change. Excluding the above
items, income in 1996 after preferred stock dividends would have been
approximately $53 million or $.98 per common share.
Operating profit in 1997 for the Company's metalworking and aftermarket
businesses, before general corporate expense, decreased to approximately $119
million from $136 million in 1996. Although 1997 results benefitted from
increased sales in the Company's transportation-related businesses, operating
performance was negatively impacted by work stoppages at certain North American
vehicle manufacturers, costs and expenses as a result of a strike at one of the
Company's manufacturing facilities and higher than anticipated product start-up
costs. Businesses sold had operating losses before general corporate expense and
gains (charge) on disposition of businesses, net of approximately $13 million
for 1996.
14
<PAGE> 16
In late 1996, the Company announced the planned sale of the Company's
Technical Services Group. Net assets of businesses held for sale decreased by
approximately $109 million during 1997 as a result of the sale which occurred on
January 3, 1997.
Other income (expense), net in 1997, was income of approximately $89
million as compared with income of approximately $8 million in 1996. Results for
1997 benefitted from a gain on the disposition of an equity affiliate, gains
from the Company's marketable securities portfolio, higher equity and interest
income from affiliates and income resulting from equity transactions by
affiliates. This income was partially offset by higher interest expense in 1997.
1996 VERSUS 1995
Sales of the Company's metalworking and aftermarket businesses increased
eight percent from 1995 to approximately $869 million, while sales of the
Company's businesses held for sale or sold decreased approximately 53 percent
from the comparable period in 1995 as a result of the disposition of a number of
such businesses. Sales for 1996 declined to $1.3 billion from $1.7 billion in
1995, reflecting the previously announced disposition of certain businesses.
Income after preferred stock dividends in 1996 was $38.7 million or $.72
per common share. Results in 1996 include an after-tax loss of approximately $26
million related to the sale of the Company's heavy-gauge stamping operations
(MSTI) which more than offset after-tax income of approximately $11.7 million
related to the cumulative effect of an accounting change. Income after preferred
stock dividends in 1995 was $46.2 million or $.81 per common share.
Operating profit in 1996 for the metalworking and aftermarket businesses,
before general corporate expense, increased to approximately $136 million from
$116 million in 1995, resulting from increased volume and the reduction of
launch and start-up costs and expenses related to the Company's capital
expansion programs. Businesses held for sale or sold (including MSTI and TSG)
had operating income (losses) before general corporate expense and gains
(charge) on disposition of businesses, net of approximately $(13) million and $5
million for 1996 and 1995, respectively.
In December 1994, the Company announced the planned disposition of a number
of businesses, including its architectural products, defense and certain of its
transportation-related products and services businesses, as part of its
long-term strategic plan to increase the focus on its core operating
capabilities. During 1995 and 1996, the Company completed the disposition of
such businesses for proceeds aggregating approximately $400 million. Net assets
of businesses held for sale decreased by approximately $167 million during 1996
as a result of the disposition of such businesses and from the reduction of
assets employed in these businesses through operating activity, asset sales and
the redeployment of certain assets. Net assets of businesses held for sale at
December 31, 1996 reflect the net assets of the Company's Technical Services
Group and APX International which were sold January 3, 1997.
In 1995, the Company sold businesses in transactions which resulted in net
gains of approximately $25 million. These net gains were substantially offset by
reductions in the estimated net proceeds that the Company expected to receive
from certain businesses remaining to be sold, aggregating approximately $12
million, and by certain exit costs related to the businesses sold or held for
sale incurred in 1995 aggregating approximately $8 million.
Other income (expense), net in 1996, was income of approximately $8 million
as compared with expense of approximately $9 million in 1995. Results for 1996
benefitted from reduced interest expense as proceeds from the disposition of
businesses were applied to reduce the Company's indebtedness as well as from
increased earnings from equity affiliates. Results for 1995 were impacted by
pre-tax income of approximately $5 million as a result of gains associated with
the sale of common stock through a public offering by an equity affiliate.
The Company's 1996 effective tax rate differs from the statutory rate
principally because a significant portion of the loss on the sale of the
heavy-gauge stamping operations does not result in a tax benefit.
15
<PAGE> 17
FORWARD-LOOKING STATEMENTS
This discussion and other sections of this annual report contain statements
reflecting the Company's views about its future performance and constitute
"forward-looking statements." These views involve risks and uncertainties that
are difficult to predict and may cause the Company's actual results to differ
significantly from the results discussed in such forward-looking statements.
Readers should consider that various factors may affect the Company's ability to
attain the projected performance, including; conditions within the markets in
which the Company competes, the cyclical nature of the automobile industry in
general, changes in the costs of raw materials, labor relations of the Company
and certain of its customers, the ability to supply new and existing products on
a timely, cost-effective basis, financial results of the Company's equity
investments, and general economic conditions. The Company undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
16
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of MascoTech, Inc.:
We have audited the accompanying consolidated balance sheet of MascoTech,
Inc. and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income and cash flows for each of the three years in
the period ended December 31, 1997 and the financial statement schedule as
listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MascoTech, Inc.
and subsidiaries as of December 31, 1997 and 1996, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
As discussed in the footnotes to the consolidated financial statements,
effective January 1, 1996, the Company changed its method of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed of.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 17, 1998
17
<PAGE> 19
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash investments................................. $ 41,110,000 $ 19,400,000
Marketable securities..................................... 45,970,000 37,760,000
Receivables............................................... 125,930,000 127,530,000
Inventories............................................... 73,860,000 69,640,000
Deferred and refundable income taxes...................... 36,270,000 39,180,000
Prepaid expenses and other assets......................... 13,310,000 14,480,000
Net current assets of businesses held for disposition..... -- 85,980,000
-------------- --------------
Total current assets................................. 336,450,000 393,970,000
Equity and other investments in affiliates.................. 263,300,000 282,470,000
Property and equipment, net................................. 417,030,000 388,460,000
Excess of cost over net assets of acquired companies........ 65,610,000 69,140,000
Notes receivable and other assets........................... 62,290,000 45,950,000
Net non-current assets of businesses held for disposition... -- 22,850,000
-------------- --------------
Total assets......................................... $1,144,680,000 $1,202,840,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 67,240,000 $ 58,170,000
Accrued liabilities....................................... 114,650,000 96,910,000
Current portion of long-term debt......................... 2,880,000 3,370,000
-------------- --------------
Total current liabilities............................ 184,770,000 158,450,000
Long-term debt held by Masco Corporation.................... -- 151,380,000
Convertible subordinated debentures......................... 310,000,000 310,000,000
Other long-term debt........................................ 282,000,000 291,020,000
Deferred income taxes and other long-term liabilities....... 157,250,000 153,170,000
-------------- --------------
Total liabilities.................................... 934,020,000 1,064,020,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par:
Authorized: 25 million; Outstanding: 10.8 million in
1996................................................. -- 10,800,000
Common stock, $1 par:
Authorized: 250 million; Outstanding: 47.3 million and
37.3 million......................................... 47,250,000 37,250,000
Paid-in capital........................................... 34,340,000 41,080,000
Retained earnings......................................... 157,790,000 61,060,000
Other..................................................... 4,160,000 14,770,000
Less: Restricted stock awards............................. (32,880,000) (26,140,000)
-------------- --------------
Total shareholders' equity........................... 210,660,000 138,820,000
-------------- --------------
Total liabilities and shareholders' equity........... $1,144,680,000 $1,202,840,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 20
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------- --------------- ---------------
<S> <C> <C> <C>
Net sales.................................... $ 922,130,000 $ 1,281,220,000 $ 1,678,210,000
Cost of sales................................ (735,470,000) (1,048,110,000) (1,397,880,000)
------------- --------------- ---------------
Gross profit............................ 186,660,000 233,110,000 280,330,000
Selling, general and administrative
expenses................................... (89,930,000) (132,260,000) (176,810,000)
Gains (charge) on disposition of businesses,
net........................................ 4,980,000 (31,520,000) 5,290,000
------------- --------------- ---------------
Operating profit........................ 101,710,000 69,330,000 108,810,000
------------- --------------- ---------------
Other income (expense), net:
Interest expense, Masco Corporation........ (7,500,000) -- --
Other interest expense..................... (29,030,000) (29,970,000) (49,900,000)
Equity and other income from affiliates.... 43,360,000 40,460,000 31,420,000
Gain from disposition of an equity
affiliate............................... 46,160,000 -- --
Gains from changes in investments in equity
affiliates.............................. 18,190,000 -- 5,100,000
Other, net................................. 17,400,000 (2,600,000) 4,850,000
------------- --------------- ---------------
88,580,000 7,890,000 (8,530,000)
------------- --------------- ---------------
Income before income taxes and
cumulative effect of accounting
change, net........................... 190,290,000 77,220,000 100,280,000
Income taxes................................. 75,050,000 37,300,000 41,090,000
------------- --------------- ---------------
Income before cumulative effect of
accounting change, net................ 115,240,000 39,920,000 59,190,000
Cumulative effect of accounting change (net
of income taxes)........................... -- 11,700,000 --
------------- --------------- ---------------
Net income.............................. $ 115,240,000 $ 51,620,000 $ 59,190,000
============= =============== ===============
Preferred stock dividends.................... $ 6,240,000 $ 12,960,000 $ 12,960,000
============= =============== ===============
Earnings attributable to common stock... $ 109,000,000 $ 38,660,000 $ 46,230,000
============= =============== ===============
</TABLE>
<TABLE>
<CAPTION>
BASIC DILUTED BASIC DILUTED BASIC DILUTED
----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings per share:
Income before cumulative effect of
accounting change, net.............. $2.70 $2.12 $.54 $.50 $.85 $.81
Cumulative effect of accounting
change, net......................... -- -- .23 .22 -- --
----- ----- ---- ---- ---- ----
Earnings attributable to common
stock............................... $2.70 $2.12 $.77 $.72 $.85 $.81
===== ===== ==== ==== ==== ====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 21
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATING ACTIVITIES:
Net income.................................. $115,240,000 $ 51,620,000 $ 59,190,000
Adjustments to reconcile net income to net
cash provided by operating activities,
excluding reclassification of businesses
held for disposition:
(Gains) charge on disposition of
businesses, net........................ (4,980,000) 31,520,000 (5,290,000)
Gains from changes in investments in
equity affiliates...................... (18,190,000) -- (5,100,000)
Gain from disposition of an equity
affiliate.............................. (46,160,000) -- --
Depreciation and amortization............. 43,460,000 44,470,000 47,070,000
Equity earnings, net of dividends......... (27,180,000) (31,650,000) (23,360,000)
Deferred income taxes..................... 17,520,000 8,640,000 51,330,000
(Increase) decrease in marketable
securities, net........................ (8,210,000) (24,890,000) 57,990,000
Decrease (increase) in receivables........ 2,670,000 10,200,000 (21,910,000)
Decrease in inventories................... 1,950,000 19,190,000 4,650,000
(Increase) decrease in prepaid expenses
and other current assets............... (1,280,000) 38,650,000 (1,900,000)
Increase (decrease) in accounts payable
and accrued liabilities................ 11,140,000 9,320,000 (9,070,000)
Other, net................................ (7,480,000) (8,820,000) 2,390,000
Net assets of businesses held for
disposition, net, including cumulative
effect of accounting change............... -- (19,240,000) 2,190,000
------------ ------------- -------------
Net cash from operating activities... 78,500,000 129,010,000 158,180,000
------------ ------------- -------------
FINANCING ACTIVITIES:
Increase in debt............................ 7,080,000 5,220,000 79,460,000
Payment of debt............................. (16,590,000) (114,900,000) (253,770,000)
Payment of note due to Masco Corporation.... (45,580,000) -- --
Retirement of preferred stock............... (8,360,000) -- --
Retirement of Company Common Stock.......... (6,610,000) (14,040,000) (13,130,000)
Repurchase of Company Common Stock and
warrants from Masco Corporation for
cash...................................... -- (116,000,000) --
Payment of dividends........................ (15,900,000) (22,940,000) (21,000,000)
Other, net.................................. (9,070,000) (8,610,000) (2,250,000)
------------ ------------- -------------
Net cash used for financing
activities........................ (95,030,000) (271,270,000) (210,690,000)
------------ ------------- -------------
INVESTING ACTIVITIES:
Cash received from sale of businesses....... 76,560,000 223,720,000 122,190,000
Acquisition of businesses................... (11,100,000) (47,200,000) (23,850,000)
Capital expenditures........................ (54,780,000) (42,390,000) (95,800,000)
Receipt of cash from notes receivable....... 17,330,000 9,300,000 6,570,000
Other, net.................................. 10,230,000 1,850,000 (2,170,000)
------------ ------------- -------------
Net cash from investing activities... 38,240,000 145,280,000 6,940,000
------------ ------------- -------------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year............ 21,710,000 3,020,000 (45,570,000)
At January 1................................ 19,400,000 16,380,000 61,950,000
------------ ------------- -------------
At December 31....................... $ 41,110,000 $ 19,400,000 $ 16,380,000
============ ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 22
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting; ownership
less than 20 percent is accounted for on the cost basis unless the Company
exercises significant influence over the investee. Capital transactions by
equity affiliates, which change the Company's ownership interest at amounts
differing from the Company's carrying amount, are reflected in other income or
expense and the investment in affiliates account.
The consolidated balance sheet at December 31, 1996 reflects the
segregation of net current and net non-current assets related to the disposition
of the Company's Technical Services Group ("TSG").
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1997 owned approximately 17 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees, which are determined
principally as a percentage of net sales, aggregated approximately $5.5 million
in 1997, $7.1 million in 1996, and $9.1 million in 1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Such estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting periods. Actual results may differ
from such estimates and assumptions.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments. The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value.
Marketable Securities. The Company's marketable equity securities holdings
are categorized as trading and, as a result, are stated at fair value. Changes
in the fair value of trading securities are recognized in earnings. Derivative
financial instruments, consisting principally of S&P futures contracts, are held
for purposes other than trading and are carried at market value. Changes in
market value of outstanding futures contracts are recognized in earnings.
Receivables. Receivables are presented net of allowances for doubtful
accounts of approximately $1.2 million and $2.0 million at December 31, 1997 and
1996, respectively.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10
percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred
financing costs are amortized over the lives of the related debt securities. The
excess of cost over net assets of acquired companies is amortized using the
straight-line method over the period estimated to be benefitted, not exceeding
40 years. At each balance sheet date, management assesses whether there has been
a permanent impairment of the excess of cost over net assets of acquired
companies by comparing anticipated undiscounted future cash flows from operating
activities with the carrying amount of the excess of cost over net assets of
21
<PAGE> 23
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
acquired companies. The factors considered by management in performing this
assessment include current operating results, business prospects, market trends,
potential product obsolescence, competitive activities and other economic
factors. Based on this assessment, there was no permanent impairment related to
the excess of cost over net assets of acquired companies at December 31, 1997.
At December 31, 1997 and 1996, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $33.2 million and
$29.4 million, respectively. Amortization expense was $9.3 million, $8.5 million
and $13.7 million in 1997, 1996 and 1995, respectively.
Income Taxes. The Company records income taxes in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 109 ("SFAS No. 109"), "Accounting
for Income Taxes." SFAS No. 109 is an asset and liability approach that requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, SFAS No. 109
generally allows consideration of all expected future events other than
enactments of changes in the tax law or tax rates. A provision has not been made
for U.S. or additional foreign withholding taxes on approximately $49 million of
undistributed earnings of foreign subsidiaries as those earnings are intended to
be permanently reinvested. Generally, such earnings become subject to U.S. tax
upon the remittance of dividends and under certain other circumstances. It is
not practicable to estimate the amount of deferred tax liability on such
undistributed earnings.
New Accounting Pronouncements and Reclassifications. At December 31, 1997,
the Company adopted SFAS No. 128, "Earnings Per Share," which replaces the
presentation of primary and fully diluted earnings per share, as computed under
Accounting Principles Board Opinion No. 15, with a presentation of basic and
diluted earnings per share. The financial statements have been retroactively
restated to conform with the earnings per share presentation required under SFAS
No. 128.
In addition, the Company has reclassified the unamortized cost of unvested
restricted stock awards from other assets to a separate component of
shareholders' equity (see "Stock Options and Awards" note). Prior periods have
been reclassified to conform to this and other presentations adopted in calendar
year 1997.
At January 1, 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which resulted in a pre-tax gain (because the fair value of the businesses being
held for sale at January 1, 1996 exceeded the carrying value for such
businesses) of $16.7 million ($11.7 million after-tax), recorded as the
cumulative effect of an accounting change. The pro forma effect of the
retroactive application of the change on the financial statements for 1995 has
not been presented because the new method did not have a material effect on the
reported earnings.
In 1998, the Company will adopt the disclosure requirements of SFAS No.
130, "Reporting of Comprehensive Income," SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information," and SFAS No. 132,
"Employers' Disclosure about Pensions and Other Postretirement Benefits." The
adoption of these disclosures will not impact earnings per common share in 1998.
22
<PAGE> 24
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
EARNINGS PER SHARE:
The following are reconciliations of the numerators and denominators used
in the computations of basic and diluted earnings per share:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Weighted average number of shares outstanding............... 40,300 50,190 54,090
======== ======== ========
Income before cumulative effect of accounting change, net... $115,240 $ 39,920 $ 59,190
Less preferred stock dividends.............................. (6,240) (12,960) (12,960)
-------- -------- --------
Earnings used for basic earnings per share
computation....................................... $109,000 $ 26,960 $ 46,230
======== ======== ========
Basic earnings per share before cumulative effect of
accounting change, net.................................... $2.70 $.54 $.85
======== ======== ========
Total shares used for basic earnings per share
computation............................................... 40,300 50,190 54,090
Dilutive securities:
Stock options and warrants................................ 1,250 1,430 860
Assumed conversion of preferred stock at January 1,
1997................................................... 5,210 -- --
Convertible debentures.................................... 10,000 -- --
Contingently issuable shares.............................. 2,160 2,170 2,100
-------- -------- --------
Total shares used for diluted earnings per share
computation....................................... 58,920 53,790 57,050
======== ======== ========
Earnings used for basic earnings per share computation...... $109,000 $ 26,960 $ 46,230
Add back of preferred stock dividends....................... 6,240 -- --
Add back of debenture interest.............................. 9,530 -- --
-------- -------- --------
Earnings used for diluted earnings per share
computation....................................... $124,770 $ 26,960 $ 46,230
======== ======== ========
Diluted earnings per share before cumulative effect of
accounting change, net.................................... $2.12 $.50 $.81
======== ======== ========
</TABLE>
Diluted earnings per share reflect the potential dilution that would occur
if securities or other contracts to issue common stock were exercised or
converted into common stock. The Company's preferred stock and convertible
debentures did not have a dilutive effect on earnings per share in 1996 and
1995.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1997: the conversion
of the Company's outstanding shares of Dividend Enhanced Convertible Preferred
Stock on June 27, 1997 for approximately 10 million shares of Company Common
Stock (see "Shareholders' Equity" note); the exchange of approximately 9.9
million shares of the outstanding common stock of Emco Limited ("Emco") with a
value of approximately $106 million, in addition to the cash payment of
approximately $46 million, in payment of a promissory note due to Masco
Corporation; in 1996: in addition to cash received, approximately $25 million
comprised of both common stock and warrants (with a portion of the common stock
subsequently sold for approximately $14 million of cash), as consideration from
the sale of MascoTech Stamping Technologies, Inc.; in addition to the cash
payment by the Company of $121 million, notes approximating $159 million were
issued for the purchase of 18 million shares of the Company's Common Stock and
warrants to purchase 10 million shares of the Company's Common Stock (see
"Shareholders' Equity" note); in 1995: in addition to cash received,
approximately $34 million comprised of both notes receivable due from, and a 29
percent equity interest in, the acquiring company, as consideration for a
non-core business unit.
23
<PAGE> 25
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income taxes paid (refunded) were $44 million, $(12) million and $11
million in 1997, 1996 and 1995, respectively. Interest paid was $39 million, $30
million and $55 million in 1997, 1996 and 1995, respectively.
DISPOSITIONS OF OPERATIONS:
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its architectural products,
defense and certain of its transportation-related products and services
businesses, as part of its long-term strategic plan to increase the focus on its
core operating capabilities. The Company has completed the disposition of such
businesses.
During 1995, the Company divested a number of such businesses, in separate
transactions, for aggregate proceeds of approximately $180 million, which
resulted in net gains of approximately $25 million. These net gains were
substantially offset by reductions in the estimated net proceeds the Company
expected to receive from certain remaining businesses to be sold, aggregating
approximately $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million.
In May 1996, the Company sold MascoTech Stamping Technologies, Inc.
("MSTI"), a wholly owned subsidiary, to Tower Automotive, Inc. ("Tower")
resulting in an after-tax loss of approximately $26 million ($.49 per common
share), including after-tax losses of approximately $1 million related to the
closure of a MSTI manufacturing facility not included in the sale. The Company
received initial consideration of approximately $80 million, consisting
principally of $55 million in cash, 785,000 shares of Tower common stock and
warrants to purchase additional Tower common stock (200,000 shares at $18 per
share expiring May 31, 1999). The Company applied the cash proceeds (including
approximately $14 million received from the subsequent sale of 600,000 shares of
Tower common stock) to reduce its indebtedness. The Company may receive
additional consideration (up to $30 million), of which approximately $5 million
was earned in 1997, contingent upon the future earnings of MSTI through May 31,
1999.
On January 3, 1997, the Company sold its Technical Services Group
(comprised of the Company's engineering and technical business services units)
to MSX International, Inc. Also included in this transaction were the net assets
of APX International which were acquired by the Company in November 1996 for
approximately $44 million. The sale resulted in total proceeds to the Company of
approximately $145 million, subject to certain adjustments, consisting of cash,
$30 million of subordinated debentures, $18 million of preferred stock and an
approximate 45 percent common equity interest in MSX International, Inc. valued
at $2 million. In January 1998, the Company received $48 million of cash from
MSX International, Inc. in payment of the subordinated debentures and other
amounts due MascoTech resulting in a realized gain in the first quarter 1998
(gain recognition was deferred at the time of the transaction pending cash
receipt) of approximately $7 million. The remaining deferred gain of
approximately $20 million will be recognized upon the liquidation of the common
and preferred stock holdings for cash. The net assets of the Technical Services
Group and APX International are reflected on the consolidated balance sheet as
net assets of businesses held for disposition at December 31, 1996. The Company
did not reflect any revenues or expenses in the consolidated statement of income
related to APX International from the date of acquisition through January 3,
1997 as control was deemed to be temporary.
The disposition of businesses did not meet the criteria for discontinued
operations treatment for accounting purposes; accordingly, the sales and results
of operations of these businesses were included in continuing operations until
disposition. Businesses held for sale or sold, including MSTI and TSG, had sales
of $0, $412 million and $874 million in 1997, 1996 and 1995, respectively, and
operating income (losses) before gains (charge) on disposition of businesses,
net of $0, $(13) million and $5 million in 1997, 1996 and 1995, respectively.
24
<PAGE> 26
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Amounts included in the consolidated balance sheet for net assets of
businesses held for disposition consist of the following at December 31, 1996:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1996
--------
<S> <C>
Receivables................................................. $ 59,110
Other current assets........................................ 46,050
Current liabilities......................................... (19,180)
--------
Net current assets..................................... 85,980
--------
Property and equipment, net................................. 22,090
Other non-current assets and liabilities, net............... 760
--------
Net non-current assets................................. 22,850
--------
Net assets of businesses held for disposition.......... $108,830
========
</TABLE>
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
------------------
1997 1996
------- -------
<S> <C> <C>
Finished goods............................................. $22,160 $21,020
Work in process............................................ 22,990 20,360
Raw material............................................... 28,710 28,260
------- -------
$73,860 $69,640
======= =======
</TABLE>
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist primarily of the
following common stock interests in publicly traded affiliates:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation.......................................... 37% 41% 41%
Emco Limited................................................ -- 43% 43%
Titan International, Inc. .................................. 15% 12% 15%
Delco Remy International, Inc. (voting)..................... 18% 26% 25%
</TABLE>
TriMas Corporation ("TriMas") is a diversified manufacturer of commercial,
industrial and consumer products (see "Subsequent Event" note). Emco Limited
("Emco") is a Canadian-based manufacturer and distributor of building and other
industrial products. Titan International, Inc. ("Titan") is a manufacturer of
wheels, tires and other products for agricultural, construction and off-highway
equipment markets. Delco Remy International, Inc. ("DRI") is a manufacturer of
automotive electronic motors and other components.
25
<PAGE> 27
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The carrying amount of investments in affiliates at December 31, 1997 and
1996 and quoted market values at December 31, 1997 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997
QUOTED 1997 1996
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
<S> <C> <C> <C>
Common stock:
TriMas Corporation............................ $522,190 $137,740 $101,880
Emco Limited.................................. -- -- 49,400
Titan International, Inc. .................... 66,110 44,080 42,280
Delco Remy International, Inc. ............... 37,820 9,320 10,440
-------- -------- --------
Common stock holdings........................... 626,120 191,140 204,000
Subordinated debt of Emco Limited............... 35,130
--------
Investments in publicly traded affiliates....... $626,120 191,140 239,130
========
Other non-public affiliates..................... 72,160 43,340
-------- --------
Total........................................... $263,300 $282,470
======== ========
</TABLE>
In June 1995, Titan sold newly issued common stock in a public offering and
issued common stock as a result of the conversion of convertible securities. The
Company recognized pre-tax income of approximately $5.1 million as a result of
the change in the Company's common equity ownership interest in Titan. In
December 1996, Titan called for redemption its 4 3/4% Convertible Subordinated
Notes which resulted in the issuance of approximately 4.5 million common shares,
reducing the Company's common equity ownership interest in Titan to
approximately 12 percent. As a result, the investment in Titan at December 31,
1996 was accounted for as available-for-sale. In March 1997, Titan repurchased
approximately 5.6 million shares of its common stock, increasing the Company's
common equity ownership interest in Titan to approximately 15 percent. As a
result, the investment in Titan has been accounted for under the equity method
of accounting.
In March 1997, TriMas called for redemption its 5% Convertible Subordinated
Debentures which resulted in the issuance of approximately 4.7 million common
shares, reducing the Company's common equity ownership in TriMas to
approximately 37 percent. The Company recognized pre-tax income of approximately
$13 million as a result of the change in the Company's common equity ownership
interest in TriMas.
In September 1997, the Company exercised its option and exchanged its
equity holdings in Emco, with a value approximating $106 million, and
approximately $46 million in cash to satisfy the indebtedness to Masco
Corporation incurred in 1996 in connection with the Company's purchase and
retirement of certain of its securities held by Masco Corporation. This
transaction resulted in a pre-tax gain of approximately $46 million. In
addition, the Company has an investment in Emco subordinated notes which are
classified as available-for-sale and, as a result, are recorded at fair value.
As a result of the sale of Emco equity, the Emco subordinated notes were
reclassified to other assets in 1997. The Company has recorded unrealized gains
of approximately $1 million and $2 million in 1997 and 1996, respectively, which
have been recorded as an adjustment to shareholders' equity.
In December 1997, DRI completed an initial public offering reducing the
Company's common equity ownership interest in DRI to approximately 12 percent on
a diluted basis (the Company owns approximately 18 percent of the voting common
stock). As a result of the change in the Company's common equity ownership
interest in DRI, the Company recognized pre-tax income of approximately $5
million.
26
<PAGE> 28
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition to its equity and other investments in publicly traded
affiliates, the Company has equity and other investment interests in privately
held automotive related companies, including the Company's common equity
ownership in Saturn Electronics & Engineering, Inc., a manufacturer of
electromechanical and electronic automotive components, and MSX International,
Inc., a transportation-focused engineering and technical services company.
Equity in undistributed earnings of affiliates of $68 million at December
31, 1997, $57 million at December 31, 1996 and $38 million at December 31, 1995
are included in consolidated retained earnings.
Approximate combined condensed financial data of the Company's equity
affiliates accounted for under the equity method are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-----------------------
1997 1996
---------- ---------
<S> <C> <C>
Current assets......................................... $1,117,940 $ 839,250
Current liabilities.................................... (520,900) (342,980)
---------- ---------
Working capital...................................... 597,040 496,270
Property and equipment, net............................ 612,060 453,350
Excess of cost over net assets of acquired companies... 371,190 257,160
Other assets........................................... 145,000 78,990
Long-term debt......................................... (702,390) (655,370)
Deferred income taxes and other long-term
liabilities.......................................... (82,610) (73,680)
---------- ---------
Shareholders' equity................................. $ 940,290 $ 556,720
========== =========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $3,484,540 $2,959,980 $2,729,260
========== ========== ==========
Operating profit........................... $ 264,590 $ 269,440 $ 235,510
========== ========== ==========
Earnings attributable to common stock...... $ 108,230 $ 128,820 $ 92,700
========== ========== ==========
</TABLE>
Equity and other income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
The Company's equity in affiliates' earnings
available for common shareholders................ $31,330 $35,190 $26,230
Interest and dividend income....................... 12,030 5,270 5,190
------- ------- -------
Equity and other income from affiliates............ $43,360 $40,460 $31,420
======= ======= =======
</TABLE>
27
<PAGE> 29
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1997 1996
-------- --------
<S> <C> <C>
Cost:
Land and land improvements............................ $ 19,820 $ 17,530
Buildings............................................. 116,270 109,730
Machinery and equipment............................... 545,590 513,010
-------- --------
681,680 640,270
Less accumulated depreciation........................... 264,650 251,810
-------- --------
$417,030 $388,460
======== ========
</TABLE>
Depreciation expense totalled $34 million, $37 million and $38 million in
1997, 1996 and 1995, respectively.
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1997 1996
-------- -------
<S> <C> <C>
Salaries, wages and commissions.......................... $ 17,690 $15,930
Income taxes............................................. 7,760 2,810
Interest................................................. 1,740 4,050
Insurance................................................ 24,740 33,940
Property, payroll and other taxes........................ 3,340 5,500
Other.................................................... 59,380 34,680
-------- -------
$114,650 $96,910
======== =======
</TABLE>
28
<PAGE> 30
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
----------------------
1997 1996
-------- --------
<S> <C> <C>
6 5/8% Note held by Masco Corporation................... $ -- $151,380
4 1/2% Convertible Subordinated Debentures, due 2003 and
convertible into Company Common Stock at $31 per
share................................................. 310,000 310,000
Bank revolving credit agreement......................... 245,000 250,000
Other................................................... 39,880 44,390
-------- --------
594,880 755,770
Less current portion of long-term debt.................. 2,880 3,370
-------- --------
Long-term debt.......................................... $592,000 $752,400
======== ========
</TABLE>
The interest rates applicable to the Company's revolving credit agreement
at December 31, 1997 are principally at alternative floating rates provided for
in the agreement (approximately six percent at December 31, 1997).
In connection with the TriMas acquisition in early 1998 (see "Subsequent
Event" note), the Company entered into a new $1.3 billion credit facility. This
facility includes a $500 million term loan with principal payments as follows:
1998 - $25 million; 1999 - $40 million; 2000 - $60 million; 2001 - $75 million;
and 2002 - $190 million. The remainder of the term loan and the $800 million
revolver terminate in 2003. The Company has the ability and intent to refinance
amounts due in 1998 on a long-term basis.
The interest rates applicable to the new credit facility are principally at
alternative floating rates which would have approximated 6.5 percent at December
31, 1997. The new credit facility requires the maintenance of a specified level
of shareholders' equity plus subordinated debt, with limitations on the ratios
of total debt to cash flow (as defined) and cash flow less capital expenditures
(as defined) to interest plus scheduled debt payments. In addition, there are
limitations on dividends, share repurchases and subordinated debt repurchases.
Under the most restrictive of these provisions, approximately $40 million would
have been available at December 31, 1997 for the payment of cash dividends and
the acquisition of Company capital stock. The facility is collateralized by a
pledge of the stock of TriMas.
The note held by Masco Corporation was part of the consideration paid by
the Company in 1996 for the purchase of 17 million shares of MascoTech common
stock and warrants to purchase 10 million shares of MascoTech common stock from
Masco Corporation. In September 1997, the Company exercised its option and
exchanged its equity holdings in Emco Limited, with a value approximating $106
million, and approximately $46 million in cash to Masco Corporation to satisfy
this indebtedness.
The maturities of debt as at December 31, 1997 during the next five years
are as follows (not taking into account the new credit facility) (in millions):
1998 - $3; 1999 - $4; 2000 - $2; 2001 - $.7; and 2002 - $.5.
29
<PAGE> 31
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SHAREHOLDERS' EQUITY:
<TABLE>
<CAPTION>
(IN THOUSANDS)
RETAINED RESTRICTED
PREFERRED COMMON PAID-IN EARNINGS STOCK SHAREHOLDERS'
STOCK STOCK CAPITAL (DEFICIT) OTHER AWARDS EQUITY
--------- ------ ------- --------- ----- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995... $ 10,800 $ 56,610 $ 318,960 $ (7,590) $ 2,360 $(19,050) $ 362,090
Net income............... -- -- -- 59,190 -- -- 59,190
Preferred stock
dividends............. -- -- -- (12,960) -- -- (12,960)
Common stock dividends... -- -- -- (6,260) -- -- (6,260)
Retirement of common
stock................. -- (1,210) (11,920) -- -- -- (13,130)
Translation adjustments,
net................... -- -- -- -- 6,210 -- 6,210
Exercise of stock
options............... -- 120 870 -- -- -- 990
Stock award purchases,
net of amortization... -- -- -- -- -- 2,000 2,000
-------- -------- --------- -------- -------- -------- ---------
Balance, December 31,
1995..................... 10,800 55,520 307,910 32,380 8,570 (17,050) 398,130
Net income............... -- -- -- 51,620 -- -- 51,620
Preferred stock
dividends............. -- -- -- (12,960) -- -- (12,960)
Common stock dividends... -- -- -- (9,980) -- -- (9,980)
Retirement of common
stock and warrants.... -- (18,720) (270,320) -- -- -- (289,040)
Translation adjustments
and other............. -- -- -- -- 6,200 -- 6,200
Exercise of stock
options............... -- 450 3,490 -- -- -- 3,940
Stock award purchases,
net of amortization... -- -- -- -- -- (9,090) (9,090)
-------- -------- --------- -------- -------- -------- ---------
Balance, December 31,
1996..................... 10,800 37,250 41,080 61,060 14,770 (26,140) 138,820
Net income............... -- -- -- 115,240 -- -- 115,240
Preferred stock
dividends............. -- 150 2,850 (6,240) -- -- (3,240)
Common stock dividends... -- -- -- (12,270) -- -- (12,270)
Retirement of common
stock................. -- (330) (6,280) -- -- -- (6,610)
Retirement of preferred
stock................. (450) -- (7,910) -- -- -- (8,360)
Conversion of outstanding
preferred stock....... (10,350) 9,750 600 -- -- -- --
Translation adjustments
and other............. -- -- -- -- (10,610) -- (10,610)
Exercise of stock
options............... -- 430 4,000 -- -- -- 4,430
Stock award purchases,
net of amortization... -- -- -- -- -- (6,740) (6,740)
-------- -------- --------- -------- -------- -------- ---------
Balance, December 31,
1997..................... -- $ 47,250 $ 34,340 $157,790 $ 4,160 $(32,880) $ 210,660
======== ======== ========= ======== ======== ======== =========
</TABLE>
On June 27, 1997, the Company completed the conversion of all remaining
issued and outstanding shares of its Dividend Enhanced Convertible Preferred
Stock (DECS). Holders of DECS received in exchange for each share of DECS .955
of a share of the Company's Common Stock, par value $1.00 per share, resulting
in the issuance of approximately 10 million shares of Company Common Stock.
30
<PAGE> 32
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On October 31, 1996, the Company purchased from Masco Corporation 17
million shares of MascoTech common stock and warrants to purchase 10 million
shares of MascoTech common stock, for cash and notes approximating $266 million.
As part of this 1996 transaction, Richard A. Manoogian, Chairman of both Masco
Corporation and MascoTech, also sold to MascoTech one million shares of
MascoTech common stock (at the then current market price) for approximately
$13.6 million. In addition, as part of this transaction, Masco Corporation's
agreement to purchase from the Company, at the Company's option, up to $200
million of subordinated debentures was extended through 2002, and the corporate
services agreement with Masco Corporation was extended until September 30, 1998.
Masco Corporation also agreed that MascoTech will have the right of first
refusal to purchase the approximate 7.8 million shares of MascoTech common stock
that Masco Corporation continues to hold, should Masco Corporation decide to
dispose of such shares.
In addition, the Company repurchased and retired approximately .3 million
shares of its common stock and approximately .5 million shares of its preferred
stock in 1997, and approximately one million shares of its common stock in each
of 1996 and 1995 in open-market purchases, pursuant to a Board of Directors'
authorized repurchase program. At December 31, 1997, the Company may repurchase
approximately three million additional shares of Company Common Stock pursuant
to this repurchase authorization.
On the basis of amounts paid (declared), cash dividends per common share
were $.22 ($.28) in 1997, $.18 ($.18) in 1996 and $.14 ($.11) in 1995.
STOCK OPTIONS AND AWARDS:
The Company's Long Term Stock Incentive Plan (the "Plan") provides for the
issuance of stock-based incentives in various forms. At December 31, 1997,
outstanding stock-based incentives are in the form of restricted long-term stock
awards and stock options.
Pursuant to the Plan, the Company granted long-term stock awards, net, for
565,000, 480,000 and 461,000 shares of Company Common Stock during 1997, 1996
and 1995, respectively, to key employees of the Company and affiliated
companies. The weighted average fair value per share of long-term stock awards
granted during 1997, 1996 and 1995 on the date of grant was $19, $14 and $12,
respectively. Compensation expense for the vesting of long-term stock awards was
approximately $4.7 million, $2.3 million and $4.8 million in 1997, 1996 and
1995, respectively. The unamortized costs of unvested stock awards, aggregating
approximately $33 million at December 31, 1997, are being amortized over the
ten-year vesting periods and are a deduction from shareholders' equity.
Fixed stock options are granted to key employees of the Company and
affiliated companies and have a maximum term of 10 years. The exercise price of
each fixed option equals the market price of Company Common Stock on the date of
grant. These options either vest no later than 10 years after grant or in
installments beginning in the third year and extending through the eighth year
after grant.
31
<PAGE> 33
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A summary of the status of the Company's stock options granted under the
Plan or prior plans for the three years ended December 31, 1997 is presented
below.
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Option shares outstanding, January 1........................ 4,290 3,440 3,620
Weighted average exercise price........................... $10 $ 8 $ 7
Option shares granted....................................... 80 1,370 --
Weighted average exercise price........................... $20 $15 --
Option shares exercised..................................... (500) (450) (120)
Weighted average exercise price........................... $ 8 $ 7 $ 7
Option shares canceled...................................... (100) (70) (60)
Weighted average exercise price........................... $16 $ 5 $ 5
Option shares outstanding, December 31...................... 3,770 4,290 3,440
Weighted average exercise price........................... $10 $10 $ 8
Weighted average remaining option term (in years)......... 4.7 5.3 4.4
Option shares exercisable, December 31...................... 1,430 1,710 1,640
Weighted average exercise price........................... $ 9 $ 9 $ 9
</TABLE>
At December 31, 1997, options have been granted and are outstanding with
exercise prices ranging from $4 1/2 to $25 per share, the fair market values at
the dates of grant.
At December 31, 1997 and 1996, a combined total of 5,223,000 and 4,656,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
The Company has elected to continue to apply the provisions of Accounting
Principles Board Opinion No. 25 and, accordingly, no stock option compensation
expense is included in the determination of net income in the statement of
income. The weighted average fair value on the date of grant of options granted
was $7.70 and $6.20 in 1997 and 1996, respectively. Had stock option
compensation expense been determined pursuant to the methodology of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," the pro forma effects on the Company's earnings per share would
have approximated $.02 and $.01 in 1997 and 1996, respectively, and had no
effect in 1995.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Risk free interest rate................................ 6.5% 6.5% 7.3%
Dividend yield......................................... 1.4% 1.1% 1.1%
Volatility factor...................................... 35.0% 39.0% 39.0%
Expected option life (in years)........................ 5.5 5.5 5.5
</TABLE>
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Directors. Aggregate charges to income under these
plans were $9 million in 1997, $11 million in 1996 and $13 million in 1995.
32
<PAGE> 34
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 3,480 $ 5,230 $ 4,680
Interest cost on projected benefit obligations..... 6,650 6,490 6,330
Actual return on assets............................ (2,830) (3,970) (6,540)
Net amortization and deferral...................... (2,790) (740) 1,600
------- ------- -------
Net periodic pension cost.......................... $ 4,510 $ 7,010 $ 6,070
======= ======= =======
</TABLE>
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Discount rate for obligations............................ 7.25% 7.50% 7.25%
Rate of increase in compensation levels.................. 5.00% 5.00% 5.00%
Expected long-term rate of return on plan assets......... 11.00% 11.00% 11.00%
</TABLE>
The funded status of the Company's defined-benefit pension plans at
December 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996
----------- -----------
ACCUMULATED ACCUMULATED
BENEFITS BENEFITS
EXCEED EXCEED
RECONCILIATION OF FUNDED STATUS ASSETS ASSETS
------------------------------- ----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................ $ 81,180 $ 72,450
======== ========
Accumulated benefit obligation....................... $ 87,830 $ 77,380
======== ========
Projected benefit obligation......................... $ 99,150 $ 89,620
Assets at fair value................................... 63,020 59,710
-------- --------
Projected benefit obligation in excess of plan
assets............................................ (36,130) (29,910)
Reconciling items:
Unrecognized net loss................................ 21,270 14,690
Unrecognized prior service cost...................... 8,290 8,050
Unrecognized net asset at transition................. (810) (930)
Adjustment required to recognize minimum liability... (17,580) (12,580)
-------- --------
Accrued pension cost................................... $(24,960) $(20,680)
======== ========
</TABLE>
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
The Company records its postretirement benefit plans in accordance with
Statement of Financial Accounting Standards No. 106 ("SFAS No. 106"),
"Employers' Accounting for Postretirement Benefits Other Than Pensions." This
statement requires the accrual method of accounting for postretirement health
care and life insurance based on actuarially determined costs to be recognized
over the period from the date of hire to the full eligibility date of employees
who are expected to qualify for such benefits. In conjunction with SFAS No. 106,
the Company recognizes the transition obligation on a prospective basis with the
net transition
33
<PAGE> 35
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
obligation amortized over its remaining life. Net periodic postretirement
benefit cost includes the following components for the years ended December 31,
1997, 1996 and 1995:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Service cost................................................ $ 300 $ 400 $ 300
Interest cost............................................... 1,400 1,600 1,900
Net amortization............................................ 700 800 1,100
------ ------ ------
Net periodic postretirement benefit cost.................... $2,400 $2,800 $3,300
====== ====== ======
</TABLE>
Postretirement benefit obligations, none of which is funded, are summarized
as follows at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees.................................................. $ 8,300 $ 13,900
Fully eligible active plan participants................... 500 800
Other active participants................................. 3,600 5,300
-------- --------
Total accumulated postretirement benefit obligation......... 12,400 20,000
Unrecognized prior service cost........................... (500) (300)
Unrecognized net gain..................................... 9,000 700
Unamortized transition obligation......................... (10,300) (11,000)
-------- --------
Accrued postretirement benefits............................. $ 10,600 $ 9,400
======== ========
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25 percent in both 1997 and 1996. The change in the
accumulated postretirement benefit obligation and the unrecognized net gain
amounts is the result of the change in the actuarial assumptions concerning the
health care cost trend rate. The assumed health care cost trend rate in 1997 was
nine percent, decreasing to an ultimate rate in the year 2007 of five percent.
If the assumed medical cost trend rates were increased by one percent, the
accumulated postretirement benefit obligation would increase by $.7 million and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost would increase by $.1 million.
34
<PAGE> 36
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEGMENT INFORMATION:
The Company's business segments involve the sale of the following products
and services:
Transportation-Related Products and Services:
Precision products, generally produced using advanced metalworking
technologies with significant proprietary content, and
aftermarket products for the transportation industry.
Engineering and technical business services.
Specialty Products:
Other Industrial -- Principally doors, windows, security grilles and
office panels and partitions for commercial and residential
markets.
The Company's export sales approximated $71 million, $75 million and $85
million in 1997, 1996 and 1995, respectively.
Corporate assets consist primarily of cash and cash investments, marketable
securities, equity and other investments in affiliates and notes receivable.
35
<PAGE> 37
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NET SALES OPERATING PROFIT(B)
---------------------------------- ------------------------------
1997 1996 1995 1997 1996 1995
-------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by
industry segment are:
Transportation-Related Products
and Services(A)................. $922,000 $1,151,000 $1,340,000 $124,000 $ 90,000 $144,000
Specialty Products:
Other Industrial................ -- 130,000 338,000 -- 1,000 (3,000)
-------- ---------- ---------- -------- -------- --------
Total......................... $922,000 $1,281,000 $1,678,000 124,000 91,000 141,000
======== ========== ==========
Other income (expense), net....... 88,000 8,000 (9,000)
General corporate expense......... (22,000) (22,000) (32,000)
-------- -------- --------
Income before income taxes and
cumulative effect of accounting
change, net..................... $190,000 $ 77,000 $100,000
======== ======== ========
Corporate assets..................
Total assets..................
Foreign Operations(F)............. $100,000 $ 170,000 $ 166,000 $ 15,000 $ 17,000 $ 22,000
======== ========== ========== ======== ======== ========
<CAPTION>
(IN THOUSANDS)
ASSETS EMPLOYED AT
DECEMBER 31(C)
------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
The Company's operations by
industry segment are:
Transportation-Related Products
and Services(A)................. $ 712,000 $ 742,000 $ 870,000
Specialty Products:
Other Industrial................ -- 55,000 150,000
---------- ---------- ----------
Total......................... 712,000 797,000 1,020,000
Other income (expense), net.......
General corporate expense.........
Income before income taxes and
cumulative effect of accounting
change, net.....................
Corporate assets.................. 433,000 406,000 402,000
---------- ---------- ----------
Total assets.................. $1,145,000 $1,203,000 $1,422,000
========== ========== ==========
Foreign Operations(F)............. $ 138,000 $ 155,000 $ 140,000
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DEPRECIATION AND
PROPERTY ADDITIONS(D) AMORTIZATION(E)
---------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company's operations by industry segments are:
Transportation-Related Products and Services................ $55,000 $41,000 $ 96,000 $43,000 $44,000 $45,000
Specialty Products:
Other Industrial.......................................... -- 3,000 14,000 -- 2,000 7,000
------- ------- -------- ------- ------- -------
Total................................................... $55,000 $44,000 $110,000 $43,000 $46,000 $52,000
======= ======= ======== ======= ======= =======
</TABLE>
(A) Included within this segment are sales to one customer of $140 million, $232
million and $397 million in 1997, 1996 and 1995, respectively; sales to
another customer of $79 million, $146 million and $182 million in 1997, 1996
and 1995, respectively; sales to a third customer of $62 million, $122
million and $178 million in 1997, 1996 and 1995, respectively; and sales to
a fourth customer of $156 million, $155 million and $136 million in 1997,
1996 and 1995, respectively.
(B) Operating profit in 1996 includes a $32 million pre-tax loss principally
from the sale of MascoTech Stamping Technologies, Inc. ("MSTI"). Operating
profit in 1997 includes approximately $5 million of additional pre-tax
consideration earned from the sale of MSTI which was sold in 1996. These
items impacted the Company's Transportation-Related Products and Services
industry segment. The Company may receive additional consideration
contingent upon the future earnings of MSTI through May 31, 1999. Operating
profit in 1995 includes $25 million in net gains resulting from sales of
non-core businesses. These net gains were substantially offset by reductions
in the estimated proceeds the Company expected to receive from businesses to
be sold, aggregating $12 million, and by certain exit costs incurred in 1995
aggregating approximately $8 million. The net gains (charge) impact the
Company's industry segments as follows: Transportation-Related Products and
Services - $21 million and Specialty Products - $(2) million. The remaining
$(14) million of the net gains (charge) was allocated to General Corporate
Expense.
(C) Assets employed at December 31, 1996 and 1995 include net assets related to
the disposition of certain operations (see "Dispositions of Operations"
note).
(D) Property additions include approximately $2 million and $14 million in 1996
and 1995, respectively, of capital expenditures for those businesses held
for disposition related to the plan adopted in late 1994.
(E) Depreciation and amortization expense includes approximately $5 million in
1995 of expense for those businesses held for disposition related to the
plan adopted in late 1994.
(F) The Company's foreign operations are located principally in Western Europe.
36
<PAGE> 38
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Other, net:
Net realized and unrealized gains (losses) from marketable
securities............................................. $13,130 $ (160) $ 730
Interest income........................................... 3,440 1,160 2,390
Dividend income........................................... 650 420 950
Other, net................................................ 180 (4,020) 780
------- ------- ------
$17,400 $(2,600) $4,850
======= ======= ======
</TABLE>
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Income before income taxes and cumulative effect of
accounting change, net:
Domestic................................................ $173,410 $59,870 $ 78,870
Foreign................................................. 16,880 17,350 21,410
-------- ------- --------
$190,290 $77,220 $100,280
======== ======= ========
Provision for income taxes (credit):
Federal, current........................................ $ 40,290 $16,170 $(24,210)
State and local......................................... 6,810 4,650 6,110
Foreign, current........................................ 10,430 7,840 7,860
Deferred, principally federal........................... 17,520 8,640 51,330
-------- ------- --------
Income taxes on income before cumulative effect of
accounting change, net............................. $ 75,050 $37,300 $ 41,090
======== ======= ========
</TABLE>
The components of deferred taxes at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Inventories............................................ $ 2,440 $ 2,860
Accrued liabilities.................................... 35,660 35,170
Alternative minimum tax................................ -- 6,750
-------- --------
38,100 44,780
-------- --------
Deferred tax liabilities:
Property and equipment................................. 64,630 59,580
Other, principally equity investments in affiliates.... 62,240 57,370
-------- --------
126,870 116,950
-------- --------
Net deferred tax liability............................... $ 88,770 $ 72,170
======== ========
</TABLE>
37
<PAGE> 39
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes allocated to income before
income taxes and cumulative effect of accounting change, net:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
U.S. federal statutory rate....................... 35% 35% 35%
------- ------- --------
Tax at U.S. federal statutory rate................ $66,600 $27,020 $ 35,100
State and local taxes, net of federal tax
benefit......................................... 4,430 3,020 3,970
Higher effective foreign tax rate................. 3,200 2,100 2,710
Non-deductible portion of charge for disposition
of businesses................................... -- 5,780 --
Amortization in excess of tax, net................ (760) (140) 1,630
Other, net........................................ 1,580 (480) (2,320)
------- ------- --------
Income taxes before cumulative effect of
accounting change, net....................... $75,050 $37,300 $ 41,090
======= ======= ========
</TABLE>
38
<PAGE> 40
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS
Fair values of financial instruments included in marketable securities,
notes receivable and other assets were estimated using various methods including
quoted market prices and discounted future cash flows based on the incremental
borrowing rates for similar types of investments. In addition, for variable-rate
notes receivable that fluctuate with the prime rate, the carrying amounts
approximate fair value.
LONG-TERM DEBT
The carrying amount of bank debt and certain other long-term debt
instruments approximate fair value as the floating rates inherent in this debt
reflect changes in overall market interest rates. The fair values of the
Company's subordinated debt instruments are based on quoted market prices. The
fair values of certain other debt instruments are estimated by discounting
future cash flows based on the Company's incremental borrowing rate for similar
types of debt instruments.
DERIVATIVES
The Company has limited involvement with derivative financial instruments,
and does not use derivatives for trading purposes. The derivatives, principally
consisting of S&P futures contracts, are intended to reduce the market risk
associated with the Company's marketable equity securities portfolio. The
Company's investment in futures contracts increases in value as a result of
decreases in the underlying index and decreases in value when the underlying
index increases. The contracts are financial instruments (with off-balance sheet
market risk), as they are required to be settled in cash. The Company's market
risk is subject to the price differential between the contract market value and
contract cost. The average monthly notional amount of derivative contracts in
1997 was approximately $17 million and there were no contracts outstanding at
December 31, 1997.
Futures contracts trade on organized exchanges, and as a result, settlement
of such contracts has little credit risk. Initial margin requirements are met in
cash or other instruments, and changes in the contract values are settled
periodically. Initial margin requirements are recorded as cash investments in
the balance sheet. Futures contracts are short-term in nature, usually less than
six months.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash investments........................... $ 41,110 $ 41,110 $ 19,400 $ 19,400
Marketable securities, notes receivable and other
assets............................................ $ 80,760 $ 81,590 $124,270 $125,460
Long-term debt:
Bank debt......................................... $267,000 $267,000 $265,000 $265,000
4 1/2% Convertible Subordinated Debentures........ $310,000 $269,700 $310,000 $252,650
6 5/8% Note held by Masco Corporation............. -- -- $151,380 $151,380
Other long-term debt.............................. $ 15,000 $ 14,500 $ 26,020 $ 24,490
</TABLE>
39
<PAGE> 41
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
------------------------------------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
<S> <C> <C> <C> <C>
1997:
- -----
Net sales................................... $233,620 $222,030 $233,040 $233,440
Gross profit................................ $ 42,020 $ 34,350 $ 53,990 $ 56,300
Net income:
Income.................................... $ 19,270 $ 38,660 $ 24,650 $ 32,660
Income attributable to common stock....... $ 19,270 $ 38,660 $ 21,650 $ 29,420
Per common share:
Basic............................. $.43 $.86 $.61 $.83
Diluted........................... $.37 $.70 $.46 $.59
Market price per common share:
High...................................... $21 5/16 $22 1/2 $23 1/2 $21 1/4
Low....................................... $16 1/2 $20 $18 1/2 $16
1996:
- -----
Net sales................................... $271,450 $290,790 $345,060 $373,920
Gross profit................................ $ 58,160 $ 55,580 $ 57,930 $ 61,440
Income (loss) before accounting change
item...................................... $ 16,450 $ 19,390 $ (6,660) $ 10,740
Per common share:
Basic............................. $.32 $.30 $(.19) $.14
Diluted........................... $.28 $.28 $(.19) $.13
Net income (loss):
Income (loss)............................. $ 16,450 $ 19,390 $ (6,660) $ 22,440
Income (loss) attributable to common
stock.................................. $ 13,210 $ 16,150 $ (9,900) $ 19,200
Per common share:
Basic............................. $.32 $.30 $(.19) $.36
Diluted........................... $.28 $.28 $(.19) $.34
Market price per common share:
High...................................... $17 $15 1/2 $16 1/8 $13 5/8
Low....................................... $13 1/2 $13 $12 1/2 $10 3/8
</TABLE>
Results for the first and fourth quarters 1997 include pre-tax gains of
approximately $13 million and $5 million, respectively, as a result of equity
transactions by affiliates of the Company.
Results for the first, second, third and fourth quarters 1997 include
pre-tax marketable securities gains (losses) of approximately $5.0 million, $4.0
million, $4.4 million and $(.3) million, respectively.
Results for the third quarter 1997 include a pre-tax gain of approximately
$46 million related to the transfer of the Company's equity holdings in Emco
Limited to Masco Corporation. This gain was partially offset by pre-tax costs
approximating $14 million associated with a plant closure and the Company's
share of a special charge recorded by an equity affiliate and other expenses.
Results for the fourth quarter 1997 include approximately $5 million
pre-tax of additional consideration earned from the sale of MascoTech Stamping
Technologies, Inc. which was sold in the second quarter 1996.
40
<PAGE> 42
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
Results for the fourth quarter 1997 were negatively impacted by charges
aggregating approximately $10 million pre-tax principally related to severance,
the Company's share of a charge recorded by an equity affiliate, write-off of
deferred charges and loss on disposition of fixed assets.
Convertible securities were anti-dilutive in the first quarter 1996 for
purposes of computing diluted earnings per common share and earnings per common
share on income before accounting change.
Results for the second quarter 1996 include an after-tax loss of
approximately $26 million related to the sale of MascoTech Stamping
Technologies, Inc.
Net income for the first quarter of 1996 includes an after-tax gain of
approximately $12 million as a result of the adoption of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996
which was recorded as a cumulative effect of an accounting change.
The 1997 and 1996 income (loss) per common share amounts for the quarters
do not total to the full year amounts due to the purchase and retirement of
shares throughout the year.
SUBSEQUENT EVENT:
In January 1998, the Company completed its tender offer for all of the
outstanding shares of common stock of TriMas Corporation not held by the Company
for approximately $920 million in accordance with the terms of the Company's
previously announced acquisition agreement with TriMas.
The acquisition will be accounted for as a purchase in 1998. The purchase
price will be allocated to the previously unowned assets acquired and
liabilities assumed based upon their estimated fair values. The excess of the
purchase price over the net assets acquired will be amortized over a period not
exceeding 40 years. The purchase price allocation will be determined during 1998
when appraisals, other studies and additional information become available.
Results of operations for TriMas will be included with those of the Company for
periods subsequent to the date of the acquisition.
TriMas is a diversified proprietary products company with leadership
positions in commercial, industrial and consumer niche markets.
The following is summarized financial data of TriMas as of and for the year
ended December 31, 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997
--------
<S> <C>
Current assets.............................................. $290,630
========
Total assets................................................ $708,460
========
Total liabilities........................................... $159,060
========
Net sales................................................... $667,910
========
Operating profit............................................ $113,700
========
</TABLE>
41
<PAGE> 43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1998 Annual
Meeting of Stockholders, to be filed on or before April 30, 1998 and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1998 Annual Meeting of Stockholders, to be
filed on or before April 30, 1998, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1998 Annual Meeting of Stockholders, to be
filed on or before April 30, 1998, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1998 Annual Meeting of Stockholders, to be
filed on or before April 30, 1998, and such information is incorporated herein
by reference.
42
<PAGE> 44
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31,
1997 and 1996, and for the years ended December 31, 1997, 1996 and
1995, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedule of the Company appended hereto,
as required for the years ended December 31, 1997, 1996 and
1995, consists of the following:
II. Valuation and Qualifying Accounts
(ii) TriMas Corporation and Subsidiaries Consolidated Financial
Statements appended hereto, as required at December 31, 1997
and 1996, and for the years ended December 31, 1997, 1996 and
1995, consist of the following:
Consolidated Statement of Income
Consolidated Balance Sheets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(3) Exhibits.
<TABLE>
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and
amendments thereto.(filed herewith)
3.ii Bylaws of MascoTech, Inc., as amended.(filed herewith)
4.a.i Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing the Company's 4 1/2%
Convertible Subordinated Debentures Due 2003.(4)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago.(3)
4.a.iii Supplemental Indenture dated as August 5, 1994 between
MascoTech, Inc. and The First National Bank of Chicago, as
trustee.(3)
4.b $1,300,000,000 Credit Agreement dated as of January 16, 1998
among MascoTech, Inc., MascoTech Acquisition, Inc., the
banks party thereto from time to time, The First National
Bank of Chicago, as Administrative Agent, Bank of America
NT&SA and NationsBank N.A., as Syndication Agents(7) and
Amendment No. 1 thereto dated as of February 10, 1998.
(filed herewith)
4.c Rights Agreement dated as of February 20, 1998, between
MascoTech, Inc. and The Bank of New York, as Rights
Agent.(10)
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of
MascoTech, Inc. or its subsidiaries have not been filed
since (i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10 percent of
MascoTech, Inc.'s consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by
MascoTech, Inc. to the Securities and Exchange Commission
upon request.
</TABLE>
43
<PAGE> 45
<TABLE>
<S> <C>
10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between Masco Corporation
and Masco Industries, Inc. (now known as MascoTech, Inc.).(1)
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and Masco Corporation (filed herewith), Amendment No. 1
dated as of October 31, 1996(8), and related letter agreement dated January 22,
1998.(filed herewith)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco Corporation and
Masco Industries, Inc. (now known as MascoTech, Inc.)(1) and Amendment No. 1 dated as of
October 31, 1996.(8)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco Corporation and Masco
Industries, Inc. (now known as MascoTech, Inc.) and related letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of December 20, 1990 and amendment
to Stock Repurchase Agreement included in Agreement dated as of November 23, 1993.(4)
10.e Amended and Restated Securities Purchase Agreement dated as of November 23, 1993
("Securities Purchase Agreement") between MascoTech, Inc. and Masco Corporation, including
form of Note(5), Agreement dated as of November 23, 1993 relating thereto(4), and
Amendment No. 1 to the Securities Purchase Agreement dated as of October 31, 1996.(8)
10.f Registration Agreement dated as of March 31, 1993, between Masco Corporation and Masco
Industries, Inc. (now known as MascoTech, Inc.).(2)
10.g Corporate Opportunities Agreement dated as of December 27, 1988 among Masco Industries,
Inc. (now known as MascoTech, Inc.), Masco Corporation and TriMas Corporation. (filed
herewith)
10.h Stock Purchase Agreement dated as of October 15, 1996 between Masco Corporation and
MascoTech, Inc.(8)
NOTE: Exhibits 10.i through 10.z constitute the management contracts and executive compensatory
plans or arrangements in which certain of the Directors and executive officers of the
Company participate.
10.i MascoTech, Inc. 1991 Long Term Stock Incentive Plan (Amended and Restated April 23, 1997).
(filed herewith)
10.j MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated December 6, 1995).(1)
10.k MascoTech, Inc. 1984 Stock Option Plan (Restated December 6, 1995).(1)
10.1 Masco Corporation 1991 Long Term Stock Incentive Plan. (Amended and Restated April 23,
1997).(filed herewith)
10.m Masco Corporation 1988 Restricted Stock Incentive Plan (Restated December 6, 1995).(1)
10.n Masco Corporation 1988 Stock Option Plan (Restated December 6, 1995).(1)
10.o MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.(2)
10.p MascoTech, Inc. Benefits Restoration Plan.(2)
10.q MascoTech, Inc. 1997 Non-Employee Directors Stock Plan.(filed herewith)
10.r MascoTech, Inc. 1997 Annual Incentive Compensation Plan.(filed herewith)
10.s TriMas Corporation 1995 Long Term Stock Incentive Plan (Restated December 5, 1995).(filed
herewith)
10.t TriMas Corporation 1988 Restricted Stock Incentive Plan (Restated December 5, 1995).(filed
herewith)
10.u TriMas Corporation Supplemental Executive Retirement and Disability Plan.(filed herewith)
10.v TriMas Corporation Retirement Benefit Restoration Plan.(filed herewith)
</TABLE>
44
<PAGE> 46
<TABLE>
<S> <C>
10.w Employment Agreement dated as of December 10, 1997, between TriMas Corporation and Brian
P. Campbell.(filed herewith)
10.x Description of the MascoTech, Inc. Program for Estate, Financial Planning and Tax
Assistance. (filed herewith)
10.y Masco Corporation 1997 Annual Incentive Compensation Plan. (filed herewith)
10.z Masco Corporation 1997 Non-Employee Directors Stock Plan. (filed herewith)
10.aa Purchase Agreement dated as of January 26, 1990 between Masco Corporation and TriMas
Corporation.(filed herewith)
10.bb Stock Purchase Agreement between Masco Corporation and Masco Industries, Inc. (now known
as MascoTech, Inc.) dated as of December 23, 1991 regarding Masco Capital
Corporation(9)and Amendment thereto dated May 21, 1997.(filed herewith)
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.(filed herewith)
21 List of Subsidiaries.(filed herewith)
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s Financial Statements and
Financial Statement Schedule.(filed herewith)
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's Financial
Statements.(filed herewith)
27.a Financial Data Schedule as of and for the year ended December 31, 1997.(filed herewith)
27.b Financial Data Schedule as of and for the year-to-date periods ended September 30, 1997,
June 30, 1997 and March 31, 1997.(filed herewith)
27.c Financial Data Schedule as of and for the year-to-date periods ended December 31, 1996,
September 30, 1996, June 30, 1996 and March 31, 1996.(filed herewith)
27.d Financial Data Schedule as of and for the year ended December 31, 1995.(filed herewith)
</TABLE>
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1995.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated January 30, 1998.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 13, 1996.
(9) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1996.
(10) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Registration Statement on Form 8-A dated February 23, 1998.
THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE
EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND
THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN
FURNISHING SUCH COPY OR COPIES.
45
<PAGE> 47
(B) REPORTS ON FORM 8-K.
(1) A Current Report on Form 8-K dated October 15, 1997 was filed by
MascoTech, Inc. during the quarter ended December 31, 1997 reporting
under Item 2. "Acquisition or Disposition of Assets," the
disposition of the Company's ownership interest in Emco Limited and
the delivery of approximately $46 million cash to Masco Corporation
in payment of the promissory note issued by MascoTech, Inc. in
connection with MascoTech's purchase and retirement of certain of
its securities held by Masco Corporation. Included under Item 7 of
such report were the following exhibits:
(i) MascoTech, Inc. Pro Forma Combined Consolidated Condensed
Statement of Income for the year ended December 31, 1996
(Unaudited)
(ii) MascoTech, Inc. Pro Forma Consolidated Condensed Statement of
Income for the six months ended June 30, 1997 (Unaudited)
(iii) MascoTech, Inc. Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1997 (Unaudited)
(2) A Current Report on Form 8-K dated December 22, 1997 was filed by
MascoTech, Inc. during the quarter ended December 31, 1997 reporting
under Item 5. "Other Events," the execution of an Agreement and Plan
of Merger, dated as of December 10, 1997, by the Company, its wholly
owned subsidiary MascoTech Acquisition, Inc. ("Merger Sub") and
TriMas Corporation ("TriMas"), and Amendment No. 1 to Agreement and
Plan of Merger dated as of December 15, 1997 (as so amended, the
"Merger Agreement"). Pursuant to the Merger Agreement, Merger Sub
commenced an offer to purchase any and all outstanding shares of
TriMas common stock at a price of $34.50 per share, net to the
seller in cash.
(3) A Current Report on Form 8-K dated January 30, 1998 was filed by
MascoTech, Inc. during the quarter ended March 31, 1998 reporting
under Item 2. "Acquisition or Disposition of Assets," the completion
of the tender offer for shares of TriMas Corporation.
(4) A Current Report on Form 8-K dated February 23, 1998 was filed by
MascoTech, Inc. during the quarter ended March 31, 1998 reporting
under Item 5. "Other Events," the Company's declaration of a
dividend of one preferred stock purchase right (a "Right") for each
outstanding share of common stock of the Company payable to holders
of record on February 27, 1998. The Rights become exercisable upon
certain events set forth in the Rights Agreement dated as of
February 20, 1998 between the Company and The Bank of New York, as
Rights Agent. The Rights have certain anti-takeover effects and may
cause substantial dilution to a person that attempts to acquire the
Company without a condition to such an offer that a substantial
number of the Rights be acquired or that the Rights be redeemed or
declared invalid.
46
<PAGE> 48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MASCOTECH, INC.
By: /s/ TIMOTHY WADHAMS
------------------------------------
TIMOTHY WADHAMS
Senior Vice President -- Finance and
Chief Financial Officer
March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ FRANK M. HENNESSEY Vice Chairman and
- --------------------------------------------- Chief Executive Officer
FRANK M. HENNESSEY
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ TIMOTHY WADHAMS Senior Vice President -- Finance
- --------------------------------------------- and Chief Financial Officer
TIMOTHY WADHAMS
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- ---------------------------------------------
RICHARD A. MANOOGIAN
/s/ PETER A. DOW Director
- ---------------------------------------------
PETER A. DOW
/s/ ROGER T. FRIDHOLM Director
- ---------------------------------------------
ROGER T. FRIDHOLM
/s/ EUGENE A. GARGARO, JR. Director
- ---------------------------------------------
EUGENE A. GARGARO, JR.
/s/ WILLIAM K. HOWENSTEIN Director
- ---------------------------------------------
WILLIAM K. HOWENSTEIN
/s/ JOHN A. MORGAN Director
- ---------------------------------------------
JOHN A. MORGAN
March 27, 1998
</TABLE>
47
<PAGE> 49
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(a)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1997
Schedules, as required for the years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
II. Valuation and Qualifying Accounts....................... F-2
TriMas Corporation and Subsidiaries Consolidated Financial
Statements................................................ F-3
</TABLE>
F-1
<PAGE> 50
MASCOTECH, INC.
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- --------------------------------- ---------- --------------------------- ---------- -------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED (CREDITED)
BEGINNING TO COSTS TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- --------------------------------- ---------- ------------ ----------- ---------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1997........................... $2,000,000 $ 500,000 $ 60,000 $1,380,000 $1,180,000
========== ========== =========== ========== ==========
1996........................... $1,880,000 $ 890,000 $ 20,000 $ 790,000 $2,000,000
========== ========== =========== ========== ==========
1995........................... $1,590,000 $ 400,000 $ 410,000 $ 520,000 $1,880,000
========== ========== =========== ========== ==========
</TABLE>
NOTES:
(A) Allowance of companies acquired, and other adjustments, net in 1997 and
1995. Allowance of companies reclassified for businesses held for
disposition, and other adjustments, net in 1996 and 1995.
(B) Deductions, representing uncollectible accounts written off, less recoveries
of accounts written off in prior years.
F-2
<PAGE> 51
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of MascoTech, Inc.:
We have audited the consolidated balance sheet of TriMas Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income and cash flows for each of the three years in the period
ended December 31, 1997 as listed in Item 14(a)(2)(ii) of this Form 10-K. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TriMas
Corporation and subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note 2 to the financial statements, substantially all the
outstanding shares of the Company not already owned by MascoTech, Inc. were
acquired by them in January 1998. The Company is now a wholly owned subsidiary
of MascoTech, Inc.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 17, 1998
F-3
<PAGE> 52
TRIMAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Net sales....................................... $ 667,910,000 $ 600,230,000 $ 553,490,000
Cost of sales................................... (447,940,000) (403,380,000) (371,470,000)
Selling, general and administrative expenses.... (106,270,000) (92,560,000) (83,340,000)
------------- ------------- -------------
Operating profit.............................. 113,700,000 104,290,000 98,680,000
Interest expense................................ (5,420,000) (10,810,000) (13,530,000)
Other, net (principally interest income)........ 6,790,000 7,110,000 6,690,000
------------- ------------- -------------
Income before income taxes and extraordinary
charge..................................... 115,070,000 100,590,000 91,840,000
Income taxes.................................... 43,730,000 39,230,000 35,820,000
------------- ------------- -------------
Income before extraordinary charge............ 71,340,000 61,360,000 56,020,000
Extraordinary charge related to becoming a
private company............................... (4,970,000)
------------- ------------- -------------
Net income.................................... $ 66,370,000 $ 61,360,000 $ 56,020,000
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 53
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $105,380,000 $105,890,000
Receivables............................................... 83,340,000 80,390,000
Inventories............................................... 97,060,000 92,210,000
Other current assets...................................... 4,850,000 4,130,000
------------ ------------
Total current assets.............................. 290,630,000 282,620,000
Property and equipment...................................... 200,490,000 194,540,000
Excess of cost over net assets of acquired companies........ 177,770,000 174,710,000
Other assets................................................ 39,570,000 44,800,000
------------ ------------
Total assets.................................... $708,460,000 $696,670,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 31,430,000 $ 33,750,000
Other current liabilities................................. 36,710,000 45,430,000
------------ ------------
Total current liabilities......................... 68,140,000 79,180,000
Deferred income taxes and other............................. 44,950,000 39,920,000
Long-term debt.............................................. 45,970,000 187,120,000
------------ ------------
Total liabilities................................. 159,060,000 306,220,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million
shares, outstanding 41.3 million shares in 1997; 36.6
million shares in 1996................................. 410,000 370,000
Paid-in capital........................................... 260,310,000 155,690,000
Retained earnings......................................... 293,500,000 238,290,000
Cumulative translation adjustments........................ (4,820,000) (3,900,000)
------------ ------------
Total shareholders' equity........................ 549,400,000 390,450,000
------------ ------------
Total liabilities and shareholders' equity...... $708,460,000 $696,670,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 54
TRIMAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income.................................... $ 66,370,000 $ 61,360,000 $ 56,020,000
Adjustments to reconcile net income to net
cash from operations:
Extraordinary charge..................... 4,970,000
Depreciation and amortization............ 25,680,000 22,930,000 21,480,000
Deferred income taxes.................... 4,830,000 2,100,000 5,560,000
(Increase) decrease in receivables....... (1,360,000) (1,460,000) (4,670,000)
(Increase) decrease in inventories....... (5,050,000) (2,430,000) (5,930,000)
Increase (decrease) in accounts payable
and other current liabilities.......... (9,900,000) 7,320,000 (2,500,000)
Other, net............................... (1,720,000) 1,260,000 (3,710,000)
------------ ------------ ------------
Net cash from operations............... 83,820,000 91,080,000 66,250,000
------------ ------------ ------------
INVESTMENTS:
Capital expenditures.......................... (28,560,000) (26,670,000) (23,470,000)
Acquisitions, net of cash acquired............ (27,490,000)
Contingent acquisition price paid (including
$7.0 million to MascoTech, Inc.)............ (11,250,000)
------------ ------------ ------------
Net cash from (used for) investments... (39,810,000) (54,160,000) (23,470,000)
------------ ------------ ------------
FINANCING:
Long-term debt:
Issuance................................. 23,750,000 27,920,000
Retirement............................... (55,980,000) (43,280,000) (51,470,000)
Fees related to becoming a private company.... (1,820,000)
Common stock dividends paid................... (10,470,000) (8,060,000) (6,590,000)
------------ ------------ ------------
Net cash from (used for) financing..... (44,520,000) (23,420,000) (58,060,000)
------------ ------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year.............. (510,000) 13,500,000 (15,280,000)
At beginning of the year...................... 105,890,000 92,390,000 107,670,000
------------ ------------ ------------
At end of the year.......................... $105,380,000 $105,890,000 $ 92,390,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 55
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its wholly owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
AFFILIATES
As of December 31, 1997 MascoTech, Inc.'s common stock ownership in the
Company approximated 36.8 percent (see "Subsequent Event" note), and Masco
Corporation's common stock ownership approximated 3.8 percent. The Company has a
corporate services agreement with Masco Corporation. Under the terms of the
agreement, the Company pays a fee to Masco Corporation for various corporate
support staff, administrative services, and research and development services.
Such fee equals .8 percent of the Company's net sales, subject to certain
adjustments, and totaled $4.0 million, $3.3 million and $3.1 million in 1997,
1996 and 1995.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31, 1997
the Company had $81.4 million invested in prime commercial paper of several
United States issuers having the highest rating given by one of the two
principal rating agencies.
RECEIVABLES
Receivables are presented net of an allowance for doubtful accounts of $2.0
million and $1.9 million at December 31, 1997 and 1996.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment additions, including significant betterments, are
recorded at cost. Upon retirement or disposal of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in income. Maintenance and repair costs are charged to expense
as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Annual depreciation rates are as
follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is
F-7
<PAGE> 56
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
being amortized using the straight-line method over the periods estimated to be
benefited, not exceeding 40 years. At December 31, 1997 and 1996, accumulated
amortization of the excess of cost over net assets of acquired companies and
other intangible assets was $42.7 million and $36.6 million. Amortization
expense was $6.1 million, $5.3 million and $5.0 million in 1997, 1996 and 1995.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1997.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of financial instruments classified in the balance
sheet as current assets and current liabilities approximate fair values. The
fair value of notes receivable, a portion of which is included in both
receivables and other assets, based on discounted cash flows using current
interest rates, approximates the carrying value of $7.8 million at December 31,
1997.
The carrying amount of borrowings from banks approximates fair value as the
floating rates applicable to this debt generally reflect changes in overall
market interest rates.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues, expenses and cash flows are translated at the
average rates of exchange during the period.
NOTE 2. SUBSEQUENT EVENT
On December 17, 1997 MascoTech Inc.("MascoTech"), through its wholly owned
subsidiary MascoTech Acquisition, Inc.("MascoTech Acquisition"), commenced a
tender offer to acquire all of the outstanding shares of the Company not already
owned by MascoTech. The tender offer was made in accordance with the terms of a
merger agreement between the Company, MascoTech and MascoTech Acquisition. The
tender offer expired on January 16, 1998 after approximately 95 percent of the
Company's outstanding shares not owned by MascoTech had been tendered. On
January 22, 1998 MascoTech Acquisition made payment on the tendered shares and
was merged with and into the Company, with the Company surviving as a private
and wholly owned subsidiary of MascoTech. During 1997 the Company recognized a
$5.0 million (pre-tax and after tax) extraordinary charge related to the
expenses incurred in connection with this going private transaction.
F-8
<PAGE> 57
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. ACQUISITIONS
During 1996 the Company acquired Queensland Towbars Pty. Ltd., The Englass
Group Limited, Heinrich Stolz GmbH and Beaumont Bolt & Gasket Co., all for an
aggregate $54.2 million of cash and assumed liabilities. The acquisitions were
accounted for as purchases. The aggregate excess of cost over net assets
acquired of $28.8 million is being amortized on a straight-line basis over 40
years. The results of operations of the acquired businesses have been included
in the consolidated financial statements from the respective acquisition dates.
During 1997 the Company paid $11.3 million to the former owners of
businesses acquired in previous years, including $7.0 million to MascoTech, Inc.
These payments resulted from the acquired businesses having achieved specified
levels of profitability during designated periods subsequent to the acquisition.
These payments were recorded as additional excess of cost over net assets of
acquired companies and are being amortized over the remainder of the original 40
year amortization period.
NOTE 4. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Interest paid............................................... $ 7,420 $10,610 $13,560
======== ======= =======
Income taxes paid........................................... $ 41,080 $33,180 $30,690
======== ======= =======
Significant noncash transactions:
Conversion of convertible subordinated debentures into
common
stock.................................................. $106,000
========
Accrued fees related to becoming a private company........ $ 3,150
========
Common stock dividends declared, payable in subsequent
year................................................... $ 2,890 $ 2,200 $ 1,830
======== ======= =======
Assumption of liabilities as partial consideration for the
assets of companies acquired........................... $26,720
=======
Increase in obligation, including accrued interest, to
former owner, MascoTech, Inc., of business acquired,
recorded as additional excess of cost over net assets
of acquired companies.................................. $ 5,850
=======
</TABLE>
NOTE 5. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
-----------------
1997 1996
------- -------
<S> <C> <C>
Finished goods.............................................. $53,260 $53,380
Work in process............................................. 15,430 14,340
Raw material................................................ 28,370 24,490
------- -------
$97,060 $92,210
======= =======
</TABLE>
F-9
<PAGE> 58
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Cost:
Land and land improvements................................ $ 14,080 $ 14,010
Buildings................................................. 71,420 71,260
Machinery and equipment................................... 261,070 240,960
-------- --------
346,570 326,230
Less accumulated depreciation............................... 146,080 131,690
-------- --------
$200,490 $194,540
======== ========
</TABLE>
Depreciation expense was $19.5 million, $17.7 million and $16.4 million in
1997, 1996 and 1995.
NOTE 7. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Employee wages and benefits................................. $19,890 $18,570
Dividends................................................... 2,890 2,200
Property taxes.............................................. 2,070 1,930
Current income taxes........................................ 1,690 3,810
Interest.................................................... 720 2,710
Amount due former owner, MascoTech, Inc., of business
acquired.................................................. 5,850
Other....................................................... 9,450 10,360
------- -------
$36,710 $45,430
======= =======
</TABLE>
NOTE 8. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1997 1996
------- --------
<S> <C> <C>
Borrowings from banks....................................... $42,130 $ 68,030
5% convertible subordinated debentures...................... 115,000
Other....................................................... 4,840 4,260
------- --------
46,970 187,290
Less current maturities..................................... 1,000 170
------- --------
$45,970 $187,120
======= ========
</TABLE>
At December 31, 1997 borrowings from banks are owing under the Company's
L20.0 million revolving credit facility in England ($25.8 million) and its DM
30.0 million revolving credit facility in Germany ($16.3 million). At December
31, 1996 borrowings from banks are owing under the Company's domestic $350.0
million revolving credit facility ($33.0 million), its L20.0 million revolving
credit facility in England ($19.3 million), its DM 30.0 million revolving credit
facility in Germany ($9.0 million) and other borrowing arrangements in Germany
($6.7 million). The domestic facility, which was terminated in January, 1998 as
a result of the acquisition of the Company by MascoTech, Inc., permitted the
Company to borrow under several
F-10
<PAGE> 59
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. LONG-TERM DEBT (CONTINUED)
different interest rate options, while the foreign facilities base interest
rates on the London Interbank Offered Rate (LIBOR). At December 31, 1997 the
blended interest rate on bank borrowings equaled 6.4 percent. The facilities
contain certain restrictive covenants, the most restrictive of which, at
December 31, 1997, required $381.5 million of shareholders' equity. The Company
had available credit of $8.6 million under its foreign revolving credit
facilities at December 31, 1997.
During 1997 the Company redeemed, for cash, $9.0 million of its $115.0
million of 5% Convertible Subordinated Debentures Due 2003. The remaining $106.0
million of debentures were converted into 4.7 million shares of TriMas
Corporation common stock at the conversion price of $22 5/8 per share.
NOTE 9. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995................... $370 $155,210 $136,310 $(1,290) $290,600
Net income............................... 56,020 56,020
Common stock dividends................... (6,960) (6,960)
Other.................................... 220 (1,210) (990)
---- -------- -------- ------- --------
Balance, December 31, 1995................. 370 155,430 185,370 (2,500) 338,670
Net income............................... 61,360 61,360
Common stock dividends................... (8,440) (8,440)
Other.................................... 260 (1,400) (1,140)
---- -------- -------- ------- --------
Balance, December 31, 1996................. 370 155,690 238,290 (3,900) 390,450
Net income............................... 66,370 66,370
Common stock dividends................... (11,160) (11,160)
Convertible debt conversion.............. 40 104,160 104,200
Other.................................... 460 (920) (460)
---- -------- -------- ------- --------
Balance, December 31, 1997................. $410 $260,310 $293,500 $(4,820) $549,400
==== ======== ======== ======= ========
</TABLE>
During 1997 $106.0 million of the Company's $115.0 million of 5%
Convertible Subordinated Debentures Due 2003 were converted into 4.7 million
shares of TriMas Corporation common stock at the conversion price of $22 5/8 per
share. As a result of the conversion, $1.8 million of costs associated with the
issuance of the debentures was charged against Paid-In-Capital.
F-11
<PAGE> 60
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. STOCK OPTIONS AND AWARDS
The Company's stock incentive plans include the TriMas Corporation 1995
Long Term Stock Incentive Plan, the 1988 Restricted Stock Incentive Plan and the
1988 Stock Option Plan. Company common stock available for grant under these
plans includes the 2,000,000 shares initially established under the 1995 plan,
plus additional shares resulting from certain reacquisitions of shares by the
Company.
The Company granted long-term incentive awards of Company common stock,
net, for 64,815 shares in 1997, 159,071 shares in 1996 and 290,588 shares in
1995, to key employees of the Company. The weighted average fair value per
share, on date of grant, of long-term incentive awards granted in 1997, 1996 and
1995 was $24.15, $19.66 and $23.21. Compensation expense recorded in 1997, 1996
and 1995 related to long-term incentive awards was $2.4 million, $2.2 million
and $1.6 million. The unamortized costs of incentive awards, aggregating $13.2
million at December 31, 1997, are being amortized over the vesting periods,
which are typically ten years.
Fixed stock options are granted to key employees of the Company and have a
maximum term of ten years. The exercise price of each fixed option equals the
market price of the Company's common stock on the date of grant. The options
generally vest in installments beginning in the second year and extending
through the eighth year after grant. For the three years ended December 31, 1997
stock option information is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Options outstanding, January 1.............................. 538,557 576,064 594,200
Options granted:
At option prices per share of $18.38-$25.50............... 890 16,154 4,864
Weighted average option price per share................... $23.89 $22.12 $23.35
Options exercised:
At option price per share of $8.88........................ 33,400 53,661 23,000
Options outstanding, December 31:
At option prices per share of $7.50-$8.88................. 484,139 517,539 571,200
Weighted average option price per share................ $8.42 $8.45 $8.49
Weighted average remaining term........................ 2.5 years 3.5 years 4.6 years
At option prices per share of $18.38-$25.50............... 21,908 21,018 4,864
Weighted average option price per share................ $22.46 $22.40 $23.35
Weighted average remaining term........................ 3.3 years 4.3 years 5.3 years
Exercisable, December 31.................................... 327,647 312,552 260,464
Weighted average option price per share................... $9.11 $8.94
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, in accounting for stock based compensation.
Accordingly, no compensation expense has been charged against income for fixed
stock option grants. Had compensation expense been determined based on the fair
value at the 1997, 1996 and 1995 grant dates, consistent with the methodology of
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, the pro forma effect on the Company's net income would not have
been material.
At December 31, 1997 and 1996, a combined total of 1,952,669 and 2,011,642
shares of Company common stock were available for the granting of options and
incentive awards under the aforementioned plans.
F-12
<PAGE> 61
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit plans and profit-sharing and other defined contribution plans, for most
of its employees.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans.................................. $3,040 $2,480 $3,470
Defined benefit plans....................................... 2,290 2,660 1,690
------ ------ ------
$5,330 $5,140 $5,160
====== ====== ======
</TABLE>
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
Net periodic pension cost of defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Service cost................................................ $ 2,490 $ 2,670 $ 2,000
Interest cost............................................... 4,270 3,980 3,570
Actual (return) or loss on assets........................... (2,960) (4,010) (5,360)
Net amortization and deferral............................... (1,510) 20 1,480
------- ------- -------
$ 2,290 $ 2,660 $ 1,690
======= ======= =======
</TABLE>
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 7.3% 7.5% 7.3%
Rate of increase in compensation levels..................... 5.1% 5.1% 5.1%
Expected long-term rate of return on plan assets............ 10.6% 10.6% 10.7%
</TABLE>
F-13
<PAGE> 62
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status of the defined benefit
plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1997 1996
-------------------------- --------------------------
PLANS PLANS PLANS PLANS
WHERE WHERE WHERE WHERE
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.................... $ 2,800 $48,110 $30,850 $12,060
======= ======= ======= =======
Accumulated benefit obligation............... $ 2,800 $49,370 $31,220 $14,190
======= ======= ======= =======
Projected benefit obligation................. $ 2,800 $60,540 $41,030 $15,270
Plan assets at fair value...................... 4,720 41,700 35,660 9,200
------- ------- ------- -------
Projected benefit obligation (in excess of) or
less than plan assets........................ 1,920 (18,840) (5,370) (6,070)
Unrecognized net (asset) or obligation......... (250) (170) (980) 390
Unrecognized prior service cost................ 2,340 400 1,680
Unrecognized net (gain) or loss................ (1,630) 14,340 5,630 3,240
Requirement to recognize minimum liability..... (5,520) (4,220)
------- ------- ------- -------
Prepaid pension cost or (pension
liability).............................. $ 40 $(7,850) $ (320) $(4,980)
======= ======= ======= =======
</TABLE>
The Company provides postretirement health care and life insurance benefits
for certain eligible retired employees under unfunded plans. Some of the plans
have cost-sharing provisions. Net periodic postretirement benefit costs during
1997, 1996 and 1995 were $1.0 million, $1.0 million and $.8 million.
The aggregate accumulated postretirement benefit obligation of these
unfunded plans was $4.4 million and $7.1 million at December 31, 1997 and 1996.
The discount rates used in determining the accumulated postretirement benefit
obligations and the net periodic postretirement benefit costs were 7.25 percent,
7.5 percent and 7.25 percent in 1997, 1996 and 1995. The assumed health care
cost trend rate in 1997 was nine percent, decreasing to an ultimate rate in the
years subsequent to 2006 of five percent. A one percent increase in the assumed
health care cost trend rates would have increased the net periodic
postretirement benefit cost by $.1 million during 1997 and would have increased
the accumulated postretirement benefit obligation at December 31, 1997 by $.5
million. The Company is amortizing the unrecognized transition accumulated
postretirement benefit obligation and subsequent plan net gains and losses in
accordance with Statement of Financial Accounting Standards No. 106. The accrued
postretirement benefit obligation was $4.1 million and $3.5 million at December
31, 1997 and 1996.
F-14
<PAGE> 63
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company's operations in its business segments consist principally of
the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures, pressurized
gas cylinders and metallic and nonmetallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
F-15
<PAGE> 64
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners.................................... $161,640 $141,510 $141,050
Towing Systems......................................... 201,410 189,540 175,000
Specialty Container Products........................... 218,920 189,320 165,670
Corporate Companies.................................... 85,940 79,860 71,770
-------- -------- --------
Total net sales..................................... $667,910 $600,230 $553,490
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.................................... $ 29,630 $ 25,740 $ 27,290
Towing Systems......................................... 31,190 31,480 31,080
Specialty Container Products........................... 46,810 42,890 39,040
Corporate Companies.................................... 14,490 11,980 8,420
-------- -------- --------
Total operating profit.............................. 122,120 112,090 105,830
Other income (expense), net.............................. 1,370 (3,700) (6,840)
General corporate expense................................ (8,420) (7,800) (7,150)
-------- -------- --------
Income before income taxes and extraordinary
charge............................................ $115,070 $100,590 $ 91,840
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.................................... $149,400 $143,060 $146,200
Towing Systems......................................... 155,500 158,840 151,160
Specialty Container Products........................... 244,600 231,610 149,790
Corporate Companies.................................... 58,020 57,220 56,230
Corporate (A).......................................... 100,940 105,940 112,980
-------- -------- --------
Total assets........................................ $708,460 $696,670 $616,360
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.................................... $ 8,340 $ 4,500 $ 10,840
Towing Systems......................................... 4,770 9,160 4,790
Specialty Container Products........................... 13,580 23,170 5,780
Corporate Companies.................................... 1,830 2,690 2,030
Corporate.............................................. 40 10 30
-------- -------- --------
Total capital expenditures.......................... $ 28,560 $ 39,530(B) $ 23,470
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.................................... $ 7,510 $ 7,510 $ 7,230
Towing Systems......................................... 6,460 6,070 5,610
Specialty Container Products........................... 8,860 6,690 6,140
Corporate Companies.................................... 2,780 2,590 2,430
Corporate.............................................. 70 70 70
-------- -------- --------
Total depreciation and amortization................. $ 25,680 $ 22,930 $ 21,480
======== ======== ========
</TABLE>
- -------------------------
(A) Corporate assets consist primarily of cash and cash equivalents.
(B) Including $12.9 million from businesses acquired.
Sales of the Company's foreign operations equaled $74.2 million, $46.0
million and $33.7 million in 1997, 1996 and 1995. Identifiable assets of foreign
operations totaled $88.3 million, $82.9 million and $32.4 million at December
31, 1997, 1996 and 1995. Export sales equaled less than ten percent of total
sales for each of the three years presented.
F-16
<PAGE> 65
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 13. INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Income before income taxes and extraordinary charge:
Domestic................................................ $105,810 $ 92,990 $86,900
Foreign................................................. 9,260 7,600 4,940
-------- -------- -------
$115,070 $100,590 $91,840
======== ======== =======
Provision for income taxes:
Federal................................................. $ 31,090 $ 29,700 $23,810
State and local......................................... 5,170 4,690 4,460
Foreign................................................. 2,640 2,740 1,990
Deferred, principally federal........................... 4,830 2,100 5,560
-------- -------- -------
$ 43,730 $ 39,230 $35,820
======== ======== =======
</TABLE>
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory tax rate............................. 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit........... 2.9 3.0 3.1
Foreign taxes in excess of U.S federal tax rate............. .1 .1 .3
Nondeductible amortization of excess of cost over net assets
of acquired companies..................................... .6 .6 .7
Other, net.................................................. (.6) .3 (.1)
----- ----- -----
Effective tax rate..................................... 38.0% 39.0% 39.0%
===== ===== =====
</TABLE>
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------------------------------------------------------
1997 1996
------------------------------ ------------------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property and equipment...................... $27,260 $23,940
Intangible assets........................... 6,300 4,960
Accrued employee benefits................... $3,350 $2,950
Inventory................................... 650 620
Other....................................... 1,050 4,710 1,420 4,480
------ ------- ------ -------
$5,050 $38,270 $4,990 $33,380
====== ======= ====== =======
</TABLE>
F-17
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and
amendments thereto.(filed herewith)
3.ii Bylaws of MascoTech, Inc., as amended.(filed herewith)
4.a.i Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee, and
Directors' resolutions establishing the Company's 4 1/2%
Convertible Subordinated Debentures Due 2003.(4)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee
dated as of August 4, 1994 among MascoTech, Inc., Morgan
Guaranty Trust Company of New York and The First National
Bank of Chicago.(3)
4.a.iii Supplemental Indenture dated as August 5, 1994 between
MascoTech, Inc. and The First National Bank of Chicago, as
trustee.(3)
4.b $1,300,000,000 Credit Agreement dated as of January 16, 1998
among MascoTech, Inc., MascoTech Acquisition, Inc., the
banks party thereto from time to time, The First National
Bank of Chicago, as Administrative Agent, Bank of America
NT&SA and NationsBank N.A., as Syndication Agents(7) and
Amendment No. 1 thereto dated as of February 10, 1998.
(filed herewith)
4.c Rights Agreement dated as of February 20, 1998, between
MascoTech, Inc. and The Bank of New York, as Rights
Agent.(10)
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term debt of
MascoTech, Inc. or its subsidiaries have not been filed
since (i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10 percent of
MascoTech, Inc.'s consolidated assets, and (ii) such
instruments, notes and extracts will be furnished by
MascoTech, Inc. to the Securities and Exchange Commission
upon request.
10.a Assumption and Indemnification Agreement dated as of May 1,
1984 between Masco Corporation and Masco Industries, Inc.
(now known as MascoTech, Inc.).(1)
10.b Corporate Services Agreement dated as of January 1, 1987
between Masco Industries, Inc. (now known as
MascoTech, Inc.) and Masco Corporation (filed herewith),
Amendment No. 1 dated as of October 31, 1996(8), and related
letter agreement dated January 22, 1998.(filed herewith)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(1) and Amendment No. 1 dated as of
October 31, 1996.(8)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.) and related letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 and amendment to Stock Repurchase
Agreement included in Agreement dated as of November 23,
1993.(4)
10.e Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 ("Securities Purchase Agreement")
between MascoTech, Inc. and Masco Corporation, including
form of Note(5), Agreement dated as of November 23, 1993
relating thereto(4), and Amendment No. 1 to the Securities
Purchase Agreement dated as of October 31, 1996.(8)
10.f Registration Agreement dated as of March 31, 1993, between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.).(2)
10.g Corporate Opportunities Agreement dated as of December 27,
1988 among Masco Industries, Inc. (now known as MascoTech,
Inc.), Masco Corporation and TriMas Corporation. (filed
herewith)
10.h Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.(8)
NOTE: Exhibits 10.i through 10.z constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the Directors and executive officers of
the Company participate.
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.i MascoTech, Inc. 1991 Long Term Stock Incentive Plan (Amended
and Restated April 23, 1997). (filed herewith)
10.j MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.k MascoTech, Inc. 1984 Stock Option Plan (Restated December 6,
1995).(1)
10.1 Masco Corporation 1991 Long Term Stock Incentive Plan.
(Amended and Restated April 23, 1997).(filed herewith)
10.m Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.n Masco Corporation 1988 Stock Option Plan (Restated December
6, 1995).(1)
10.o MascoTech, Inc. Supplemental Executive Retirement and
Disability Plan.(2)
10.p MascoTech, Inc. Benefits Restoration Plan.(2)
10.q MascoTech, Inc. 1997 Non-Employee Directors Stock
Plan.(filed herewith)
10.r MascoTech, Inc. 1997 Annual Incentive Compensation
Plan.(filed herewith)
10.s TriMas Corporation 1995 Long Term Stock Incentive Plan
(Restated December 5, 1995).(filed herewith)
10.t TriMas Corporation 1988 Restricted Stock Incentive Plan
(Restated December 5, 1995).(filed herewith)
10.u TriMas Corporation Supplemental Executive Retirement and
Disability Plan.(filed herewith)
10.v TriMas Corporation Retirement Benefit Restoration
Plan.(filed herewith)
10.w Employment Agreement dated as of December 10, 1997, between
TriMas Corporation and Brian P. Campbell.(filed herewith)
10.x Description of the MascoTech, Inc. Program for Estate,
Financial Planning and Tax Assistance. (filed herewith)
10.y Masco Corporation 1997 Annual Incentive Compensation Plan.
(filed herewith)
10.z Masco Corporation 1997 Non-Employee Directors Stock Plan.
(filed herewith)
10.aa Purchase Agreement dated as of January 26, 1990 between
Masco Corporation and TriMas Corporation.(filed herewith)
10.bb Stock Purchase Agreement between Masco Corporation and Masco
Industries, Inc. (now known as MascoTech, Inc.) dated as of
December 23, 1991 regarding Masco Capital Corporation(9)and
Amendment thereto dated May 21, 1997.(filed herewith)
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends.(filed herewith)
21 List of Subsidiaries.(filed herewith)
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech,
Inc.'s Financial Statements and Financial Statement
Schedule.(filed herewith)
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas
Corporation's Financial Statements.(filed herewith)
27.a Financial Data Schedule as of and for the year ended
December 31, 1997.(filed herewith)
27.b Financial Data Schedule as of and for the year-to-date
periods ended September 30, 1997, June 30, 1997 and March
31, 1997.(filed herewith)
27.c Financial Data Schedule as of and for the year-to-date
periods ended December 31, 1996, September 30, 1996, June
30, 1996 and March 31, 1996.(filed herewith)
27.d Financial Data Schedule as of and for the year ended
December 31, 1995.(filed herewith)
</TABLE>
<PAGE> 68
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1995.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated June 22, 1993.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated January 30, 1998.
(8) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 13, 1996.
(9) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1996.
(10) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Registration Statement on Form 8-A dated February 23, 1998.
<PAGE> 1
EXHIBIT 3.i
RESTATED CERTIFICATE OF INCORPORATION
OF
MASCO INDUSTRIES, INC.
* * * * *
MASCO INDUSTRIES, INC., a corporation organized and existing under the Laws
of the State of Delaware (the "Company"), hereby certifies as follows:
FIRST: The name of the Company is MASCO INDUSTRIES, INC. The date of filing
its original Certificate of Incorporation with the Secretary of State was March
15, 1984.
SECOND: This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
THIRD: The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or changes
to read as herein set forth in full:
1. The name of the corporation is:
MASCO INDUSTRIES, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
<PAGE> 2
4. The total number of shares of stock the corporation shall have
authority to issue is two hundred seventy-five million (275,000,000) shares.
Two hundred fifty million (250,000,000) of such shares shall consist of
common shares, par value one dollar ($1.00) per share, and twenty-five million
(25,000,000) of such shares shall consist of preferred shares, par value one
dollar ($1.00) per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
A. Each share of common stock shall be equal in all respects to all
other shares of such stock, and each share of outstanding common stock is
entitled to one vote.
B. Each share of preferred stock shall have or not have voting rights
as determined by the Board of Directors prior to issuance.
Dividends on all outstanding shares of preferred stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of common stock
with respect to the same dividend period.
In the event of any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, the holders of
the preferred stock shall be entitled, before any assets of the Company
shall be distributed among or paid over to the holders of the common stock,
to an amount per share to be determined before issuance by the Board of
Directors, together with a sum of money equivalent to the amount of any
dividends declared thereon and remaining unpaid at the date of such
liquidation, dissolution or winding up of the Company. After the making of
such payments to the holders of the preferred stock, the remaining assets
of the Company shall be distributed among the holders of the common stock
alone, according to the number of shares held by each. If, upon such
liquidation, dissolution or winding up, the assets of the Company
distributable as aforesaid among the holders of the preferred stock shall
be insufficient to permit the payment to them of said amount, the entire
assets shall be distributed ratably among the holders of the preferred
stock.
The Board of Directors shall have authority to divide the shares of
preferred stock into series and fix, from time to time before issuance, the
number of shares to be included in any series and the designation, relative
rights, preferences and limitations of all shares of such series. The
authority
- 2 -
<PAGE> 3
of the Board of Directors with respect to each series shall include the
determination of any or all of the following, and the shares of each series
may vary from the shares of any other in the following respects: (a) the
number of shares constituting such series and the designation thereof to
distinguish the shares of such series from the shares of all other series;
(b) the rate of dividend, cumulative or noncumulative, and the extent of
further participation in dividend distribution, if any; (c) the prices at
which issued (at not less than par) and the terms and conditions upon which
the shares may be redeemable by the Company; (d) sinking fund provisions
for the redemption or purchase of shares; (e) the voting rights; and (f)
the terms and conditions upon which the shares are convertible into other
classes of stock of the Company, if such shares are to be convertible.
C. No holder of any class of stock issued by this Company shall be
entitled to pre-emptive rights.
D. The number of authorized shares of each class of stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the
stock of the Company entitled to vote, voting together as a single class.
5. (a) The business and affairs of the Company shall be managed by or
under the direction of a Board of Directors consisting of not less than five nor
more than twelve directors, the exact number of directors to be determined
from time to time by resolution adopted by affirmative vote of a majority
of the entire Board of Directors. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. At the 1988 Annual Meeting of
stockholders, Class I directors shall be elected for a one-year term, Class II
directors for a two-year term and Class III directors for a three-year term. At
each succeeding Annual Meeting of stockholders beginning in 1989, successors to
the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement or removal from office. Except as otherwise
required by law, any vacancy on the Board of
- 3 -
<PAGE> 4
Directors that results from an increase in the number of directors shall be
filled only by a majority of the Board of Directors then office, provided that a
quorum is present, and any other vacancy occurring in the Board of Directors
shall be filled only by a majority of the directors then in office, even if less
than a quorum, or by a sole remaining director. Any director elected to fill a
vacancy not resulting from an increase in the number of directors shall serve
for the remaining term of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Company shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Designation with respect to such
stock, such directors so elected shall not be divided into classes pursuant to
this Article 5, and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the foregoing
provisions of this Article 5, in each case unless expressly provided by such
terms.
(b) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote in the election of directors.
Any stockholder entitled to vote in the election of directors, however, may
nominate one or more persons for election as director only if written notice of
such stock-holder's intent to make such nomination or nominations has been
given either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Company not later than (i) with respect to an election to
be held at an Annual Meeting of stockholders, 45 days in advance of the date
on which the Company's proxy statement was released to stockholders in
connection with the previous year's Annual Meeting of stockholders and (ii) with
respect to an election to be held at a special meeting of stock-holders for the
election of directors, the close of business on the seventh day following the
day on which notice of such meeting is first given to stockholders. Each such
notice shall include: (A) the name and address of the stockholder who intends to
make the nomination or nominations and of the person or persons to be nominated;
(B) a representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(C) a description of all arrangements or understanding between such stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations is or are to be made by the
stockholder; (D) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and
- 4 -
<PAGE> 5
Exchange Commission if the nominee had been nominated by the Board of Directors;
and (E) the written consent of each nominee to serve as a director of the
Company if elected. The chairman of any meeting of stockholders may refuse to
acknowledge the nomination of any person if not made in compliance with the
foregoing procedure.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the
by-laws), and in addition to any affirmative vote required by law, the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding capital stock of the Company entitled to vote, voting together as a
single class, shall be required to amend, adopt in this Certificate of
Incorporation or in the by-laws any provision inconsistent with, or repeal this
Article 5.
6. Any action required or permitted to be taken by the stockholders of
the Company must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by any such holders.
Except as otherwise required by law, special meetings of stockholders of the
Company may be called only by the Chairman of the Board, the President or a
majority of the Board of Directors, subject to the rights of holders of any one
or more classes or series of preferred stock or any other class of stock issued
by the Company which shall have the right, voting separately by class or series,
to elect directors. Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding that a lesser percentage may
be specified by law, this Certificate of Incorporation or the by-laws), and in
addition to any affirmative vote required by law, the affirmative vote of the
holders of at least 80% of the voting power of the outstanding capital stock of
the Company entitled to vote, voting together as single class, shall be required
to amend, adopt in this Certificate of Incorporation or in the by-laws any
provision inconsistent with, or repeal this Article 6.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Company.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the Company.
To set apart out of any of the funds of the Company available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
- 5 -
<PAGE> 6
When and as authorized by the affirmative vote of the holders of a majority
of the stock issued and outstanding having voting power given at a stockholders'
meeting duly called for that purpose, to sell, lease or exchange all of the
property and assets of the Company, including its good will and its corporate
franchises, upon such terms and conditions and for such consideration, which may
be in whole or in part shares of stock in, and/or other securities of, any other
corporation or corporations, as its Board of Directors shall deem expedient and
for the best interests of the Company.
8. The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
9. Whenever a compromise or arrangement is proposed between the Company
and its creditors or any class of them and/or between the Company and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the Company or
of any creditor or stockholder thereof, or on the application of any receiver or
receivers appointed for the Company under the provisions of Section 279 of Title
8 of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Company, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the Company,
as the case may be, agree to any compromise or arrangement and to any
reorganization of the Company as consequence of such compromise or arrangement,
the said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of the Company, as the case may be, and also on the
Company.
10. Meetings of stockholders may be held outside the State of Delaware, if
the bylaws so provide. The books of the Company may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in
the bylaws of the Company. Elections of Directors need not be by ballot unless
the bylaws of the Company shall so provide.
11. The Company reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
12. A. The affirmative vote of the holders of 95% of all shares of stock
of the Company entitled to vote in elections of
- 6 -
<PAGE> 7
directors, considered for the purposes of this Article 12 as one class, shall be
required for the adoption or authorization of a business combination (as
hereinafter defined) with any other entity (as hereinafter defined) if, as of
the record date for the determination of stockholders entitled to notice thereof
and to vote thereon, such other entity is the beneficial owner, directly or
indirectly, of 30% or more of the outstanding shares of stock of the Company
entitled to vote in elections of directors considered for the purposes of this
Article 12 as one class; provided that such 95% voting requirement shall not be
applicable if:
(a) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Company in such business
combination bears the same or a greater percentage relationship to the
market price of the Company's common stock immediately prior to the
announcement of such business combination as the highest per share price
(including brokerage commissions and soliciting dealers' fees) which such
other entity has theretofore paid for any of the shares of the Company's
common stock already owned by it bears to the market price of the common
stock of the Company immediately prior to the commencement of acquisition
of the Company's common stock by such other entity;
(b) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Company in such business
combination: (i) is not less than the highest per share price (including
brokerage commissions and soliciting dealers' fees) paid by such other
entity in acquiring any of its holdings of the Company's common stock, and
(ii) is not less than the earnings per share of common stock of the Company
for the four full consecutive fiscal quarters immediately preceding the
record date for solicitation of votes on such business combination,
multiplied by the then price/earnings multiple (if any) of such other
entity as customarily computed and reported in the financial community;
(c) After such other entity has acquired a 30% interest and prior to
the consummation of such business combination: (i) such other entity shall
have taken steps to ensure that the Company's Board of Directors included
at all times representation by continuing director(s) (as hereinafter
defined) proportionate to the stockholdings of the Company's public common
stockholders not affiliated with such other entity (with a continuing
director to occupy any resulting fractional board position); (ii) there
shall have been no reduction in the rate of dividends payable on the
Company's common stock except as necessary to insure that a quarterly
dividend payment does not exceed 5% of the net income of the Company for
the four full consecutive fiscal quarters immediately preceding the
declaration date of such dividend,
- 7 -
<PAGE> 8
or except as may have been approved by a unanimous vote of the directors;
(iii) such other entity shall not have acquired any newly issued shares of
stock, directly or indirectly, from the Company (except upon conversion of
convertible securities acquired by it prior to obtaining a 30% interest or
as a result of a pro rata stock dividend or stock split); and (iv) such
other entity shall not have acquired any additional shares of the Company's
outstanding common stock or securities convertible into common stock except
as a part of the transaction which results in such other entity acquiring
its 30% interest;
(d) Such other entity shall not have (i) received the benefit,
directly or indirectly (except proportionately as a stockholder) of any
loans, advances, guarantees, pledges or other financial assistance or tax
credits of or provided by the Company, or (ii) made any major change in the
Company's business or equity capital structure without the unanimous
approval of the directors, in either case prior to the consummation of such
business combination; and
(e) A proxy statement responsive to the requirements of the United
States securities laws shall be mailed to all common stockholders of the
Company for the purpose of soliciting stockholder approval of such business
combination and shall contain on its first page thereof, in a prominent
place, any recommendations as to the advisability (or inadvisability) of
the business combination which the continuing directors, or any of them,
may choose to state and, if deemed advisable by a majority of the
continuing directors, an opinion of a reputable investment banking firm as
to the fairness (or not) of the terms of such business combination, from
the point of view of the remaining public stockholders of the Company (such
investment banking firm to be selected by a majority of the continuing
directors and to be paid a reasonable fee for their services by the Company
upon receipt of such opinion).
The provisions of this Article 12 shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of 30% or more the outstanding shares of stock of
the Company entitled to vote in elections of directors considered for the
purposes of this Article 12 as one class, notwithstanding the fact that such
other entity has reduced its shareholdings below 30% if, as of the record date
for the determination of stockholders entitled to notice of and to vote on the
business combination, such other entity is an "affiliate" of the Company (as
hereinafter defined).
B. As used in this Article 12, (a) the term "other entity" shall include
any corporation, person or other entity and any other entity with which it or
its "affiliate" or "associate" (as defined
- 8 -
<PAGE> 9
below) has any agreement, arrangement or understanding, directly or indirectly,
for the purpose of acquiring, holding, voting or disposing of stock of the
Company, or which is its "affiliate" or "associate" as those terms are defined
in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934 as in effect on March 31, 1984, together with the successors and
assigns of such persons in any transaction or series of transactions not
involving a public offering of the Company's stock within the meaning of the
Securities Act of 1933; provided, however, that an "other entity" shall not in
any event include any entity owning 30% or more of the outstanding shares of
stock of the Company entitled to vote in the elections of directors considered
for purposes of this Article 12 as one class at the time of the adoption of this
Article 12, any subsidiary of such entity, or any corporation succeeding to the
business of such entity if (i) such business as conducted immediately prior to
such succession is, immediately after such succession, the sole business of such
successor, and (ii) the stockholders of the corporation conducting such business
immediately prior to such succession are, immediately after such succession, the
sole stockholders of the successor corporation or of a corporation owning all of
the capital stock of such successor corporation; (b) an other entity shall be
deemed to be the beneficial owner of any shares of stock of the Company which
the other entity (as defined above) has the right to acquire pursuant to any
agreement, arrangement or understanding or upon exercise of conversion rights,
warrants or options, or otherwise; (c) the outstanding shares of any class of
stock of the Company shall include shares deemed owned through application of
clause; (b) above but shall not include any other shares which may be issuable
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise; (d) the term "business combination" shall include any
merger or consolidation of the Company with or into any other entity, or the
sale or lease of all or any substantial part of the assets of the Company to, or
any sale or lease to the Company or any subsidiary thereof in exchange for
securities of the Company of any assets (except assets having an aggregate fair
market value of less than $5,000,000) of, any other entity; (e) the term
"continuing director" shall mean a person who was a member of the Board of
Directors of the Company elected by stockholders prior to the time that such
other entity acquired in excess of 10% of the stock of the Company entitled to
vote in the election of directors, or a person recommended to succeed a
continuing director by a majority of continuing directors; and (f) for the
purposes of subparagraphs A(a) and (b) of this Article 12 the term "other
consideration to be received" shall mean, in addition to other consideration
received, if any, capital stock of the Company retained by its existing public
stockholders in the event of a business combination with such other entity in
which the Company is the surviving corporation; and (g) the exclusion of an
entity from constituting an "other entity" under subparagraph B(a) of this
Article 12 shall only continue to be effective if such entity does not
thereafter decrease such
- 9 -
<PAGE> 10
ownership percentage to less than 30% (other than through the Company's issuance
of its capital stock) and subsequently reacquire such a 30% interest and
provided that, upon any such decrease and subsequent reacquisition, such entity
shall be deemed for purposes of this Article 12 to have first become an "other
entity" and to first have acquired capital stock of the Company on the date of
such reacquisition.
C. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article 12 on the basis of information
known to them whether (a) such other entity beneficially owns 30% or more of the
outstanding shares of stock of the Company entitled to vote in elections of
directors; (b) an other entity is an "affiliate" or "associate" (as defined
above) of another; (c) an other entity has an agreement, arrangement or
understanding with another; or (d) the assets being acquired by the Company, or
any subsidiary thereof, have an aggregate fair market value of less than
$5,000,000.
D. No amendment to the Certificate of Incorporation of the Company shall
amend or repeal any of the provisions of this Article 12, unless the amendment
effecting such amendment or repeal shall receive the affirmative vote of the
holders of 95% of all shares of stock of the corporation entitled to vote in
elections of directors, considered for the purposes of this Article 12 as one
class; provided that this paragraph D shall not apply to, and such 95% vote
shall not be required for, any amendment or repeal unanimously recommended to
the stockholders by the Board of Directors of the Company if all of such
directors are persons who would be eligible to serve as "continuing directors"
within the meaning of paragraph B of this Article 12.
E. Nothing contained in this Article 12 shall be construed to relieve any
other entity from any fiduciary obligation imposed by law.
13. A director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (a) for any breach of the director's duty
of loyalty to the Company or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the Delaware General Corporation Law, or (d) for
any transaction from which the director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to authorize the
further limitation or elimination of the liability of directors, then the
liability of a director of the Company, in addition to the limitation on
liability provided herein, shall be limited to the fullest extent permitted by
the Delaware General Corporation Law, as amended. Any repeal or modification of
this Article 13 shall not increase the liability of any director of the Company
for any act or occurrence taking place
- 10 -
<PAGE> 11
prior to such repeal or modification, or otherwise adversely affect any right or
protection of a director of the Company existing at the time of such repeal or
modification.
14. A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer or employee of the Company,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or employee or in any other capacity while serving as a
director, officer, or employee, shall be indemnified and held harmless by the
Company to the fullest extent permitted by the Delaware General Corporation Law,
as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than such law permitted the company to provide
prior to such amendment), against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of such
person's heirs, executors and administrators. The Company shall indemnify a
director, officer or employee in connection with an action, suit or proceeding
(other than an action, suit or proceeding to enforce indemnification rights
provided for herein or elsewhere) initiated by such Director, officer or
employee only if such action, suit or proceeding was authorized by the Board of
Directors. The right to indemnification conferred in this Paragraph A shall be a
contract right and shall include the right to be paid by the Company the
expenses incurred in defending any action, suit or proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person) in advance of the final
disposition of an action, suit or proceeding shall be made only upon delivery to
the Company of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined by final.
judicial decision from which there is no further right to appeal that such
director or officer is not entitled to be indemnified for such expenses under
this Article 14 or otherwise.
B. The Company may, to the extent authorized from time to time by the
Board of Directors, provide indemnification and the advancement of expenses, to
any agent of the Company and to any person who is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, to such extent
and to such effect as the Board of Directors shall determine
- 11 -
<PAGE> 12
to be appropriate and permitted by applicable law, as the same exists or may
hereafter be amended.
C. The rights to indemnification and to the advancement of expenses
conferred in this Article 14 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation or bylaws of the Company, agreement, vote of
stockholders or disinterested directors or otherwise.
FOURTH: This Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Section 245 of the General Corporation Law
of Delaware.
IN WITNESS WHEREOF, said MASCO INDUSTRIES, INC. has caused its
corporate seal to be affixed and this Certificate to be signed by Richard A.
Manoogian, its Chairman of the Board, and attested by Timothy Wadhams, its
Assistant Secretary, this 31st day of May, 1988.
MASCO INDUSTRIES, INC.
BY/s/ Richard A. Manoogian
------------------------------------
Richard A. Manoogian
Chairman of the Board
ATTEST:
/s/ Timothy Wadhams
- -------------------
Timothy Wadhams
Assistant Secretary
STATE OF MICHIGAN )
)
COUNTY OF WAYNE )
I, , a notary public, do hereby certify that on this
day of May, 1988, personally appeared before me Richard A. Manoogian, who,
being by me first duly sworn, declared that he is the Chairman of the Board that
he signed the foregoing document as the act and deed of said corporation, and
that the statements therein contained are true.
/s/ Terry Lynn Przybylo
--------------------------
- 12 -
<PAGE> 13
Notary Public
Wayne County, Michigan
My commission expires _______.
- 13 -
<PAGE> 14
MASCO INDUSTRIES, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
12% EXCHANGEABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $100 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of Masco
Industries, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY
that the following resolutions have been duly adopted by the Board of Directors
of the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Company by the provisions of the Restated
Certificate of Incorporation of the Company, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the Preferred Stock of
the Company (the "Preferred Stock") which shall consist of 775,000 shares, and
this Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock) as
follows:
(i) Designation. The designation of this Series shall be 12% Exchangeable
Preferred Stock. The number of shares of this Series shall be 775,000. The
liquidation value of shares of this Series shall be $100 per share.
(ii) Dividends. (a) The dividend rate on shares of this Series shall be
$12.00 per share per annum. Dividends on shares of this Series shall be fully
cumulative and shall accrue, without interest, from the date of issuance of such
shares, and shall be payable, when and as declared by the Board of Directors out
of funds legally available therefor, in arrears on April 1, 1991 and quarterly
in arrears thereafter on July 1, October 1, January 1 and April 1 of each year.
Holders of shares of this Series shall be entitled to receive such dividends in
preference to and in priority over dividends upon the Common Shares (hereinafter
defined) and all Junior Shares (hereinafter defined), but subject to the rights
of holders of Preference Shares (hereinafter defined) having a preference and a
priority over the payment of dividends on the
- 1 -
<PAGE> 15
shares of this Series. Shares of this Series shall be on a parity as to
dividends with all Parity Shares (hereinafter defined). The holders of shares of
this Series shall not be entitled to any dividends other than the dividends
provided in this Clause (ii).
(b) If at any time the Company has failed to pay accrued dividends on
any shares of this Series or any Parity Shares at the time outstanding at the
times such dividends are payable, the Company shall not
(1) declare or pay any dividend on the Common Shares or on any Junior
Shares or make any payment on account of, or set apart money for a sinking
or other analogous fund for, the purchase, redemption or other retirement
of, any Common Shares or any Junior Shares or make any distribution in
respect thereof, either directly or indirectly and whether in cash or
property or in obligations or shares of the Company (other than in Common
Shares or Junior Shares),
(2) purchase any shares of this Series or Parity Shares (except for a
consideration payable in Common Shares or Junior Shares) or redeem fewer
than all of the shares of this Series and all of the Parity Shares then
outstanding, or
(3) permit any corporation or other entity directly or indirectly
controlled by the Company to purchase any Common Shares, Junior Shares,
shares of this Series or Parity Shares,
unless, in the case of any such dividend, payment, setting apart, distribution,
purchase, redemption or other retirement, all dividends accrued and payable but
unpaid on shares of this Series and all Parity Shares have been or
contemporaneously are declared and paid in full or declared and a sum sufficient
for the payment thereof set aside for such payment. Unless and until all
dividends accrued and payable but unpaid on shares of this Series and all Parity
Shares at the time outstanding have been paid in full, all dividends declared by
the Company upon shares of this Series or Parity Shares shall be declared pro
rate with respect to all shares of this Series and all Parity Shares then
outstanding, so that the amounts of any dividends declared on shares of this
Series and such Parity Shares shall in all cases bear to each other the same
ratio that, at the time of such declaration, all accrued and payable but unpaid
dividends on shares of this Series and such Parity Shares, respectively, bear to
each other.
(iii) Optional Redemptions for Cash. Subject to the restrictions in Clause
(ii) above, shares of this Series shall be redeemable at the option of the
Company in whole or from time to time in part, on any April 1, July 1, October 1
or January 1, commencing April 1, 1991 in cash at $100 per share, plus an amount
equal to the dividends accrued and unpaid thereon to the redemption date.
- 2 -
<PAGE> 16
Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Clause (iii), a notice
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series to be redeemed at their respective addresses as the
same shall appear on the books of the Company, specifying the certificate
numbers of such shares, the effective date of the redemption and the place where
certificates for shares of this Series are to be surrendered for redemption and.
stating that dividends on such shares of this Series will cease to accrue on and
after the redemption date, but neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
If notice of redemption has been given pursuant to this Clause (iii) and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for
cancellation, dividends shall cease to accrue on the shares of this Series to be
redeemed and the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Company by virtue thereof and shall have no voting or other rights with respect
to such shares, except the right to receive the moneys payable upon such
redemption, without interest thereon, upon surrender (and endorsement, if
required by the Company) of their certificates, and the shares evidenced thereby
shall no longer be outstanding. Subject to applicable escheat laws, any moneys
so set aside by the Company and unclaimed at the end of one year from the
redemption date shall revert to the general funds of the Company after which
reversion the holders of such shares so called for redemption shall look only to
the general funds of the Company for the payment of the redemption price. Any
interest accrued on funds so deposited shall be paid to the Company from time to
tome. Any holder of record of the shares of this Series to be redeemed pursuant
to this Clause (iii) may waive its right to notice hereunder.
In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iii), the shares to be redeemed shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) in accordance with the Exchange
Agreement as amended from time to time (the "Exchange Agreement") dated as of
December 18, 1990 between the Company and Masco Corporation, a Delaware
corporation ("Masco"), a copy of which Exchange Agreement
- 3 -
<PAGE> 17
shall be kept on file with the Secretary of the Company, provided that only
whole shares shall be selected for redemption.
(iv) Optional Redemption through Debenture Exchange.
(a) Subject to the restrictions in subclauses (b) and (d) of this Clause
(iv), shares of this Series shall be redeemable at the option of the Company, in
whole or from time to time in part, on any April 1, July 1, October 1 or April
1, commencing April 1, 1991 through the issuance, in redemption of and in
exchange for shares of this Series, of the Company's Junior Subordinated
Debentures Due 2006 (hereinafter referred to as the "Junior Debentures") in the
manner provided in this Clause (iv). The Junior Debentures shall be issued in
substantially the form of Exhibit B to the Exchange Agreement subject to any
changes that may be made to such Junior Debentures pursuant to the Exchange
Agreement to qualify an indenture with respect to such Junior Debentures. The
Junior Debentures shall be issued in series with the interest rate on such
series being a rate per annum that is the lower of 12% or 400 basis points over
the Treasury Rate (as hereinafter defined) for the week preceding the week in
which the notice of redemption and exchange is given to holders of shares of
this Series as provided in subclause (iv)(c) below. "Treasury Rate" means, the
rate for direct obligations of the United States ("Treasury Notes") having a 10-
year maturity, as published in the Federal Reserve Statistical Release H.15(519)
(or any successor publication provided by the Board of Governors of the Federal
Reserve Board) under the heading "Treasury Constant Maturities." In the event
that a rate for Treasury Notes having a 10-year maturity is not published or
reported for the prior week as provided above by 1:00 p.m., New York City time,
on the third business day preceding the day such notice of redemption and
exchange is given to such holders, then the Treasury Rate shall be calculated by
the Company and shall be a yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 1:30 P.M., New York City time, on the date of such notice of
redemption and exchange, of three leading primary United States government
securities dealers selected by the Company for the issue of Treasury Notes with
a remaining maturity of 10 years.
(b) The Junior Debentures will be issued solely in redemption of and in
exchange for shares of this Series at the rate of $100 principal amount of
Junior Debentures for each share of this Series redeemed and exchanged on the
applicable Exchange Date (as defined below). An amount equal to all accrued but
unpaid dividends on such shares to the dividend payment date which coincides
with the date of redemption and exchange shall be paid in cash on the date of
such redemption and exchange. No redemption and exchange shall be for an
aggregate principal amount of Junior Debentures less than $5 million, and no
Junior Debentures in amounts other than $1,000 (and integral multiples thereof)
shall be issued in any redemption
- 4 -
<PAGE> 18
and exchange. Cash will be paid in lieu of any such fraction of a Junior
Debenture which would otherwise have been issued.
(c) Not less than 30 nor more than 60 days prior to the date fixed for the
issue of Junior Debentures in redemption of and in exchange for shares of this
Series pursuant to this Clause (iv), a notice shall be given by first class
mail, postage prepaid, to the holders of record of the shares of this Series to
be redeemed and exchanged at their respective addresses as the same shall appear
on the books of the Company, specifying the certificate numbers of such shares,
the effective date of the redemption and exchange (the "Exchange Date") and the
place where certificates for shares of this Series are to be surrendered for
Junior Debentures and stating that dividends on such shares of this Series will
cease to accrue on and after the Exchange Date, but neither failure to mail such
notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption and exchange with respect to the other holders. Any
notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the notice.
Any holder of record of the shares of this Series to be redeemed and exchanged
pursuant to this Clause (iv) may waive its right to notice hereunder.
If notice of redemption and exchange has been given pursuant to this Clause
(iv), then on or after the Exchange Date (unless the Company shall default in
issuing Junior Debentures in redemption of and in exchange for shares of this
Series to be redeemed and exchanged on such Exchange Date or shall fail to pay
or set aside accrued and unpaid dividends on such shares of this Series and
notwithstanding that any certificates for such shares of this Series have not
been surrendered for exchange), dividends shall cease to accrue on such shares
of this Series and the holders of such shares shall cease to be stockholders
with respect to such shares (provided, that the persons entitled to receive
Junior Debentures in exchange for such shares shall be treated for all purposes
as the registered holders of such Junior Debentures) and shall have no interest
in or claims against the Company by virtue thereof (except the right to receive
Junior Debentures) and shall have no voting or other rights with respect to such
shares and such shares of this Series shall no longer be outstanding. Upon the
surrender (and endorsement, if required by the Company) in accordance with such
notice of the certificates for such shares of this Series, such certificates
shall be redeemed and exchanged for Junior Debentures in accordance with this
Clause (iv).
(d) The Company may not redeem and exchange less than all shares of this
Series (1) if, at the time of such redemption and exchange, there are accrued
and unpaid dividends on any shares of this Series and (2) unless, immediately
after such redemption and exchange, at least 50,000 shares of this Series will
be outstand-
- 5 -
<PAGE> 19
ing. In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iv), the shares shall be selected (a) by
lot or by such other manner as may be prescribed by resolution of the Board of
Directors of the Company and (b) in accordance with the Exchange Agreement,
provided that only whole shares shall be selected for redemption.
(v) Liquidation.
(a) The liquidation price of shares of this Series, in case of the
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
shall be $100 per share, plus the amount per share of any dividends accrued
thereon and remaining unpaid at the date of such liquidation, dissolution or
winding-up.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the holders of shares of this Series shall be
entitled to receive the liquidation price of such shares held by them in
preference to and in priority over any distributions upon the Common Shares and
all Junior Shares, but subject to the rights of holders of Preference Shares
having a preference to and priority over the payment of distributions on the
shares of this Series. Upon payment in full of the liquidation price to which
the holders of shares of this Series are entitled, the holders of shares of this
Series will not be entitled to any further participation in any distribution of
assets by the Company. If the assets of the Company are not sufficient to pay in
full the liquidation price payable to the holders of shares of this Series and
the liquidation price payable to the holders of all Parity Shares, the holders
of all such shares shall share ratably in such distribution of assets in
accordance with the amounts which would be payable on such distribution if the
amounts to which the holders of shares of this Series and the holders of Parity
Shares are entitled were paid in full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash, securities or other property shall be considered a liquidation,
dissolution or winding-up of the Company within the meaning of this Clause (v).
(vi) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Clause (iii) or redeemed and exchanged pursuant to Clause
(iv) above and all shares of this Series which are otherwise reacquired by the
Company and subsequently cancelled by the Board of Directors of the Company
shall have the status of authorized but unissued Preferred Stock, without
designation as to series, subject to reissuance by the Board of Directors of the
Company as shares of this Series or shares of any one or more other series.
- 6 -
<PAGE> 20
(vii) Voting Rights. Except as otherwise provided in this Clause (vii) or
as otherwise provided by law or the Restated Certificate of Incorporation of the
Company, holders of shares of this Series have no voting rights.
If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preference Shares as to which dividends are in arrears and unpaid in
an aggregate amount equal to or exceeding the aggregate amount of dividends
payable for six quarterly dividend periods (but only if the holders of the
shares of such other series would otherwise have a right to elect Directors as a
result of a dividend arrearage), will have the exclusive right (superseding the
separate right of such other series to elect Directors so long as shares of this
Series remain outstanding, except as otherwise expressly provided in the
certificate of designation establishing such other series), voting separately as
a class with any such other series, to elect two Directors of the Company, such
Directors to be in addition to the number of Directors constituting the Board of
Directors of the Company immediately prior to the accrual of such right. Such
right of the holders of shares of this Series to elect two Directors shall, when
vested, continue until all dividends in default on the shares of this Series
shall have been paid in full and, when so paid, such right of the holders of
shares of this Series to elect two Directors separately as a class shall cease,
subject, always, to the same provisions for the vesting of such right of the
holders of the shares of this Series to elect two Directors in the case of
future dividend defaults. At any time when such right to elect such Directors
separately as a class shall have so vested, the Company may, and upon the
written request of the holders of record of not less than 20% of the total
number of shares of this Series and such other series of Preference Shares then
outstanding shall, call a special meeting of the holders of such shares to fill
such newly-created directorships for the election of Directors. In the case of
such a written request, such special meeting shall be held within 90 days after
the delivery of such request and, in either case, at the place and upon the
notice provided by law and in the Bylaws of the Company, provided that the
Company shall not be required to call such a special meeting if such request is
received less than 120 days before the date fixed for the next ensuing annual
meeting of stockholders of the Company, in which case such newly-created
directorships shall be filled by the holders of such shares of this Series
and such other series of Preference Shares at such meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (x) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (y)
the termination of the right of the
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<PAGE> 21
holders of shares of this Series and such other series of Preference Shares to
vote for Directors pursuant to the preceding paragraph. If, prior to the end of
the term of any Director elected as aforesaid, a vacancy in the office of such
Director shall occur, such vacancy shall be filled for the unexpired term by the
appointment by the remaining Director elected as aforesaid of a new Director for
the unexpired term of such former Director. If both Directors so elected by the
holders of shares of this Series and such other series of Preference Shares
shall cease to serve as Directors before their terms shall expire, the holders
of the shares of this Series, together with the holders of such other series of
Preference Shares may, at a special meeting of the holders called as provided
above, elect successors to hold office for the unexpired terms of such Directors
whose places shall be vacant.
The voting rights provided in this Clause (vii) shall be in addition to any
other right to vote provided to the holders of shares of this Series by law or
the Restated Certificate of Incorporation of the Company.
(viii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(ix) Certain Definitions. As used in this Certificate, the following terms
shall have the following respective meanings:
"Common Shares" shall mean any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"Junior Shares" shall mean Preference Shares of any series or class of the
Company which are by their terms expressly made junior to shares of this Series
at the time outstanding as to dividends or as to the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company or as to both dividends and distributions.
"Parity Shares" shall mean Preference Shares which are by their terms on a
parity with the shares of this Series at the time outstanding both as to
dividends and as to the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
"Preference Shares" shall mean any class or series of shares of the Company
ranking prior to at lease one other class or series of shares of the Company as
to the payment of dividends or the
- 8 -
<PAGE> 22
distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding-up of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned Chairman of the Board of Directors and
attested to by its Assistant Secretary this 18th day of December, 1990.
/s/Richard A. Manoogian
---------------------------------
Richard A. Manoogian
Chairman of the Board
of Directors
ATTEST:
/s/James Tompkins
- ------------------
James Tompkins
Assistant Secretary
- 9 -
<PAGE> 23
MASCO INDUSTRIES, INC.
CERTIFICATE OF THE POWERS DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
10% EXCHANGEABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $100 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of Masco
Industries, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY
that the following resolutions have been duly adopted by the Board of Directors
of the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Company by the provisions of the Restated
Certificate of Incorporation of the Company, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the Preferred Stock of
the Company (the "Preferred Stock") which shall consist of 1,000,000 shares, and
this Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock) as
follows:
(i) Designation. The designation of this Series shall be 10% Exchangeable
Preferred Stock. The number of shares of this Series shall be 1,000,000. The
liquidation value of shares of this Series shall be $100 per share.
(ii) Dividends. (a) The dividend rate on shares of this Series shall be
$10.00 per share per annum. Dividends on shares of this Series shall be fully
cumulative and shall accrue, without interest, from the date of issuance of such
shares, and shall be payable, when and as declared by the Board of Directors out
of funds legally available therefor, in arrears on July 1, 1993 and quarterly in
arrears thereafter on October 1, January 1, April 1
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<PAGE> 24
and July 1 of each year. The amount of dividends payable for the initial
dividend period or any period shorter than a full dividend period shall be
calculated on the basis of a 360-day year of twelve 30-day months. Holders of
shares of this Series shall be entitled to receive such dividends in preference
to and in priority over dividends upon the Common Shares (hereinafter defined)
and all Junior Shares (hereinafter defined), but subject to the rights of
holders of Preference Shares (hereinafter defined) having a preference and a
priority over the payment of dividends on the shares of this Series. Shares of
this Series shall be on a parity as to dividends with all Parity Shares
(hereinafter defined). The holders of shares of this Series shall not be
entitled to any dividends other than the dividends provided in this Clause (ii).
(b) If at any time the Company has failed to pay accrued dividends on any
shares of this Series or any Parity Shares at the time outstanding at the times
such dividends are payable, the Company shall not
(1) declare or pay any dividend on the Common Shares or on any Junior
Shares or make any payment on account of, or set apart money for a sinking or
other analogous fund for, the purchase, redemption or other retirement of, any
Common Shares or any Junior Shares or make any distribution in respect thereof,
either directly or indirectly and whether in cash or property or in obligations
or shares of the Company (other than in Common Shares or Junior Shares),
(2) purchase any shares of this Series or Parity Shares (except for a
consideration payable in Common Shares or Junior Shares) or redeem (or redeem
and exchange for subordinated Debentures as hereinafter provided) fewer than all
of the shares of this Series and all of the Parity Shares then outstanding, or
(3) permit any corporation or other entity directly or indirectly
controlled by the Company to purchase any Common Shares, Junior Shares, shares
of this Series or Parity Shares,
unless, in the case of any such dividend, payment, setting apart, distribution,
purchase, redemption or other retirement, all dividends accrued and payable but
unpaid on shares of this Series and all Parity Shares have been or
contemporaneously are declared and paid in full or declared and a sum sufficient
for the payment thereof set aside for such payment. Unless and until all
dividends accrued and payable but unpaid on shares of this Series and all Parity
Shares at the time outstanding have been paid in full, all dividends declared by
the Company upon shares of this Series or Parity Shares shall be declared pro
rata with respect to all shares of this Series and all Parity Shares then
outstanding, so that the amounts of any dividends declared on shares of this
Series and such Parity Shares shall in all cases bear to each other the same
ratio that, at the time of such declaration, all accrued and payable but
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<PAGE> 25
unpaid dividends on shares of this Series and such Parity Shares, respectively,
bear to each other.
(iii) Optional Redemptions for Cash. Subject to the restrictions in Clause
(ii) above, shares of this Series shall be redeemable at the option of the
Company in whole or from time to time in part in cash at $100 per share, plus an
amount equal to the dividends accrued and unpaid thereon to the redemption date.
Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Clause (iii), a notice
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series to be redeemed at their respective addresses as the
same shall appear on the books of the Company, specifying the certificate
numbers of such shares, the effective date of the redemption and the place where
certificates for shares of this Series are to be surrendered for redemption and
stating that dividends on such shares of this Series will cease to accrue on and
after the redemption date, but neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
If notice of redemption has been given pursuant to this Clause (iii) and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for
cancellation, dividends shall cease to accrue on the shares of this Series to be
redeemed and the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Company by virtue thereof and shall have no voting or other rights with respect
to such shares, except the right to receive the moneys payable upon such
redemption, without interest thereon, upon surrender (and endorsement, if
required by the Company) of their certificates, and the shares evidenced thereby
shall no longer be outstanding. Subject to applicable escheat laws, any moneys
so set aside by the Company and unclaimed at the end of one year from the
redemption date shall revert to the general funds of the Company after which
reversion the holders of such shares so called for redemption shall look only to
the general funds of the Company for the payment of the redemption price. Any
interest accrued on funds so deposited shall be paid to the Company from time to
time. Any holder of record of the shares of this Series to be redeemed pursuant
to this Clause (iii) may waive its right to notice hereunder.
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<PAGE> 26
In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iii), the shares to be redeemed shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) to the extent Masco
Corporation, a Delaware corporation ("Masco"), or any subsidiary thereof, holds
shares of this Series, the Company shall allow Masco to select, in its sole
discretion, the specific shares of this Series then owned by Masco to be
redeemed, provided that Masco informs the Company no later than the day prior to
the date of such redemption of the specific shares Masco has selected for
redemption.
(iv) Optional Redemption through Debenture Exchange.
(a) Subject to the restrictions in clause (ii) above and subclauses (b)
and (d) of this Clause (iv), shares of this Series shall be redeemable at the
option of the Company, in whole or from time to time in part through the
issuance, in redemption of and in exchange for shares of this Series, of the
Company's Subordinated Debentures due the earlier of ten years from the date of
issuance or March 31, 2008 (hereinafter referred to as the "Subordinated
Debentures"), in the manner provided in this Clause (iv). The Subordinated
Debentures shall be issued in substantially the form on file with the Secretary
of the Company and identified to this Series, subject to any changes that may
be made to such Subordinated Debentures in order to qualify an indenture with
respect to such Subordinated Debentures. The Subordinated Debentures shall be
issued in series with the interest rate on each series being a rate per annum
that is 400 basis points over the Treasury Rate (as hereinafter defined) for
the week preceding the week in which the notice of redemption and exchange is
given to holders of shares of this Series as provided in subclause (c) of this
clause (iv) below. "Treasury Rate" means, the rate for direct obligations of
the United States ("Treasury Notes") having a remaining maturity of 10 years,
as published in the Federal Reserve Statistical Release H.15 (519) (or any
successor publication provided by the Board of Governors of the Federal Reserve
System) under the heading "Treasury Constant Maturities." In the event that a
rate for Treasury Notes having a remaining maturity of 10 years is not
published or reported for the prior week as provided above by 1:00 P.M., New
York City time, on the third business day preceding the day such notice of
redemption and exchange is given to such holders, then the Treasury Rate shall
be calculated by the Company and shall be a yield to maturity (expressed as a
bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 1:30 P.M., New York City time, on the date of such
notice of redemption and exchange, of three leading primary United States
government securities dealers selected by the Company for the purchase of
Treasury Notes with a remaining maturity of 10 years.
- 4 -
<PAGE> 27
(b) The Subordinated Debentures will be issued solely in redemption of and
in exchange for shares of this Series at the rate of $100 principal amount of
Subordinated Debentures for each share of this Series redeemed and exchanged on
the applicable Exchange Date (as defined below). An amount equal to all accrued
but unpaid dividends on such shares to the dividend payment date which coincides
with the date of redemption and exchange shall be paid in cash on the date of
such redemption and exchange. No redemption and exchange shall be for and
aggregate principal amount of Subordinated Debentures less than $5 million, and
no Subordinated Debentures in amounts other than $1,000 (and integral multiples
thereof) shall be issued in any redemption and exchange. Cash will be paid in
lieu of any such fraction of a Subordinated Debenture which would otherwise have
been issued.
(c) Not less than 30 nor more than 60 days prior to the date fixed for the
issue of Subordinated Debentures in redemption of and in exchange for shares of
this Series pursuant to this Clause (iv), a notice shall be given by first class
mail, postage prepaid, to the holders of record of the shares of this Series to
be redeemed and exchanged at their respective addresses as the same shall appear
on the books of the Company, specifying the certificate numbers of such
shares, the effective date of the redemption and exchange (the "Exchange Date")
and the place where certificates for shares of this Series are to be surrendered
for Subordinated Debentures and stating that dividends on such shares of this
Series will cease to accrue on and after the Exchange Date, but neither failure
to mail such notice, nor any defect therein or in the mailing thereof, to any
particular holder shall affect the sufficiency of the notice or the validity of
the proceedings for redemption and exchange with respect to the other holders.
Any notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the notice.
Any holder of record of the shares of this Series to be redeemed and exchanged
pursuant to this Clause (iv) may waive its right to notice hereunder.
If notice of redemption and exchange has been give pursuant to this Clause
(iv), then on or after the Exchange Date (unless the Company shall default in
issuing Subordinated Debentures in redemption of and in exchange for shares of
this Series to be redeemed and exchanged on such Exchange Date or shall fail to
pay or set aside accrued and unpaid dividends on such shares of this Series and
notwithstanding that any certificates for such shares of this Series have not
been surrendered for exchange), dividends shall cease to accrue on such shares
of this Series and the holders of such shares shall cease to be stockholders
with respect to such shares (provided, that the persons entitled to receive
Subordinated Debentures in exchange for such shares shall be treated for all
purposes as the registered holders of such Subordinated Debentures) and shall
have no interest in or claims against the Company by virtue thereof (except the
right to receive Subordinated Debentures
- 5 -
<PAGE> 28
and accrued dividends through the Exchange Date) and shall have no voting or
other rights with respect to such shares and such shares of this Series shall no
longer be outstanding. Upon the surrender (and endorsement, if required by the
Company) in accordance with such notice of the certificates for such shares of
this Series, such certificates shall be redeemed and exchanged for Subordinated
Debentures in accordance with this Clause (iv).
(d) In every case of redemption of less than all of the outstanding shares
of this Series pursuant to this Clause (iv), the shares shall be selected (a) by
lot or by such other manner as may be prescribed by resolution of the Board of
Directors of the Company and (b) to the extent Masco, or any subsidiary thereof,
holds shares of this Series, the Company shall allow Masco to select, in its
sole discretion, the specific shares of this Series then owned by Masco to be
redeemed, provided that Masco informs the Company no later than the day prior to
the date of such redemption of the specific shares Masco has selected for
redemption.
(v) Liquidation.
(a) The liquidation price of shares of this Series, in case of the
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
shall be $100 per share, plus the amount per share of any dividends accrued
thereon and remaining unpaid at the date of such liquidation, dissolution or
winding-up.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the holders of shares of this Series shall
be entitled to receive the liquidation price of such shares held by them in
preference to and in priority over any distributions upon the Common Shares and
all Junior Shares, but subject to the rights of holders of Preference Shares
having a preference to and priority over the payment of distributions on the
shares of this Series. Upon payment in full of the liquidation price to which
the holders of shares of this Series are entitled, the holders of shares of this
Series will not be entitled to any further participation in any distribution of
assets by the Company. If the assets of the Company are not sufficient to pay in
full the liquidation price payable to the holders of shares of this Series and
the liquidation price payable to the holders of all Parity Shares, the holders
of all such shares shall share ratably in such distribution of assets in
accordance with the amounts which would be payable on such distribution if the
amounts to which the holders of shares of this Series and the holders of Parity
Shares are entitled were paid in full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash, securities or other property
- 6 -
<PAGE> 29
shall be considered a liquidation, dissolution or winding-up of the Company
within the meaning of this Clause (v).
(vi) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Clause (iii) above or redeemed and exchanged pursuant to
Clause (iv) above and all shares of this Series which are otherwise reacquired
by the Company and subsequently cancelled by the Board of Directors of the
Company shall have the status of authorized but unissued Preferred Stock,
without designation as to series, subject to reissuance by the Board of
Directors of the Company as shares of this Series or shares of any one or more
other series.
(viii) Voting Rights. Except as otherwise provided in this Clause (vii) or
as otherwise provided by law or the Restated Certificate of Incorporation of the
Company, holders of shares of this Series have not voting rights.
If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preference Shares then having a right to elect Directors as a result
of a dividend arrearage, will have the exclusive right (superseding the separate
right of such other series to elect Directors so long as shares of this Series
remain outstanding, except as otherwise expressly provided in the certificate of
designation establishing such other series), voting separately as a class with
any such other series, to elect two Directors of the Company, such Directors to
be in addition to the number of Directors constituting the Board of Directors of
the Company immediately prior to the accrual of such right. Such right of the
holders of shares of this Series to elect two Directors shall, when vested,
continue until all dividends in default on the shares of this Series shall have
been paid in full and, when so paid, such right of the holders of shares of this
Series to elect two Directors separately as a class shall cease, subject,
always, to the same provisions for the vesting of such right of the holders of
the shares of this Series to elect two Directors in the case of future dividend
defaults. At any time when such right to elect such Directors separately as a
class shall have so vested, the Company may, and upon the written request of the
holders of record of not less than 20% of the total number of shares of this
Series and such other series of Preference Shares then outstanding shall, call a
special meeting of the holders of such shares to fill such newly-created
directorships for the election of Directors. In the case of such a written
request, such special meeting shall be held within 90 days after the delivery of
such request and, in either case, at the place and upon the notice provided by
law and in the Bylaws of the Company, provided that the Company shall not be
required to call such a special meeting if such request is received less than
120 days before the date fixed
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<PAGE> 30
for the next ensuing annual meeting of stockholders of the Company, in which
case such newly-created directorships shall be filled by the holders of such
shares of this Series and such other series of Preference Shares at such
meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (x) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (y)
the termination of the right of the holders of shares of this Series and such
other series of Preference Shares to vote for Directors pursuant to the
preceding paragraph. If, prior to the end of the term of any Director elected as
aforesaid, a vacancy in the office of such Director shall occur, such vacancy
shall be filled for the unexpired term by the appointment by the remaining
Director elected as aforesaid of a new Director for the unexpired term of such
former Director. If both Directors so elected by the holders of shares of this
Series and such other series of Preference Shares shall cease to serve as
Directors before their terms shall expire, the holders of the shares of this
Series, together with the holders of such other series of Preference Shares may,
at a special meeting of the holders called as provided above, elect successors
to hold office for the unexpired terms of such Directors whose places shall be
vacant.
The voting rights provided in this Clause (vii) shall be in addition to any
other right to vote provided to the holders of Shares of this Series by law or
the Restated Certificate of Incorporation of the Company.
(viii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(ix) Certain Definitions. As used in this Certificate, the following terms
shall have the following respective meanings:
"Common Shares" shall mean any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"Junior Shares" shall mean Preference Shares of any series or class of the
Company which are by their terms expressly made junior to shares of this Series
at the time outstanding as to dividends or as to the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company or as to both dividends and distributions.
- 8 -
<PAGE> 31
"Parity Shares" shall mean Preference Shares which are by their terms on a
parity with the shares of this Series at the time outstanding both as to
dividends and as to the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
"Preference Shares" shall mean any class or series of shares of the Company
ranking prior to at least one other class or series of shares of the Company as
to the payment of dividends or the distribution of assets on any voluntary or
involuntary liquidation, dissolution or winding-up of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned Chairman of the Board of Directors and
attested to by its Assistant Secretary this 23rd day of March, 1993.
/s/Lee M. Gardner
----------------------
Lee M. Gardner
President
ATTEST:
/s/James Tompkins
- ----------------------
James Tompkins
Assistant Secretary
- 9 -
<PAGE> 32
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
Masco Industries, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Company a
resolution was duly adopted setting forth a proposed amendment to the Restated
Certificate of Incorporation of the Company. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that Article 1 of the text of the Restated Certificate of
Incorporation, be amended to read as follows: "The name of the corporation
is MascoTech, Inc."
SECOND: That thereafter, at the annual meeting of the stockholders of the
Company, duly called and held on May 18, 1993, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware at which
meeting the necessary number of shares as required by statute were voted in
favor of the amendment.
THIRD: The said amendment was duly adopted in accordance with the
applicable provisions of Sections 242 of the General Corporation law of the
State of Delaware.
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<PAGE> 33
IN WITNESS WHEREOF, the Company has caused this certificate to be signed by
Lee Gardner, its President and attested to by Eugene A. Gargaro, Jr., its
Secretary, this 17th day of June, 1993.
MASCO INDUSTRIES, INC.
By/s/Lee Gardner
-----------------------
Lee Gardner - President
ATTEST:
By/s/Eugene A. Gargaro, Jr.
----------------------------------
Eugene A. Gargaro, Jr. - Secretary
- 2 -
<PAGE> 34
MASCOTECH, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
$1.20 CONVERTIBLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $20.00 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of MascoTech, Inc.,
a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that the following
resolutions were duly adopted by the Pricing Committee of the Board of Directors
of the Company (pursuant to the authority conferred upon it by the Board of
Directors) and by the Board of Directors (pursuant to the authority granted and
vested in it by the provisions of the Restated Certificate of Incorporation of
the Company), respectively.
A. On June 30, 1993, the Pricing Committee of the Board of Directors
adopted the following resolution:
RESOLVED, that pursuant to the authority conferred upon the Pricing
Committee of the Board of Directors of the Company, this Pricing Committee
hereby authorizes the issuance of a series (this "Series"), of the Preferred
Stock of the Company ( the "Preferred Stock") which shall consist of 11,500,000
shares, and this Pricing Committee hereby fixes the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations, or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock and in
addition to the voting rights established by the resolutions of the Board of
Directors of the Company adopted June 26, 1993) as follows:
(1) Designation. The designation of this Series shall be $1.20 Convertible
Preferred Stock. The number of shares of this Series shall be 11,500,000. The
liquidation value of shares of this Series shall be $20.00 per share.
(2) Dividends. (a) The holders of shares of this Series shall be entitled
to receive, when, as and if declared by the Board of Directors of the Company
out of funds legally available therefor, cumulative preferential dividends from
the issue date of such shares, at the rate per share of $1.20 per annum, and no
more, payable quarterly for each share of this Series, payable in arrears on the
first day of each January, April, July and October, respectively (each such date
being hereinafter referred to as a "Dividend Payment Date") or, if any Dividend
Payment
- 1 -
<PAGE> 35
Date is not a business day, then the Dividend Payment Date shall be the next
succeeding business day; provided, however, that with respect to any dividend
period during which a redemption occurs, the Company may, at its option, declare
accrued dividends to, and pay such dividends on, the redemption date, in which
case such dividends would be payable on the redemption date in cash to the
holders of the shares of this Series as of the record date for such dividend
payment and such accrued dividends would not be included in the calculation of
the related Call Price (as hereinafter defined). Each dividend on the shares of
this Series shall be payable to holders of record as they appear on the stock
books of the Company on such record dates, not less than 10 nor more than 60
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors. The first dividend payment shall be for the period from the issue
date of the shares of this Series to and including September 30, 1993 and shall
be payable on October 1, 1993. Dividends (or amounts equal to accrued and unpaid
dividends) payable on shares of this Series for any period shorter than a
quarterly dividend period shall be computed on the basis of a 360-day year of
twelve 30-day months.
Dividends on the shares of this Series shall accrue (whether or not the
Company has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared) on a
daily basis from the previous Dividend Payment Date, except that the first
dividend shall accrue from the date of issuance of the shares of this Series.
Dividends accumulate to the extent they are not paid on the Dividend Payment
Date for the quarter for which they accrue. Accumulated unpaid dividends shall
not bear interest.
(b) Unless full cumulative dividends, if any, accrued on the shares of this
Series which are payable in cash have been paid or contemporaneously are
declared and paid and a sum set aside sufficient for such payment through the
most recent Dividend Payment Date, then, whether or not the Mandatory Conversion
Date (as hereinafter defined) has occurred:
(i) No full cash dividend shall be declared by the Board of Directors
or paid or set aside for payment by the Company or other
distribution declared or made on any shares of the Company
ranking on a parity with the shares of this Series as to
dividends;
(ii) No dividend (other than a dividend or distribution paid in shares
of, or warrants, rights or options exercisable for or convertible
into shares of, Common Stock or in any other shares of the
Company ranking junior to the shares of this Series as to
dividends and upon liquidation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the
Common Stock or upon any other shares of the Company ranking
junior to the shares of this Series as to dividends; and
(iii) No Common Stock or any other shares of the Company ranking junior
to or on a parity with the shares of this Series as to dividends
or upon liquidation
- 2 -
<PAGE> 36
shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such series
or class) by the Company, except by conversion into or exchange
for shares of the Company ranking junior to the shares of this
Series as to dividends and upon liquidation.
When dividends which are payable in cash have not been paid or set aside in full
with respect to the shares of this Series and any other shares of the Company
ranking on a parity with the shares of this Series as to dividends, all
dividends declared with respect to the shares of this Series and any other
shares of the Company ranking on a parity with the shares of this Series as to
dividends shall be declared pro rata so that the amount of dividends declared
per share on this Series and such other shares shall in all cases bear to each
other the same ratio that, at the time of declaration, accrued and payable but
unpaid dividends per share on the shares of this Series and such other shares
bear to each other. Holders of the shares of this Series shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein described.
(c) Subject to the foregoing provisions of this paragraph (2) and
paragraph (3)(d), the Board of Directors may declare and the Company may pay or
set aside for payment dividends and other distributions on any shares of the
Company ranking on a parity with or junior to the shares of this Series as to
dividends or upon liquidation, and may redeem, purchase or otherwise acquire any
shares of the Company ranking on a parity with or junior to the shares of this
Series as to dividends or upon liquidation, and the holders of the shares of
this Series shall not be entitled to share therein.
(d) Any dividend payment made on the shares of this Series shall
first be credited against the earliest accrued but unpaid dividend due with
respect to the shares of this Series.
(e) All dividends paid with respect to the shares of this Series
shall be paid pro rata to the holders entitled thereto.
(f) Holders of the shares of this Series shall be entitled to receive
dividends in preference to and in priority over any dividends upon any shares of
the Company ranking junior to the shares of this Series as to dividends, but
subject to the rights of holders of shares of the Company having a preference
and a priority over the payment of dividends on the shares of this Series.
(3) Redemptions and Conversions.
(a) Mandatory Conversion. On July 1, 1997 (the "Mandatory Conversion
Date"), each outstanding share of this Series shall convert automatically (the
"Mandatory Conversion") into shares of Common Stock at the Common Equivalent
Rate (as hereinafter defined) in effect on the Mandatory Conversion Date and the
right to receive an amount in cash equal to all accrued and unpaid dividends on
such share of this Series (other than dividends payable to a holder of
- 3 -
<PAGE> 37
record on a prior date) to the Mandatory Conversion Date, whether or not
declared, out of funds legally available for the payment of dividends, subject
to the right of the Company to redeem the shares of this Series on or after the
Initial Redemption Date (as hereinafter defined) and prior to the Mandatory
Conversion Date, as described below, and subject to the conversion of the shares
of this Series at the option of the holder at any time prior to the Mandatory
Conversion Date. The Common Equivalent Rate is initially one share of Common
Stock for each share of this Series and is subject to adjustment as set forth
below. Dividends on the shares of this Series shall cease to accrue and such
shares shall cease to be outstanding on the Mandatory Conversion Date. The
Company shall make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and for the payment of cash in
respect of such accrued and unpaid dividends, if any, or cash in lieu of
fractional shares, if any, in exchange for and contingent upon surrender of
certificates representing the shares of this Series, and the Company may defer
the payment of dividends on such shares of Common Stock and the voting thereof
until, and make such payment and voting contingent upon, the surrender of such
certificates representing the shares of this Series, provided that the Company
shall give the holders of the shares of this Series such notice of any such
actions as the Company deems appropriate and upon such surrender such holders
shall be entitled to receive such dividends declared and paid on such shares of
Common Stock subsequent to the Mandatory Conversion Date. Amounts payable in
cash in respect of the shares of this series or in respect of such shares of
Common Stock shall not bear interest.
(b) Redemption by the Company.
(i) Right to Redeem. Shares of this Series are not redeemable by the
Company prior to July 1, 1996 (the "Initial Redemption Date"). At any time and
from time to time on or after the Initial Redemption Date and prior to the
Mandatory Conversion Date, the Company shall have the right to redeem, in whole
or in part, the outstanding shares of this Series. Upon any such redemption, the
Company shall deliver to the holders of shares of this Series, in accordance
with the provisions of this Certificate, in exchange for each share so redeemed,
a number of shares of Common Stock equal to (A) the Call Price (as hereinafter
defined) in effect on the redemption date, divided by (B) the Current Market
Price (as hereinafter defined) of the Common Stock determined as of the date
which is one trading day prior to the public announcement of the redemption. The
Call Price of each share of this Series is the sum of (X) $20.30 on and after
the Initial Redemption Date through September 30, 1996, $20.225 on and after
October 1, 1996 through December 31, 1996, $20.15 on and after January 1, 1997
through March 31, 1997, $20.075 on and after April 1, 1997 through May 31, 1997
and $20.00 on and after June 1, 1997 until the Mandatory Conversion Date and (Y)
all accrued and unpaid dividends thereon to the redemption date (other than
dividends payable to a holder of record as of a prior date), subject to the
right of the Company pursuant to paragraph (2) to pay such accrued and unpaid
dividends in cash. The public announcement of any call for redemption shall be
made prior to the mailing of the notice of such call to holders of shares of
this Series as described below. If fewer than all the outstanding shares of this
Series are to be redeemed, shares to be redeemed shall be selected by the
Company from outstanding shares of this Series not previously redeemed by lot or
pro rata (as nearly as may be practicable) or by any other
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<PAGE> 38
method determined by the Board of Directors of the Company in its sole
discretion to be equitable.
(ii) Current Market Price. As used in this subparagraph (b), the term
"Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (X) the average of the Closing Prices (as
hereinafter defined) of the Common Stock for the fifteen consecutive Trading
Dates (as hereinafter defined) ending on and including such date of
determination, and (Y) the Closing Price of the Common Stock for such date of
determination; provided, however, that, with respect to any redemption of shares
of this Series, if any event that results in an adjustment of the Common
Equivalent Rate occurs during the period beginning on the first day of such
fifteen-day period and ending on the applicable redemption date, the Current
Market Price as determined pursuant to the foregoing shall be appropriately
adjusted to reflect the occurrence of such event.
(iii) Notice of Redemption. The Company shall provide notice of any
redemption of the shares of this Series to holders of record of this Series to
be called for redemption not less than 15 nor more than 60 days prior to the
date fixed for such redemption. Such notice shall be provided by mailing notice
of such redemption first class postage prepaid, to each holder of record of
shares of this Series to be redeemed, at such holder's address as it appears on
the stock register of the Company; provided, however, that neither failure to
give such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of this Series to be redeemed.
Each such notice shall state, as appropriate, the following and may contain
such other information as the Company deems advisable:
(A) the redemption date;
(B) that all outstanding shares of this Series are to be redeemed or,
in the case of a call for redemption of fewer than all
outstanding shares of this Series, the number of such shares held
by such holder to be redeemed;
(C) the Call Price, the number of shares of Common Stock deliverable
upon redemption of each share of this Series to be redeemed and
the Current Market Price used to calculate such number of shares
of Common Stock;
(D) the place or places where certificates for such shares are to be
surrendered for redemption; and
(E) that dividends on the shares of this Series to be redeemed shall
cease to accrue on such redemption date (except as otherwise
provided herein).
(iv) Deposit of Shares and Funds. The Company's obligation to deliver
shares of Common Stock and provide funds upon redemption in
accordance with this paragraph (3) shall
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<PAGE> 39
be deemed fulfilled if, on or before a redemption date, the Company shall
irrevocably deposit, with a bank or trust company, or an affiliate of a bank or
trust company, having an office or agency in New York City and having a capital
and surplus of at least $50,000,000, or shall set aside or make other reasonable
provision for the issuance of such number of shares of Common Stock as are
required to be delivered by the Company pursuant to this paragraph (3) upon the
occurrence of the related redemption (and for the payment of cash in lieu of the
issuance of fractional share amounts and accrued and unpaid dividends payable in
cash on the shares to be redeemed as and to the extent provided by this
paragraph (3)). Any interest accrued on such funds shall be paid to the Company
from time to time. Any shares of Common Stock or funds so deposited and
unclaimed at the end of two years from such redemption date shall be repaid and
released to the Company, after which the holder or holders of such shares of
this Series so called for redemption shall look only to the Company for delivery
of such shares of Common Stock or funds.
(v) Surrender of Certificates; Status. Each holder of shares of this
Series to be redeemed shall surrender the certificates evidencing such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state) to the Company at the
place designated in the notice of such redemption and shall thereupon be
entitled to receive certificates evidencing shares of Common Stock and to
receive any funds payable pursuant to this paragraph (3) following such
surrender and following the date of such redemption. In case fewer than all the
shares represented by any such surrendered certificate are called for
redemption, a new certificate shall be issued at the expense of the Company
representing the unredeemed shares. If such notice of redemption shall have been
given, and if on the date fixed for redemption shares of Common Stock and funds
necessary for the redemption shall have been irrevocably either set aside by the
Company separate and apart from its other funds or assets in trust for the
account of the holders of the shares to be redeemed or converted (and so as to
be and continue to be available therefor) or deposited with a bank or a trust
company or an affiliate thereof as provided herein or the Company shall have
made other reasonable provision therefor, then, notwithstanding that the
certificates evidencing any shares of this Series so called for redemption or
subject to conversion shall not have been surrendered, the shares represented.
thereby so called for redemption shall be deemed no longer outstanding,
dividends with respect to the shares so called for redemption shall cease to
accrue on the date fixed for redemption (except that holders of shares of this
Series at the close of business on a record date for any payment of dividends
shall be entitled to receive the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares following such record date and prior to such Dividend Payment Date) and
all rights with respect to the shares so called for redemption shall forthwith
after such date cease and terminate, except for the rights of the holders to
receive the shares of Common Stock and funds, if any, payable pursuant to this
paragraph (3) without interest upon surrender of their certificates therefor.
Holders of shares of this Series that are redeemed shall not be entitled to
receive dividends declared and paid on such shares of Common Stock, and such
shares of Common Stock shall not be entitled to vote, until such shares of
Common Stock are issued upon the surrender of the certificates representing such
shares of this Series and upon such surrender
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<PAGE> 40
such holders shall be entitled to receive such dividends declared and paid on
such shares of Common Stock subsequent to such redemption date.
(c) Conversion at Option of Holder. Shares of this Series are convertible,
in whole or in part, at the option of the holders thereof, at any time prior to
the Mandatory Conversion Date, unless previously redeemed, into shares of Common
Stock at a rate of .806 of a share of Common Stock for each share of this Series
(the "Optional Conversion Rate") (equivalent to a conversion price of $24.81 per
share of Common Stock), subject to adjustment as set forth below. The right to
convert shares of this Series called for redemption shall terminate at the close
of business on the redemption date.
Conversion of shares of this Series may be effected by delivering
certificates evidencing such shares, together with written notice of conversion
and a proper assignment of such certificates to the Company or in blank, to the
office or agency to be maintained by the Company for that purpose (and, if
applicable, payment of an amount equal to the dividend payable on such shares),
and otherwise in accordance with conversion procedures established by the
Company. Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the foregoing requirements shall
have been satisfied. The conversion shall be at the Optional Conversion Rate in
effect at such time and on such date.
Holders of shares of this Series at the close of business on a record date
for any payment of dividends shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such record date and prior to such Dividend
Payment Date. However, shares of this Series surrendered for conversion after
the close of business on a record date for any payment of dividends and before
the opening of business on the next succeeding Dividend Payment Date must be
accompanied by payment in cash of an amount equal to the dividend thereon which
is to be paid on such Dividend Payment Date (unless such shares are subject to
redemption on a redemption date in that period). Except as provided above, the
Company shall make no payment or allowance for unpaid dividends whether or not
in arrears, on converted shares of this Series or for dividends or distributions
on the shares of Common Stock issued upon such conversion.
(d) Common Equivalent Rate and Optional Conversion Rate Adjustments. The
Common Equivalent Rate and the Optional Conversion Rate shall be subject to
adjustment from time to time as provided below in this paragraph.
(i) If the Company shall:
(A) pay a dividend or make a distribution with respect to
its Common Stock in shares of such stock,
(B) subdivide or split its outstanding Common Stock into a
greater number of shares,
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<PAGE> 41
(C) combine its outstanding shares of Common Stock into a
smaller number of shares, or
(D) issue by reclassification of its shares of Common Stock
any shares of common stock of the Company,
then, in any such event, the Common Equivalent Rate and the
Optional Conversion Rate in effect immediately prior to such
event shall each be adjusted so that the holder of any shares of
this Series shall thereafter be entitled to receive, upon
Mandatory Conversion or upon conversion at the option of the
holder, the number of shares of Common Stock of the Company which
such holder would have owned or been entitled to receive
immediately following any event described above had such shares
of this Series been converted immediately prior to such event or
any record date with respect thereto. Such adjustment shall
become effective at the opening of business on the business day
next following the record date for determination of stockholders
entitled to receive such dividend or distribution in the case of
a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, split,
combination or reclassification. Such adjustment shall be made
successively.
(ii) If the Company shall, after the date hereof, issue rights or
warrants to all holders of its Common Stock entitling them (for a
period not exceeding forty-five days from the date of such issu-
ance) to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price of the Common
Stock, then in each case the Common Equivalent Rate and Optional
Conversion Rate shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate, in effect
immediately prior to the date of issuance of such rights or war-
rants, by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on the date of issuance of
such rights or warrants, immediately prior to such issuance, plus
the number of additional shares of Common Stock offered for sub-
scription or purchase pursuant to such rights or warrants, and of
which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or war-
rants, immediately prior to such issuance, plus the number of
additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered ."
for subscription or purchase pursuant to such rights or warrants
would purchase at such current market price (determined by multi-
plying such total number of shares by the exercise price of such
rights or warrants and dividing the product so obtained by such
current market price). Such adjustment shall become effective at
the opening of business on the business day next following the
record date for the determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of
Common Stock are not delivered
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<PAGE> 42
after the expiration of such rights or warrants, the Common
Equivalent Rate shall be readjusted to the Common Equivalent Rate
which would then be in effect had the adjustments been made upon
the issuance of such rights or warrants been made upon the basis
of delivery of only the number of shares of Common Stock actually
delivered. Such adjustment shall be made successively.
(iii) If the Company shall pay a dividend or make a distribution to all
holders of its Common Stock of evidences of its indebtedness or
other assets (excluding any dividends or distributions referred
to in subparagraph (i) above or any cash dividends) or shall
issue to all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than those
referred to in subparagraph (ii) above), then in each such case,
the Common Equivalent Rate and the Optional Conversion Rate shall
each be adjusted by multiplying the Common Equivalent Rate and
the Optional Conversation Rate in effect on the record date men-
tioned below, by a fraction of which the numerator shall be the
current market price per share of the Common Stock on the record
date for the determination of stockholders entitled to receive
such dividend or distribution, and of which the denominator shall
be such current market price per share of Common Stock less the
fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described
in a resolution adopted with respect thereto) as of such record
date of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants applicable
to one share of Common Stock. Such adjustment shall become
effective on the opening of business on the business day next
following the record date for the determination of stockholders
entitled to receive such dividend or distribution. Such
adjustment shall be made successively.
(iv) Any shares of Common Stock issuable in payment of a dividend
shall be deemed to have been issued immediately prior to the
close of business on the record date for such dividend for
purposes of calculating the number of outstanding shares of
Common Stock under subparagraph (ii) above. For purposes of any
computation under subparagraphs (ii) and (iii) above, the current
market price per share of Common Stock at any date shall be
deemed to be the average of the daily Closing Prices for the
thirty consecutive Trading Dates preceding the date in
question; provided, however, if any event that results in an
adjustment of the Common Equivalent Rate occurs during such
thirty-day period, the current market price as determined
pursuant to the foregoing shall be appropriately adjusted to
reflect the occurrence of such event.
(v) The Company shall also be entitled to make upward adjustments in
the Common Equivalent Rate, the Optional Conversion Rate and the
Call Price,
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<PAGE> 43
as it in its discretion shall determine to be advisable, in order
that any stock dividends, subdivisions of shares, distribution of
rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock (or any
transaction which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue Code
of 1986, as amended) hereafter made by the Company to its
stockholders shall not be taxable.
(vi) In any case in which subparagraph (3)(d) shall require that an
adjustment as a result of any event become effective at the
opening of business on the business day next following a record
date and the date fixed for conversion pursuant to subparagraph
(3)(a) or redemption pursuant to subparagraph (3)(b) occurs after
such record date, but before the occurrence of such event, the
Company may in its sole discretion, elect to defer the following
until after the occurrence of such event: (A) issuing to the
holder of any converted or redeemed shares of this Series the
additional shares of Common Stock issuable upon such conversion
or redemption over the shares of Common Stock issuable before
giving effect to such adjustment and (B) paying to such holder
any amount in cash in lieu of a fractional share of Common Stock
pursuant to subparagraph (3)(g).
(vii) All adjustments to the Common Equivalent Rate and the Optional
Conversion Rate shall be calculated to the nearest 1/1000th of a
share of Common Stock (or if there is not a nearest 1/1000th of a
share to the next lower 1/1000th of a share). No adjustment in
the Common Equivalent Rate and the Optional Conversion Rate shall
be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(e) Adjustment for Consolidation or Merger. In case of any consolidation
or merger to which the Company is a party (other than a merger or consolidation
in which the Company is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation remains unchanged),
or in case of any sale or transfer to another corporation of the property of the
Company as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation (other than in connec-
tion with a merger or acquisition), proper provision shall be made so that
each share of this Series shall, after consummation of such transaction,
be subject to (i) conversion at the option of the holder into the kind and
amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock into which
such share of this Series might have been converted immediately prior to
consummation of such transaction, (ii) conversion on the Mandatory Conversion
Date into the kind and amount of securities, cash or other property receivable
upon consummation of such transaction by a
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<PAGE> 44
holder of the number of shares of Common Stock into which such share of this
Series would have converted if the conversion on the Mandatory Conversion Date
had occurred immediately prior to the date of consummation of such transaction,
and (iii) redemption on any redemption date in exchange for the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock that would have
been issuable at the Call Price in effect on such redemption date upon a
redemption of such share immediately prior to consummation of such transaction,
assuming that the public announcement of such redemption had been made on the
last possible date permitted by the terms of this Series and applicable law;
assuming in each case that such holder of Common Stock failed to exercise rights
of election, if any, as to the kind or amount of securities, cash or other
property receivable upon consummation of such transaction (provided that if the
kind or amount of securities, cash or other property receivable upon
consummation of such transaction is not the same for each non-electing share,
then the kind and amount of securities, cash or other property receivable upon
consummation of such transaction for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). The kind and amount of securities into which the shares of
this Series shall be convertible after consummation of such transaction shall be
subject to adjustment as described in the immediately preceding paragraph
following the date of consummation of such transaction. The Company may not
become a party to any such transaction unless the terms thereof are consistent
with the foregoing.
(f) Notice of Adjustments. Whenever the Common Equivalent Rate and
Optional Conversion Rate are adjusted as herein provided, the Company shall:
(i) forthwith compute the adjusted Common Equivalent Rate and
Optional Conversion Rate in accordance herewith and prepare a
certificate signed by an officer of the Company setting forth the
adjusted Common Equivalent Rate and the Optional Conversion Rate,
the method of calculation thereof in reasonable detail and the
facts requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and file such
certificate forthwith with the transfer agent for the shares of
this Series and the Common Stock; and
(ii) mail a notice to the holders of the outstanding shares of this
Series stating that the Common Equivalent Rate and the Optional
Conversion Rate have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting.
forth the adjusted Common Equivalent Rate and Optional Conversion
Rate, such notice to be mailed at or prior to the time the
Company mails an interim statement to its stockholders covering
the fiscal quarter during which the facts requiring such
adjustment occurred, but in any event within 45 days of the end
of such fiscal quarter.
(g) Notices. In case, at any time while any of the shares of this Series
are outstanding,
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<PAGE> 45
(i) the Company shall declare a dividend (or any other distribution)
on its Common Stock, excluding any cash dividends; or
(ii) the Company shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase
shares of its Common Stock or of any other subscription rights or
warrants; or
(iii) of any reclassification of Common Stock of the Company (other
than a subdivision or combination thereof) or of any
consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required
(except for a merger of the Company into one of its subsidiaries
solely for the purpose of changing the corporate domicile of the
Company to another state of the United States and in connection
with which there is no substantive change in the rights or privi-
leges of any securities of the Company other than changes
resulting from differences in the corporate statutes of the then
existing and the new state of domicile), or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of this Series, and shall cause to be
mailed to the holders of shares of this Series at their last addresses as they
shall appear on the stock register, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. The failure to give or receive
the notice required by this paragraph (g) or any defect therein shall not affect
the legality or validity of any such dividend, distribution, right or
warrant or other action.
(h) Effect of Conversions and Redemptions. The person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon any conversion or redemption shall be deemed to have become on
the date of any such conversion or redemption the holder or holders of record of
the shares represented thereby; provided, however, that any such surrender on
any date when the stock transfer books of the Company shall be closed shall
constitute the person or persons in whose name or names the certificate or
certificates for such shares are to be issued as the record holder or holders
thereof for all
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<PAGE> 46
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open.
(i) No Fractional Shares. No fractional shares or script representing
fractional shares of Common Stock shall be issued upon the redemption or
conversion of any shares of this Series. In lieu of any fractional share
otherwise issuable in respect of all the shares of this Series of any holder
which are redeemed or converted on any redemption date or upon Mandatory
Conversion or any optional conversion, such holder shall be entitled to receive
an amount in cash (computed to the nearest cent) equal to the same fraction of
the (i) Current Market Price in the case of redemption, or (ii) Closing Price of
the Common Stock determined (A) as of the fifth Trading Date immediately
preceding the Mandatory Conversion Date, in the case of Mandatory Conversion,
(B) as of the second Trading Date immediately preceding the effective date of
conversion, in the case of an optional conversion by a holder. If more than one
share shall be surrendered for conversion or redemption at one time by or for
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of this Series so surrendered or redeemed.
(j) Reissuance. Shares of this Series that have been issued and reacquired
in any manner, including shares purchased, exchanged, redeemed or converted,
shall not be reissued as part of this Series and shall (upon compliance with any
applicable provisions of the laws of the State of Delaware) have the status of
authorized and unissued shares of the Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of Preferred Stock.
(k) Definitions. As used in this Certificate:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking
institutions in the State of New York or the State of
Michigan are authorized or obligated by law or
executive order to close or are closed because of a
banking moratorium or otherwise;
(ii) the term "Closing Price" on any day shall mean the
closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of
the reported closing bid and asked prices regular
way, in each case on the New York Stock Exchange or, if
the Common Stock is not listed or admitted to trading
on such Exchange, then on the principal national
securities exchange on which the Common Stock is listed
or admitted to trading (which shall be the national
securities exchange on which the greatest number of
shares of Common Stock has been traded during the five
consecutive Trading Dates ending on and including the
date of determination), or, if not quoted or listed or
admitted to trading on any national securities exchange
or quotation system, the average of the closing bid and
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<PAGE> 47
asked prices of the Common Stock on the
over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service, or
if not so available as determined in good faith by the
Board of Directors, on the basis of such relevant
factors as it in good faith considers appropriate;
(iii) the term "Trading Date" shall mean a date on which the
New York Stock Exchange (or any successor thereto) is
open for the transaction of business.
(l) Payment of Taxes. The Company shall pay any and all documentary, stamp
or similar issue or transfer taxes payable in respect of the issue or deliver of
shares of Common Stock on the redemption or conversion of shares of this Series
pursuant to this paragraph (3); provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any registration of
transfer involved in the issue or delivery of shares of Common Stock in a name
other than that of the registered holder of shares of this Series redeemed or
converted or to be redeemed or converted, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Company
the amount of any such tax or has established, to the satisfaction of the
Company, that such tax has been paid.
(m) Reservation of Common Stock. The Company shall at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock and/or its issued Common Stock held in its
treasury, for the purpose of effecting any Mandatory Conversion of the shares of
this Series or any conversion of the shares of this Series at the option of the
holder, the full number of shares of Common Stock then deliverable upon any such
conversion of all outstanding shares of this Series.
(4) Liquidation Rights. (a) In the event of the liquidation, dissolution,
or winding up of the business of the Company, whether voluntary or involuntary,
the holders of shares of this Series then outstanding, after payment or
provision for payment of the debts and other liabilities of the Company and the
payment or provision for payment of any distribution on any shares of the
Company having a preference and a priority over the shares of this Series on
liquidation, and before any distribution to the holders of the Common Stock or
any other stock ranking junior to the shares of this Series with respect to
distribution upon liquidation, dissolution or winding up, shall be entitled to
be paid out of the assets of the Company available for distribution to its
stockholders, an amount per share of this Series in cash equal to the sum of (i)
the liquidation value set forth in paragraph (1) above plus (ii) all accrued and
unpaid dividends thereon to the date of liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of shares of the Company ranking junior to the shares of this Series upon
liquidation. In the event the assets of the Company available for distribution
to the holders of the shares of this Series upon any dissolution, liquidation or
winding up of the Company shall be insufficient to pay in full the liquidation
payments payable to the holders of outstanding shares of this Series and any
shares of the Company ranking on a
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<PAGE> 48
parity with the shares of this Series upon liquidation, then the holders of all
such shares shall share ratably in such distribution of assets in accordance
with the amount which would be payable on such distribution if the amounts to
which the holders of outstanding shares of this Series and the holders of
outstanding shares of such shares of the Company ranking on a parity with the
shares of this Series upon liquidation are entitled were paid in full. Except as
provided in this paragraph (4), holders of this Series shall not be entitled to
any distribution in the event of liquidation, dissolution or winding up of the
affairs of the Company.
(b) For the purposes of this paragraph (4), none of the following shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Company:
(i) the voluntary sale, conveyance, lease, exchange or
transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the
property or assets of the Company;
(ii) the consolidation or merger of the Company with or into
one or more other corporations, or other associations;
(iii) the consolidation or merger of one or more corporations
or other associations with or into the Company; or
(iv) the participation by the Company in a share exchange.
(5) Definition. As used in this Certificate, the term "Common Stock"
shall mean any stock of any class of the Company which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which is
not subject to redemption by the Company. However, shares of Common Stock
issuable upon conversion of shares of this Series shall include only shares of
the class designated as Common Stock as of the original date of issuance of
shares of this Series, or shares of the Company of any class or classes
resulting from any reclassification or reclassification thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each
such.) class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from such reclassification
bears to the total number of shares of all classes resulting from all such
reclassification.
(6) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
- 15 -
<PAGE> 49
B. On June 26, 1993, the Board of Directors adopted certain
resolutions with respect to the authority of the Pricing Committee of the Board
of Directors and fixing the voting rights of the $1.20 Convertible Preferred
Stock as follows:
RESOLVED, that pursuant to the authority granted and vested in the Board of
Directors, this Board of Directors empowers the Pricing Committee of the Board
of Directors to authorize the issuance of a series (this "Series"), of the
Preferred Stock of the Company (the "Preferred Stock"), which shall consist of
11,500,000 shares, and to fix the powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, other than voting rights,
of the shares of this Series.
RESOLVED, that this Board of Directors fixes the voting rights of the
shares of this Series as follows:
(1) Voting Rights. (a) The holders of shares of this Series shall have the
right with the holders of Common Stock to vote in the election of directors and
upon each other matter coming before any meeting of the stockholders on the
basis of 4/5 of a vote for each share held. The holders of shares of this Series
and the holders of Common Stock shall vote together as one class except as
otherwise set forth herein or as otherwise provided by law or by the Restated
Certificate of Incorporation of the Company.
(b) If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preferred Stock then having a right to elect Directors as a result of
a dividend arrearage, shall have the exclusive right (superseding the separate
right of such other series to elect Directors so long as shares of this Series
remain outstanding, except as otherwise expressly provided in the certificate of
designation establishing such other series), voting separately as a class with
any such other series, to elect two Directors of the Company, such Directors to
be in addition to the number of Directors constituting the Board of Directors of
the Company immediately prior to the accrual of such right. Such right of the
holders of shares of this Series to elect two Directors shall, when vested,
continue until all dividends in default on the shares of this Series shall have
been paid in full and, when so paid, such right of the holders of shares of this
Series to elect two Directors separately as a class shall cease, subject,
always, to the same provisions for the vesting of such right of the holders of
the shares of this Series to elect two Directors in the case of future
dividend defaults. At any time when such right to elect such Directors
separately as a class shall have so vested, the Company may, and upon the
written request of the holders of record of not less than 20 percent of the
total number of shares of this Series and such other series of Preferred Stock
then outstanding shall, call a special meeting of the holders of such shares for
the election of Directors to fill such newly-created directorships. In the case
of such a written request, such special meeting shall be held within 90 days
after the delivery of such request and, in either case, at the place and upon
the notice provided by law and in the Bylaws of the Company, provided that the
Company shall not be required to call such a special meeting if such request is
received less than 120 days
- 16 -
<PAGE> 50
before the date fixed for the next ensuing annual meeting of stockholders of the
Company, in which case such newly-created directorships shall be filled by the
holders of such shares of this Series and such other series of Preferred Stock
at such meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (i) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (ii)
the termination of the right of the holders of shares of this Series and such
other series of Preferred Stock to vote for Directors pursuant to the preceding
paragraph. If, prior to the end of the term of any Director elected as
aforesaid, a vacancy in the office of such Director shall occur, such vacancy
shall be filled for the unexpired term by the appointment by the remaining
Director elected as aforesaid of a new Director for the unexpired term of such
former Director. If both Directors so elected by the holders of shares of this
Series and such other series of Preferred Stock shall cease to serve as
Directors before their terms shall expire, the holders of the shares of this
Series, together with the holders of such other series of Preferred Stock may,
at a special meeting of the holders called as provided above, elect successors
to hold office for the unexpired terms of such Directors whose places shall be
vacant.
(c) So long as any shares of this Series remain outstanding, the consent
of the holders of at least two-thirds thereof (voting separately as a class)
given in person or by proxy, at any annual meeting or special meeting called for
such purpose, shall be necessary to amend, alter or repeal any of the provisions
of the Restated Certificate of Incorporation of the Company which would
materially and adversely affect any right, preference, privilege or voting power
of the shares of this Series; provided, however, that any such amendment,
alteration or repeal, that would authorize, create or issue any additional
shares of Preferred Stock or any other shares of stock (whether or not already
authorized) ranking senior to, on a parity with or junior to the shares of this
Series as to dividends or on the distribution of assets upon liquidation,
dissolution or winding up of the affairs of the Company, shall be deemed not to
materially and adversely affect such right, preference, privilege or voting
power and shall not be subject to approval by the holders of shares of this
Series.
MASCOTECH, INC.
By:/s/ Richard A. Manoogian
-------------------------
Richard A. Manoogian
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ James Tompkins
- ------------------
James Tompkins
Assistant Secretary
- 17 -
<PAGE> 51
CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE 12% EXCHANGEABLE PREFERRED STOCK
OF MASCOTECH, INC.
-------------------------------------
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
-------------------------------------
MascoTech, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of
the State of Delaware and authority granted in the Restated
Certificate of Incorporation of the Corporation, the Board of
Directors of the Corporation, by resolution duly adopted on
December 12, 1990, authorized the issuance of a series of 775,000
shares of 12% Exchangeable Preferred Stock, par value $1.00 per
share (this "Series"), and established the voting powers,
designations, preferences and relative, participating and other
rights, and the qualifications, limitations or restrictions
thereof, and, on December 19, 1990, filed a Certificate of
Designations with respect to this Series in the office of the
Secretary of State of Delaware.
2. That no shares of such Series are outstanding and no shares
thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of the
Corporation, the following resolution was adopted:
"WHEREAS, by resolution of the Board of
Directors of the Corporation, dated
December 12, 1990, and by a Certificate
of Designations with respect to the 12%
Exchangeable Preferred Stock filed in
the office of the Secretary of State of
Delaware on December 19, 1990, this
Corporation authorized the issuance of a
series of 775,000 shares of 12% Exchangeable
Preferred Stock of the Corporation (this
"Series") and established the voting pow-
- 1 -
<PAGE> 52
ers, designations, preferences and
relative, participating and other
rights, and the qualifications,
limitations or restrictions thereof; and
WHEREAS, as of the date hereof no shares
of this Series are outstanding and no
shares of this Series will be issued;
and
WHEREAS, it is desirable that all
reference to this Series be eliminated
from the Corporation's Restated
Certificate of Incorporation, as
amended;
IT IS HEREBY RESOLVED, that the Chairman
of the Board, the President or any Vice
President and the Secretary or any
Assistant Secretary of the Corporation
are authorized and directed in the name
and on behalf of the Corporation to
execute and file a Certificate with the
Secretary of State of the State of
Delaware setting forth a copy of this
resolution whereupon all reference to
such Series shall be eliminated from the
Corporation's Restated Certificate of
Incorporation, as amended."
4. That, accordingly, all reference to the 12% Exchangeable Preferred
Stock, par value $1.00 per share, of the Corporation is eliminated from the
Corporation's Restated Certificate of Incorporation, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by an Assistant Secretary, as of this
1st day of October, 1993.
MASCOTECH, INC.
[Corporate Seal] By:/s/Timothy Wadhams
------------------
Attest:
By:/s/Barry J. Silverman
---------------------
Assistant Secretary
- 2 -
<PAGE> 53
CERTIFICATE OF DECREASE OF THE NUMBER OF SHARES
OF $1.20 CONVERTIBLE PREFERRED STOCK OF MASCOTECH, INC.
DESIGNATED AS $1.20 CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The Restated Certificate of Incorporation, as amended to date, of
MascoTech, Inc., a Delaware corporation (the "Corporation"), authorizes
275,000,000 shares of capital stock, which consists of 250,000,000 shares of
Common Stock and 25,000,000 shares of Preferred Stock.
The Corporation, pursuant to authority conferred on the Board of Directors
of the Corporation by its Restated Certificate of Incorporation and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, certifies that the Board of Directors of the Corporation,
at a meeting thereof duly called and held on September 14, 1993, at which a
quorum was present and acting throughout, duly adopted the following resolution:
"RESOLVED: That pursuant to the authority
expressly granted and vested in the Board of
Directors of the Corporation in accordance with
the provisions of its Restated Certificate of
Incorporation, the number of shares of the series
of the $1.20 Convertible Preferred Stock of the
Corporation designated as "$1.20 Convertible
Preferred Stock" is reduced from 11,500,000 shares
to 10,800,000 shares and that the Chairman of
the Board, the President or any Vice President and
the Secretary or any Assistant Secretary of the
Corporation are authorized and directed in the
name and on behalf of the Corporation to execute
and file a Certificate of Decrease with the
Secretary of State of the State of Delaware and to
take any other actions deemed necessary or
appropriate to effectuate this resolution."
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Decrease to be signed by a Vice President
and attested by an Assistant Secretary this 1st day of October, 1993.
MASCOTECH, INC.
ATTEST:
By: /s/ Timothy Wadhams
--------------------
/s/ Barry J. Silverman
- ----------------------
Assistant Secretary
[Corporate Seal]
<PAGE> 54
CERTIFICATE OF OWNERSHIP AND MERGER
OF
MASCOTECH BRAUN CO.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws of the
State of Delaware, certifies that:
FIRST: That this corporation was incorporated on the 15th day of March,
1984, pursuant to the General Corporation Law of the State of Delaware (the
"GCL").
SECOND: That this company owns all of the outstanding shares of stock
MascoTech Braun Co., a corporation incorporated on the 8th day of January, 1947,
pursuant to the Business Corporation Law of the State of Michigan.
THIRD: That this corporation, by the following resolutions of its Board of
Directors, duly adopted at a meeting held on the 22nd day of November, 1993,
determined to and approve the did merger into itself of said MascoTech Braun Co.
RESOLVED, that the company is authorized to execute a Certificate of
Ownership and Merger, Certificate of Merger and Agreement of Merger in
substantially the form attached hereto as Attachment A (collectively the
"Merger Agreement"), pursuant to which MascoTech Braun Co., a Michigan
corporation and wholly-owned subsidiary of the company, will be merged with
and into the company, and that the transactions contemplated in the Merger
Agreement are approved in all respects;
FURTHER RESOLVED, that the merger shall become effective on January 1,
1994;
FURTHER RESOLVED, that the officers of the company are authorized to
take any and all actions and to execute, deliver and file any and all
instruments, agreements, certificates, and other documents as such officer
may deem necessary or appropriate to effectuate the foregoing resolutions
or to carry out the purpose of intent thereof, the taking of any such
action and the execution, delivery or filing of any such instrument,
agreement, certificate or documents, as the case may be, conclusively to
evidence the due authorization thereof by the company.
FOURTH: This Certificate of Ownership and Merger shall be effective on
January 1, 1994.
<PAGE> 55
FIFTH: Anything herein or elsewhere to the contrary notwithstanding, this
merger may be amended or terminated and abandoned by the Board of Directors of
MascoTech, Inc. at any time prior to the date of filing the merger with the
Secretary of State.
MASCOTECH, INC.
By /s/Timothy Wadhams
-------------------
Timothy Wadhams
Vice President
ATTEST:
By /s/Eugene A. Gargaro, Jr.
--------------------------
Eugene A. Gargaro, Jr.
Secretary
- 2 -
<PAGE> 56
CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE 10% EXCHANGEABLE PREFERRED STOCK
OF MASCOTECH, INC.
----------------------------------------------
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
----------------------------------------------
MascoTech, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of
the State of Delaware and authority granted in the Restated
Certificate of Incorporation of the Corporation, the Board of
Directors of the Corporation, by resolution duly adopted on
January 27, 1993, authorized the issuance of a series of
1,000,000 shares of 10% Exchangeable Preferred Stock, par value
$1.00 per share (this "Series"), and established the voting
powers, designation, preferences and relative, participating and
other rights, and the qualifications, limitations or
restrictions thereof, and, on March 26, 1993, filed a
Certificate of Designations with respect to this Series in the
office of the Secretary of State of Delaware.
2. That no shares of such Series are outstanding and no shares
thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of
Directors of the Corporation, the following resolution was
adopted:
"WHEREAS, by resolution of the Board of
Directors of the Corporation, dated
January 27, 1993, and by a Certificate
of Designations with respect to the 10%
Exchangeable Preferred Stock filed in
the office of the Secretary of State of
Delaware on March 26, 1993, this
Corporation authorized the issuance of
a series of 1,000,000 shares of 10%
Exchangeable Preferred Stock of the
Corporation (this "Series") and
established the voting powers,
designations, preferences and relative,
participating and other rights, and the
qualifications, limitations or
restrictions thereof; and
<PAGE> 57
WHEREAS, as of the date hereof no shares
of this Series are outstanding and no
shares of this Series will be issued;
and
WHEREAS, it is desirable that all
reference to this Series be eliminated
from the Corporation's Restated
Certificate of Incorporation, as amended;
IT IS HEREBY RESOLVED, that the
Chairman of the Board, the President or
any Vice President and the Secretary or
any Assistant Secretary of the
Corporation are authorized and directed
in the name and on behalf of the
Corporation to execute and file a
Certificate with the Secretary of State
of the State of Delaware setting forth a
copy of this resolution whereupon all
reference to such Series shall be
eliminated from the Corporation's
Restated Certificate of Incorporation,
as amended."
4. That, accordingly, all reference to the 10% Exchangeable
Preferred Stock, par value $1.00 per share, of the Corporation is
eliminated from the Corporation's Restated Certificate of
Incorporation, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by the Secretary, as of this 15th day of
December, 1993.
MASCOTECH, INC.
[Corporate Seal] By: /s/ Timothy Wadhams
--------------------------
Vice President
Attest:
By: /s/ Eugene A. Gargaro, Jr.
---------------------------
Secretary
- 2 -
<PAGE> 58
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
TIEX METALS, INC.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws
of Delaware (the "company"),
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 15th day
of March, 1984, pursuant to the General Corporation Law of the State of
Delaware.
SECOND: That this corporation owns all of the out standing
shares of the stock of Tiex Metals, Inc., a corporation incorporated on the 7th
day of December, 1989, pursuant to the General Corporation Law of the State of
Delaware.
THIRD: That this corporation, by the following resolutions of
its Board of Directors, duly adopted at a meeting held on the 7th day of
December,1994, determined to and did merge into itself said Tiex Metals, Inc.
FOURTH: This Certificate of Ownership and Merger shall
be effective on January 1, 1995;
FIFTH: That this corporation, by the following resolutions of
its Board of Directors, determined to and did approve the merger of Tiex Metals,
Inc. into itself.
RESOLVED, that the company is authorized to execute a Certificate
of Ownership and Merger, Certificate of Merger and Agreement of Merger in
substantially the form attached hereto as Attachment A (collectively the
Merger Agreement), pursuant to which Tiex Metals, Inc., a Delaware
corporation and wholly owned subsidiary of the company, will be merged with
and into the company, and that the transactions contemplated in the Merger
Agreement are approved in all respects;
- 1 -
<PAGE> 59
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
MASCOTECH PRECISION HEADED PRODUCTS, INC.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws
of Delaware, (the "company"),
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 15th day of
March,,3 1984, pursuant to the General Corporation Law of the State of
Delaware.
SECOND: That this corporation owns all of the outstanding shares
of each class of the stock of MascoTech Precision Headed Products, Inc., a
corporation incorporated on the 8th day of December, 1958, pursuant to the
Business Corporation Act of the State of Michigan.
THIRD: That this corporation, by the following resolutions of its
Board of Directors, duly adopted at a meeting held on the 7th day of December,
1994,determined to and did merge into itself said MascoTech Precision Headed
Products, Inc.;
FOURTH: This Certificate of Ownership and Merger shall be
effective on January 1, 1995.
FIFTH: That this corporation by the following resolutions of its
Board of Directors, determined to and did approve the merger of MascoTech
Precision Headed Products, Inc. into itself.
RESOLVED, that the Company is authorized to execute a Certificate
of Ownership and Merger, Certificate of Merger and Agreement of Merger in
substantially the form attached hereto as Attachment A (collectively the
"Merger Agreement"), pursuant to which MascoTech Precision Headed Products,
Inc., a Michigan corporation and wholly owned subsidiary of the company,
will be merged with and into the company, and that the transactions
contemplated in the Merger Agreement are approved in all respects;
- 1 -
<PAGE> 60
FURTHER RESOLVED, that the merger shall become effective
on January 1, 1995;
FURTHER RESOLVED, that the officers of the company are authorized
to take any and all actions and to execute, deliver and file any and all
instruments, agreements, certificates, and other documents as such officer
may deem necessary or appropriate to effectuate the foregoing resolutions
or to carry out the purpose of intent thereof, the taking of any such
action and the execution, delivery or filing of any such instrument,
agreement, certificate or documents, as the case may be, conclusively or
documents, as the case may be, conclusively to evidence the due
authorization thereof by the company.
IN WITNESS WHEREOF, said MascoTech, Inc. has caused this Certificate to
be signed by Timothy Wadhams, its Vice President and attested by Eugene A.
Gargaro, Jr. its Secretary, this 1st day of December, 1994.
MASCOTECH, INC.
BY/s/ Timothy Wadhams
-------------------------
Timothy Wadhams
Vice President
ATTEST:
BY/s/ Eugene a. Gargaro, Jr.
--------------------------
Eugene A. Gargaro
Secretary
- 2 -
<PAGE> 61
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
"MASCOTECH, INC.
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Frank M. Hennessey, Chief Executive Officer, and Timothy Wadhams,
Senior Vice President and Assistant Secretary, of MascoTech, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("Delaware Law"), in accordance with the provisions thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Company, the Board of Directors on
February 17, 1998, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 250,000. Such number of shares of the Series A Preferred Stock may be
increased or decreased by resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
issuable upon exercise or conversion of outstanding rights, options or other
securities, issued by the Company.
<PAGE> 62
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable on February 15,
May 15, August 15 and November 15 of each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 and (b) subject
to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends or other cash distributions
and 1,000 times the aggregate per share amount of all non-cash dividends or
other noncash distributions (other than (i) a dividend payable in shares of
Common Stock, par value $1.00 per share, of the Company (the "Common Stock") or
(ii) a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise)), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. If the Company shall at any
time after February 17, 1998 (the "Rights Declaration Date") pay any dividend
on Common Stock payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series A
Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than as
described in clauses (i) and (ii) of the first sentence of paragraph (A));
provided that if no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to the
first Quarterly Dividend Payment Date, the period between the first issuance of
any share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
A-2
<PAGE> 63
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is on or before the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue and be cumulative from the date of issue of such shares,
or unless the date of issue is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and on or before such Quarterly Dividend Payment
Date, in which case dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall not be more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each share of
Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of stockholders of the Company. If the Company shall
at any time after the Rights Declaration Date pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) into
a greater or lesser number of shares of Common Stock, then in each such case
the number of votes per share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock shall
vote together as a single class on all matters submitted to a vote of
stockholders of the Company.
A-3
<PAGE> 64
(C) (i) If at any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock and any other series of
Preferred Stock then entitled as a class to elect directors, voting together as
a single class, irrespective of series, shall have the right to elect two
Directors.
(ii) During any default period, such voting right of the holders of Series
A Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of 10% in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of holders of Common Stock shall not affect the exercise by holders
of Preferred Stock of such voting right. At any meeting at which holders of,
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may then exist up
to two Directors or, if such right is exercised at an annual meeting, to elect
two Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling
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<PAGE> 65
of special meeting of holders of Preferred Stock, which meeting shall thereupon
be called by the President, a Vice President or the Secretary of the Company.
Notice of such meeting and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the Company. Such
meeting shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate not
less than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Company if applicable, shall continue to be entitled to
elect the whole number of Directors until the holders of Preferred Stock shall
have exercised their right to elect two Directors voting as a class, after the
exercise of which right (x) the Directors so elected by the holders of Preferred
Stock shall continue in office until their successors shall have been elected by
such holders or until the expiration of the default period, and (y) any vacancy
in the Board of Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected the
Director whose office shall have become vacant. References in this paragraph (C)
to Directors elected by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner
provided by law or in the certificate of incorporation or bylaws). Any vacancies
in the Board of Directors
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<PAGE> 66
effected by the provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining Directors.
(D) The Certificate of Incorporation of the Company shall not be amended
in any manner (whether by merger or otherwise) so as to adversely affect the
powers, preferences or special rights of the Series A Preferred Stock without
the affirmative vote of the holders of a majority of the outstanding shares of
Series A Preferred Stock, voting separately as a class.
(E) Except as otherwise provided herein, holders of Series A Preferred
Stock shall have no special voting rights, and their consent shall not be
required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
other parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
the Company may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of stock of the Company
ranking junior (as to dividends and upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either
A-6
<PAGE> 67
as to dividends or upon liquidation, dissolution or winding up) with the Series
A Preferred Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders of
Series A Preferred Stock and all such other parity stock upon such terms as
the Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for value any shares of stock of the Company unless
the Company could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under the General Corporation Law of the
State of Delaware.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $1.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment;
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of Common Stock, or (2) to the holders of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such other
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. If the
Company shall at any time after the Rights Declaration Date pay any dividend on
Common Stock payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount
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<PAGE> 68
to which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Company shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash or any other property, then in any such case the shares of Series A
Preferred Stock shall at the same time be similarly exchanged for or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount of stock, securities, cash
or any other property, as the case may be, into which or for which each share of
Common Stock is changed or exchanged. If the Company shall at any time after the
Rights Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Company's preferred stock except any series that specifically provides
that such series shall rank junior to or pari passu with the Series A Preferred
Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
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<PAGE> 69
IN WITNESS WHEREOF, we have executed and subscribed this Certificate this 23rd
day of February, 1998.
MASCOTECH, INC.
/s/Frank M. Hennessey
---------------------------------
Frank M. Hennessey
Chief Executive Officer
Attest:
/s/Timothy Wadhams
- ------------------
Timothy Wadhams
Senior Vice President
and Assistant Secretary
<PAGE> 70
CERTIFICATE OF ELIMINATION OF THE
$1.20 CONVERTIBLE PREFERRED STOCK
OF MASCOTECH, INC.
---------------------------------
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
---------------------------------
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), in accordance with the provisions
of Section 151(g) of the General Corporation Law of the State of Delaware,
hereby certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of the
State of Delaware and authority granted in the Restated Certificate of
Incorporation of the Corporation, the Board of Directors of the Corporation, by
resolution duly adopted on June 30, 1993, authorized the issuance of a series
of 11,500,000 shares of $1.20 Convertible Preferred Stock (this "Series"), and
established the voting powers, designations, preferences and relative,
participating and other rights, and the qualifications, limitations or
restrictions thereof, and, on July 7, 1993, filed a Certificate of Designations
with respect to this Series in the office of the Secretary of State of
Delaware.
2. That, pursuant to the authority expressly granted and vested in the
Board of Directors of the Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, the Board of Directors, by resolution
duly adopted on September 14, 1993, reduced the number of shares of this Series
from 11,500,000 shares to 10,800,000 shares, and, on October 8, 1993, filed a
Certificate of Decrease with the Secretary of State of the State of Delaware.
3. That no shares of such Series are outstanding and no shares thereof
will be issued.
4. That the Board of Directors of the Corporation has duly adopted
the following resolutions:
"WHEREAS, by resolution of the Board of Directors of
the MascoTech, Inc., dated June 30, 1993, and by a
Certificate of Designations with respect to $1.20
Convertible Preferred Stock filed in the office of the
Secretary of State of Delaware on July 7, 1993, this
Company authorized the issuance of a series of
11,500,000 shares of $1.20 Convertible Preferred Stock
of the Company (this "Series") and established the
voting powers, designations, preferences and relative,
participating and other rights, and the qualifications,
limitations or restrictions thereof; and
WHEREAS, by resolution of the Board of Directors of the
Company, dated September 14, 1993, and by Certificate of
Decrease with respect to this Series filed in the office
of the
<PAGE> 71
Secretary of State of the State of Delaware on October
8, 1993, the number of shares of this Series was reduced
to 10,800,000 shares; and
WHEREAS, as of the date hereof no shares of this Series
are outstanding and no shares of this Series will be
issued; and
WHEREAS, it is desirable that all reference to this
Series be eliminated from the Company's Restated
Certificate of Incorporation, as amended; and,
therefore
IT IS HEREBY RESOLVED, that the Chairman of the Board,
the President or any Vice President and the Secretary
or any Assistant Secretary of the Company are
authorized and directed in the name and on behalf of
the Company to execute and file a Certificate with the
Secretary of State of the State of Delaware setting
forth a copy of this resolution whereupon all reference
to such Series shall be eliminated from the Company's
Restated Certificate of Incorporation, as amended."
5. That, accordingly, all reference to the $1.20 Convertible Preferred
Stock of the Corporation is eliminated from the Corporation's Restated
Certificate of Incorporation, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by the Secretary, as of this 17th day
of February, 1998.
MASCOTECH, INC.
By:/s/Timothy Wadhams
Timothy Wadhams, Vice President
[Corporate Seal]
Attest:
By:/s/Eugene A. Gargaro
Eugene A. Gargaro, Secretary
<PAGE> 1
EXHIBIT 3.ii
BYLAWS
OF
MASCOTECH, INC.
(a Delaware corporation)
(As Amended February 17, 1998)
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of stockholders for
election of Directors and for the transaction of such other proper business,
notice of which was given in the notice of the meeting, shall be held on a date
(other than a legal holiday) in May or June of each year which shall be
designated by the Board of Directors, or on such other date to which a meeting
may be adjourned or re-scheduled, at such time and place within or without the
State of Delaware as shall be designated in the notice of such meeting.
Section 1.02. Special Meetings. Except as otherwise required by law,
special meetings of stockholders of the Corporation may be called only by the
Chairman of the Board, the Chief Executive Officer or a majority of the Board of
Directors, subject to the rights of holders of any one or more classes or series
of preferred stock or any other class of stock issued by the Corporation which
shall have the right, voting separately by class or series, to elect Directors.
Special meetings shall be held at such place within or without the State of
Delaware and at such hour as may be designated in the notice of such meeting and
the business transacted shall be confined to the object stated in the notice of
the meeting.
Section 1.03. Re-scheduling and Adjournment of Meetings. Notwithstanding
Sections 1.01 and 1.02 of this Article, the Board of Directors may postpone and
re-schedule any previously scheduled annual or special meeting of stockholders.
The person presiding at any meeting is empowered to adjourn the meeting at any
time after it has been convened.
Section 1.04. Notice of Stockholders' Meetings. The notice of all
meetings of stockholders shall be in writing and shall state the place, date
and hour of the meeting. The notice of an annual meeting shall state that the
meeting is called for the election of
<PAGE> 2
the Directors to be elected at such meeting and for the transaction of such
other business as is stated in the notice of the meeting. The notice of a
special meeting shall state the purpose or purposes for which the meeting is
called and shall also indicate that it is being issued by or at the direction
of the person or persons calling the meeting. If, at any meeting, action is
proposed to be taken which would, if taken, entitle stockholders fulfilling the
requirements of the General Corporation Law to receive payment for their
shares, the notice of such meeting shall include a statement to that effect.
A copy of the notice of each meeting of stockholders shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, to each stockholder entitled to vote at such meeting
at his record address or at such other address as he may have furnished by
request in writing to the Secretary of the Corporation. If a meeting is
adjourned to another time or place, and, if any announcement of the adjourned
time or place is made at the meeting, it shall not be necessary to give notice
of the adjourned meeting unless the adjournment is for more than thirty days or
the Directors, after adjournment, fix a new record date for the adjourned
meeting.
Notice of a meeting need not be given to any stockholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of a stockholder at a meeting, in person or by proxy,
without protesting prior to the meeting the lack of notice of such meeting shall
constitute a waiver of notice of the meeting.
Section 1.05 Business to be Considered. Only those matters stated to be
considered in the notice of the meeting, or of which written notice has been
given to the Corporation either by personal delivery to the Chairman of the
Board or the Secretary or by U.S. mail, postage prepaid, of a stockholder's
intent to bring the matter before the meeting, may be considered at the Annual
Meeting of Stockholders. Such notice shall be received no later than 120 days
in advance of the date on which the Corporation's proxy statement was released
to stockholders in connection with the previous year's Annual Meeting.
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<PAGE> 3
Only that business brought before a special meeting pursuant to the notice
of the meeting may be conducted or considered at such meeting.
Only such business brought before an annual or special meeting of
stockholders pursuant to these bylaws shall be eligible to be conducted or
considered at such meetings.
Section 1.06. Quorum. Except as otherwise required by law, by the
Certificate of Incorporation or by these bylaws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the Corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
Directors shall be elected by a plurality of the votes cast at a meeting
of stockholders by the holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election of Directors, is to be
taken by vote of the stockholders, except as otherwise required by the General
Corporation Law, the Certificate of Incorporation or these bylaws, it shall be
authorized by a majority of the votes cast on the proposal by the holders of
shares entitled to vote thereon at a meeting of stockholders.
Section 1.07. Inspectors at Stockholders' Meetings. The Board of
Directors, in advance of any stockholders' meeting, shall appoint one or more
inspectors to act at the meeting or any adjournment thereof and to make a
written report thereof. In case any inspector or alternate appointed is unable
to act, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to
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<PAGE> 4
execute the duties of inspector at such meeting with strict impartiality and ac-
cording to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, and shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
Section 1.08. Presiding Officer at Stockholders' Meetings. The Chairman
of the Board or in his absence the Chief Executive Officer shall preside at
Stockholders' Meetings as more particularly provided in Article III hereof. In
the event that both the Chairman and the Chief Executive Officer shall be absent
or otherwise unable to preside, then a majority of the Directors present at the
meeting shall appoint one of the Directors or some other appropriate person to
preside.
ARTICLE II
DIRECTORS
Section 2.01. Qualifications and Number; Term; Vacancies. A Director
need not be a stockholder, a citizen of the United States, or a resident of the
State of Delaware. The number of Directors constituting the entire Board shall
be not less than five nor more than twelve, the exact number of Directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The Directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. Directors shall be
nominated and serve for such terms, and vacancies shall be filled, as provided
in the
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<PAGE> 5
Certificate of Incorporation. Directors may be removed only for cause.
Section 2.02. Place and Time of Meetings of the Board. Regular and
special meetings of the Board shall be held at such places (within or without
the State of Delaware) and at such times as may be fixed by the Board or upon
call of the Chairman of the Board of the Corporation or of the executive
committee or of any two Directors, provided that the Board of Directors shall
hold at least four meetings a year.
Section 2.03. Quorum and Manner of Acting. A majority of the entire
Board of Directors shall constitute a quorum for the transaction of business,
but if there shall be less than a quorum at any meeting of the Board, a majority
of those present (or if only one be present, then that one) may adjourn the
meeting from time to time and the meeting may be held as adjourned without
further notice. Except as provided to the contrary by the General Corporation
Law, by the Certificate of Incorporation or by these bylaws, at all meetings of
Directors, a quorum being present, all matters shall be decided by the vote of a
majority of the Directors present at the time of the vote.
Section 2.04. Renumeration of Directors. In addition to reimbursement
for his reasonable expenses incurred in attending meetings or otherwise in
connection with his attention to the affairs of the Corporation, each Director
as such, and as a member of any committee of the Board, shall be entitled to
receive such remuneration as may be fixed from time to time by the Board.
Section 2.05. Notice of Meetings of the Board. Regular meetings of the
Board may be held without notice if the time and place of such meetings are
fixed by the Board. All regular meetings of the Board, the time and place of
which have not been fixed by the Board, and all special meetings of the Board
shall be held upon twenty-four hours' notice to the Directors given by letter or
telegram. No notice need specify the purpose of the meeting. Any requirement
of notice shall be effectively waived by any Director who signs a waiver of
notice before or after the meeting or who attends the meeting without protesting
(prior thereto or at its commencement) the lack of notice to him; provided,
however, that a regular meeting of the Board may be held without notice
immediately following the annual meeting of the
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<PAGE> 6
stockholders at the same place as such meeting was held, for the purpose of
electing officers and a Chairman of the Board for the ensuing year.
Section 2.06. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an Executive Committee and other committees to
serve at the pleasure of the Board. Each Committee shall consist of such number
of Directors as shall be specified by the Board in the resolution designating
the Committee. Except as set forth below, the Executive Committee shall have
all of the authority of the Board of Directors. Each other committee shall be
empowered to perform such functions, as may, by resolution, be delegated to it
by the Board.
The Board of Directors may designate one or more Directors as alternate
members of any such committee, who may replace any absent member or members at
any meetings of such committee. Vacancies in any committee, whether caused by
resignation or by increase in the number of members constituting said committee,
shall be filled by a majority of the entire Board of Directors. The Executive
Committee may fix its own quorum and elect its own Chairman. In the absence or
disqualification of any member of any such committee, the member or members
thereof present at any meeting and not disqualified from voting whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in place of any such absent or
disqualified member.
Section 2.07. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board, or of such committee as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
Section 3.01. Officers. The Board of Directors, at its first meeting
held after the annual meeting of stockholders in each year
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<PAGE> 7
may elect such officers as the Board of Directors may determine, and such
officers may include a Chairman of the Board, a Chief Executive Officer, one or
more Vice Chairman, one or more Presidents, one or more Vice Presidents, a
Secretary, a Treasurer and a Controller. In addition, the Board of Directors
may, in its discretion, also appoint from time to time, such other officers or
agents as it may deem proper. The Chairman of the Board shall be elected from
among the members of the Board of Directors.
Any two or more offices may be held by the same person.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor has
been elected and qualified; provided, however, that the Board of Directors may
remove any officer for cause or without cause at any time.
Section 3.02. Chairman of the Board. The Chairman of the Board shall
preside, unless he designates another to act in his stead, at all meetings of
the stockholders, the Board of Directors, and the Executive Committee and shall
be a member ex officio of all committees appointed by the Board of Directors,
except that the Board may, at his request, excuse him from membership on a
committee. The Chairman of the Board shall have the power on behalf of the
Corporation to enter into, execute, or deliver all contracts, instruments,
conveyances, or documents and to affix the corporate seal thereto. The Chairman
shall do and perform all acts and duties herein specified or which may be
assigned to him from time to time by the Board of Directors.
Section 3.03. Chief Executive Officer. The Chief Executive Officer of
the Corporation shall have general supervision of the affairs of the Corporation
subject to the control of the Board of Directors and the Chairman of the Board.
At the request of the Chairman of the Board or in his absence or inability to
act, the Chief Executive Officer shall preside at meetings of the stockholders.
The Chief Executive Officer shall also perform such other duties as may be
prescribed by the Board of Directors or the Executive Committee or the Chairman
of the Board.
Section 3.04. President(s). The President or Presidents shall perform
such duties as may be prescribed by the Board of
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<PAGE> 8
Directors or the Executive Committee or the Chairman of the Board or the Chief
Executive Officer.
Section 3.05. Secretary. The Secretary shall keep minutes of the
proceedings taken and the resolutions adopted at all meetings of the
stockholders, the Board of Directors and the Executive Committee, and shall give
due notice of the meetings of the stockholders, the Board of Directors and the
Executive Committee. He shall have charge of the seal and all books and papers
of the Corporation, and shall perform all duties incident to his office. In
case of the absence or disability of the Secretary, his duties and powers may be
exercised by such person as may be appointed by the Board of Directors or the
Executive Committee.
Section 3.06. Treasurer. The Treasurer shall receive all the monies
belonging to the Corporation, and shall forthwith deposit the same to the credit
of the Corporation in such financial institutions as may be selected by the
Board of Directors or the Executive Committee. He shall keep books of account
and vouchers for all monies disbursed. He shall also perform such other duties
as may be prescribed by the Board of Directors or Executive Committee, the
Chairman of the Board or the Chief Executive Officer, and, in case of the
absence or disability of the Treasurer, his duties and powers may be exercised
by such person as may be appointed by the Board of Directors or Executive
Committee.
Section 3.07. Controller. The Controller shall have custody of the
financial records of the Corporation and shall keep full and accurate books and
records of the financial transactions of the Corporation. He shall determine
the methods of accounting and reporting for all entities comprising the
Corporation, and shall be responsible for assuring adequate systems of internal
control. The Controller shall render to the Chairman of the Board of Directors,
the Chief Executive Officer and the Board of Directors, whenever they may
request it, a report on the financial condition of the Corporation and on the
results of its operations.
ARTICLE IV
CAPITAL STOCK
Section 4.01. Share Certificates. Each certificate representing shares
of the Corporation shall be in such form as may be
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<PAGE> 9
approved by the Board of Directors, and, when issued, shall contain upon the
face or back thereof the statements prescribed by the General Corporation Law
and by any other applicable provision of law. Each such certificate shall be
signed by the Chairman of the Board, the Chief Executive Officer, a President or
a Vice President and by the Secretary or Treasurer or an Assistant Secretary or
Assistant Treasurer. The signatures of said officers upon a certificate may be
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the Corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
Section 4.02. Lost, Destroyed or Stolen Certificates. No certificate
representing shares shall be issued in place of any certificate alleged to have
been lost, destroyed or stolen, except on production of evidence of such loss,
destruction or theft and, unless waived by the Board of Directors, on delivery
to the Corporation, if the Board of Directors shall so require, of a bond of
indemnity in such amount, upon such terms and secured by such surety as the
Board of Directors may in its discretion require.
Section 4.03. Transfer of Shares. The shares of stock of the Corporation
shall be transferable or assignable on the books of the Corporation only by the
person to whom may have been issued or his legal representative, in person or by
attorney, and only upon surrender of the certificate or certificates
representing such shares properly assigned. The person in whose name shares of
stock shall stand on the record of stockholders of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation.
Section 4.04. Record Dates. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other action, the Board may fix, in advance, a date as the record date of any
such determination of stockholders. Such date shall
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<PAGE> 10
not be more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action.
ARTICLE V
MISCELLANEOUS
Section 5.01. Signing of Instruments. All checks, drafts, notes,
acceptances, bills of exchange, and orders for the payment of money shall be
signed in such manner as may be provided and by such person or persons as may be
authorized from time to time by resolution of the Board of Directors or the
Executive Committee or these bylaws.
Section 5.02. Corporate Seal. The seal of the Corporation shall
consist of a metal disc having engraved thereon the words "MascoTech, Inc.,
Delaware."
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January of each year and shall end on the thirty-first
day of December following.
ARTICLE VI
AMENDMENTS OF BYLAWS
Section 6.01. Amendments. Except as provided to the contrary by the
General Corporation Law, by the Certificate of Incorporation or by these bylaws,
these bylaws may be amended or repealed at a meeting, (1) by vote of a majority
of the whole Board of Directors, provided that notices of the proposed
amendments shall have been sent to all the Directors not less than three days
before the meeting at which they are to be acted upon, or at any regular meeting
of the Directors by the unanimous vote of all the Directors present, or (2) by
the affirmative vote of the holders of at least 80% of the stock of the
Corporation generally entitled to vote, voting together as a single class.
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<PAGE> 1
EXHIBIT 4.b
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT ("Amendment") is entered into
and dated as of February 10, 1998 by and among MascoTech, Inc., a Delaware
corporation (together with its successors, "MascoTech"), TriMas Corporation, a
Delaware corporation (successor by merger to MascoTech Acquisition, Inc., a
Delaware corporation, and, together with its successors, "TriMas"), any
Borrowing Subsidiaries which are now or may hereafter become a party hereto
from time to time (each individually a "Borrowing Subsidiary" and collectively,
the "Borrowing Subsidiaries") (MascoTech, TriMas and each Borrowing Subsidiary
referred to individually as a "Borrower" and collectively as the "Borrowers"),
the Banks party hereto from time to time (collectively, the "Banks" and
individually, a "Bank"), The First National Bank of Chicago (the
"Administrative Agent") and Bank of America NT&SA and NationsBank, N.A. (the
"Syndication Agents", and collectively with the Administrative Agent, the
"Agents") under that certain Credit Agreement among the parties referred to
above dated as of January 16, 1998 (the "Credit Agreement"). Defined terms
used herein and not otherwise defined herein shall have the meaning given to
them in the Credit Agreement.
WHEREAS, the Borrowers, the Banks and the Agents have entered the
Credit Agreement; and
WHEREAS, the Borrowers, the Banks and the Agents have agreed to amend
the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrowers, the Banks and the Agents agree as
follows:
1. Amendment to the Credit Agreement. Effective as of February 10,
1998 and subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the Credit Agreement shall be and hereby is amended as
follows:
(a) The following definitions in Section 1.1 shall be amended:
(1) The definition of "Revolving Credit Commitment" shall be
amended to delete the reference to "Section 3.10" and substitute
therefor "Section 3.10(a)" at the end thereof.
(2) The definition of "Term Loan Commitment" shall be amended
to delete the word "and" before "(ii)" and to insert a comma in its
place, and to add "and (iii) as such amount may be reduced from time
to time pursuant to Section 3.10(b)" before the period at the end
thereof.
<PAGE> 2
(b) Section 3.2 is amended in its entirety as follows:
3.2 Term Loans. Subject to the terms and conditions set forth in
this Agreement, each Bank on and after the Closing Date severally and not
jointly agrees to make a term loan, in Dollars, to one or more of the
Borrowers in an aggregate amount not to exceed such Bank's Term Loan
Commitment (each individually, a "Term Loan" and, collectively, the "Term
Loans"). All Term Loans shall be made by the Banks on or after the Closing
Date simultaneously and pro rata, it being understood that no Bank shall be
responsible for any failure by any other Bank to perform its obligation to
make any Term Loan hereunder nor shall the Term Loan Commitment of any Bank
be increased or decreased as a result of any such failure, it being further
understood that all or part of the initial Term Loans extended to the
Borrowers on the Closing Date may be refinanced after the Closing Date with
Term Loans made to one or more of the Borrowers. Each Bank's Term Loan
Commitment shall be reinstated as of the date any Borrower requests a Term
Loan to refinance an existing Term Loan originally made to a different
Borrower.
(c) Section 3.7(a) is amended to delete the word "Revolving" in the
fifth line thereof.
(d) Section 3.8(b) is amended to add the following sentence at the
end thereof:
Upon any refinancing of a Term Loan, the applicable Borrower or
Borrowers shall execute a new Term Loan Note payable to each Bank in
an amount equal to the Term Loan Commitment of such Bank.
(e) Section 3.10 is amended (1) to add "(a)" prior to the first word
thereof and (2) to add a new Section 3.10(b) as follows:
Subject to Section 5.5, the Borrowers shall have the right at any time
and from time to time, upon one Business Day's prior written notice to the
Administrative Agent, to terminate or proportionately reduce the amount of
the Term Loan Commitments, provided, that any partial reduction of the
amount of the Term Loan Commitments shall be in the amount of $5,000,000 or
a multiple of $1,000,000 in excess thereof, provided that after giving
effect to any such voluntary reduction, the Dollar Equivalent of the
outstanding Term Loans shall not exceed the amount of the Term Loan
Commitments, as reduced from time to time. The Term Loan Commitments or
any portion thereof terminated or reduced pursuant to this Section may not
be reinstated. Upon receipt of any notice from the Borrowers pursuant to
this Section, the Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's share of any reduction of the Term
Loan Commitments. Each such notice shall be irrevocable by the Borrowers
once the Administrative Agent begins notifying any Bank of the contents
thereof.
2
<PAGE> 3
(f) Section 3.11 is amended (1) to delete words "The Revolving Credit
Commitments" in the first line and to substitute therefor "All Commitments" and
(2) to delete the last sentence thereof.
(g) Section 4.1(b)(i) is amended (1) to add the words "and the Term
Loan Commitments" after the words "Term Loans" in the third line thereto and
(2) to add the following sentence after the word "hereunder" in the fourth line
thereto:
The principal amount of the installments may be paid by any or all of the
Borrowers at their discretion provided that each of the quarterly
installments shall be in the aggregate amounts set forth below:
(h) Section 4.1(b)(i) is further amended to insert the words ",
except that the initial Term Loans extended to the Borrowers on the Closing
Date may be refinanced with Term Loans made subsequently to one or more of the
Borrowers" after the word "repaid" at the end thereof.
(i) The following Section 4.1(b)(ii) is added:
A repayment made within five (5) Business Days prior to the scheduled
installment date for such repayment, as set forth in Section 4.1(b)(i),
shall be applied to the installment due within such five (5) Business Days
and shall not be deemed a prepayment. Any such repayment shall be subject
to the provisions of Section 5.5.
(j) Section 4.2(g) is amended to add the words "(other than
repayments made within five (5) Business Days prior to the scheduled
installment date for such repayments as permitted by Section 4.1(b)(ii))" after
the words "Term Loans" in the first line thereof.
(k) Section 7.11(b) shall be amended to delete the words "and (v)" in
the last line thereof and to substitute the words ", (v) to refinance the Term
Loans made to the Borrowers on the Closing Date with Term Loans made to one or
more of the Borrowers and (vi)".
(l) Section 7.14 is amended to delete "(i)" in the third line
thereof.
(m) Section 11.1(a)(ii) is amended in its entirety as follows:
except as expressly authorized hereunder, amend, extend or terminate the
respective Commitment of any Bank (other than any amendment, extension or
termination of any Alternate Currency Commitment other than an extension of
any Alternate Currency Commitment beyond the Termination Date.)
(n) Section 11.6(c) is amended to insert the words "or special
purpose funding entity" after each appearance of the words "financial
institution(s)" in the first, second and third
3
<PAGE> 4
lines thereof and to insert the words "or special purpose funding entity's"
after the words "financial institution's" in the fourth line thereof.
(o) Section 11.6(d) is amended to delete the reference to "the
Borrowers" in the first line thereof and to substitute therefor the word
"MascoTech".
(p) Section 11.6(e) is amended to insert the word "it" after the word
"that" in the last line thereof.
(q) Section 11.6(g) is amended to insert the word "a" before the
words "new Revolving Note" and before the words "Term Note" in the tenth line
thereof.
(r) Section 11.7 is amended to insert the words "or special purpose
funding entity" after each appearance of the words "financial institution" in
the eighteenth and twentieth lines thereof and after the word "institutions" in
the twenty-third line thereof.
2. Conditions Precedent. This Amendment shall become effective as
of the date above written, if, and only if, the Administrative Agent has
received duly executed originals of this Amendment from the Borrowers and the
Required Banks.
3. Representations and Warranties of the Borrowers. The Borrowers
hereby represent and warrant as follows:
(a) This Amendment and the Credit Agreement, as amended hereby,
constitute legal, valid and binding obligations of the Borrowers and are
enforceable against the Borrowers in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Borrowers hereby
reaffirm all representations and warranties made in the Credit Agreement, and
to the extent the same are not amended hereby, agree that all such
representations and warranties shall be deemed to have been remade as of the
date of delivery of this Amendment, unless and to the extent that any such
representation and warranty is stated to relate solely to an earlier date, in
which case such representation and warranty shall be true and correct as of
such earlier date.
4. Reference to and Effect on the Credit Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Credit Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby.
(b) The Credit Agreement, as amended hereby, and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and confirmed.
4
<PAGE> 5
(c) Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Administrative Agent or the Banks, nor constitute a
waiver of any provision of the Credit Agreement or any other documents,
instruments and agreements executed and/or delivered in connection therewith.
5. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws (as opposed to the conflict of law
provisions) of the State of New York.
6. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
7. Counterparts. This Amendment may be executed by one or more of
the parties to the Amendment on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered on the date first above written.
MASCOTECH, INC., as a Borrower
By: /s/Timothy Wadhams
------------------------------
Name: Timothy Wadhams
Title: Vice President/Controller and
Treasurer
TRIMAS CORPORATION, as a Borrower
By: /s/Timothy Wadhams
------------------------------
Name: Timothy Wadhams
Title: Senior Vice President
and CFO
<PAGE> 7
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent and Bank
By: /s/Richard H. Huttenlocher
------------------------------
Name: Richard H. Huttenlocher
Title: First Vice President
BANK OF AMERICA NT&SA, as Syndication
Agent and Bank
By: /s/Lewis B. Fisher
------------------------------
Name: Lewis B. Fisher
Title: Managing Director
NATIONSBANK, N.A., as Syndication Agent
and Bank
By: /s/Wallace Harris Jr.
------------------------------
Name: Wallace Harris Jr.
Title: Vice President
BANKS: COMERICA BANK
By: /s/A.J. Anderson
------------------------------
Name: A.J. Anderson
Title: First Vice President
CIBC INC.
By: /s/Stephanie E. DeVane
------------------------------
Name: Stephanie E. DeVane
Title: Executive Director, CIBC
Oppenheimer Corp., as Agent
<PAGE> 8
FIRST UNION NATIONAL BANK
By: /s/Glenn F. Edwards
------------------------------
Name: Glenn F. Edwards
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/Thomas A. Crandell
------------------------------
Name: Thomas A. Crandell
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By:
------------------------------
Name: Peter F. Stack
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/Edward J. Dougherty III
------------------------------
Name: Edward J. Dougherty III
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/F.C.H. Ashby
------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan
Operations
<PAGE> 1
EXHIBIT 10.b
CORPORATE SERVICES AGREEMENT
This Agreement is made as of January 1, 1987 between Masco Corporation,
a Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco and Industries desire to amend and restate that certain
Corporate Services Agreement between them dated as of May 1, 1984 (the "1984
Corporate Services Agreement"); and
WHEREAS, Masco and Industries desire to terminate that certain Corporate
Services Agreement dated as of July 1, 1985 (the "1985 Corporate Services
Agreement") between Masco's wholly-owned subsidiary Masco Building Products
Corp., a Delaware corporation ("MBPC"), and NI Industries, Inc. a Delaware
corporation and currently an indirect wholly-owned subsidiary of Industries
("NI"); and
WHEREAS, Industries desires that Masco provide, and Masco is willing to
provide, either directly or through its subsidiaries, certain services and
facilities on the terms and conditions hereinafter set forth; and
WHEREAS, Masco desires that Industries provide, and Industries is
willing to provide, either directly or through NI, certain facilities on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree to amend and restate the 1984 Corporate
Services Agreement and take certain other action as follows:
<PAGE> 2
1. Masco shall provide to Industries and its subsidiaries corporate
support staff and administrative services of those personnel which Masco
maintains internally for its own officers, operating executives and business
operations and which Masco has heretofore provided to Industries' headquarters
and businesses pursuant to the 1984 Corporate Services Agreement, such as
accounting, legal, treasury, tax, corporate development, data processing,
research and development and human resources, provided that Masco shall not be
obligated to provide any services which would be in contravention of law.
Masco shall furnish such services at the reasonable request of Industries,
provided that Masco shall not be required to disrupt the provisions of
services for its own business purposes and shall not be obligated to retain
additional employees in order to accommodate Industries' requirements for
services other than in the ordinary course of business. In addition, Masco
shall provide to Industries headquarters office space and data processing
equipment in Masco's corporate office in Taylor, Michigan.
2. Industries shall provide to MBPC headquarters office space at the
corporate offices of NI in Long Beach, California, as heretofore provided
pursuant to the 1985 Corporate Services Agreement.
3. Industries will pay Masco a fee for the services and office space
provided under Section 1 hereof, irrespective of Industries' or its
subsidiaries' actual use thereof, equal to eight tenths of one percent of
Industries' consolidated annual net sales (pro rated for any partial year), as
shown in Industries' annual audited financial statements, less (in
consideration of the facilities provided by Industries to MBPC pursuant to
Section 2 hereof) the real estate related costs incurred by NI to maintain
headquarters office space for MBPC in NI's Long Beach, California
headquarters, including, but not limited to, depreciation expense,
maintenance, repairs and taxes related to such
2
<PAGE> 3
facility. Such fee shall be payable monthly in arrears within 30 days of the
end of each month, based upon Industries' consolidated unaudited net sales for
each month, with such timely adjustment as may be required following the
preparation of such audited financial statements. Industries shall be
responsible for the payment of fees and expenses for services rendered by
third parties retained by Masco on behalf of Industries and its subsidiaries.
In addition, Industries shall pay for material utilized and purchased
components in research and development projects, in accordance with Masco's
customary practice. The parties recognize that Industries may, in the future,
hire certain support and administrative staff to be employed solely by
Industries and incur other expenses for equipment, services or space, and to
the extent any such support and administrative staff are employed by
Industries or such expenses are incurred, Masco shall review the resulting
cost savings, if any, to Masco in providing support staff and administrative
services, equipment and headquarters office space hereunder and if, in Masco's
good faith judgment, such a cost savings has resulted, Masco shall reflect
such savings by a corresponding reduction in the subsequent fees to be paid
hereunder.
4. Additional services, facilities and other items made available by
Masco to its operating units which are not covered by the base fee will
similarly be made available to Industries except if the provision of such
services, facilities and other items would be in contravention of law. The
charges for additional services, facilities and other items shall be
determined form time to time by Masco, but Industries shall have no obligation
to purchase or use any such additional services, facilities or other times.
3
<PAGE> 4
5. The term of this agreement shall be from the date hereof through
December 31, 1988. The term shall be extended automatically for a period of
one year each January 1 thereafter, provided that Masco may give notice of
non-renewal not less than 90 days prior to any such January 1. This Agreement
may be terminated by Industries at any time, without cause, on 90 days written
notice, provided that such termination shall not relieve Industries of its
obligations accruing hereunder through the effective date of such termination.
6. In providing services, equipment and facilities hereunder, Masco
and Industries shall each have a duty to act, and to cause their respective
employees to act, in a reasonable and prudent manner. Subject to the
provisions of the Research and Development Undertaking attached as Annex A
hereto, neither Masco or its subsidiaries, nor any officer, Director, employee
or agent of Masco or its subsidiaries, nor Industries or its subsidiaries, nor
any officer, director, employee or agent of Industries or its subsidiaries,
shall be liable for any loss incurred in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance or
bad faith.
7. The selection of Masco employees to provide services hereunder
shall be determined by Masco and such employees shall be the employees of
Masco. All work performed hereunder by Masco shall be performed by Masco as
an independent contractor.
8. Masco and Industries shall take reasonable measures to keep
confidential all information concerning the other which is acquired in the
course of performing services hereunder and which is of a nature customarily
considered to be confidential by them. Research and development services
provided by Masco shall be subject to the additional provisions set forth in
Annex A hereto.
4
<PAGE> 5
9. This Agreement shall not be assigned by Industries without the
express written consent of Masco, except for an assignment by Industries to a
successor to substantially all of its business.
10. The 1985 Corporate Services Agreement is hereby terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By/s/Richard G. Mosteller By/s/Erwin H. Billig
----------------------------- ---------------------------------
Senior Vice President - President
Finance
The termination of the 1985 Corporate Services Agreement is accepted and
agreed to as of the day and year first above written.
NI INDUSTRIES, INC.
By/s/James Shaffer
---------------------------
5
<PAGE> 6
January 22, 1998
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Gentlemen:
As you are aware, MascoTech, Inc. completed its acquisition of TriMas
Corporation on Thursday, January 22, 1998 (the "Effective Date"). This will
confirm our agreement that the Corporate Services Agreement, dated as of
December 27, 1988, between Masco Corporation ("Masco") and TriMas Corporation
(the "TriMas Corporate Services Agreement"), is terminated effective as of the
end of business on the Effective Date, except with respect to rights and
obligations of the parties thereto which have accrued as a result of services
rendered thereunder prior to the Effective Date. Furthermore, Masco agrees
that the period for which a fee is payable under the TriMas Corporate Services
Agreement will terminate on the earlier of (i) the Effective Date, or (ii) the
date immediately preceding the date that the consolidated net sales of TriMas
are included in the consolidated net sales of MascoTech, Inc. After such
date, Masco will be compensated for work performed for the TriMas companies
under Masco's Corporate Services Agreement with MascoTech (the "MascoTech
Corporate Services Agreement"). Finally, Masco agrees that, in calculating
the fee payable under the MascoTech Corporate Services Agreement, MascoTech is
entitled to the credits that were historically permitted to TriMas under the
TriMas Corporate Services Agreement of up to $250,000 per year for occupancy
costs at TriMas' Ann Arbor headquarters (consisting of rent, utilities,
maintenance and property taxes), office supplies and postage costs at TriMas'
Ann Arbor headquarters and the credit historically provided for the Norris
management services that had been discontinued by you when Masco Building
Products shut down its operations.
If the foregoing is your understanding of our Agreement, please
acknowledge by signing below on the attached copy of this letter, and
returning same to the undersigned.
Very truly yours,
MASCOTECH, INC.
By/s/David B. Liner
--------------------------
The foregoing is acknowledged
and agreed to:
MASCO CORPORATION
By/s/John R. Leekley
-------------------------
<PAGE> 1
EXHIBIT 10.g
CORPORATE OPPORTUNITIES AGREEMENT
This Agreement is made as of December 27, 1988 among Masco Corporation, a
Delaware corporation ("Masco"), Masco Industries, Inc., a Delaware corporation
("Industries") and TriMas Corporation, a Delaware corporation ("TriMas").
WHEREAS, Industries has agreed, pursuant to an Acquisition and Subscription
Agreement (the "Acquisition Agreement") dated as of November 7, 1988, to
transfer certain businesses and cash to TriMas in exchange for an equity
interest in TriMas and TriMas subordinated debentures;
WHEREAS, Masco has agreed, pursuant to the Acquisition Agreement, to
contribute cash to TriMas in exchange for shares of TriMas common stock, and
proposes thereafter, pursuant to the Acquisition Agreement, to distribute as a
dividend (the "Distribution") a portion of its shares of TriMas common stock to
its stockholders, as a result of which TriMas will become a publicly held
corporation with approximately 48% of its outstanding common stock owned by
Industries and approximately 19% owned by Masco;
WHEREAS, following the consummation of the transactions set forth in the
Acquisition Agreement and the Distribution, certain of the officers and
Directors of Masco and Industries may also serve as officers and Directors of
TriMas and, pursuant to the Corporate
<PAGE> 2
Services Agreement dated as of the date hereof (the "Corporate Services
Agreement") between Masco and TriMas, certain of the corporate staff of Masco
may perform or assist TriMas in the performance of a number of corporate staff
and administrative services, including corporate development functions; and
WHEREAS, in light of the relationships among Masco, Industries and TriMas,
the parties wish to reduce the potential for conflicts of interest, or the
appearance of conflicts of interest, created by such relationships and to
emphasize the development and growth of their several businesses rather than the
development and growth of competitive product lines;
NOW, THEREFORE, the parties agree as follows:
1. Business Opportunities.
(a) Neither TriMas nor any of its subsidiaries shall undertake any
Third-Party Transaction (as hereinafter defined) which comes to the
attention of TriMas, Industries or Masco or any of their respective
subsidiaries if a major portion of the business of the Third-Party
Transaction entity involves: (i) residential or commercial building or home
improvement products or services (excluding water supply valves which are
not of the type currently manufactured or sold by Masco or its subsidiaries
and which are installed on main water supply
-2-
<PAGE> 3
lines), unless the opportunity to undertake such Third-Party Transaction
has been presented to Masco and Industries and thereafter both decline or
fail, within a reasonable period, to conclude such transaction, (ii) home
furnishings products or services, unless the opportunity to undertake such
Third-Party Transaction has been presented to Masco and thereafter Masco
declines or fails, within a reasonable period, to conclude such
transaction, or (iii) automotive products (other than fasteners), unless
the opportunity to undertake such Third-Party Transaction has been
presented to Industries and thereafter Industries declines or fails, within
a reasonable period, to conclude such transaction.
(b) Neither TriMas nor any of its subsidiaries shall otherwise
establish a business, the acquisition of which would be subject to the
provisions of paragraph (a) above, without the consent of Masco, Industries
or both Masco and Industries, as the case may be.
2. Third-Party Transaction. For purposes of this Agreement, a
"Third-Party Transaction" shall mean any acquisition, merger, consolidation or
joint venture with, investment (other than investments solely in marketable
securities) in or any similar transaction involving a party other than TriMas,
Masco or
-3-
<PAGE> 4
Industries, 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.
3. Prior Agreement. Nothing herein shall alter the Corporate
Opportunities Agreement dated as of May 1, 1984 between Masco and Industries,
which shall remain in full force and effect in accordance with its terms.
4. Duration. This Agreement shall continue in effect until the date
which is two years after the termination of the Corporate Services Agreement and
will thereafter be automatically renewed for one-year periods, subjects to the
right of TriMas, Masco or Industries to terminate this Agreement by written
notice which is received by the other parties at least 90 days prior to any
such scheduled renewal date.
5. Assignability. This Agreement shall not be assigned by any party,
except to a successor to substantially all of the business of a party, without
the express written consent of the other parties.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
MASCO CORPORATION TRIMAS CORPORATION
By /s/ Richard G. Mosteller By /s/ Brian P. Campbell
------------------------- --------------------------
Senior Vice President - President
Finance and Assistant Secretary
MASCO INDUSTRIES, INC.
By /s/ Erwin H. Billig
-------------------------
President
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<PAGE> 1
EXHIBIT 10.i
MASCOTECH, INC.
1991 LONG TERM STOCK INCENTIVE PLAN
(Amended and Restated April 23, 1997)
SECTION 1. PURPOSES
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan")
are to encourage selected employees of and consultants to MascoTech, Inc. (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's
future success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest,
whether more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of
not less than two directors, each of whom is a "non-employee director" within
the meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6 (a) of the Plan that is intended to meet the requirements of Section 422 of
the Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(k) "Other Stock-Based Award" shall mean any right granted under
Section 6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the
Company or any Affiliate designated to be granted an Award under the Plan.
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(m) "Performance Award" shall mean any right granted under Section 6(d)
of the Plan.
(n) "Restricted Period" shall mean the period of time during which
Awards of Restricted Stock or Restricted Stock Units are subject to
restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c)
of the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act, or any successor rule or
regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules
and regulations promulgated by the Securities and Exchange Commission
thereunder, or any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(c) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
SECTION 3. ADMINISTRATION
The Committee shall administer the Plan, and subject to the terms of
the Plan and applicable law, the Committee's authority shall include without
limitation the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and
any payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof
or of the Committee;
(vii) determine the methods or procedures for establishing the
fair market value of any property (including, without limitation, any
Shares or other securities) transferred, exchanged, given or received
with respect to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
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(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards
and any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for
the administration of the Plan;
(xii) decide all questions and settle all controversies and
disputes which may arise in connection with the Plan, Award Agreements
and Awards;
(xiii) delegate to directors of the Company the authority to
designate Participants and grant Awards, and to amend Awards granted
to Participants;
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and Awards.
All designations, determinations, interpretations and other decisions
under or with respect to the Plan, Award Agreements or any Award shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons, including the Company,
Affiliates, Participants, beneficiaries of Awards and stockholders of the
Company.
SECTION 4. SHARES AVAILABLE FOR AWARDS
(a) Shares Available. Subject to adjustment as provided in Section
4(c):
(i) Initial Authorization. There shall be 6,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above,
up to 6,000,000 Shares acquired by the Company subsequent to the 1997
Annual Meeting of Stockholders as full or partial payment for the
exercise price for an Option or any other stock option granted by the
Company, or acquired by the Company, in open market transactions or
otherwise, in connection with the Plan or any Award hereunder or any
other employee stock option or restricted stock issued by the Company
may thereafter be included in the Shares available for Awards. If any
Shares covered by an Award or to which an Award relates are forfeited,
or if an Award expires, terminates or is cancelled, then the Shares
covered by such Award, or to which such Award relates, or the number
of Shares otherwise counted against the aggregate number of Shares
available under the Plan by reason of such Award, to the extent of any
such forfeiture, expiration, termination or cancellation, may
thereafter be available for further granting of Awards and included as
acquired Shares for purposes of the preceding sentence.
(iii) Shares Under Prior Plans. In addition to the amounts set
forth above, shares remaining available for issuance upon any
termination of authority to make further awards under both the
Company's 1984 Restricted Stock Incentive Plan and its 1984 Stock
Option Plan shall thereafter be available for issuance hereunder.
(iv) Accounting for Awards. For purposes of this Section 4,
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(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such
Award, or to which such Award relates, shall be counted on the
date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan to the extent
determinable on such date and insofar as the number of Shares is
not then determinable under procedures adopted by the Committee
consistent with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares available
for granting Awards under the Plan in such amount and at such
time as the Committee shall determine under procedures adopted by
the Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are
substituted for, other Awards or restricted stock awards or stock
options granted under any other plan of the Company may be counted or
not counted under procedures adopted by the Committee in order to avoid
double counting. Any Shares that are delivered by the Company or its
Affiliates, and any Awards that are granted by, or become obligations
of, the Company, through the assumption by the Company of, or in
substitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case
of Awards granted to Participants who are directors or officers of the
Company for purposes of Section 16, be counted against the Shares
available for Granting Awards under the Plan.
(v) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized but unissued Shares or of Shares reacquired by the
Company, including but not limited to Shares purchased on the open
market.
(b) Individual Stock-Based Awards. Subject to adjustment as provided
in Section 4(c), no Participant may receive Options or Stock Appreciation
Rights under the Plan in any calendar year that relate to more than 1,000,000
Shares in the aggregate; provided, however, that such number may be increased
with respect to any Participant by any Shares available for grant to such
Participant in accordance with this Paragraph 4(b) in any prior years that were
not granted in such prior year beginning on or after January 1, 1997. No
provision of this Paragraph 4(b) shall be construed as limiting the amount of
any other stock-based or cash-based Award which may be granted to any
Participant.
(c) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company or extraordinary transaction or event
which affects the Shares, then the Committee shall have the authority to make
such adjustment, if any, in such manner as it deems appropriate, in (i) the
number and type of Shares (or other securities or property) which thereafter
may be made the subject of Awards, (ii) outstanding Awards including without
limitation the number and type of Shares (or other securities or property)
subject thereto, and (iii) the grant, purchase or exercise price with respect
to outstanding Awards and, if deemed appropriate, make provision for cash
payments to the holders of outstanding Awards; provided, however, that the
number of Shares subject to any Award denominated in Shares shall always be a
whole number.
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SECTION 5. ELIGIBILITY
Any employee of or consultant to the Company or any Affiliate,
including any officer of the Company (who may also be a director, any person
who serves only as a director of the Company and any consultant to the Company
or an Affiliate who is also a director of the Company and who is not rendering
services pursuant to a written agreement with the entity in question), as may
be selected from time to time by the Committee or by the directors to whom
authority may be delegated pursuant to Section 3 hereof in its or their
discretion, is eligible to be designated a Participant.
SECTION 6. AWARDS
(a) Options. The Committee is authorized to grant Options to
Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option, provided,
however, that such price shall not be less than 100% of the fair
market value of the Shares underlying such Option on the date of
grant;
(B) the term of each Option; and
(C) the time or times at which an Option may be exercised, in
whole or in part, the method or methods by which and the form or
forms (including, without limitation, cash, Shares, other Awards
or other property, or any combination thereof, having a fair
market value on the exercise date equal to the relevant exercise
price) in which payment of the exercise price with respect
thereto may be made or deemed to have been made. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code, or any
successor provision thereto, and any regulations promulgated
thereunder.
Subject to the terms of the Plan, the Committee may impose such
conditions or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the
Committee, of exercise of the Option and the number of Shares
elected for exercise, such notice to be accompanied by such
instruments or documents as may be required by the Committee, and
shall tender the purchase price of the Shares elected for
exercise.
(B) At the time of exercise of an Option payment in full in
cash or in Shares (that have been held by the Participant for at
least six months) or any combination thereof, at the option of
the Participant, shall be made for all Shares then being
purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
(I) if the class of Shares at the time is listed upon any
stock exchange, the Shares to be issued have been listed, or
authorized to be added to the list upon official notice of
issuance, upon such exchange, and
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(II) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company
may require from the Participant such investment representation
or such agreement, if any, as the Company's counsel may consider
necessary in order to comply with the Securities Act of 1933 as
then in effect, and may require that the Participant agree that
any sale of the Shares will be made only in such manner as shall
be in accordance with law and that the Participant will notify
the Company of any intent to make any disposition of the Shares
whether by sale, gift or otherwise. The Participant shall take
any action reasonably requested by the Company in such
connection. A Participant shall have the rights of a stockholder
only as and when Shares have been actually issued to the
Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer an Affiliate)
other than the Participant's death, the Participant may
thereafter exercise the Option as provided below, except that the
Committee may terminate the unexercised portion of the Option
concurrently with or at any time following termination of the
employment or consulting arrangement (including termination of
employment upon a change of status from employee to consultant)
if it shall determine that the Participant has engaged in any
activity detrimental to the interests of the Company or an
Affiliate. If such termination is voluntary on the part of the
Participant, the option may be exercised only within ten days
after the date of termination. If such termination is involuntary
on the part of the Participant, if an employee retires on or
after normal retirement date or if the employment or consulting
relationship is terminated by reason of permanent and total
disability, the Option may be exercised within three months after
the date of termination or retirement. For purposes of this
Paragraph (D), a Participant's employment or consulting
arrangement shall not be considered terminated (i) in the case
of approved sick leave or other bona fide leave of absence (not
to exceed one year), (ii) in the case of a transfer of employment
or the consulting arrangement among the Company and Affiliates,
or (iii) by virtue of a change of status from employee to
consultant or from consultant to employee, except as provided
above.
(E) If a Participant dies at a time when entitled to
exercise an Option, then at any time or times within one year
after death such Option may be exercised, as to all or any of the
Shares which the Participant was entitled to purchase immediately
prior to death. The Company may decline to deliver Shares to a
designated beneficiary until it receives indemnity against claims
of third parties satisfactory to the Company. Except as so
exercised such Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent such
Option was exercisable at the date of termination of employment
or the consulting arrangement, and an Option may not be exercised
at a time when the Option would not have been exercisable had the
employment or consulting arrangement continued.
(iii) Restoration Options. The Committee may grant a Participant
the right to receive a restoration Option with respect to an Option or any other
option granted by the Company. Unless the Committee shall otherwise determine,
a restoration Option shall provide that the underlying option must be exercised
while the Participant is an employee of or consultant to the Company or an
Affiliate and the number of Shares which are subject to a restoration Option
shall not exceed the number of whole Shares exchanged in payment of the original
option.
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(b) Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the fair
market value of one Share on the date of exercise or, if the Committee shall so
determine in the case of any such right other than one related to any Incentive
Stock Option, at any time during a specified period before or after the date of
exercise over (ii) the grant price of the right as specified by the Committee.
Subject to the terms of the Plan, the Committee shall determine the grant price,
term, methods of exercise and settlement and any other terms and conditions of
any Stock Ap- preciation Right and may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to
Participants Awards of Restricted Stock, which shall consist of Shares,
and Restricted Stock Units which shall give the Participant the right to
receive cash, other securities, other Awards or other property, in each
case subject to the termination of the Restricted Period determined by
the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of
the Plan, Awards of Restricted Stock and Restricted Stock Units shall
have such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise. Unless the Committee shall
otherwise determine, any Shares or other securities distributed with
respect to Restricted Stock or which a Participant is otherwise entitled
to receive by reason of such Shares shall be subject to the restrictions
contained in the applicable Award Agreement. Subject to the
aforementioned restrictions and the provisions of the Plan, Participants
shall have all of the rights of a stockholder with respect to Shares of
Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
stock certificates.
(iv) Forfeiture. Except as otherwise determined by the Committee:
(A) If the employment of or consulting arrangement with
a Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate),
other than the Participant's death or permanent and total
disability or, in the case of an employee, retirement on or after
normal retirement date, all Shares of Restricted Stock theretofore
awarded to the Participant which are still subject to restrictions
shall upon such termination of employment or the consulting
relationship be forfeited and transferred back to the Company.
Notwithstanding the foregoing or Paragraph (C) below, if a
Participant continues to hold an Award of Restricted Stock
following termination of the employment or consulting arrangement
(including retirement and termination of employment upon a change
of status from employee to consultant), the Shares of Restricted
Stock which remain subject to restrictions shall nonetheless be
forfeited and transferred back to the Company if the Committee at
any time thereafter determines that the Participant has engaged in
any activity detrimental to the interests of the Company or an
Affiliate. For purposes of this Paragraph (A), a Participant's
employment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona
fide leave of absence (not to exceed one year), (ii) in the case
of a transfer of employment or the consulting arrangement among
the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
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(B) If a Participant ceases to be employed or retained
by the Company or an Affiliate by reason of death or permanent and
total disability or if following retirement a Participant
continues to have rights under an Award of Restricted Stock and
thereafter dies, the restrictions contained in the Award shall
lapse with respect to such Restricted Stock.
(C) If an employee ceases to be employed by the Company
or an Affiliate by reason of retirement on or after normal
retirement date, the restrictions contained in the Award of
Restricted Stock shall continue to lapse in the same manner as
though employment had not terminated.
(D) At the expiration of the Restricted Period as to
Shares covered by an Award of Restricted Stock, the Company shall
deliver the Shares as to which the Restricted Period has expired,
as follows:
(1) if an assignment to a trust has been made in
accordance with Section 6(g)(iv)(B)(2)(c), to such
trust; or
(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in form
approved by the Company, to the beneficiary so
designated; or
(3) in all other cases, to the Participant or the
legal representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan, a
Performance Award granted under the Plan (i) may be denominated or payable in
cash, Shares (including, without limitation, Restricted Stock), other
securities, other Awards, or other property and (ii) shall confer on the holder
thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Award, in whole or in part, upon
the achievement of such performance goals during such performance periods as the
Committee shall establish. Subject to the terms of the Plan, the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted, the amount of
any payment or transfer to be made pursuant to any Performance Award and other
terms and conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to receive
payments equivalent to dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have such terms
and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan,
the Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof, as the Committee shall determine.
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(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may,
in the discretion of the Committee, be granted either alone or in
addition to, in tandem with or in substitution for any other Award or
any award granted under any other plan of the Company or any
Affiliate. Awards granted in addition to or in tandem with other Awards
or in addition to or in tandem with awards granted under another plan of
the Company or any Affiliate, may be granted either at the same time as
or at a different time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no
Award or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A)
above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee;
(b) by will or the applicable laws of descent
and distribution to the personal representative,
executor or administrator of the Participant's
estate; or
(c) to a revocable grantor trust established by
the Participant for the sole benefit of the
Participant during the Participant's life, and under
the terms of which the Participant is and remains the
sole trustee until death or physical or mental
incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory
to the Committee, and the Participant shall deliver
to the Committee a true copy of the agreement or
other document evidencing such trust. If in the
judgment of the Committee the trust to which a
Participant may attempt to assign rights under such
an Award does not meet the criteria of a trust to
which an assignment is permitted by the terms hereof,
or if after assignment, because of amendment, by
force of law or any other reason such trust no longer
meets such criteria, such attempted assignment shall
be void and may be disregarded by the Committee and
the Company and all rights to any such Options shall
revert to and remain solely in the Participant.
Notwithstanding a qualified assignment, the
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Participant, and not the trust to which rights under
such an Option may be assigned, for the purpose of
determining compensation arising by reason of the
Option hall continue to be considered an employee or
consultant, as the case may be, of the Company or an
Affiliate, but such trust and the Participant shall
be bound by all of the terms and conditions of the
Award Agreement and this Plan. Shares issued in the
name of and delivered to such trust shall be
conclusively considered issuance and delivery to the
Participant.
(2) A Participant may assign or transfer rights
under an Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the Participant
in writing on a form approved by the Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor
or administrator of the Participant's estate; or
(c) to a revocable grantor trust established by the
Participant for the sole benefit of the Participant
during the Participant's life, and under the terms of
which the Participant is and remains the sole trustee
until death or physical or mental incapacity. Such
assignment shall be effected by a written instrument
in form and content satisfactory to the Committee,
and the Participant shall deliver to the Committee a
true copy of the agreement or other document
evidencing such trust. If in the judgment of the
Committee the trust to which a Participant may at-
tempt to assign rights under such an Award does not
meet the criteria of a trust to which an assignment
is permitted by the terms hereof, or if after
assignment, because of amendment, by force of law
or any other reason such trust no longer meets such
criteria, such attempted assignment shall be void and
may be disregarded by the Committee and the Company
and all rights to any such Awards shall revert to and
remain solely in the Participant. Notwithstanding a
qualified assignment, the Participant, and not the
trust to which rights under such an Award may be
assigned, for the purpose of determining compensation
arising by reason of the Award shall continue to be
considered an employee or consultant, as the case may
be, of the Company or an Affiliate, but such trust
and the Participant shall be bound by all of the
terms and conditions of the Award Agreement and this
Plan. Shares issued in the name of and delivered to
such trust shall be conclusively considered issuance
and delivery to the Participant.
(3) The Committee shall not permit directors or
officers of the Company for purposes of Section 16 to
transfer or assign Awards except as permitted under Rule
16b-3.
(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or other
instrument of transfer, copies of trust agreements and any other
documents delivered to them by or on behalf of the Participant which
they believe genuine and any action taken by them in reliance thereon
shall be conclusive and binding upon the Participant, the personal
representatives of the Participant's estate and all persons asserting a
claim based on an Award. The delivery by a Participant of a beneficiary
designation, or an assignment of rights under an Award as permitted
hereunder, shall constitute the Participant's irrevocable undertaking to
hold the Committee, the Company and its officers, agents and employees
harmless against claims, including any cost or expense incurred in
defending against claims, of any person (including the Participant)
which may be asserted or alleged to be based on an Award subject to a
beneficiary
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designation or an assignment. In addition, the Company may decline
to deliver Shares to a beneficiary until it receives indemnity against
claims of third parties satisfactory to the Company.
(v) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other
securities are then listed and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(vi) Change in Control. (A) Notwithstanding any of the
provisions of this Plan or instruments evidencing Awards granted
hereunder, upon a Change in Control of the Company (as hereinafter
defined) the vesting of all rights of Participants under outstanding
Awards shall be accelerated and all restrictions thereon shall terminate
in order that Participants may fully realize the benefits thereunder.
Such acceleration shall include, without limitation, the immediate
exercisability in full of all Options and the termination of
restrictions on Restricted Stock and Restricted Stock Units. Further, in
addition to the Committee's authority set forth in Section 4(c), the
Committee, as constituted before such Change in Control, is authorized,
and has sole discretion, as to any Award, either at the time such Award
is made hereunder or any time thereafter, to take any one or more of the
following actions: (i) provide for the purchase of any such Award, upon
the Participant's request, for an amount of cash equal to the amount
that could have been attained upon the exercise of such Award or
realization of the Participant's rights had such Award been currently
exercisable or payable; (ii) make such adjustment to any such Award then
outstanding as the Committee deems appropriate to reflect such Change in
Control; and (iii) cause any such Award then outstanding to be assumed,
or new rights sub- stituted therefore, by the acquiring or surviving
after such Change in Control.
(B) With respect to any Award granted hereunder prior to
December 6, 1995, a Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, other than pursuant to
a transaction or agreement previously approved by the Board of Directors
of the Company, directly or indirectly purchases or otherwise becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
or has the right to acquire such beneficial ownership (whether or not
such right is exercisable immediately, with the passage of time, or
subject to any condition) of voting securities representing 25 percent
or more of the combined voting power of all outstanding voting
securities of (A) the Company or (B) Masco Corporation, a Delaware
corporation ("Masco"); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period constitute
the Company's or Masco's Board of Directors, and any new directors
whose election by such Board or nomination for election by stockholders
was approved by a vote of at least two-thirds of the members of such
Board who were either directors on such Board at the beginning of the
period or whose election or nomination for election as directors was
previously so approved, for any reason cease to constitute at least a
majority of the members thereof.
(C) Notwithstanding the provisions of subparagraph (B), with
respect to Awards granted hereunder on or after December 6, 1995, a
Change in Control shall occur only if the event described in this
subparagraph (C) shall have occurred. With respect to any other Award
granted prior thereto, a Change in Control shall occur if any of
the events described in subparagraphs (B) or (C) shall have occurred,
unless the holder of any such Award shall have consented to the
application of this subparagraph (C) in lieu of the foregoing
subparagraph (B). A Change in Control for purposes of this
subparagraph (C) shall occur if, during any period of twenty-four
consecutive calendar months, the individuals who at the beginning of
such period
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constitute the Company's Board of Directors, and any new directors (other than
Excluded Directors, as hereinafter defined), whose election by such Board or
nomination for election by stockholders was approved by a vote of at least
two-thirds of the members of such Board who were either directors on such Board
at the beginning of the period or whose election or nomination for election as
directors was previously so approved, for any reason cease to constitute at
least a majority of the members thereof. For purposes hereof, "Excluded
Directors" are directors whose election by the Board or approval by the Board
for stockholder election occurred within one year of any "person" or "group of
persons", as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act, commencing a tender offer for, or becoming the beneficial owner of, voting
securities representing 25 percent or more of the combined voting power of all
outstanding voting securities of the Company, other than pursuant to a tender
offer approved by the Board prior to its commencement or pursuant to stock
acquisitions approved by the Board prior to their representing 25 percent or
more of such combined voting power.
(D) (1) In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company to or for the
benefit of a Participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, other than any
payment pursuant to this subparagraph (D) (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
such Participant shall be entitled to receive from the Company, within 15 days
following the determination described in (2) below, an additional payment
("Excise Tax Adjustment Payment") in an amount such that after payment by such
Participant of all applicable Federal, state and local taxes (computed at the
maximum marginal rates and including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, such Participant retains an amount of the Excise Tax
Adjustment Payment equal to the Excise Tax imposed upon the Payments.
(2) All determinations required to be made under this Section
6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is required and
the amount of such Excise Tax Adjustment Payment, shall be made by Coopers &
Lybrand L.L.P., or such other national accounting firm as the Company, or,
subsequent to a Change in Control, the Company and the Participant jointly,
may designate, for purposes of the Excise Tax, which shall provide detailed
supporting calculations to the Company and the affected Participant within 15
business days of the date of the applicable Payment. Except as hereinafter
provided, any determination by Coopers & Lybrand L.L.P., or such other
national accounting firm, shall be binding upon the Company and the
Participant. As a result of the uncertainty in the application of Section
4999 of the Code that may exist at the time ofthe initial determination
hereunder, it is possible that (x) certain Excise Tax Adjustment Payments will
not have been made by the Company which should have been made (an
"Underpayment"), or (y) certain Excise Tax Adjustment Payments will have been
made which should not have been made (an "Overpayment"), consistent with the
calculations required to be made hereunder. In the event of an Underpayment,
such Underpayment shall be promptly paid by the Company to or for the benefit
of the affected Participant. In the event that the Participant discovers
that an Overpayment shall have occurred, the amount thereof shall be promptly
repaid to the Company.
(3) This Section 6(g)(vi)(D) shall not apply to any Award (x) that was
granted prior to February 17, 1993 and (y) the holder of which is an executive
officer of the Company, as determined under the Exchange Act.
(vii) Cash Settlement. Notwithstanding any provision of this Plan or
of any Award Agreement to the contrary, any Award outstanding hereunder may at
any time be cancelled in the Committee's sole discretion upon payment of the
value of such Award to the holder thereof in cash or in another Award
hereunder, such value to be determined by the Committee in its sole discretion.
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SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any out-
standing Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as
stockholder approval thereof is required in order for the Plan to continue
to satisfy the conditions of Rule 16b-3, and (ii) without the consent of
affected Participants no amendment of the Plan or of any Award may impair
the rights of Participants under outstanding Awards, and (iii) no Option
may be amended to reduce its initial exercise price other than in connection
with an event described in Section 4(c) hereof.
(b) Waivers. The Committee may waive any conditions or rights under
any Award theretofore granted, prospectively or retroactively, without the
consent of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits to be made
available under the Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to effectuate the Plan.
SECTION 8. GENERAL PROVISIONS
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, including the grant of
options and other stock-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability, or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement or other written agreement with the Participant.
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(e) Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Michigan and applicable Federal law.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, person or Award, and the remainder of the
Plan and any such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other person. To the extent that any person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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EXHIBIT 10.l
MASCO CORPORATION
1991 LONG TERM STOCK INCENTIVE PLAN
(Amended and Restated April 23, 1997)
SECTION 1. PURPOSES
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are
to encourage selected employees of and consultants to Masco Corporation (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's
future success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest,
whether more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of
not less than two directors, each of whom is a "non-employee director" within
the meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company
or any Affiliate designated to be granted an Award under the Plan.
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(m) "Performance Award" shall mean any right granted under Section 6(d)
of the Plan.
(n) "Restricted Period" shall mean the period of time during which
Awards of Restricted Stock or Restricted Stock Units are subject to
restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c)
of the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or
regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules
and regulations promulgated by the Securities and Exchange Commission
thereunder, or any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(c) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
SECTION 3. ADMINISTRATION
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without
limitation the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and
any payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof
or of the Committee;
(vii) determine the methods or procedures for establishing the
fair market value of any property (including, without limitation, any
Shares or other securities) transferred, exchanged, given or received
with respect to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and
other instruments required under or advisable with respect to the Plan;
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(ix) designate Options granted to key employees of the Company
or its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards
and any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
administration of the Plan;
(xii) decide all questions and settle all controversies and
disputes which may arise in connection with the Plan, Award Agreements
and Awards;
(xiii) delegate to directors of the Company the authority to
designate Participants and grant Awards, and to amend Awards granted to
Participants;
(xiv) make any other determination and take any other action
that the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and Awards.
All designations, determinations, interpretations and other decisions
under or with respect to the Plan, Award Agreements or any Award shall be
within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all persons, including the Company,
Affiliates, Participants, beneficiaries of Awards and stockholders of the
Company.
SECTION 4. SHARES AVAILABLE FOR AWARDS
(a) Shares Available. Subject to adjustment as provided in Section
4(c):
(i) Initial Authorization. There shall be 8,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth
above, up to 8,000,000 Shares acquired by the Company subsequent to
the 1997 Annual Meeting of Stockholders as full or partial payment
for the exercise price for an Option or any other stock option
granted by the Company, or acquired by the Company, in open market
transactions or otherwise, in connection with the Plan or any Award
hereunder or any other employee stock option or restricted stock
issued by the Company may thereafter be included in the Shares
available for Awards. If any Shares covered by an Award or to which
an Award relates are forfeited, or if an Award expires, terminates or
is cancelled, then the Shares covered by such Award, or to which such
Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares available under the Plan by reason of such
Award, to the extent of any such forfeiture, expiration, termination
or cancellation, may thereafter be available for further granting of
Awards and included as acquired Shares for purposes of the preceding
sentence.
(iii) Shares Under Prior Plans. In addition to the amounts set
forth above, shares remaining available for issuance upon any
termination of authority to make further awards under both the Company's
1988 Restricted Stock Incentive Plan and its 1988 Stock Option Plan
shall thereafter be available for issuance hereunder.
(iv) Accounting for Awards. For purposes of this Section 4,
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(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such
Award, or to which such Award relates, shall be counted on the
date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan to the
extent determinable on such date and insofar as the number of
Shares is not then determinable under procedures adopted by the
Committee consistent with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in
Shares shall be counted against the aggregate number of Shares
available for granting Awards under the Plan in such amount and
at such time as the Committee shall determine under procedures
adopted by the Committee consistent with the purposes of the
Plan;
provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are
substituted for, other Awards or restricted stock awards or stock
options granted under any other plan of the Company may be counted or
not counted under procedures adopted by the Committee in order to avoid
double counting. Any Shares that are delivered by the Company or its
Affiliates, and any Awards that are granted by, or become obligations
of, the Company, through the assumption by the Company of, or in sub-
stitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case
of Awards granted to Participants who are directors or officers of the
Company for purposes of Section 16, be counted against the Shares
available for granting Awards under the Plan.
(v) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized but unissued Shares or of Shares reacquired by the Company,
including but not limited to Shares purchased on the open market.
(b) Individual Stock-Based Awards. Subject to adjustment as provided in
Section 4(c), no Participant may receive Options or Stock Appreciation Rights
under the Plan in any calendar year that relate to more than 1,000,000 Shares
in the aggregate; provided, however, that such number may be increased with
respect to any Participant by any Shares available for grant to such
Participant in accordance with this Paragraph 4(b) in any prior years that
were not granted in such prior year beginning on or after January 1, 1997. No
provision of this Paragraph 4(b) shall be construed as limiting the amount of
any other stock-based or cash-based Award which may be granted to any
Participant.
(c) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company or extraordinary transaction or
event which affects the Shares, then the Committee shall have the authority to
make such adjustment, if any, in such manner as it deems appropriate, in (i)
the number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards, (ii) outstanding Awards
including without limitation the number and type of Shares (or other
securities or property) subject thereto, and (iii) the grant, purchase or
exercise price with respect to outstanding Awards and, if deemed appropriate,
make provision for cash payments to the holders of outstanding Awards; pro-
vided, however, that the number of Shares subject to any Award denominated in
Shares shall always be a whole number.
SECTION 5. ELIGIBILITY
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, any person who serves
only as a director of the Company and any consultant to the Company or an
Affiliate who is also a director of the Company and who is not rendering
services pursuant to a written agreement with the entity in question), as may
be selected from time to time by the Committee or by the directors to whom
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authority may be delegated pursuant to Section 3 hereof in its or their
discretion, is eligible to be designated a Participant.
SECTION 6. AWARDS
(a) Options. The Committee is authorized to grant Options to
Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option,
provided, however, that such price shall be not less than 100%
of the fair market value of the Shares underlying such Option
on the date of grant;
(B) the term of each Option; and
(C) the time or times at which an Option may be
exercised, in whole or in part, the method or methods by which
and the form or forms (including, without limitation, cash,
Shares, other Awards or other property, or any combination
thereof, having a fair market value on the exercise date equal
to the relevant exercise price) in which payment of the
exercise price with respect thereto may be made or deemed to
have been made. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions
of Section 422 of the Code, or any successor provision thereto,
and any regulations promulgated thereunder.
Subject to the terms of the Plan, the Committee may impose such
conditions or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall
give written notice to the Company, as may be specified by the
Committee, of exercise of the Option and the number of Shares
elected for exercise, such notice to be accompanied by such in-
struments or documents as may be required by the Committee, and
shall tender the purchase price of the Shares elected for
exercise.
(B) At the time of exercise of an Option payment in
full in cash or in Shares (that have been held by the
Participant for at least six months) or any combination
thereof, at the option of the Participant, shall be made for
all Shares then being purchased.
(C) The Company shall not be obligated to issue any
Shares unless and until:
(I) if the class of Shares at the time is listed
upon any stock exchange, the Shares to be issued have
been listed, or authorized to be added to the list
upon official notice of issuance, upon such exchange,
and
(II) in the opinion of the Company's counsel
there has been compliance with applicable law in
connection with the issuance and delivery of Shares
and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the
Company may require from the Participant such investment
representation or such agreement, if any, as the Company's
counsel may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that
the Participant agree that any sale of the Shares will be made
only in such manner as shall
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be in accordance with law and that the Participant will notify
the Company of any intent to make any disposition of the Shares
whether by sale, gift or otherwise. The Participant shall take
any action reasonably requested by the Company in such
connection. A Participant shall have the rights of a
stockholder only as and when Shares have been actually issued
to the Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with
a Participant terminates for any reason (including termination
by reason of the fact that an entity is no longer an Affiliate)
other than the Participant's death, the Participant may
thereafter exercise the Option as provided below, except that
the Committee may terminate the unexercised portion of the
Option concurrently with or at any time following termination of
the employment or consulting arrangement (including termination
of employment upon a change of status from employee to
consultant) if it shall determine that the Participant has
engaged in any activity detrimental to the interests of the
Company or an Affiliate. If such termination is voluntary on the
part of the Participant, the Option may be exercised only within
ten days after the date of termination. If such termination is
involuntary on the part of the Participant, if an employee
retires on or after normal retirement date or if the employment
or consulting relationship is terminated by reason of permanent
and total disability, the Option may be exercised within three
months after the date of termination or retirement. For purposes
of this Paragraph (D), a Participant's employment or consulting
arrangement shall not be considered terminated (i) in the case
of approved sick leave or other bona fide leave of absence (not
to exceed one year), (ii) in the case of a transfer of
employment or the consulting arrangement among the Company and
Affiliates, or (iii) by virtue of a change of status from
employee to consultant or from consultant to employee, except as
provided above.
(E) If a Participant dies at a time when entitled to
exercise an Option, then at any time or times within one year
after death such Option may be exercised, as to all or any of
the Shares which the Participant was entitled to purchase
immediately prior to death. The Company may decline to deliver
Shares to a designated beneficiary until it receives indemnity
against claims of third parties satisfactory to the Company.
Except as so exercised such Option shall expire at the end of
such period.
(F) An Option may be exercised only if and to the
extent such Option was exercisable at the date of termination of
employment or the consulting arrangement, and an Option may not
be exercised at a time when the Option would not have been
exercisable had the employment or consulting arrangement contin-
ued.
(iii) Restoration Options. The Committee may grant a
Participant the right to receive a restoration Option with respect to an
Option or any other stock option granted by the Company. Unless the
Committee shall otherwise determine, a restoration Option shall provide
that the underlying option must be exercised while the Participant is an
employee of or consultant to the Company or an Affiliate and the number
of Shares which are subject to a restoration Option shall not exceed the
number of whole Shares exchanged in payment for the exercise of the
original option.
(b) Stock Appreciation Rights. The Committee is authorized to grant
Stock Appreciation Rights to Participants. Subject to the terms of the Plan, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the fair
market value of one Share on the date of exercise or, if the Committee shall
so determine in the case of any such right other than one related to any
Incentive Stock Option, at any time during a specified period before or after
the date of exercise over (ii) the grant price of the right as specified by
the Committee. Subject to the terms of the Plan, the Committee shall determine
the grant price, term, methods of exercise and settlement and any other terms
and conditions of any Stock Appreciation Right and may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.
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<PAGE> 7
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to
Participants Awards of Restricted Stock, which shall consist of Shares,
and Restricted Stock Units which shall give the Participant the right to
receive cash, other securities, other Awards or other property, in each
case subject to the termination of the Restricted Period determined by
the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of
the Plan, Awards of Restricted Stock and Restricted Stock Units shall
have such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise. Unless the Committee shall
otherwise determine, any Shares or other securities distributed with
respect to Restricted Stock or which a Participant is otherwise entitled
to receive by reason of such Shares shall be subject to the restrictions
contained in the applicable Award Agreement. Subject to the
aforementioned restrictions and the provisions of the Plan, Participants
shall have all of the rights of a stockholder with respect to Shares of
Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
stock certificates.
(iv) Forfeiture. Except as otherwise determined by the
Committee:
(A) If the employment of or consulting arrangement with
a Participant terminates for any reason (including termination
by reason of the fact that any entity is no longer an
Affiliate), other than the Participant's death or permanent and
total disability or, in the case of an employee, retirement on
or after normal retirement date, all Shares of Restricted Stock
theretofore awarded to the Participant which are still subject
to restrictions shall upon such termination of employment or the
consulting relationship be forfeited and transferred back to the
Company. Notwithstanding the foregoing or Paragraph (C) below,
if a Participant continues to hold an Award of Restricted Stock
following termination of the employment or consulting
arrangement (including retirement and termination of employment
upon a change of status from employee to consultant), the Shares
of Restricted Stock which remain subject to restrictions shall
nonetheless be forfeited and transferred back to the Company if
the Committee at any time thereafter determines that the
Participant has engaged in any activity detrimental to the
interests of the Company or an Affiliate. For purposes of this
Paragraph (A), a Participant's employment or consulting
arrangement shall not be considered terminated (i) in the case
of approved sick leave or other bona fide leave of absence (not
to exceed one year), (ii) in the case of a transfer of
employment or the consulting arrangement among the Company and
Affiliates, or (iii) by virtue of a change of status from
employee to consultant or from consultant to employee, except as
provided above.
(B) If a Participant ceases to be employed or retained
by the Company or an Affiliate by reason of death or permanent
and total disability or if following retirement a Participant
continues to have rights under an Award of Restricted Stock and
thereafter dies, the restrictions contained in the Award shall
lapse with respect to such Restricted Stock.
(C) If an employee ceases to be employed by the Company
or an Affiliate by reason of retirement on or after normal
retirement date, the restrictions contained in the Award of
Restricted Stock shall continue to lapse in the same manner as
though employment had not terminated.
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<PAGE> 8
(D) At the expiration of the Restricted Period as to
Shares covered by an Award of Restricted Stock, the Company
shall deliver the Shares as to which the Restricted Period has
expired, as follows:
(1) if an assignment to a trust has been made in
accordance with Section 6(g)(iv)(B)(2)(c), to such
trust; or
(2) if the Restricted Period has expired by reason
of death and a beneficiary has been designated in form
approved by the Company, to the beneficiary so
designated; or
(3) in all other cases, to the Participant or the
legal representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant
Performance Awards to Participants. Subject to the terms of the Plan, a
Performance Award granted under the Plan (i) may be denominated or payable in
cash, Shares (including, without limitation, Restricted Stock), other
securities, other Awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Award, in whole or in part, upon
the achievement of such performance goals during such performance periods as
the Committee shall establish. Subject to the terms of the Plan, the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Award granted, the
amount of any payment or transfer to be made pursuant to any Performance Award
and other terms and conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to
receive payments equivalent to dividends or interest with respect to a number
of Shares determined by the Committee, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Shares
or otherwise reinvested. Subject to the terms of the Plan, such Awards may
have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the
Plan, the Committee shall determine the terms and conditions of such Awards.
Shares or other securities delivered pursuant to a purchase right granted
under this Section 6(f) shall be purchased for such consideration, which may
be paid by such method or methods and in such form or forms, including,
without limitation, cash, Shares, other securities, other Awards or other
property or any combination thereof, as the Committee shall determine.
(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may,
in the discretion of the Committee, be granted either alone or in
addition to, in tandem with or in substitution for any other Award or
any award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under another plan of the
Company or any Affiliate, may be granted either at the same time as or
at a different time from the grant of such other Awards or awards.
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<PAGE> 9
(iii) Forms of Payment Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers to
be made by the Company or an Affiliate upon the grant, exercise, or
payment of an Award may be made in such form or forms as the Committee
shall determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no
Award or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and
any attempt to do any of the foregoing shall be void and
unenforceable against the Company.
(B) Notwithstanding the provisions of Paragraph (A)
above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee;
(b) by will or the applicable laws of
descent and distribution to the personal
representative, executor or administrator of the
Participant's estate; or
(c) to a revocable grantor trust established by
the Participant for the sole benefit of the
Participant during the Participant's life, and under
the terms of which the Participant is and remains the
sole trustee until death or physical or mental
incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to
the Committee, and the Participant shall deliver to
the Committee a true copy of the agreement or other
document evidencing such trust. If in the judgment of
the Committee the trust to which a Participant may
attempt to assign rights under such an Award does not
meet the criteria of a trust to which an assignment is
permitted by the terms hereof, or if after assignment,
because of amendment, by force of law or any other
reason such trust no longer meets such criteria, such
attempted assignment shall be void and may be
disregarded by the Committee and the Company and all
rights to any such Options shall revert to and remain
solely in the Participant. Notwithstanding a qualified
assignment, the Participant, and not the trust to
which rights under such an Option may be as signed,
for the purpose of determining compensation arising by
reason of the Option shall continue to be considered
an employee or consultant, as the case may be, of the
Company or an Affiliate, but such trust and the
Participant shall be bound by all of the terms and
conditions of the Award Agreement and this Plan.
Shares issued in the name of and delivered to such
trust shall be conclusively considered issuance and
delivery to the Participant.
(2) A Participant may assign or transfer rights under
an Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the
Participant in writing on a form approved by the
Committee;
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<PAGE> 10
(b) by will or the applicable laws of descent
and distribution to the personal representative,
executor or administrator of the Participant's estate;
or
(c) to a revocable grantor trust established by
the Participant for the sole benefit of the
Participant during the Participant's life, and under
the terms of which the Participant is and remains the
sole trustee until death or physical or mental
incapacity. Such assignment shall be effected by a
written instrument in form and content satisfactory to
the Committee, and the Participant shall deliver to
the Committee a true copy of the agreement or other
document evidencing such trust. If in the judgment of
the Committee the trust to which a Participant may
attempt to assign rights under such an Award does not
meet the criteria of a trust to which an assignment is
permitted by the terms hereof, or if after assignment,
because of amendment, by force of law or any other
reason such trust no longer meets such criteria, such
attempted assignment shall be void and may be
disregarded by the Committee and the Company and all
rights to any such Awards shall revert to and remain
solely in the Participant. Notwithstanding a qualified
assignment, the Participant, and not the trust to
which rights under such an Award may be assigned, for
the purpose of determining compensation arising by
reason of the Award shall continue to be considered an
employee or consultant, as the case may be, of the
Company or an Affiliate, but such trust and the
Participant shall be bound by all of the terms and
conditions of the Award Agreement and this Plan.
Shares issued in the name of and delivered to such
trust shall be conclusively considered issuance and
delivery to the Participant.
(3) The Committee shall not permit directors or
officers of the Company for purposes of Section 16 to transfer
or assign Awards except as permitted under Rule 16b-3.
(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or other
instrument of transfer, copies of trust agreements and any other
documents delivered to them by or on behalf of the Participant which
they believe genuine and any action taken by them in reliance thereon
shall be conclusive and binding upon the Participant, the personal
representatives of the Participant's estate and all persons asserting a
claim based on an Award. The delivery by a Participant of a beneficiary
designation, or an assignment of rights under an Award as permitted
hereunder, shall constitute the Participant's irrevocable undertaking to
hold the Committee, the Company and its officers, agents and employees
harmless against claims, including any cost or expense incurred in
defending against claims, of any person (including the Participant)
which may be asserted or alleged to be based on an Award subject to a
beneficiary designation or an assignment. In addition, the Company may
decline to deliver Shares to a beneficiary until it receives indemnity
against claims of third parties satisfactory to the Company.
(v) Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall
be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which such Shares or other securities are then listed and any
applicable Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(vi) Change in Control. (A) Notwithstanding any of the provisions of
this Plan or instruments evidencing Awards granted hereunder, upon a Change in
Control of the Company (as hereinafter defined) the vesting of all rights of
Participants under outstanding Awards shall be accelerated and all
restrictions thereon shall terminate in order that Participants may fully
realize the benefits thereunder. Such acceleration shall
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<PAGE> 11
include, without limitation, the immediate exercisability in
full of all Options and the termination of restrictions on
Restricted Stock and Restricted Stock Units. Further, in
addition to the Committee's authority set forth in Section
4(c), the Committee, as constituted before such Change in
Control, is authorized, and has sole discretion, as to any
Award, either at the time such Award is made hereunder or any
time thereafter, to take any one or more of the following
actions: (i) provide for the purchase of any such Award, upon
the Participant's request, for an amount of cash equal to the
amount that could have been attained upon the exercise of such
Award or realization of the Participant's rights had such
Award been currently exercisable or payable; (ii) make such
adjustment to any such Award then outstanding as the Committee
deems appropriate to reflect such Change in Control; and (iii)
cause any such Award then outstanding to be assumed, or new
rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control.
(B) With respect to any Award granted hereunder prior to
December 6, 1995, a Change in Control shall occur if:
(1) any "person" or "group of persons" as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act, other than pursuant to a transaction or agreement
previously approved by the Board of Directors of the Company,
directly or indirectly purchases or otherwise becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) or has the right to acquire such beneficial ownership
(whether or not such right is exercisable immediately, with the
passage of time, or subject to any condition) of voting
securities representing 25 percent or more of the combined
voting power of all outstanding voting securities of the
Company; or
(2) during any period of twenty-four consecutive
calendar months, the individuals who at the beginning of such
period constitute the Company's Board of Directors, and any new
directors whose election by such Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds of the members of such Board who were either
directors on such Board at the beginning of the period or whose
election or nomination for election as directors was previously
so approved, for any reason cease to constitute at least a
majority of the members thereof.
(C) Notwithstanding the provisions of subparagraph (B),
with respect to Awards granted hereunder on or after December 6, 1995, a
Change in Control shall occur only if the event described in this
subparagraph (C) shall have occurred. With respect to any other Award
granted prior thereto, a Change in Control shall occur if any of the
events described in subparagraphs (B) or (C) shall have occurred, unless
the holder of any such Award shall have consented to the application of
this subparagraph (C) in lieu of the foregoing subparagraph (B). A
Change in Control for purposes of this subparagraph (C) shall occur if,
during any period of twenty-four consecutive calendar months, the
individuals who at the beginning of such period constitute the Company's
Board of Directors, and any new directors (other than Excluded
Directors, as hereinafter defined), whose election by such Board or
nomination for election by stockholders was approved by a vote of at
least two-thirds of the members of such Board who were either directors
on such Board at the beginning of the period or whose election or
nomination for election as directors was previously so approved, for any
reason cease to constitute at least a majority of the members thereof.
For purposes hereof, "Excluded Directors" are directors whose election
by the Board or approval by the Board for stockholder election occurred
within one year of any "person" or "group of persons", as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, commencing a
tender offer for, or becoming the beneficial owner of, voting securities
representing 25 percent or more of the combined voting power of all
outstanding voting securities of the Company, other than pursuant to a
tender offer approved by the Board prior to its commencement or pursuant
to stock acquisitions approved by the Board prior to their representing
25 percent or more of such combined voting power.
(D) (1) In the event that subsequent to a Change in Control it
is determined that any payment or distribution by the Company to or for
the benefit of a Participant, whether paid or payable or distributed or
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<PAGE> 12
distributable pursuant to the terms of this Plan or otherwise, other
than any payment pursuant to this subparagraph (D) (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such Participant
shall be entitled to receive from the Company, within 15 days following
the determination described in (2) below, an additional payment ("Excise
Tax Adjustment Payment") in an amount such that after payment by such
Participant of all applicable Federal, state and local taxes (computed
at the maximum marginal rates and including any interest or penalties
imposed with respect to such taxes), including any Excise Tax, imposed
upon the Excise Tax Adjustment Payment, such Participant retains an
amount of the Excise Tax Adjustment Payment equal to the Excise Tax
imposed upon the Payments.
(2) All determinations required to be made under this
Section 6(g)(vi)(D), including whether an Excise Tax Adjustment Payment
is required and the amount of such Excise Tax Adjustment Payment, shall
be made by Coopers & Lybrand L.L.P., or such other national accounting
firm as the Company, or, subsequent to a Change in Control, the Company
and the Participant jointly, may designate, for purposes of the Excise
Tax, which shall provide detailed supporting calculations to the Company
and the affected Participant within 15 business days of the date of the
applicable Payment. Except as hereinafter provided, any determination
by Coopers & Lybrand L.L.P., or such other national accounting firm,
shall be binding upon the Company and the Participant. As a result of
the uncertainty in the application of Section 4999 of the Code that may
exist at the time of the initial determination hereunder, it is possible
that (x) certain Excise Tax Adjustment Payments will not have been made
by the Company which should have been made (an "Underpayment"), or (y)
certain Excise Tax Adjustment Payments will have been made which should
not have been made (an "Overpayment"), consistent with the calculations
required to be made hereunder. In the event of an Underpayment, such
Underpayment shall be promptly paid by the Company to or for the benefit
of the affected Participant. In the event that the Participant
discovers that an Overpayment shall have occurred, the amount thereof
shall be promptly repaid to the Company.
(3) This Section 6(g)(vi)(D) shall not apply to any Award
(x) that was granted prior to February 17, 1993 and (y) the holder of
which is an executive officer of the Company, as determined under the
Exchange Act.
(vii) Cash Settlement. Notwithstanding any provision of this
Plan or of any Award Agreement to the contrary, any Award outstanding
hereunder may at any time be cancelled in the Committee's sole
discretion upon payment of the value of such Award to the holder thereof
in cash or in another Award hereunder, such value to be determined by
the Committee in its sole discretion.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any out-
standing Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as stockholder
approval thereof is required in order for the Plan to continue to satisfy the
conditions of Rule 16b-3, and (ii) without the consent of affected
Participants no amendment of the Plan or of any Award may impair the rights of
Participants under outstanding Awards, and (iii) no Option may be amended to
reduce its initial exercise price other than in connection with an event
described in Section 4(c) hereof.
(b) Waivers. The Committee may waive any conditions or rights under
any Award theretofore granted, prospectively or retroactively, without the
consent of any Participant.
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<PAGE> 13
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(c) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits to be
made available under the Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to effectuate the Plan.
Section 8. General Provisions
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continu-
ing in effect other or additional compensation arrangements, including the
grant of options and other stock-based awards, and such arrangements may be
either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of
the Company or any Affiliate. Further, the Company or an Affiliate may at any
time dismiss a Participant from employment, free from any liability, or any
claim under the Plan, unless otherwise expressly provided in the Plan or in
any Award Agreement or other written agreement with the Participant.
(e) Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Michigan and applicable Federal law.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot
be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award, and the
remainder of the Plan and any such Award shall remain in full force and
effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant
or any other person. To the extent that any person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
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<PAGE> 14
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares, or whether such fractional Shares or any
rights thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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<PAGE> 1
EXHIBIT 10.q
MASCOTECH, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to ensure that the non-employee Directors of
MascoTech, Inc. (the "Company") have an equity interest in the Company and
thereby have a direct and long term interest in the growth and prosperity of the
Company by payment of part of their compensation in the form of common stock of
the Company.
SECTION 2. ADMINISTRATION OF THE PLAN
This Plan will be administered by the Company's Board of Directors (the
"Board"). The Board shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for the administration of the
Plan. The Boards interpretation of the terms and provisions of this Plan
shall be final and conclusive. The Secretary of the Company shall be authorized
to implement the Plan in accordance with its terms and to take such actions of
a ministerial nature as shall be necessary to effectuate the intent and
purposes thereof. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable Federal law.
SECTION 3. ELIGIBILITY
Participation will be limited to individuals who are Eligible Directors,
as hereinafter defined. Eligible Director shall mean any Director of the
Company who is not an employee of the Company and who receives a fee for
service as a Director.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) Subject to the adjustments set forth below, the aggregate number of
shares of Company Common Stock, par value $1.00 per share ("Shares"), which may
be the subject of awards issued under the Plan shall be 500,000.
(b) Any Shares to be delivered under the Plan shall be made available from
newly issued Shares or from Shares reacquired by the Company, including Shares
purchased in the open market.
(c) To the extent a Stock Option award, as hereinafter defined, terminates
without having been exercised, or an award of Restricted Stock, as hereinafter
defined, is forfeited, the Shares subject to such Stock Option or Restricted
Stock award shall again be available for distribution in connection with future
awards under the Plan. Shares equal in number to the Shares surrendered to the
Company in payment of the option exercise price or withholding taxes (if any)
relating to or arising in connection with any Restricted Stock or Stock Option
hereunder shall be added to the number of Shares then available for future
awards under clause (a) above.
(d) In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, or other change in corporate
structure affecting the Shares, the aggregate number of Shares which may be
issued under the Plan, the number of Shares subject to Stock Options to be
granted under Section 6(a) hereof and the number of Shares subject to any
outstanding award of Restricted Stock or unexercised Stock Option shall be
adjusted to avoid enhancement or diminution of the benefits intended to be made
available hereunder.
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SECTION 5. DIRECTOR STOCK COMPENSATION
(a) The compensation of each Eligible Director for the five year period
beginning January 1, 1997 shall be payable in part with an award of Restricted
Stock determined as set forth below, and in part in cash. Compensation for
this purpose means annual retainer fees but does not include supplemental
retainer fees for committee positions or fees for attendance at meetings, which
shall be paid in cash. The portion of compensation payable in Restricted Stock
during the five year period shall be equal to one-half of the annual
compensation paid to Eligible Directors in the year immediately prior to the
award multiplied by five, and the balance of compensation, unless otherwise
determined by the Board, shall be payable in cash. Each award of Restricted
Stock shall vest in twenty percent annual installments (disregarding fractional
shares) on January 1 of each of the five consecutive years following the year
in which the award is made. Subject to the approval of this Plan by the
Company's stockholders, each Eligible Director on February 17, 1997 is awarded
as of that date 5,790 Shares of Restricted Stock, based on the closing price of
the Shares as reported on the New York Stock Exchange Composite Tape (the
"NYSE") on February 14, 1997, the last trading date preceding the grant. Cash
shall be paid to an Eligible Director in lieu of a fractional share.
(b) Subject to the approval of this Plan by the Company's stockholders,
each Eligible Director who is first elected or appointed to the Board on or
after the date of the Company's 1997 annual meeting of stockholders shall
receive, as of the date of such election or appointment, an award of
Restricted Stock determined in accordance with Section 5(a) for the five year
period beginning on January 1 of the year in which such election or appointment
occurred; provided, however, that the price of the Shares used in determining
the number of Shares of Restricted Stock which shall be issued to such Eligible
Director shall be the closing price of the Shares as reported on the NYSE on
the date on which such Eligible Director is elected or appointed, and provided,
further, that the amount of Restricted Stock awarded to any Eligible Director
who begins serving as a Director other than at the beginning of a calendar year
shall be prorated to reflect the partial service of the initial year of such
Director's term, such proration to be effected in the initial vesting.
(c) Upon the full vesting of any award of Restricted Stock awarded
pursuant to Section 5(a) or 5(b), each affected Eligible Director shall be
eligible to receive a new award of Restricted Stock, subject to Section 4. The
number of Shares subject to such award shall be determined generally in
accordance with the provisions of Section 5(b); provided, however, that the
Board shall have sole discretion to adjust the amount of compensation then to
be paid in the form of Shares and the terms of any such award of Shares.
Except as the Board may otherwise determine, any increase or decrease in an
Eligible Director's annual compensation during the period when such Director
has an outstanding award of Restricted Stock shall be implemented by increasing
or decreasing the cash portion of such Director's compensation.
(d) Each Eligible Director shall be entitled to vote and receive dividends
on the unvested portion of his or her Restricted Stock, but will not be able to
obtain a stock certificate or sell, encumber or otherwise transfer such
Restricted Stock except in accordance with the terms of the Company's 1991 Long
Term Stock Incentive Plan (the "Long Term Plan"). If an Eligible Director's
term is terminated by reason of death or permanent and total disability, the
restrictions on the Restricted Stock will lapse and such Eligible Director's
rights to the Shares will become vested on the date of such termination. If an
Eligible Director's term is terminated for any reason other than death or
permanent and total disability, the Restricted Stock that has not vested shall
be forfeited and transferred back to the Company; provided, however, that a pro
rata portion of the Restricted Stock which would have vested on January 1 of
the year following the year of the Eligible Director's termination shall vest
on the date of termination, based upon the portion of the year during which the
Eligible Director served as a Director of the Company.
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SECTION 6. STOCK OPTION GRANT
(a) Subject to approval of this Plan by the Company's stockholders, each
Eligible Director on the date of such approval will be granted on such date a
stock option to purchase 5,000 Shares (the "Stock Option"). Thereafter, on
the date of each of the Company's subsequent annual stockholders meetings, each
person who is or becomes an Eligible Director on that date and whose service on
the Board will continue after such date shall be granted a Stock Option,
subject to Section 4, effective as of the date of such meeting.
(b) Stock Options Granted under this Section 6 shall be non-qualified
stock options and shall have the following terms and conditions.
1. Option Price. The option price per Share shall be equal to the
closing price of the Shares as reflected on the NYSE on the date of grant (or
if there were no sales on such date, the most recent prior date on which there
were sales).
2. Term of Option. The term of the Stock Option shall be ten years from
the date of grant, subject to earlier termination in the event of termination of
service as an Eligible Director. If an Eligible Director's term is terminated
for any reason other than death at a time when such Director is entitled to
exercise an outstanding Stock Option, then at any time or times within three
months after termination such Stock Option may be exercised as to all or any of
the Shares which the Eligible Director was entitled to purchase at the date of
termination. If an Eligible Director dies at a time when such Director is
entitled to exercise a Stock Option, then at any time or times within one year
after death such Stock Option may be exercised as to all or any of the Shares
which the Eligible Director was entitled to purchase immediately prior to such
Director's death. Except as so exercised, such Stock Options shall expire at
the end of such periods. That portion of the Stock Option not exercisable at
the time of such termination shall be forfeited and transferred back to the
Company on the date of such termination.
3. Exercisability. Subject to clause 2 above, each Stock Option shall
vest and become exercisable with respect to twenty percent of the underlying
Shares on each of the first five anniversaries of the date of grant, provided
that the optionee is an Eligible Director on such date.
4. Method of Exercise. A Stock Option may be exercised in whole or in
part during the period in which such Stock Option is exercisable by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the
purchase price shall be made in cash, by delivery of Shares, or by any
combination of the foregoing.
5. Non-Transferability. Unless otherwise provided by the terms of the
Long Term Plan or the Board, (i) Stock Options shall not be transferable by the
optionee other than by will or by the laws of descent and distribution, and
(ii) during the optionee's lifetime, all Stock Options shall be exercisable
only by the optionee or by his or her guardian or legal representative.
6. Stockholder Rights. The holder of a Stock Option shall, as such, have
none of the rights of a stockholder.
SECTION 7. GENERAL
(a) Plan Amendments. The Board may amend, suspend or discontinue the
Plan as it shall deem advisable or to conform to any change in any law or
regulation applicable thereto; provided, that the Board may not, without the
authorization and approval of the stockholders of the Company: (a) modify the
class of persons who constitute Eligible Directors as defined in the Plan; or
(b) increase the total number of Shares available under the Plan. In addition,
without the consent of affected participants, no amendment of the Plan or any
award under the Plan may impair the rights of participants under outstanding
awards.
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(b) Listing and Registration. If at any time the Board shall determine,
in its discretion, that the listing, registration or qualification of the
Shares under the Plan upon any securities exchange or under any state or
Federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of any award hereunder, no Shares may be delivered or disposed of unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the Board.
(c) Award Agreements. Each award of Restricted Stock and Stock Option
granted hereunder shall be evidenced by the Eligible Director's written
agreement with the Company which shall contain such terms and conditions not
inconsistent with the provisions of the Plan as shall be determined by the
Board in its discretion.
<PAGE> 1
EXHIBIT 10.r
MASCOTECH, INC. 1997 ANNUAL INCENTIVE
COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the MascoTech, Inc. 1997 Annual Incentive Compensation Plan
(the "Plan") is to provide selected executive officers of MascoTech, Inc. (the
"Company") with incentive compensation based upon the achievement of established
annual performance goals.
SECTION 2. ELIGIBILITY
The individuals eligible to participate in the Plan (the "Participants")
are the executive officers of the Company.
SECTION 3. PERFORMANCE PERIODS
Each Performance Period for purposes of the Plan shall have a duration of
one calendar year, commencing January 1 and ending December 31.
SECTION 4. ADMINISTRATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") shall have the full power and authority to administer and interpret
the Plan and to establish rules for its administration.
SECTION 5. PERFORMANCE GOALS
On or before the 90th day of each Performance Period, the Committee shall
establish in writing one or more performance criteria for the Performance Period
and the weighting of the performance criteria if more than one. The performance
criteria shall consist of one or more of the following: net income, earnings per
share, cash flow, revenues, return on assets or total shareholder return.
SECTION 6. AWARDS
On or before the 90th day of each Performance Period, the Committee shall
establish in writing a performance incentive award for such Participants as
shall be designated by the Committee and in such amounts as the Committee shall
determine, subject to the limitations of the Plan. No award to any Participant
shall be greater than $2 million. The Committee shall have the power and
authority to reduce or eliminate for any reason the amount of the award that
would otherwise be payable to a Participant based on the performance criteria.
SECTION 7. CERTIFICATION AND PAYMENT
As soon as practicable after release of the Company's financial results
for the Performance Period, the Committee will certify the Company's attainment
of the criteria established for such Performance Period pursuant to Section 5,
will calculate the possible payment of an award for each Participant and will
certify the amount of the award to each Participant for such Performance
Period. Payments of the awards shall be made in cash. To the extent net
income is used alone or as a component of another performance criteria, it
shall mean net income as reported to stockholders, but before losses resulting
from discontinued operations, extraordinary losses (in accordance with
generally accepted accounting principles, as currently in effect), the
cumulative effect of changes in accounting principles and other unusual,
nonrecurring items of loss that are separately identified and quantified in the
Company's audited financial statements.
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SECTION 8. AMENDMENT
The Committee shall have the right to suspend or terminate this Plan at
any time and may amend or modify the Plan at any time.
SECTION 9. ADOPTION AND DURATION
The Plan was approved by the Committee on February 17, 1997, subject to
the approval of the stockholders of the Company at the 1997 Annual Meeting of
Stockholders. The effective date of the Plan shall be January 1, 1997 and the
Plan shall remain in effect for a period of five years.
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EXHIBIT 10.S
TRIMAS CORPORATION
1995 LONG TERM STOCK INCENTIVE PLAN
(RESTATED DECEMBER 5, 1995)
Section 1. Purposes
The purposes of the 1995 Long Term Stock Incentive Plan (the "Plan") are
to encourage selected employees of and consultants to TriMas Corporation (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's future
success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest, whether
more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of not
less than two directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3.
<PAGE> 2
(f) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company
or any Affiliate designated to be granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
(n) "Restricted Period" shall mean the period of time during which Awards
of Restricted Stock or Restricted Stock Units are subject to restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section
6(c) of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or regulation.
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(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules and
regulations promulgated by the Securities and Exchange Commission thereunder, or
any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $.01 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(c) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
Section 3. Administration
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without
limitation the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and any
payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof or
of the Committee;
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(vii) determine the methods or procedures for establishing the fair
market value of any property (including, without limitation, any Shares
or other securities) transferred, exchanged, given or received with
respect to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards and
any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan;
(xii) decide all questions and settle all controversies and disputes
which may arise in connection with the Plan, Award Agreements and Awards;
(xiii) delegate to directors of the Company who need not be
"disinterested persons" within the meaning of Rule 16b-3 the authority to
designate Participants and grant Awards, provided such Participants are
not directors or officers of the Company for purposes of Section 16; and
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and
Awards.
All designations, determinations, interpretations and other decisions under
or with respect to the Plan, Award Agreements or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all persons, including the Company, Affiliates,
Participants, beneficiaries of Awards and stockholders of the Company.
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Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(c):
(i) Initial Authorization. There shall be 2,000,000 Shares initially
available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above, up
to 2,000,000 Shares acquired by the Company subsequent to the
effectiveness of the Plan as full or partial payment for the exercise
price for an Option or any other stock option granted by the Company, or
acquired by the Company, in open market transactions or otherwise, in
connection with the Plan or any Award hereunder or any other employee
stock option or restricted stock issued by the Company may thereafter be
included in the Shares available for Awards. If any Shares covered by an
Award or to which an Award relates are forfeited, or if an Award expires,
terminates or is cancelled, then the Shares covered by such Award, or to
which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares available under the Plan by reason
of such Award, to the extent of any such forfeiture, expiration,
termination or cancellation, may thereafter be available for further
granting of Awards and included as acquired Shares for purposes of the
preceding sentence.
(iii) Additional Shares. Shares acquired by the Company in the
circumstances set forth in (ii) above in excess of the amount set forth
therein may thereafter be included in the Shares available for Awards
to the extent permissible for purposes of allowing the Plan to continue to
satisfy the conditions of Rule 16b-3.
(iv) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of
grant of such Award against the aggregate number of Shares available
for granting Awards
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under the Plan to the extent determinable on such date and insofar
as the number of Shares is not then determinable under procedures
adopted by the Committee consistent with the purposes of the Plan;
and
(B) Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares available
for granting Awards under the Plan in such amount and at such time
as the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that
are substituted for, other Awards or restricted stock awards or stock
options granted under any other plan of the Company may be counted or
not counted under procedures adopted by the Committee in order to avoid
double counting. Any Shares that are delivered by the Company or its
Affiliates, and any Awards that are granted by, or become obligations
of, the Company, through the assumption by the Company of, or in
substitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case
of Awards granted to Participants who are directors or officers of the
Company for purposes of Section 16, be counted against the Shares
available for granting Awards under the Plan.
(v) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized but
unissued Shares or of Shares reacquired by the Company, including but
not limited to Shares purchased on the open market.
(b) Individual Stock-Based Awards. Subject to adjustment as provided
in Section 4(c), no Participant may receive stock-based Awards under the Plan in
any calendar year that relate to more than 400,000 Shares; provided, however,
that such number may be increased with respect to any Participant by any Shares
available for grant to such Participant in accordance with this Paragraph 4(b)
in any prior years that were not granted in such prior years. No provision of
this Paragraph 4(b) shall be
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construed as limiting the amount of any cash-based Award which may be granted to
any Participant.
(c) Adjustments. Upon the occurrence of any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company or extraordinary transaction or event
which affects the Shares, then the Committee shall have the authority to make
such adjustment, if any, in such manner as it deems appropriate, in (i) the
number and type of Shares (or other securities or property) which thereafter may
be made the subject of Awards, (ii) outstanding Awards including without
limitation the number and type of Shares (or other securities or property)
subject thereto, and (iii) the grant, purchase or exercise price with respect to
outstanding Awards and, if deemed appropriate, make provision for cash payments
to the holders of outstanding Awards; provided, however, that the number of
Shares subject to any Award denominated in Shares shall always be a whole
number.
Section 5. Eligibility
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, but excluding a member
of the Committee, any person who serves only as a director of the Company and
any consultant to the Company or an Affiliate who is also a director of the
Company and who is not rendering services pursuant to a written agreement with
the entity in question), as may be selected from time to time by the Committee
or by the directors to whom authority may be delegated pursuant to Section 3
hereof in its or their discretion, is eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is authorized to grant Options to
Participants.
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(i) Committee Determinations. Subject to the terms of the Plan, the
Committee shall determine:
(A) the purchase price per Share under each Option;
(B) the term of each Option; and
(C) the time or times at which an Option may be exercised, in
whole or in part, the method or methods by which and the form or
forms (including, without limitation, cash, Shares, other Awards or
other property, or any combination thereof, having a fair market
value on the exercise date equal to the relevant exercise price) in
which payment of the exercise price with respect thereto may be made
or deemed to have been made. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision
thereto, and any regulations promulgated thereunder.
Subject to the terms of the Plan, the Committee may impose such
conditions or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the Committee,
of exercise of the Option and the number of Shares elected for
exercise, such notice to be accompanied by such instruments or
documents as may be required by the Committee, and shall tender the
purchase price of the Shares elected for exercise.
(B) At the time of exercise of an Option payment in full in
cash shall be made for all Shares then being purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
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(I) if the class of Shares at the time is listed upon any
stock exchange, the Shares to be issued have been listed, or
authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(II) in the opinion of the Company's counsel there has
been compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company
may require from the Participant such investment representation or
such agreement, if any, as the Company's counsel may consider
necessary in order to comply with the Securities Act of 1933 as then
in effect, and may require that the Participant agree that any sale
of the Shares will be made only in such manner as shall be in
accordance with law and that the Participant will notify the Company
of any intent to make any disposition of the Shares whether by sale,
gift or otherwise. The Participant shall take any action reasonably
requested by the Company in such connection. A Participant shall
have the rights of a stockholder only as and when Shares have been
actually issued to the Participant pursuant to the Plan.
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer an Affiliate) other
than the Participant's death, the Participant may thereafter
exercise the Option as provided below, except that the Committee may
terminate the unexercised portion of the Option concurrently with or
at any time following termination of the employment or consulting
arrangement (including termination of employment upon a change of
status from employee to consultant) if it shall determine that the
Participant has engaged in any activity detrimental to the interests
of the Company or an Affiliate. If such termination is voluntary on
the part of the Participant, the option may be exercised only within
ten days after the date of
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termination. If such termination is involuntary on the part of the
Participant, if an employee retires on or after normal retirement
date or if the employment or consulting relationship is terminated
by reason of permanent and total disability, the Option may be
exercised within three months after the date of termination or
retirement. For purposes of this Paragraph (D), a Participant's
employment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona fide
leave of absence (not to exceed one year), (ii) in the case of a
transfer of employment or the consulting arrangement among the
Company and Affiliates, or (iii) by virtue of a change of status
from employee to consultant or from consultant to employee, except
as provided above.
(E) If a Participant dies at a time when entitled to exercise
an Option, then at any time or times within one year after death
such Option may be exercised, as to all or any of the Shares which
the Participant was entitled to purchase immediately prior to death.
The Company may decline to deliver Shares to a designated
beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company. Except as so exercised such
Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent such
Option was exercisable at the date of termination of employment or
the consulting arrangement, and an Option may not be exercised at a
time when the Option would not have been exercisable had the
employment or consulting arrangement continued.
(iii) Restoration Options. The Committee may grant a Participant the
right to receive a restoration Option with respect to an Option or any
other option granted by the Company. Unless the Committee shall otherwise
determine, a restoration Option shall provide that the underlying
option must be exercised while the Participant is an employee of or
consultant to the Company or an Affiliate and the number of Shares which
are subject to a restoration Option shall not
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exceed the number of whole Shares exchanged in payment of the original
option.
(b) Stock Appreciation Rights. The Committee is authorized to grant Stock
Appreciation Rights to Participants. Subject to the terms of the Plan, a Stock
Appreciation Right granted under the Plan shall confer on the holder thereof a
right to receive, upon exercise thereof, the excess of (i) the fair market value
of one Share on the date of exercise or, if the Committee shall so determine in
the case of any such right other than one related to any Incentive Stock Option,
at any time during a specified period before or after the date of exercise over
(ii) the grant price of the right as specified by the Committee. Subject to the
terms of the Plan, the Committee shall determine the grant price, term, methods
of exercise and settlement and any other terms and conditions of any Stock
Appreciation Right and may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to Participants
Awards of Restricted Stock, which shall consist of Shares, and Restricted
Stock Units which shall give the Participant the right to receive cash,
other securities, other Awards or other property, in each case subject to
the termination of the Restricted Period determined by the Committee.
(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of the
Plan, Awards of Restricted Stock and Restricted Stock Units shall have
such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise. Unless the Committee shall otherwise
determine, any Shares or other securities distributed with respect to
Restricted Stock or which a Participant is otherwise entitled to receive
by reason of such Shares shall be subject to the restrictions contained
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in the applicable Award Agreement. Subject to the aforementioned
restrictions and the provisions of the Plan, Participants shall have all
of the rights of a stockholder with respect to Shares of Restricted
Stock.
(iii) Registration. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
stock certificates.
(iv) Forfeiture. Except as otherwise determined by the Committee:
(A) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate), other
than the Participant's death or permanent and total disability or,
in the case of an employee, retirement on or after normal retirement
date, all Shares of Restricted Stock theretofore awarded to the
Participant which are still subject to restrictions shall upon such
termination of employment or the consulting relationship be
forfeited and transferred back to the Company. Notwithstanding the
foregoing or Paragraph (C) below, if a Participant continues to hold
an Award of Restricted Stock following termination of the employment
or consulting arrangement (including retirement and termination of
employment upon a change of status from employee to consultant), the
Shares of Restricted Stock which remain subject to restrictions
shall nonetheless be forfeited and transferred back to the Company
if the Committee at any time thereafter determines that the
Participant has engaged in any activity detrimental to the interests
of the Company or an Affiliate. For purposes of this Paragraph (A),
a Participant's employment or consulting arrangement shall not be
considered terminated (i) in the case of approved sick leave or
other bona fide leave of absence (not to exceed one year), (ii) in
the case of a transfer of employment or the consulting arrangement
among the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
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<PAGE> 13
(B) If a Participant ceases to be employed or retained by the
Company or an Affiliate by reason of death or permanent and total
disability or if following retirement a Participant continues to
have rights under an Award of Restricted Stock and thereafter dies,
the restrictions contained in the Award shall lapse with respect to
such Restricted Stock.
(C) If an employee ceases to be employed by the Company or an
Affiliate by reason of retirement on or after normal retirement
date, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment had
not terminated.
(D) At the expiration of the Restricted Period as to Shares
covered by an Award of Restricted Stock, the Company shall deliver
the Shares as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in ac-
cordance with Section 6(g)(iv)(B)(1)(c), to such trust; or
(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in a form approved
by the Company, to the beneficiary so designated; or
(3) in all other cases, to the Participant or the legal
representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant Performance
Awards to Participants. Subject to the terms of the Plan, a Performance Award
granted under the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock), other securities, other
Awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee and payable to, or exercisable by, the
holder of the Performance Award, in whole or in part, upon the achievement of
such performance goals during such performance periods as the Committee shall
establish. Subject to the
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<PAGE> 14
terms of the Plan, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any Performance
Award granted, the amount of any payment or transfer to be made pursuant to any
Performance Award and other terms and conditions shall be determined by the
Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to receive
payments equivalent to dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have such terms
and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan,
the Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof, as the Committee shall determine.
(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for no
cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or in addition
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<PAGE> 15
to or in tandem with awards granted under another plan of the Company or
any Affiliate, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise, or payment
of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, and may be
made in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures established
by the Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments.
(iv) Limits on Transfer of Awards.
(A) Except as the Committee may otherwise determine, no Award
or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A) above:
(1) Except as set forth in Paragraph (2) below, a
Participant may assign or transfer an Option or rights under an
Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the Participant in
writing on a form approved by the Committee;
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<PAGE> 16
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate; or
(c) to a revocable grantor trust established by the
Participant for the sole benefit of the Participant during
the Participant's life, and under the terms of which the
Participant is and remains the sole trustee until death or
physical or mental incapacity. Such assignment shall be
effected by a written instrument in form and content
satisfactory to the Committee, and the Participant shall
deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment
of the Committee the trust to which a Participant may
attempt to assign rights under such an Award does not meet
the criteria of a trust to which an assignment is
permitted by the terms hereof, or if after assignment,
because of amendment, by force of law or any other reason
such trust no longer meets such criteria, such attempted
assignment shall be void and may be disregarded by the
Committee and the Company and all rights to any such
Awards shall revert to and remain solely in the
Participant. Notwithstanding a qualified assignment, the
Participant, and not the trust to which rights under such
an Award may be assigned, for the purpose of determining
compensation arising by reason of the Award, shall
continue to be considered an employee or consultant, as
the case may be, of the Company or an Affiliate, but such
trust and the Participant shall be bound by all of the
terms and conditions of the Award Agreement and this Plan.
Shares issued in the name of and delivered to such trust
shall be conclusively considered issuance and delivery to
the Participant.
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<PAGE> 17
(2) The Committee shall not permit directors or officers
of the Company for purposes of Section 16 to transfer or assign
Awards except as permitted under Rule 16b-3.
(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or
other instrument of transfer, copies of trust agreements and any
other documents delivered to them by or on behalf of the Participant
which they believe genuine and any action taken by them in reliance
thereon shall be conclusive and binding upon the Participant, the
personal representatives of the Participant's estate and all persons
asserting a claim based on an Award. The delivery by a Participant
of a beneficiary designation, or an assignment of rights under an
Award as permitted hereunder, shall constitute the Participant's
irrevocable undertaking to hold the Committee, the Company and its
officers, agents and employees harmless against claims, including
any cost or expense incurred in defending against claims, of any
person (including the Participant) which may be asserted or alleged
to be based on an Award, subject to a beneficiary designation or an
assignment. In addition, the Company may decline to deliver Shares
to a beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company.
(v) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities
are then listed and any applicable Federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(vi) Change in Control. (A) Notwithstanding any of the provisions of
this Plan or instruments evidencing Awards granted hereunder, upon a
Change in Control (as hereinafter
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<PAGE> 18
defined) the vesting of all rights of Participants under outstanding
Awards shall be accelerated and all restrictions thereon shall terminate
in order that Participants may fully realize the benefits thereunder.
Such acceleration shall include, without limitation, the immediate
exercisability in full of all Options and the termination of restrictions
on Restricted Stock and Restricted Stock Units. Further, in addition to
the Committee's authority set forth in Section 4(c), the Committee, as
constituted before such Change in Control, is authorized, and has sole
discretion, as to any Award, either at the time such Award is made
hereunder or any time thereafter, to take any one or more of the
following actions: (i) provide for the purchase of any such Award, upon
the Participant's request, for an amount of cash equal to the amount that
could have been attained upon the exercise of such Award or realization
of the Participant's rights had such Award been currently exercisable or
payable; (ii) make such adjustment to any such Award then outstanding as
the Committee deems appropriate to reflect such Change in Control; and
(iii) cause any such Award then outstanding to be assumed, or new rights
substituted therefor, by the acquiring or surviving corporation after
such Change in Control.
(B) With respect to any Award granted hereunder prior to December 5,
1995, a Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, other than pursuant
to a transaction or agreement previously approved by the Board of
Directors of the Company, directly or indirectly purchases or
otherwise becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) or has the right to acquire such beneficial
ownership (whether or not such right is exercisable immediately,
with the passage of time, or subject to any condition) of voting
securities representing 25 percent or more of the combined voting
power of all outstanding voting securities of (A) the Company or (B)
an Affiliated Party (as hereinafter defined); or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of
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<PAGE> 19
such period constitute the Company's Board of Directors, and any new
directors whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at the
beginning of the period or whose election or nomination for election
as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
An "Affiliated Party" shall mean (x) MascoTech, Inc., a Delaware
corporation ("MascoTech"), provided MascoTech then owns at least twenty
percent of the combined voting power of all voting securities of the
Company, or (y) Masco Corporation, a Delaware corporation ("Masco"),
provided Masco then owns (i) at least twenty percent of the combined
voting power of all voting securities of the Company, or (ii) at least
twenty percent of the combined voting power of all voting securities of
MascoTech and MascoTech and Masco Corporation together then own an
aggregate of at least twenty percent of the combined voting power of all
voting securities of the Company.
(C) Notwithstanding the provisions of subparagraph (B), with respect
to Awards granted hereunder on or after December 5, 1995, a Change in
Control shall occur only if the event described in this subparagraph (C)
shall have occurred. With respect to any other Award granted prior
thereto, a Change in Control shall occur if any of the events described
in subparagraphs (B) or (C) shall have occurred, unless the holder of any
such Award shall have consented to the application of this subparagraph
(C) in lieu of the foregoing subparagraph (B). A Change in Control for
purposes of this subparagraph (C) shall occur if, during any period of
twenty-four consecutive calendar months, the individuals who at the
beginning of such period constitute the Company's Board of Directors, and
any new directors (other than Excluded Directors, as hereinafter
defined), whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the members
of such Board who were either directors on such Board at the beginning of
the period or whose election or nomination for election as directors was
previously so approved, for any reason cease to
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<PAGE> 20
constitute at least a majority of the members thereof. For purposes
hereof, "Excluded Directors" are directors whose election by the Board or
approval by the Board for stockholder election occurred within one year
of any "person" or "group of persons", as such terms are used in Sections
13(d) and 14(d) of the Exchange Act, commencing a tender offer for, or
becoming the beneficial owner of, voting securities representing 25
percent or more of the combined voting power of all outstanding voting
securities of the Company, other than pursuant to a tender offer approved
by the Board prior to its commencement or pursuant to stock acquisitions
approved by the Board prior to their representing 25 percent or more of
such combined voting power.
(D) (1) In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company to or for the
benefit of a Participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, other than
any payment pursuant to this subparagraph (D) (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such Participant
shall be entitled to receive from the Company, within 15 days following
the determination described in (2) below, an additional payment ("Excise
Tax Adjustment Payment") in an amount such that after payment by such
Participant of all applicable Federal, state and local taxes (computed at
the maximum marginal rates and including any interest or penalties
imposed with respect to such taxes), including any Excise Tax, imposed
upon the Excise Tax Adjustment Payment, such Participant retains an
amount of the Excise Tax Adjustment Payment equal to the Excise Tax
imposed upon the Payments.
(2) All determinations required to be made under this Section
6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., or such other national accounting firm
as the Company, or, subsequent to a Change in Control, the Company and
the Participant jointly, may designate, for purposes of the Excise
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<PAGE> 21
Tax, which shall provide detailed supporting calculations to the
Company and the affected Participant within 15 business days of the date
of the applicable Payment. Except as hereinafter provided, any
determination by Coopers & Lybrand L.L.P., or such other national
accounting firm, shall be binding upon the Company and the Participant.
As a result of the uncertainty in the application of Section 4999 of the
Code that may exist at the time of the initial determination hereunder,
it is possible that (x) certain Excise Tax Adjustment Payments will not
have been made by the Company which should have been made (an
"Underpayment"), or (y) certain Excise Tax Adjustment Payments will have
been made which should not have been made (an "Overpayment"), consistent
with the calculations required to be made hereunder. In the event of an
Underpayment, such Underpayment shall be promptly paid by the Company to
or for the benefit of the affected Participant. In the event that the
Participant discovers that an Overpayment shall have occurred, the amount
thereof shall be promptly repaid to the Company.
(vii) Cash Settlement. Notwithstanding any provision of this Plan or
of any Award Agreement to the contrary, any Award outstanding hereunder
may at any time be cancelled in the Committee's sole discretion upon
payment of the value of such Award to the holder thereof in cash or in
another Award hereunder, such value to be determined by the Committee in
its sole discretion.
Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend the Plan and the Board of Directors or the Committee may amend any
outstanding Award; provided, however, that (i) no Plan amendment shall be
effective until approved by stockholders of the Company insofar as stockholder
approval thereof is required in order for the Plan to continue to satisfy the
conditions of Rule 16b-3, and (ii) without the consent of affected Participants
no amendment of the Plan or of any Award may impair the rights of Participants
under outstanding Awards.
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<PAGE> 22
(b) Waivers. The Committee may waive any conditions or rights under any
Award theretofore granted, prospectively or retroactively, without the consent
of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(c) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits to be made available under the
Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
effectuate the Plan.
Section 8. General Provisions
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
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<PAGE> 23
(c) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, including the grant of
options and other stock-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement
or other written agreement with the Participant.
(e) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable Federal law.
(f) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as
to any person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, person or Award, and the remainder of the Plan and any such Award
shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the
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<PAGE> 24
Committee shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be cancelled, terminated or
otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of the date of its approval by the
Company's stockholders.
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<PAGE> 1
EXHIBIT 10.t
TRIMAS CORPORATION
1988 RESTRICTED STOCK INCENTIVE PLAN
(Restated December 5, 1995)
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid TriMas Corporation (the "Company")
and its subsidiaries and affiliated companies in attracting and retaining key
employees and consultants of outstanding ability. In addition, the Company
expects that it will benefit from the added interest which such individuals
will have in its welfare as a result of their ownership or increased ownership
of the Company's Common Stock. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock possessing
more than fifty percent of the total combined voting power of all classes of
stock, and an "affiliated company" is any other corporation, at least twenty
percent of the total combined voting power of all classes of stock of which is
owned by the Company or by one or more other corporations in a chain of
corporations, at least twenty percent of the stock of each of which is held by
the Company or a subsidiary or another corporation within such chain.
2. STOCK SUBJECT TO THE PLAN
The shares which may be awarded under the Plan are shares of the
Company's Common Stock, par value $.01 per share. Subject to adjustment as
provided in Paragraph 6, the total number of shares of the Company's Common
Stock that may be awarded under the Plan shall not exceed 2,000,000; provided,
however, that such number of shares shall be reduced by the number of shares of
the Company's Common Stock as to which options have been granted under the
Company's 1988 Stock Option Plan (other than shares which are available for
further grants under Article IV of such plan notwithstanding the prior grant of
options with respect to such shares). Such stock may be authorized but
unissued shares or shares reacquired by the Company, including but not limited
to shares purchased on the open market. Shares of stock awarded under the Plan
which are
<PAGE> 2
later reacquired by the Company as a result of forfeiture pursuant to the Plan
shall again become available for awards under the Plan.
3. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of
three or more of the Company's directors to be appointed by the Board of
Directors. Upon registration of the Company's Common Stock under Section 12 of
the Securities Exchange Act of 1934 (the "Exchange Act"), members of the
Committee shall be "disinterested persons" as such term is defined in Rule
16b-3(d) under the Exchange Act or any rule which modifies, amends or replaces
Rule 16b-3(d). The Committee shall have the authority, consistent with the
Plan, to determine the terms and conditions of each award, to interpret the
Plan and the agreements entered into pursuant to the Plan, to adopt, amend
and rescind rules and regulations for its administration and the awards, and
generally to conduct and administer the Plan and to make all determinations in
connection therewith which may be necessary or advisable, and all such actions
of the Committee shall be conclusive and binding upon all parties concerned.
4. ELIGIBILITY
Key employees of and consultants to the Company and its subsidiaries
and affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only
as a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company or
who is not rendering services pursuant to a written agreement with the
corporation in question), as may be selected from time to time by the Committee
in its discretion, are eligible to receive awards under the Plan. The
Committee shall determine in its sole discretion the number of shares to be
awarded to each participant.
5. TERMS AND CONDITIONS OF AWARDS
All shares of Common Stock awarded to participants shall be subject to
the following terms and conditions, and to such
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<PAGE> 3
other terms and conditions not inconsistent with the Plan as shall be
contained in each Award Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" which shall be not
less than ninety days. Such Restricted Period may differ among
participants and may have different expiration dates with respect to
portions of shares covered by the same award. The Committee may also
determine that the expiration of any Restricted Period shall be subject
to such additional terms and conditions as it decides in its sole
discretion and as set forth in the participant's Agreement.
(b) Shares of Common Stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer, the participant shall have all the rights of
a stockholder including but not limited to the right to receive all
dividends paid on such shares (subject to the provisions of Paragraph 6)
and the right to vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any
reason (including termination by reason of the fact that any corporation
is no longer a subsidiary or affiliated company), other than death,
permanent and total disability, or, in the case of an employee,
retirement on or after normal retirement date, all shares of stock
theretofore awarded to the participant which are still subject to the
restrictions imposed by Paragraph 5(b) shall upon such termination of
employment or the consulting relationship be forfeited and transferred
back to the Company, provided, however, that if such employment or
consulting relationship is terminated by action of the Company or any of
its subsidiaries or affiliated companies without cause or by agreement of
the Company or any of its subsidiaries or affiliated companies and the
participant, the Committee may, but need not, determine that some or all
of the shares shall not be so forfeited, and provided further that the
Committee may remove or modify restrictions on shares which are not
forfeited. For purposes of this Paragraph 5(c), a participant's
employment or consulting arrangement shall not
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<PAGE> 4
be considered terminated (i) in the case of transfers of employment or
the consulting arrangement among the Company, its subsidiaries and
affiliated companies, (ii) by virtue of a change of status from employee
to consultant or from consultant to employee, or (iii) in the case of
interruption in service, not exceeding one year in duration unless
otherwise approved by the Committee, for approved sick leave or other
bona fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if an employee ceases to be
employed by the Company or any of its subsidiaries or affiliated
companies by reason of retirement on or after normal retirement date, the
restrictions imposed by Paragraph 5(b) shall lapse with respect to the
shares then subject to restrictions, except to the extent provided to the
contrary in the Agreement.
(e) Shares of Common Stock awarded under the Plan shall not be
evidenced by certificates until restrictions lapse but shall be registered
in the name of the participant in book entry form in the Company's stock
register.
(f) The participant shall enter into an Agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the award, the expiration of the Restricted Period as to
the shares covered by the award, and such other matters, including
compliance with applicable federal and state securities laws and methods
of withholding or providing for the payment of required taxes, as the
Committee in its sole discretion shall determine. The Committee may at
any time amend the terms of any Agreement consistent with the terms of
the Plan, except that without the participant's written consent no such
amendment shall adversely affect the rights of the participant.
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<PAGE> 5
(g) At the expiration of the Restricted Period as to shares
covered by any award, the Company shall redeliver the stock
certificates deposited with it pursuant to Paragraph 5(e) and as to
which the Restricted Period has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
(h) (1) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards granted hereunder, in the case of a Change
in Control of the Company, each award theretofore granted shall
immediately become fully vested and non-forfeitable and shall thereupon
be distributed to participants as soon as practicable, free of all
restrictions. A Change in Control shall occur if any of the events
described below in subparagraphs (A), (B) or (C) shall have occurred,
unless the holder of any such award shall have consented to the
application of subparagraph (C) in lieu of subparagraphs (A) and (B):
(A) any "person" or "group of persons" as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act other than
pursuant to a transaction or agreement previously approved by the
Board of Directors directly or indirectly purchases or otherwise
becomes the "beneficial owner" (as defined in Rule 13d3 under the
Exchange Act) or has the right to acquire such beneficial ownership
(whether or not such
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<PAGE> 6
right is exercisable immediately, with the passage of time, or
subject to any condition), of voting securities representing
twenty-five percent or more of the combined voting power of
all outstanding voting securities of (A) the Company, or (B) of an
Affiliated Party (as hereinafter defined);
(B) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at
the beginning of the period or whose election or nomination for
election as directors was previously so approved, for any reason
cease to constitute at least a majority of the members thereof; or
(C) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
(other than Excluded Directors, as hereinafter defined), whose
election by such Board or nomination for election by stockholders
was approved by a vote of at least two-thirds of the members of
such Board who were either directors on such Board at the beginning
of the period or whose election or nomination for election as
directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof. For
purposes hereof, "Excluded Directors" are directors whose election
by the Board or approval by the Board for stockholder election
occurred within one year of any "person" or "group of persons", as
such terms are used in Sections 13(d) and 14(d) of the Exchange
Act, commencing a tender offer for, or becoming the beneficial
owner of, voting securities representing 25 percent or more of the
combined voting power of all outstanding voting securities of the
Company, other than pursuant to a tender offer approved by
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<PAGE> 7
the Board prior to its commencement or pursuant to stock
acquisitions approved by the Board prior to their representing 25
percent or more of such combined voting power.
An "Affiliated Party" shall mean (x) MascoTech, Inc., a Delaware
corporation ("MascoTech"), provided MascoTech then owns at least twenty
percent of the combined voting power of all voting securities of the
Company, or (y) Masco Corporation, a Delaware corporation ("Masco"),
provided Masco then owns (i) at least twenty percent of the combined
voting power of all voting securities of the Company, or (ii) at least
twenty percent of the combined voting power of all voting securities of
MascoTech and MascoTech then owns at least twenty percent of the combined
voting power of all voting securities of the Company.
(2)(A) In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company to or for the
benefit of a participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, other than
any payment pursuant to this subparagraph (2) (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such participant
shall be entitled to receive from the Company, within 15 days following
the determination described in (B) below, an additional payment ("Excise
Tax Adjustment Payment") in an amount such that after payment by such
participant of all applicable Federal, state and local taxes (computed at
the maximum marginal rates and including any interest or penalties
imposed with respect to such taxes), including any Excise Tax, imposed
upon the Excise Tax Adjustment Payment, such participant retains an
amount of the Excise Tax Adjustment Payment equal to the Excise Tax
imposed upon the Payments.
-7-
<PAGE> 8
(B) All determinations required to be made under this Section
5(h)(2), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by Coopers & Lybrand L.L.P., or such other national accounting firm
as the Company, or, subsequent to a Change in Control, the Company and
the participant jointly, may designate, for purposes of the Excise Tax,
which shall provide detailed supporting calculations to the Company and
the affected participant within 15 business days of the date of the
applicable Payment. Except as hereinafter provided, any determination by
Coopers & Lybrand L.L.P., or such other national accounting firm, shall
be binding upon the Company and the participant. As a result of the
uncertainty in the application of Section 4999 of the Code that may exist
at the time of the initial determination hereunder, it is possible that
(x) certain Excise Tax Adjustment Payments will not have been made by the
Company which should have been made (an "Underpayment"), or (y) certain
Excise Tax Adjustment Payments will have been made which should not have
been made (an "Overpayment"), consistent with the calculations required
to be made hereunder. In the event of an Underpayment, such Underpayment
shall be promptly paid by the Company to or for the benefit of the
affected participant. In the event that the participant discovers that
an Overpayment shall have occurred, the amount thereof shall be promptly
repaid to the Company.
(C) This Section 5(h)(2) shall not apply to any Award (x) that was
granted prior to February 17, 1993 and (y) the holder of which is an
executive officer of the Company, as determined under the Exchange Act.
(i) Notwithstanding any other provision of this Plan, a participant
may assign all rights under any award to a revocable grantor trust
established by the participant for the sole benefit of the participant
during the life of the participant, and under the terms of which the
participant is and remains the sole trustee until death or physical or
mental incapacity. Such assignment shall be effected by a written in-
strument in form and content satisfactory to the Committee and the
participant shall
-8-
<PAGE> 9
deliver to the Committee a true copy of the agreement or other document
evidencing such trust. If in the judgment of the Committee the trust to
which a participant may attempt to assign rights under an award does not
meet the criteria of a trust to which an assignment is permitted by the
terms of this paragraph, or if after assignment, because of amendment, by
force of law or any other reason such trust no longer meets such
criteria, such attempted assignment shall be void and may be disregarded
by the Committee and the Company and all rights to any awards shall
revert to and remain solely in the participant. Notwithstanding a
qualified assignment, the participant, and not the trust to which rights
under an award may be assigned, for the purpose of determining
compensation arising by reason of the award shall continue to be
considered an employee or consultant, as the case may be, of the Company,
a subsidiary or affiliated company, but such trust and the participant
shall be bound by all of the terms and conditions of the Agreement and
this Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other
instrument of transfer, copies of trust agreements and any other
documents delivered to them by or on behalf of the participant which they
believe genuine and any action taken by them in reliance thereon shall be
conclusive and binding upon the participant, his personal representatives
and all persons asserting a claim based on an award granted pursuant to
this Plan. The delivery by a participant of a beneficiary designation,
or an assignment of rights under an award as permitted by this Paragraph
5(i), shall constitute the participant's irrevocable undertaking to
hold the Committee, the Company and its officers, agents and employees
harmless against claims, including any cost or expense incurred in
defending against claims, of any person (including the participant) which
may be asserted or alleged to be based upon an award subject to a
beneficiary designation or an assignment. In addition, the Company may
decline to deliver shares to a beneficiary until it receives indemnity
against claims of third parties satisfactory to the Company. Issuance
of shares as to which restrictions have lapsed in the name of, and
delivery to,
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<PAGE> 10
the trust to which rights may be assigned shall be conclusively
considered issuance and delivery to the participant.
(j) The Committee, in its discretion and in accordance with its
procedures, may permit the participant to satisfy, in whole or in part,
the applicable income tax withholding obligations when the restrictions
imposed by Paragraph 5(b) lapse by having shares withheld from the shares
as to which the Restricted Period has expired or by delivering shares of
Common Stock of the Company having a fair market value equal to the
amount needed to satisfy such obligations.
(k) In its sole discretion the Committee may also provide the
participant with the right to receive cash payments in connection with
shares of Common Stock awarded under the Plan (including shares previously
awarded), the amount of which payments are based, in whole or only in
part, on the value of such Common Stock. The right to receive such
payments shall be subject to such other terms and conditions not
inconsistent with the Plan as the Committee may determine.
6. CHANGES IN CAPITALIZATION
If there is a change in, reclassification, subdivision or combination
of, stock dividend on, or exchange of stock by the Company for the outstanding
Common Stock of the Company, the maximum aggregate number and class of shares
as to which awards may be granted under the Plan shall be appropriately
adjusted by the Committee whose determination thereof shall be conclusive.
Unless the Committee shall otherwise determine, any shares of stock or other
securities received by a participant with respect to shares still subject to
the restrictions imposed by Paragraph 5(b) will be subject to the same
restrictions and shall be deposited with the Company.
If the Company shall be consolidated or merged with another
corporation, the stock, securities or other property which a participant is
entitled to receive by reason of his ownership of the shares of stock subject
to the restrictions imposed pursuant to Paragraph 5(b) shall be subject to the
-10-
<PAGE> 11
same or equivalent restrictions unless the Committee shall determine otherwise
at that time.
7. AMENDMENT OF THE PLAN
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of the Company's stockholders no
amendment shall increase the number of shares which may be awarded under the
Plan, extend the date for awards of shares under the Plan beyond December 31,
1998 or change the standards of eligibility of employees or consultants
eligible to participate in the Plan. The number of shares awardable under the
Plan may, however, without stockholder approval, be adjusted pursuant to the
adjustment provisions described in Paragraph 6 hereof.
8. EMPLOYMENT RIGHTS
The adoption of the Plan, the award of stock hereunder and the
participation by a participant in the Plan do not confer upon any employee of
or consultant to the Company or a subsidiary or an affiliated company any right
to continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any way
impair the right of the Company or a subsidiary or an affiliated company to
terminate the employment of any of its employees or the consulting arrangement
with any of its consultants at any time, with or without cause, unless a
written employment or consulting agreement provides otherwise.
9. EFFECTIVE DATE AND TERMINATION OF AWARDS
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1998.
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<PAGE> 1
EXHIBIT 10.u
February 28, 1995
Dear :
As you know, our company's Board of Directors has adopted a Plan whereby
supplemental retirement and other benefits, in addition to those provided under
the Company's pension and other benefit plans, will be made available to those
Company and subsidiary executives as may be designated from time to time by the
company's Chief Executive Officer. You have been previously designated as a
participant in the Plan by a letter agreement signed by you and dated February
14, 1994. This agreement amends and replaces in its entirety your previously
signed letter agreement and describes in full your benefits pursuant to the
Plan and all of the Company's obligations to you and yours to the Company under
the Plan. These benefits as described below are contractual obligations of the
Company.
For the purposes of this Agreement, words and terms are defined as follows:
a. "Retirement" shall mean your termination of employment with the
Company, on or after you attain age 65. Your acting as a consultant shall
not be considered employment.
b. "Average Compensation" shall mean the aggregate of your highest
three years' total annual cash compensation paid to you by the Company,
consisting of (i) base salaries and (ii) regular year-end cash bonuses
paid with respect to the years in which such salaries are paid, divided
by three.
c. If you become Disabled, "Total Compensation" shall mean your
annual base salary rate in the year in which you become Disabled plus the
regular year-end cash bonus paid to you for the year immediately prior
thereto.
d. "Surviving Spouse" shall be the person to whom you shall be
legally married (under the law of the jurisdiction of your permanent
residence) at the date of (i) your Retirement or death after attaining age
65 (if death
<PAGE> 2
Page 2 February 28, 1995
terminated employment with the Company) for the purposes of paragraphs 1,
2 and 3, (ii) your death for the purposes of paragraph 5, and (iii) your
Disability for the purposes of paragraphs 6 and 7. For the purposes of
paragraphs 10a, 10e, 10f, 10g and 10h, "Surviving Spouse" shall be any
spouse entitled to survivor's benefits.
e. "Disability" and "Disabled" shall mean your being unable to
perform your duties as a Company executive by reason of your physical or
mental condition, prior to your attaining age 65, provided that you have
been employed by the Company for two consecutive Years or more.
f. "Company" shall mean TriMas Corporation or any corporation in
which TriMas Corporation or a subsidiary owns stock possessing at least
20% of the total combined voting power of all classes of stock.
g. "Year" shall mean twelve full consecutive months, and "year"
shall mean a calendar year.
h. "Plan Limitation" for any year shall mean (x) for 1989,
$300,000 multiplied by the Cost of Living Factor for 1988, and (y) for any
year subsequent to 1989, the Plan Limitation for the immediately
preceding year multiplied by the Cost of Living Factor for such preceding
year.
i. "Cost of Living Factor" for any year shall mean, except as
otherwise provided generally with respect to the Plan by the Company's
Board of Directors, the quotient (in no event to exceed 1.03 or to be
less than .97) obtained by dividing the monthly Consumer Price Index
Number (as compiled in the Consumer Price Index for Urban Consumers by the
Bureau of Labor Statistics) for the month of December in such year by the
monthly Consumer Price Index Number for the immediately preceding month of
December.
j. A "Change in Control" shall be deemed to have occurred if,
during any period of twenty-four consecutive calendar months, the
individuals who at the beginning of such period constitute the Company's
Board of Directors, and any new directors whose election by such Board or
nomination for election by stockholders was approved by a vote of at
<PAGE> 3
Page 3 February 28, 1995
least two-thirds of the members of such Board who were either directors on
such Board at the beginning of the period or whose election or nomination
for election as directors was previously so approved, for any reason cease
to constitute at least a majority of the members thereof.
1. In accordance with the Plan, upon your Retirement the Company will
pay you annually during your lifetime 60% of your Average Compensation, less:
(i) a sum equal to the annual benefit which would be payable to you upon your
Retirement if benefits payable to you under the Company funded qualified
pension plans and the defined benefit (pension) plan restoration provisions of
the Company's Retirement Benefits Restoration Plan and any similar plan were
converted to a life annuity, or if you are married when you retire, to a joint
and spouse survivor life annuity, (ii) a sum equal to the annual benefit which
would be payable to you upon Retirement if your vested accounts in the
Company's Future Service Profit Sharing Trust and the defined contribution
(profit sharing) restoration provisions of the Company's Retirement Benefits
Restoration Plan and any similar plan were converted to a life annuity, and
(iii) any retirement benefits payable to you by reason of employment by your
prior employers (excluding, however, from such deduction any portion thereof,
and earnings thereon, determined by the committee referred to in paragraph 10
to have been contributed by you rather than your prior employers). In all
cases the amount offset pursuant to these subsections (i) and (ii) shall be
determined prior to the effect of any payments from the plans and trust
referred to therein which are authorized pursuant to a Qualified Domestic
Relations Order under ERISA.
2. Upon your death after Retirement or while employed by the Company
after attaining age 65, your Surviving Spouse shall receive for life 75% of the
annual benefit pursuant to paragraph 1 of this Agreement which was payable to
you prior to your death (or, if death terminated employment after attaining age
65, which would have been payable to you had your Retirement occurred
immediately prior to your death).
3. Upon your Retirement the Company will provide or
<PAGE> 4
Page 4 February 28, 1995
purchase for you and your spouse's benefit, or at its option reimburse you or
your Surviving Spouse for premiums paid, during your joint and several lives,
such supplemental medical insurance as the Company may deem advisable from time
to time.
4. Under no circumstances (i) will any retirement benefits be paid to
you or your Surviving Spouse pursuant to this Agreement unless you were employed
by the Company or Disabled on your Retirement, or were employed by the
Company at the time of your death after attaining age 65, and (ii) will you or
your Surviving Spouse be entitled to receive retirement benefits under this
Agreement if your Retirement commences prior to your attaining age 65.
5. If while employed by the Company you die prior to your attaining
age 65 leaving a Surviving Spouse, and provided you shall have been employed by
the Company for two consecutive Years or more, your Surviving Spouse shall
receive annually for life 45% of your Average Compensation, less: (i) a sum
equal to the annual benefit which would be payable to your Surviving Spouse
under Company funded qualified pension plans and the defined benefit (pension)
plan restoration provisions of the Company's Retirement Benefits Restoration
Plan and any similar plan if such benefit were converted to a life annuity, and
(ii) a sum equal to the annual payments which would be received by your
Surviving Spouse as if your spouse were designated as the beneficiary of your
vested accounts in the Company's Future Service Profit Sharing Trust and the
defined contribution (profit sharing) restoration provisions of the Company's
Retirement Benefits Restoration Plan and any similar plan and such accounts were
converted to a life annuity. In all cases the amount offset pursuant to these
subsections (i) and (ii) shall be determined prior to the effect of any payments
from the plans and trust referred to therein which are authorized pursuant to a
Qualified Domestic Relations Order under ERISA. No death benefits are payable
except to your Surviving Spouse.
6. If you shall have been employed by the Company for two Years or more
and while employed by the Company you become Disabled prior to your
attaining age 65, until the earlier of your death, termination of Disability or
attaining age 65 the
<PAGE> 5
Page 5 February 28, 1995
Company will pay you an annual benefit equal to 60% of your Total Compensation
less any benefits payable to you pursuant to long-term disability insurance or
other plans the cost of which is paid by the Company. If your Disability
continues until you attain age 65, you shall be considered retired and you shall
receive retirement benefits pursuant to paragraph 1 above, based upon your
Average Compensation as of the date it is determined you became Disabled.
7. If you die leaving a Surviving Spouse while receiving Disability
benefits pursuant to paragraph 6 of this Agreement, notwithstanding paragraph 4
you will be deemed to have retired on your death and your Surviving Spouse shall
receive for life 75% of the annual benefit which would have been payable to you
if you had retired on the date of your death and your benefit determined
pursuant to paragraph 1, based upon your Average Compensation as of your
becoming Disabled.
8. Notwithstanding any of the provisions of this Agreement, the maximum
retirement, disability and death benefits payable to you and your spouse
pursuant to this Agreement for any year shall in no event exceed the higher of
(A) $500,000 less those sums to be deducted from benefits pursuant to clauses
(i), (ii) and (iii) of paragraph 1, clauses (i) and (ii) of paragraph 5, or
under paragraph 6, whichever is applicable, or (B) the Plan Limitation for the
year in which such benefits were first paid, less the aggregate annual benefit
with respect to the Company's Retirement Benefits Restoration Plan (and any
future non-qualified retirement plan) to be deducted (x) under clauses (i) and
(ii) of paragraph 1, (y) under paragraph 5 should you die while employed prior
to attaining age 65 or (z) under paragraph 6 should you become disabled prior to
attaining age 65.
9. If you are eligible to receive benefits hereunder, unless otherwise
specifically agreed by the Company in writing, you will not be able to receive
benefits under any other Company sponsored non-qualified retirement plans other
than the Company's Retirement Benefits Restoration Plan.
10. We also agree upon the following:
a. The Compensation Committee of the company's
<PAGE> 6
Page 6 February 28, 1995
Board of Directors, or any other committee however titled which shall be
vested with authority with respect to the compensation of the company's
officers and executives, shall have the exclusive authority to make all
determinations which may be necessary in connection with this Agreement
including the date of and whether you are Disabled, the amount of annual
benefits payable to you by reason of employment by other employers, the
interpretation of this Agreement, and all other matters or disputes
arising under this Agreement. The determinations and findings of the
Compensation Committee or such other committee of the company's Board
of Directors shall be conclusive and binding, without appeal, upon both of
us.
b. You will not during your employment or Disability, and after
Retirement or the termination of your employment, for any reason disclose
or make use of for your own or another person's benefit under any
circumstances any of the Company's Proprietary Information.
Proprietary Information shall include trade secrets, secret processes,
information concerning products, developments, manufacturing techniques,
new product or marketing plans, inventions, research and development
information or results, sales, pricing and financial data, information
relating to the management, operations or planning of the Company and any
other information treated as confidential or proprietary.
c. If your employment by the Company shall terminate for any
reason whatsoever prior to your Retirement other than by reason of your
death or Disability, for a period of two years after the termination of
your employment, and if your employment shall be terminated by reason of
Retirement or any Disability during such time as you shall receive
retirement or disability benefits pursuant to this Agreement, you agree
that you will not directly or indirectly engage in any business
activities, whether as a consultant, advisor or otherwise, in which the
Company is engaged in any geographic area in which the products or
services of the Company have been sold, distributed or provided during the
five year period prior to the date of termination of employment or
Retirement.
In addition to the foregoing and provided no "Change in
<PAGE> 7
Page 7 February 28, 1995
Control" has occurred, if while you are receiving retirement or other
benefits pursuant to this Agreement, in the judgment of the committee you
directly or indirectly engage in activity or act in a manner which can be
considered adverse to the interest of the Company or any of its direct or
indirect subsidiaries or affiliated companies, the committee may terminate
your rights to any further benefits hereunder.
d. Except as may be provided to the contrary in a duly authorized
written agreement between yourself and the Company you acknowledge that
the Company has made no commitments to you of any kind with respect to
the continuation of your employment, which we expressly agree is an
employment at will, and you or the Company shall have the unrestricted
right to terminate your employment with or without cause, at any time in
your or its discretion.
e. At the Company's request, expressed through a Company officer,
you agree to provide such information with respect to matters which may
arise in connection with this Agreement as may be deemed necessary by the
Company or the Compensation or other committee, including for example
only and not in limitation, information concerning benefits payable to
you from third parties, and you further agree to submit to such medical
examinations by duly licensed physicians as may be requested by the
Company or such committee from time to time. You also agree to direct
third parties to provide such information, and your Surviving Spouse's
cooperation in providing such information is a condition to the receipt of
survivor's benefits under this Agreement.
f. To the extent permitted by law, no interest in this Agreement
or benefits payable to you or to your Surviving Spouse shall be
subject to anticipation, or to pledge, assignment, sale or transfer in any
manner nor shall pledge, assignment, sale or transfer in any manner
nor shall you or your Surviving Spouse have the power in any
manner to charge or encumber such interest or benefits, nor shall such
interest or benefits be liable or subject in any manner for the
liabilities of you or your Surviving Spouse's debts, contracts, torts or
other engagements of any kind.
<PAGE> 8
Page 8 February 28, 1995
g. No person other than you and your Surviving Spouse shall have
any rights or property interest of any kind whatsoever pursuant to this
Agreement, and neither you nor your Surviving Spouse shall have any rights
hereunder other than those expressly provided in this Agreement. Upon the
death of you and your Surviving Spouse no further benefits of whatsoever
kind or nature shall accrue or be payable pursuant to this Agreement.
h. All benefits payable pursuant to this Agreement shall be paid
in installments of one-twelfth of the annual benefit, or at such
shorter intervals as may be deemed advisable by the Company in its
discretion, upon receipt of your or your Surviving Spouse's written
application, or by the applicant's personal representative in the event of
disability.
i. All benefits under this Agreement shall be payable from the
Company's general assets, which assets are subject to the claims of
general creditors, and are not set aside for your or your Surviving
Spouse's benefit.
j. This Agreement shall be governed by the laws of the State of
Michigan.
11. We have agreed that the determinations of the committee described in
paragraph 10a shall be conclusive as provided in such paragraph, but if for any
reason a claim is asserted which subverts the provisions of paragraph 10a, we
agree that, except for causes of action which may arise under paragraph 10b and
the first paragraph of paragraph 10c, arbitration shall be the sole and
exclusive remedy to resolve all disputes, claims or controversies which could be
the subject of litigation (hereafter referred to as "dispute") involving or
arising out of this Agreement. It is our mutual intention that the arbitration
award will be final and binding and that a judgment on the award may be entered
in any court of competent jurisdiction and enforcement may be had according to
its terms.
The arbitrator shall be chosen in accordance with the commercial
arbitration rules of the American Arbitration
<PAGE> 9
Page 9 February 28, 1995
Association and the expenses of the arbitration shall be borne equally by the
parties to the dispute. The place of the arbitration shall be the principal
offices of theAmerican Arbitration Association in the metropolitan Detroit area.
The arbitrator's sole authority shall be to apply the clauses of this
Agreement.
We agree that the provisions of this paragraph 11, and the decision of the
arbitrator with respect to any dispute, with only the exception provided in this
paragraph 11, shall be the sole and exclusive remedy for any alleged cause of
action in any manner based upon or arising out of this Agreement. Subject to
the foregoing exception, we acknowledge that since arbitration is the
exclusive remedy, neither of us or any party claiming under this Agreement has
the right to resort to any federal, state or local court or administrative
agency concerning any matters dealt with by this Agreement and that the decision
of the arbitrator shall be a complete defense to any action or proceeding
instituted in any tribunal or agency with respect to any dispute. The
arbitration provisions contained in this paragraph shall survive the termination
or expiration of this Agreement, and shall be binding on our respective
successors, personal representatives and any other party asserting a claim based
upon this Agreement.
We further agree that any demand for arbitration must be made within one
year of the time any claim accrues which you or any person claiming hereunder
may have against the Company; unless demand is made within such period it is
forever barred.
We are pleased to be able to make this supplemental plan available to you.
Please examine the terms of this Agreement carefully and at your earliest
convenience indicate your assent to all of its terms and conditions by signing
and dating where provided below and returning a signed copy to me.
Sincerely,
TRIMAS CORPORATION
<PAGE> 10
Page 10 February 28, 1995
By/s/Richard A. Manoogian
---------------------------
Richard A. Manoogian
Chief Executive Officer
- -------------------------
DATE:
--------------------
<PAGE> 1
EXHIBIT 10.v
TRIMAS CORPORATION RETIREMENT
BENEFIT RESTORATION PLAN
SECTION l
ADOPTION OF PLAN
1.1 Adoption. TriMas Corporation (TriMas) hereby adopts the TriMas
Corporation Retirement Benefit Restoration Plan (Plan), effective January 1,
1995 (Effective Date).
1.2 Purpose. The sole purpose of the Plan is to provide benefits to
a select group of management or highly compensated employees that would be
provided to such employees who terminate employment or retire after the
Effective Date under certain retirement plans of TriMas Corporation and
its subsidiaries, which plans are set forth in Appendix "A" hereto and are
qualified plans under Section 401(a) of the Internal Revenue Code of 1986, as
amended (Code) (the "Qualified Plans"), but for the benefit limitations of the
Code, in order to encourage the continued employment and diligent service of
such employees with TriMas following the Effective Date. Accordingly (by way
of example and not limitation), in no event shall the provisions of the Plan be
construed to benefit any employee whose termination of employment occurred
prior to the Effective Date.
1.3 Construction. The Plan shall be construed in accordance with
Michigan law, except where preempted by federal law. It is intended that the
Plan shall be unfunded and maintained by TriMas primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, so that the Plan is exempt from the requirements of
Parts 2, 3 and 4 of the
<PAGE> 2
Employee Retirement Income Security Act of 1974, as amended (ERISA). All
provisions of the Plan shall be interpreted in accordance with such intentions.
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<PAGE> 3
SECTION 2
COVERAGE
2.1 Covered Employees. The coverage of the Plan shall be limited to
highly-compensated or management employees of TriMas and of those subsidiaries
of TriMas the Qualified Plans of which are listed in Appendix "A", who (a)
receive from TriMas or the subsidiary of TriMas which is the employer of such
person compensation otherwise eligible for coverage under the terms of such
Qualified Plan for any calendar year which compensation exceeds $150,000 or
such other adjusted limit as provided by Section 401(a)(17) of the Code, or (b)
whose benefits or contributions under the Qualified Plans are reduced due to
the application of Section 415 of the Code.
2.2 Commencement and Cessation of Coverage. An employee shall be
covered under the Plan commencing on the later of (a) the Effective Date or (b)
the earlier of the date that his plan-eligible compensation described in
Section date his benefits or contributions under the Qualified Plans are first
reduced by the application of Code Section 415. An employee shall cease to be
covered by the Plan on his date of termination of employment from TriMas and
its subsidiaries. If prior to such termination an employee ceases to qualify
for coverage under the Plan due to some other event (by way of examples and not
as limitation, a decrease in Plan-eligible compensation or the commencement of
employment with a TriMas subsidiary which has no Qualified Plan or has
discontinued its Qualified Plan), his coverage under the Plan shall cease as of
the time such disqualifying event occurs and only the benefits accrued
hereunder up to such time shall be payable from this Plan.
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<PAGE> 4
SECTION 3
BENEFITS
3.1 Amount. Subject to Section 3.3 hereof, a covered employee shall
be entitled to either or both, as applicable, the supplemental retirement
benefits described below:
(a) An annual amount equal to the benefit which would have been
payable to the employee under any defined benefit (pension) Qualified
Plan in which he is a participant ("Qualified Pension Plan") but for
any benefit limitations imposed by the Code on the computation of such
benefit, reduced (but not below zero) by
(b) any benefits which the employee is eligible to receive,
prior to the giving effect to any qualified domestic relations order,
under any such Qualified Pension Plan,
each benefit being expressed for this purpose in the normal form of payment
under said Qualified Pension Plan, plus
(c) A single lump sum payment equal to the sum of amounts which
would have been contributed to the account of the employee as a
company contribution with respect to periods after December 31, 1993
under any defined contribution (profit sharing) Qualified Plan in
which he is a participant (but in no case including any amounts,
however characterized, which the employee or the company may have
contributed to any such plan pursuant to the provisions of Section
401(k) or 401(m) of the Code) ("Qualified Profit Sharing Plan") but
for any benefit limitations imposed by the Code on the contribution
amount, plus
(d) investment adjustments applied to the contribution
amounts of Section 3.1(c) which
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<PAGE> 5
adjustments shall be applied to such accounts (i) utilizing
the same provisions for calculating the effect of investment earnings
(or losses) as prevail under the terms of any such Qualified
Profit Sharing Plan and (ii) utilizing the amount of investment
earnings (or loss) as is experienced in a given year in the TriMas
Master Profit Sharing Trust or other investment vehicle in which the
assets of any such Qualified Profit Sharing Plan are invested (and in
no case applying any adjustments for forfeitures of any kind) reduced
(but not below zero) by
(e) the covered employee's account balance attributable to
company profit sharing contributions made with respect to periods
after December 31, 1993 which the employee is eligible to receive,
prior to the giving effect to any qualified domestic relations
order, under any such Qualified Profit Sharing Plan,
provided, however, that any lump sum payment made pursuant to this Plan shall
have no adjustment the purpose of which is to make such payment equivalent
after the effect of any taxes which may have to be paid by the employee
because such lump sum payments from this Plan are taxable when received as
ordinary income and may not be eligible for rollover or other tax-advantaged
treatment under the Code.
3.2 Timing and Form of Payments. (a) Retirement benefit payments
hereunder which are supplemental to a Qualified Pension Plan shall be made at
the same time as benefit payments are made from the Qualified Pension Plan and
shall be payable (i) for an employee who is unmarried at the time payments
commence, in the form of a single life annuity, or (ii) for any employee who is
married when payments commence, in the form of a 50% joint and survivor annuity
with the employee's spouse, unless, in either case, the employee validly elects
another form of payment for benefits under the Qualified Pension Plan, in which
case the supplemental retirement benefit hereunder shall be paid in the same
form as benefits are paid under the Qualified
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<PAGE> 6
Pension Plan, computed using the same formulas and actuarial factors as
set forth for the determination of optional forms of benefits under such plan;
for purposes of this Section 3.2(a), an employee's marital status and spouse
shall be determined in accordance with the Qualified Pension Plan.
(b) Retirement benefit payments hereunder which are supplemental to a
Qualified Profit Sharing Plan shall be payable in a lump sum and shall be made
at the time and to the same person as the lump sum payment is made from
the Qualified Profit Sharing Plan.
3.3 Forfeitability. Payment of benefits under the Plan shall be
conditioned upon receipt of benefit payments from the respective Qualified Plans
and shall be vested in the same manner and to the same extent as benefits under
such Qualified Plans.
3.4 No Payment During Employment. Notwithstanding the foregoing, no
periodic payments computed under paragraphs (a) and (b) of Section 3.1 of this
Plan shall be made during such time as any person both receives payments from
any Qualified Plan and is employed by TriMas or any affiliated company, and no
lump sum payment computed under paragraphs (c), (d) and (e) of Section 3.1 of
this Plan shall be made until after the covered employee's termination of
employment.
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SECTION 4
COST OF BENEFITS
4.1 Current Expense. The entire cost of providing benefits under
the Plan, including the costs of the Plan Administrator, shall be paid by
TriMas out of its current operating budget, and TriMas's obligations under the
Plan shall be an unfunded and unsecured promise to pay. TriMas shall not be
obligated under any circumstances to separately fund its obligations under the
Plan.
4.2 Option to Fund Informally. Notwithstanding Section 4.1, TriMas
may, at its sole option, or by agreement, informally fund its obligations under
the Plan in whole or in part, provided, however, in no event shall such
informal funding be construed to create any trust fund, escrow account
or other security for an employee with respect to the payment of benefits under
the Plan, other than as permitted under Internal Revenue Service and Department
of Labor rules and regulations for unfunded supplemental retirement plans.
Furthermore, if TriMas decides to informally fund the Plan, in whole or in
part, by procuring, as owner, life insurance for its own benefit on the lives
of employees, the form of such insurance and the amounts thereof shall be the
sole decision of TriMas, and in no event shall an employee have any incidents
of ownership in any such policies of insurance.
4.3 Physical Examinations. If a physical examination is required
for TriMas to obtain insurance for covered employees under Section 4.2, each
employee agrees to undergo such physical examinations as may be required
by the insurance carrier. Such physical examinations shall be conducted by a
physician approved by TriMas, at the expense of TriMas.
4.4 No Employee Contributions or Loans. No loans
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<PAGE> 8
or hardship distributions or contributions by employees are permitted or
required under the Plan.
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<PAGE> 9
SECTION 5
ADMINISTRATION
5.1 Plan Administrator and Named Fiduciary. The Plan Administrator
and Named Fiduciary of the Plan for purposes of ERISA shall be TriMas
Corporation whose business address is 315 East Eisenhower Parkway, Ann
Arbor, MI 48108, and whose telephone number is (313) 747-7025. TriMas shall
have the right to change the Plan Administrator and Named Fiduciary of the Plan
at any time, and to change the address and telephone number of the same.
TriMas shall give each covered employee written notice of any such change in
the Plan Administrator and Named Fiduciary, or in the address or telephone
number of the same.
5.2 Claims Procedure. The Plan Administrator has the power to
interpret all provisions of the Plan and make final determinations concerning
the meaning of the Plan and the right of any person to benefits under the
Plan.
Each covered employee, or other person claiming through the employee,
must file a written claim for benefits with the Plan Administrator as a
prerequisite to the payment of benefits under the Plan. Any denial by the Plan
Administrator of a claim for benefits under the Plan by an employee or other
person (collectively referred to as "claimant") shall be stated in writing by
the Plan Administrator and delivered or mailed to the claimant within 90 days
after receipt of the claim, unless special circumstances require an extension
of time for processing the claim. If such an extension of time is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 90-day period. In no event shall such extension
exceed a period of 90 days from the end of the initial period.
Any notice of denial shall set forth the specific reasons for the
denial, specific reference to pertinent
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<PAGE> 10
provisions of the Plan upon which the denial is based, a description
of any additional material or information necessary for the claimant to perfect
his claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures under the Plan,
written to the best of the Plan Administrator's ability in a manner that may be
understood without legal or actuarial counsel.
A claimant whose claim for benefits has been wholly or
partially denied by the Plan Administrator may request, within 90 days
following the date of such denial, in a writing addressed to the Plan
Administrator, a review of such denial. The claimant shall be entitled to
submit such issues or comments in writing or otherwise, as he shall consider
relevant to a determination of his claim, and may include a request for a
hearing in person before the Plan Administrator. Prior to submitting his
request, the claimant shall be entitled to review such documents as the Plan
Administrator shall agree are pertinent to his claim. The claimant may, at all
stages of review, be represented by counsel, legal or otherwise, of his choice,
provided that the fees and expenses of such counsel shall be borne by the
claimant.
All requests for review shall be promptly resolved. The Plan
Administrator's decision with respect to any such review shall be set forth in
writing and shall be mailed to the claimant not later than 60 days following
receipt by the Plan Administrator of the claimant's request unless special
circumstances, such as the need to hold a hearing, require an extension of time
for processing, in which case the Plan Administrator's decision shall be so
mailed not later than 120 days after receipt of such request.
5.3 Arbitration. Exhaustion of the claim and claim review
procedures of Section 5.2 is prerequisite to any further consideration of
a claim. In the event that any claim remains fully or partially unresolved
after exhaustion of the claim and claim review procedures of Section 5.2, any
remaining dispute shall, within 30 days of the date of the Plan Administrator's
final decision on review, be submitted
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<PAGE> 11
to arbitration, which shall be the sole and exclusive remedy. The arbitration
decision shall be final and binding on the Plan, TriMas, the claimant, and any
other party involved. All claims shall be arbitrated in Taylor, Michigan. The
arbitrator shall be chosen in accordance with the Voluntary Labor Arbitration
Rules of the American Arbitration Association then in effect, and the expense
of the arbitration shall be shared equally by TriMas and the claimant. Any
claim shall be deemed waived unless presented within the time limits specified
in Section 5.2 and this Section 5.3. The arbitrator shall not have
jurisdiction or authority to change, add to or subtract from any of the
provisions of the Plan. The arbitrator's sole authority shall be to interpret
or apply the provisions of the Plan. Because arbitration is the exclusive
remedy with respect to any claim hereunder, neither TriMas, the claimant nor
any other party has the right to resort to any federal, state or local court or
administrative agency concerning any claim, and the decision of the arbitrator
shall be a complete defense to any suit, action or proceeding instituted in any
federal, state or local court or before any administrative agency with respect
to any dispute which is arbitrable as herein set forth. The arbitration
provisions hereof shall, with respect to any claim, survive the termination of
the Plan.
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SECTION 6
LIMITATION OF COVERED EMPLOYEE'S RIGHTS
6.1 No Contract of Employment. The Plan shall not be deemed to
create a contract of employment between TriMas or any TriMas subsidiary and any
covered employee and shall create no right in any covered employee to continue
in the employ of TriMas or any of its subsidiaries for any specific period of
time, or to create any other rights in any covered employee or obligations on
the part of TriMas, except as are set forth explicitly herein or in a written
employment contract. In consideration of his coverage hereunder each covered
employee shall be deemed to have agreed that TriMas has the right to terminate
him at any time, with or without cause, and nothing in the Plan shall restrict
the right of any covered employee to terminate his employment.
6.2 Unsecured Creditor. The rights of any employee or any person
claiming through the employee under the Plan shall be solely those of an
unsecured general creditor of TriMas. Any employee, or any person
claiming through the employee, shall only have the right to receive from TriMas
those payments as specified herein. Each covered employee agrees that he or
any person claiming through him shall have no rights or interests in any asset
of TriMas, including any insurance policies or contracts which TriMas may
possess to informally fund the Plan.
6.3 No Trust. No asset used or acquired by TriMas in connection
with the liabilities it has assumed under the Plan shall be deemed to be held
under any trust for the benefit of any employee nor shall any such asset
be considered security for the performance of the obligations of TriMas, but
shall be, and remain, a general unpledged and unrestricted asset of TriMas,
except as may be provided by separate agreement and as permitted under Internal
Revenue Service and Department of Labor rules and regulations for
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<PAGE> 13
unfunded supplemental retirement plans.
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<PAGE> 14
SECTION 7
AMENDMENT OR TERMINATION
7.1 Right to Amend or Terminate Plan. TriMas reserves the right to
amend the Plan in any manner deemed appropriate by TriMas's Board of Directors,
and TriMas reserves the right to terminate the Plan for any reason and at any
time in whole or part by action of the Board of Directors.
7.2 Limitations. Notwithstanding Section 7.1, no such amendment or
termination shall reduce or otherwise affect the benefits payable to or on
behalf of any covered employee that have accrued prior to such amendment or
termination without the written consent of the employee (or beneficiary, if
applicable). In addition, the complete or partial termination of this Plan,
should it occur or be deemed by facts and circumstances to have occurred, shall
have the same effect on the vesting of benefits accrued to date under this Plan
as in the case of a complete or partial termination of a Qualified Plan.
7.3 Payment of Benefits Upon Termination. Upon termination or
partial termination of the Plan TriMas may elect the method by which benefits
accrued through the date of such termination or partial termination shall be
provided. Such election may include the payment of the present value of all
such accrued benefits directly to covered employees (or beneficiaries, if
applicable) or any other method of payment or funding which TriMas may, in its
sole discretion, determine.
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<PAGE> 15
SECTION 8
MISCELLANEOUS PROVISIONS
8.1 Independence of Benefits. Except as otherwise provided herein
or pursuant to the terms of any separate agreement with an employee, the
benefits payable under the Plan shall be independent of, and in addition
to, any other benefits or compensation, whether by salary, or bonus or
otherwise, payable under any employment agreements that now exist or may
hereafter exist from time to time between TriMas and any employee. The Plan
does not involve a reduction in salary or foregoing of an increase in future
salary by any employee, nor does the Plan in any way affect or reduce the
existing and future compensation and other benefits of any employee.
8.2 Nonalienation of Benefits. Except insofar as this provision may
be contrary to applicable law (such as an order of divorce or separation), no
sale, transfer, alienation, assignment, pledge, collateralization, or attachment
of any benefits under the Plan shall be valid or recognized by TriMas.
8.3 Payments for the Benefit of Employee. In the event that TriMas
shall find that any person to whom a benefit is payable under the Plan is
unable to care for his affairs because of illness or accident, is otherwise
mentally or physically incompetent, or is unable to give a valid receipt,
TriMas may cause the payments becoming due to such person to be paid to another
individual for such person's benefit, without responsibility on the part of
TriMas to follow application of such payment. Any such payment shall be a
payment on account of such person and shall operate as a complete discharge of
TriMas from all liability under the Plan.
8.4 Use of Words. Wherever any words are used in
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<PAGE> 16
the Plan in the masculine gender, they shall be construed as though they also
were used in the feminine gender in all cases where they would so apply,
and wherever any words are used in the Plan in the singular forms they shall be
construed as though they also were used in the plural form in all cases where
they would so apply, and vice versa.
8.5 Headings. Headings of Sections herein are inserted for
convenience of reference. They constitute no part of the Plan and are not to be
considered in the construction of the Plan.
8.6 Savings Clause. If any provisions of the Plan shall be for any
reason invalid or unenforceable, the remaining provisions nevertheless shall be
carried into effect.
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SECTION 9
DEFINITIONS
Terms capitalized in the text of this Plan shall have the meanings
referred to below, unless the context requires otherwise. Terms not defined
herein shall be construed in reference to the same or similar terms as used in
the applicable Qualified Plan.
9.1 Code. See Section 1.2.
9.2 Effective Date. See Section 1.1.
9.3 ERISA. See Section 1.3.
9.4 Plan. See Section 1.1.
9.5 TriMas. See Section 1.1.
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SECTION 10
EXECUTION
IN WITNESS WHEREOF, TriMas Corporation has caused the Plan to be
executed on March 30, 1995.
TriMas Corporation
By:Richard A. Manoogian
Its Chairman
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APPENDIX A
RETIREMENT PLANS LIST
TRIMAS CORPORATION
DEFINED BENEFIT PLANS DEFINED CONTRIBUTION PLANS
TriMas Corporation Pension Plan Lake Erie Screw Corporation Pension Plan
and Trust
Lake Erie Screw Corporation Profit
Sharing Plan and Trust
TriMas Corporation Future Service
Profit Sharing Plan
TriMas Corporation Master Defined
Contribution Plan
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<PAGE> 1
EXHIBIT 10.W
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement") is made as of the 10th day of December,
1997, between TriMas Corporation, a Delaware corporation and Brian P. Campbell
(the "Employee").
RECITALS
The Employee has actively and significantly participated in the management
and development of the business, assets and value of the Company and the Company
considers the retaining of the Company's existing management essential to
protecting and enhancing the best interest of the Company and enhancing
shareholder value;
The Company believes that executing this Agreement is in the best interest
of the Company and its shareholders and the Employee believes that the execution
of this Agreement is in his best interests; and
The Company and the Employee desire to enter into this Agreement;
NOW, THEREFORE, to induce the Employee to remain in the employ of the
Company, and for other good and valuable consideration, the Company and the
Employee agree as follows:
1. Definitions.
(i) "Benefit Period" shall mean the period commencing on the date
of this Agreement and continuing through the later of (i) the end of the
Contract Employment Period or (ii) the date which is one (1) year after
the Termination Date, but in no event to end later than March 8, 2004.
(ii) "Board" shall mean the Company's Board of Directors.
(iii) "Business Activities" shall mean the design, development,
manufacture, distribution, sale and marketing of products or services sold,
distributed or provided by TriMas
<PAGE> 2
Corporation or any of its subsidiaries prior to the Termination Date. Business
Activities shall not include the provision of services of a professional nature
(including but not limited to the provision of financial, treasury, consulting
or accounting services) by an individual professionally licensed or
trained to perform such services ("Professional Services") in any capacity as
an employee, partner, owner or otherwise for any enterprise generally engaged
in the provision of such Professional Services to the public.
(iv) "Cause," when used in connection with the termination of the
Employee's employment by the Company, shall mean (a) the willful and continued
failure (after written notice from the Company to the Employee) by the Employee
to substantially perform the Employee's primary duties and obligations (of a
nature consistent with this Agreement including without limitation Section 3
hereof) to the Company (other than any failure resulting from the Employee's
Disability or actions taken by the Company which prevent the Employee'S
performance), (b) the engaging by the Employee in willful misconduct which is
materially injurious to the Company, monetarily or otherwise, or (c) the
commission of any act constituting a felony under the laws of any state within
the United States or of the United States.
(v) "Company" shall mean TriMas Corporation and any corporation
or entity that is a successor (whether by purchase of all or substantially all
of the business and/or assets, merger, consolidation or liquidation) of the
Company.
(vi) "Contract Employment Period" shall mean that period
commencing with the date of this Agreement and continuing to March 8, 2001.
(vii) "Disability" shall mean a physical or mental incapacity of
the Employee which entitles the Employee to benefits under the long term
disability plan applicable to the
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<PAGE> 3
Employee and maintained by the Company as in effect at the time of such
disability, provided however the TriMas Corporation Supplemental Executive
Retirement and Disability Plan shall not be deemed to be such a long term
disability plan. However, if the Company has no such plan at that time,
"Disability" shall mean any physical or mental condition that renders the
Employee unable to substantially perform the Employee's duties with the Company
for a period of one hundred and eighty (180) days during any period of twelve
(12) consecutive months.
(viii) "Employment Term" shall have the meaning set forth in
Section 2 of this Agreement.
(ix) "Good Reason," when used with reference to a voluntary
termination by the Employee of the Employee's employment with the Company, shall
mean:
(a) a substantial diminution in the Employee's position
such that the Employee's job is no longer of a significant or responsible
management or professional nature;
(b) at any time on or after March 31, 1999, the demotion
or a continuation of a prior demotion of the Employee to a position
where the Employee is no longer discharging as the principal part of that
position, responsibilities of a general nature substantially consistent
with the type of responsibilities being discharged by the Employee as of
the date hereof;
(c) a reduction in the Employee's base salary as in effect
on the date of this Agreement or as the same may be increased from time
to time; or the Company's failure to pay to the Employee at least the
Minimum Bonus Compensation for the year ended December 31, 1997 or
December 31, 1998; or a failure of the Company to include the
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<PAGE> 4
Employee as an eligible participant in the Company's bonus plan, stock
incentive plan and other management incentive programs in which the
Employee currently participates other than as part of a broad-based
restructuring of benefits of the Company affecting no less than
substantially all comparably compensated employees of the Company,
provided that the awarding of any such incentive compensation is in the
Board's discretion;
(d) a change in the Employee's principal work location to
any location more than forty miles outside of Ann Arbor, Michigan, except
for required travel on the Company's business to an extent substantially
consistent with the Employee's current business travel obligations on the
date of this Agreement; or
(e) the failure by the Company to comply with any of its
obligations under Section 13(i).
(x) "Minimum Bonus Compensation" shall apply to the years ended
December 31, 1997 and December 31, 1998 only and shall mean the bonus amount of
$285,000.
(xi) "Protected Vesting Period" shall have the meaning set forth
in Section 9(vii) of this Agreement.
(xii) "Termination Date" shall mean the effective date as provided
under this Agreement of the termination of the Employee's employment.
(xiii) "Unvested Options" and "Unvested Stock Awards" shall mean
all (a) unvested restricted stock awards under the 1988 TriMas Corporation
Restricted Stock Incentive Plan (Restated December 5, 1995), (b) unvested
options under the 1988 TriMas Corporation Stock Option Plan (Restated December
5, 1995), and (c) unvested restricted stock awards, options, or other awards of
any form under the TriMas Corporation 1995 Long Term Stock Incentive Plan
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<PAGE> 5
(Restated December 5, 1995) representing awards, options or grants granted prior
to February 28, 1998.
(xiv) "Without Cause" when used in connection with the
termination of the Employee's employment by the Company, shall mean any
termination of employment of the Employee by the Company which is not a
termination of employment for Cause or Disability.
2. Employment, Acceptance and Term. The Company hereby employs the
Employee in a senior management position with the Company and the Employee
hereby accepts such employment with the Company on the terms set forth in this
Agreement for the Contract Employment Period unless sooner terminated pursuant
to the provisions of Sections 7 or 8 of this Agreement or upon the Employee's
death (the "Employment Term").
3. Duties and Authority. During the Employment Term, the Employee
shall devote his full business time and energies to the business and affairs of
the Company and shall not, without the Company's written consent, accept
other employment or permit such personal business interests as he may have to
interfere with the performance of his duties under this Agreement. The
Employee agrees to use his best efforts, skill and abilities to promote the
interests of the Company, to work with other employees of the Company in a
competent and professional manner and generally to promote the interests
of the Company and to perform such other duties of a management or professional
nature as may be assigned to him by the Chairman or Board of the Company.
4. Compensation. For all services to be performed by the Employee
during the Employment Term the Company shall pay the Employee an annual base
salary of not less than Five Hundred Twenty Eight Thousand ($528,000) Dollars
per year, payable in accordance with
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<PAGE> 6
the prevailing payroll practices of the Company and less all applicable taxes
required to be withheld by federal, state or local laws. The Employee shall be
eligible for annual merit increases in base salary, consistent with the annual
merit increases granted to other comparably compensated employees of the
Company. In addition during the Employment Term, the Employee shall be
entitled to such bonus pursuant to the Company's bonus plan, in effect on the
date hereof or which may hereafter exist, to the extent the Employee meets the
eligibility requirements of such plan and such other discretionary compensation
as in each case may be awarded from time to time in the discretion of the
Board, provided that, during the Employment Term, the Company shall pay to the
Employee as a bonus (a) for 1997 and 1998 an amount not less than the Minimum
Bonus Compensation, and (b) for 1999 and 2000 an amount commensurate with other
comparably compensated employees of the Company but not less than ninety
percent (90%) of the Employee's 1998 bonus.
5. Participation in Employee Benefit Plans. In addition to the cash
compensation payable hereunder, the Employee shall be entitled to participate
during the Employment Term in such employee benefit plans, whether contributory
or non-contributory, such as group insurance plans, hospital, surgical, vision
and dental benefit plans or other bonus incentive, profit sharing, retirement
or employee benefit plans of the Company existing on the date hereof or as may
be subsequently amended or adopted by the Company for management employees in
significant or responsible management positions covered thereby to the extent
that the Employee meets the general eligibility requirements of any such plans.
These plans include, without limitation, the TriMas Corporation Pension Plan,
the TriMas Corporation Future Service Profit Sharing Plan, the TriMas
Corporation Salaried Savings Plan, the TriMas Corporation Retirement Benefit
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<PAGE> 7
Restoration Plan and the TriMas Corporation Supplemental Executive Retirement
and Disability Plan. The Employee shall be entitled during each year of the
Employment Term to paid vacation time consistent with past practice and Company
policy for comparable senior executives. Any reference to a benefit plan under
this Agreement, including without limitation those referenced in this Section 5
and in Section 1(xiii), shall include any successor plans (the "Plans").
6. Application of this Agreement: Term of Agreement. The provisions of
Sections 7 and 8 of this Agreement shall apply with respect to any termination
of employment of the Employee which occurs during the period commencing on the
date of this Agreement and ending on March 8, 2003. Such provisions shall not
apply to any termination of employment of the Employee which occurs following
March 8, 2003 after which date the Employee shall have no further rights
under this Agreement except to the extent they have heretofore accrued to the
Employee, including without limitation those which have accrued under Section
9. Continuation of employment with a successor to TriMas Corporation, as
described in Section 13(i), shall not alone constitute termination of the
Employee's employment.
7. Termination of Employment of the Employee By the Company.
(i) The Company shall have the right to terminate the Employee's
employment hereunder at any time for Disability, for Cause, or Without Cause in
each circumstance; however if such termination occurs during the Contract
Employment Period, the Company will be required to comply with the procedures
hereinafter specified.
(ii) During the Contract Employment Period, termination of the
Employee's employment for Disability shall become effective no sooner than
thirty (30) days after a notice of intent to terminate the Employee's
employment, specifying Disability as the basis for such
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<PAGE> 8
termination, is given to the Employee by the Board, by a committee of the Board
or by the officer to whom the Employee normally reports and any applicable
requirements of the Company'S long term disability plan or, if the Company has
no such plan, its administrative practices then applicable to disability have
been met.
(iii) During the Contract Employment Period, termination of the
Employee's employment for Cause shall be effective immediately upon written
notification from the Board, a committee of the Board, or the officer to whom
the Employee normally reports, to the Employee stating in such notice that the
Employee is terminated for Cause and providing reasonable detail of the facts
and circumstances claimed by the Company to constitute Cause. In the event the
Employee believes that there was not Cause for such termination, the Employee
may notify the Company in writing of such belief within fifteen (15) days after
the Company's delivery of written notice of termination for Cause to the
Employee. In the event the Employee gives notice to the Company within such
fifteen (15) day period, the Employee shall (unless such an opportunity has
been previously offered to the Employee) within fifteen (15) days of the giving
of such notice be afforded an opportunity, together with the Employee's
counsel, to be heard before the superior to the officer to whom the Employee
normally reports. If, pursuant to such hearing, such superior officer
determines that there was no Cause for such termination, then such termination
shall be deemed to be Without Cause. Any determination by such superior
officer shall be in addition to and shall not limit the right of the Employee
to arbitrate whether such termination was for Cause under Section 16 hereof.
(iv) The Company shall have the absolute right to terminate the
Employee's employment Without Cause by notice from the President of the Company
or the Board; however,
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<PAGE> 9
during the Contract Employment Period, termination of the Employee's employment
Without Cause shall be effective on the date specified in the notice but no
sooner than five (5) business days after the date of the Company's giving to
the Employee a notice of termination, specifying that such termination is
Without Cause.
(v) Upon a termination of the Employee's employment for Cause or
(except as provided to the contrary in Section 14) for Disability, the Employee
shall have no right to receive any compensation or benefits based on the
provisions of this Agreement provided, however, with respect to Disability
nothing in this sentence shall restrict any benefits that the Employee would
otherwise receive upon the occurrence of the Employee's disability under any
benefit plans of the Company covering the Employee. Upon a termination of the
Employee's employment Without Cause, the Employee shall be entitled to receive
the benefits provided in Section 9 hereof.
8. Termination of Employment By the Employee. The Employee shall be
entitled at any time to terminate employment with the Company for any reason
and, if such termination is for Good Reason, to receive the benefits provided
in Section 9 hereof in the same manner as if such Employee had been terminated
Without Cause. The Employee shall give the Company notice of voluntary
termination of employment, which notice need specify only the Employee's desire
to terminate employment and, if such termination is for Good Reason, also set
forth in reasonable detail the facts and circumstances claimed by the Employee
to constitute Good Reason. Any notice by the Employee pursuant to this Section
shall be effective five (5) business days after the date it is given by the
Employee. If the Employee terminates his employment with the Company other
than for Good Reason, the Employee shall not be entitled to receive benefits
under this Agreement except those provided in Section 9(i) and 9(ii) hereof.
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<PAGE> 10
9. Benefits Upon Termination in Certain Circumstances. Upon the
termination of the Employee's employment by the Company Without Cause pursuant
to Section 7(iv) hereof or by the Employee for Good Reason pursuant to Section
8 hereof during the period commencing on the date of this Agreement and ending
on March 8, 2003, the Employee shall execute a Separation Agreement and
Complete Release of Liability in the form attached as Exhibit A hereto (the
"Release") in favor of the Company and commencing eight (8) days thereafter,
provided the Employee did not revoke the Release pursuant to Section 8 thereof,
the Employee shall be entitled to receive the following benefits:
(i) The Company shall pay to the Employee, not later than thirty
(30) days after the Termination Date, a lump sum cash amount equal to the sum
of (a) the full base salary earned by the Employee through the Termination Date
and unpaid at the Termination Date, (b) the amount of any base salary
attributable to vacation earned by the Employee but not taken before the
Termination Date, (c) all other amounts earned by the Employee and unpaid
at the Termination Date (including any amount of a bonus remaining unpaid from
a prior performance year), and (d) all amounts owing by the Company on account
of expenditures by the Employee on behalf of the Company, including without
limitation all amounts due as reimbursement of travel and entertainment
expenses.
(ii) The Company shall pay to the Employee, not later than thirty
(30) days after the Termination Date, the greater of (a) a pro-rata amount of
any bonus award earned by the Employee during the year in which the Termination
Date occurred; or (b) a pro-rata amount (x) in cases in which the Termination
Date occurs during 1997 and 1998, of the Minimum Bonus Compensation, and (y) in
cases in which the Termination Date occurs after December 31, 1998, of
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<PAGE> 11
the Employee's cash bonus incentive compensation for the immediately preceding
full year prior to the Termination Date. In each case, the proration shall be
based on the number of days in the year through the Termination Date compared
with 365 days.
(iii) The Company shall pay to the Employee a cash amount equal
to, the Employee's Base Annual Compensation multiplied by a fraction,
(A) the numerator of which is (x) if the Termination Date occurs
before March 8, 2000, the number of days remaining in the
Contract Employment Period or, (y) if the Termination Date
occurs on or after March 8, 2000, the number 365 and
(B) the denominator of which is 365 (the "Termination Payment").
"Base Annual Compensation" shall be the sum of (a) the Employee's base annual
salary at the highest rate in effect during the year of the Termination Date
plus (b) the greater of (x) the Employee's cash incentive bonus compensation
for the full year immediately preceding the Termination Date or (y) in cases in
which the Termination Date occurs during 1997 or 1998, the Minimum Bonus
Compensation, and (z) in cases in which the Termination Date occurs during the
period from January 1, 1999 through March 8, 2003, an amount equal to the
Employee's cash bonus incentive compensation pursuant to Section 4 hereof for
the immediately preceding full year prior to the Termination Date. The
Termination Payment shall be paid at the option of the Employer either (a) in
equal monthly installments over the remaining months of the Benefit Period, or
(b) (x) in a lump sum equal to the lesser of the Termination Payment or the
Employee's Base Annual Compensation, payable within thirty (30) days of the
Termination Date, and (y) the amount, if any, by which the Termination Payment
exceeds such lump sum payment made, in equal
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<PAGE> 12
monthly installments commencing one (1) year after the Termination Date and
ending in the last month of the Benefit Period.
(iv) The Company shall also pay to the Employee all legal fees
and expenses incurred by the Employee as a result of successfully enforcing any
right or benefit provided to the Employee by this Agreement.
(v) The Company shall pay, when due, for outplacement services
as requested by the Employee to assist in locating new employment, up to a
maximum amount of $30,000.
(vi) The Company shall maintain in full force and effect for the
Employee's continued benefit, and for the benefit of the Employee's dependents,
until the earlier of (a) the end of the Benefit Period or (b) the Employee's
commencement of employment with a new employer, any medical or dental insurance
plans or medical or dental insurance arrangements in which the Employee was
entitled to participate upon the Termination Date (subject to the Company's
right under Section 5 of this Agreement to amend or replace such plans or
arrangements after the Termination Date), provided that the Employee's
continued participation is possible under the general terms and provisions of
such plans or arrangements. In the event that the Employee's participation in
any plans or arrangements of a new employer is barred, then until the end of
the Benefit Period, the Company shall arrange to provide the Employee with
benefits substantially similar to those which the Employee is entitled to
receive under such plans or arrangements of the Company. Should the medical
insurance plans or arrangements provided by the Employee's new employer not
entitle the Employee or the Employee's dependents (a) to any coverage during an
initial qualification period or (b) to coverage for any condition which is
considered a pre-existing condition under the new employer's plan and which was
covered under the Company's medical
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<PAGE> 13
insurance plans or arrangements at the Termination Date, then notwithstanding
the Employee's employment, the Company shall, until the end of the Benefit
Period, continue to provide medical benefits as stated above in this Section
9(vi) during such qualification period (if clause (a) of this sentence is
applicable) and for such pre-existing condition (if clause (b) of this sentence
is applicable).
(vii) Any Unvested Options of the Employee under the Company's
Plans shall, to the extent such Unvested Options have not been converted or
adjusted in any transaction approved by the Company's Board of Directors as
contemplated by the applicable Plan, immediately vest at the Termination Date.
All Unvested Stock Awards under the Company's Plans shall continue to vest in
accordance with the terms of the respective Plans during the period which (x)
if the Termination Date occurs before March 8, 2000, shall extend until June
30, 2001, or (y) if the Termination Date occurs on or after March 8, 2000,
shall extend until the last day of the end of the fifteen (15th) month
following the Termination Date, (the applicable time period of this sentence is
referred to as the "Protected Vesting Period"). All Unvested Stock Awards, as
to which restrictions have not lapsed under the Plan as provided in the
preceding sentence, shall be forfeited to the Company.
(viii) The Employee's right to participate in the Company's non-
qualified Supplemental Executive Retirement and Disability Plan ("SERP"), shall
terminate on the Termination Date unless the Employee hereafter becomes entitled
to vested benefits thereunder as a result of future amendments to SERP
agreements generally implemented for Company's management employees with
significant or responsible management positions covered thereby.
Any payments to be made under this Section 9 (except payments under
subsection (vi))
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<PAGE> 14
shall be reduced by the amount of (a) any loans or other monetary advances made
by the Company to the Employee which remain outstanding on the Termination
Date are to be paid back to the Company according to the terms of the current
arrangement, (b) any payments made to the Employee pursuant to the SERP, and
(c) any other retirement benefits received by the Employee from the Company.
Subject to the succeeding paragraph, in the event that any payments,
distributions or benefits to or for the benefit of the Employee from the
Company, whether paid or payable, distributed or distributable, as provided for
in Section 9 hereof, any other section of this Agreement, or otherwise under
any other plan or arrangement of the Company would constitute a "parachute
payment", as defined in Section 280G of the Internal Revenue Code of 1986, as
amended, or any successors thereto (the "Code"), such payments under the
Agreement shall be reduced to the largest amount that will eliminate both the
imposition of the excise tax imposed by Section 4999 of the Code and the
disallowance as deductions to the Company under Section 280G of the Code of any
such payments under this Agreement. The determination of any reduction in the
payments under this Agreement pursuant to this paragraph shall be made by a
major accounting firm selected by the Company (which shall not be the Company's
independent auditors) and approved by the Employee, which approval shall not be
unreasonably withheld.
Upon the termination of the Employee's employment by the Company Without
Cause or by the Employee for Good Reason, in each case prior to March 31, 1999,
then in the event that any payments, distributions or benefits to or for the
benefit of the Employee from the Company, whether paid or payable, distributed
or distributable, as provided for in Section 9 hereof, any other section of this
Agreement, or otherwise from the Company would be subject to an excise
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<PAGE> 15
tax pursuant to Section 4999 of the Code, or subject to any interest or
penalties with respect to such excise tax, the Employee shall be entitled to
receive, not later than three (3) days prior to the date upon which the
Employee is required to make any payment based on such determination,
additional payments from the Company in an amount equal to all additional
income and excise taxes (including interest and penalties thereon) payable,
including income and excise taxes, interest and penalties, on any payment
received pursuant to this sentence, by the Employee by reason of the imposition
of such excise tax pursuant to Section 4999 of the Code. All taxes deemed
payable hereunder are to be calculated by a major accounting firm selected by
the Company (which shall not be the Company's independent auditors) and
approved by the Employee, which approval shall not be unreasonably withheld,
using maximum marginal rates applicable to the Employee. If, after the payment
of any amount pursuant to this paragraph, the Company elects to contest such
tax or taxes, the Employee shall cooperate with the Company, in good faith at
the Company's sole expense, to contest such tax or taxes. If the Company
is successful in contesting any proposed tax, the Employee shall return to the
Company, upon receipt by the Employee, any refunds (including any interest paid
or penalties remitted on any such refunds) with respect to such contested tax
or taxes and any other payments made by the Company to the Employee pursuant to
this paragraph with respect to the amount refunded.
10. Other Employment; Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in Section 9 by
seeking other employment. The amount of any payment or benefit provided for in
Section 9 shall not be reduced by any compensation earned by the Employee as
the result of other employment or consulting services performed.
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<PAGE> 16
11. Life and Disability Insurance. During the Benefit Period, the
Company will continue to maintain in effect and pay the premiums on any
insurance policies insuring the life or disability of the Employee which are in
effect on the effective date hereof or may hereafter be taken out by Company,
or substitute policies for all significant management employees covered
thereby.
12. Non-Competition. In consideration of the payments to be received by
the Employee hereunder, in recognition of the highly competitive nature of the
industries in which the Company conducts its business and to further protect the
goodwill of the Company and to promote and preserve its legitimate business
interests, the Employee agrees that during the period commencing the date hereof
and ending on the last day of the Protected Vesting Period, he will not:
(i) Engage in any Business Activities (other than on behalf of
the Company) whether such engagement is as an officer, director, proprietor,
employee, partner, investor (other than as a holder of less than 1% of the
outstanding capital stock of a publicly traded corporation), consultant
advisor, agent or otherwise, in any geographic area in which the products or
services of the Company have been distributed or provided during the period
commencing two years prior to the date hereof and ending on the Termination
Date;
(ii) Other than on behalf of the Company supply products or
provide services (but only to the extent such restricted activities constitute
Business Activities) to any customer with whom the Company has done any
business during the period commencing two years prior to the date hereof and
ending on the Termination Date, whether as an officer, director,
proprietor, employee, partner, investor (other than as a holder of less than 1%
of the outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent or otherwise;
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<PAGE> 17
(iii) Assist others in engaging in any of the Business Activities
in the manner prohibited to the Employee; and
(iv) Induce or attempt to induce employees of the Company, or its
affiliates to engage in any activities hereby prohibited to the Employee or to
terminate their employment. It is expressly understood and agreed that although
the Employee and the Company consider the restrictions contained in each of
clauses (i) through (iv) above to be reasonable for the purpose of preserving
the Company's goodwill, proprietary rights, trade secrets, valuable
confidential business interests, relationships with specific prospective and
existing customers and going concern value, and to protect the Company's
business opportunities, markets and trade areas, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or scope of restricted activities or any other restriction contained in this
Agreement is an unenforceable restriction on the activities of the Employee,
the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time, restricted activities and territory
and to such other extent as such court may judicially determine or indicate to
be reasonable. Alternatively, if the court referred to above finds that any
restriction contained in this Section 12 is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect
the enforceability of any of the other restrictions contained therein. It is
further expressly understood and agreed that the providing of Professional
Services shall not be restricted under this Agreement.
13. Successors: Binding Agreement.
(i) The Company shall require any successor (whether by
purchase of all or substantially all of the business and/or assets, merger,
consolidation or liquidation) of the Company
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<PAGE> 18
to expressly assume, by written agreement, the obligation of the Company to
perform this Agreement upon or prior to such succession taking place. A copy of
such written agreement shall be delivered to the Employee promptly after its
execution by the successor or such person or group.
(ii) Failure of the Company to obtain such agreement upon or
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Employee to benefits as set forth above in
Section 9. These amounts shall not be discounted to any present value.
(iii) This Agreement is personal to the Employee and the Employee
may not assign or transfer any part of the Employee's rights or duties
hereunder, or any compensation due to the Employee hereunder, to any other
person, except that this Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees or beneficiaries.
14. Death: Disability. If the Employee dies or experiences a Disability
on or prior to March 8, 2003 and before the date that the Employee gives notice
of termination for Good Reason pursuant to Section 8 hereof, or before the
Company gives notice of termination Without Cause pursuant to Section 7(iv)
hereof, or for Cause pursuant to Section 7(iii) hereof, the Employee shall not
be entitled to any benefits under this Agreement provided, however, such
restriction shall not otherwise restrict any benefits that the Employee would
otherwise receive upon the occurrence of the Employee's death or disability
under any benefit plans of the Company covering the Employee. If the Employee
dies or experiences a Disability on or prior to March 8, 2003 and on or after
the date that the Employee gives notice of termination for Good Reason pursuant
to Section 8 hereof, or on or after the Company gives notice of termination
Without Cause pursuant to Section 7(iv)
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<PAGE> 19
hereof, the Employee shall be entitled to the benefits available to the
Employee under this Agreement and any such benefits shall not be reduced in any
way because of such death or Disability. If the Employee dies on the date the
Employee is terminated for Cause the Employee shall not be entitled to any
benefits hereunder unless it is subsequently determined pursuant to this
Agreement that such termination was not for Cause.
15. Modification: Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by the Employee and by the Company, provided,
however, the Employee shall not be required to execute as a condition of
continued employment any additional agreement or any agreement which modifies
or replaces this Agreement during the Benefit Period. Waiver by any party of
any breach of or failure to comply with any provision of this Agreement by the
other party shall not be construed as, or constitute, a continuing waiver
of such provision, or a waiver of any other breach of, or failure to comply
with, any other provision of this Agreement.
16. Arbitration of Disputes.
(i) Except with respect to the enforcement of the Company's
rights under Section 12 hereof or the enforcement of the Company's rights under
the Release, any disagreement dispute, controversy or claim arising out of or
relating to this Agreement, the interpretation or validity hereof, or the terms
and conditions of Employee's employment including the termination thereof,
shall be settled exclusively and finally by arbitration. Except as provided in
the preceding sentence, it is specifically understood and agreed that any
disagreement dispute or controversy which cannot be resolved between the
parties, including without limitation any matter relating to the interpretation
of this Agreement, claims of discrimination under state or federal law, shall
be
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<PAGE> 20
resolved solely by arbitration irrespective of the magnitude thereof, the amount
in controversy, or the nature of the relief sought.
(ii) The arbitration shall be conducted in accordance with
Employment Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA"), the terms of which are incorporated herein.
(iii) The arbitral tribunal shall consist of one arbitrator
skilled in arbitration of senior executive employment matters. The parties to
the arbitration shall jointly directly appoint such arbitrator within thirty
(30) days of initiation of the arbitration. If the parties shall fail to
appoint such arbitrator as provided above, such arbitrator shall be
appointed by the AAA as provided in the Arbitration Rules and shall be a person
who has had substantial experience in senior executive employment matters. The
Company shall pay all of the fees, if any, and expenses of such arbitrator and
the arbitration.
(iv) The arbitration shall be conducted in the Southeastern
Michigan area or in such other city in the United States of America as the
parties to the dispute may designate by mutual written consent.
(v) At any oral hearing of evidence in connection with the
arbitration, each party thereto or its legal counsel shall have the right to
examine its witnesses and to cross-examine the witnesses of any opposing party.
No evidence of any witness shall be presented in form unless the opposing party
or parties shall have the opportunity to cross-examine such witness, except as
the parties to the dispute otherwise agree in writing or except under
extraordinary circumstances where the interests of justice require a different
procedure.
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<PAGE> 21
(vi) Any decision or award of the arbitral tribunal shall be
final and binding upon the parties to the arbitration proceeding. The parties
hereto agree that the arbitral award may be enforced against the parties to the
arbitration proceeding or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having
jurisdiction.
(vii) Nothing herein contained shall be deemed to give the
arbitral tribunal any authority, power, or right to alter, change, amend,
modify, add to, or subtract from any of the provisions of this Agreement.
17. Notice. All notices, requests, demands and other communications
required or permitted to be given by either party to the other party by this
Agreement (including, without limitation, any notice of termination of
employment and any notice under the Arbitration Rules of an intention to
arbitrate) shall be in writing and shall be deemed to have been duly given when
actually received, or three (3) business days after being mailed by certified
or registered mail, return receipt requested, postage prepaid, or one (1)
business day after being sent by a nationally recognized overnight courier
service, with charges prepaid by sender and receipted for by or on behalf of
the intended recipient, in each case to the address of the other party, as
follows:
If to the Company, to:
TriMas Corporation
315 East Eisenhower Parkway
Suite 300
Ann Arbor, Michigan 48108
Attention: President
With a copy to:
Corporate Counsel
21001 Van Born Road
Taylor, Michigan 48180
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<PAGE> 22
If to the Employee:
Brian P. Campbell
1140 Heatherway
Ann Arbor, Michigan 48104
Either party hereto may change its address for purposes of this Section 16 by
giving ten (10) days' prior notice to the other party hereto.
18. Severability. If any term or provision of this Agreement or the
application hereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to which it
is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
19. Headings. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of this Agreement.
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original.
21. Governing Law. This Agreement shall in all respects be governed by,
and construed and enforced in accordance with, the laws of the State of
Michigan, without regard to the conflicts of laws principles of such state.
22. Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction for any
then applicable payroll-related or withholding taxes, which the Company shall
timely pay or deposit as required by the Internal Revenue Code of 1986, as
amended and any successors thereto.
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<PAGE> 23
23. Entire Agreement. This Agreement supersedes any and all other oral
or written employment agreements heretofore made and constitutes the entire
agreement of the parties relating to the subject matter hereof.
Notwithstanding the forgoing, this Agreement is not intended to and does not
alter or amend any agreements between the Employee and the Company relating to
matters such as non-competition and non-disclosure of Company matters, and is
not intended to and does not limit the Employee's obligations under any
Company employee benefit or welfare plan or limit, restrict, or reduce any
employee benefit that the Employee is entitled to under any other agreement,
plan, or arrangement, including without limitation as applicable, those
providing for stock options, restricted stock, disability insurance or life
insurance.
24. Additional Benefits. During the Employment Term, the Company shall
provide the Employee with reasonable and suitable office space in Ann Arbor,
Michigan and a secretary located in Ann Arbor, Michigan at such office for as
long as the Employee is providing ongoing services hereunder to the Company.
The Employee shall be responsible for selecting his secretary and the Company
shall be responsible for the salary and other benefits of the secretary, which
shall approximate the current level of salary and benefits payable to the
Employee's secretary, subject to normal Company salary increases.
[remainder of the page intentionally left blank]
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<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TriMas Corporation
/s/Brian P. Campbell By: /s/Peter C. DeChants
- ------------------------------ -------------------------------
(Employee Signature)
Its: Vice President, Treasurer
Brian P. Campbell -------------------------------
- ------------------------------
(Employee Printed Name)
<PAGE> 25
EXHIBIT A
SEPARATION AGREEMENT AND
COMPLETE RELEASE OF LIABILITY
This Separation Agreement and Complete Release of Liability (this
"Agreement') is made this ______ day of __________, ____ by and between
_________________ (the "Employee") and TriMas Corporation, a Delaware
corporation (the "Company").
The Company and Employee agree to the following terms:
1. DATE OF SEPARATION - Employee's active full-time employment with the
Company will irrevocably and forever cease on ______________. Employee will
not seek employment with the Company thereafter.
2. COMPLETE RELEASE - In exchange for the compensation to be paid to Employee
pursuant to Section 9 of that certain Employment Agreement dated November ____,
1997 between the Employee and the Company (the "Employment Agreement"), which
Employee acknowledges he would not otherwise be entitled to receive without
signing this Agreement, Employee forever discharges and releases the Company,
its affiliates, subsidiaries, and their respective officers and directors,
agents or representatives (the "Company Parties") from and forever promises not
to sue the Company Parties for any and all claims, demands, damages, rights and
causes of action, including, without limitation, claims for compensatory and
punitive damages and for injunctive and other equitable or declaratory relief,
Employee now has or may have against the Company Parties up to the date of
signing this Agreement, whether known or unknown, including, but not limited
to, claims, demands, rights and causes of action arising out of Employee'S
employment and termination thereof, claims of employment discrimination or
bias, wrongful discharge, severance pay, unused vacation and breach of contract
and any violation of Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Employee Retirement Income Security Act of 1974
(ERISA), the Americans with Disabilities Act of 1990 (ADA), the Age
Discrimination and Employment Act of 1967 (ADEA), the Older Workers Benefit
Protection Act, the Fair Labor Standards Act, the Occupational and Safety &
Health Act, the Equal Pay Act and any and all other federal, state and local
laws and regulations and ordinances and or public policy and any and all
claims, demands, rights and causes of action the Employee now has or may have
against the Company Parties under common law or in equity including, without
limitation, contract or tort actions.
Employee acknowledges and fully understands and agrees that the Company
Parties may plead this release as a complete defense to any claim or entitlement
that may be asserted by Employee or other persons or agencies on the Employee's
behalf in any suit, grievance or claim
<PAGE> 26
against the Company Parties for or on account of any matter whatsoever. This
does not preclude, however, the right of Employee to enforce the terms of this
Agreement.
This release does not include a release of any pension benefits for which
Employee may be eligible under the terms of applicable Company benefits plans.
3. CONFIDENTIALITY AND NON-DISPARAGEMENT - Employee promises not to disclose
the contents of any Proprietary Information of the Company or any of its
affiliates or subsidiaries. Proprietary Information shall mean information or
material of the Company or any of its affiliates or subsidiaries (1) which is
not generally available to or used by others or (2) the utility or value of
which is not generally known or recognized as standard practice, whether or not
the underlying details are in the public domain and includes, without
limitation:
(a) Information or materials which relate to the Company's or any of its
affiliates' or subsidiaries' trade secrets, manufacturing methods,
machines, articles of manufacture, compositions, inventions,
engineering services, technological developments, know-how,
purchasing, accounting, merchandising or licensing;
(b) Software in various stages of development (source code, object code,
documentation, diagrams, flow charts), designs, drawings,
specifications, models, data and customer information; and
(c) Any information of the type described above which the Company or any
of its affiliates or subsidiaries obtained from another party and
which the Company or any of its affiliates or subsidiaries treats as
proprietary or designates as confidential, whether or not owned or
developed by the Company or any of its affiliates or subsidiaries.
Employee agrees not to disparage the Company, its subsidiaries or
affiliates or their respective officers, directors or employees.
4. NON-ADMISSION OF LIABILITY - This Agreement is made solely to facilitate
an arrangement reached by the Company with Employee. This Agreement should not
be construed as an admission by the Company of any wrongdoing.
5. CONSEQUENCES OF EMPLOYEE VIOLATION OF PROMISES - If Employee (i) breaks
the promises in Paragraph 2 of this Agreement and files a lawsuit or makes a
claim or charge based on legal claims that Employee has released, (ii) breaks
the promise made in Paragraph 3 of this Agreement and discloses Proprietary
Information to any non-authorized third party, and such disclosure results in
damage or injury to the Company or any of its affiliates or subsidiaries, (iii)
does not use his reasonable efforts to avoid disparaging the Company, its
subsidiaries and affiliates and their respective officers, directors and
employees, or (iv) without Company's prior written consent, induces any
Employee of the Company to leave the Company's employment, Employee will
reimburse the Company for all such damage or injury occasioned by such action,
including reasonable attorneys.
2
<PAGE> 27
6. PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT - Employee understands
that Employee has been given a period of 21 days to review and consider this
Agreement before signing it. Employee further understands that Employee may
use as much of this 21 day period as Employee wishes prior to signing and that
Employee will have waived the full 21 day period by signing this Agreement
before the 21 day period expires.
7. ENCOURAGEMENT TO CONSULT WITH ATTORNEY - Employee is strongly encouraged
to consult with an attorney before signing this Agreement. Employee
understands that whether or not to do so is Employee's decision.
8. EMPLOYEE'S RIGHT TO REVOKE AGREEMENT - Employee may revoke this Agreement
within seven (7) days of Employee's signing it. Revocation can be made only by
delivering a written notice of revocation to ____________________________. For
this revocation to be effective, written notice must be received by
_________________ no later than the close of business on the seventh day after
Employee signs this Agreement. If Employee properly revokes this Agreement, it
shall not be effective or enforceable, and Employee will not receive the
benefits described in Employee's Employment Agreement.
9. ASSISTANCE IN THE DEFENSE OF CLAIMS AND CONSULTATIVE ADVICE - Employee
agrees, upon reasonable notice from the Company, to assist the Company in the
defense of any legal or administrative proceeding now pending or which later may
be filed by or against the Company or by or against any affiliated or related
companies or any of their officers, directors or employees. Company will
reimburse and/or advance monies to Employee for lost wages and out-of-pocket
expenses incurred in connection with such assistance. Employee agrees, in
addition, to the extent requested from time to time by the Company and provided
such requests do not require more than a nominal amount of Employee's time, to
provide telephonic consultative advice with respect to questions the Company may
have regarding matters for which the Employee previously had responsibility or
otherwise possesses knowledge.
10. COMPANY PROPERTY - Employee shall return to the Company upon signing this
Agreement any and all Company property which has been entrusted to the Employee
during the Employee's tenure with the Company.
11. APPLICABLE LAW; SEVERABILITY - The parties agree that this Agreement shall
be governed by the laws of the State of Michigan. If any provision of this
Agreement is declared invalid, the remaining provisions shall remain in effect.
12. ENTIRE AGREEMENT - The Company has used its best efforts to compose this
Agreement in a manner calculated to be readily understood by the Employee.
This Agreement is the complete, entire and final agreement between Employee and
the Company concerning the subject matter expressed herein. This Agreement may
not be modified or terminated except in writing signed by both parties. The
Company has made no promises to Employee other than those in this Agreement and
the Employment Agreement.
13. SUCCESSORS/ASSIGNS. This Agreement is personal to the Employee and may
not be assigned or transferred by the Employee. This Agreement shall inure to
the benefit of the
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<PAGE> 28
Employee's personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees or beneficiaries, and to the Company, and its
successors and assigns.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS
VOLUNTARILY ENTERING INTO IT. PLEASE READ THIS AGREEMENT CAREFULLY. IT
CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
EMPLOYEE WITNESS
__________________________ ______________________________
By ________________________
DATED: ____________________
TRIMAS CORPORATION WITNESS
By ________________________ _______________________________
Its ________________________
DATED: _____________________
4
<PAGE> 1
EXHIBIT 10.x
DESCRIPTION OF THE MASCOTECH, INC. PROGRAM FOR
ESTATE, FINANCIAL PLANNING AND TAX ASSISTANCE
In order to assure that the Company's senior executives receive the full
benefit of the Company's benefit programs given the complexities of the tax
laws relating thereto, and remain focused on Company matters, the Company
established a program to provide senior executives with assistance in their
estate, financial planning and tax matters. Under this program, the Company
will pay up to $10,000 for such services each year, with a special
"carry-forward" of the second year's $10,000 allowance during the first year to
cover additional costs that may be associated with developing initial estate
plans. The Company will inform each participant during the course of this
process as to the amount of professional fees allocated to services performed
on such participant's behalf. The value of services received will be taxable
as ordinary income to the participant.
<PAGE> 1
EXHIBIT 10.y
MASCO CORPORATION 1997 ANNUAL INCENTIVE
COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Masco Corporation 1997 Annual Incentive Compensation
Plan (the "Plan") is to provide selected executive officers of Masco
Corporation (the "Company") with incentive compensation based upon the
achievement of established annual performance goals.
SECTION 2. ELIGIBILITY
The individuals eligible to participate in the Plan (the "Participants")
are the executive officers of the Company.
SECTION 3. PERFORMANCE PERIODS
Each Performance Period for purposes of the Plan shall have a duration of
one calendar year, commencing January 1 and ending December 31.
SECTION 4. ADMINISTRATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") shall have the full power and authority to administer and interpret
the Plan and to establish rules for its administration.
SECTION 5. PERFORMANCE GOALS
On or before the 90th day of each Performance Period, the Committee shall
establish in writing one or more performance criteria for the Performance
Period and the weighting of the performance criteria if more than one. The
performance criteria shall consist of one or more of the following: net
income, earnings per share, cash flow, revenues, return on assets or total
shareholder return.
SECTION 6. AWARDS
On or before the 90th day of each Performance Period, the Committee shall
establish in writing a performance incentive award for such Participants as
shall be designated by the Company and in such amounts as the Committee shall
determine, subject to the limitations of the Plan. No award to any
Participant shall be greater than $2 million. The Committee shall have the
power and authority to reduce or eliminate for any reason the amount of the
award that would otherwise be payable to a Participant based on the performance
criteria.
SECTION 7. CERTIFICATION AND PAYMENT
As soon as practicable after release of the Company's financial results
for the Performance Period, the Committee will certify the Company's attainment
of the criteria established for such Performance Period pursuant to Section 5,
will calculate the possible payment of an award for each Participant and
will certify the amount of the award to each Participant for such Performance
Period. Payments of the awards shall be made in cash. To the extent net
income is used alone or as a component of another performance criteria, it
shall mean net income as reported to stockholders, but before losses resulting
from discontinued operations, extraordinary losses (in accordance with
generally accepted accounting principles, as currently in effect), the
cumulative effect of changes in accounting principles and other unusual,
non-recurring items of loss that are separately identified and quantified in
the Company's audited financial statements.
1
<PAGE> 2
SECTION 8. AMENDMENT
The Committee shall have the right to suspend or terminate this Plan
at any time and may amend or modify the Plan at any time.
SECTION 9. ADOPTION AND DURATION
The Plan was approved by the Committee on February 18, 1997, subject
to the approval of the stockholders of the Company at the 1997 Annual Meeting
of Stockholders. The effective date of the Plan shall be January 1, 1997
and the Plan shall remain in effect for a period of five years.
2
<PAGE> 1
EXHIBIT 10.z
MASCO CORPORATION
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to ensure that the non-employee Directors of
Masco Corporation (the "Company") have an equity interest in the Company and
thereby have a direct and long term interest in the growth and prosperity of the
Company by payment of part of their compensation in the form of common stock of
the Company.
SECTION 2. ADMINISTRATION OF THE PLAN
This Plan will be administered by the Company's Board of Directors (the
"Board"). The Board shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's interpretation of the terms and provisions of this Plan
shall be final and conclusive. The Secretary of the Company shall be
authorized to implement the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to effectuate the intent
and purposes thereof. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Michigan and applicable Federal law.
SECTION 3. ELIGIBILITY
Participation will be limited to individuals who are Eligible Directors,
as hereinafter defined. Eligible Director shall mean any Director of the
Company who is not an employee of the Company and who receives a fee for
services as a Director.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) Subject to the adjustments set forth below, the aggregate number of
shares of Company Common Stock, par value $1.00 per share ("Shares"), which may
be the subject of awards issued under the Plan shall be 500,000.
(b) Any Shares to be delivered under the Plan shall be made available from
newly issued Shares or from Shares reacquired by the Company, including Shares
purchased in the open market.
(c) To the extent a Stock Option award, as hereinafter defined, terminates
without having been exercised, or an award of Restricted Stock, as hereinafter
defined, is forfeited, the Shares subject to such Stock Option or Restricted
Stock award shall again be available for distribution in connection with future
awards under the Plan. Shares equal in number to the Shares surrendered to the
Company in payment of the option price or withholding taxes (if any) relating to
or arising in connection with any Restricted Stock or Stock Option hereunder
shall be added to the number of Shares then available for future awards under
clause (a) above.
(d) In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, or other change in corporate
structure affecting the Shares, the aggregate number of Shares which may be
issued under the Plan, the number of Shares subject to Stock Options to be
granted under Section 6(a) hereof and the number of Shares subject to any
outstanding award of Restricted Stock or unexercised Stock Option shall be
adjusted to avoid enhancement or diminution of the benefits intended to be made
available hereunder.
SECTION 5. DIRECTOR STOCK COMPENSATION
(a) The compensation of each Eligible Director for the five year period
beginning January 1, 1997 shall be
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<PAGE> 2
payable in part with an award of Restricted Stock determined as set
forth below, and in part in cash. Compensation for this purpose means annual
retainer fees but does not include supplemental retainer fees for committee
positions or fees for attendance at meetings, which shall be paid in cash. The
portion of compensation payable in Restricted Stock during the five year period
shall be equal to one-half of the annual compensation paid to Eligible
Directors in the year immediately prior to the award multiplied by five, and
the balance of compensation, unless otherwise determined by the Board, shall be
payable in cash. Each award of Restricted Stock shall vest in twenty percent
annual installments (disregarding fractional shares) on January 1 of each of
the five consecutive years following the year in which the award is made.
Subject to the approval of this Plan by the Company's stockholders, each
Eligible Director on February 18, 1997 is awarded as of that date 3,470 Shares
of Restricted Stock, based on the closing price of the Shares as reported on
the New York Stock Exchange Composite Tape (the "NYSE") on February 18, 1997.
Cash shall be paid to an Eligible Director in lieu of a fractional share.
(b) Subject to the approval of this Plan by the Company's stockholders,
each Eligible Director who is first elected or appointed to the Board on or
after the date of the Company's 1997 annual meeting of stockholders shall
receive, as of the date of such election or appointment, an award of
Restricted Stock determined in accordance with Section 5(a) for the five year
period beginning on January 1 of the year in which such election or appointment
occurred; provided, however, that the price of the Shares used in determining
the number of Shares of Restricted Stock which shall be issued to such Eligible
Director shall be the closing price of the Shares as reported on the NYSE on
the date on which such Eligible Director is elected or appointed, and provided,
further, that the amount of Restricted Stock awarded to any Eligible Director
who begins serving as a Director other than at the beginning of a calendar year
shall be prorated to reflect the partial service of the initial year of the
Director's term, such proration to be effected in the initial vesting.
(c) Upon the full vesting of any award of Restricted Stock awarded
pursuant to Section 5(a) or 5(b), each affected Eligible Director shall be
eligible to receive a new award of Restricted Stock, subject to Section 4. The
number of Shares subject to such award shall be determined generally in
accordance with the provisions of Section 5(b); provided, however, that
the Board shall have sole discretion to adjust the amount of compensation then
to be paid in the form of Shares and the terms of any such award of Shares.
Except as the Board may otherwise determine, any increase or decrease in an
Eligible Director's annual compensation during the period when such Director
has an outstanding award of Restricted Stock shall be implemented by increasing
or decreasing the cash portion of such Director's compensation.
(d) Each Eligible Director shall be entitled to vote and receive
dividends on the unvested portion of his or her Restricted Stock, but will not
be able to obtain a stock certificate or sell, encumber or otherwise transfer
such Restricted Stock except in accordance with the terms of the Company's 1991
Long Term Stock Incentive Plan (the "Long Term Plan"). If an Eligible
Director's term is terminated by reason of death or permanent and total
disability, the restrictions on the Restricted Stock will lapse and such
Eligible Director's rights to the Shares will become vested on the date of
such termination. If an Eligible Director's term is terminated for any reason
other than death or permanent and total disability, the Restricted Stock that
has not vested shall be forfeited and transferred back to the Company;
provided, however, that a pro rata portion of the Restricted Stock which would
have vested on January 1 of the year following the year of the Eligible
Director's termination shall vest on the date of termination, based upon the
portion of the year during which the Eligible Director served as a Director of
the Company.
SECTION 6. STOCK OPTION GRANT
(a) Subject to approval of this Plan by the Company's stockholders, each
Eligible Director on the date of such approval will be granted on such date a
stock option to purchase 4,000 Shares (the "Stock Option"). Thereafter, on
the date of each of the Company's subsequent annual stockholders meetings,
each person who is or becomes an Eligible Director on that date and whose
service on the Board will continue after such date shall be granted a Stock
Option, subject to Section 4, effective as of the date of such meeting.
(b) Stock Options granted under this Section 6 shall be non-qualified
stock options and shall have the following terms and conditions.
2
<PAGE> 3
1. Option Price. The option price per Share shall be equal to the
closing price of the Shares as reflected on the NYSE on the date of grant (or
if there were no sales on such date, the most recent prior date on which there
were sales).
2. Term of Option. The term of the Stock Option shall be ten years from
the date of grant, subject to earlier termination in the event of termination
of service as an Eligible Director. If an Eligible Director's term is
terminated for any reason other than death at a time when such Director is
entitled to exercise an outstanding Stock Option, then at any time or times
within three months after termination such Stock Option may be exercised as to
all or any of the Shares which the Eligible Director was entitled to purchase
at the date of termination. If an Eligible Director dies at a time when such
Director is entitled to exercise a Stock Option, then at any time or times
within one year after death such Stock Option may be exercised as to all or any
of the Shares which the Eligible Director was entitled to purchase immediately
prior to such Director's death. Except as so exercised, such Stock Options
shall expire at the end of such periods. That portion of the Stock Option not
exercisable at the time of such termination shall be forfeited and transferred
back to the Company on the date of such termination.
3. Exercisability. Subject to clause 2 above, each Stock Option shall
vest and become exercisable with respect to twenty percent of the underlying
Shares on each of the first five anniversaries of the date of grant,
provided that the optionee is an Eligible Director on such date.
4. Method of Exercise. A Stock Option may be exercised in whole or in
part during the period in which such Stock Option is exercisable by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the
purchase price shall be made in cash, by delivery of Shares, or by any
combination of the foregoing.
5. Non-Transferability. Unless otherwise provided by the terms of the
Long Term Plan or the Board, (i) Stock Options shall not be transferable by
the optionee other than by will or by the laws of descent and distribution,
and (ii) during the optionee's lifetime, all Stock Options shall be exercisable
only by the optionee or by his or her guardian or legal representative.
6. Stockholder Rights. The holder of a Stock Option shall, as such,
have none of the rights of a stockholder.
SECTION 7. GENERAL
(a) Plan Amendments. The Board may amend, suspend or discontinue the
Plan as it shall deem advisable or to conform to any change in any law or
regulation applicable thereto; provided, that the Board may not, without the
authorization and approval of the stockholders of the Company: (a) modify the
class of persons who constitute Eligible Directors as defined in the Plan; or
(b) increase the total number of Shares available under the Plan. In addition,
without the consent of affected participants, no amendment of the Plan or any
award under the Plan may impair the rights of participants under outstanding
awards.
(b) Listing and Registration. If at any time the Board shall determine,
in its discretion, that the listing, registration or qualification of the
Shares under the Plan upon any securities exchange or under any state or
Federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of any award hereunder, no Shares may be delivered or disposed of unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the Board.
(c) Award Agreements. Each award of Restricted Stock and Stock Option
granted hereunder shall be evidenced by the Eligible Director's written
agreement with the Company which shall contain such terms and conditions
not inconsistent with the provisions of the Plan as shall be determined by the
Board in its discretion.
3
<PAGE> 1
EXHIBIT 10.aa
CONFORMED COPY
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of January 26, 1990 between Masco
Corporation, a Delaware corporation ("Masco"), and TriMas Corporation, a
Delaware corporation ("TriMas").
WHEREAS, Masco or its wholly-owned subsidiary Masco Corporation of
Indiana, an Indiana corporation ("Masco Indiana") owns all of the outstanding
capital stock of Compact Corporation, a Delaware corporation ("Compact"),
Fulton Manufacturing Corporation, a Delaware corporation ("Fulton"), Netcong
Investments, Inc., a New Jersey corporation ("Netcong"), Reese Products, Inc.,
an Indiana corporation ("Reese"), Reese Products of Canada Ltd., an Ontario
corporation ("RCL"), Reese Service Center of California, Inc., a California
corporation ("RSC") and Hayman-Reese Pty. Ltd., a company organized under the
laws of the State of Victoria, Australia ("Hayman"). The foregoing companies
(other than TriMas, Masco and Masco Indiana) are referred to individually as a
"Company" and collectively as the "Companies"; Fulton and the Subsidiary (as
hereinafter defined) are collectively referred to as the "Fulton Group"; Compac
and Netcong are collectively referred to as the "Compac Group"; and Reese, RCL,
RSC and Hayman are collectively referred to as the "Reese Group". The Fulton
Group, Compac Group and Reese Group are individually referred to as a "Group"
and collectively as the "Groups".
WHEREAS, TriMas wishes to purchase from Masco and Masco Indiana and
Masco wishes to sell or cause to be sold to TriMas, upon the terms and
conditions hereinafter provided, all of the outstanding shares of capital stock
of each of the Companies;
NOW, THEREFORE, the parties agree as follows:
I
REPRESENTATIONS AND WARRANTIES
OF MASCO
1.00 Masco represents and warrants to TriMas as follows:
<PAGE> 2
1.01 Each of the Companies and the Subsidiary is a corporation duly
organized, existing and in good standing under the laws of the jurisdiction of
its incorporation, has full power and authority to own its properties and to
carry on its business as now conducted, and is in good standing and duly
qualified to conduct business as a foreign corporation in each of the
jurisdictions in which the ownership or leasing of its properties or the
conduct of its business requires such qualification.
1.02 The authorized capitalization of each of the Companies is set
forth in Schedule I hereto. The outstanding shares of capital stock of each of
the Companies (collectively the "Shares") are owned of record and beneficially
by Masco or Masco Indiana as set forth in Schedule I hereto, free and clear of
all liens, encumbrances and claims. All outstanding shares of capital stock of
Masco Indiana are owned of record and beneficially by Masco, free and clear of
all liens, encumbrances and claims. No other shares of capital stock of any of
the Companies are authorized, issued or outstanding. All of the Shares are
validly issued, fully paid and nonassessable. There are no options, calls,
warrants or other securities or rights outstanding which are convertible into,
exercisable for or relate to any shares of capital stock of any of the
Companies. As of the Closing (as hereinafter defined), there will be no
accrued or unpaid dividends on any equity securities of any of the Companies.
1.03 Except for the ownership by Fulton of all of the outstanding
capital stock of Spar Marine Manufacturing Limited, a British Columbia
corporation (the "Subsidiary"), the Companies do not own directly or indirectly
any interest or have any investment in any corporation or other business. The
Subsidiary was acquired by Fulton on September 6, 1989. All outstanding shares
of capital stock of the Subsidiary are owned of record and beneficially by
Fulton, free and clear of all liens, encumbrances and claims, and such shares
are validly issued, fully paid and nonassessable. There are no options, calls,
warrants or other securities or rights outstanding which are convertible into,
exercisable for or relate to any shares of capital stock of the Subsidiary.
1.04 Exhibit 1.04(a) (the "Financial Statements") consists of copies
of the respective unaudited consolidated balance sheets as of December 31,
1986, 1987, 1988 and 1989 for the Compac Group, the
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Reese Group and the Fulton Group and the related unaudited consolidated
statements of income for the fiscal years then ended. Except as described on
Exhibit 1.04(b), in the aggregate the Financial Statements:
(i) are true, complete and correct in all material respects as of
the respective dates and for the respective periods stated above;
(ii) fairly present the properties, assets, financial position and
results of operations of the Groups as of the respective dates and for the
respective periods stated above; and
(iii) have been prepared pursuant to and in accordance with
generally accepted accounting principles applied on a consistent basis.
Except as described on Exhibit 1.04(b), all inventories of the Groups,
net of reserves, are reflected in the Financial Statements and are valued at
the lower of cost or net realizable value with cost determined principally by
use of the first in, first out method. Except as described on Exhibit 1.04(b),
in the aggregate for all of the Groups, adequate provision has been timely made
in the Financial Statements for doubtful accounts and other receivables; sales
are stated in the Financial Statements net of discounts, returns and
allowances; all taxes assessable against the Groups and due or paid are timely
and adequately reflected in the Financial Statements and all taxes assessable
against the Groups for any period prior to the Effective Date (as hereinafter
defined) but not due and payable as of December 31, 1989 are fully accrued or
otherwise provided for therein to the extent required by generally accepted
accounting principles; 1989 year-end bonuses paid or payable to employees of
the Groups are reflected as an expense in the Financial Statements for the year
ended December 31, 1989, and to the extent such bonuses were not paid on or
before December 31, 1989, they are accrued as liabilities on the December 31,
1989 balance sheets (the "December Balance Sheets") included in the Financial
Statements; and the Groups had no liability or obligation as of the close of
business on December 31, 1989, whether accrued, absolute, or contingent,
arising out of transactions entered into or any facts existing on or prior to
the dates of the Financial Statements, except for liabilities and
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<PAGE> 4
obligations timely reflected therein or as indicated in the Exhibits hereto and
except for contractual or other obligations of performance which do not arise by
reason of a default in performance and which are not required to be reflected in
the Financial Statements under generally accepted accounting principles
consistently applied. All transactions between each of the Groups and any
affiliates of such Groups during 1989 in excess of $50,000 in any transaction or
series of related transactions are set forth on Exhibit 1.04(c).
1.05 All corporate action of each of the Companies and the Subsidiary
has been duly recorded in its respective corporate minute books and duly
authorized and adopted in accordance with applicable law and its respective
by-laws and charter documents.
1.06 Masco and each Company and the Subsidiary have filed returns for
and paid in full all taxes, penalties, interest and related charges and fees
relating to the Companies and the Subsidiary to the extent such filings and
payments are required prior to the date hereof (it being understood that
payments relating to any period from and after the Effective Date as well as
liabilities reflected in the December Balance Sheets are for the account of
TriMas). Neither any Company nor the Subsidiary has a deficiency with respect
to any tax period ending prior to the Effective Date and neither any Company
nor the Subsidiary is or will be subject to any current or deferred liability
with respect to taxes or penalties or interest thereon, or related charges and
fees, whether or not assessed, arising out of transactions entered into or any
facts existing prior to the Effective Date, which are not timely and adequately
provided for in the tax accruals in the most recent of the Financial
Statements. Neither Masco, Masco Indiana nor any of the Companies or the
Subsidiary has ever filed an election under Section 341(f) of the Internal
Revenue Code. No question has been raised by the Internal Revenue Service in
the course of any current audit or audit during the three year period prior to
the Effective Date relating to any asset, transaction or matter of any of the
Companies.
1.07 Since December 31, 1989 there has not been any material adverse
change, either individually or in the aggregate, in the general affairs,
business, prospects, properties, financial position, results of operations, or
net equity of any of the respective Groups; except as set forth on Exhibit
1.07, the
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business affairs of the respective Groups have since such date been
conducted in the same manner as theretofore conducted and in the usual and
ordinary course; after the close of business on such date no transaction has
taken place and no material contract has been entered into in respect of any of
the Groups other than in the usual and ordinary course of business; and
specifically, without limitation of the foregoing, there have been no sales,
removals or deliveries of inventory reflected in the December Balance Sheets
(other than shipments of inventory in the usual and ordinary course of business
consistent with past practice), machinery, fixtures or other tangible or
intangible assets of any nature material to the conduct of the business of any
of the Groups, respectively, since that date.
1.08 Since December 31, 1989 there has been no casualty, loss, damage
or destruction to any properties of any Group that is material to such Group,
whether or not covered by or compensated under any insurance policy.
1.09 Since December 31, 1989, neither any Company nor the Subsidiary
has:
(i) merged or consolidated with another corporation;
(ii) created, incurred or assumed or committed to create, incur or
assume indebtedness of other liability, except for (A) intercorporate
borrowings in the ordinary course of business, and (B) accounts payable
or other current liabilities which (1) are not for borrowed money and (2)
were incurred in the usual and ordinary course of business;
(iii) mortgaged, pledged or otherwise encumbered any asset;
(iv) raised salaries, hourly rates or the rate of bonuses or
commissions or other compensation, except for normal increases consistent
with past practice and increases required by the collective bargaining
agreement between Local 918 of the International Brotherhood of Teamsters
and Compac, a copy of which is included in Exhibit 1.15;
(v) varied insurance coverage;
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<PAGE> 6
(vi) altered or amended its respective charter documents or by-laws;
or
(vii) entered into or materially amended or terminated any contract,
agreement, franchise, permit or license that is material to the
operation of any of the Groups, except in the ordinary course of business
and except for the agreement between Local 918 of the International
Brotherhood of Teamsters and Compac.
1.10 Exhibit 1.10 contains lists of substantially all tangible personal
property having a cost in excess of $10,000 owned by the Groups as of
December 31, 1989.
1.11 Neither this Agreement nor any Exhibits or other documents
furnished to TriMas pursuant hereto which are identified as Exhibits contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the factual statements contained herein of therein, in light
of the circumstances under which they were made, not misleading. Masco does
not have knowledge of any events, transactions or other facts which, either
individually or in the aggregate, might reasonably give rise to circumstances
or conditions which are reasonably likely to have a material adverse effect on
the general affairs, business, prospects, properties, financial position,
results of operations or net equity of any of the Groups.
1.12 As of the close of business on December 31, 1989, each of the
Groups had a valid leasehold interest in all of its leases of personalty, had
good and unencumbered marketable title to all personalty of any kind or nature
owned by it, and had a valid legal right to use all other personalty used by it
in its business, free and clear of all liens, encumbrances, claims or other
conditions affecting title or use except for (i) liens for nondelinquent ad
valorem taxes, and (ii) such liens and encumbrances as do not materially
detract from or interfere with the present or reasonably foreseeable use of the
properties subject thereto. Exhibit 1.12 lists all liens on such personalty
which are known to Masco.
1.13 The buildings and improvements and the machinery and equipment
owned or used by the Fulton Group are, in the aggregate, in adequate repair and
operating condition and adequate to carry on the business of the Fulton Group
as presently conducted. The
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<PAGE> 7
buildings and improvements and the machinery and equipment owned or
used by the other Groups are, in the aggregate, in good repair and in good
operating condition and adequate to carry on the business of such other Groups
as presently conducted.
1.14 Exhibit 1.14(a) lists by legal description all real property
which was owned (which includes property currently being purchased on land
contract) by each of the Groups as of December 31, 1989, and lists by street
address all other real property which was leased or used by the Groups in their
respective businesses of in which any of the Groups had an interest as of that
date. As of December 31, 1989, each of the Groups had good and marketable fee
simple title to all real property owned by it and a valid leasehold interest in
all real property described on Exhibit 1.14(a) as being leased by it, free and
clear of all easements, restrictions, encroachments, occupancy agreements,
assessments, liens, encumbrances, claims or other matters affecting title, use
or occupancy except for (i) liens for nondelinquent ad valorem taxes, and (ii)
such easements, restrictions, encroachments, occupancy agreements, assessments,
liens, encumbrances, claims or other matters as do not materially detract from
or interfere with the present or reasonably foreseeable use of the properties
subject thereof. Exhibit 1.14(b) includes copies of current title reports for
all such real property owned by each of the Groups, and such title reports
describe all easements, liens or encumbrances on such real property that are
known to Masco. As of December 31, 1989, except for matters that, individually
or in the aggregate, do not have a material adverse effect on any Group, the
rights of any such Group under such leasehold estates were not subordinate to,
or defeasible by, any lien on the subject real estate, or any prior lease
thereon, there were no ground subsidences or slides on such properties, and the
properties and improvements thereon were fully accessible by public roads and
were free from strips, gores and enclaves. Except for buildings and
improvements on properties indicated as being leased, the buildings and
improvements used by each Group are located on property described in Exhibit
1.14(a), and such buildings and improvements do not encroach onto the property
of other persons. Except as described on Exhibit 1.14(c), prior to the
Effective Date, the properties, the use of such properties and the conduct
therein of the businesses of each of the Groups had not violated, and based
upon present and foreseeable uses of such properties are not expected to
violate, any law, rule of regulation of any
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<PAGE> 8
governmental authority, including but not limited to, environmental
laws, zoning ordinances and building codes. Except as set forth on Exhibit
1.14(c), as of December 31, 1989 such properties were served by utilities,
including but not limited to, water, sewage, gas, waste disposal, electricity
and telephone, and Masco is not aware of any inadequacies with respect to such
utilities. Prior to the Effective Date, except as set forth on Exhibit
1.14(c), each of the Groups had utilized, stored, delivered for disposal,
disposed of and transported all wastes, whether hazardous or not, in full
compliance with all laws, rules, regulations, ordinances or the common law and
so as not to contaminate any of its properties (whether now or previously owned
or leased) or any other property and so as to not give rise to any remediation
or clean-up obligation under any law, rule, regulation, ordinance or the common
law (including provisions of law or regulation scheduled for future
implementation). Except as set forth on Exhibit 1.14(c), as of December 31,
1989, the real property owned or leased or previously owned or leased by each
of the Groups did not appear on the National Priority List or any state listing
which identifies sites for remedial clean-up or investigatory actions, and
Masco has no knowledge that any such real property was added to any such list
since the Effective Date. Except as set forth on Exhibit 1.14(c), as of
December 31, 1989, no asbestos, PCB's, ureaformaldehyde or underground storage
tanks were located on the real property owned or leased (or previously owned or
leased) by any Group and, as of December 31, 1989, the real property owned or
leased or previously owned or leased by each of the Groups had not been used to
handle, treat, store or dispose of and had not otherwise been contaminated
(including without limitation, contamination of soils, groundwater and surface
waters located on, in or under such premises) with pollutants or other
substances which contamination may give rise to a remediation or clean-up
obligation of such property or the property of others under any law, rule,
regulation, ordinance or the common law (including provisions of law or
regulation for future implementation). Except as set forth on Exhibit 1.14(d),
no governmental authority having jurisdiction over such properties has given
notice to any Group of a possible future imposition of assessments affecting
such properties in excess of any amount reserved on the December Balance Sheets
of the Groups or to exercise the power of eminent domain. The provisions of
this Section 1.14 shall also apply to the real property of, and actions taken
by, each person controlled by any of the Groups during all periods ending prior
to the Effective Date in which such person was
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<PAGE> 9
controlled by such Group. The Reese Group has applied for all environmental
permits required for the installation of the powdered paint line currently being
installed by such Group.
1.15 Except as set forth in Exhibit 1.15, none of the Groups is a
party to or bound by any written agreement, contract or commitment (a) having a
remaining term of more than one year or providing for payments to or by any of
them in excess of $50,000; (b) providing for employment or which contains any
severance or termination pay liabilities or obligations; (c) with any union or
other collective bargaining representative of its employees; or (d) providing
for or evidencing indebtedness for borrowed money. Exhibit 1.15 also includes
copies of all leases of real property and all pension, stock option, stock
purchase, bonus, profit sharing or other employee or executive welfare or
benefits plans or agreements as to which any of the employees of the Groups
participate, other than copies of multiemployer plans.
1.16 All of the agreements, contracts and commitments of the Groups
are valid and binding obligations of the parties thereto in accordance with
their respective terms and, prior to the Effective Date, there has occurred no
event which would constitute any breach of or default in any provision of any
such agreement, contract or commitment or which would permit the acceleration
of any obligation of any party thereto or the creation of a lien or encumbrance
upon any asset of any of the Groups or which would give rise to any such
liabilities upon the giving of notice or lapse of time. As of the date hereof,
Masco is not aware of increased competitive activities or of plans for such
increased activities in any of the markets for any of the Groups' products over
the level of competitive activities experienced by any such Group during the
previous twelve month period. As of the date hereof, no information has been
brought to the attention of Masco which might reasonably lead Masco to believe
that any customer or supplier of any of the Groups intends to cease dealing
with such Group or intends to alter in any material respect the amount of such
customer's or supplier's dealings with such Group or would alter in any
material respect such dealings, in each case in the event of the consummation
of the transactions contemplated hereby.
1.17 To the knowledge of Masco and except for transactions with
affiliates of the Groups described on Exhibit 1.04(c), no material portion of
the sales or other ongoing business
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<PAGE> 10
relationships of any of the Groups is dependent upon the friendship or
the personal relationships (other than those customary within business
generally) of any employees of the Groups or is dependent upon a corporate
relationship presently existing between Masco or any of its affiliates and any
of the Companies, and, prior to the Effective Date, no employee of any of the
Groups had violated the published business policies of any third party with
respect to gifts, services or corporate business practices. Except as
reflected in the Financial Statements, as of December 31, 1989, none of the
Groups had outstanding loans or other advances directly or indirectly to or
from any officer, director or employee of that Group or Masco, other than
travel advances in the usual and ordinary course of business. Exhibit 1.17
lists all officers or other key employees of each of the Groups who terminated
employment with the Groups from January 1, 1988 through the date hereof.
Except as set forth in Exhibit 1.17, as of the date hereof, Masco has no
knowledge that any officer or other key employee of any of the Groups is
considering the termination of employment. Prior to the Effective Date,
neither the Groups nor any person acting on behalf of any of the Groups had
engaged in any business practice of the nature referred to in the Report of the
Securities and Exchange Commission dated May 12, 1976, on Questionable and
Illegal Corporate Payments & Practices. During the period covered by the
Financial Statements, none of the Groups had forgiven or canceled, without
receiving full consideration, any indebtedness owing to it by any of its
officers, directors or other employees.
1.18 The Groups will incur no liabilities by reason of failure to
comply prior to the Effective Date with applicable laws, regulations, orders
and other requirements of governmental authorities, other than liabilities
reflected in the Financial Statements and liabilities for which TriMas and the
Groups will be indemnified under Section 8.01 hereof. Irrespective of
insurance coverage, and except (i) as set forth on Exhibits 1.14(c) or 1.18,
and (ii) for routine claims for employee benefits:
(a) None of the Groups was subject to any judicial, governmental or
administrative order, judgment or decree on December 31, 1989;
(b) No investigation, governmental or administrative proceeding or
other litigation of any kind or nature to which any Group was a party was
pending on December 31, 1989; and
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<PAGE> 11
(c) No claim, arising out of facts, circumstances or conditions
existing prior to the Effective Date, which claim has not ripened into
litigation or another proceeding, has been made or (to the best knowledge
of Masco) threatened against any Group, and there are no facts,
circumstances or conditions existing prior to the Effective Date which
will give rise to such a claim, litigation or other proceeding.
Except as set forth on Exhibit 1.14(c), the Groups have each obtained
all governmental licenses, permits, approvals, authorizations, exemptions,
classifications and certificates material to the conduct of their respective
businesses prior to the Effective Date or to the ownership of their respective
properties, all of which as of December 31, 1989 were in full force and effect
in all material respects.
1.19 Except as set forth on Exhibit 1.19, no employees of any of the
Groups are represented by a union or other labor organization and no
representation question exists respecting the employees of any of the Groups.
All compensation expense of employees of the Groups during the period covered
by the Financial Statements is reflected as an expense in the Financial
Statements, except as set forth on Exhibit 1.04(b). Prior to the Effective
Date, each of the Groups had complied with all applicable laws affecting
employment and employment practices, terms and conditions of employment and
wages and hours, and had not engaged in any unfair labor practice; except as
set forth on Exhibit 1.19, prior to the Effective Date there have been no
complaints alleging unfair labor practices against any of the Groups filed with
the National Labor Relations Board; from January 1, 1985 through December 31,
1989, there was no grievance or arbitration proceeding against any of the
Groups arising out of or under a collective bargaining agreement and, to the
knowledge of Masco, no basis therefor exists as a result of facts,
circumstances or conditions existing prior to the Effective Date, in each case
other than routine grievances; except for the collective bargaining agreements
included in Exhibit 1.15, no agreement which is binding on any of the Groups
restricts any from relocating or closing any of its operations; and none of the
Groups has experienced any work stoppage or other labor difficulty since
January 1, 1985. Each of the employee benefit plans of the Groups or
maintained by Masco on behalf of the Groups complies in all respects with the
Internal Revenue Code of 1986, as amended, and the Employee Retirement
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<PAGE> 12
Income Security Act of 1974, as amended ("ERISA") and the regulations
thereunder and no "Reportable Event" under ERISA or such regulations has
occurred with respect to any of such plans, and there exists no condition or
set of circumstances which could result in a Reportable Event. Except as set
forth on Exhibit 1.19 or Exhibit 1.04(b), the value of all actuarial accrued
liabilities are fully funded by the assets of such plans. All contributions
for periods prior to the Effective Date have been made or accrued for each of
such plans, except as set forth on Exhibit 1.04(b). Except as set forth on
Exhibit 1.19, since August 1, 1981 none of the Groups has participated in any
"multiemployer plan" as defined in ERISA. Exhibit 1.19 includes a copy of a
letter from the administrator of each multiemployer pension plan to which any
Company had an obligation to contribute at any time during the period September
25, 1980 through December 31, 1989 setting forth the estimated withdrawal
liability which would be imposed by such plan if the contributing Company were
to withdraw from such plan in a complete withdrawal, as of the most
recently-available information. Except as disclosed on Exhibit 1.19, no
Company has incurred a withdrawal (either complete or partial) (as defined in
Section 4203 or 4205 of ERISA) from any multiemployer plan. There is no
pending dispute between any Company and any multiemployer plan concerning
payment of contributions or payment of withdrawal liability payments. None of
the Groups will incur liability under ERISA on account of the termination of
any employee welfare or benefit plan since January 1, 1980. Except as set
forth on Exhibit 1.19, the terminations of all such employee welfare and
pension benefit plans have been approved by the Internal Revenue Service
(except in cases where such approvals are not generally permitted or provided
for) and, in the case of any defined benefit pension plan, by the Pension
Benefit Guaranty Corporation.
1.20 All inventories (including raw materials, work in process and
finished goods) of the Groups, net of the aggregate reserves deducted
therefrom, reflected on the December Balance Sheets, are in good condition, not
obsolete, nondefective and useable or saleable, in the aggregate at existing
operating profit margins, within one year from the date hereof in the usual and
ordinary course of business as conducted as of the date hereof. All of the
receivables (other than intercorporate loans) of the Companies and the
Subsidiary of any nature, net of the aggregate reserves deducted therefrom on
the December Balance Sheets, will be collected in the usual and ordinary course
of business without
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<PAGE> 13
resort to legal proceedings and will be paid in cash within 210 days of the date
of Closing.
1.21 As of December 31, 1989 all tangible personal property owned by
or an interest in which is claimed by any other person (whether a customer,
supplier or other person) for which any of the Groups is responsible was in the
actual possession of one of the Groups and was in such condition that upon the
return of such property to its owner, such Group will not be liable in any
amount to such owner.
1.22 Exhibit 1.22 includes a listing of all patents, patent
applications and trademarks owned by each of the Companies, and, to the
knowledge of Masco, includes copies of all patents and patent applications
owned by the Companies and the Subsidiary. Each of the Groups is the sole and
exclusive owner of all patents, patent applications and trademarks listed on
Exhibit 1.22, and, to the knowledge of Masco, of all patents, patent
applications, copyrights, invention disclosures, trademarks, trade names and
service marks, whether registered or common law, and all applications therefor,
that are pending or in the process of preparation, and trade secrets, secret
processes and other proprietary rights of every kind and nature, in the United
States and in foreign countries (the "Rights") which are used or required for
use in its respective business; as of December 31, 1989 the Rights were free
and clear of any claims, liens, licenses, sublicenses, charges or encumbrances
and no governmental registration of any of the Rights had lapsed, expired or
had been canceled, abandoned, opposed or the subject of a re-examination
request. As of December 31, 1989 there had been no claims, and, to the
knowledge of Masco, as of such date there was no basis for any claim
challenging the scope, validity or enforceability of any of such copyrights,
patents, trademarks, trade names or service marks. There are no instances
where it has been held, claimed, or alleged, whether directly or indirectly,
and Masco has no knowledge of any basis upon which a claim may be made, that
any of the Rights of any of the Groups infringed the Rights of any third party
prior to the Effective Date, or that any activity of any third party infringed
upon any of the Rights of any of the Groups. Prior to the Effective Date, each
of the Groups conducted its business in a manner which, to the knowledge of
Masco, was not in violation of any Right of another and did not require a
license or other proprietary right (other than licenses and other rights set
forth
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<PAGE> 14
in Exhibit 1.22) to so operate its business. The manufacturing and
engineering drawings, process sheets, specifications, bills of material, trade
secrets, "know-how" and other like data of each of the Groups are in such from
and of such quality and will be so maintained so that each of the Groups can,
following the Closing, design, produce, manufacture, assemble and sell the
products and provide the services heretofore provided by them so that such
products and services meet applicable specifications and conform with the
standards of quality and cost of production standards heretofore met by each of
them.
1.23 Masco has full power and authority to enter into this Agreement
and, subject to approval by its Board of Directors prior to the Closing, to
consummate the transactions contemplated herein. This Agreement has been duly
executed and delivered by Masco and, subject to approval by its Board of
Directors, is a valid and binding obligation of Masco in accordance with its
terms. Subject to approval by Masco's Board of Directors, the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action of Masco and Masco Indiana, respectively. Neither
the execution of this Agreement nor the consummation of the transactions
contemplated herein will constitute or cause a breach or violation of Masco's
or Masco Indiana's charter documents or by-laws or any covenant or obligation
binding upon Masco or Masco Indiana or affecting any of their respective
properties. Masco has complete and unrestricted power to sell, assign and
deliver or cause to be sold, assigned and delivered to TriMas good and
marketable title to the Shares. At the Closing there will be no restrictions
upon the vesting in TriMas of such title to the Shares, free and clear of
liens, encumbrances and other claims of any kind whatsoever, and such title
shall then vest in TriMas.
1.24 Except as set forth on Exhibit 1.24, neither the execution of
this Agreement nor the consummation of the transactions contemplated herein
will constitute or cause a breach, default or violation of the charter
documents, by-laws or other covenants or obligations binding upon any of the
Groups or affecting any of their properties, or cause a lien or other
encumbrance to attach to any of the properties of any of the Groups, or result
in the acceleration of or the right to accelerate any obligation under or the
termination of or the right to terminate any license, franchise, lease, permit,
approval or
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<PAGE> 15
agreement to which any of the Groups is a party, or require a consent of any
person to prevent such breach, default, violation, lien, encumbrance,
acceleration, right or termination.
1.25 No approval of or filing with any court, governmental authority
or administrative agency (domestic or foreign) which is required prior to the
Closing and which has not been made or obtained is necessary to authorize the
execution and delivery of this Agreement by Masco or the consummation of the
transactions contemplated herein.
1.26 In connection with the possible sale of any Company, Masco has
not disclosed any non-public information pertaining to any of the Groups prior
to the date hereof except under such agreements of confidentiality as Masco, in
its sole discretion, has deemed appropriate. To the best knowledge of Masco,
no non-public information of any of the Companies has been given, during the
two years prior to the date hereof, to any competitor of any of the Companies.
1.27 The financial records of the Groups are in such condition that,
after the Closing, historical combined financial statements for the Groups can
be prepared for calendar years 1987, 1988, and 1989 that are capable of being
audited by Coopers & Lybrand, with an opinion unqualified with respect to the
completeness of such financial statements.
1.28 Exhibit 1.28 includes a schedule of all policies of insurance
insuring the real and personal property of the Companies and the Subsidiary and
policies insuring the Companies and the Subsidiary against risks.
1.29 Prior to the Effective Date, Masco Indiana transferred all of the
business, assets and liabilities of its Reese Products division to Reese.
1.30 To the knowledge of Masco, no matter has occurred since December
31, 1989 which would have been required to be disclosed pursuant to this
Agreement if such matter had existed prior to such date, except for matters
that have been disclosed on an Exhibit to this Agreement or that will be
disclosed in a certificate to be delivered to TriMas at the Closing.
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<PAGE> 16
II
REPRESENTATIONS AND WARRANTIES
OF TRIMAS
2.00 TriMas represents and warrants to Masco as follows:
2.01 TriMas is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2.02 TriMas has full corporate power to enter into this Agreement and,
subject to approval by its Board of Directors, to consummate the transactions
contemplated herein. This Agreement has been duly executed and delivered by
TriMas and, subject to approval by its Board of Directors, is a valid and
binding obligation of TriMas in accordance with its terms. Neither the
execution of this Agreement nor the consummation of the transactions
contemplated herein will constitute or cause a breach or violation of the
charter documents or by-laws of TriMas or of any covenants or obligations
binding upon it or affecting any of its properties.
2.03 No approval of or filing with any court, governmental authority
or administrative agency (domestic or foreign) which is required prior to the
Closing and which has not been made or obtained is necessary to authorize the
execution of this Agreement by TriMas or the consummation of the transactions
contemplated herein.
2.04 TriMas or its subsidiary to which its rights hereunder may be
assigned is acquiring the Shares for its own account for investment and with no
present view to distribution thereof within the meaning of the Securities Act
of 1933.
III
COVENANTS OF MASCO
3.00 Masco covenants and agrees that after December 31, 1989 until
Closing (except for the covenants contained in Sections 3.06, 3.07 and 3.09
which are to be performed thereafter), except with TriMas' prior written
consent or as contemplated herein:
3.01 Except as set forth in Exhibit 1.07, each of the Groups will
carry on its business in a good and diligent manner consistent
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<PAGE> 17
with prior practice in the usual and ordinary course, will not introduce
any new method of management or operation, will perform in all material respects
its obligations to be performed by it pursuant to each material agreement to
which it is bound, and will use its best efforts to preserve its business
organization intact and conserve the goodwill and relationships of its
customers, suppliers and others having business relations with it and the
services of all of its officers, employees, agents and representatives.
3.02 Each of the Groups will maintain its corporate existence and good
standing in its jurisdiction of incorporation and in each jurisdiction in which
it is qualified to do business, and it will not amend its charter documents or
bylaws.
3.03 Except for purchase and sales orders issued or accepted in the
ordinary course, none of the Groups will waive a material right or cancel a
material contract, debt or claim, or assume or enter into a material contract,
lease, license, obligation, indebtedness, commitment, purchase or sale and,
except in the usual and ordinary course of business, none of the Groups will
enter into or assume any other contract, lease, license, obligation,
indebtedness, commitment, purchase or sale. For purposes of this Section 3.03
and without limiting the foregoing, all indebtedness for borrowed money, other
than intercorporate borrowings, and commitments and agreements having a duration
in excess of one year or in amounts in excess of $50,000 are deemed to be
material and not in the usual and ordinary course of business.
3.04 Masco will, with respect to the Groups:
(i) duly and timely file all reports and returns required to be
filed with any governmental agency and will promptly pay when due all
taxes, assessments and governmental charges including interest and
penalties levied or assessed, unless diligently contested in good faith by
appropriate proceedings;
(ii) cause the Groups to maintain and keep in their current
condition all buildings, offices, shops and other structures, and keep
all of their machinery, tools, equipment, fixtures and other property used
or useable in their businesses in their current condition, repair and
working order;
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<PAGE> 18
(iii) maintain in full force and effect all policies of insurance
listed on Exhibit 1.28; and
(iv) from the date hereof on reasonable notice afford TriMas and its
representatives (including its counsel, accountants and other agents)
full access at all reasonable times throughout the period prior to the
Closing to all of their plants, offices, properties and records including
such access as may be necessary to allow TriMas at its expense to make an
audit or otherwise attempt to satisfy itself of the accuracy of the
representations contained in this Agreement and that the conditions and
warranties contained in this Agreement have been satisfied or complied
with, and will furnish documents and all such other information concerning
their properties, general affairs, prospects, financial condition, results
of operations and business as TriMas may reasonably request; provided,
however, that any investigation or inquiry made by TriMas or actual
knowledge obtained by TriMas shall not in any way affect the
representations and warranties contained in this Agreement or their
survival of the Closing.
3.05 Masco shall not take any action or omit to take any action within
its control to the extent such action or omission might result in any of the
representations or warranties contained in this Agreement being inaccurate or
incorrect on and as of the date of Closing.
3.06 Masco will leave sufficient cash in each of the Companies and the
Subsidiary to satisfy all uncashed checks of the Groups that have been written
prior to the Closing.
3.07 After the Closing, Masco will cooperate with TriMas in connection
with the preparation of audited combined financial statements of the Groups for
calendar years 1987, 1988 and 1989 in a timely and expeditious manner.
3.08 From the date hereof until the termination of this Agreement,
Masco, Masco Indiana and all of the Groups will not, and Masco will use its best
efforts to ensure that the officers, directors, employees or other agents of
Masco, Masco Indiana and all of the Groups will not, directly or indirectly take
any action to solicit, initiate or encourage any offer or proposal for, or any
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<PAGE> 19
indication of interest in, a merger or other business combination
involving any of the Groups or the acquisition of any equity interest in, or a
substantial portion of the assets or businesses of, any of the Groups, other
than with TriMas; provided, however, the obligation under this Section 3.08
shall terminate if Masco is notified that TriMas does not intend to consummate
the transactions contemplated under this Agreement.
3.09 After the Closing, Masco will make awards of Masco Common Stock to
certain employees of the Groups, based on the performance of the Groups in 1989
using the Return on Assets formula in accordance with Masco's past practice.
IV
MASCO'S CONDITIONS PRECEDENT
4.00 All of the following shall be conditions precedent to Masco's
obligations to consummate the transactions contemplated by this Agreement:
4.01 The representations and warranties made by TriMas herein shall be
accurate and correct in all material respects on and as of the date when made,
and on and as of the date of Closing as if made on and as of that date, and
Masco shall have received a certificate dated the date of Closing signed by
TriMas to the foregoing effect.
4.02 Masco shall have been furnished with an opinion of Pepper,
Hamilton & Scheetz, counsel for TriMas, dated as of the Closing, to the effect
that:
(i) TriMas is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(ii) TriMas has full corporate power to enter into this Agreement
and to consummate the transactions contemplated herein; and
(iii) This Agreement has been duly authorized, executed and
delivered by TriMas, and is its valid and binding obligation.
Such opinion may contain such qualifications as are acceptable to
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<PAGE> 20
Masco.
4.03 TriMas shall have complied in all material respects with all of
its obligations under this Agreement.
4.04 There shall not be in effect any statute, rule or regulation which
makes it illegal for Masco to consummate the transactions contemplated herein,
or any order, decree or judgment which enjoins Masco from consummating the
transactions contemplated herein, and this Agreement and the transactions
contemplated herein shall have been approved by the Board of Directors of Masco.
4.05 No suit, action, or other proceeding shall be pending or
threatened before any court or governmental agency seeking to restrain, prohibit
or obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated herein and there shall have been
no investigation or inquiry made or commenced by any governmental agency in
connection with this Agreement or the transactions contemplated herein other
than the investigation heretofore commenced pursuant to ECRA (as hereinafter
defined).
4.06 Masco shall have received a "fairness opinion" with respect to the
transactions contemplated by this Agreement from Salomon Brothers Inc.
V
TRIMAS' CONDITIONS PRECEDENT
5.00 All of the following shall be conditions precedent to TriMas'
obligations to consummate the transactions contemplated by this Agreement:
5.01 The representations and warranties made by Masco contained in this
Agreement or in any certificate delivered to TriMas or its representatives
pursuant hereto shall be accurate and correct in all material respects on and as
of the date when made, and on and as of the date of Closing as if made on and as
of that date.
5.02 TriMas shall have been furnished with the opinion of Masco's
counsel, dated as of the Closing and in the form of Schedule II hereto.
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<PAGE> 21
5.03 Masco shall have complied in all material respects with all of its
obligations under this Agreement, and all of the covenants contained in Article
III hereof shall have been performed and the conditions satisfied in all
material respects.
5.04 There shall not be in effect any statute, rule or regulation which
makes it illegal for TriMas to consummate the transactions contemplated herein
or any order, decree or judgment which enjoins TriMas from consummating the
transactions contemplated herein, and this Agreement and the transactions
contemplated herein shall have been approved by the Board of Directors of
TriMas.
5.05 No suit, action, or other proceeding shall be pending or
threatened before any court or governmental agency seeking to restrain, prohibit
or obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated herein and there shall have been
no investigation or inquiry made or commenced by any governmental agency in
connection with this Agreement or the transactions contemplated herein other
than the investigation heretofore commenced pursuant to ECRA.
5.06 There shall not have been any material error, misstatement or
omission in any Exhibit, Schedule or certificate delivered in connection
herewith by Masco.
5.07 During the period from the date hereof to the Closing there shall
not have been any material adverse effect, either individually or in the
aggregate, on the general affairs, business, prospects, properties, financial
position, results of operations or net equity of any of the Groups as a result
of any casualty or disaster, accident, labor dispute, exercise of the power of
eminent domain or other governmental act, or any other event or circumstance;
none of the Groups shall have sustained any loss or damage to its properties,
whether or not insured, which materially affects its ability to conduct its
business; and TriMas shall have received a certificate dated the date of Closing
signed by Masco to the foregoing effect and representing to the further effect
that the conditions precedent provided in Sections 5.01, 5.03, 5.05 and 5.06
have been satisfied and setting forth any matters required to be disclosed under
Section 1.30. The delivery of such certificate shall in no way diminish or
supersede the warranties and representations of Masco made in this Agreement.
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<PAGE> 22
VI
TERMINATION
6.01 This Agreement may be abandoned or terminated on or before the
Closing by mutual agreement of Masco and TriMas.
6.02 In addition to TriMas' rights provided elsewhere in this Article
VI, either Masco or TriMas may terminate this Agreement at any time prior to the
Closing by giving the other party written notice thereof, if and only if:
(i) there is a breach of or failure by the party not terminating
to perform in any material respect any of the warranties,
representations, commitments, covenants or conditions under this
Agreement; or
(ii) there exists any material error, misstatement or omission
on the part of the party not terminating which renders any Exhibit,
representations, document, information or Schedule delivered in connection
herewith misleading to the party terminating this Agreement.
Such notice shall clearly specify the breach or failure of such notified
party to perform or satisfy its warranties, representations, commitments,
covenants and conditions, or the material error, misstatement or omission of the
notified party.
6.03 By an instrument in writing delivered to the other party either
Masco or TriMas may waive any condition precedent, covenant or condition
contained herein for the benefit of the party delivering such waiver, and upon
the exercise of such right of waiver, the transactions shall be closed in
accordance with the terms contained in this Agreement as modified by such
waiver.
6.04 If this Agreement is abandoned or terminated as provided in
Section 6.01, this Agreement shall forthwith become wholly void and of no
effect, without liability of either party to the other.
6.05 Regardless of whether the transactions contemplated by this
Agreement are consummated, each party shall pay all fees and expenses incurred
by such party in connection herewith, except that Masco shall reimburse TriMas
for the reasonable expenses of TriMas' counsel (which shall include the expenses
of such counsel's
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environmental consultants, not to exceed $30,000). Masco and TriMas shall each
pay one-half of any documentary, stamp or transfer taxes incurred in connection
with the transactions contemplated by this Agreement, except that Masco shall be
responsible for such taxes and other expenses relating to the transfer of the
Reese Products division assets from Masco Indiana to Reese.
6.06 If (i) a condition precedent stated in Section 5.01 is not
satisfied, (ii) Masco in its certificate to be delivered under Section 5.07
specifically describes the representation or warranty contained in this
Agreement or in any certificate delivered to TriMas or its representatives
pursuant hereto which is not accurate or correct in all material respects as of
the date thereof, and (iii) TriMas at any time thereafter proceeds with the
Closing notwithstanding such unsatisfied condition, inaccuracy or incorrectness,
then, unless otherwise then or thereafter agreed to in writing by Masco and
TriMas, Masco shall have no liability to TriMas or any other party indemnified
pursuant to Section 8.01 with respect to the condition precedent which is not
satisfied or the inaccuracy or incorrectness described in such certificate.
VII
CLOSING
7.01 Subject to the terms and conditions of this Agreement, Masco
agrees to sell, transfer and convey, or cause the sale, transfer and conveyance
and TriMas hereby agrees to purchase, the Shares. Said purchase and the closing
of the transactions contemplated hereby (the "Closing") shall take place on
January 30, 1990, unless this Agreement shall have theretofore terminated as
herein provided. The transactions contemplated by this Agreement shall be
effective as of January 1, 1990 (the "Effective Date"). Subject to the terms
and conditions of this Agreement, each party agrees to use best efforts to take
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable, to cause the Closing to be timely consummated.
7.02 At the Closing, Masco shall deliver to TriMas certificates
representing all of the Shares (without any restrictive legend thereon),
endorsed in blank or with accompanying stock powers duly signed.
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7.03 Contemporaneously with the Closing such of the directors and
officers of each of the Groups as may be requested by TriMas shall resign.
7.04 Except as provided in Section 7.06, the aggregate purchase price
payable hereunder for all of the Shares shall be $77 million (the "Purchase
Price"), payable on the date of Closing by wire transfer or intrabank transfer
to Masco. All payments made by TriMas for the Shares and payments made pursuant
to Section 7.05 shall be paid to Masco or pursuant to Masco's direction. Masco
agrees to allocate to Masco Indiana the appropriate portion of the Purchase
Price and any Additional Payment and Contingent Purchase Price Payment, both as
hereinafter defined, and any interest thereon, for the Shares that Masco Indiana
is transferring pursuant to this Agreement, and to indemnify TriMas for the
failure to do so or for an incorrect allocation.
7.05(a) Masco agrees that the aggregate "Net Worth", as hereinafter
defined, of the Groups transferred by Masco and Masco Indiana to TriMas will be
$47 million as of the Effective Date. If, after completion of the review
referred to below, a final determination is made that the Net Worth exceeds $47
million, then TriMas shall pay to Masco within ten days after such determination
becomes final the difference between the Net Worth, as so determined, and $47
million. If, after completion of the review referred to below, a final
determination is made that the Net Worth is less than $47 million, then Masco
shall pay to TriMas or, at TriMas' direction, the Groups, within ten days after
such determination becomes final the difference between $47 million and the Net
Worth, as so determined. The Net Worth determination shall be conclusive and
binding on TriMas unless TriMas shall give notice of its objection thereto to
Masco within sixty days after the date of Closing. If TriMas shall not agree
with the determination of Net Worth, TriMas shall, within such sixty day period,
give written notice of such fact to Masco, such notice to contain in reasonable
detail the reasons for such objection, and unless within fifteen days of receipt
by Masco of such objection the matters in dispute shall be resolved by mutual
agreement, either Masco or TriMas may within ten days after the expiration of
such fifteen day period submit the December Balance Sheets and all changes
proposed by either party thereto to Coopers & Lybrand, independent public
accountants. Upon any such request, such accountants shall either confirm the
determination of Net Worth or make such changes therein
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as they deem appropriate with respect to such proposed changes in
accordance with this Section 7.05, and, after such review and any such change,
such determination shall, except as provided below, be conclusive and binding
upon the parties hereto. Masco and TriMas will each pay one-half of the
expenses incurred in connection with retaining Coopers & Lybrand to resolve any
disputes as provided under this Section 7.05. If Masco or TriMas is not
satisfied with the determination of Coopers & Lybrand and gives notice of such
fact and the specific objections thereto to the other within 10 days after the
receipt of such determination by Coopers & Lybrand, Masco and TriMas agree to
select another "big six" firm of independent certified accountants of recognized
standing reasonably acceptable to TriMas and Masco to review the matters
previously submitted to Coopers & Lybrand. Such accountants shall either
confirm the determination of Coopers & Lybrand with respect to the matters
subject to their review or make such changes therein as they deem appropriate in
accordance with this Section 7.05, and, after such review and any such change by
such accountants, such determination shall be conclusive and binding upon the
parties hereto. The party requesting review by such other "big six" firm shall
pay the expenses incurred in connection therewith except that if such party
shall substantially prevail (as determined by such firm) all such expenses shall
be borne by the other party. For purposes of this Section 7.05, "Net Worth" for
each Group is defined as the aggregate of the assets, less the liabilities, of
such Group as reflected on the December Balance Sheet of such Group, determined
by utilizing the accounting policies, practices and agreement set forth on
Exhibit 1.04(b), and as to matters not set forth thereon, by utilizing the
accounting policies and practices used by the Groups prior to the Effective
Date, as long as such policies and practices not set forth on Exhibit 1.04(b)
are in accordance with generally accepted accounting principles. In determining
Net Worth, neither Masco nor TriMas may dispute any of the accounting policies,
practices or agreements specifically set forth on Exhibit 1.04(b), and such
matters shall not be reviewed by Coopers & Lybrand or any other firm of
independent certified accountants reviewing the December Balance Sheets. TriMas
shall have no claim under Section 8.01 of this Agreement with respect to any
matter for which an adjustment is made pursuant to this Section 7.05 to the
extent of such adjustment.
(b) From and after the Effective Date, the Groups have been and shall be
operated by Masco at the expense of and for the
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benefit of TriMas. In connection therewith, promptly after the Closing,
the parties agree to reconcile, for the period from the Effective Date to the
date of Closing, the amount of cash collected on behalf of each of the Companies
and the Subsidiary by Masco and Masco Indiana, and the amount of cash
contributed or expended by Masco and Masco Indiana (including any cash left in
the Groups pursuant to Section 3.06) to or for the benefit of the Companies and
the Subsidiary. The amount of such cash contributed or expended by Masco and
Masco Indiana in excess of the amount it has collected will be reimbursed by
TriMas to Masco. Likewise, the amount of such cash collected by Masco and Masco
Indiana in excess of the amounts contributed or expended by Masco and Masco
Indiana will be reimbursed to TriMas or, at TriMas' direction, the Groups, by
Masco. Charges for specific services rendered or paid (such as insurance
premiums and similar items) by or on behalf of Masco for the Groups relating to
activities after December 31, 1989 shall be deemed an expense of the Groups in
accordance with Masco's past practice, prorated if appropriate based on the
number of days from the Effective Date to the day prior to Closing, except that
no management fee shall be charged by Masco for such period and in lieu thereof
the Groups shall be deemed subject to the Corporate Services Agreement between
Masco and TriMas dated as of December 27, 1988, effective as of the Effective
Date.
7.06(a) In addition to the amounts provided under Section 7.04 and
clause (b) of this Section 7.06, TriMas shall pay to Masco the sum of $6 million
(the "Additional Payment") if the average of the annual Pre-Tax Income, as
hereinafter defined, for any two or more consecutive calendar years, the first
of which is 1990 and the last of which is 1991, 1992, 1993 or 1994, equals or
exceeds $12 million. The total amount payable under this clause (a) shall be
deemed earned after the earliest calendar year that the requirements set forth
in the preceding sentence have been met.
(b) In addition to the amounts provided under Section 7.04 and clause
(a) of this Section 7.06, TriMas shall pay to Masco, if entitled thereto under
the terms and conditions contained herein, the following amounts ("Contingent
Purchase Price Payments"), provided, however, that excluding the interest
payments provided under clause (e) below, the total aggregate amount payable
under this clause (b) of Section 7.06 shall not exceed $12 million:
(i) the product of (A) seven, multiplied by (B) the
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amount by which the average of the annual Pre-Tax Income for calender
years 1990, 1991 and 1992 exceeds $13 million;
(ii) if the amount payable to Masco pursuant to subclause (i) above
is less than $12 million, excluding interest, then (A) the product of
(1) seven, multiplied by (2) the amount by which the average of the annual
Pre-Tax Income for calendar years 1990, 1991, 1992 and 1993 exceeds $13
million, less (B) the amount paid pursuant to subclause (i) above
excluding interest;
(iii) if the amounts payable to Masco pursuant to subclauses (i) and
(ii) above aggregate less than $12 million, excluding interest, then (A)
the product of (1) seven, multiplied by (2) the amount by which the
average of the annual Pre-Tax Income for calendar years 1990, 1991, 1992,
1993 and 1994 exceeds $13 million, less (B) the amounts paid pursuant to
subclauses (i) and (ii) above excluding interest.
(c) As used herein, the following terms have the respective meanings set
forth below:
"Pre-Tax Income" for any period shall mean the income of the
Combined Companies, considered as an independent corporate entity, prior
to any deduction for foreign, Federal, state and local taxes measured by
earnings or gross income, and any deduction for the Michigan Single
Business tax, and prior to reflecting the inclusion of any income tax
credits, all determined in accordance with the accounting policies,
practices and agreements specifically described on Exhibit 1.04(b), and as
to matters not set forth thereon, the accounting policies and practices
utilized by the Groups prior to the Effective Date as long as such
accounting policies and practices not set forth on Exhibit 1.04(b) are in
accordance with generally accepted accounting principles consistently
applied, but with the following adjustments:
(1) Except as set forth in clause (3) below, the amount of any
extraordinary gain or extraordinary loss or any gain or loss
from the sale, exchange or other disposition of property (other than
inventory sold in the ordinary course of business) shall not be
taken into account in determining Pre-Tax Income.
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(2) If TriMas directly or through a subsidiary makes a
contribution to the capital of or otherwise directly or through
a subsidiary loans funds to the Combined Companies or charges the
Combined Companies for taxes (other than taxes accrued in the
December Balance Sheets) which would have been payable or accruable
by the Combined Companies if they were an independent corporate
entity, such contribution, funds or charges will be deemed to be
debt owed to TriMas bearing interest at a rate equal to the prime
rate of interest at National Bank of Detroit to major corporate
customers (as such rate prevails from time to time while such debt
is deemed to be outstanding). Such assumed interest expense shall
be deemed an additional expense for the Combined Companies for the
period during which such contribution, funds or charges are
outstanding from or unpaid to TriMas.
(3) If TriMas sells any of the companies in the Combined
Companies, or the assets thereof, as an entirety or
substantially as an entirety, the gross proceeds of such sale will
be deemed to be debt owed to the Combined Companies bearing interest
from the date of sale at the rate of fourteen (14%) percent per
annum payable quarterly and such deemed interest shall be deemed to
be debt owed to the Combined Companies bearing interest from the
deemed date of payment thereof at the rate set forth in the next
sentence. If the Combined Companies pay a dividend or make a
distribution, or otherwise loan funds to TriMas or any subsidiary of
TriMas, such dividend, distribution or loan will be deemed to be
debt owed to the Combined Companies bearing interest at a rate equal
to two percentage points under the prime rate of interest at
National Bank of Detroit to major corporate customers (as such rate
prevails from time to time while such debt is deemed to be
outstanding). Such assumed interest income described in the
preceding two sentences shall be added in determining Pre-Tax Income
for the period during which such proceeds, dividend, distribution or
loan were outstanding from or paid by the Combined Companies. To
the extent the Combined Companies are not directly liable for any
taxes which would otherwise have been payable or accruable had the
Combined Companies existed as an independent corporate entity, any
payments to TriMas or
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to any subsidiary of TriMas of funds equal to such taxes shall not,
for purposes of this clause, be deemed to be a distribution or
property paid or otherwise made available from the Combined
Companies.
(4) Assets of the Combined Companies shall be valued in
accordance with accounting principles consistently applied which
were used by the Groups in the Financial Statements as of December
31, 1989 and without considering any adjustment to asset values from
any allocation by TriMas of the Purchase Price, Additional Payment
or Contingent Purchase Price Payments as though the acquisition by
TriMas of the Combined Companies had not been effected.
(5) TriMas may charge a management fee to the Combined
Companies not to exceed one percent of net sales of the Combined
Companies, and such amount shall be deemed an expense in determining
Pre-Tax Income, and charges for specific services rendered or paid
by or on behalf of TriMas or a subsidiary for the Combined Companies
in conformity with the past practices of Masco with respect to the
Combined Companies shall be deemed an expense of the Combined
Companies for the period in which such services were rendered.
(6) If TriMas establishes an accrued liability or asset value
reduction as of the Effective Date in connection with the
acquisition of the Groups on account of the possible consolidation
of certain of the operations of the Combined Companies, whereby such
amount is not deemed an expense in determining Pre-Tax Income, and
if thereafter any excess of such accrued liability or asset value
reductions eliminated in a manner whereby income is increased as a
result of the elimination of such excess accrued liability or asset
value reduction, the income resulting from such elimination shall be
excluded for purposes of determining Pre-Tax Income.
(7) To the extent Masco indemnifies TriMas or any of the
Groups for any claim, liability, obligation, loss, damage,
assessment, judgment, cost or expense under this Agreement or pays
any expense required under this
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Agreement, such claim, liability, obligation, loss, damage,
assessment, judgment, cost or expense shall not be deemed an
expense or loss for purposes of determining Pre-Tax Income, and the
receipt of any such indemnification payment from Masco shall not be
deemed income for purposes of determining Pre-Tax Income.
(d) The parties hereto recognize, by reason of the Combined Companies'
integration into the consolidated operations of TriMas, that certain adjustments
to Pre-Tax Income may be necessary, in addition to the types of adjustments set
forth above, in order that the calculation of Pre-Tax Income will not be
distorted from the calculation which would be made if the Combined Companies
were considered under generally accepted accounting principles to be an
independent corporate entity. All determinations for the Combined Companies
under this Section 7.06, including all adjustments thereto to prevent any such
distortion in Pre-Tax Income and other determinations, shall be made and
reported to TriMas and Masco by the internal audit staff utilized by TriMas
within 120 days after the end of the period for which such determination is
being made. The determination of such internal audit staff shall be conclusive
and binding upon the parties hereto on the sixtieth day thereafter (or such
earlier date as TriMas is advised by Masco that Masco accepts such determination
as conclusive and binding) unless Masco within such sixty-day period submits all
its proposed changes to Coopers & Lybrand, independent certified public
accountants. Within fifteen days following Masco's submission, TriMas may
submit proposed changes to Coopers & Lybrand. Upon any such request, such
accountants shall either confirm such original determination or make such
changes therein as they deem appropriate with respect to such proposed changes
raised by either party hereto in accordance with this Section 7.06, and, after
such review and any such change, such determination shall be conclusive and
binding upon the parties hereto, except as provided below. Masco and TriMas
will each pay one-half of the expenses incurred in connection with retaining
Coopers & Lybrand to resolve any disputes as provided under this Section 7.06.
If Masco or TriMas is not satisfied with the determination of Coopers & Lybrand
and gives notice of such fact and the specific objections thereto to the other
within 10 days after the receipt of such determination by Coopers & Lybrand,
Masco and TriMas agree to select another "big six" firm of independent certified
accountants of recognized standing reasonably acceptable to TriMas and Masco to
review the matters in dispute. Such
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accountants shall either confirm the determination of Coopers & Lybrand
with respect to the matters subject to their review or make such changes therein
as they deem appropriate in accordance with this Section 7.06, and, after such
review and any such change, such determination shall be conclusive and binding
upon the parties hereto. The party requesting review by such other "big six"
firm shall pay the expenses incurred in connection therewith except that if such
party shall substantially prevail in its position (as determined by such firm)
all such expenses shall be borne by the other party.
(e) Any payments owed pursuant to this Section 7.06 shall be paid
within thirty days after the determination has become conclusive and binding on
the parties in accordance with clause (d) above that such payment is due to
Masco. Such payments shall be made by wire transfer or intrabank transfer to
Masco. Any payments made pursuant to clause (a) or (b) of this Section 7.06
shall bear interest from the Effective Date until paid at the rate of 8.06% per
annum, compounded annually, with such interest payable concurrently with such
payments.
7.07 From and after the Effective Date, the treatment of existing
health and welfare benefits as well as existing stock awards and stock options
of employees of the Groups will be as described on Schedule III hereto.
7.08 At the Closing, the parties shall execute and shall cause the
Companies, as required, to execute the administrative consent order in the form
proposed by the State of New Jersey and shall execute such other documents as
may be reasonably required under ECRA.
VIII
INDEMNIFICATION AND TAX MATTERS
8.01 Subject to the provisions of Section 6.06 and Exhibit 1.04(b),
Masco shall indemnify, defend and hold harmless TriMas, the Groups and their
respective affiliates and the respective officers, directors, employees and
shareholders of the foregoing (other than Masco and Masco Indiana) from, against
and with respect to any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense (including, without limitation,
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reasonable attorneys' and accountant's fees and costs and expenses
reasonably incurred in investigating, preparing, defending against, settling or
prosecuting any litigation or claim, action, suit, proceeding or demand), of any
kind or character, arising out of or in any manner incident, relating or
attributable to (and after giving effect to (a) any proceeds from insurance
received (other than self-assurance and insurance which is retrospectively
rated), and (b) any amount reflected or reserved therefor in the December
Balance Sheets) (i) any inaccuracy in any representation or breach of warranty
of Masco contained in this Agreement or in any certificate, instrument of
transfer or other document or agreement executed by Masco or any of the Groups
in connection with this Agreement, (ii) any failure by Masco to perform or
observe, or to have performed or observed any covenant, agreement or condition
to be performed or observed by Masco under this Agreement or under any
certificate or other documents, instrument of transfer or agreement executed by
Masco or any of the Groups in connection with this Agreement, (iii) (a) the
matters disclosed on Exhibit 1.14(c) to the extent provided therein, and (b)
remediation or clean-up obligations of any of the Groups and their respective
officers, directors, employees or shareholders in their capacities as such, for
(1) the presence of hazardous or toxic wastes, substances or similar materials
in the soil or ground water on, in, under or above property now or previously
owned or leased by any of the Groups; or (2) the contamination of any property
belonging to other parties with hazardous or toxic wastes, substances or similar
materials insofar as such contamination is the result of the handling, storage,
use, disposal, delivery for disposal or generation of any such hazardous or
toxic wastes, substances or similar materials at any time prior to the Effective
Date by or on behalf of any of the Groups, in each such case, regardless of the
accuracy of the representations and warranties contained in Section 1.14 hereof
or disclosures made on Exhibit 1.14(c) (except as otherwise set forth therein),
(iv) any agreements, contracts, negotiations or other dealings by Masco with any
person concerning the sale of the capital stock or business of any of the
Groups, (v) any guaranty to which any of the Groups is a party and which
guarantees amounts payable by, or obligations of, any person or entity other
than such Groups but in any event only insofar as such guaranty arises out of
transactions prior to the Effective Date and is not reflected as a liability in
the December Balance Sheets, (vi) the matters disclosed on Exhibit 1.18, (vii)
any deferred Federal, state and local income tax liability of each of the Groups
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relating to any period prior to the Effective Date, (viii) any liability
for damage to persons or property caused by acts or omissions of any of the
Groups prior to the Effective Date, (ix) any liability incurred by the Reese
Group in connection with the transfer of the assets of the Reese Products
division of Masco Indiana to Reese, or (x) any liability of any of the Groups on
account of product warranties for products or services manufactured, sold,
provided, or performed by or on behalf of any of the Groups prior to the
Effective Date.
8.02 Notwithstanding the provisions of Section 8.01:
(A) TriMas shall have no right to make a claim under this Agreement
except for the amount by which the aggregate of all claims thereunder which have
not theretofore been reimbursed to TriMas and which TriMas would have been
entitled to assert against Masco absent this Section 8.02, exceeds $900,000
("Basket Amount") as adjusted pursuant to clause 8.02(C) below; provided,
however, that the foregoing limitations shall not apply to any claim for
indemnification arising out of or in any manner incident, relating or
attributable to (i) any inaccuracy or incorrectness in any representations or
warranties or any breach of any covenants contained in Sections 1.02, 1.03,
1.23, 1.25, 7.04, 8.10, 8.11, 8.12 or 9.01, (ii) a willful and intentional
breach of, or failure to perform as a result of gross negligence, a covenant to
be performed by Masco prior to he Closing, (iii) any claim arising under clauses
(iv), (vi), (vii) or (ix) of Section 8.01, (iv) the matters disclosed on Exhibit
1.14(c) to the extent set forth thereon, (v) costs arising which relate to
remedial action required in order to obtain approval of the transactions
contemplated herein under the New Jersey Environmental Clean-up Responsibility
Act of 1983 ("ECRA") or (vi) the amount of expense relating to the Reese Group's
obligation to repair or replace defective products under product warranties in
the three-year period 1990 through 1992, if any, in excess of $375,000, and less
than $530,000. Notwithstanding the foregoing or the provisions of Section 9.03,
Masco shall have the right at its election to reimburse TriMas for amounts for
which it is not otherwise obligated to reimburse TriMas as a result of the
Basket Amount or as a result of the termination of the obligation to indemnify
as set forth in Section 9.03, provided that Masco shall also pay TriMas interest
on such amounts at the rate of 8.06 percent per annum, compounded annually, from
the date of the loss giving rise to such indemnity until paid.
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(B) Masco shall have no responsibility or liability for, and shall
have no indemnification obligation under Section 8.01 or otherwise on account
of, the ownership or conduct of the businesses of the Groups from and after the
Effective Date (including without limitation the continuation of conduct engaged
in prior to the Effective Date), except to the extent that such may exist for
the breach of any representation which specifically relates to the period after
the Effective Date and prior to the Closing in Sections 1.07, 1.08, 1.14 and
1.30 or for breach of a covenant or a specific indemnification obligation of
Masco to be performed after the Closing.
(C) If TriMas or any of the Groups receives a tax benefit as a result
of a matter subject to an indemnification claim under Section 8.01, TriMas shall
apply such tax benefit when realized by TriMas as follows:
(i) TriMas shall pay to Masco an amount equal to the lessor of:
(a) the amount of such tax benefit or (b) amounts previously paid by
Masco to TriMas pursuant to Section 8.01.
(ii) To the extent any such tax benefit exceeds the amount paid to
Masco pursuant to subclause (i) above, the amount of such excess shall
be an additional Basket Amount.
(iii) If any such tax benefit is later disallowed by the taxing
authority, then Masco shall promptly refund to TriMas the amount of any
payment to Masco pursuant to subclause (i) above plus interest charged by
the taxing authority on such disallowed tax benefit, and any adjustment to
the Basket Amount on account of such tax benefit under subclause (ii)
above shall be reversed and eliminated and Masco shall promptly pay to
TriMas any payment which may be due as a result of the elimination of such
adjustment to the Basket Amount.
(D) The right of indemnification provided in Section 8.01 is solely
for the benefit of the parties referred to therein, and such right will not be
extended directly or indirectly, to any other person.
(E) To the extent Exhibit 1.14(c) specifically limits or excludes
Masco's indemnification obligation for certain matters,
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Masco shall have no indemnification obligation for such matters under other
provisions of this Agreement.
8.03 If Masco is required to make or otherwise makes any payments to
TriMas as a result of the inaccuracy of the representations contained in Section
1.20 relating to the collection of receivables, TriMas shall, concurrently with
such payment, assign to Masco all of its title to and the right to collect the
amount of the accounts receivable for which payment in any equal amount was made
to TriMas by Masco. If any Group has receivables arising from unrecorded sales
as of the Effective Date in excess of those reflected on its December Balance
Sheet, Masco shall have the benefit thereof and TriMas shall at Masco's expense,
assist Masco in the collection thereof provided that such collection effort does
not unreasonably interfere with the business relationship between the Group and
the account debtors.
8.04 TriMas shall give Masco prompt notice of any claim for which
indemnification may be sought by TriMas under Section 8.01 notwithstanding the
fat that such claim would be subject to the Basket Amount. Masco shall at its
own expense assume the defense of all claims for which it either is obligated to
indemnify TriMas or elects to indemnify TriMas, with counsel of its choice.
TriMas shall have the right to employ its own counsel in any such case at its
own expense. TriMas agrees to cooperate with Masco in connection with any claim
for which Masco is providing indemnification hereunder. Masco shall have the
absolute right to settle at Masco's expense any claim, except for any settlement
wherein criminal liability is admitted or which involves any action other than
the payment of money, and in either such case, only with the prior written
consent of TriMas.
8.05 If a final determination is made that Masco is obligated to
provide indemnification under Section 8.01 hereof, then Masco agrees to make any
such indemnification payment promptly after such final determination is made.
If Masco fails to make any such indemnification payment which is owing to TriMas
or any of the Groups within 30 days after such determination becomes final,
TriMas shall have the right to off-set such amount against amounts owing to
Masco by TriMas under this Agreement in addition to any other remedy which
TriMas may have.
8.06 TriMas shall file all tax returns or reports for the
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Groups with respect to any taxable period which ends after the Effective
Date (except for any consolidated or combined return which reports income of
Masco), provided that any tax liability with respect to a taxable period that
began prior to the Effective Date shall be allocated between Masco and TriMas in
accordance with the following provisions, and, provided, however, that Masco
will receive as a credit to amounts allocated to it all amounts relating to such
tax liability which are accrued on the Financial Statements.
(A) In the case of any tax based on income of the Groups or any
sales or use tax, the tax liability shall be divided between Masco and
TriMas such that the tax liability attributable to income earned or sales
made before the Effective Date shall be allocated to Masco and any tax
liability attributed to income earned or sales made on or after the
Effective Date shall be allocated to TriMas.
(B) In the case of real estate tax, or other tax not based upon
income or sales, the tax liability shall be divided between Masco and
TriMas such that TriMas shall pay that portion of the tax liability
determined on the basis of the number of days in the taxable period after
the Effective Date divided by the total number of days in the taxable
period and Masco shall pay that portion of the tax liability determined
on the basis of the number of days in the tax period up to and including
the Effective Date divided by the total number of days in the taxable
period.
8.07 Masco shall be entitled to any refund of any taxes attributable to
the Groups for all periods ending before the Effective Date including interest
thereon, and shall be paid any such refund, including interest thereon, promptly
upon receipt thereof by TriMas or any of the Groups. Masco shall have the right
to determine whether any such claim for refund of such taxes shall be made on
behalf of the Groups. If Masco elects to make such a claim for refund, Masco
shall bear the full expense of the making of such claim, shall reimburse TriMas
or the Groups for the reasonable out-of-pocket expenses incurred by them in
assisting in such claim, and TriMas and the Groups shall cooperate fully in
connection with making such a claim. In the event any Group incurs a net
operating loss after the Effective Date which is carried back
-36-
<PAGE> 37
to a prior period of any Group, Masco shall pay to the Group who
incurred the net operating loss any such refund, including interest thereon,
received by Masco or its affiliates, promptly upon receipt thereof, or shall pay
to such Group the amount of any reduction in tax liability that Masco obtains as
a consequence of such carryback and any such payment shall not be included in
Pre-Tax Income under Section 7.06.
8.08 (a) Masco shall have exclusive authority, through counsel and
other representatives of its choice, to control, compromise or settle any audit
or other examination by any governmental body or any judicial or administrative
proceeding relating to liability for taxes ("Tax Contest") with respect to which
(1) a consolidated tax return or any other consolidated or combined tax return
including any of the Groups for any period beginning before the Effective Date
was filed, or (2) a separate tax return was filed for any of the Groups for any
period ending on or before the Effective Date, except that in either case with
respect to any item which may affect the Groups for any period after the
Effective Date Masco must obtain the agreement of TriMas prior to a compromise
or settlement of the matter, which agreement will not be unreasonably withheld
by TriMas. TriMas shall promptly notify Masco of any notice TriMas or any of
the Groups receives after the Closing of any threatened or pending Tax Contest
or any proposed adjustment attributable to any such Tax Contest. TriMas and the
Groups shall deliver to Masco any power of attorney required to allow Masco and
its counsel and other representatives to represent any of the Groups in
connection with any Tax Contest and shall use their best efforts to provide
Masco with such assistance as may be reasonably requested by Masco in connection
therewith. Masco shall reimburse TriMas for reasonable out-of-pocket expenses
incurred by it in providing such assistance.
(b) For any Tax Contest involving a tax liability for a period beginning
before the Effective Date and ending after the Effective Date, TriMas
shall have exclusive authority, through counsel and other representatives of its
choice, to control, compromise or settle such Tax Contest, and any taxes owed or
professional fees incurred therewith shall be apportioned between TriMas and
Masco as set forth in Section 8.06.
(c) If as a result of any Tax Contest (other than pertaining to the making of
the Section 338(h)(10) election pursuant to Section
-37-
<PAGE> 38
8.09 hereof or the increase in tax basis received by TriMas pursuant to
such election), Masco incurs additional income tax liability but TriMas receives
a related tax benefit in the form of an increase in tax basis or otherwise, such
tax benefit shall be equitably apportioned between Masco and TriMas. Likewise,
if as a result of any Tax Contest, TriMas incurs additional income tax liability
and Masco receives a related benefit, such tax benefit shall be equitably
apportioned between Masco and TriMas.
8.09 At TriMas' request, Masco will make an effective election under
Section 338(h)(10) of the Internal Revenue Code relating to the transactions
contemplated hereby.
8.10 At the request of Masco, TriMas agrees to cause Fulton to withhold
amounts owing by Fulton to the former stockholder of the Subsidiary, provided,
however, that if Masco makes such a request, Masco will indemnify and hold
TriMas and Fulton harmless against any liability relating to the withholding of
such amounts. TriMas agrees to indemnify and hold Masco harmless with respect
to (i) any liability incurred by Masco under the guarantee provided to the
former stockholder of the Subsidiary in connection with the purchase of the
Subsidiary by Fulton, except for liability arising form the above withholding,
at the request of Masco, of amounts owing by Fulton to such former stockholder,
(ii) any liability incurred by Masco with respect to guarantees issued to third
parties by Masco for the benefit of any of the Companies or the Subsidiary, and
(iii) any liability relating to any matter as to which any Group is responsible
and which is not then subject to indemnification by Masco hereunder.
8.11 Masco shall be responsible for the filing of returns for, and
payment of, all 1989 local, state and Federal income taxes for all of the
Groups. Masco will file all such returns and pay such income taxes in a timely
manner. TriMas shall be responsible for the filing of returns for, and payment
of, all other 1989 taxes for all of the Groups, provided, however, that Masco
will promptly reimburse TriMas for any amount paid by TriMas for such other 1989
tax which is not reflected as a liability in the December Balance Sheets. If,
however, such liability reflected in the December Balance Sheets exceeds the
amount of such other 1989 taxes, such excess shall be promptly paid to Masco by
TriMas.
8.12 Masco shall perform all investigative and remedial
-38-
<PAGE> 39
measures required by the New Jersey Department of Environmental Protection
for compliance with ECRA, at its sole expense (except for measures
set forth on Exhibit 1.14(c) to be performed at TriMas' expense), and shall have
the responsibility, at its sole expense, to negotiate with and make all
necessary filings and submissions regarding ECRA. Masco shall also, at its sole
expense, perform all of its other obligations described in Exhibit 1.14(c).
Notwithstanding the foregoing, Masco shall consult with TriMas with respect to
such matters and provide TriMas with a complete copy of each filing or
submission at the time it is made. TriMas agrees to cooperate with Masco in
connection with the compliance with ECRA and any remediation which may be
required in connection therewith or any other laws, rules or regulations
relating to environmental matters or with respect to the matters described in
Exhibit 1.14(c) as to which Masco has an obligation to perform, provided,
however that Masco will not take any action which will unduly hamper the ability
of the Groups to carry on their respective businesses in the ordinary course.
Notwithstanding the foregoing, if any capital expenditures are required in
connection with any such remediation, and such capital expenditures will provide
efficiencies to any Group which will result in decreased capital or operating
costs unrelated to environmental compliance in the future, TriMas will, promptly
after such capital expenditures are made, pay to Masco the present value of the
amount of savings which will be realized by any Group as a result of such
decreased costs, provided, however, that such payment shall not exceed the
amount of such capital expenditure.
IX
GENERAL
9.01 Except for services of Salomon Brothers Inc, the cost for which
Masco will pay, Masco represents and warrants to TriMas that the services of a
broker or finder have not been used by Masco in connection with any of the
matters pertaining to the transactions contemplated herein and that no broker's,
finder's or financial advisor's fee will become payable by TriMas or any of the
Groups by reason of the execution of this Agreement or the consummation of the
transactions contemplated herein and arising out of the acts or omissions of
Masco. Masco will hold harmless and indemnify TriMas, each of the Groups and
their respective affiliates and the officers, directors, employees and
shareholders of the foregoing (other than Masco and Masco Indiana) from and
against any claim for
-39-
<PAGE> 40
broker's, finder's or financial advisor's fees, including costs or expenses
incurred in connection with the defense of any suit claiming such fees,
or in any other manner pertaining to claims for such fees, which may become
payable by reason of the acts or omissions of Masco. TriMas retained the
services of PaineWebber Incorporated in connection with the transactions
contemplated by this Agreement, the cost of which will be paid by TriMas.
TriMas shall hold harmless and indemnify Masco from and against any claim for
broker's, finder's, or financial advisor's fees, including costs or expenses
incurred in connection with the defense of any suit claiming such fees, or in
any other manner pertaining to claims for such fees, which may become payable by
Masco solely by reason of the acts or omissions of TriMas.
9.02 This Agreement shall be construed, interpreted and rights of the
parties determined in accordance with the laws of the State of Michigan.
9.03 The representations, warranties and other agreements herein
contained shall continue in full force and effect after the Closing
notwithstanding any investigation by a party hereto or such party's actual
knowledge of any inaccuracy in any representation or warranty, subject to
Section 6.06, (i) without termination in the case of those contained in Sections
1.02, 1.03, 1.23, 1.25, 7.04, 8.10, 8.11, 8.12 and 9.01 and clauses (iii) (a),
(iv), (vi), (vii) and (ix) of Section 8.01 and clauses (C) and (D) of Section
8.02, (ii) in the case of those contained in Section 1.06, 8.06, 8.07, 8.08 and
8.09, until the expiration of the statute of limitations (including any
extensions) applicable to tax returns relating to any period prior to the
Effective Date, (iii) in the case of those contained in Section 1.19 which
relate to compliance with ERISA, until the expiration of the statue of
limitations (including any extensions) contained in ERISA, and (iv) until the
date which is three years (or such longer period as specifically provided
herein) after the Effective Date in the case of all other representations,
warranties, and agreements contained herein. No claim for indemnity may be made
on account of the inaccuracy or incorrectness of any representation, warranty or
agreement contained herein unless prior to the expiration for the survival
period the party claiming indemnity has given notice to the party against whom
indemnification is sought. Any claim timely and properly made prior to such
expiration shall be subject to indemnification hereunder notwithstanding any
subsequent expiration.
-40-
<PAGE> 41
9.04 This Agreement (which terms, as used in this Agreement, includes
the Schedules and Exhibits referred to herein) constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be implied or be binding (including, without limitation, any
alleged waiver based on a party's knowledge of a breach or inaccuracy in any
representation or warranty contained herein) unless in writing and signed by the
party against which such amendment, supplement, modification, waiver or
termination is asserted. No waiver of a provision of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly therein provided.
9.05 All of the terms and provisions of this Agreement by or for the
benefit of the parties shall be binding upon and inure to the benefit of their
successors, assigns, heirs and personal representatives. The rights and
obligations provided by this Agreement shall not be assignable, except by TriMas
(without discharge of its obligations hereunder) to a subsidiary or affiliate or
a successor to its business and, except as expressly provided herein, nothing
herein is intended to confer upon any person other than the parties and their
successors, any rights or remedies under or by reason of this Agreement.
9.06 All instruments or documents to be delivered by any party to this
Agreement shall be in form and content reasonably satisfactory to the counsel
for the party receiving such instrument or document. Each Exhibit shall be
identified by a cover page and initialed on each page for purposes of
identification on behalf of Masco by an officer or counsel for Masco. TriMas'
authorized representative or counsel shall likewise initial each page thereof
solely for purposes of identification and to acknowledge receipt thereof. Each
Exhibit shall be deemed an integral part of this Agreement.
9.07 This Agreement my be executed simultaneously in two or
-41-
<PAGE> 42
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
9.08 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given (except as may
otherwise be specifically provided herein to the contrary) if delivered by hand
and receipted for by the party to whom said notice or other communication shall
have been directed or mailed by certified or registered mail with postage
prepaid or shipped and receipted by express courier service, charges prepaid by
shipper addressed as follows (or to such other address as may be designated by
notice given pursuant hereto):
(a) If to Masco to President
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
with a copy to General Counsel
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
(b) If to TriMas to President
TriMas Corporation
315 East Eisenhower Parkway
Ann Arbor, Michigan 48108
with a copy to Michael Staebler
Pepper, Hamilton & Scheetz
36th Floor
100 Renaissance Center
Detroit, Michigan 48243
9.09 In order to preserve for TriMas the corporate opportunity of the
business of each of the Groups, Masco agrees that, for a period of ten years
following the Closing, neither Masco nor any subsidiary of Masco will, directly
or indirectly, engage in any Business Activity in respect of the Products, as
such terms are hereinafter defined (other than on behalf of TriMas or any of its
subsidiaries and other than as a result of any activities engaged in by Masco
Industries, Inc. or any of its subsidiaries) whether such engagement is as a
proprietor, partner, or investor (other
-42-
<PAGE> 43
than as a holder of less than 10% of the outstanding capital stock of a
publicly traded corporation) in the respective geographic areas in which the
products or services of the Groups have been distributed or provided during the
two year period prior to the Closing; provided, however, that the foregoing
shall in no way restrict Masco or any of its subsidiaries or any entity in which
Masco or any of its subsidiaries has a investment from investing in and
thereafter owning or operating any such entity whose annual revenues for the
complete fiscal year immediately prior to such investment, relating to the
Business Activities in respect of the Products, do not exceed 15% of the total
revenues of such entity for such year. For purposes of this Section 9.09,
"subsidiary of Masco" is defined as any company (i) over 50% of the common stock
of which is owned by Masco, and (ii) a majority of the directors of which can be
elected by Masco. "Business Activity" is defined as designing, developing,
manufacturing, selling, marketing or servicing Products. "Products" are defined
as weight-distributing and weight-carrying hitches, custom hitch receivers, sway
control devices and towing accessories; marine trailer, automatic brake and worm
gear winches, trailer jacks for marine, industrial and agricultural
applications, couplers and trailer accessories, outboard motor brackets, boat
hooks, boarding ladders, boat cover poles, boat fender holders, paddles,
trolling motor connecting rod assemblies, marine radar reflectors and radar
scanner platforms and propeller locks and rudders; and pressure sensitive tapes
and coatings and facing for commercial and industrial insulation. It is
expressly understood and agreed that although Masco and TriMas consider the
restrictions contained in this Section 9.09 to be reasonable for the purpose of
preserving for TriMas the corporate opportunity of each of the Groups, if a
final judicial determination is made by a court having jurisdiction that the
time or territory or any other restriction contained in this Section 9.09 is an
unenforceable restriction on the activities of Masco or its subsidiaries, the
provisions of this Section 9.09 shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such other extent
as such court may judicially determine or indicate to be reasonable.
Alternatively, if the court referred to above finds that any restriction
contained in this Section 9.09 is unenforceable, and such restriction cannot be
amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained therein.
-43-
<PAGE> 44
9.10 For purposes of this Agreement, "knowledge of Masco" or phrases of
similar import will be deemed to include the knowledge of the officers,
directors and other key employees of Masco and each of the Groups.
9.11 TriMas agrees that it will not, with respect to any of the Groups,
effect any "plant closing" or "mass layoff" as defined by Section 1 of the
Worker Adjustment and Retraining Notification Act, within 60 days after the date
of Closing.
9.12 Except with respect to Compac, immediately after the Closing,
TriMas will cause each of the Groups to use all reasonable efforts to cause the
products of each of the Groups to be identified as manufactured after the date
of Closing.
9.13 TriMas and Masco each agree with the other that the original sales
and accounting records of each of the Groups to be delivered to or retained by a
party pursuant to the terms hereof shall be retained by such party for a period
of five years after the Closing and that such party shall afford to the other
reasonable access thereto as may be necessary for purposes of preparing tax
returns, financial statements or for such other purposes as such other party may
reasonably request.
9.14 After the Closing, each of the parties will execute and deliver
from time to time at the request of the other party all such other instruments
as are necessary or appropriate to evidence or effectuate the transactions
contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
MASCO CORPORATION
By/s/Richard A. Manoogian
------------------------------
Chairman of the Board
TRIMAS CORPORATION
By/s/Brian P. Campbell
------------------------------
President
-44-
<PAGE> 1
EXHIBIT 10.bb
AMENDMENT TO STOCK PURCHASE AGREEMENT
AMENDMENT dated as of May 21, 1997 between Masco Corporation, a
Delaware corporation ("Masco"), and MascoTech, Inc., a Delaware corporation
("MSX").
WHEREAS, Masco and MSX are parties to a Stock Purchase Agreement, dated
as of December 23, 1991 (the "Agreement"), whereby Masco purchased from MSX the
fifty percent equity interest in Masco Capital Corporation, a Delaware
corporation ("Masco Capital"), owned by MSX;
WHEREAS, a portion of the aggregate purchase price payable by Masco to
MSX (the "Additional Payment") under the Agreement is based on Incremental
Value, which, in turn is based on a Valuation;
WHEREAS, pursuant to Section 10 of the Agreement, the Oversight
Committees of the Boards of Directors of Masco and MSX (the "Oversight
Committees") elected to defer payment of the Additional Payment until after a
September 30, 1996 determination of the Valuation and the Incremental Value;
and
WHEREAS, the Boards of Directors of each of Masco and MSX, acting with
the concurrence and based upon the recommendations of their respective
Oversight Committees, have decided to again defer the Additional Payment until
after December 31, 1996 and to continue the authority of the Oversight
Committees in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties hereto agree as follows:
1. CAPITALIZED TERMS. Unless indicated otherwise, capitalized terms
used in this Amendment shall have the same meanings ascribed to them in the
Agreement.
2. DETERMINATIONS. The determinations of Valuation and Incremental
Value will be made as of September 30, 1997, or such later date as the
Oversight Committees may from time to time jointly determine.
3. PAYMENT. The Additional Payment owing by Masco to MSX, if any,
shall be paid within thirty (30) days after the Oversight Committees jointly
determine the Valuation and Incremental Value.
4. EFFECT. This Amendment shall have the effect of modifying the
Agreement, and except as modified, all of the provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
MASCO CORPORATION MASCOTECH, INC.
By/s/Robert B. Rosowski By/s/Timothy Wadhams
----------------------------------------- -------------------------
Robert B. Rosowski Timothy Wadhams
Vice President - Controller and Treasurer Vice President - Controller
and Treasurer
<PAGE> 1
EXHIBIT 12
MASCOTECH, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-----------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS (LOSS) BEFORE INCOME
TAXES AND FIXED CHARGES:
Income (loss) from continuing
operations before income taxes
(credit), extraordinary item and
cumulative effect of accounting
change, net....................... $190,290 $ 77,220 $100,280 $(264,490) $121,180
Deduct equity in undistributed
earnings of less-than-fifty-
percent owned
companies......................... (46,030) (31,650) (29,590) (23,350) (19,930)
Add interest on indebtedness, net.... 36,650 30,350 51,500 51,290 83,000
Add amortization of debt expense..... 900 1,490 1,670 3,450 4,390
Estimated interest factor for
rentals........................... 2,100 6,350 7,070 6,220 5,550
-------- -------- -------- --------- --------
Earnings (loss) before income taxes
and fixed charges................. $183,910 $ 83,760 $130,930 $(226,880) $194,190
======== ======== ======== ========= ========
FIXED CHARGES:
Interest on indebtedness, net........ $ 36,770 $ 30,590 $ 51,690 $ 51,540 $ 83,110
Amortization of debt expense......... 900 1,490 1,670 3,450 4,390
Estimated interest factor for
rentals........................... 2,100 6,350 7,070 6,220 5,550
-------- -------- -------- --------- --------
Total fixed charges............... 39,770 38,430 60,430 61,210 93,050
-------- -------- -------- --------- --------
Preferred stock dividend
requirement(a).................... 10,300 21,570 21,970 14,630 25,860
-------- -------- -------- --------- --------
Combined fixed charges and preferred
stock dividends................... $ 50,070 $ 60,000 $ 82,400 $ 75,840 $118,910
======== ======== ======== ========= ========
RATIO OF EARNINGS TO FIXED CHARGES..... 4.6 2.2 2.2 --(b) 2.1
======== ======== ======== ========= ========
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS............................ 3.7 1.4 1.6 --(c) 1.6
======== ======== ======== ========= ========
</TABLE>
(a) Represents amount of income before provision for income taxes required to
meet the preferred stock dividend requirements of the Company and its 50%
owned companies.
(b) 1994 results of operations are inadequate to cover fixed charges by
$288,090.
(c) 1994 results of operations are inadequate to cover combined fixed charges
and preferred stock dividends by $302,720.
<PAGE> 1
EXHIBIT 21
MASCOTECH, INC.
(A DELAWARE CORPORATION)
Subsidiaries as of March 15, 1998*
JURISDICTION OF
NAME INCORPORATION OR ORGANIZATION
Arrow Specialty Company Delaware
BLD Products, Ltd. Michigan
Novo Products, Inc. Florida
Glo North America Company Delaware
Hebco Products, Inc. Ohio
International Brake Industries, Inc. Delaware
Kendallville Foundry, Inc. Delaware
Longman Enterprises, Inc. Florida
Pylon Manufacturing Corp. Delaware
MASG Disposition, Inc. Michigan
MASX Energy Services Group, Inc. Delaware
Masco Industries International Sales, Inc. Barbados
MascoTech Sintered Components Espana S.L. Spain
MascoTech Sintered Components Limited United Kingdom
MascoTech Accessories, Inc. California
MascoTech Coatings, Inc. Michigan
*Directly owned subsidiaries appear at the left hand margin, first tier
and second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.
<PAGE> 2
MascoTech Edison, Inc. New Jersey
MascoTech Europe, Inc. Delaware
MascoTech European Holdings, Inc. Delaware
GLO SpA Italy
MascoTech GmbH Germany
H&B Hyprotec Technology OHG Germany
Huber & Bauer GmbH 20% Germany
Holzer GmbH & Co. Germany
Holzer Limited United Kingdom
Neumeyer CR spol S.r.o. Czech Republic
Neumeyer Fliesspressen GmbH Germany
MascoTech Forming Technologies - Fort Wayne, Inc. Delaware
MascoTech Holding Company Delaware
MascoTech Industrial Components, Inc. Delaware
MascoTech Services, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Sintered Components of Indiana, Inc. Indiana
MascoTech Tubular Products, Inc. Michigan
McGuane Industries, Inc. Delaware
Mr. Bracket, Inc. Delaware
NI Foreign Military Sales, Inc. Delaware
NI West, Inc. California
NI Wheel, Incorporated Ontario
Norris Industries, Inc. California
Plastic Form, Inc. Delaware
2
<PAGE> 3
TriMas Corporation Delaware
Beaumont Bolt & Gasket, Inc. Texas
Industrial Bolt & Gasket, Inc. Louisiana
Louisiana Bolt and Gasket, Inc. Louisiana
Compac Corporation Delaware
Netcong Investments, Inc. New Jersey
Di-Rite Company Ohio
Draw-Tite, Inc. Delaware
Draw-Tite (Canada) Ltd. Ontario
Eskay Screw Corporation Delaware
Fulton Performance Products, Inc. Delaware
Heinrich Stolz GmbH Germany
Stolz North America, Inc. Texas
Hitch 'N Post, Inc. Delaware
Kee Services, Inc. Michigan
Keo Cutters, Inc. Delaware
Lake Erie Screw Corporation Ohio
Lamons Metal Gasket Co. Delaware
Canadian Gasket & Supply Inc. Canada
Louisiana Hose & Rubber Co. Louisiana
Monogram Aerospace Fasteners, Inc. Delaware
Norris Cylinder Company Delaware
Punchcraft Company Michigan
Reese Products, Inc. Indiana
TriMas Corporation Pty. Ltd. Australia
Reese Products of Canada Ltd. Ontario
Reska Spline Products, Inc. Michigan
Richards Micro-Tool, Inc. Delaware
Rieke Corporation Indiana
Rieke Canada Limited Canada
Rieke of Mexico, Inc. Delaware
Rieke de Mexico, S.A. de C.V. Mexico
Rieke Leasing Co., Incorporated Delaware
TriMas Corporation Limited United Kingdom
The Englass Group Limited United Kingdom
The English Glass Company Limited United Kingdom
Top Emballage S.A. France
TriMas Export, Inc. Barbados
TriMas Fasteners, Inc. Delaware
TriMas Services Corp. Delaware
W.C. McCurdy & Co. Michigan
3
<PAGE> 1
Exhibit 23.a
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses
included in the registration statements of MascoTech, Inc. on Form S-3
(Registration Nos. 33-59222 and 33-55837) and Form S-8 (Registration Nos.
33-30735, 33-42230 and 333-30869) of our report dated February 17, 1998, on our
audits of the consolidated financial statements and financial statement
schedule of MascoTech, Inc. and subsidiaries as of December 31, 1997 and 1996,
and for each of the three years in the period ended December 31, 1997, which
report is included in this Annual Report on Form 10-K. We also consent to the
reference to our Firm under the caption "Experts" in such prospectuses.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 23, 1998
<PAGE> 1
Exhibit 23.b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses
included in the registration statements of MascoTech, Inc. on Form S-3
(Registration Nos. 33-59222 and 33-55837) and on Form S-8 (Registration Nos.
33-30735, 33-42230 and 333-30869) of our report dated February 17, 1998, on our
audits of the consolidated financial statements of TriMas Corporation and
subsidiaries as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 23, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCOTECH,
INC.'S DECEMBER 31, 1997 FORM 10-K. THIS INFORMATION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 41,110
<SECURITIES> 45,970
<RECEIVABLES> 127,130
<ALLOWANCES> (1,200)
<INVENTORY> 73,860
<CURRENT-ASSETS> 336,450
<PP&E> 681,680
<DEPRECIATION> (264,650)
<TOTAL-ASSETS> 1,144,680
<CURRENT-LIABILITIES> 184,770
<BONDS> 592,000
0
0
<COMMON> 47,250
<OTHER-SE> 163,410
<TOTAL-LIABILITY-AND-EQUITY> 1,144,680
<SALES> 922,130
<TOTAL-REVENUES> 922,130
<CGS> 735,470
<TOTAL-COSTS> 735,470
<OTHER-EXPENSES> (4,980)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,530
<INCOME-PRETAX> 190,290
<INCOME-TAX> 75,050
<INCOME-CONTINUING> 115,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,240
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCOTECH,
INC.'S FORM 10-QS FOR THE FIRST, SECOND AND THIRD QUARTERS OF 1997. THIS
INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS, EXCEPT FOR PRIMARY (WHICH IS BASIC) AND DILUTED EARNINGS PER SHARE
INFORMATION WHICH HAS BEEN RESTATED TO CONFORM WITH THE DECEMBER 31, 1997
PRESENTATION.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> SEP-30-1997 JUN-30-1997 MAR-31-1997
<CASH> 66,950 39,680 16,340
<SECURITIES> 33,690 48,440 49,530
<RECEIVABLES> 127,930 125,160 145,600
<ALLOWANCES> 0 0 0
<INVENTORY> 70,990 70,960 71,060
<CURRENT-ASSETS> 340,370 333,550 334,930
<PP&E> 671,050 660,770 641,900
<DEPRECIATION> (262,120) (262,450) (254,450)
<TOTAL-ASSETS> 1,146,840 1,186,760 1,179,600
<CURRENT-LIABILITIES> 176,120 164,400 168,140
<BONDS> 600,000 699,100 691,160
0 0 0
0 0 10,800
<COMMON> 47,150 47,300 37,540
<OTHER-SE> 148,950 120,180 113,420
<TOTAL-LIABILITY-AND-EQUITY> 1,146,840 1,186,760 1,179,600
<SALES> 688,510 466,480 233,440
<TOTAL-REVENUES> 688,510 466,480 233,440
<CGS> 543,870 356,190 177,140
<TOTAL-COSTS> 543,870 356,190 177,140
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 29,280 19,760 9,710
<INCOME-PRETAX> 158,660 94,880 54,080
<INCOME-TAX> 62,690 37,570 21,420
<INCOME-CONTINUING> 95,970 57,310 32,660
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 95,970 57,310 32,660
<EPS-PRIMARY> 2.32 1.43 .83
<EPS-DILUTED> 1.74 1.04 .59
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCOTECH,
INC.'S 1996 FORM 10-K AND ITS FORM 10-QS FOR THE FIRST, SECOND, AND THIRD
QUARTERS OF 1996. THIS INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS, EXCEPT FOR PRIMARY (WHICH IS BASIC) AND DILUTED
EARNINGS PER SHARE INFORMATION WHICH HAS BEEN RESTATED TO CONFORM WITH THE
DECEMBER 31, 1997 PRESENTATION.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> DEC-31-1996 SEP-30-1996 JUN-30-1996 MAR-31-1996
<CASH> 19,400 48,500 17,450 6,280
<SECURITIES> 37,760 0 0 4,120
<RECEIVABLES> 129,530 192,380 191,900 215,880
<ALLOWANCES> (2,000) 0 0 0
<INVENTORY> 69,640 79,240 81,280 97,900
<CURRENT-ASSETS> 393,970 412,300 365,560 417,740
<PP&E> 640,270 690,120 683,800 758,270
<DEPRECIATION> (251,810) (284,480) (278,500) (291,290)
<TOTAL-ASSETS> 1,202,840 1,222,230 1,148,710 1,295,630
<CURRENT-LIABILITIES> 158,450 191,650 169,930 191,050
<BONDS> 752,400 456,160 448,740 557,790
0 0 0 0
10,800 10,800 10,800 10,800
<COMMON> 37,250 55,250 55,390 55,390
<OTHER-SE> 90,770 344,020 328,250 342,200
<TOTAL-LIABILITY-AND-EQUITY> 1,202,840 1,222,230 1,148,710 1,295,630
<SALES> 1,281,220 1,009,770 718,980 373,920
<TOTAL-REVENUES> 1,281,220 1,009,770 718,980 373,920
<CGS> 1,048,110 834,820 599,610 312,480
<TOTAL-COSTS> 1,048,110 834,820 599,610 312,480
<OTHER-EXPENSES> 31,520 31,520 31,520 2,000
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 29,970 20,640 14,760 7,930
<INCOME-PRETAX> 77,220 49,940 17,470 17,890
<INCOME-TAX> 37,300 26,470 13,390 7,150
<INCOME-CONTINUING> 39,920 23,470 4,080 10,740
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 11,700 11,700 11,700 11,700
<NET-INCOME> 51,620 35,170 15,780 22,440
<EPS-PRIMARY> 0.77 0.48 0.17 0.36
<EPS-DILUTED> 0.72 0.45 0.16 0.34
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCOTECH,
INC.'S DECEMBER 31, 1995 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS, EXCEPT FOR PRIMARY (WHICH IS BASIC) AND
DILUTED EARNINGS PER SHARE INFORMATION WHICH HAS BEEN RESTATED TO CONFORM WITH
THE DECEMBER 31, 1997 PRESENTATION.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 16,380
<SECURITIES> 4,120
<RECEIVABLES> 218,380
<ALLOWANCES> (1,890)
<INVENTORY> 94,420
<CURRENT-ASSETS> 466,750
<PP&E> 747,230
<DEPRECIATION> (280,780)
<TOTAL-ASSETS> 1,421,720
<CURRENT-LIABILITIES> 187,260
<BONDS> 701,910
0
10,800
<COMMON> 55,520
<OTHER-SE> 331,810
<TOTAL-LIABILITY-AND-EQUITY> 1,421,720
<SALES> 1,678,210
<TOTAL-REVENUES> 1,678,210
<CGS> 1,397,880
<TOTAL-COSTS> 1,397,880
<OTHER-EXPENSES> (5,290)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,900
<INCOME-PRETAX> 100,280
<INCOME-TAX> 41,090
<INCOME-CONTINUING> 59,190
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,190
<EPS-PRIMARY> .85
<EPS-DILUTED> .81
</TABLE>
