SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report January 20, 1997
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Date of earliest event reported December 20, 1996
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ARVIN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Indiana 1-302 35-0550190
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(State or other Commission File Number (I.R.S.Employer
jurisdiction of Identification No.)
incorporation)
One Noblitt Plaza, Box 3000
Columbus, IN 47202-3000
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(Address of principal executive offices) (Zip Code)
812-379-3000
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(Registrant's telephone number including area code)
Item 5. Other Events
On December 20, 1996, the Registrant created a grantor
trust and entered into a stock ownership trust agreement
dated December 20, 1996 with the Northern Trust Company to
provide a means to meet currently the Registrant's
anticipated future obligations to employees under
Registrant's employee benefit plans, including its stock
option plans and savings plan.
The Registrant sold one million eight hundred thousand
newly issued shares of Common Stock, $2.50 par value, to
the aforementioned stock ownership trust for $42,187,500.
The Trustee delivered to the Registrant a promissory note
in such amount for such shares. Shares of Common Stock
held in the stock ownership trust will be released by the
Trustee as the note is paid down.
In the event the trust is terminated or upon a change
of control, shares held by the trust will be sold with the
Registrant receiving proceeds equal to the amount of the
note then outstanding and the balance being distributed to
employees of the Registrant in accordance with the terms of
the trust.
The trust agreement contains pass-through voting and
tendering provisions.
The trust agreement, the stock purchase agreement and
the note are filed herewith as exhibits and the foregoing
description does not purport to be complete and is
qualified by reference to the trust agreement, the stock
purchase agreement and the note.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Employee Stock Benefit Trust
99.2 Common Stock Purchase Agreement
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ARVIN INDUSTRIES, INC.
by: /s/ William M. Lowe, Jr.
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William M. Lowe, Jr.
Controller & Chief Accounting Officer
Date: January 20, 1997
ARVIN INDUSTRIES, INC.
EMPLOYEE STOCK BENEFIT TRUST
Effective as of December 20, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1.
Trust, Trustee and Trust Fund 2
1.1. Trust 2
1.2. Trustee 2
1.3. Trust Fund 2
1.4. Trust Fund Subject to Claims 2
1.5. Definitions 3
ARTICLE 2.
Contributions and Dividends 7
2.1. Contributions 7
2.2. Dividends 7
ARTICLE 3.
Release and Allocation of Company Stock 7
3.1. Release of Shares 7
3.2. Allocations 8
ARTICLE 4.
Compensation, Expenses and Tax Withholding 8
4.1. Compensation and Expenses 8
4.2. Withholding of Taxes 8
ARTICLE 5.
Administration of Trust Fund 9
5.1. Management and Control of Trust Fund 9
5.2. Investment of Funds 9
5.3. Trustee's Administrative Powers 9
5.4. Voting and Tendering of Company Stock 11
5.5. Indemnification 13
5.6. General Duty to Communicate to Committee 14
ARTICLE 6.
Accounts and Reports of Trustee 14
6.1. Records and Accounts of Trustee 14
6.2. Fiscal Year 14
6.3. Reports of Trustee 14
6.4. Final Report 14
6.5 Approval of Report 15
ARTICLE 7.
Succession of Trustee 15
7.1. Resignation of Trustee 15
7.2. Removal of Trustee 15
7.3. Appointment of Successor Trustee 15
7.4. Succession to Trust Fund Assets 15
7.5. Continuation of Trust 16
7.6. Changes in Organization of Trustee 16
7.7. Continuance of Trustee's Powers in Event of
Termination of the Trust 16
ARTICLE 8.
Amendment or Termination 16
8.1. Amendments 16
8.2. Termination 17
8.3. Form of Amendment or Termination 17
ARTICLE 9.
Miscellaneous 18
9.1. Controlling Law 18
9.2. Committee Action 18
9.3. Notices 18
9.4. Severability 18
9.5. Protection of Persons Dealing with
the Trust 19
9.6. Tax Status of Trust 19
9.7. Participants to Have No Interest in the
Company by Reason of the Trust 19
9.8. Nonassignability 19
9.9. Gender and Plurals 19
9.10. Counterparts 19
ARVIN INDUSTRIES, INC.
EMPLOYEE STOCK BENEFIT TRUST
THIS TRUST AGREEMENT (the "Agreement") made effective
as of December 20, 1996, between Arvin Industries, Inc., an
Indiana corporation, and The Northern Trust Company, an Illinois
corporation, as trustee.
W I T N E S S E T H :
WHEREAS, the Company (as defined below) desires to
establish a trust (the "Trust") in accordance with the laws of
the State of Indiana and for the purposes stated in this
Agreement;
WHEREAS, the Trustee (as defined below) desires to act
as trustee of the Trust, and to hold legal title to the assets of
the Trust, in trust, for the purposes hereinafter stated and in
accordance with the terms hereof;
WHEREAS, the Company or its subsidiaries have
previously adopted the Plans (as defined below);
WHEREAS, the Company desires to provide assurance of
the availability of the shares of its common stock necessary to
satisfy certain of its obligations or those of its subsidiaries
under the Plans (as defined below);
WHEREAS, the Company desires that the assets to be held
in the Trust Fund (as defined below) should be principally or
exclusively securities of the Company and, therefore, expressly
waives any diversification of investments that might otherwise be
necessary, appropriate, or required pursuant to applicable
provisions of law; and
WHEREAS, The Northern Trust Company has been appointed
as trustee and has accepted such appointment as of the date set
forth first above;
NOW, THEREFORE, the parties hereto hereby establish the
Trust and agree that the Trust will be comprised, held and
disposed of as follows:
ARTICLE 1.
Trust, Trustee and Trust Fund
1.1. Trust. This Agreement and the Trust shall be
known as the Arvin Industries, Inc. Employee Stock Benefit Trust.
The parties intend that the Trust will be an independent legal
entity with title to and power to convey all of its assets. The
parties hereto further intend that the Trust not be subject to
the Employee Retirement Income Security Act of 1974, as amended.
The assets of the Trust will be held, invested and disposed of by
the Trustee, in accordance with the terms of the Trust. In
addition, the Company represents to the Trustee that the Trust
will not be subject to Section 402(b) of the Code.
1.2. Trustee. The trustee named above, and its
successor or successors, is hereby designated as the trustee
hereunder, to receive, hold, invest, administer and distribute
the Trust Fund in accordance with this Agreement, the provisions
of which shall govern the power, duties and responsibilities of
the Trustee.
1.3. Trust Fund. The assets held at any time and from
time to time under the Trust collectively are herein referred to
as the "Trust Fund" and shall consist of contributions received
by the Trustee, proceeds of any loans, investments and
reinvestment thereof, the earnings and income thereon, less
disbursements therefrom. Except as herein otherwise provided,
title to the assets of the Trust Fund shall at all times be
vested in the Trustee and securities that are part of the Trust
Fund shall be held in such manner that the Trustee's name and the
capacity in which the securities are held are fully disclosed,
subject to the right of the Trustee to hold title in bearer form
or in the name of a nominee or in a corporate depositary, and the
interests of others in the Trust Fund shall be only the right to
have such assets received, held, invested, administered and
distributed in accordance with the provisions of the Trust.
1.4. Trust Fund Subject to Claims. Notwithstanding any
provision of this Agreement to the contrary, the Trust Fund shall
at all times remain subject to the claims of the Company's
general creditors under federal and state law.
In addition, the Board of Directors and Chief Executive
Officer of the Company shall have the duty to inform the Trustee
in writing of the Company's Insolvency. If a person claiming to
be a creditor of the Company alleges in writing to the Trustee
that the Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue allocations pursuant
to Article 3.
Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the Company or
a person claiming to be a creditor alleging that the Company is
Insolvent, the Trustee shall have no duty to inquire whether the
Company is Insolvent. The Trustee may in all events rely on such
evidence concerning the Company's solvency as may be furnished to
the Trustee and that provides the Trustee with a reasonable basis
for making a determination concerning the Company's Insolvency.
If at any time the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue allocations
pursuant to Article 3 and shall hold the Trust Fund for the
benefit of the Company's general creditors or follow the order of
any court of competent jurisdiction. Nothing in this Trust
Agreement shall in any way diminish any rights of employees as
general creditors of the Company with respect to benefits due
under the Plan(s) or otherwise.
The Trustee shall resume allocations pursuant to
Article 3 only after the Trustee has determined that the Company
is not Insolvent (or is no longer Insolvent).
The Trustee may appoint an independent accounting or
consulting firm or similar expert to make any determination
required by the Trustee under Section 1.4. In such event, the
Trustee may conclusively rely upon the determination by such firm
and shall be responsible only for the prudent selection of such
firm.
1.5. Definitions. In addition to the terms defined in
the preceding portions of the Trust, certain capitalized terms
have the meanings set forth below:
Board of Directors. "Board of Directors" means the
board of directors of the Company.
Change of Control. "Change of Control" means any of
the following events:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (c); or
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
The Committee shall notify the Trustee in writing
promptly upon any Change of Control and the Trustee may
conclusively rely upon such notice.
Code. "Code" means the Internal Revenue Code of 1986,
as amended.
Committee. "Committee" means a committee of the
Company which is charged by the Board of Directors with
administration of the Trust.
Company. "Company" means Arvin Industries, Inc., an
Indiana corporation, or any successor thereto. References to the
Company shall include its subsidiaries where appropriate.
Company Stock. "Company Stock" means shares of common
stock, par value $2.50 per share, issued by the Company or any
successor securities.
DC Participant. "DC Participant" means as of any date
any individual who is employed by the Company or any subsidiary
of the Company as of such date and is a participant in a DC Plan.
DC Plan. "DC Plan" shall mean the Arvin Savings Plan,
or any successor thereto.
DC Plans Trustee Certification. "DC Plans Trustee
Certification" means a certification to be delivered by the
trustee of each DC Plan to the Trustee pursuant to Section 5.4,
which sets forth the directions made by each DC Participant as to
voting or tendering of Company Stock allocated to his account in
the respective DC Plan with respect to the voting or tendering
decision at issue.
Extraordinary Dividend. "Extraordinary Dividend" means
any dividend or other distribution of cash or other property
(other than Company Stock) made with respect to Company Stock,
which the Board of Directors declares generally to be other than
an ordinary dividend.
Insolvent. "Insolvent" means as to the Company, (i)
the inability of the Company to pay its debts as they come due,
or (ii) the Company being subject to a pending proceeding as
debtor under the provisions of Title 11 of the United States
Code.
Loan. "Loan" means the loan and extension of credit to
the Trust evidenced by the promissory note made by the Trustee
dated December 20, 1996, with which the Trustee purchased Company
Stock.
Option Plans. "Option Plans" means the Company's
[Stock Plans] and any successor plans.
Plans. "Plans" means the Option Plans and the employee
benefit plans listed on Schedule A hereto and any other employee
benefit plan of the Company or its subsidiaries designated as
such by the Board of Directors.
Plan Participant. "Plan Participant" means a
participant in any of the Plans.
Trustee. "Trustee" means The Northern Trust Company
(not in its corporate capacity but as trustee of the Trust) or
any successor trustee.
Trust Year. "Trust Year" means the period beginning on
the date hereof and ending on December 31, 1996 and each 12-month
period beginning on January 1 and ending on December 31
thereafter.
ARTICLE 2.
Contributions and Dividends
2.1. Contributions. For each Trust Year, the Company
shall contribute to the Trust in cash such amount, which together
with dividends, as provided in Section 2.2, and any other
earnings of the Trust, shall enable the Trustee to make all
payments of principal and interest due under the Loan on a timely
basis. Unless otherwise expressly provided herein, the Trustee
shall apply all such contributions, dividends and earnings to the
payment of principal and interest due under the Loan. If, at the
end of any Trust Year, no such contribution has been made in
cash, such contribution shall be deemed to have been made in the
form of forgiveness of principal and interest on the Loan to the
extent of the Company's failure to make contributions as required
by this Section 2.1. All contributions made under the Trust
shall be delivered to the Trustee. The Trustee shall be
accountable for all contributions received by it, but shall have
no duty to require any contributions to be made to it.
2.2. Dividends. Except as otherwise provided herein,
dividends paid in cash on Company Stock (including Extraordinary
Dividends) held by the Trust shall be applied to pay interest and
repay scheduled principal due under the Loan. Dividends which
are not in cash or in Company Stock (including Extraordinary
Dividends, or portions thereof) shall be reduced to cash by the
Trustee and used to pay principal and/or interest under the Loan,
provided that an Extraordinary Dividend constituting a spin-off,
split-off or similar transaction may be transferred to a trust
sponsored by the spun-off company or dealt with in another
equitable manner as determined in good faith by the Committee.
In the Trustee's discretion, investments in Company Stock may be
made through open-market purchases, private transactions or (with
the Company's consent) purchases from the Company.
ARTICLE 3.
Release and Allocation of Company Stock
3.1. Release of Shares. Subject to the other
provisions of this Article 3, upon the payment or forgiveness in
any Trust Year of any principal on the Loan (a "Principal
Payment"), the following number of shares of Company Stock
acquired with the proceeds of the Loan shall be available for
allocation ("Available Shares") as provided in this Article 3:
the number of shares so acquired and held in the Trust
immediately before such payment or forgiveness, multiplied by a
fraction the numerator of which is the amount of the Principal
Payment and the denominator of which is the sum of such Principal
Payment and the remaining principal of the Loan outstanding after
such Principal Payment.
3.2. Allocations. Available Shares shall be allocated
as directed by the Committee to the Plans no less frequently than
annually. The Committee's discretion shall be limited to the
amounts allocated among Plans, with the allocation itself being
mandatory. In the event that any Available Shares remain after
the Committee determines there has been satisfaction of all
benefit obligations under each of the Plans for a given Trust
Year, all remaining Available Shares shall be contributed by the
Trustee to the Plans or such other plans of the Company or its
subsidiaries covering a broad cross-section of individuals
employed by the Company at the times and the amounts as the
Committee shall direct, including, without limitation, in the
final Trust Year of the Trust. The Trustee shall have no
responsibility to determine whether the Available Shares are
properly allocated or contributed pursuant to this Section 3.2
ARTICLE 4.
Compensation, Expenses and Tax Withholding
4.1. Compensation and Expenses. The Trustee shall be
entitled to such reasonable compensation for its services as may
be agreed upon from time to time by the Company and the Trustee
and to be reimbursed for its reasonable legal, accounting and
appraisal fees, expenses and other charges reasonably incurred in
connection with the administration, management, investment and
distribution of the Trust Fund. Such compensation shall be paid,
and such reimbursement shall be made out of the Trust Fund. The
Company agrees to make sufficient contributions to the Trust to
pay such amounts owing the Trustee in addition to those
contributions required by Section 2.1.
4.2. Withholding of Taxes. The Trustee may withhold,
require withholding, or otherwise satisfy its withholding
obligation, on any distribution which it is directed to make,
such amount as the Committee determines is necessary to comply
with applicable federal, state and local withholding
requirements. Upon settlement of such tax liability, the Trustee
shall distribute the balance of such amount. Prior to making any
distribution hereunder, the Trustee may require such release or
documents from any taxing authority, or may require such
indemnity, as the Trustee shall reasonably deem necessary for its
protection.
ARTICLE 5.
Administration of Trust Fund
5.1. Management and Control of Trust Fund. Subject to
the terms of this Agreement, the Trustee shall have exclusive
authority, discretion and responsibility to manage and control
the assets of the Trust Fund.
5.2. Investment of Funds.
The initial transaction shall take place in the manner
described in Section 1.1 of the Common Stock Purchase Agreement
by and between the Company and the Trustee dated December 20,
1996. Except as otherwise provided in Section 2.2, in investment
guidelines provided by the Company to the Trustee and in this
Section 5.2, the Trustee shall invest and reinvest the Trust Fund
exclusively in Company Stock, including any accretions thereto
resulting from the proceeds of a tender offer, recapitalization
or similar transaction which, if not in Company Stock, shall be
reduced to cash as soon as practicable. The Trustee may invest
any portion of the Trust Fund temporarily pending investment in
Company Stock, distribution or payment of expenses in (i)
investments in United States Government obligations with
maturities of less than one year, (ii) interest-bearing accounts
including but not limited to certificates of deposit, time
deposits, saving accounts and money market accounts with
maturities of less than one year in any bank, including the
Trustee's, with aggregate capital in excess of $1,000,000,000 and
a Moody's Investor Services rating of at least P1, or an
equivalent rating from a nationally recognized ratings agency,
which accounts are insured by the Federal Deposit Insurance
Corporation or other similar federal agency, (iii) obligations
issued or guaranteed by any agency or instrumentality of the
United States of America with maturities of less than one year,
(iv) short-term discount obligations of the Federal National
Mortgage Association, or (v) units of money market portfolios of
the Benchmark Funds, a registered investment company for which
the Trustee serves as Advisor.
5.3. Trustee's Administrative Powers.
Except as otherwise provided herein, and subject to the
Trustee's duties hereunder, the Trustee shall have the following
powers and rights, in addition to those provided elsewhere in
this Agreement or by law:
(a) to retain any asset of the Trust Fund;
(b) subject to Section 5.4(b), Section 8.2 and
Articles 2 and 3, to sell, transfer, mortgage, pledge, lease
or otherwise dispose of, or grant options with respect to
any Trust Fund assets at public or private sale;
(c) upon direction from the Company, to borrow from
any lender (including the Company pursuant to the Loan), to
acquire Company Stock as authorized by this Agreement, to
enter into lending agreements upon such terms (including
reasonable interest and security for the loan and rights to
renegotiate and prepay such loan) as may be determined by
the Committee; provided, however, that any collateral given
by the Trustee for the Loan shall be limited to cash and
property contributed by the Company to the Trust and
dividends paid on Company Stock held in the Trust Fund and
shall not include Company Stock acquired with the proceeds
of Loan;
(d) with the consent of the Committee, to settle,
submit to arbitration, compromise, contest, prosecute or
abandon claims and demands in favor of or against the Trust
Fund;
(e) to vote or to give any consent with respect to any
securities, including any Company Stock, held by the Trust
either in person or by proxy for any purpose, provided that
the Trustee shall vote, tender or exchange all shares of
Company Stock as provided in Section 5.4;
(f) to exercise any of the powers and rights of an
individual owner with respect to any asset of the Trust Fund
and to perform any and all other acts that in its judgment
are necessary or appropriate for the proper administration
of the Trust Fund, even though such powers, rights and acts
are not specifically enumerated in this Agreement;
(g) to employ such accountants, actuaries, investment
bankers, appraisers, other advisors and agents as may be
reasonably necessary in collecting, managing, administering,
investing, valuing, distributing and protecting the Trust
Fund or the assets thereof or any borrowings of the Trustee
made in accordance with Section 5.3(c); and to pay their
reasonable fees and expenses, which shall be deemed to be
expenses of the Trust and for which the Trustee shall be
reimbursed in accordance with Section 4.1;
(h) to cause any asset of the Trust Fund to be issued,
held or registered in the Trustee's name or in the name of
its nominee, or in such form that title will pass by
delivery, provided that the records of the Trustee shall
indicate the true ownership of such asset;
(i) to utilize another entity as custodian to hold,
but not invest or otherwise manage or control, some or all
of the assets of the Trust Fund; and
(j) to consult with legal counsel (who may also be
counsel for the Trustee generally) with respect to any of
its duties or obligations hereunder; and to pay the
reasonable fees and expenses of such counsel, which shall be
deemed to be expenses of the Trust and for which the Trustee
shall be reimbursed in accordance with Section 4.1.
Notwithstanding the foregoing, neither the Trust nor the
Trustee shall have any power to, and shall not, engage in
any trade or business.
5.4. Voting and Tendering of Company Stock.
(a) Voting of Company Stock. The Trustee shall follow
the directions of the trustee of any trust established under a DC
Plan as to the manner in which shares of Company Stock held by
the Trust are to be voted on each matter brought before an annual
or special stockholders' meeting of the Company or the manner in
which any consent is to be executed, in each case as provided
below. Before each such meeting of stockholders, the Trustee
shall cause to be furnished to the trustee of each trust
established under a DC Plan a copy of the proxy solicitation
material received by the Trustee, together with a form requesting
confidential instructions as to how to vote the shares of Company
Stock held by the Trustee. Upon timely receipt of the DC Plans
Trustee Certification, the Trustee shall on each such matter vote
the number of shares (including fractional shares) of Company
Stock held by the Trust as follows:
The Trustee shall, with respect to each DC Plan, assign
to each DC Participant, a number of shares (the "DC Participant
Directed Amount") equal to the product of (x) the total number of
shares of Common Stock held in the Trust Fund, and (y) a
fraction, the numerator of which is the number of shares of
Company Stock allocated from the Trust Fund to such DC
Participant's account in the DC Plan for the most recent
preceding Trust Year and the denominator of which is the total
number of shares of Company Stock contributed by the Trustee to
the trustees of the trusts established under all the DC Plans
with respect to such Trust Year, in each case, as reflected in
the DC Plans Trustee Certification. Each share assigned to each
DC Participant in accordance with the previous sentence shall be
voted in accordance with such participant's direction to the
trustee of the DC Plan in which he participates with respect to
shares of Company Stock allocated to his account in such DC Plan,
as reflected in the DC Plans Trustee Certification. Any shares
of Company Stock which remain undirected pursuant to the
foregoing provisions shall be voted for, against or to abstain in
the same proportions as the shares of Company Stock for which the
Trustee is directed as provided above. Similar provisions shall
apply in the case of any action by shareholder consent without a
meeting.
(b) Tender or Exchange of Company Stock. The Trustee
shall use its best efforts timely to distribute or cause to be
distributed to the trustee of any trust established under any DC
Plan any written materials distributed to stockholders of the
Company generally in connection with any tender offer or exchange
offer, together with a form requesting confidential instructions
on whether or not to tender or exchange shares of Company Stock
held in the Trust. Upon timely receipt of the DC Plans Trustee
Certification, the Trustee shall tender or not tender the DC
Participant Directed Amount for each DC Participant in accordance
with such participant's direction to the trustee of the DC Plan
in which he participates with respect to shares of Company Stock
allocated to his account in such DC Plan, as set forth in the DC
Plans Trustee Certification. The trustee of any DC Plan shall
not be limited in the number of instructions to tender or
withdraw from tender which it may give but shall not have the
right to give instructions to tender or withdraw from tender
after a reasonable time established by the Trustee. If the
Trustee shall not receive timely instruction by means of the DC
Plans Trustee Certification as to the manner in which to respond
to such a tender or exchange offer, the Trustee shall not tender
or exchange any shares of Company Stock with respect to which the
trustee of any DC Plan has the right of direction, and the
Trustee shall have no discretion in such matter.
(c) The Company shall maintain appropriate procedures
to ensure that all instructions by DC Participants are collected,
tabulated, and transmitted to the trustees under the DC Plans and
to the Trustee without being divulged or released to any person
affiliated with the Company or its affiliates. All actions taken
by DC Participants and the contents of the DC Plans Trustee
Certification shall be held confidential by the Trustee and shall
not be divulged or released to any person, other than (i) agents
of the Trustee who are not affiliated with the Company or its
affiliates or (ii) by virtue of the execution by the Trustee of
any proxy, consent or letter of transmittal for the shares of
Company Stock held in the Trust or as otherwise is necessary in
order for the Trustee to carry out its responsibilities.
5.5. Indemnification.
(a) The Company (which has the authority to do so
under the laws of its state of incorporation) shall indemnify The
Northern Trust Company, and defend it and hold it harmless from
and against any and all liabilities, losses, claims, suits or
expenses (including attorneys fees) of whatsoever kind and nature
which may be imposed upon, asserted against or incurred by The
Northern Trust Company at any time by reason of: (a) any
borrowing in connection with the purchase of Company Stock, (b)
the purchase, retention, voting, tender or exchange of Company
Stock, (c) the alleged violation of any law or regulation,
including but not limited to federal and state securities laws or
regulations, or (d) any act or failure to act under this
agreement, except to the extent that any such liability, loss,
claim suit or expense arises directly from the Trustee's
negligence or bad faith in the performance of its
responsibilities under this Agreement. The Trustee shall be
under no liability to any person for any loss of any kind which
may result (i) by reason of any action taken by it in accordance
with any provision of this Trust, any direction, instruction or
notice of the Committee, Company or any Plan Participant
(hereinafter collectively referred to as the "directing
participants"), or any DC Plans Trustee Certification (ii) by
reason of its failure to exercise any power or authority or to
take any action hereunder because of the failure of the
Committee, Company, DC Plans trustee or any directing participant
to give direction to the Trustee as provided for in this
Agreement, (iii) by reason of any act or omission of any of the
Committee, Company, DC Plans, trustees of the DC Plans or
directing participants with respect to its duties under this
Trust. The Trustee shall be fully protected in acting upon any
instrument, certificate, or paper delivered by the Company,
Committee or any Plan Participant or beneficiary and believed in
good faith to be genuine and the Trustee shall be under no duty
to make any investigation or inquiry as to any statement
contained in any such writing, but may accept the same as
conclusive evidence of the truth and accuracy of the statements
therein contained. This paragraph shall survive the termination
of this Agreement.
(b) The Company may, but shall not be required to,
maintain liability insurance to insure its obligations hereunder.
If any payments made by the Company or the Trust pursuant to this
indemnity are covered by insurance, the Company or the Trust (as
applicable) shall be subrogated to the rights of the indemnified
party against the insurance company.
(c) Without limiting the generality of the foregoing,
the Company may, at the request of the Trustee, advance to the
Trustee reasonable amounts of expenses, including reasonable
attorneys' fees and expenses, which the Trustee advised have been
incurred in connection with its investigation or defense of any
claim, demand, action, cause of action, administrative or other
proceeding arising out of or in connection with the Trustee's
performance of its duties under this Agreement.
5.6. General Duty to Communicate to Committee. The
Trustee shall promptly notify the Committee of all communications
with or from any government agency or with respect to any legal
proceeding with regard to the Trust and with or from any Plan
Participants concerning their entitlements under the Plans or the
Trust.
ARTICLE 6.
Accounts and Reports of Trustee
6.1. Records and Accounts of Trustee. The Trustee
shall maintain accurate and detailed records and accounts of all
transactions of the Trust, which shall be available at all
reasonable times for inspection or audit by any person designated
by the Company and which shall be retained as required by
applicable law.
6.2. Fiscal Year. The fiscal year of the Trust shall
be the twelve month period beginning on January 1 and ending on
December 31.
6.3. Reports of Trustee. The Trustee shall prepare and
present to the Committee a report for the period ending on the
last day of each fiscal year, and for such shorter periods as the
Committee may reasonably request, listing all securities and
other property acquired and disposed of and all receipts,
disbursements and other transactions effected by the Trust after
the date of the Trustee's last account, and further listing all
cash, securities, and other property held by the Trust, together
with the fair market value thereof, as of the end of such period.
In addition to the foregoing, the report shall contain such
information regarding the Trust Fund's assets and transactions as
the Committee in its discretion may reasonably request.
6.4. Final Report. In the event of the resignation or
removal of a Trustee hereunder, the Committee may request and the
Trustee shall then with reasonable promptness submit, for the
period ending on the effective date of such resignation or
removal, a report similar in form and purpose to that described
in Section 6.3.
6.5. Approval of Report. In the absence of the filing
in writing with the Trustee by the Company of exceptions or
objections to any report of the Trustee under Sections 6.3 or 6.4
hereof within 90 days, the Committee shall be deemed to have
approved such report, the Trustee shall be released, relieved and
discharged with respect to all matters and things set forth in
such report as though such report had been settled by the decree
of a court of competent jurisdiction.
ARTICLE 7.
Succession of Trustee
7.1. Resignation of Trustee. The Trustee or any
successor thereto may resign as Trustee hereunder at any time
upon delivering a written notice of such resignation, to take
effect sixty (60) days after the delivery thereof to the
Committee, unless the Committee accepts shorter notice; provided,
however, that no such resignation shall be effective until a
successor Trustee has assumed the office of Trustee hereunder.
7.2. Removal of Trustee. The Trustee or any successor
thereto may be removed by the Company by delivering to the
Trustee so removed an instrument executed by the Committee. Such
removal shall take effect at the date specified in such
instrument, which shall not be less than sixty (60) days after
delivery of the instrument, unless the Trustee accepts shorter
notice; provided, however, that no such removal shall be
effective until a successor Trustee has assumed the office of
Trustee hereunder.
7.3. Appointment of Successor Trustee. Whenever the
Trustee or any successor thereto shall resign or be removed or a
vacancy in the position shall otherwise occur, the Board of
Directors shall use its best efforts to appoint a successor
Trustee as soon as practicable after receipt by the Committee of
a notice described in Section 7.1, or the delivery to the Trustee
of a notice described in Section 7.2, as the case may be, but in
no event more than ninety (90) days after receipt or delivery, as
the case may be, of such notice. A successor Trustee's
appointment shall not become effective until such successor shall
accept such appointment by delivering its acceptance in writing
to the Company. If a successor is not appointed within such 90
day period, the Trustee, at the Company's expense, may petition a
court of competent jurisdiction for appointment of a successor.
Any successor Trustee shall be an institutional trustee not
affiliated with the Company.
7.4. Succession to Trust Fund Assets. The title to all
property held hereunder shall vest in any successor Trustee
acting pursuant to the provisions hereof without the execution or
filing of any further instrument, but a resigning or removed
Trustee shall execute all instruments and do all acts necessary
to vest title in the successor Trustee. Each successor Trustee
shall have, exercise and enjoy all of the powers, both
discretionary and ministerial, herein conferred upon its
predecessors. A successor Trustee shall not be obliged to
examine or review the accounts, records, or acts of, or property
delivered by, any previous Trustee and shall not be responsible
for any action or any failure to act on the part of any previous
Trustee.
7.5. Continuation of Trust. In no event shall the
legal disability, resignation or removal of a Trustee terminate
the Trust, but the Board of Directors shall forthwith appoint a
successor Trustee in accordance with Section 7.3 to carry out the
terms of the Trust.
7.6. Changes in Organization of Trustee. In the event
that any corporate Trustee hereunder shall be converted into,
shall merge or consolidate with, or shall sell or transfer
substantially all of its assets and business to, another
corporation, state or federal, the corporation resulting from
such conversion, merger or consolidation, or the corporation to
which such sale or transfer shall be made, shall thereunder
become and be the Trustee under the Trust with the same effect as
though originally so named.
7.7. Continuance of Trustee's Powers in Event of
Termination of the Trust. In the event of the termination of the
Trust, as provided herein, the Trustee shall dispose of the Trust
Fund in accordance with the provisions hereof. Until the final
distribution of the Trust Fund, the Trustee shall continue to
have all powers provided hereunder as necessary or expedient for
the orderly liquidation and distribution of the Trust Fund.
ARTICLE 8.
Amendment or Termination
8.1. Amendments. Except as otherwise provided herein,
the Company may amend the Trust at any time and from time to time
in any manner which it deems desirable, provided that no
amendment which would adversely effect the contingent rights of
Plan Participants may change (i) the allocation formula contained
in Section 3.1 or Section 3.2, (ii) the provisions of Section
5.4, other than an amendment to reflect a change in the Plans
funded by this Trust, (iii) the provisions of Section 8.2, (iv)
the provisions of this Section 8.1, or (v) change the duties of
the Trustee without the Trustee's consent, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, the
Company shall retain the power under all circumstances to amend
the Trust to correct any errors or clarify any ambiguities or
similar issues of interpretation in this Agreement.
8.2. Termination. Subject to the terms of this Section
8.2, the Trust shall terminate on December 31, 2006 or any
earlier date on which the Loan is paid in full (the "Termination
Date"). The Board of Directors may terminate the Trust at any
time prior to the Termination Date. The Trust shall also
terminate automatically upon the Company giving the Trustee
notice of a Change of Control. Immediately upon a termination of
the Trust, the Company shall be deemed to have forgiven all
amounts then outstanding under the Loan. As soon as practicable
after receiving notice from the Company of a Change of Control or
upon any other termination of the Trust, the Trustee shall sell
all of the Company Stock and other non-cash assets (if any) then
held in the Trust Fund as directed by the Committee in good faith
taking into account the interests of a broad cross-section of
individuals employed by the Company. The proceeds of such sale
shall first be returned to the Company up to an amount equal to
the principal amount, plus any accrued interest of the Loan that
was forgiven upon such termination. Any funds remaining in the
Trust after such payment to the Company shall be distributed with
reasonable promptness to a broad cross-section of Plan
Participants or to individuals employed by the Company generally
or to any benefit plan or trust in which a broad cross-section of
individuals employed by the Company participate, as the Committee
may in good faith determine taking into account the best
interests of a broad cross-section of the individuals employed by
the Company.
8.3. Form of Amendment or Termination. Any amendment
or termination of the Trust shall be evidenced by an instrument
in writing signed by an authorized officer of the Company,
certifying that said amendment or termination has been authorized
and directed by the Company or the Board of Directors, as
applicable, and, in the case of any amendment, shall be
consented to by signature of an authorized officer of the
Trustee, if required by Section 8.1.
ARTICLE 9.
Miscellaneous
9.1. Controlling Law. The laws of the State of Indiana
shall be the controlling law in all matters relating to the
Trust, without regard to conflicts of law.
9.2. Committee Action. Any action required or
permitted to be taken by the Committee may be taken on behalf of
the Committee by any individual so authorized. The Company shall
furnish to the Trustee the name and specimen signature of each
member of the Committee upon whose statement of a decision or
direction the Trustee is authorized to rely. Until notified of a
change in the identity of such person or persons, the Trustee
shall act upon the assumption that there has been no change.
9.3. Notices. All notices, requests, or other
communications required or permitted to be delivered hereunder
shall be in writing, delivered by registered or certified mail,
return receipt requested as follows:
To the Company:
One Noblitt Plaza
Columbus, Indiana 47202
Attention: General Counsel
To the Trustee:
50 South LaSalle Street
Chicago, Illinois 60676
Attention: Michael Finelli
Any party hereto may from time to time, by written notice given
as aforesaid, designate any other address to which notices,
requests or other communications addressed to it shall be sent.
9.4. Severability. If any provision of the Trust shall
be held illegal, invalid or unenforceable for any reason, such
provision shall not affect the remaining parts hereof, but the
Trust shall be construed and enforced as if said provision had
never been inserted herein.
9.5. Protection of Persons Dealing with the Trust. No
person dealing with the Trustee shall be required or entitled to
monitor the application of any money paid or property delivered
to the Trustee, or determine whether or not the Trustee is acting
pursuant to authorities granted to it hereunder or to
authorizations or directions herein required.
9.6. Tax Status of Trust. It is intended that the
Company, as grantor hereunder, be treated for Federal income tax
purposes as the owner of the entire Trust and the trust assets
under Section 671, et seq. of the Code. Until advised otherwise,
the Trustee may presume that the Trust is so characterized for
federal income tax purposes and shall make all filings of tax
returns on that presumption.
9.7. Participants to Have No Interest in the Company or
Trust by Reason of the Trust. Neither the creation of the Trust
nor anything contained in the Trust shall be construed as giving
any person, including any individual employed by the Company or
any subsidiary of the Company, any equity or interest in the
assets, business, or affairs of the Company or the Trust, except
to the extent that any such individuals are entitled to exercise
stockholder rights with respect to Company Stock pursuant to
Section 5.4.
9.8. Nonassignability. No right or interest of any
person to receive distributions from the Trust shall be
assignable or transferable, in whole or in part, either directly
or by operation of law or otherwise, including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, or
bankruptcy, but excluding death or mental incompetency, and no
right or interest of any person to receive distributions from the
Trust shall be subject to any obligation or liability of any such
person, including claims for alimony or the support of any spouse
or child.
9.9. Gender and Plurals. Whenever the context requires
or permits, the masculine gender shall include the feminine
gender and the singular form shall include the plural form and
shall be interchangeable.
9.10. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be considered an
original.
IN WITNESS WHEREOF, the Company and the Trustee have
caused this Agreement to be signed, and their seals affixed
hereto, by their authorized officers all as of the day, month and
year first above written.
ARVIN INDUSTRIES, INC.
By /s/ Richard A. Smith
--------------------------
Name: Richard A. Smith
Title:Vice President-Finance
and Chief Financial Officer
THE NORTHERN TRUST COMPANY
By /s/ Michael A. Finelli, Jr.
----------------------------
SCHEDULE A
The Arvin Savings Plan
1988 Stock Benefit Plan
1978 Stock Option Plan
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this
"Agreement"), made this 20th day of December, 1996, between Arvin
Industries, Inc., an Indiana corporation (the "Seller") and The
Northern Trust Company, an Illinois corporation, not in its
individual or corporate capacity, but solely in its capacity as
trustee (the "Trustee") of The Arvin Industries, Inc. Employee
Stock Benefit Trust (the "Trust", which is hereinafter sometimes
referred to as the "Purchaser") under a trust agreement between
the Seller and the Trustee dated as of December 20, 1996 (the
"Trust Agreement")
W I T N E S S E T H:
WHEREAS, as contemplated by the Trust Agreement, the
Purchaser is to purchase from the Seller, and the Seller is to
sell to the Purchaser, 1,800,000 shares of the Seller's Common
Stock, par value $2.50 per share (the "Common Shares"), all as
more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein, and subject to and
on the terms and conditions herein set forth, the parties hereto
agree as follows:
1. ARTICLE I
PURCHASE AND SALE OF SHARES
1.1. Purchase and Sale. Subject to the terms and
conditions set forth herein, the Seller will sell to the
Purchaser, and the Purchaser will purchase from the Seller, at
the Closing (as hereinafter defined), the Common Shares, and, in
consideration for the Common Shares, the Purchaser will deliver
to the Seller the note in the form of Appendix I to this
Agreement in the principal amount of $42,187,500 (the "Note").
The transactions contemplated hereby shall be the simultaneous
execution of the Note by the Purchaser and delivery of the Shares
by the Seller, and the Purchaser shall not have the ability to
issue the Note to any other party other than the Seller.
1.2. Closing. The closing of the sale and purchase of
the Common Shares hereunder (the "Closing") will be held at the
offices of the Seller at 10:00 a.m., Columbus, Indiana time, on
the date of execution and delivery of this Agreement by the
Seller and the Purchaser, or at such other time, date and place
as may be mutually agreed upon by the Seller and the Purchaser.
1.3. Delivery and Payment. At the Closing, the Seller
will deliver to the Purchaser a certificate representing the
Common Shares, which certificate shall be registered in the name
of the Trustee, or the name of its nominee, against payment by
the Purchaser to the Seller of the aggregate consideration set
forth in Section 1.1 therefor. The Seller will pay all stamp and
other transfer taxes, if any, that may be payable in respect of
the sale and delivery of the Common Shares.
2. ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as
follows:
2.1. Corporate Existence and Authority. The Seller
(a) is a corporation duly organized and validly existing under
the laws of the State of Indiana, (b) has all requisite corporate
power to execute, deliver and perform this Agreement and (c) has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
2.2. No Conflict. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate, conflict with or
constitute a default under (a) the Seller's articles of
incorporation or bylaws, (b) any agreement, indenture or other
instrument to which the Seller is a party or by which the Seller
or its assets may be bound or (c) any law, regulation, order,
arbitration, award, judgment or decree applicable to the Seller.
2.3. Validity. This Agreement has been duly executed
and delivered by the Seller and is a valid and binding agreement
of the Seller enforceable against the Seller in accordance with
its terms, except as the enforceability thereof may be limited by
any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws affecting the
enforcement of creditors' rights generally, and by general
principles of equity.
2.4. The Common Shares. The Common Shares have been
duly authorized and issued and when sold as contemplated hereby
will be validly issued, fully-paid and non-assessable shares of
the Seller. No stockholder of the Seller has any preemptive or
other subscription right to acquire any shares of Common Stock.
The Seller will convey to the Purchaser, on the date of Closing,
good and valid title to the Common Shares free and clear of any
liens, claims, security interests and encumbrances.
2.5. Litigation. There are no actions, suits,
proceedings, arbitrations or investigations pending, or to the
Seller's best knowledge, threatened in any court or before any
governmental agency or instrumentality or arbitration panel or
otherwise against or by the Seller which seek to or could
restrain, prohibit, rescind or declare unlawful, or result in
substantial damages in respect of, this Agreement or the
performance hereof by the Seller (including, without limitation,
the delivery of the Common Shares).
2.6. Business and Financial Information. Seller has
heretofore delivered to the Purchaser copies of the audited
consolidated balance sheets, statements of stockholders' equity,
statements of income and statements of cash flows of Seller and
its subsidiaries as of and for the fiscal years ending in 1995
and in 1994 and the unaudited consolidated balance sheet,
statement of stockholders' equity, statement of income and
statement of cash flows of Seller and its subsidiaries as of and
for the nine months ending September 30, 1996 (including the
related notes and schedules, the "Seller Financial Statements").
The Seller Financial Statements fairly present the consolidated
results of operations, changes in stockholders' equity and cash
flows for the periods set forth therein and the consolidated
financial position as at the dates thereof of Seller and its
subsidiaries, in accordance with generally accepted accounting
principles consistently applied throughout the periods involved,
except as set forth in the notes thereto and subject, in the case
of unaudited financial statements, to the omission of certain
notes not ordinarily accompanying such unaudited financial
statements and to normal year-end audit adjustments which in each
case will not be material to Seller and its subsidiaries taken as
a whole. Since December 31, 1995, Seller has filed with the
Securities and Exchange Commission all forms, reports and
documents required pursuant to the Securities Act of 1933, as
amended (the "1933 Act"), and the Securities Exchange Act of
1934, as amended (the "1934 Act"), to be filed by it (the
"Disclosure Documents"). At the time filed, all of the
Disclosure Documents complied as to form in all material respects
with all applicable requirements of such Acts. None of the
Disclosure Documents, at the time filed, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
3. ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the
Seller as follows:
3.1. Authority; Validity. The Purchaser has full
power and authority under the Trust to execute and deliver this
Agreement and the Note and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Trustee on behalf of the Trust and
represents with respect to itself that it is a valid and binding
agreement of the Purchaser enforceable in accordance with its
terms, except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws affecting the enforcement of
creditors' rights generally, and by general principles of equity.
Assuming the Trustee has received a direction from the Company in
accordance with the terms of the Trust, the Note has been duly
authorized by the Trustee on behalf of the Trust and, upon the
execution and delivery by the Trustee on behalf of the Trust, the
Note will be a valid and binding agreement of the Purchaser
enforceable in accordance with its terms, except as the
enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws affecting the enforcement of creditors'
rights generally, and by general principles of equity.
3.2. No Conflict. The execution and delivery of this
Agreement do not, and the execution and delivery of the Note, and
the consummation of the transactions contemplated hereby and
thereby will not, violate, conflict with or constitute a default
under (a) the terms of the Trust, (b) any agreement, indenture or
other instrument to which the Trust is a party or by which the
Trust or, to the best of the Trustee's knowledge, its assets may
be bound or subject or (c) to the best of the Trustee's
knowledge, any law, regulation, order, arbitration award,
judgment or decree applicable to the Trust.
4. ARTICLE IV
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
4.1. Restricted Securities. The Purchaser
acknowledges that the Purchaser is acquiring the Common Shares
pursuant to a transaction exempt from registration under the 1933
Act. The Purchaser represents, warrants and agrees that all
Common Shares acquired by the Purchaser pursuant to this
Agreement are being acquired for investment without any intention
of making a distribution thereof, or of making any sale or other
disposition thereof which would be in violation of the 1933 Act
or any applicable state securities law, and that the Purchaser
will not dispose of any of the Common Shares, except that the
Trustee will, from time to time, convey a portion of the Common
Shares to the participants in the Company's stock incentive plans
to satisfy the obligations of the Seller thereunder; convey a
portion of the Common Shares to the trustee of the Company's 401(k)
Plan; and may convey or sell a portion of the Common Shares to
fund the obligations of the Seller under certain other plans as
may be set forth in Schedule A to the Trust Agreement, and upon
termination of the Trust to the extent that the Trust then holds
any Common Shares, all in compliance with all provisions of
applicable federal and state law regulating the issuance, sale and
distribution of securities.
4.2. Legend. Until such time as the Common Shares are
registered pursuant to the provisions of the 1933 Act, any
certificate or certificates representing the Common Shares
delivered pursuant to Section 1.3 will bear a legend in
substantially the following form:
"The shares represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, and may not be sold, transferred or
otherwise disposed of unless they have first been
registered under such Act or unless an exemption from
registration is available."
The Seller may place stop transfer orders against the
registration of transfer of any share evidenced by such a
certificate or certificates until such time as the requirements
of the foregoing are satisfied.
5. ARTICLE V
COVENANTS OF SELLER
The Seller agrees that:
5.1. Financial Statements, Reports and Documents.
Subsequent to the Closing, and for as long as the Common Shares
are held by the Trust (unless the Trustee shall otherwise consent
in writing), the Seller shall deliver to the Trustee each of the
following:
(a) Annual Statements. As soon as available and
in any event within one hundred twenty (120) days after the
close of each fiscal year of the Seller, copies of the
consolidated balance sheet of the Seller and its
subsidiaries as of the close of such fiscal year and
consolidated statements of income, statements of
stockholders' equity and statements of cash flow of the
Seller and its subsidiaries for such fiscal year, in each
case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and
accompanied by an opinion thereon of Price Waterhouse LLP,
or of other independent public accountants of recognized
national standing, to the effect that such financial
statements have been prepared in accordance with generally
accepted accounting principles consistently applied (except
for changes in which such accountants concur) and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards and, accordingly,
includes such tests of the accounting records and such other
auditing procedures as were considered necessary in the
circumstances;
(b) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Seller to
stockholders generally and of each regular or periodic
report, registration statement or prospectus (other than any
registration statement on Form S-8 and its related
prospectus) filed by the Seller with the Securities and
Exchange Commission or any successor agency; and
(c) Other Information. Such other information
concerning the business, properties or financial condition
of the Seller as the Trustee shall reasonably request.
The Seller will comply with all federal, state, local and foreign
laws, regulations or orders, and all the rules of any stock
exchange or similar entity which are applicable to it or to the
conduct of its business, and, without limiting the generality of
the foregoing, shall make such filings, distributions and
disclosures as are required by the 1933 Act, the 1934 Act or any
of the regulations, rules or orders promulgated thereunder,
insofar as the failure to comply would materially and adversely
affect the Seller and its subsidiaries taken as a whole. The
Seller will maintain complete and accurate books, records and
accounts in accordance with the requirements of Section 13(b)(2)
under the 1934 Act.
5.2. Registration; Listing. If so requested by the
Trustee, the Seller shall cause the Common Shares to be listed on
the New York Stock Exchange, Inc. The Seller will, as promptly
as practicable (but in any event within 75 days) after a request
by the Trustee, prepare for filing at the Seller's expense a
registration statement with the Securities and Exchange
Commission sufficient to permit the public offering of such
Common Shares in accordance with the terms of this Agreement, and
the Seller will use its best efforts in all matters necessary or
advisable to cause such registration statement to become
effective as promptly as practicable and to remain effective for
a reasonable period, all to the extent requisite to permit the
sale or other disposition of such Common Shares. The Seller
shall also use its best efforts to register or qualify the Common
Shares so registered under the securities blue sky laws of such
jurisdictions within the United States as the Trustee may
reasonably request; provided, however, that the Seller shall not
be required to consent to general service of process for all
purposes in any jurisdiction where it is not then qualified.
6. ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Common Shares is
subject to the satisfaction of the following conditions on the
date of Closing:
(a) The representations and warranties of the
Seller set forth in Article II hereof shall be true and
correct; and if the Closing shall occur on a date other than
the date of this Agreement, the Purchaser shall have been
furnished with a certificate, dated the date of the Closing,
to such effect, signed by an authorized officer of the
Seller; and
(b) All permits, approvals, authorizations and
consents of third parties necessary for the consummation of
the transactions herein shall have been obtained, and no
order of any court or administrative agency shall be in
effect which restrains or prohibits the transactions
contemplated by this Agreement, and no suit, action or other
proceeding by any governmental body or other person shall
have been instituted which questions the validity or
legality of the transactions contemplated by this Agreement.
(c) Receipt of a direction from the Company regarding
the execution of the Note.
6.2. Conditions to Obligations of the Seller. The
obligation of the Seller to issue, sell and deliver the Common
Shares to the Purchaser is subject to the satisfaction of the
following conditions on the date of Closing:
(a) The representations and warranties of the
Purchaser set forth in Article III hereof shall be true and
correct; and if the Closing shall occur on a date other than
the date of this Agreement, the Seller shall have been
furnished with a certificate dated the date of the Closing,
to such effect, signed by an authorized officer of the
Trustee; and
(b) No order of any court or administrative
agency shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement, and no suit,
action or other proceeding by any governmental body or other
person shall have been instituted which questions the
validity or legality of the transactions contemplated by
this Agreement.
7. ARTICLE VII
MISCELLANEOUS
7.1. Expenses. The Seller shall pay all of its
expenses, and it shall pay the Purchaser's expenses, in
connection with the authorization, preparation, execution and
performance of this Agreement, including without limitation the
reasonable fees and expenses of the Trustee, its agents,
representatives, counsel, financial advisors and consultants.
7.2. Survival of Seller's Representations and
Warranties. All representations and warranties made by the
Seller to the Purchaser in this Agreement shall survive the
Closing.
7.3. Notices. All notices, requests, or other
communications required or permitted to be delivered hereunder
shall be in writing, delivered by registered or certified mail,
return receipt requested, as follows:
(a) To the Seller:
One Noblitt Plaza
Columbus, Indiana 47202
Attention: General Counsel
(b) To the Purchaser:
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Michael Finelli
Any party hereto may from time to time, by written notice given
as aforesaid, designate any other address to which notices,
requests or other communications addressed to it shall be sent.
7.4. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for any
breach of the provisions of this Agreement and agree that the
obligations of the parties hereunder shall be specifically
enforceable, and neither party will take any action to impede the
other from seeking to enforce such rights of specific
performance.
7.5. Successors and Assigns; Integration; Assignment.
This Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective legal
representatives, successors and assigns. This Agreement (a)
constitutes, together with the Note, the Trust Agreement and any
other written agreements between the Purchaser and the Seller
executed and delivered on the date hereof, the entire agreement
between the parties hereto and supersedes all other prior
agreements and understandings, both written and oral, among the
parties, with respect to the subject matter hereof, (b) shall not
confer upon any person other than the parties hereto any rights
or remedies hereunder and (c) shall not be assignable by
operation of law or otherwise, except that the Trustee may assign
all its rights hereunder to any corporation or other institution
exercising trust powers in connection with any such institution
assuming the duties of a trustee under the Trust.
7.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Indiana.
7.7. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the
transactions contemplated by this Agreement.
7.8. Amendment and Waiver. No amendment or waiver of
any provision of this Agreement or consent to departure therefrom
shall be effective unless in writing and signed by the Purchaser
and the Seller.
7.9. Counterparts. This Agreement may be executed in
any number of counterparts with the same effect as if the
signatures thereto were upon one instrument.
7.10. Certain Limitations. The execution, delivery
and performance by the Trustee of this Agreement have been, and
will be, effected by the Trustee solely in its capacity as
Trustee under the terms of the Trust and not in its individual or
corporate capacity. Nothing in this Agreement shall be
interpreted to increase, decrease or modify in any manner any
liability of the Trustee to the Seller or to any trustee,
representative or other claimant by right of the Seller resulting
from the Trustee's performance of its duties under the
constituent instruments of the Trust, and no personal or
corporate liability shall be asserted or enforceable against the
Trustee by reason of any of the covenants, statements or
representations contained in this Agreement.
7.11. Incorporation. The terms and conditions of the
Trust Agreement relating to the nature of the responsibilities of
the Trustee and the indemnification of the Trustee by the Seller
are incorporated herein by reference and made applicable to this
Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement on the date and year first above written.
ARVIN INDUSTRIES, INC.
By:/s/ Richard A. Smith
--------------------------
Name: Richard A. Smith
Title:Vice President-Finance
and Chief Financial Officer
THE NORTHERN TRUST COMPANY
By:/s/ Michael A. Finelli, Jr.
--------------------------
Name: Michael A. Finelli, Jr.
Title:Vice President
PROMISSORY NOTE
$42,187,500 Columbus, Indiana
December 20, 1996
FOR VALUE RECEIVED, the undersigned, The Northern Trust
Company not in its individual or corporate capacity but solely in
its capacity as Trustee of The Arvin Industries, Inc. Employee
Stock Benefit Trust (the "Trust") hereby promises on behalf of
the Trust to pay to the order of Arvin Industries, Inc., an
Indiana corporation (the "Company") without relief from valuation
and appraisment laws, at the principal offices of the Company in
Columbus, Indiana, or at such other place as the Company shall
designate in writing, the aggregate principal amount of FORTY TWO
MILLION ONE HUNDRED AND EIGHTY-SEVEN THOUSAND FIVE HUNDRED
DOLLARS ($42,187,500), as shown on Schedule A attached hereto as
such may be amended from time to time, with interest in arrears
thereon, as hereinafter provided.
Principal shall be paid in installments in the amounts
and on the dates set forth on the Maturity Schedule attached
hereto as Schedule A, the last such installment due on January 1,
2006; provided, however, that this Note may be prepaid in whole
or in part at any time without penalty; and provided further that
the principal amount of this Note (1) shall be forgiven in the
event that the Trust shall have been terminated in accordance
with Section 8.2 thereof and the Trustee shall have complied with
the requirements of such Section or (2) shall be deemed forgiven,
if applicable, in accordance with Section 2.1 of the Trust.
Interest on the unpaid principal balance, at an annual interest
rate (the "Interest Rate") equal to 8.0%, shall be paid
quarterly, in arrears, on each January 1, April 1, July 1 and
October 1, commencing January 1, 1997, and shall be calculated on
the basis of a 360-day year of 30-day months. Whenever any
payment falls due on a Saturday, Sunday or public holiday, such
payment shall be made on the next succeeding business day.
This Note shall be construed under the laws of the
State of Indiana.
The undersigned represents and warrants that the
indebtedness represented by this Note was incurred for the
purpose of purchasing shares of Common Stock, $2.50 par value, of
the Company.
This Note may not be assigned by the Company, other
than by operation of law, without the prior express written
consent of the undersigned.
The Company shall have no recourse whatsoever to any
assets of the Trustee in its individual or corporate capacity for
repayment. The Trustee is entering into this Agreement not in
its individual or corporate capacity but solely as Trustee, and
no personal or corporate liability or personal or corporate
responsibilities are assumed by, or shall at any time be asserted
or enforceable against, the Trustee in its individual or
corporate capacity under, or with respect to, this Agreement.
The Northern Trust Company,
on behalf of THE ARVIN INDUSTRIES, INC.
EMPLOYEE STOCK BENEFIT TRUST
By: /s/ Michael A. Finelli, Jr.
----------------------------
Name: Michael A. Finelli, Jr.
Title: Vice President
Schedule A
PRINCIPAL PAYMENT DATES
Date Amount
January 1, 1997 $1,000,000
January 1, 1998 $1,000,000
January 1, 1999 $1,000,000
January 1, 2000 $1,000,000
January 1, 2001 $1,000,000
January 1, 2002 $1,000,000
January 1, 2003 $1,000,000
January 1, 2004 $1,000,000
January 1, 2005 $1,000,000
January 1, 2006 $33,187,500
