UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission file number 1-278
EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
Missouri 43-0259330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri 63136
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (314) 553-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock of $.50 par value per share New York Stock Exchange
Chicago Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by nonaffiliates of the registrant as of close of business on October 30, 1998: $28,692 million.
Common stock outstanding at October 31, 1998: 438,098,038 shares.
Documents Incorporated by Reference
1. Portions of Emerson Electric Co. 1998 Annual Report to Stockholders (Parts I and II).
2. Portions of Emerson Electric Co. Notice of 1999 Annual Meeting of the Stockholders and Proxy Statement (Part III).
PART I
Emerson was incorporated in Missouri in 1890. Originally engaged in the manufacture and sale of electric motors and fans, Emerson subsequently expanded its product lines through internal growth and acquisitions. Emerson is now engaged principally in the worldwide design, manufacture and sale of a broad range of electrical, electromechanical and electronic products and systems.
The products manufactured by the Company are classified into the following industry segments: Commercial and Industrial Components and Systems, and Appliance and Construction-Related Components. Net sales, income before income taxes and total assets attributable to each industry segment for the three years ended September 30, 1998, are set forth in Note 13 of Notes to Consolidated Financial Statements on page 39 of the 1998 Annual Report, which note is hereby incorporated by reference. Information with respect to acquisition and divestiture activities by Emerson is set forth in Note 2 of Notes to Consolidated Financial Statements on page 33 of the 1998 Annual Report, which note is hereby incorporated by reference.
The Commercial and Industrial segment includes process control instrumentation, valves and systems; industrial motors and drives; industrial machinery, equipment and components; and electronics. These products are generally highly engineered, both in product design and manufacturing process. Products of this segment are sold to commercial and industrial distributors and end-users for manufacturing and commercial applications.
Products used in process industries include various types of instrumentation, valves and control systems for measurement and control of fluid flow. Included are various types of meters such as rotameters, positive displacement meters, magnetic flow meters, turbine meters, direct mass flow meters and instruments to measure water quality. Other products include solid state telemetering equipment, various types of pressure and vacuum relief valves and personal computer-based software used for industrial automation applications. In addition, Emerson manufactures and sells temperature sensors, pressure sensors and transmitters used to measure and/or control temperature, pressure, level and rate and amount of flow. Also produced are process gas chromatographs, in-situ oxygen analyzers, infrared gas and process fluid analyzers, combustion analyzers and systems, and other analyzers which measure pH and conductivity. The Company also manufactures and sells sliding stem valves, rotary valves, plastic-lined plug valves, butterfly valves, pressure regulators, and related actuators and controllers. In addition, Emerson provides repair services for many of these products, as well as engineered solutions and consulting services.
Emerson also manufactures electronic measurement, data acquisition and condition monitoring equipment for use in industrial processing. In addition, Emerson produces vibratory separating equipment used primarily in the chemical, mining, pharmaceutical, food processing, pulp and paper, ceramic and metal-working markets.
Beginning with a line of electric motors for industrial and heavy commercial applications, Emerson's products for industrial automation include certain kinds of integral horsepower motors, gear drives, pump motors, alternators, electronic variable speed drives and diesel generator sets. Emerson also produces and services electronic uninterruptible and primary power supplies, power conditioning, conversion and distribution equipment, modular power systems, electrical testing equipment and environmental control systems and electronic components used in communications and information processing applications.
Emerson manufactures and sells components for the transmission and regulation of mechanical power, such as certain kinds of chains, sprockets, sheaves, gears, bearings, couplings and speed reducers, and a line of cam-operated index drives, programmable motion controllers and automation accessories. These products are used primarily in industrial and commercial applications requiring the transmission of mechanical motion or drive systems of various types.
Emerson also manufactures a line of multi-purpose pressure and solenoid valves, pressure, vacuum and temperature switches, automatic transfer switches, remote control switches and electric power and pump control systems. These products are widely used in the automation of equipment and industrial processes and for the control of emergency electric power.
Emerson also produces a variety of industrial and commercial ultrasonic products for applications such as cleaning, sealing, welding and flaw detection. Other products include material preparation and microstructure analysis equipment. Emerson also manufactures electric circulation heaters, fluid heat transfer systems and component heating elements.
Emerson manufactures a broad line of components for current- and noncurrent- carrying electrical distribution devices such as panelboards, receptacles, fittings, cable handling reels and lighting products for use in hazardous and nonhazardous environments.
The Appliance and Construction-Related segment consists of fractional motors and appliance components; heating, ventilating and air conditioning components; and tools. This segment includes components sold to distributors and original equipment manufacturers for inclusion in end products and systems (ultimately sold through commercial and residential building construction channels), and construction-related products which retain their identity and are sold through distributors to consumers and the professional trades.
Emerson manufactures and sells a variety of components and systems for refrigeration and comfort control applications, including hermetic and semi- hermetic compressors; hermetic motors and terminals for hermetically sealed compressors; and fractional and sub-fractional horsepower motors for selected appliance, office equipment, ventilating equipment, pump, heater and other motor-driven machine applications. Automatic temperature controls, timers, switches, electronics, thermo-protective devices and pumps are manufactured for gas and electric heating systems, refrigeration and air conditioning equipment and various large and small appliances. Emerson also manufactures and sells a variety of electric heating elements and electrostatic air cleaners.
Emerson manufactures and sells a line of electrical products primarily for the residential markets, including electric waste disposers, hot water dispensers, ventilating equipment and exhaust fans.
Emerson is a producer of selected professional and hardware tools and accessories, and service equipment. These products include certain kinds of wrenches, thread cutters, pipe cutters, reamers, vises, pipe and bolt threading machines and sewer and drain cleaning equipment. Emerson also manufactures power tool accessories such as drill, router and screwdriver bits, and saw blades. The principal markets for these professional tools and service equipment include plumbing, heating and air conditioning contractors, construction and maintenance companies, petroleum and gas producers, refiners and processors, and farm and home consumers.
Emerson produces ladders, scaffolding and related accessories, free-standing and wall-mounted ventilated shelving and specialty storage products. Also produced by Emerson for marketing by a major retailer are shop vacuum cleaners, a line of bench power tools for home workshop use and a line of hand tools including adjustable wrenches, screwdrivers, pliers and chisels.
Emerson utilizes various production operations and methods. The principal production operations are metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, Emerson also uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining and special furnaces for heat treating and foundry applications. Management believes the equipment, machinery and tooling used in these processes are of modern design and are well maintained.
Emerson's major requirements for basic raw materials include steel, copper, cast iron, aluminum and brass and, to a lesser extent, plastics and other petroleum-based chemicals. Emerson has multiple sources of supply for each of its major requirements and is not significantly dependent on any one supplier. The raw materials and various purchased components required for its products have generally been available in sufficient quantities.
Emerson uses various forms of energy, principally natural gas and electricity, obtained from public utilities. A majority of the plants have the capability of being converted to use alternative sources of energy.
The Company has a number of patents, trademarks, licenses and franchises, none of which is considered material to any segment of its consolidated operations.
The estimated consolidated order backlog of the Company was $2,084 million and $1,989 million at September 30, 1998 and 1997, respectively. Nearly all of the September 30, 1998 consolidated backlog amount is expected to be shipped within one year. The estimated backlog by industry segment at September 30, 1998 and 1997, follows (dollars in millions):
1998 1997
------- -------
Commercial and Industrial $ 1,361 1,331
Appliance and Construction-Related 723 658
------- -------
Consolidated Order Backlog $ 2,084 1,989
======= =======
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Emerson's businesses are highly competitive, and Emerson competes on product performance, quality, service or price across the industries and markets served. A significant element of the Company's competitive strategy is its objective to manufacture high quality products at the lowest relevant global cost. Although no single company competes directly with Emerson in all of the Company's product lines, various companies compete in one or more product lines. Some of these companies have substantially greater sales and assets than Emerson, and Emerson also competes with many smaller companies. The number of Emerson's competitors varies by product line, and management believes that Emerson has a market leadership position in many of these product lines.
Costs associated with Company-sponsored research, new product development and product improvement were $491.3 million in 1998, $445.1 million in 1997 and $398.7 million in 1996.
The Company's manufacturing locations generate waste, the treatment, storage, transportation and disposal of which are subject to federal, state and/or local laws and regulations relating to the protection of the environment. Compliance with laws regulating the discharge of materials into the environment or otherwise relating to the protection of the environment has not had a material effect upon Emerson's capital expenditures, earnings or competitive position. It is not anticipated that Emerson will have material capital expenditures for environmental control facilities during the next fiscal year.
Emerson and its subsidiaries had an average of approximately 111,800 employees during 1998. Management believes that the Company's employee relations are favorable. Some of the Company's employees are represented by collective bargaining agreements, but none of these is considered significant.
International sales were $5,387 million in 1998, $5,245 million in 1997 and $4,867 million in 1996, including U.S. exports of $968 million, $1,054 million and $885 million in 1998, 1997 and 1996, respectively. Although there are additional risks attendant to foreign operations, such as nationalization of facilities, currency fluctuations and restrictions on the movement of funds, Emerson's financial position has not been materially affected thereby to date. See Note 13 of Notes to Consolidated Financial Statements on page 39 of the 1998 Annual Report for further information with respect to foreign operations.
At September 30, 1998, Emerson had approximately 370 manufacturing locations worldwide, of which approximately 190 were located outside the United States, primarily in Europe and to a lesser extent in Asia-Pacific, Canada and Latin America. Approximately 240 locations are occupied by the Commercial and Industrial segment, and approximately 130 are occupied by the Appliance and Construction-Related segment. The majority of the locations are owned or occupied under capital lease obligations, with the remainder occupied under operating leases. The Company considers its facilities suitable and adequate for the purposes for which they are used.
Emerson is a party to a number of pending legal proceedings, several of which claim substantial amounts of damages. There are no pending legal proceedings that management believes will be material in relation to the Company's business or financial position.
There were no matters submitted to a vote of security holders during the quarter ended September 30, 1998.
Executive Officers of the Registrant
The following sets forth certain information as of December 1998 with respect to Emerson's executive officers. These officers have been elected or appointed to terms which will expire February 2, 1999:
First
Served as
Name Position Age Officer
---- -------- --- ----------
C. F. Knight* Chairman of the Board
and Chief Executive Officer 62 1972
G. W. Tamke* President and Chief Operating
Officer 51 1989
A. E. Suter* Senior Vice Chairman and
Chief Administrative Officer 63 1979
R. W. Staley* Vice Chairman
63 1975
J. G. Berges* Vice Chairman 51 1989
W. J. Galvin Senior Vice President - Finance
and Chief Financial Officer 52 1984
W. W. Withers Senior Vice President, Secretary
and General Counsel 58 1989
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*Also chairman and/or member of certain committees of the Board of Directors.
There are no family relationships among any of the executive officers and directors.
Each of the above has served as an officer or in a supervisory capacity with Emerson for the last five years.
PART II
The information regarding the market for the Company's common stock, quarterly market price ranges and dividend payments set forth in Note 14 of Notes to Consolidated Financial Statements on page 40 of the 1998 Annual Report is hereby incorporated by reference. There were approximately 37,200 stockholders at September 30, 1998. In 1998, the Company issued 122,097 shares of common stock in connection with the acquisition of all of the stock from the five shareholders of a process control consulting company with some of the shares subject to forfeiture over a three-year period. The shares were not registered under the Securities Act of 1933 in reliance on the exemption provided by Section 4(2) of the Act.
Years ended September 30
(Dollars in millions except per share amounts)
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Net sales $ 13,447.2 12,298.6 11,149.9 10,012.9 8,607.2
Net earnings $ 1,228.6 1,121.9 1,018.5 907.7 788.5
Basic earnings
per common share $ 2.80 2.52 2.27 2.03 1.76
Diluted earnings
per common share $ 2.77 2.50 2.25 2.01 1.75
Cash dividends
per common share $ 1.18 1.08 .98 .89 .78
Long-term debt $ 1,056.6 570.7 772.6 208.6 279.9
Total assets $ 12,659.8 11,463.3 10,481.0 9,399.0 8,215.0
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Income before cumulative effect of change in accounting for postemployment benefits ($21.3 million, $.05 per share) was $929.0 million in 1995. Income before cumulative effect of change in accounting for postretirement benefits ($115.9 million, $.26 per share) was $904.4 million in 1994. Net earnings in 1995 and 1994 include non-recurring items which were substantially offset by the accounting change.
See Note 2 of Notes to Consolidated Financial Statements on page 33 of the 1998 Annual Report for information regarding the Company's acquisition and divestiture activities.
Narrative discussion appearing under "Results of Operations" and "Financial Position, Capital Resources and Liquidity" on pages 22 through 26, and the "Safe Harbor Statement" on page 48 of the 1998 Annual Report are hereby incorporated by reference.
Narrative discussion appearing under "Financial Instruments" on page 26 of the 1998 Annual Report is hereby incorporated by reference.
The consolidated financial statements of the Company and its subsidiaries on pages 27 through 40 and the report thereon of KPMG Peat Marwick LLP appearing on page 41 of the 1998 Annual Report are hereby incorporated by reference.
None.
PART III
Information regarding nominees and directors appearing under "Nominees and Continuing Directors" in the Emerson Electric Co. Notice of Annual Meeting of the Stockholders and Proxy Statement for the February 1999 annual stockholders' meeting (the "1999 Proxy Statement") is hereby incorporated by reference. Information regarding executive officers is set forth in Part I of this report.
Information appearing under "Director Compensation" and "Executive Compensation" in the 1999 Proxy Statement is hereby incorporated by reference.
The information regarding beneficial ownership of shares by nominees and continuing directors and by all directors and executive officers as a group appearing under "Nominees and Continuing Directors" in the 1999 Proxy Statement is hereby incorporated by reference.
Information appearing under "Certain Business Relationships" in the 1999 Proxy Statement is hereby incorporated by reference.
PART IV
A) Documents filed as a part of this report:
1. The consolidated financial statements of the Company and its subsidiaries on pages 27 through 40 and the report thereon of KPMG Peat Marwick LLP appearing on page 41 of the 1998 Annual Report.
2. Financial Statement Schedules
All schedules are omitted because they are not required, not applicable or the information is given in the financial statements or notes thereto contained in the 1998 Annual Report.
3. Exhibits (Listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).
3(a) Restated Articles of Incorporation of Emerson Electric Co., incorporated by reference to Emerson Electric Co. Form 10-Q for the quarter ended March 31, 1997, Exhibit 3(a); Termination of Designated Shares of Stock and Certificate of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock, filed herewith.
3(b) Bylaws of Emerson Electric Co., as amended through November 3, 1998, filed herewith.
4(a) Indenture dated as of April 17, 1991, between Emerson Electric Co. and The Boatmen's National Bank of St. Louis, Trustee, incorporated by reference to Emerson Electric Co. Registration Statement on Form S-3, File No. 33-62545, Exhibit 4.1.
4(b) Indenture dated as of December 10, 1998, between Emerson Electric Co. and The Bank of New York, Trustee, filed herewith.
No other long-term debt instruments are filed since the total amount of securities authorized under any such instrument does not exceed 10 percent of the total assets of Emerson Electric Co. and its subsidiaries on a consolidated basis. Emerson Electric Co. agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request.
4(c) Rights Agreement dated as of November 1, 1998,
between Emerson Electric Co. and ChaseMellon Shareholder
Services, L.L.C. incorporated by reference to
Emerson Electric Co. Form 8-A, dated October 6, 1998,
Exhibit 1.
10(a)* 1982 Incentive Stock Option Plan, as amended,
incorporated by reference to Emerson Electric Co.
1992 Form 10-K, Exhibit 10(b).
10(b)* Employment Agreement made as of October 1, 1975, as
amended January 9, 1987, and as further amended
October 22, 1997, between Emerson Electric Co. and
C. F. Knight, incorporated by reference to Emerson
Electric Co. 1997 Form 10-K, Exhibit 10(c).
10(c)* 1986 Stock Option Plan, as amended, incorporated by
reference to Emerson Electric Co. 1992 Form 10-K,
Exhibit 10(e) and Form 10-Q for the quarter ended
December 31, 1992, Exhibit 10(b).
10(d)* 1991 Stock Option Plan, as amended and restated effective
October 1, 1997, incorporated by reference to Emerson
Electric Co. 1997 Form 10-K, Exhibit 10(e).
10(e)* 1988 Incentive Shares plan, incorporated by
reference to Emerson Electric Co. 1988 Proxy
Statement dated December 18, 1987, Exhibit A, and
Form 10-Q for the quarter ended December 31, 1992,
Exhibits 10(d) and 10(e), and Amendments No. 3 and
No. 4 thereto, incorporated by reference to Emerson
Electric Co. 1993 Form 10-K, Exhibit 10(g).
10(f)* Third Amendment to the Emerson Electric Co. 1993
Incentive Shares Plan, as restated, incorporated by
reference to Emerson Electric Co. 1996 Form 10-K,
Exhibit 10(g).
10(g)* Emerson Electric Co. Directors' Continuing
Compensation Plan, incorporated by reference to
Emerson Electric Co. 1987 Form 10-K, Exhibit 10(g),
and Amendment incorporated by reference to Emerson
Electric Co. 1996 Form 10-K, Exhibit 10(i).
10(h)* Deferred Compensation Plan for Non-Employee Directors,
as amended, incorporated by reference to Emerson
Electric. Co. 1994 Form 10-K, Exhibit 10(k).
10(i)* Emerson Electric Co. Supplemental Executive
Retirement Plan, incorporated by reference to
Emerson Electric Co. 1989 Form 10-K, Exhibit 10(i).
10(j)* Fourth Amendment to the Supplemental Executive
Savings Investment Plan, incorporated by reference
to Emerson Electric Co. Form 10-Q for the quarter ended
March 31, 1998, Exhibit 10(l).
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10(k)* Annual Incentive Plan incorporated by reference to
Emerson Electric Co. 1995 Proxy Statement dated
December 14, 1994, Appendix A.
10(l)* 1997 Incentive Shares Plan, incorporated by reference to
Emerson Electric Co. 1997 Proxy Statement dated
December 6, 1996, Exhibit A.
10(m)* 1998 Stock Option Plan, incorporated by reference to Emerson
Electric Co. 1998 Proxy Statement dated December 12, 1997,
Appendix A.
13 Portions of Emerson Electric Co. Annual Report to
Stockholders for the year ended September 30, 1998,
incorporated by reference herein.
21 Subsidiaries of Emerson Electric Co.
23 Independent Auditors' Consent.
24 Power of Attorney.
27 Financial Data Schedule.
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* Management contract or compensatory plan.
B) No reports on Form 8-K were filed during the quarter ended September 30, 1998.
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.
EMERSON ELECTRIC CO.
By /s/ W. J. Galvin
-------------------------
W. J. Galvin
Senior Vice President -
Finance and Chief Financial
Officer (and Principal Accounting
Officer)
Date: December 22, 1998
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on December 22, 1998, by the following persons on behalf of the registrant and in the capacities indicated.
Signature Title
--------- -----
*
---------------------------------------- Chairman of the Board
C. F. Knight and Chief Executive Officer
and Director
/s/ W. J. Galvin
---------------------------------------- Senior Vice President -
W. J. Galvin Finance and Chief Financial
Officer (and Principal Accounting
Officer)
*
---------------------------------------- Director
J. G. Berges
*
---------------------------------------- Director
L. L. Browning, Jr.
*
---------------------------------------- Director
A. A. Busch, III
*
---------------------------------------- Director
D. C. Farrell
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*
---------------------------------------- Director
J. A. Frates
*
---------------------------------------- Director
R. B. Horton
*
---------------------------------------- Director
G. A. Lodge
*
---------------------------------------- Director
V. R. Loucks, Jr.
*
---------------------------------------- Director
R. B. Loynd
*
---------------------------------------- Director
R. L. Ridgway
*
---------------------------------------- Director
R. W. Staley
*
---------------------------------------- Director
A. E. Suter
*
---------------------------------------- Director
G. W. Tamke
*
---------------------------------------- Director
W. M. Van Cleve
*
---------------------------------------- Director
E. E. Whitacre, Jr.
* By /s/ W. J. Galvin
--------------------------------
W. J. Galvin
Attorney-in-fact
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INDEX TO EXHIBITS
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Exhibits are listed by numbers corresponding to the Exhibit Table of
Item 601 in Regulation S-K.
Exhibit No. Exhibit
----------- -------
3(a)(i) Termination of Designated Shares of Stock
3(a)(ii) Certificate of Designation, Preferences and
Rights of Series B Junior Participating
Preferred Stock
3(b) Bylaws of Emerson Electric Co.
4(b) Indenture dated as of December 10, 1998
13 Portions of Annual Report to Stockholders for
the year ended September 30, 1998, incorporated
by reference herein
21 Subsidiaries of Emerson Electric Co.
23 Independent Auditors' Consent
24 Power of Attorney
27 Financial Data Schedule
See Item 14(A)(3) for a list of exhibits incorporated by reference.
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EXHIBIT 3(a)(i)
TERMINATION OF DESIGNATED SHARES OF STOCK
PURSUANT TO SECTION 351.180 (7)
2,500,000 SHARES OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK, $2.50 PAR VALUE
Pursuant to Section 351.180(7) of the General and Business Corporation Law of the State of Missouri, the undersigned hereby certifies as follows:
1. The name of the corporation is: Emerson Electric Co., a Missouri corporation (the "Company").
2. On November 3, 1988, a Certificate of Designation of Series A Junior Participating Preferred Stock (the "Series A Preferred Stock") was filed with the Missouri Secretary of State. A copy of the Certificate of Designation issued by the Secretary of State is attached.
3. No shares of Series A Preferred Stock are outstanding and none have been or will be issued subject to the Certificate of Designations previously filed.
4. On October 6, 1998, the Board of Directors of the Company adopted the following resolution, approving the termination of the Series A Preferred Stock:
RESOLVED FURTHER, that provided the 1988 Rights are not then exercisable, effective November 1, 1998, no shares of Series A Preferred Stock will be outstanding and none of such shares will be issued pursuant to the Certificate of Designation designating the number of shares Series A Preferred Stock, and fixing the powers, preferences and relative, participating, optional and other special rights of the shares of Series A Preferred Stock, so that such Certificate of Designation will be terminated, and the reservation of shares of the Company's capital stock for issuance upon exercise of the 1988 Rights, will be canceled, and such shares of the Company's capital stock be eligible to be issued or reserved for other proper purposes.
IN WITNESS WHEREOF, this Termination of Designated Shares is executed on behalf of the Company by its Senior Vice President and attested by its Assistant Secretary on this 1st day of November, 1998.
/s/ W. Wayne Withers
-----------------------------
W. Wayne Withers
Senior Vice President,
Secretary and General Counsel
/s/ Harley M. Smith
---------------------------
Harley M. Smith
Assistant Secretary
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EXHIBIT 3(a)(ii)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B
JUNIOR PARTICIPATING PREFERRED STOCK
OF
EMERSON ELECTRIC CO.
Pursuant to Section 351.180 of
The General and Business Corporation Law of Missouri
We, W. Wayne Withers, Senior Vice President, Secretary and General Counsel, and Harley M. Smith, Assistant Secretary, of Emerson Electric Co., a corporation organized and existing under The General and Business Corporation Law of the State of Missouri, in accordance with the provisions of Section 351.180 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the Restated Articles of Incorporation, as amended, of the Company, the said Board of Directors on October 6, 1998, adopted the following resolution creating a series of One Million Two Hundred Thousand (1,200,000) shares of Preferred Stock designated as Series B Junior Participating Preferred Stock par value $2.50 per share:
RESOLVED, that pursuant to the authority vested in the Board of Directors of the Company in accordance with the provisions of its Restated Articles of Incorporation, as amended, a series of Preferred Stock of the company be and it hereby is created, and that the designation and amount thereof and the powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be designated as "Series B Junior Participating Preferred Stock" (the "Series B Preferred Stock") and the number of shares constituting the Series B Preferred Stock shall be One Million Two Hundred Thousand (1,200,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of preferred stock (or any similar stock) ranking prior and superior to the Series B Preferred Stock with respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the holders of shares of Common Stock, par value $0.50 per share (the "Common Stock"), of the Company, and of any other junior 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 in cash on any regular quarterly dividend payment date as shall be established by the Board of Directors (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount(payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or 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 B Preferred Stock. In the event the Company shall at any time after October 6, 1998 (the "Rights Declaration Date") declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series B 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 B Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event 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, a dividend of $1.00 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B 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, in accordance with applicable law, fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than such number of days prior to the date fixed for the payment thereof as may be allowed by applicable law.
Section 3. Voting Rights. The holders of shares of Series B Preferred Stock shall have the following voting rights:
(A) Each share of Series B Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the stockholders of the Company.
(B) Except as otherwise provided herein, in the Company's Restated Articles of Incorporation, or by law, the holders of shares of Series B Preferred Stock, the holders of shares of Common Stock, and the holders of shares of any other capital stock of the Company having general voting rights, shall vote together as one class on all matters submitted to a vote of stockholders of the Company.
(C) Except as set forth herein or in the Company's Restated Articles of Incorporation, and except as otherwise provided by law, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B 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 shares of Series B Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, 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 B Preferred Stock;
(ii) declare or pay dividends, 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 B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such 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 or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B 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 any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, or any shares of stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration 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 B Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the Restated Articles of Incorporation of the Company, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.
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 B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received $1,000.00 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 B 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
shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except distributions made ratably on the
Series B Preferred Stock and all such 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. In the event the Company shall at any
time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series B 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. In case 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 and/or any other property, then in any such case each share of Series B Preferred Stock shall at the same time be similarly exchanged 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 and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Company shall at any time after the Rights Declaration Date declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) 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 B 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 are outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred Stock shall not be redeemable.
Section 9. Rank. The Series B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Company's Preferred Stock.
Section 10. Amendment. The Restated Articles of Incorporation of the Company shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock, voting together as a single class.
Section 11. Fractional Shares. Series B 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 B Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 1st day of November, 1998.
By: /s/ W. Wayne Withers
-------------------------------
Name: W. Wayne Withers
Title: Senior Vice President,
Secretary and General Counsel
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Attest
By: /s/ Harley M. Smith
-------------------
Name: Harley M. Smith
Title: Assistant Secretary
|
EXHIBIT 3(b)
As Amended through November 3, 1998
EMERSON ELECTRIC CO.
BYLAWS
INDEX
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ARTICLE I - OFFICES; DEFINITIONS Page
Section 1. Registered Office........................ 1
Section 2. Other Offices............................ 1
Section 3. Definitions.............................. 1
ARTICLE II - MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings........................ 1
Section 2. Annual Meeting........................... 1
Section 3. Special Meetings......................... 2
Section 4. Notice of Meetings....................... 3
Section 5. List of Shareholders Entitled to Vote.... 3
Section 6. Quorum................................... 4
Section 7. Requisite Vote........................... 4
Section 8. Voting................................... 5
Section 9. Notice of Shareholder Business at Annual
Meetings.............................. 5
ARTICLE III - DIRECTORS
Section 1. Number; Classification; Nominations;
Election; Term of Office.............. 7
Section 2. Filling of Vacancies..................... 11
Section 3. Qualifications........................... 11
Section 4. Removal.................................. 12
Section 5. General Powers........................... 12
Section 6. Place of Meetings........................ 12
Section 7. Regular Annual Meeting................... 12
Section 8. Additional Regular Meetings.............. 13
Section 9. Special Meetings......................... 14
Section 10. Place of Meetings........................ 14
Section 11. Notices.................................. 14
Section 12. Quorum................................... 14
Section 13. Compensation of Directors................ 15
Section 14. Executive Committee...................... 15
Section 15. Finance Committee........................ 16
Section 16. Other Committees of the Board............ 16
Section 17. Committees - General Rules............... 16
Section 18. Directors Emeritus and Advisory Directors 17
ARTICLE IV - NOTICES
Section 1. Service of Notice........................ 18
Section 2. Waiver of Notices........................ 18
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ARTICLE V - OFFICERS Page
Section 1. Titles................................... 18
Section 2. Election................................. 19
Section 3. Term..................................... 20
Section 4. Chairman of the Board.................... 20
Section 5. President................................ 21
Section 6. Vice Chairmen of the Board............... 21
Section 7. Vice Presidents.......................... 21
Section 8. Secretary and Assistant Secretaries...... 21
Section 9. Treasurer and Assistant Treasurers....... 22
Section 10. Controller and Assistant Controllers..... 23
Section 11. Appointed Officers....................... 23
ARTICLE VI - CERTIFICATES OF SHARES
Section 1. Certificates............................. 24
Section 2. Signatures on Certificates............... 24
Section 3. Transfer Agents and Registrars;
Facsimile Signatures.................. 24
Section 4. Lost Certificates........................ 25
Section 5. Transfer of Shares....................... 26
Section 6. Registered Shareholders.................. 26
Section 7. Interested Shareholders.................. 26
ARTICLE VII - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers
or Employees.......................... 27
Section 2. Actions Involving Agents................. 28
Section 3. Determination of Right to Indemnification
in Certain Instances.................. 29
Section 4. Advance Payment of Expenses.............. 30
Section 5. Successful Defense....................... 30
Section 6. Not Exclusive Right...................... 30
Section 7. Insurance................................ 31
Section 8. Subsidiaries of Corporation.............. 31
Section 9. Spousal Indemnification.................. 33
ARTICLE VIII - GENERAL PROVISIONS
Section 1. Dividends................................ 33
Section 2. Checks................................... 33
Section 3. Fiscal Year.............................. 34
Section 4. Seal..................................... 34
Section 5. Closing of Transfer Books and Fixing of
Record Dates.......................... 34
ARTICLE IX - AMENDMENTS
Section 1. ......................................... 35
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EMERSON ELECTRIC CO.
* * * * *
BYLAWS
* * * * *
ARTICLE I
OFFICES; DEFINITIONS
Section 1. Registered Office. The registered office of Emerson
Electric Co. (the "Corporation") shall be located in the County of St. Louis,
State of Missouri.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Missouri as the Board
may, from time to time, determine or the business of the Corporation may
require.
Section 3. Definitions. Unless the context otherwise requires,
defined terms herein shall have the meaning ascribed thereto in the Articles
of Incorporation (the "Articles").
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the shareholders shall
be held at such place within or without the State of Missouri as may be, from
time to time, fixed or determined by the Board.
Section 2. Annual Meeting. The annual meeting of the shareholders
shall be held on the first Tuesday in February of each year if not a legal
holiday, or, if a legal holiday, then on the next business day following, at
such hour as may be specified in the notice of the meeting; provided, however,
that the day fixed for such meeting in any year may be changed by resolution
of the Board to such other day in February, March, April, May or June not a
legal holiday as the Board may deem desirable or appropriate. At the annual
meeting the shareholders shall elect Directors in accordance with Article 5 of
the Articles of Incorporation and Article III of these Bylaws, and shall
transact such other business as may properly be brought before the meeting.
If no other place for the annual meeting is determined by the Board of
Directors and specified in the notice of such meeting, the annual meeting
shall be held at the principal offices of the Corporation at 8000 West
Florissant Avenue, St. Louis, Missouri.
Section 3. Special Meetings.
(a) Unless otherwise limited by statute or by the
Articles, special meetings of the shareholders, for any purpose or purposes,
may be called at any time by the Chairman of the Board, any Vice Chairman of
the Board, the President, the Secretary, or a majority of the Board.
(b) A special meeting may also be called by the holders of
not less than 85% of all of the outstanding shares entitled to vote at such
meeting, upon written request delivered to the Secretary of the Corporation.
Such request shall state the purpose or purposes of the proposed meeting.
Upon receipt of any such request, it shall be the duty of the Secretary to
call a special meeting of the shareholders to be held at any time, not less
than ten (10) nor more than seventy (70) days thereafter, as the Secretary may
fix. If the Secretary shall neglect to issue such call, the person or persons
making the request may issue the call.
Section 4. Notice of Meetings. Written notice of every meeting of the
shareholders, specifying the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called shall be delivered or mailed, postage prepaid, by or at the direction
of the Secretary, not less than ten (10) nor more than seventy (70) days
before the date of the meeting to each shareholder of record entitled to vote
at such meeting.
Section 5. List of Shareholders Entitled to Vote. At least ten (10)
days before each meeting of the shareholders, a complete list of the
shareholders entitled to vote at such meeting shall be prepared and arranged
in alphabetical order with the address of each shareholder and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time
and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of Missouri, shall
be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders. Failure to comply with the above requirements in respect of
lists of shareholders shall not affect the validity of any action taken at
such meeting.
Section 6. Quorum. The holders of a majority of the issued and
outstanding shares entitled to vote, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided by
law, the Articles or by these Bylaws. The shareholders present at a meeting
at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of such number of shareholders as
to reduce the remaining shareholders to less than a quorum. Whether or not a
quorum is present, the chairman of the meeting or a majority of the
shareholders entitled to vote thereat, present in person or by proxy, shall
have power, except as otherwise provided by statute, successively to adjourn
the meeting to such time and place as they may determine, to a date not longer
than ninety (90) days after each such adjournment, and no notice of any such
adjournment need be given to shareholders other than the announcement of the
adjournment at the meeting. At any adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called.
Section 7. Requisite Vote. When a quorum is present or represented at
any meeting, the vote of the holders of a majority of the shares entitled to
vote which are present in person or represented by proxy shall decide any
questions brought before such meeting, unless the question is one upon which,
by express provision of law, the Articles or by these Bylaws, a different vote
is required, in which case such express provisions shall govern and control
the decision of such question.
Section 8. Voting. Each shareholder shall, at every meeting of the
shareholders, be entitled to one vote in person or by proxy for each share
having voting power held by such shareholder, but no proxy shall be voted
after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. In each election for Directors, no shareholder shall
be entitled to vote cumulatively or to cumulate his votes.
Section 9. Notice of Shareholder Business at Annual Meetings. At any
annual meeting of shareholders, only such business shall be conducted as shall
have been properly brought before the meeting. In addition to any other
requirements imposed by or pursuant to law, the Articles or these Bylaws, each
item of business to be properly brought before an annual meeting must (a) be
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board or the persons calling the meeting pursuant to the
Articles; (b) be otherwise properly brought before the meeting by or at the
direction of the Board; or (c) be otherwise properly brought before the
meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 90 days nor more
than 120 days prior to the annual meeting; provided, however, that in the
event less than 100 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, notice by the shareholder to
be timely must be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the annual meeting
was mailed or such public disclosure was made. For purposes of these Bylaws
"public disclosure" shall mean disclosure in a press release reported by the
Dow Jones, Associated Press, Reuters or comparable national news service, or
in a document publicly filed by the Corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). A shareholder's notice to
the Secretary shall set forth as to each matter he or she proposes to bring
before the annual meeting (a) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Corporation's
books, of the shareholder(s) proposing such business, (c) the class and number
of shares of the Corporation which are beneficially owned by the proposing
shareholder(s), and (d) any material interest of the proposing
shareholder(s) in such business. Notwithstanding anything in these Bylaws
to the contrary, but subject to Article III, Section 1(c) hereof, no
business shall be conducted at an annual meeting except in accordance with
the procedures set forth in this Section. The Chairman of the annual
meeting shall, if the facts warrant, determine and declare to the annual
meeting that business was not properly brought before the annual meeting in
accordance with the provisions of this Section; and if he or she should so
determine, shall so declare to the meeting and any such business not
properly brought before the annual meeting shall not be transacted. The
Chairman of the meeting shall have absolute authority to decide questions
of compliance with the foregoing procedures, and his or her ruling thereon
shall be final and conclusive. The provisions of this Section 9 shall also
govern what constitutes timely notice for purposes of Rule 14a-4(c) under
the 1934 Act.
ARTICLE III
DIRECTORS
Section 1. Number; Classification; Nominations; Election; Term of
Office.
(a) The Board shall consist of such number of
Directors as the Board may from time to time determine, provided that in no
event shall the number of Directors be less than three (3), and provided
further that no reduction in the number of Directors shall have the effect
of shortening the term of any incumbent Director. In addition, the Board may,
from time to time, appoint such number of "Advisory Directors" and "Directors
Emeritus" as it may deem advisable.
(b) The Board of Directors (herein the "Board") shall be
divided into three classes, as nearly equal in number as possible. In the
event of any increase in the number of Directors, the additional Director(s)
shall be added to such class(es) as may be necessary so that all classes shall
be as nearly equal in number as possible. In the event of any decrease in the
number of Directors, all classes of Directors shall be decreased as nearly
equally as may be possible. Subject to the foregoing, the Board shall
determine the class(es) to which any additional Director(s) shall be added and
the class(es) which shall be decreased in the event of any decrease in the
number of Directors.
At each annual meeting of shareholders the successors
to the class of Directors whose term shall then expire shall be elected for a
term expiring at the third succeeding annual meeting after such election.
(c) In addition to the qualifications set out in Section 3
of this Article III, in order to be qualified for election as a Director,
persons must be nominated in accordance with the following procedure:
Nominations of persons for election to the Board of
the Corporation may be made at a meeting of shareholders by or at the
direction of the Board or by any shareholder of the Corporation entitled to
vote for the election of Directors at the meeting who complies with the
procedures set forth in this Section 1(c). In order for persons nominated to
the Board, other than those persons nominated by or at the direction of the
Board, to be qualified to serve on the Board, such nominations shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice shall be delivered to or mailed and received
by the Secretary of the Corporation not less than 90 days nor more than 120
days prior to the meeting; provided, however, that in the event less than 100
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such shareholder's notice shall set forth (i) as to each
person whom the shareholder proposes to nominate for election or re-election
as a Director, (A) the name, age, business address and residence address of
such person, (B) the principal occupation or employment of such person, (C)
the class and number of shares of the Corporation which are beneficially owned
by such person, (D) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected) and (E) if the
shareholder(s) making the nomination is an Interested Person, details of any
relationship, agreement or understanding between the shareholder(s) and the
nominee; and (ii) as to the shareholder(s) making the nomination (A) the name
and address, as they appear on the Corporation's books, of such shareholder(s)
and (B) the class and number of shares of the Corporation which are
beneficially owned by such shareholder(s). At the request of the Board,
any person nominated by the Board for election as a Director shall furnish
to the Secretary of the Corporation that information required to be set forth
in a shareholder's notice of nomination which pertains to the nominee. No
person shall be qualified for election as a Director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 1(c).
The Chairman of a meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he or she should so determine, shall so
declare to the meeting, and the defective nomination shall be disregarded.
The Chairman of a meeting shall have absolute authority to decide questions
of compliance with the foregoing procedures, and his or her ruling thereon
shall be final and conclusive.
(d) Directors shall be elected at annual meetings of the
shareholders, except as provided in Section 2 of this Article III, and each
Director shall hold office until his or her successor is elected and
qualified.
Section 2. Filling of Vacancies. Vacancies and newly created
directorships shall be filled only by a majority of the remaining Directors,
though less than a quorum, and each person so elected shall be a Director
until his or her successor is elected by the shareholders, who may make such
election at the next annual meeting of the shareholders at which Directors of
his or her class are elected or at any special meeting of shareholders duly
called for that purpose and held prior thereto.
Section 3. Qualifications. Directors must be nominated in accordance
with the procedure set out in Section 1(c) of this Article III. Directors
need not be shareholders. No person shall be eligible for election as a
Director, either under Section 1 or Section 2 of this Article III, if such
person's seventy-second (72d) birthday shall fall on a date prior to the
commencement of the Term for which such Director is to be elected or
appointed; provided, however, that this limitation shall not apply to persons
who were Directors of the Corporation on April 4, 1967. No person shall be
qualified to be elected and to hold office as a Director if such person is
determined by a majority of the whole Board to have acted in a manner contrary
to the best interests of the Corporation, including, but not limited to,
violation of either State or Federal law, maintenance of interests not
properly authorized and in conflict with the interests of the Corporation, or
breach of any agreement between such Director and the Corporation relating to
such Director's services as a Director, employee or agent of the Corporation.
Section 4. Removal. By action of a majority of the whole Board, any
Director may be removed from office for cause if such Director shall at the
time of such removal fail to meet the qualifications for election as a
Director as set forth under Article III, Section 3 hereof. Notice of the
proposed removal shall be given to all Directors of the Corporation prior to
action thereon. Directors may be otherwise removed only in the manner
prescribed in the Articles.
Section 5. General Powers. The property and business of the
Corporation shall be controlled and managed by its Board of Directors which
may exercise all such powers of the Corporation and do all such lawful acts
and things as are not, by law, the Articles or by these Bylaws, directed or
required to be exercised and done by the shareholders or the Continuing
Directors.
Section 6. Place of Meetings. The Board may hold meetings, both
regular and special, either within or without the State of Missouri.
Section 7. Regular Annual Meeting. A regular annual meeting of the
Board, including newly elected Directors, shall be held immediately following
the annual meeting of the shareholders and shall be held at the principal
offices of the Corporation at 8000 West Florissant Avenue, St. Louis,
Missouri, unless another time or place shall be fixed therefor by the
Directors. No notice of such meeting shall be necessary to the Directors in
order, legally, to constitute the meeting, provided a majority of the whole
Board shall be present. In the event such annual meeting of the Board is not
held at the time and place specified herein, or at such other time and place
as may be fixed by the Directors, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
meetings of the Board, or as shall be specified in a written waiver signed by
all of the Directors.
Section 8. Additional Regular Meetings. Additional regular meetings
of the Board shall be held once each month on the first Tuesday thereof, or on
such other day thereof as the Board may, by resolution, prescribe, and at such
hour of such day as shall be stated in the notice of the meeting; provided
that the Chairman, in his or her discretion, may dispense with any one or more
of such meetings, by having notice of the intention so to do given, by letter
or telegram, to each Director not less than ten (10) days prior to the
regularly scheduled date of each meeting so to be dispensed with. If the
first Tuesday of any month shall be a legal holiday, the regular meeting for
such month shall be held on the Thursday following, and if the Monday
preceding the first Tuesday of any month shall be a legal holiday, the regular
meeting for such month shall be held on the Wednesday following, in each case
unless the Board shall otherwise prescribe by resolution. Notice of any
regular meeting shall be given to each Director at least forty-eight (48)
hours in advance thereof, either personally, by mail or by telegram.
Section 9. Special Meetings. Special meetings of the Board may be
called by the Chairman, any Vice Chairman, the President, any Vice President or
the Secretary, on notice given personally, by mail, by telephone, by telegram
or by facsimile to each Director given twenty-four (24) hours in advance of
such meeting. Special meetings shall be called by the Chairman, any Vice
Chairman, the President or Secretary in like manner and on like notice on the
written request of any two Directors.
Section 10. Place of Meetings. Special meetings and regular meetings
of the Board, other than the regular annual meeting, shall be held at such
place within the City or County of St. Louis, Missouri, as may be specified in
the notice of such meeting; provided that any meeting may be held elsewhere,
within or without the State of Missouri, pursuant to resolution of the Board
or pursuant to the call of the Chairman, any Vice Chairman or the President.
Members of the Board and its Committees may participate in meetings by means
of conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other, and such
participation shall constitute presence at the meeting.
Section 11. Notices. Notice of any meeting may be given by the
Chairman, any Vice Chairman, the President, any Vice President or the
Secretary and shall specify the time and place of the meeting.
Section 12. Quorum. At all meetings of the Board a majority of
Directors in office (the "whole Board") shall be necessary to constitute a
quorum for the transaction of business, and the acts of a majority of the
Directors present at a meeting at which a quorum is present shall be the acts
of the Board, except as otherwise may be specifically provided by law or by
the Articles. If a quorum shall not be present at any meeting of the Board,
the Directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present. So long as the whole Board shall consist of sixteen (16) or more
members, a Director who may be disqualified, by reason of personal interest,
from voting on any particular matter before a meeting of the Board may
nevertheless be counted for the purpose of constituting a quorum of the Board.
Section 13. Compensation of Directors. Directors, as such, shall
receive for their services such compensation as may be fixed, from time to
time, by resolution of the Board, together with a stipend for attendance, and
expenses of attendance, if any, for each meeting of the Board or meetings of
any committee on which the Directors may serve; provided that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 14. Executive Committee. The Board may, by resolution passed
by a majority of the whole Board, designate two or more of its number to
constitute an Executive Committee which, to the extent provided in such
resolution, shall have and exercise the authority of the Board in the
management and business of the Corporation.
Section 15. Finance Committee. The Board may, by resolution passed by
a majority of the whole Board, designate two or more of its number, one of
whom shall be the Committee Chairman, as the Finance Committee of the Board,
which to the extent provided in such resolution shall have and exercise the
authority of the Board in the management and business of the Corporation. The
Committee shall study and consider financial matters affecting the operations
of the Corporation, including its long range financial requirements, shall
advise the Board in respect thereto, and shall have such other duties as shall
be specified by resolution of the Board.
Section 16. Other Committees of the Board. The Board may, by
resolution passed by a majority of the whole Board, designate two or more of
its members to constitute such other Committees of the Board as the Board by
such resolution or resolutions may determine. To the extent provided in such
resolution or resolutions, such Committees shall have and exercise the
authority of the Board in the management and business of the Corporation.
Section 17. Committees-General Rules. Each Committee of the Board
shall keep regular minutes of its proceedings and report the same to the Board
when required. Vacancies in the membership of each Committee shall be filled
by the Board at any regular or special meeting of the Board. A Director who
may be disqualified, by reason of personal interest, from voting on any
particular matter before a meeting of a Committee may nevertheless be counted
for the purpose of constituting a quorum of the Committee. At all meetings of
a Committee, a majority of the Committee members then in office shall
constitute a quorum for the purpose of transacting business, and the acts of a
majority of the Committee members present at any meeting at which there is a
quorum shall be the acts of the Committee.
Section 18. Directors Emeritus and Advisory Directors. The Board may
from time to time create one or more positions of Director Emeritus and
Advisory Director, and may fill such position or positions for such term as
the Board deems proper. Each Director Emeritus and Advisory Director shall
have the privilege of attending meetings of the Board but shall do so solely
as an observer. Notice of such meetings to a Director Emeritus or Advisory
Director shall not be required under any applicable law, the Articles, or
these Bylaws. Each Director Emeritus and Advisory Director shall be entitled
to receive such compensation as may be fixed from time to time by the Board.
No Director Emeritus or Advisory Director shall be entitled to vote on any
business coming before the Board, nor shall they be counted as members of the
Board for the purpose of determining the number of Directors necessary to
constitute a quorum, for the purpose of determining whether a quorum is
present, or for any other purpose whatsoever. In the case of a Director
Emeritus or Advisory Director, the occurrence of any event which in the case
of a Director would create a vacancy on the Board, shall be deemed to create a
vacancy in such position; but the Board may declare the position terminated
until such time as the Board shall again deem it proper to create and to fill
the position.
ARTICLE IV
NOTICES
Section 1. Service of Notice. Notices to Directors and shareholders
shall be in writing and delivered personally or mailed or sent by telegram,
telex or facsimile transmission to the Directors or shareholders at their
addresses appearing on the books of the Corporation, except that notice to
Directors of a special meeting of the Board may be given orally. Notice by
mail shall be deemed to be given at the time when the same shall be mailed;
notice by telegram when such notice is delivered to the telegraph company;
notice by facsimile transmission when transmitted.
Section 2. Waiver of Notices. Whenever any notice is required to be
given under the provisions of law, the Articles, or of these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V
OFFICERS
Section 1. Titles. The Officers of the Corporation shall be chosen by
the Board of Directors and shall be a Chairman of the Board (herein the
"Chairman"), a President, at least one Vice President, a Secretary and a
Treasurer. The Board may also elect one or more Vice Chairmen of the Board
(herein "Vice Chairmen"), additional Vice Presidents, a Controller, one or
more Assistant Controllers, and such other officers as the Board may deem
appropriate. Any two of the aforesaid offices, except those of President and
Vice President or President and Secretary, may be held by the same person.
Vice Presidents of the Corporation may be given distinctive designations such
as Executive Vice President, Group Vice President, Senior Vice President and
the like.
Section 2. Election. The Board, at its annual meeting immediately
following each annual meeting of the shareholders, shall elect a Chairman and a
President, and may elect one or more Vice Chairmen, all of whom shall be
Directors or Advisory Directors; and the Board shall also at such annual
meeting elect one or more Vice Presidents, a Secretary and a Treasurer, who
may, but need not, be Directors or Advisory Directors. The Board may elect
such other officers and agents as it shall determine necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board. In connection
with the election of any officer of the Corporation, the Board may determine
that such officer, in addition to the title of the office to which he is
elected, shall have a further title such as Chief Administrative Officer,
Chief Operating Officer or such other title as the Board may designate, and
the Board may prescribe powers to be exercised and duties to be performed by
any such officer to whom any such additional title of office is given in
addition to those powers and duties provided for by these Bylaws for such
office.
Section 3. Term. The officers of the Corporation shall hold office
until their respective successors are elected and qualify. Any officer
elected or appointed by the Board may be removed by the Board at any time with
or without cause by the affirmative vote of a majority of the whole Board.
Any vacancy occurring in any such office may be filled only by the Board.
Section 4. Chairman of the Board. The Chairman shall be the Chief
Executive Officer of the Corporation. In addition to his or her duties as
Chairman and Chief Executive Officer, the Chairman shall be responsible for
the general and active management of the business and affairs of the
Corporation, subject only to the control of the Board; shall have full
authority in respect to the signing and execution of deeds, bonds, mortgages,
contracts and other instruments of the Corporation; and, in the absence or
disability of a Vice Chairman or the President, shall exercise all of the
powers and discharge all of the duties of such Vice Chairman or the President.
The Chairman shall also be, ex officio, a member of all standing Board
Committees, shall preside at all meetings of shareholders and Directors, and
shall perform such other duties as the Board may prescribe.
Section 5. President. The President shall be an executive Officer of
the Corporation, shall preside at all meetings of the shareholders and
Directors in the absence of the Chairman and the Senior Vice Chairman, and
shall perform such other duties as the Chairman or the Board shall prescribe.
The President shall have equal authority with the Chairman and the Vice
Chairmen, if any, to sign and execute deeds, bonds, mortgages, contracts and
other instruments of the Corporation.
Section 6. Vice Chairmen of the Board. Vice Chairmen, if any, may but
need not be executive officers of the Corporation. The Vice Chairmen shall
perform such other duties, and have such other powers as the Chairman or the
Board may, from time to time, prescribe. Each Vice Chairman shall have equal
authority with the Chairman and the President with respect to the signing and
execution of deeds, bonds, mortgages, contracts and other instruments of the
Corporation.
Section 7. Vice Presidents. The Vice President, or if there shall be
more than one, the Vice Presidents shall, in the absence or disability of the
Chairman, the President and all Vice Chairmen, perform the duties and exercise
the powers of the President. Each Vice President shall perform such other
duties and have such other powers as the Chairman and the Board may, from time
to time, prescribe.
Section 8. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board and all meetings of the shareholders and
record all the proceedings of the meetings of the Corporation and of the Board
in books to be kept for that purpose, shall perform like duties for Committees
of the Board when required, and shall perform such other duties as may be
prescribed by the Board, the Chairman, any Vice Chairman, or the President.
The Secretary shall keep in safe custody the seal of the Corporation and affix
the same to any instrument requiring it, and, when so affixed, it shall be
attested by his or her signature or by the signature of an Assistant
Secretary. The Assistant Secretary, or, if there be more than one, the
Assistant Secretaries, in the order determined by the Board, shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such
other powers as the Board may, from time to time, prescribe.
Section 9. Treasurer and Assistant Treasurers. The Treasurer shall
have charge of the funds of the Corporation; shall keep the same in
depositories designated by the Board or by officers of the Corporation
authorized by the Board to make such designation; shall cause said funds to
be disbursed upon checks, drafts, bills of exchange or orders for the payment
of money signed in such manner as the Board or authorized officers of the
Corporation may, from time to time, direct; shall perform such other duties
as directed by the Board, the Chairman or other senior officers; and, if
required by the Board, shall give bond for the faithful performance of his or
her duties in such form and amount as may be determined by the Board. The
Assistant Treasurer, or, if there be more than one, the Assistant Treasurers,
in the order determined by the Board, shall, in the absence or disability of
the Treasurer, perform the duties and exercise the powers of the Treasurer,
and shall have such other duties and powers as the Board may prescribe.
Section 10. Controller and Assistant Controllers. The Controller, if
one is elected by the Board, shall have charge of the accounting records of
the Corporation; shall keep full and accurate accounts of all receipts and
disbursements in books and records belonging to the Corporation; shall
maintain appropriate internal control and auditing of the Corporation; and
shall perform such other duties as directed by the Board, the Chairman or
other senior officers. The Assistant Controller or, if there be more than
one, the Assistant Controllers, in the order determined by the Board, shall,
in the absence or disability of the Controller, perform the duties and
exercise the powers of the Controller and shall have such other duties and
powers as the Board may prescribe.
Section 11. Appointed Officers. In addition to the corporate officers
elected by the Board as hereinabove in this Article V provided, the Chairman
may, from time to time, appoint one or more other persons as appointed
officers who shall not be deemed to be corporate officers, but may,
respectively, be designated with such titles as the Chairman may deem
appropriate. The Chairman may prescribe the powers to be exercised and the
duties to be performed by each such appointed officer, may designate the term
for which each such appointment is made, and may, from time to time, terminate
any or all of such appointments with or without cause. Such appointments and
termination of appointments shall be reported periodically to the Board.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Certificates. The certificates of shares of the
Corporation shall be numbered and registered in a share register as they are
issued. They shall exhibit the name of the registered holder and the number
and class of shares and the series, if any, represented thereby and the par
value of each share or a statement that such shares are without par value as
the case may be.
Section 2. Signatures on Certificates. Every share certificate shall
be signed by the Chairman of the Board, the President or a Vice President;
and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer; and shall be sealed with the Corporation's seal which
may be facsimile, engraved or printed.
Section 3. Transfer Agents and Registrars; Facsimile Signatures. The
Board may appoint one or more transfer agents or transfer clerks and one or
more registrars and may require all certificates for shares to bear the
signature or signatures of any of them. Where a certificate is signed (a) by
a transfer agent or an assistant or co-transfer agent, or (b) by a transfer
clerk or (c) by a registrar or co-registrar, the signature of any officer
thereon may be facsimile. Where a certificate is signed by a registrar or co-
registrar the certificate of any transfer agent or co-transfer agent thereon
may be by facsimile signature of the authorized signatory of such transfer
agent or co-transfer agent. In case any officer or officers of the
Corporation who have signed, or whose facsimile signature or signatures have
been used on, any such certificate or certificates shall cease to be such
officer or officers, whether because of death, resignation or otherwise,
before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may, nevertheless, be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation.
Section 4. Lost Certificates. In case of loss or destruction of any
certificate of stock or other security of the Corporation, another may be
issued in its place upon satisfactory proof of such loss or destruction and
upon the giving of a satisfactory bond of indemnity to the Corporation and to
the transfer agents and registrars, if any, of such stock or other security,
in such sum as the Board may provide. The Board may delegate to any officer
or officers of the Corporation the authorization of the issue of such new
certificate or certificates and the approval of the form and amount of such
indemnity bond and the surety thereon.
Section 5. Transfer of Shares. Upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation may issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 6. Registered Shareholders. The Corporation and its transfer
agents shall be entitled to treat the holder of record of any share or shares
as the holder in fact thereof and shall not be bound to recognize any
equitable or other claims to, or interest in, such shares on the part of any
other person and shall not be liable for any registration or transfer of
shares which are registered, or to be registered, in the name of a fiduciary
or the nominee of a fiduciary unless made with actual knowledge that a
fiduciary, or nominee of a fiduciary, is committing a breach of trust in
requesting such registration or transfer, or with knowledge of such facts that
its participation therein amounts to bad faith.
Section 7. Interested Shareholders. The provisions of these Bylaws,
including without limitation the provisions of this Article VI as they apply
to any Interested Person or shares beneficially owned by such Interested
Person, are subject to the provisions of Article 9 of the Articles.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers or Employees. The
Corporation shall indemnify any person who was or is a party (other than a
party plaintiff suing on his own behalf or in the right of the Corporation),
or who is threatened to be made such a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including, but not limited to, an action by or in the right
of the Corporation) by reason of the fact that he or she is or was a Director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding; provided, that no such person shall be indemnified
(a) except to the extent that the aggregate of losses to be indemnified under
the provisions of this Article VII exceeds the amount of such losses for which
the Director, officer or employee is insured pursuant to any directors and
officers liability insurance policy maintained by the Corporation; (b) in
respect to remuneration paid to such person if it shall be finally adjudged
that such remuneration was in violation of law; (c) on account of any suit in
which judgment is rendered against such person for an accounting of profits
made from the purchase or sale by such person of securities of the Corporation
pursuant to the provisions of Section 16(b) of the 1934 Act and amendments
thereto or similar provisions of any federal, state or local statutory law;
(d) on account of such person's conduct which is finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct; and (e)
if it shall be finally adjudged that such indemnification is not lawful.
Section 2. Actions Involving Agents. The Corporation may indemnify
any person who was or is a party (other than a party plaintiff suing on his
own behalf or in the right of the Corporation), or who is threatened to be
made such a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(including, but not limited to, an action by or in the right of the
Corporation) by reason of the fact that he or she is an agent of the
Corporation, or is or was serving at the request of the Corporation as an
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, all to the full extent
permitted by law.
Section 3. Determination of Right to Indemnification in Certain
Instances.
(a) Any indemnification under Section 1 of this Article VII
(unless ordered by a court) shall be made by the Corporation unless a
determination is reasonably and promptly made that indemnification of the
director, officer or employee is not proper in the circumstances because he or
she has not satisfied the conditions set forth in such Section 1. Such
determination shall be made (1) by the Board by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested Directors so directs, by independent legal counsel
in a written opinion, or (3) by the shareholders; provided, that no such
determination shall preclude an action brought in an appropriate court to
challenge such determination.
(b) Any indemnification under Section 2 of this Article
VII (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
the agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in such Section 2. Such determination
shall be made (1) by the Board by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested Directors so directs, by independent legal counsel in a written
opinion, or (3) by the shareholders.
Section 4. Advance Payment of Expenses. Expenses incurred by
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amounts unless it shall ultimately be
determined that he or she is entitled to be indemnified by the Corporation as
authorized in this Article.
Section 5. Successful Defense. Notwithstanding any other provision of
this Article VII, to the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise (including the
dismissal of an action without prejudice or the settlement of an action
without admission of liability) in defense of any action, suit or proceeding
referred to in Sections 1 or 2 of this Article VII, or in defense of any
claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred in
connection therewith.
Section 6. Not Exclusive Right. The indemnification provided by this
Article VII shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any statute, bylaw, agreement,
vote of shareholders or disinterested directors or otherwise, both as to
action in an official capacity and as to action in another capacity while
holding such office. Without limiting the generality of the foregoing, in
the event of conflict between the provisions of this Article VII and the
provisions of any agreement adopted by the shareholders between the
Corporation on the one hand, and any director, officer, employee or agent of
the Corporation on the other, providing for indemnification, the terms of such
agreement shall prevail. Any indemnification, whether required under this
Bylaw or permitted by statute or otherwise, shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such person.
Section 7. Insurance. The Board shall have the power to cause the
Corporation to purchase and maintain insurance on behalf of any person who is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
Section 8. Subsidiaries of Corporation. For the purposes of this
Article VII, (a) any officer, Director, or employee of the Corporation who
shall serve as an officer, director, employee or agent of any other
corporation, joint venture, trust or other enterprise of which the
Corporation, directly or indirectly, is or was a stockholder or creditor, or
in which the Corporation is or was in any way interested, or (b) any officer,
director, or employee of any subsidiary corporation, venture, trust or other
enterprise wholly owned by the Corporation, shall be deemed to be serving as
such director, officer, employee or agent at the request of the Corporation,
unless the Board shall determine otherwise. In all instances where any person
shall serve as a director, officer, employee or agent of another corporation,
joint venture, trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise interested, if it
is not otherwise established that such person is or was serving as such
director, officer, employee or agent at the request of the Corporation, the
Board may determine whether such service is or was at the request of the
Corporation, and it shall not be necessary to show any actual or prior request
for such service.
Note: The indemnification provided in the foregoing provisions of Article VII
(and related matters) was approved by the stockholders of the Corporation on
February 10, 1987.
Section 9. Spousal Indemnification. The spouse of a person entitled
to indemnification under Section 1 hereof or who is granted indemnification
under Section 2 hereof, shall be entitled to be so indemnified; provided, that
the spouse was or is a party (other than a party plaintiff suing on his or her
own behalf or in the right of the Corporation), or was or is threatened to be
made a party, to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative
(including, but not limited to, an action by or in the right of the
Corporation), solely by reason of the spousal relationship to the person
entitled to indemnification under Section 1 hereof or who is granted
indemnification under Section 2 hereof.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the shares of the Corporation,
subject to the provisions of the Articles, if any, may be declared by the
Board at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock or other
securities of the Corporation, in rights or warrants relating thereto, or in
any other form authorized by law.
Section 2. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board, or officers authorized by the Board, may, from time
to time, designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall
commence on October 1, and close on September 30.
Section 4. Seal. The Corporation's seal shall have inscribed thereon
the name of the Corporation, the numeral "1890" being the year of the
incorporation of the Corporation, and the words "Corporate Seal, Missouri".
The seal may be used by causing it, or a facsimile thereof, to be impressed,
affixed, reproduced or otherwise.
Section 5. Closing of Transfer Books and Fixing of Record Dates. The
Board shall have power to close the share transfer books of the Corporation
for a period not exceeding seventy (70) days preceding the date of any meeting
of shareholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change, conversion or exchange
of shares shall go into effect; provided, however, that, in lieu of closing
the share transfer books as aforesaid, the Board may fix in advance a date,
not exceeding seventy (70) days preceding the date of any meeting of
shareholders, or the date for the payment any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise rights in respect of any such
change, conversion or exchange of shares; and, in each such case, such
shareholders and only such shareholders as shall be shareholders of record on
the date of closing the share transfer books, or on the record date so fixed,
shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares after such date of closing of the
share transfer books or such record date fixed as aforesaid.
ARTICLE IX
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed solely by
a majority vote of the members of the whole Board at any regular or special
meeting thereof duly called and convened.
Exhibit 4(b)
Emerson Electric Co.
and
The Bank of New York, Trustee
Indenture
Dated as of December 10, 1998
CROSS REFERENCE SHEET*
Between
Provisions of Trust Indenture Act of 1939, as amended, and the Indenture dated as of December 10, 1998 between Emerson Electric Co., Issuer, and The Bank of New York, Trustee:
Section of the Act Section of Indenture 310(a)(1) and (2) ........................... 6.9 310(a)(3) and (4) ........................... Inapplicable 310(b) ...................................... 6.8 and 6.10(a), (b) and (d) 310(c) ...................................... Inapplicable 311(a) ...................................... 6.13 311(b) ...................................... 6.13 311(c) ...................................... Inapplicable 312(a) ...................................... 4.1 and 4.2(a) 312(b) ...................................... 4.2(a) and (b) 312(c) ...................................... 4.2(c) 313(a) ...................................... 4.4(a) 313(b)(1) ................................... Inapplicable 313(b)(2) ................................... 4.4 313(c) ...................................... 4.4 313(d) ...................................... 4.4 314(a) ...................................... 4.3 314(b) ...................................... Inapplicable 314(c)(1) and (2) ........................... 13.5 314(c)(3) ................................... Inapplicable 314(d) ...................................... Inapplicable 314(e) ...................................... 13.5 314(f) ...................................... Inapplicable 315(a), (c) and (d) ......................... 6.1 315(b) ...................................... 5.11 315(e) ...................................... 5.12 316(a)(1) ................................... 5.9 316(a)(2) ................................... Not required 316(a) (last sentence) ...................... 7.4 316(b) ...................................... 5.7 316(c) ...................................... 7.1 317(a) ...................................... 5.2 317(b) ...................................... 3.4(a) and (b) 318(a) ...................................... 13.7 --------------------- |
*This Cross Reference Sheet is not part of the Indenture.
TABLE OF CONTENTS
Page
PARTIES........................................................................1
RECITALS.......................................................................1
Authorization of Indenture.....................................................1
Compliance with Legal Requirements.............................................1
Purpose of and Consideration for Indenture.....................................1
|
ARTICLE ONE DEFINITIONS.......................................................1
SECTION 1.1 Certain Terms Defined.....................................1
Board of Directors...........................................1
Business Day.................................................1
Commission...................................................1
Consolidated Net Tangible Assets.............................2
Corporate Trust Office.......................................2
Depositary...................................................2
Event of Default.............................................2
Exchange Rate Agent..........................................2
Global Security..............................................2
Holder.......................................................2
Indenture....................................................2
Interest.....................................................2
Issuer.......................................................2
Market Exchange Rate.........................................2
Officers' Certificate........................................3
Opinion of Counsel...........................................3
Original issue date..........................................3
Original Issue Discount Security.............................3
Outstanding..................................................3
Person.......................................................4
principal....................................................4
Principal Property...........................................4
record date..................................................4
Responsible Officer..........................................4
Restricted Subsidiary........................................4
Security.....................................................4
Subsidiary...................................................4
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Trustee......................................................5
Trust Indenture Act..........................................5
U.S. Government Obligations..................................5
vice president...............................................5
Yield to Maturity............................................5
ARTICLE TWO SECURITIES.........................................................5
SECTION 2.1 Forms Generally...........................................5
SECTION 2.2 Form of Trustee's Certificate of Authentication...........6
SECTION 2.3 Amount Unlimited; Issuable in Series......................6
SECTION 2.4 Authentication and Delivery of Securities.................8
SECTION 2.5 Execution of Securities...................................9
SECTION 2.6 Certificate of Authentication.............................9
SECTION 2.7 Denomination and Date of Securities; Payments
of Interest..............................................10
SECTION 2.8 Registration, Transfer and Exchange......................10
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities...............................................12
SECTION 2.10 Cancellation of Securities; Destruction Thereof.........13
SECTION 2.11 Temporary Securities....................................13
SECTION 2.12 CUSIP Numbers...........................................14
ARTICLE THREE COVENANTS OF THE ISSUER.........................................14
SECTION 3.1 Payment of Principal and Interest........................14
SECTION 3.2 Offices for Payments, etc................................14
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.......14
SECTION 3.4 Paying Agents............................................14
SECTION 3.5 Written Statement to Trustee.............................15
SECTION 3.6 Limitation on Liens......................................15
SECTION 3.7 Limitation on Sale and Lease-Back........................16
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ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE......................................................17
SECTION 4.1 Issuer to Furnish Trustee Information as to Names
and Addresses of Securityholders.........................17
SECTION 4.2 Preservation and Disclosure of Securityholders' Lists....17
SECTION 4.3 Reports by the Issuer....................................18
SECTION 4.4 Reports by the Trustee...................................18
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ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT....................................................18
SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default........................................18
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee
May Prove Debt...........................................20
SECTION 5.3 Application of Proceeds..................................22
SECTION 5.4 Suits for Enforcement....................................23
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings......23
SECTION 5.6 Limitations on Suits by Securityholders..................23
SECTION 5.7 Unconditional Right of Securityholders to Institute
Certain Suits............................................24
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default....................................24
SECTION 5.9 Control by Securityholders...............................24
SECTION 5.10 Waiver of Past Defaults.................................25
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SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances................................25
SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs............................................26
ARTICLE SIX CONCERNING THE TRUSTEE............................................26
SECTION 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default.........................26
SECTION 6.2 Certain Rights of the Trustee............................27
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof.........28
SECTION 6.4 Trustee and Agents May Hold Securities;
Collections, etc.........................................28
SECTION 6.5 Moneys Held by Trustee...................................28
SECTION 6.6 Compensation and Indemnification of Trustee and
Its Prior Claim..........................................28
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, etc.........................................29
SECTION 6.8 Conflicting Interests....................................29
SECTION 6.9 Persons Eligible for Appointment as Trustee..............29
SECTION 6.10 Resignation and Removal; Appointment of
Successor Trustee.......................................29
SECTION 6.11 Acceptance of Appointment by Successor Trustee..........30
SECTION 6.12 Merger, Conversion, Consolidation or Succession
to Business of Trustee..................................31
SECTION 6.13 Preferential Collection of Claims Against the Issuer....32
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS..................................32
SECTION 7.1 Evidence of Action Taken by Securityholders..............32
SECTION 7.2 Proof of Execution of Instruments and of Holding
of Securities............................................33
SECTION 7.3 Holders to be Treated as Owners..........................33
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding........33
SECTION 7.5 Right of Revocation of Action Taken......................33
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ARTICLE EIGHT SUPPLEMENTAL INDENTURES.........................................34
SECTION 8.1 Supplemental Indentures Without Consent
of Securityholders......................................34
SECTION 8.2 Supplemental Indentures With Consent
of Securityholders......................................35
SECTION 8.3 Effect of Supplemental Indenture........................36
SECTION 8.4 Documents to Be Given to Trustee........................36
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SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.................................36
ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE........................36
SECTION 9.1 Issuer May Consolidate, etc., on Certain Terms..........36
SECTION 9.2 Successor Corporation Substituted.......................37
SECTION 9.3 Opinion of Counsel to Trustee...........................37
ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS.........37
SECTION 10.1 Satisfaction and Discharge of Indenture................37
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SECTION 10.2 Application by Trustee of Funds Deposited for
Payment of Securities..................................38
SECTION 10.3 Repayment of Moneys Held by Paying Agent...............38
SECTION 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Three Years........................39
ARTICLE ELEVEN REDEMPTION OF SECURITIES AND SINKING FUNDS.....................39
SECTION 11.1 Applicability of Article...............................39
SECTION 11.2 Notice of Redemption; Partial Redemptions..............39
SECTION 11.3 Payment of Securities Called for Redemption............40
SECTION 11.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption...........................40
SECTION 11.5 Mandatory and Optional Sinking Funds...................41
ARTICLE TWELVE DEFEASANCE.....................................................43
SECTION 12.1 Applicability of Article: Issuer's Option to
Effect Defeasance.....................................43
SECTION 12.2 Defeasance and Discharge...............................43
SECTION 12.3 Covenant Defeasance....................................43
SECTION 12.4 Conditions to Defeasance...............................44
ARTICLE THIRTEEN MISCELLANEOUS PROVISIONS.....................................45
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SECTION 13.1 Incorporators, Stockholders, Officers and Directors
of Issuer Exempt from Individual Liability.............45
SECTION 13.2 Provisions of Indenture for the Sole Benefit of
Parties and Securityholders............................45
SECTION 13.3 Successors and Assigns of Issuer Bound by Indenture....45
SECTION 13.4 Notices and Demands on Issuer, Trustee and
Securityholders........................................45
SECTION 13.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein.....................46
SECTION 13.6 Payments Due on Saturdays, Sundays and Holidays........47
SECTION 13.7 Conflict of Any Provision of Indenture with
Trust Indenture Act....................................47
SECTION 13.8 New York Law to Govern.................................47
SECTION 13.9 Counterparts...........................................47
SECTION 13.10 Effect of Headings....................................47
SECTION 13.11 Securities in a Foreign Currency......................47
SECTION 13.12 Judgment Currency.....................................48
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TESTIMONIUM...................................................................48
SIGNATURES....................................................................48
THIS INDENTURE, dated as of December 10, 1998 between EMERSON ELECTRIC CO., a Missouri corporation (the "Issuer"), and THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debentures, notes and other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture and to provide, among other things, for the authentication, delivery and administration thereof, the Issuer has duly authorized the execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the holders thereof, the receipt and sufficiency of which is hereby acknowledged, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act, including terms defined therein by reference to the Securities Act of 1933 (except as herein otherwise expressly provided or unless the context otherwise clearly requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.
"Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act hereunder.
"Business Day" means, with respect to any Security, a day that in the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, is not a day on which banking institutions are authorized by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of assets after deducting therefrom (a) all current liabilities (excluding liabilities which could be classified as long-term debt in conformity with generally accepted accounting principles) and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and deferred charges (other than prepaid items such as insurance, taxes, interest, commissions, rents and similar items and tangible assets being amortized), all as set forth on the most recent quarterly consolidated balance sheet of the Issuer and its consolidated Subsidiaries and computed in accordance with generally accepted accounting principles.
"Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be administered, which office is, at the date as of which this Indenture is dated, located at 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust Administration.
"Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the Person designated as Depositary by the Issuer pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions hereof, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Securities of that series.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Exchange Rate Agent" means the Trustee or other agent designated to make calculations of the Market Exchange Rate in respect of the Securities of any series, as specified pursuant to Section 2.3.
"Global Security" means a Security evidencing all or a part of a series of Securities, issued to the Depositary for such series in accordance with Section 2.4, and bearing the legend prescribed in Section 2.4.
"Holder", "holder of securities", "Securityholder" or other similar terms mean the registered holder of any Security.
"Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder.
"Interest" means, when used with respect to non-interest bearing Securities, interest payable after maturity.
"Issuer" means (except as otherwise provided in Article Six) Emerson Electric Co., a Missouri corporation, and, subject to Article Nine, its successors and assigns.
"Market Exchange Rate" means, for any amount in respect of Securities of any series which is expressed in a currency other than U.S. dollars (unless otherwise provided in respect of such series pursuant to Section 2.2), the amount in U.S. dollars calculated by the Exchange Rate Agent on the basis of the highest bid quotation in The City of New York received by the Exchange Rate
Agent as of 11:00 a.m., New York time, on the Business Day as of which the Market Exchange Rate is to be determined, from three recognized dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of such other currency for settlement on such date in the aggregate amount of such other currency in respect of which the Market Exchange Rate is being determined, and at which the applicable dealer commits to execute an exchange contract.
"Officers' Certificate" means a certificate signed by the chairman of the Board of Directors or any vice chairman of the Board of Directors or the president or any vice president and by the treasurer or the secretary or any assistant secretary of the Issuer and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 13.5.
"Opinion of Counsel" means an opinion in writing signed by legal counsel
who may be an employee of or counsel to the Issuer and who shall be satisfactory
to the Trustee. Each such opinion shall include the statements provided for in
Section 13.5, if and to the extent required hereby.
"Original issue date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1.
"Outstanding" (except as otherwise provided in Section 6.8), when used with reference to Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the holders of such Securities (if the Issuer shall act as its own paying agent); provided that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice;
(c) Securities in substitution for which other Securities shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a Person in whose hands such Security is a legal, valid and binding obligation of the Issuer); and
(d) Except to the extent provided in Sections 12.2 and 12.3, Securities with respect to which the Issuer has effected defeasance and/or covenant defeasance as provided in Article Twelve.
In determining whether the holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1, (ii) the principal amount of any Securities denominated in any currency other than U.S. dollars shall be deemed to be the U.S. dollar equivalent amount calculated at the Market Exchange Rate at the date of determination and (iii) the principal amount of any Security the principal of which is determined with reference to an index based on a currency other than that in which the Securities of the series are denominated that shall be deemed to be the principal face amount of such indexed Security as of its original issuance date.
"Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
"principal" whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include "and premium, if any".
"Principal Property" shall mean any manufacturing plant or manufacturing facility owned by the Issuer or any Restricted Subsidiary which is located within the continental United States and, in the opinion of the Board of Directors, is of material importance to the total business conducted by the Issuer and the Restricted Subsidiaries taken as a whole.
"record date" has the meaning given in Section 2.7.
"Responsible Officer" shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
"Restricted Subsidiary" shall mean any Subsidiary (i) substantially all the
property of which is located within the continental United States of America and
(ii) which owns any Principal Property; provided, however, that the term
"Restricted Subsidiary" shall not include any Subsidiary which is principally
engaged in leasing or in financing installment receivables or which is
principally engaged in financing the Issuer's operations outside the continental
United States of America.
"Security" or "Securities" (except as otherwise provided in Section 6.8) has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture.
"Subsidiary" shall mean any corporation of which stock having by the terms thereof ordinary voting power to elect at least a majority of the board of directors of said corporation (irrespective of whether at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by the Issuer or by the Issuer and one or more Subsidiaries or by one or more Subsidiaries.
"Trustee" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article Six, shall also include any successor trustee.
"Trust Indenture Act" (except as otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as amended by the Trust Indenture Reform Act of 1990 and in force at the date as of which this Indenture was originally executed.
"U.S. Government Obligations" means securities that are (x) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt.
"vice president" when used with respect to the Issuer or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title of "vice president".
"Yield to Maturity" means the yield to maturity on a series of Securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice.
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series shall be substantially in such form (including global form) (not inconsistent with this Indenture) as shall be established by or pursuant to a resolution of the Board of Directors or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities, as evidenced by their execution of the Securities.
If any Security of a series is issuable in the form of a Global Security or Securities, each such Global Security may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount of Outstanding Securities represented thereby shall be made by the Trustee and in such manner as shall be
specified on such Global Security. Any instructions by the Issuer with respect to a Global Security, after its initial issuance, shall be in writing but need not comply with Section 13.5.
The definitive Securities shall be printed, lithographed or produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
SECTION 2.2 Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication on all Securities shall be in substantially the following form:
This is one of the Securities of the Series described in the within- mentioned Indenture of Trust.
Dated: The Bank of New York
as Trustee
By:
-----------------------------
Authorized Signatory
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SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate principal amount of securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board of Directors and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 5.3, 8.5 or 12.3);
(3) if other than U.S. dollars, the currency, currencies or currency units in which the principal of, premium, if any, and interest on the Securities of the series is payable, and the Person who shall serve as Exchange Rate Agent for purposes of making any related calculations of the Market Exchange Rate;
(4) the date or dates on which the principal of the Securities of the series is payable, or the method by which such date or dates will be determined or extended;
(5) the rate or rates at which the Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue, or the method by which such date or dates shall be determined, the interest payment dates on which such interest shall be payable and the record dates for the determination of Holders to whom interest is payable;
(6) the place or places where the principal and any interest on Securities of the series shall be payable (if other than as provided in Section 3.2);
(7) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Issuer, pursuant to any sinking fund or otherwise;
(8) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any multiple thereof, the denominations in which Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 5.1 or provable in bankruptcy pursuant to Section 5.2;
(11) any limitations on the applicability of Section 12.2 or 12.3 to the Securities of the series;
(12) any authenticating or paying agents, transfer agents or registrars, if other than the Trustee, or any other agents with respect to the Securities of such series;
(13) the coin or currency in which the Securities of that series are denominated and, if other than the coin or currency in which the Securities of that series are denominated, the coin or currency in which payment of the principal of, premium, if any, and/or interest, if any, on the Securities of such series shall be payable;
(14) if the amount of payments of principal of, premium, if any, and interest, if any, on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined;
(15) whether the Securities of such series shall be issued in whole or in part in the form of one or more Global Securities and, in such case, the Depositary for such Global Security or Securities and whether beneficial owners of interests in any such Global Securities may exchange such interests for other Securities of such series in the manner provided in Section 2.8, and the manner and the circumstances under which and the place or places where any such exchanges may occur if other than in the manner provided in Section 2.8, and any other terms of the series relating to the global nature of the Securities of such series and the exchange, registration or transfer thereof and the payment of any principal thereof, or interest or premium, if any, thereon; and
(16) any Events of Default with respect to the Securities of such Series which may be in addition to those provided herein, and any covenants or obligations of the Issuer to the Holders of such Securities in addition to those set forth herein;
(17) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board of Directors or in any such indenture supplemental hereto. Except as provided in such resolution, the Securities of any one series need not be issued at the same time and a series may be reopened without the consent of the Holders, for issuances of additional Securities of such series.
SECTION 2.4 Authentication and Delivery of Securities. At any time and from
time to time after the execution and delivery of this Indenture, the Issuer may
deliver Securities of any series executed by the Issuer to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver such
Securities to or upon the written order of the Issuer, signed by both (a) the
chairman of its Board of Directors, or any vice chairman of its Board of
Directors, or its president or any vice president and (b) by its treasurer or
any assistant treasurer, without any further action by the Issuer. If any
Security of a series shall be represented by a Global Security, then, for
purposes of this Section and Section 2.11, the notation of the record owner's
interest therein upon original issuance of such Security shall be deemed to be
delivery in connection with the original issuance of each beneficial owner's
interest in such Global Security. In authenticating such Securities and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon:
(a) a certified copy of any resolution or resolutions of the Board of Directors authorizing the action taken pursuant to the resolution or resolutions delivered under clause (2) below;
(b) a copy of any resolution or resolutions of the Board of Directors relating to such series, in each case certified by the secretary or an assistant secretary of the Issuer;
(c) an executed supplemental indenture, if any;
(d) an Officers' Certificate setting forth the form and terms of the Securities as required pursuant to Section 2.1 and 2.3, respectively and prepared in accordance with Section 13.5; and
(e) an Opinion of Counsel, prepared in accordance with Section 13.5, which shall state
(i) if the form or forms of such Securities have been established by or pursuant to a resolution or resolutions of the Board of Directors or by a supplemental indenture as permitted by Section 2.1, that such form or forms have been established in conformity with the provisions of this Indenture;
(ii) if the terms of such Securities have been established by or pursuant to a resolution or resolutions of the Board of Directors or by a supplemental indenture as permitted by Section 2.3, that such terms have been established in conformity with the provisions of this Indenture;
(iii) that such Securities, when authenticated and delivered by the Trustee and issued by the Issuer in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and
(iv) such other matters as the Trustee may reasonably request.
If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section and the authentication order of the Issuer with respect to such series, authenticate and deliver one or more Global Securities in temporary or permanent form that shall (i) represent and be denominated in an
aggregate amount equal to the aggregate principal amount of the Outstanding
Securities of such series to be represented by one or more Global Securities,
(ii) be registered in the name of the Depositary for such Global Security or
Securities or the nominee of such Depositary, (iii) be delivered by the Trustee
to such Depositary or pursuant to such Depositary's instruction; and (iv) bear a
legend substantially to the following effect or in other form satisfactory to
the Depositary: "Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any nominee to a successor Depositary or a nominee of any
successor Depositary."
Each Depositary designated pursuant to Section 2.3 for a Global Security in registered form must, at the time of its designation and at all times while it serves as a Depositary, be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and shall be eligible to serve as such under any other applicable statute or regulation.
The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee's rights, duties or immunities under the Securities or this Indenture.
SECTION 2.5 Execution of Securities. The Securities shall be signed on behalf of the Issuer by both (a) the chairman of its Board of Directors or any vice chairman of its Board of Directors or its president or any vice president and (b) by its treasurer or any assistant treasurer or its secretary or any assistant secretary, under its corporate seal which may, but need not, be attested. Such signatures may be manual or facsimile. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the Securities shall cease to be such officer before the Security so signed shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security had not ceased to be such officer of the Issuer; and any Security may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer.
SECTION 2.6 Certificate of Authentication. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized signatories, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of Interest. The Securities shall be issuable as registered securities without coupons and in denominations as shall be specified as contemplated by Section 2.3. In the absence of any such specification with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any multiple thereof. The Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof.
Each Security shall be dated the date of its authentication, shall bear interest, if any, from the date and shall be payable on the dates, in each case, which shall be specified as contemplated by Section 2.3.
The Person in whose name any Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the Persons in whose names Outstanding Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the holders of Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) shall mean the date specified as such in the terms of the Securities of any particular series, or, if no such date is so specified, if such interest payment date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8 Registration, Transfer and Exchange. With respect to each series of Securities, the Issuer will cause to be kept at each office or agency to be maintained for the purpose as provided in Section 3.2 a register or registers in which, subject to such reasonable regulations as it may prescribe, it will provide for the registration and transfer thereof as in this Article provided. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. In the event that such registers are not maintained by the Trustee, at all reasonable times such register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Security or Securities of the same series in authorized denominations for a like aggregate principal amount.
Notwithstanding any other provision of this Section, unless and until it is exchanged in whole or in part for Securities in definitive form, a Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary.
Any Security or Securities of any series (other than a Global Security,
except as set forth herein) may be exchanged for a Security or Securities of the
same series in other authorized denominations, in an equal aggregate principal
amount. Securities of any series to be exchanged shall be surrendered at any
office or agency to be maintained by the Issuer for the purpose as provided in
Section 3.2, and the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor the Security or Securities of the same series which
the Securityholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
If at any time the Depositary for the Securities of a series notifies the Issuer that it is unwilling or unable to continue as Depositary for the Securities of such series or if at any time the Depositary for the Securities of such series shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary with respect to the Securities of such series. If a successor Depositary for the Securities of such series is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3(15) shall no longer be effective with respect to the Securities of such series and the Issuer will execute, and the Trustee, upon receipt of an order of the Issuer for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form in the aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In the event of such a determination by the Issuer or if an Event of Default has occurred and is continuing and the beneficial owners representing a majority in principal amount of the applicable series of Securities represented by one or more Global Securities advise the Depositary to cease acting as depositary for such Global Security or Securities, the Issuer will execute, and the Trustee, upon receipt of an order of the Issuer for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to a series of Securities, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange in whole or in part for the Securities of such series in definitive form on such terms as are acceptable to Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and deliver, without service charge:
(1) to each Person specified by such Depositary a new Security or Securities of the same series, of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and
(2) to such Depositary a new Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to Holders thereof.
Upon the exchange of the Global Security for Securities in definitive form, such Global Security shall be cancelled by the Trustee. Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Persons in whose names such Securities are so registered.
All Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Security registrar duly executed by, the holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction.
The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the date of selection of Securities of such series to be redeemed, or (b) any Securities selected, called or being called for redemption except, in the case of any Security where public notice has been given that such Security is to be redeemed in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In case any temporary or definitive Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substitute Security shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Security), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities of such series duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof. Unless otherwise provided with respect to any series of Securities, all Securities surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall cancel Securities held by it and deliver a certificate of cancellation to the Issuer at the Issuer's written direction. If the Issuer shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation of a permanent Global Security or Securities or definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series or one or more temporary Global Securities (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as registered Securities without coupons, of any authorized denomination, and substantially in the form of the definitive Securities or permanent Global Security, as the case may be, of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the issuer shall execute and shall furnish a permanent Global Security or Securities or definitive Securities of such series and thereupon temporary Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series a like aggregate principal amount of permanent global securities or definitive Securities of the same series of authorized denominations. Until so
exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as permanent global securities or definitive Securities of such series.
SECTION 2.12 CUSIP Numbers. The Issuer in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Issuer will promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest. The Issuer covenants and
agrees for the benefit of the Holders of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of, and interest on,
each of the Securities of such series at the office or agency of the Issuer
maintained for such purpose pursuant to Section 3.2 or at such other place or
places, at the respective times and in the manner provided in such Securities.
Unless otherwise specified with respect to the Securities of any series in
accordance with Section 2.3, at the option of the Issuer, each installment on
any such series may be paid (i) by mailing a check for such interest, payable to
or upon the written order of the Person entitled thereto pursuant to Section
2.7, to the address of such Person as it appears on the Security register or
(ii) by wire transfer to an account maintained by the payee and located inside
the United States.
SECTION 3.2 Offices for Payments, etc. So long as any of the Securities remain outstanding, the Issuer will maintain the following for each series: an office or agency (a) where the Securities may be presented for payment, (b) where the Securities may be presented for registration of transfer and for exchange as in this Indenture provided and (c) where notices and demands to or upon the Issuer in respect of the Securities or of this Indenture may be served. The Issuer will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Unless otherwise specified in accordance with Section 2.3, the Issuer hereby appoints the Trustee as paying agent and registrar and designates the Corporate Trust Office of The Bank of New York, 101 Barclay Street, New York, New York 10286, as the office to be maintained by it for each such purpose. In case the Issuer shall fail to so designate or maintain any such office or agency or shall fail to give such notice of the location or any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder.
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a paying agent other than the Trustee with respect to the Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the holders of the Securities of such series or of the Trustee, and
(b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable.
The Issuer will, on or prior to each due date of the principal of or interest on the Securities of such series, deposit with the paying agent a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the holders of the Securities of such series a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of such action.
Anything in this Section to the contrary notwithstanding, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4.
SECTION 3.5 Written Statement to Trustee. The Issuer will deliver to the Trustee on or before May 1 in each year, a brief certificate from its principal executive, accounting or financial officer (which need not comply with Section 13.5), as to his or her knowledge of the Issuer's compliance with all conditions and covenants in this Indenture (without regard to any period of grace or requirement of notice provided under this Indenture).
SECTION 3.6 Limitation on Liens. (a) So long as the Securities of any series are outstanding, the Issuer will not, nor will it permit any Restricted Subsidiary to, issue, assume or guarantee any debt for money borrowed (hereinafter in this Article Three referred to as "Debt"), secured by a mortgage, security interest, pledge, lien or other encumbrance (mortgages, security interests, pledges, liens and other encumbrances being hereinafter called "mortgage" or "mortgages") upon any Principal Property of the Issuer or any Restricted Subsidiary or upon any shares of stock or indebtedness of any Restricted Subsidiary (whether such Principal Property, shares of stock or indebtedness are now owned or hereafter acquired) without in any such case effectively providing concurrently with the issuance, assumption or guaranty of any such Debt that the Securities (together with, if the Issuer shall so determine, any other indebtedness of or guaranteed by the Issuer or such Restricted Subsidiary ranking equally with the Securities and then existing or thereafter created) shall be secured equally and ratably with such Debt; provided, however, that the foregoing restrictions shall not apply to Debt secured by
(i) mortgages on property, shares of stock or indebtedness of any corporation existing at the time such corporation becomes a Restricted Subsidiary;
(ii) mortgages on property existing at the time of acquisition of such property by the Issuer or a Restricted Subsidiary, or mortgages to secure the payment of all or any part of the purchase price of such property upon the acquisition of such property by the Issuer or a Restricted Subsidiary or to secure any Debt incurred prior to, at the time of, or within 120 days after, the acquisition of such property for the purpose of financing all or any part of the purchase price thereof, or mortgages to secure any Debt incurred for the purpose
of financing all or any part of the cost to the Issuer or a Restricted Subsidiary of improvements to such acquired property;
(iii) mortgages securing Debt of a Restricted Subsidiary owing to the Issuer or to another Restricted Subsidiary;
(iv) mortgages existing at the date as of which this Indenture is executed;
(v) mortgages on property of a corporation existing at the time such corporation is merged into or consolidated with the Issuer or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation as an entirety or substantially as an entirety to the Issuer or a Restricted Subsidiary;
(vi) mortgages on property owned by the Issuer or a Restricted Subsidiary in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of construction of the property subject to such mortgages; or
(vii) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any mortgage referred to in the foregoing clauses (i) to (vi), inclusive; provided, however, that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the mortgage so extended, renewed or replaced (plus improvements on such property).
(b) Notwithstanding the foregoing provisions of this Section 3.6 the Issuer and any one or more Restricted Subsidiaries may issue, assume or guarantee Debt secured by a mortgage which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with all other Debt of the Issuer and its Restricted Subsidiaries which (if originally issued, assumed or guaranteed at such time) would otherwise be subject to the foregoing restrictions (not including Debt permitted to be secured under clauses (i) through (vii) above), does not at the time exceed 10% of Consolidated Net Tangible Assets.
SECTION 3.7 Limitation on Sale and Lease-Back. So long as the Securities of any series are outstanding, the Issuer will not, nor will it permit any Restricted Subsidiary to, enter into any arrangement with any Person providing for the leasing by the Issuer or any Restricted Subsidiary of any Principal Property owned by the Issuer or any Restricted Subsidiary whether such Principal Property is now owned or hereafter acquired (except for temporary leases for a term of not more than three years and except for leases between the Issuer and a Restricted Subsidiary or between Restricted Subsidiaries), which property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to such Person, unless
(a) the Issuer or such Restricted Subsidiary would be entitled, pursuant to the provisions of Section 3.6, to issue, assume or guarantee Debt secured by a mortgage upon such property at least equal in amount to the Attributable Debt in respect of such arrangement without equally and ratably securing the Securities; provided, however, that from and after the date on which such arrangement becomes effective the Attributable Debt in
respect of such arrangement shall be deemed for all purposes under Sections 3.6 and 3.7 to be Debt subject to the provisions of Section 3.6; or
(b) the Issuer shall apply an amount in cash equal to the Attributable Debt in respect of such arrangement to the retirement (other than any mandatory retirement or by way of payment at maturity), within 90 days of the effective date of any such arrangement, of Debt (except as otherwise provided by the terms of any series of Securities issued hereunder) of the Issuer or any Restricted Subsidiary (other than Debt owned by the Issuer or any Restricted Subsidiary) which by its terms matures at or is extendible or renewable at the option of the obligor to a date more than twelve months after the date of the creation of such Debt.
The term "Attributable Debt" shall mean, at the time of determination, the present value (discounted at the interest rate, compounded semiannually, equal to the weighted average Yield to Maturity of the Outstanding Securities, such average being weighted by the principal amount of the Securities of each series or, in the case of Original Issue Discount Securities, such amount to be determined as provided in the definition of "Outstanding") of the obligation of a lessee for net rental payments during the remaining term of any lease entered into in connection with a transaction contemplated by this Section 3.7 (including any period for which such lease has been extended).
ARTICLE FOUR
SECURITYHOLDERS' LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders. The Issuer covenants and agrees that it will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the holders of the Securities of each series:
(a) semiannually and not more than 15 days after each record date for the payment of interest on such Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing securities in each year, and
(b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished,
provided that if and so long as the Trustee shall be the Security registrar for such series, such list shall not be required to be furnished.
SECTION 4.2 Preservation and Disclosure of Securityholders' Lists. (a) The
Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of each series of
Securities contained in the most recent list furnished to it as provided in
Section 4.1 or maintained by the Trustee in its capacity as Security registrar
for such series, if so acting. The Trustee may destroy any list furnished to it
as provided in Section 4.1 upon receipt of a new list so furnished.
(b) The rights of Holders of Securities of any series to communicate with other Holders of Securities of such series with respect to their rights under
this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.
(c) Each and every holder of Securities, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities made pursuant to the Trust Indenture Act.
SECTION 4.3 Reports by the Issuer. The Issuer shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission.
SECTION 4.4 Reports by the Trustee. (a) The Trustee shall transmit to Holders and other persons such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act on or before July 15 in each year that such report is required, such reports to be dated as of the immediately preceding May 15.
(b) A copy of each such report shall, at the time of such transmission to Securityholders, be furnished to the Issuer and be filed by the Trustee with each stock exchange upon which the Securities of any applicable series are listed and also with the Commission. The Issuer agrees to notify the Trustee with respect any series when and as the Securities of such series become admitted to trading on any national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default. "Event of Default" with respect to Securities of any series, wherever used herein, means each one of the following events which shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or
(b) default in the payment of all or any part of the principal of any of the Securities of such series as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or
(c) default in the payment of all or any part of any sinking fund installment or other similar obligation as and when the same shall become due and payable by the terms of the Securities of such series; or
(d) default in the performance, or breach, of any covenant or warranty of the Issuer in respect of the Securities of such series (other than a covenant or warranty in respect of the Securities of such series a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of all series affected thereby, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder or, if there is a judicial or administrative proceeding pending at any time during the above-referenced 90 day period in which one of the disputed issues relates to whether or not there was a default or breach, for a period of 90 days after the final resolution of whether or not there was a default or breach; or
(e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Issuer or for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or
(f) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Issuer or for any substantial part of its property, or make any general assignment for the benefit of creditors, or
(g) any other Event of Default provided in the supplemental indenture or resolution of the Board of Directors under which such series of Securities is issued or in the form of Security for such series.
If an Event of Default described in clauses (a), (b), (c) or (d) above (if the Event of Default under clause (d) is with respect to less than all series of Securities then Outstanding) occurs and is continuing, then, and in each and every such case, unless the principal of all of the Securities of such series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of such series then outstanding hereunder (each such series voting as a separate class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of such series and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default described in clause (d) (if the Event of Default under clause (d) is with respect to all series of Securities then Outstanding), (e) or (f) occurs and is continuing, then and in each and every such case, unless the principal of all the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding hereunder (treated as one class), by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if any Securities are Original Issue Discount Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities then outstanding and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series (or of all the Securities, as the case may be) and the principal of any and all Securities of such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series (or at the respective rates of interest or Yields to Maturity of all the Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein--then and in every such case the holders of a majority in aggregate principal amount of all the Securities of such series, each series voting as a separate class (or of all the Securities, as the case may be, voting as a single class) then Outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.
For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt. The Issuer covenants that (a) in case default shall be made in the payment of any installment of interest on any of the securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series when the same shall have become due and payable, whether upon maturity of
the Securities of such series or upon any redemption or by declaration or otherwise--then, upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered holders, whether or not the principal of and interest on the Securities of such series be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon such Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Securities, wherever situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities of any series, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of any Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities of any series, or to the creditors or property of the Issuer or such other obligor,
(b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Securityholders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith and
all other amounts due to the Trustee or any predecessor Trustee pursuant to
Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan or reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee without the possession of any of the Securities or the production thereof on any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the holders of the Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Securities in respect to which such action was taken, and it shall not be necessary to make any holders of such Securities parties to any such proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to such series in respect of which monies have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.6;
SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.
SECTION 5.6 Limitations on Suits by Securityholders. No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such holder
previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the holders of not less than 25% in aggregate principal amount of the Securities of such series then outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
SECTION 5.7 Unconditional Right of Securityholders to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Security, the right of any Holder of any Security to receive payment of the principal of and interest on such Security on or after the respective due dates expressed in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except as provided in Section 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Securityholder to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
Section 5.6, every power and remedy given by this Indenture or by law to the
Trustee or to the Securityholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.9 Control by Securityholders. The Holders of a majority in aggregate principal amount of the Securities of each series affected (with each series voting as a separate class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law
and the provisions of this Indenture and provided further that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Securities of any series as provided in
Section 5.1, the Holders of a majority in aggregate principal amount of the
Securities of such series at the time Outstanding may on behalf of the Holders
of all the Securities of such series waive any past default or Event of Default
described in clause (c) of Section 5.1 (or, in the case of an event specified in
clause (d) of Section 5.1 which relates to less than all series of Securities
then Outstanding, the Holders of a majority in aggregate principal amount of the
Securities then outstanding affected thereby (each series voting as a separate
class) may waive any such default or Event of Default, or, in the case of an
event specified in clause (d) (if the Event of Default under clause (d) relates
to all series of Securities then Outstanding), (e) or (f) of Section 5.1 the
Holders of Securities of a majority in principal amount of all the Securities
then Outstanding (voting as one class) may waive any such default or Event of
Default), and its consequences except a default in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Security affected.
Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture, and the Issuer, the Trustee and the Holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances. The Trustee shall transmit to the Securityholders of any series, as the names and addresses of such Holders appear on the registry books, notice by mail of all defaults which have occurred with respect to such series, such notice to be transmitted within 90 days after the occurrence thereof, unless such defaults shall have been cured before the giving of such notice (the term "default" or "defaults" for the purposes of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of, interest on, or any sinking fund installment or other similar obligation with respect to, any of the Securities of such series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series.
SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of all series (or, if the matter in issue does not relate to all series of Securities, then the Holders of 10% in principal amount of the Outstanding Securities of all series to which such issue relates), treated as a single class, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default. With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the Securities of any Series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it.
The provisions of this Section 6.1 are in furtherance of and subject to Sections 315 and 316 of the Trust Indenture Act.
SECTION 6.2 Certain Rights of the Trustee. In furtherance of and subject to the Trust Indenture Act and subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture with the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the holders of not less than a majority in aggregate principal amount of the Securities of all series affected then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of his Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof.
SECTION 6.4 Trustee and Agents May Hold Securities; Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the provisions of Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) to be agreed to in writing by the Trustee and the Issuer, and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including (i) the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ and (ii) interest at the prime rate on any disbursements
and advances made by the Trustee and not paid by the Issuer within 60 days after receipt of an invoice for such disbursement or advance) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities, and the Securities are hereby subordinated to such senior claim. The provisions of this Section shall survive the termination of this Indenture.
SECTION 6.7 Right of Trustee to Rely on Officers' Certificate, etc. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof.
SECTION 6.8 Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act.
SECTION 6.9 Persons Eligible for Appointment as Trustee. The Trustee for
each series of Securities hereunder shall at all times be a corporation having a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.10.
SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and by mailing notice thereof by first class mail to Holders of the applicable series of Securities at their last addresses as they shall appear on the Security register. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor
trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section 6.8 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; or
(iv) the Issuer shall determine that the Trustee has failed to perform its obligations under this Indenture in any material respect;
then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 5.12, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. If no successor trustee shall have been appointed with respect to any series and have accepted appointment within 30 days after a notice of removal has been given, the removed trustee may petition a court of competent jurisdiction for the appointment of a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders.
(d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.11.
SECTION 6.11 Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee
with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor trustee with respect to the Securities of any series as to which the predecessor trustee is not retiring shall continue to be vested in the predecessor trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures.
No successor trustee with respect to any series of Securities shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided in this
Section 6.11, the Issuer shall mail notice thereof by first class mail to the
Holders of Securities of any series for which such successor trustee is acting
as trustee at their last addresses as they shall appear in the Security
register. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.10. If the Issuer fails to mail
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Issuer.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of
Trustee. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
SECTION 6.13 Preferential Collection of Claims Against the Issuer. The Trustee shall comply with the provisions of Section 311 of the Trust Indenture Act.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article.
If the Issuer shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other act of the Securityholders, the Issuer may, at its option, by a resolution of the Board of Directors, fix in advance a record date for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other act, but the Issuer shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other act may be given before or after such record date, but only the Securityholders of record at the close of business on such record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Securityholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.
If any Security of a series is issuable in the form of a Global Security or Securities, the Depositary therefor may grant proxies and otherwise authorize participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which the Holder of such Security is entitled to grant or take under this Indenture.
SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Securities shall be proved by the Security register or by a certificate of the registrar thereof.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the Person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security.
None of the Issuer, the Trustee any paying agent, or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above-described Persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination.
SECTION 7.5 Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in
this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of Securityholders. The Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof) for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article Nine;
(c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as its Board of Directors and the Trustee shall consider to be for the protection of the Holders of Securities, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not adversely affect the interests of the Holders of the Securities;
(e) to establish the form or terms of Securities of any series as permitted by Sections 2.1 and 2.3, including, without limitation, any terms relating to the issuance, exchange, registration or transfer of Securities issued in whole or in part in the form of one or more global Securities and the payment of any principal thereof, or interest or premium, if any, thereon; and
(f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of Securityholders. With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series; provided, that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or reduce the amount of the principal of an Original Issue Discount Security that could be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or impair or affect the right of any Securityholder to institute suit for the payment thereof or, if the Securities provide therefor, any right of repayment at the option of the Securityholder without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected.
Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Issuer shall mail a notice thereof by first class mail to the Holders of Securities of each series affected thereby at their addresses as they shall appear on the registry books of the Issuer, setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 8.4 Documents to Be Given to Trustee. The Trustee, subject to the provisions to Sections 6.1 and 6.2, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Issuer May Consolidate, etc., on Certain Terms. The Issuer covenants that it will not merge or consolidate with any other corporation or sell or convey all or substantially all of its assets to any Person, unless (i) either the Issuer shall be the continuing corporation, or the successor corporation or the Person which acquires by sale or conveyance substantially all the assets of the Issuer (if other than the Issuer) shall be a corporation organized under the laws of the United States of America or any State thereof and shall expressly assume the due and punctual payment of the principal of and interest on all the Securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Issuer, by supplemental
indenture satisfactory to the Trustee, executed and delivered to the Trustee by such corporation, and (ii) the Issuer or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition.
SECTION 9.2 Successor Corporation Substituted. In case of any such consolidation, merger, sale or conveyance, and following such an assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Issuer, with the same effect as if it had been named herein. Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Issuer prior to such succession any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such successor corporation instead of the Issuer and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by way of lease) the Issuer or any successor corporation which shall theretofore have become such in the manner described in this Article shall be discharged from all obligations and covenants under this Indenture and the Securities and may be liquidated and dissolved.
SECTION 9.3 Opinion of Counsel to Trustee. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel, prepared in accordance with Section 13.5, as conclusive evidence that any such consolidation, merger, sale, lease or conveyance, and any such assumption, and any such liquidation or dissolution, complies with the applicable provisions of this Indenture.
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of Indenture. If at any time
(a) the Issuer shall have paid or caused to be paid the principal of and
interest on all the Securities of any series outstanding hereunder (other than
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9) as and when the same shall have
become due and payable, or (b) the Issuer shall have delivered to the Trustee
for cancellation all Securities of any series theretofore authenticated (other
than any Securities of such series which shall have been destroyed, lost or
stolen and which shall have been replaced or paid as provided in Section 2.9) or
(c) (i) all the securities of such series not theretofore delivered to the
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and (ii) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee as trust funds the entire
amount in cash (other than moneys repaid by the Trustee or any paying agent to
the Issuer in accordance with Section 10.4) sufficient to pay at maturity or
upon redemption all Securities of such series (other than any Securities of such
series which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.9) not theretofore delivered to the
Trustee for cancellation, including principal and interest due or to become due
to such date of maturity as the case may be, and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer with respect to Securities of such series, then this Indenture shall cease to be of further effect with respect to Securities of such series (except as to (i) rights of registration of transfer and exchange, and the Issuer's right of optional redemption, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of holders to receive payments of principal thereof and interest thereon and remaining rights of the holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations and immunities of the Trustee hereunder and (v) the rights of the Securityholders of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, on demand of the Issuer accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture with respect to such series; provided, that the rights of Holders of the Securities to receive amounts in respect of principal of and interest on the Securities held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series.
SECTION 10.2 Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 10.4, all moneys deposited with the Trustee
pursuant to Section 10.1, all money and U.S. Government Obligations deposited
with the Trustee pursuant to Section 12.4 and all money received by the Trustee
in respect of U.S. Government Obligations deposited with the Trustee pursuant to
Section 12.4 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Issuer acting as its own
paying agent), to the Holders of the particular Securities of such series for
the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest or
to make mandatory sinking fund payments or analogous payments as contemplated by
Section 12.4; but such money need not be segregated from other funds except to
the extent required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys.
SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years. Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Security of any series and not applied but remaining unclaimed for three years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Security of such series shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 11.1 Applicability of Article. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series.
SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of redemption to the Holders of Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the registry books. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice, to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only the notice of redemption shall state the serial number of the Security and the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer.
At least one Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is acting
as its own paying agent, set aside, segregate and hold in trust as provided in
Section 3.4) an amount of money sufficient to redeem on the redemption date all
the Securities of such series so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If less than all the outstanding Securities of a series are to be
redeemed, the Issuer will deliver to the Trustee at least 70 days (or shorter
period satisfactory to the Trustee) prior to the date fixed for redemption an
Officers' Certificate stating the aggregate principal amount of Securities to be
redeemed.
If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the serial numbers of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.
SECTION 11.3 Payment of Securities Called for Redemption. If notice of redemption had been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided that any semiannual payment of interest becoming due on the date fixed for redemption shall be payable to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.7 hereof.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by the Security.
Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.
SECTION 11.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption. Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Issuer and delivered to the Trustee at least 40 days (or shorter period satisfactory to the Trustee) prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer.
SECTION 11.5 Mandatory and Optional Sinking Funds. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Issuer may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Issuer
through any optional redemption provision contained in the terms of such series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities.
On or before the sixtieth day (or shorter period satisfactory to the Trustee) next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee a written statement (which need not contain the statements required by Section 13.5) signed by an authorized officer of the Issuer (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such written statement (or reasonably promptly thereafter if acceptable to the Trustee). Such written statement shall be irrevocable and upon its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such sixtieth day, to deliver such written statement and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit
Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the Issuer shall so request) with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 is available. The Trustee shall select, in the manner provided in Section 11.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities of any series which are (a) owned by the Issuer or an entity known by the Trustee to be directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer, as shown by the Security register, and not known to the Trustee to have been pledged or hypothecated by the Issuer or any such entity or (b) identified in an Officers' Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being beneficially owned by, and not pledged or hypothecated by, the Issuer or an entity directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer shall be excluded from Securities of such series eligible for selection for redemption. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 11.2 (and with the effect provided in Section 11.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity.
At least one Business Day before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been
collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities.
ARTICLE TWELVE
DEFEASANCE
SECTION 12.1. Applicability of Article: Issuer's Option to Effect
Defeasance. Except to the extent otherwise provided pursuant to Section 2.3 in
respect of either or both of (a) defeasance of the Securities of a series under
Section 12.2 or (b) covenant defeasance of the Securities of a series under
Section 12.3, then the provisions of such Section or Sections, as the case may
be, together with the other provisions of this Article Twelve, shall be
applicable to the Securities of such series, and the Issuer may at its option by
resolution of the Board of Directors, at any time, with respect to the
Securities of such series, elect to have either Section 12.2 (if applicable) or
Section 12.3 (if applicable) be applied to the Outstanding Securities of such
series upon compliance with the conditions set forth below in this Article
Twelve.
SECTION 12.2 Defeasance and Discharge. Upon the Issuer's exercise of the above option applicable to this Section, the Issuer shall be deemed to have been discharged from its obligations with respect to the Outstanding Securities of such series on the date the conditions set forth below are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Issuer shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities of such series and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of Outstanding Securities of such series to receive solely from the trust fund described in Section 12.4 and as more fully set forth in such Section, payments in respect of the principal of and interest on such Securities when such payments are due, (B) the Issuer's obligations with respect to such Securities under Sections 2.8, 2.9, 2.11, 3.2 and 3.4, (C) the rights, powers, trusts, duties, and immunities of the Trustee hereunder and (D) this Article Twelve. Subject to compliance with this Article Twelve, the Issuer may exercise its option under this Section 12.2 notwithstanding the prior exercise of its options under Section 12.3 with respect to Securities of such series.
SECTION 12.3 Covenant Defeasance. Upon the Issuer's exercise of the above option applicable to this Section, the Issuer shall be released from its obligations under Sections 3.6 and 3.7 (and under other covenants which may be specified in respect of such Securities pursuant to Section 2.3(16)) with respect to the Outstanding Securities of such series on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of such series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section, whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 12.4 Conditions to Defeasance. The following shall be the conditions to application of either Section 12.2 or Section 12.3 to the Outstanding Securities of such series:
(a) the Issuer shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 6.9 who shall agree to comply with the provisions of this Article Twelve applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (i) money in an amount, or (ii) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment referred to in this subparagraph (a) money in an amount, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (A) the principal of and each installment of principal of and interest on the Outstanding Securities of such series on the date that such principal or installment of principal or interest is due and payable and (B) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Securities of such series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities.
(b) No Event of Default or event with which notice or lapse of time or both would become an Event of Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit or, at any time during the period ending on the 91st day after the date of such deposit or, if longer, ending on the day following the expiration of the longest preference period applicable to the Issuer under any applicable bankruptcy, insolvency or similar law in respect of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).
(c) Such defeasance or covenant defeasance shall not cause the Trustee for
the Securities of such series to have a conflicting interest as defined in
Section 6.8 and for purposes of the Trust Indenture Act with respect to any
securities of the Issuer.
(d) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound.
(e) Such defeasance or covenant defeasance shall not cause any Securities of such series then listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, to be delisted.
(f) In the case of an election under Section 12.2, the Issuer shall have delivered to the Trustee an Opinion of Counsel stating that (x) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (y) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance had not occurred.
(g) In the case of an election under Section 12.3, the Issuer shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred.
(h) Such defeasance or covenant defeasance shall be effected in compliance with any additional terms, conditions or limitations which may be imposed on the Issuer in connection therewith pursuant to Section 2.3.
(i) The Issuer shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 12.2 or the covenant defeasance under Section 12.3 (as the case may be) have been complied with.
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
SECTION 13.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the holders thereof and as part of the consideration for the issue of the Securities.
SECTION 13.2 Provisions of Indenture for the Sole Benefit of Parties and Securityholders. Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the Holders of the Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities.
SECTION 13.3 Successors and Assigns of Issuer Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not.
SECTION 13.4 Notices and Demands on Issuer, Trustee and Securityholders. Any notice or demand which any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities to or on the Issuer may be given or served by being deposited postage prepaid, first class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to Emerson Electric Co., 8000 W. Florissant Ave., St. Louis, Missouri 63136 Attention: Secretary. Any notice, direction, request or demand by the Issuer or
any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made at the offices of
the Trustee, 101 Barclay Street, 21st Floor, New York, New York 10286 Attention:
Corporate Trust Administration Facsimile: (212) 815-5919.
Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer and Securityholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 13.5 Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer of officers of the Issuer, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent.
SECTION 13.6 Payments Due on Saturdays, Sundays and Holidays. If the date of maturity of interest on or principal of the Securities of any series or the date fixed for redemption or repayment of any such Security shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day, with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date.
SECTION 13.7 Conflict of Any Provision of Indenture with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture without such limitation, qualification or conflict, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.
SECTION 13.8 New York Law to Govern. This Indenture and each Security shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law.
SECTION 13.9 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
SECTION 13.10 Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 13.11 Securities in a Foreign Currency. Unless otherwise specified in an Officers' Certificate delivered pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the holders of a specified percentage in aggregate principal amount of Securities of all series at the time outstanding and, at such time, there are outstanding Securities of any series which are denominated in a coin or currency other than United States dollars, then the principal amount of Securities of such series which shall be deemed to be outstanding for the purpose of taking such action shall be that amount of United States dollars that could be obtained for such amount at the Market Exchange Rate.
All decisions and determinations of the Exchange Rate Agent regarding the Market Exchange Rate shall, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon the Issuer and all Holders.
SECTION 13.12 Judgment Currency. The Issuer agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert any sum due in respect of the principal of, premium, if any, or interest on the Securities of any series (the "Required Currency") into United States dollars, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency on the New York Banking Day preceding that on which final judgment is giving and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt by the payee of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized by law or required by executive order to close.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture, to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the date first above written.
EMERSON ELECTRIC CO.
By: /s/ Walter J. Galvin
----------------------------
[CORPORATE SEAL] Senior Vice President of Finance
and Chief Financial Officer
Attest: Walter J. Galvin
By: /s/ Harley M. Smith
--------------------------------
Assistant Secretary
|
THE BANK OF NEW YORK, as Trustee
By: /s/ Robert A. Massimillo
----------------------------
Name: Robert A. Massimillo
Title: Assistant Vice President
[CORPORATE SEAL]
Attest:
By: /s/ Michele L. Russo
--------------------------------
Michele L. Russo
|
EXHIBIT 13
Financial Review
Results of Operations
Net Sales
Sales for 1998 were a record $13.4 billion, an increase of $1.1 billion or 9.3
percent from 1997. The strong sales growth reflected balanced performance
from the Company's segments and the contribution of acquisitions (see note
2). All businesses reported underlying sales growth in 1998. This growth was
achieved despite the impact of a stronger dollar that reduced reported sales
growth by more than 2 percent. Slightly more than half of the sales increase
was attributable to solid underlying domestic growth and modest international
demand. Domestic sales increased approximately $1.0 billion or 14 percent,
benefiting from very strong gains in the electronics business, strong growth
in the fractional motors and appliance business and acquisitions.
International sales increased approximately $140 million, or 3 percent.
Demand was solid throughout the year in the United States and Europe, which
account for more than three-quarters of consolidated revenue. New product
sales, from products introduced in the past five years, increased
approximately $490 million or 13 percent to a record $4.4 billion,
representing 33 percent of sales. Acquisitions completed throughout fiscal
1998 and the first quarter 1999 acquisition of the Westinghouse Process
Control Division are expected to have total sales of $1 billion in fiscal
1999.
In 1997, sales were $12.3 billion, up $1,149 million or 10.3 percent from 1996. Approximately half of the sales increase was attributable to solid international demand and modest domestic growth with the remainder due to acquisitions. All businesses reported sales growth in 1997. Domestic sales increased approximately $770 million or 12 percent, benefiting from acquisitions, solid gains in the tools business, very strong gains in the electronics business and slight price increases. International sales increased approximately $380 million, reflecting moderate growth in Europe, continued strength in Asia-Pacific and Latin America, strong growth in Canada and acquisitions, partially offset by unfavorable foreign currency translation of approximately $235 million. New product sales increased approximately $520 million or 15 percent to $3.9 billion, representing 32 percent of sales.
International Sales
International sales, including U.S. exports, increased approximately 3 percent to a record $5.4 billion in 1998, representing 40 percent of the Company's total sales. Solid demand in Europe and the strong growth in other regions of the world, led by Latin America, more than offset the impact of significant weakness in Asian economies. Sales by non-U.S. subsidiaries were $4.4 billion in 1998, up $228 million or 5 percent from 1997. U.S. exports decreased 8 percent to $968 million in 1998 compared to the record export sales in 1997, reflecting weakness in Asia-Pacific. International subsidiary sales increased approximately 6 percent excluding acquisitions and the unfavorable impact of currency translation of approximately $250 million.
In 1997, international sales increased 8 percent to $5.2 billion, representing 43 percent of the Company's total sales. Sales by non-U.S. subsidiaries were $4.2 billion in 1997, up $209 million or 5 percent from 1996. U.S. exports exceeded $1 billion for the first time in 1997, increasing 19 percent to $1,054 million, reflecting strong sales gains in the process and the heating, ventilating and air conditioning businesses and acquisitions. International sales increased approximately 7 percent excluding acquisitions and the unfavorable impact of currency translation as all major geographic regions achieved sales growth, with particular strength in Asia-Pacific, Latin America and Canada.
Industry Segment Sales
Sales in the Commercial and Industrial segment were $8.1 billion, up $737 million or 10.0 percent from 1997, reflecting moderate demand and acquisitions, partially offset by the stronger dollar. The electronics business continued its very strong underlying sales growth, reflecting broad strength across product lines and service offerings. In addition, sales of the business benefited from the acquisition of Hiross, an Italian manufacturer of precision environmental control and site monitoring products. Sales of the industrial motors and drives business grew solidly, excluding the negative impact of foreign currency, as a result of strong international demand outside of Asia and the contribution of the Computational Systems, Inc. acquisition. The industrial components and equipment business reported modest underlying sales growth on a fixed rate basis, and the majority-owned joint venture formed with General Signal's Electrical Group in September 1997 further enhanced sales growth. Excluding the effects of currency translation, the process business reported moderate sales growth as demand was balanced across the major geographic regions it serves.
Sales in the Appliance and Construction-Related segment were $5.3 billion, up $411 million or 8.3 percent from 1997, reflecting solid domestic growth and acquisitions, partially offset by weak Asian demand. Sales of the underlying fractional motors and appliance components business grew solidly, benefiting from robust demand in the United States. Strong gains in the tools business reflect the 1997 acquisition of InterMetro Industries and modest underlying growth. The heating, ventilating and air conditioning business reported modest sales growth, as very strong demand in the U.S. and Europe was partially offset by the impact of weak Asian economies on U.S. export sales.
In 1997, sales in the Commercial and Industrial segment were $7.4 billion, up $730 million or 11.0 percent from 1996, reflecting solid international demand, moderate domestic gains and acquisitions. The electronics business achieved very strong underlying sales growth, reflecting broad strength across product lines and service offerings. During the second quarter of 1997, the Company increased its ownership and began consolidating the results of Astec (BSR) Plc. The process business reported modest sales gains as solid international demand was limited by the impact of the strengthening dollar. Sales of the industrial motors and drives business increased moderately over a very strong prior year, as the contribution of 1996 acquisitions helped offset the effects of sluggish European economies and unfavorable currency translation. The industrial components and equipment business reported modest sales gains, as solid international demand was offset by unfavorable exchange rates.
In 1997, sales in the Appliance and Construction-Related segment were $4.9 billion, up $419 million or 9.3 percent from 1996, reflecting slight domestic gains, strong international demand, the impact of the 1996 Vermont American consolidation and other acquisitions. Sales of the underlying tools business increased solidly, reflecting strong domestic demand and the success of new products. The heating, ventilating and air conditioning business reported slight sales gains as strong international demand offset the significant impact of cool weather on U.S. markets. Sales of the fractional motors and appliance components business increased slightly as the cool weather reduced demand for motors used in room air-conditioners and fans.
Total Costs and Expenses
Cost of sales for 1998 was $8.6 billion, an increase of 9.3 percent, due primarily to increased sales volume. In 1997, cost of sales was $7.9 billion, compared to $7.2 billion in 1996, an increase of 9.8 percent. Cost of sales as a percent of net sales was 63.9 percent in 1998 compared to 64.0 percent and 64.3 percent in 1997 and 1996, respectively. Gross profit margins have improved as a result of the Company's ongoing commitment to cost reduction and containment efforts and productivity improvement programs.
Selling, general and administrative (SG&A) expenses were $2.7 billion, $2.5 billion, and $2.2 billion in 1998, 1997 and 1996, respectively. As a percent of net sales, SG&A expenses were 19.9 percent in 1998 and 1997, and 19.6 percent in 1996. These increases in SG&A expenses reflect increased investment in new product development and other revenue growth programs and acquisitions, offset by ongoing cost reduction efforts. The Company continued its commitment to new product development by increasing engineering and development expense 10.4 percent to a record $491 million in 1998, compared to $445 million and $399 million in 1997 and 1996, respectively.
Interest expense increased to $152 million in 1998 from $121 million in 1997, reflecting higher average borrowings resulting from acquisitions and share repurchases. In 1997, interest expense decreased from $127 million in 1996, reflecting lower interest rates.
Other deductions, net, including amortization of intangibles, were $100 million in 1998, compared to $78 million and $57 million in 1997 and 1996, respectively. The fourth quarter of 1997 included a gain of approximately $80 million from the formation of the joint venture between Emerson's Appleton Electric division and General Signal's Electrical Group. The fourth quarter of 1996 included a $78 million gain from the disposition of Emerson's interest in the S-B Power Tool joint venture. These gains were substantially offset by other non-recurring items. See note 2 for additional information.
Income Before Income Taxes
Income before income taxes increased $140 million, or 7.8 percent, to $1.9 billion in 1998, reflecting increased sales and improvement in underlying margins, partially offset by increased interest expense. Income before interest expense and income taxes in the Commercial and Industrial segment increased $110 million, or 10.9 percent, to $1,123 million in 1998. Income of the segment was 13.9 percent and 13.8 percent of net sales in 1998 and 1997, respectively. These results reflect worldwide sales growth, acquisitions and ongoing cost reduction efforts. Income in the Appliance and Construction- Related segment increased $127 million, or 15.6 percent, to $940 million in 1998. As a percent of net sales, income of the segment was 17.6 percent in 1998 and 16.5 percent in 1997. This improvement is primarily the result of solid domestic sales growth and ongoing cost reduction efforts.
Income before income taxes increased $175 million, or 10.9 percent, to $1.8 billion in 1997, reflecting increased sales and improved margins. Income before interest expense and income taxes in the Commercial and Industrial segment increased $103 million, or 11.3 percent, to $1,013 million in 1997. This improvement is primarily a result of solid international demand, moderate domestic sales growth and acquisitions. Income of the segment was 13.8 percent and 13.7 percent of net sales in 1997 and 1996. Income in the Appliance and Construction-Related segment increased $71 million, or 9.6 percent, to $813 million in 1997. As a percent of net sales, income of the segment was 16.5 percent in 1997 and 16.4 percent in 1996. These results reflect increased worldwide sales volume, acquisitions and ongoing cost reduction efforts. See note 13 for additional information by industry segment and geographic area.
Income Taxes
Income taxes were $695 million, $662 million and $590 million in 1998, 1997, and 1996, respectively. The effective income tax rate was 36.1 percent in 1998, compared to 37.1 percent in 1997 and 36.7 percent in 1996, reflecting the impact of global tax planning strategies and acquisitions.
Net Earnings and Return on Equity
Net earnings for 1998 were a record $1.2 billion, up 9.5 percent from $1.1 billion in 1997. Net earnings as a percent of sales was 9.1 percent in 1998 and 1997. Diluted earnings per common share were a record $2.77 in 1998, up 10.8 percent from $2.50 in 1997. Emerson achieved a return on average stockholders' equity of 21.9 percent compared to 20.8 percent and 19.9 percent in 1997 and 1996, respectively. Net earnings for 1997 were up 10.2 percent from $1.0 billion in 1996. Diluted earnings per common share in 1997 were up 11.1 percent from $2.25 in 1996.
Financial Position, Capital Resources and Liquidity
The Company continues to generate substantial cash from operations and remains in a strong financial position with resources available for reinvestment in existing businesses, strategic acquisitions and managing the capital structure on a short- and long-term basis.
Cash Flow
Emerson generated record operating cash flow of $1.7 billion in 1998, an increase of 10.2 percent compared to 1997. Operating cash flows were $1.5 billion and $1.3 billion in 1997 and 1996, respectively. Operating working capital was approximately 17 percent of sales in 1998 and 1997, and 18 percent of sales in 1996. Initiatives to reduce working capital during the year contributed to solid improvements in the underlying company's inventory turnover and days sales outstanding.
Capital expenditures were $603 million, $575 million and $514 million in 1998, 1997 and 1996, respectively. These expenditures increase the Company's global capacity to leverage opportunities within the heating, ventilating and air conditioning and stand-by power generation industries, as well as improve manufacturing productivity in a number of our businesses. The Company continued work on a $200 million project focused on a new compressor and motor plant in Suzhou, China. Cash paid in connection with Emerson's purchase acquisitions was $573 million, $319 million and $300 million in 1998, 1997 and 1996, respectively.
Dividends were a record $521 million ($1.18 per share) in 1998, compared with $481 million ($1.08 per share) in 1997 and $439 million ($.98 per share) in 1996. In November 1998, the Board of Directors voted to increase the quarterly cash dividend 10.2 percent to an annualized rate of $1.30 per share.
Leverage/Capitalization
Total debt increased to $2.6 billion in 1998 from $2.0 billion in 1997 and $1.7 billion in 1996, reflecting the impact of acquisitions and the Company's share repurchase program. The program, initiated in fiscal 1997, authorizes the repurchase of up to 40 million shares of the Company's outstanding common stock, with more than 16 million shares repurchased through September 30, 1998. Net purchases of treasury stock totaled $499 million and $377 million in 1998 and 1997, respectively. See notes 2, 3 and 4 for additional information.
The total debt-to-capital ratio was 30.8 percent at year-end 1998, compared to 27.1 percent in 1997 and 24.5 percent in 1996. At September 30, 1998, net debt (total debt less cash and equivalents and short-term investments) was 29.0 percent of net capital, compared to 24.9 percent in 1997 and 22.9 percent in 1996. The Company's interest coverage ratio (income before income taxes, non-recurring items and interest expense divided by interest expense) was 13.7 times in 1998, compared to 15.8 times in 1997 and 13.7 times in 1996, as a result of higher average borrowings in 1998, partially offset by earnings growth.
At year-end 1998, the Company and its subsidiaries maintained lines of credit amounting to $1.8 billion to support commercial paper and had available non-U.S. bank credit facilities of $585 million to support non-U.S. operations. Lines of credit totaling $900 million are effective until 2003, with the remainder through June 1999. These lines of credit and bank credit facilities assure the availability of funds at prevailing interest rates. In addition, the Company increased its shelf registration with the Securities and Exchange Commission subsequent to year end to permit the issuance of up to $1 billion of additional debt securities. See note 3.
Financial Instruments
The Company is exposed to market risk related to changes in interest rates and European and other foreign currency exchange rates, and selectively uses derivative financial instruments, including forwards, swaps and purchased options, to manage these risks. The Company does not hold derivatives for trading purposes. The value of market risk sensitive derivative and other financial instruments is subject to change as a result of movements in market rates and prices. Sensitivity analysis is one technique used to evaluate these impacts. Based on a hypothetical ten-percent increase in interest rates or ten-percent weakening in the U.S. dollar across all currencies, the potential losses in future earnings, fair value and cash flows are immaterial. This methodology has limitations; for example, a weaker U.S. dollar would benefit future earnings through favorable translation of non-U.S. operating results. See notes 1, 3, 4 and 5.
Year 2000 Readiness
The Company has developed a comprehensive Year 2000 plan that includes assessment, hardware and software remediation, and testing. The Company has substantially completed the assessment phase, which included review of internal computer applications and information systems, products, facilities and equipment, as well as products and services provided by third parties. Remediation and testing activities at the Company's divisions are at various stages, with more than half of the work completed on critical systems. Substantially all computer applications and systems are expected to be Year 2000 compliant by September 30, 1999. Numerous third parties have been contacted to assess and monitor their compliance and remediation efforts, with particular emphasis placed on more than 3,000 key suppliers. The estimated costs of the Year 2000 compliance program are not material to the Company's operating results or financial position.
The Company is supplementing existing emergency recovery plans with Year 2000- specific procedures to mitigate the impact of any unsuccessful remediation or third party failures. Management believes that the diversity of the Company's operations and systems reduces overall exposure and expects that the consequences of any unsuccessful remediation will not be significant. However, there can be no assurance that the Company's efforts or those of other entities will be successful, or that any potential failure would not have a material adverse effect on the Company's operating results or financial condition.
Consolidated Statements of Earnings
Emerson Electric Co. and Subsidiaries
Years ended September 30
(Dollars in millions except per share amounts)
1998 1997 1996
--------- -------- --------
Net sales $13,447.2 12,298.6 11,149.9
--------- -------- --------
Costs and expenses:
Cost of sales 8,595.6 7,865.6 7,165.0
Selling, general and administrative expenses 2,676.7 2,450.9 2,192.0
Interest expense 151.7 120.9 126.9
Other deductions, net 99.7 77.6 57.0
--------- -------- --------
Total costs and expenses 11,523.7 10,515.0 9,540.9
--------- -------- --------
Income before income taxes 1,923.5 1,783.6 1,609.0
Income taxes 694.9 661.7 590.5
--------- -------- --------
Net earnings $ 1,228.6 1,121.9 1,018.5
========= ======== ========
Basic earnings per common share $ 2.80 2.52 2.27
========= ======== ========
Diluted earnings per common share $ 2.77 2.50 2.25
========= ======== ========
|
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets
Emerson Electric Co. and Subsidiaries
September 30
(Dollars in millions except per share amounts)
Assets
1998 1997
--------- --------
Current assets
Cash and equivalents $ 209.7 221.1
Receivables, less allowances of $54.6 in 1998
and $54.0 in 1997 2,416.1 2,200.2
Inventories:
Finished products 858.6 789.6
Raw materials and work in process 1,137.9 1,092.0
--------- --------
Total inventories 1,996.5 1,881.6
Other current assets 379.0 413.9
--------- --------
Total current assets 5,001.3 4,716.8
--------- --------
Property, plant and equipment
Land 173.4 167.0
Buildings 1,205.5 1,066.0
Machinery and equipment 4,373.5 3,928.9
Construction in progress 318.3 271.8
--------- --------
6,070.7 5,433.7
Less accumulated depreciation 3,059.1 2,698.3
--------- --------
Property, plant and equipment, net 3,011.6 2,735.4
--------- --------
Other assets
Excess of cost over net assets of purchased businesses,
less accumulated amortization of $617.5 in 1998 and $509.5 in 1997 3,702.7 3,116.0
Other 944.2 895.1
--------- --------
Total other assets 4,646.9 4,011.1
--------- --------
$12,659.8 11,463.3
========= ========
|
See accompanying notes to consolidated financial statements.
Liabilities and Stockholders' Equity
1998 1997
--------- --------
Current liabilities
Short-term borrowings and current
maturities of long-term debt $ 1,524.4 1,445.1
Accounts payable 1,036.7 942.1
Accrued expenses 1,252.7 1,241.9
Income taxes 207.9 213.3
--------- --------
Total current liabilities 4,021.7 3,842.4
--------- --------
Long-term debt 1,056.6 570.7
--------- --------
Other liabilities 1,778.2 1,629.5
--------- --------
Stockholders' equity
Preferred stock of $2.50 par value per share.
Authorized 5,400,000 shares; issued - none -- --
Common stock of $.50 par value per share. Authorized
1,200,000,000 shares; issued 476,677,006 shares in
1998 and 1997 238.3 238.3
Additional paid-in capital 27.9 3.3
Retained earnings 7,056.5 6,348.9
Cumulative translation adjustments (236.2) (205.9)
--------- --------
7,086.5 6,384.6
Less cost of common stock in treasury, 38,452,823
shares in 1998 and 35,873,321 shares in 1997 1,283.2 963.9
--------- --------
Total stockholders' equity 5,803.3 5,420.7
--------- --------
$12,659.8 11,463.3
========= ========
|
Consolidated Statements
of Stockholders' Equity
Emerson Electric Co. and Subsidiaries
Years ended September 30
(Dollars in millions except per share amounts)
1998 1997 1996
--------- ------- -------
Common stock $ 238.3 238.3 238.3
--------- ------- -------
Additional paid-in capital
Beginning balance 3.3 12.3 15.0
Stock plans (43.4) (2.8) .1
Treasury stock issued for acquisitions and other 68.0 (6.2) (2.8)
--------- ------- -------
Ending balance 27.9 3.3 12.3
--------- ------- -------
Retained earnings
Beginning balance 6,348.9 5,707.7 5,128.3
Net earnings 1,228.6 1,121.9 1,018.5
Cash dividends (per share: 1998, $1.18;
1997, $1.08; 1996, $.98) (521.0) (480.7) (439.1)
--------- ------- -------
Ending balance 7,056.5 6,348.9 5,707.7
--------- ------- -------
Cumulative translation adjustments
Beginning balance (205.9) (29.2) 17.0
Translation adjustments (30.3) (176.7) (46.2)
--------- ------- -------
Ending balance (236.2) (205.9) (29.2)
--------- ------- -------
Treasury stock
Beginning balance (963.9) (575.7) (527.8)
Acquired (498.4) (427.2) (99.5)
Issued under stock plans 108.5 18.3 14.2
Issued for acquisitions and other 70.6 20.7 37.4
--------- ------- -------
Ending balance (1,283.2) (963.9) (575.7)
--------- ------- -------
Total stockholders' equity $ 5,803.3 5,420.7 5,353.4
========= ======= =======
|
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Emerson Electric Co. and Subsidiaries
Years ended September 30
(Dollars in millions)
1998 1997 1996
--------- ------- -------
Operating activities
Net earnings $ 1,228.6 1,121.9 1,018.5
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 562.5 511.6 464.6
Changes in operating working capital (81.0) (42.6) (131.6)
Other (58.5) (92.3) (34.2)
--------- ------- -------
Net cash provided by operating activities 1,651.6 1,498.6 1,317.3
--------- ------- -------
Investing activities
Capital expenditures (602.6) (575.4) (513.5)
Purchases of businesses, net of cash and equivalents acquired (572.9) (319.2) (299.8)
Divestiture of business interests and other, net 76.2 34.0 272.3
--------- ------- -------
Net cash used in investing activities (1,099.3) (860.6) (541.0)
--------- ------- -------
Financing activities
Net increase (decrease) in short-term borrowings 145.4 321.8 (363.8)
Proceeds from long-term debt 452.0 5.8 249.9
Principal payments on long-term debt (132.5) (13.1) (77.0)
Net purchases of treasury stock (499.4) (376.6) (120.3)
Dividends paid (521.0) (480.7) (439.1)
--------- ------- -------
Net cash used in financing activities (555.5) (542.8) (750.3)
--------- ------- -------
Effect of exchange rate changes on cash and equivalents (8.2) (23.1) 5.7
--------- ------- -------
Increase (decrease) in cash and equivalents (11.4) 72.1 31.7
Beginning cash and equivalents 221.1 149.0 117.3
--------- ------- -------
Ending cash and equivalents $ 209.7 221.1 149.0
========= ======= =======
Changes in operating working capital
Receivables $ (76.1) (117.3) (124.3)
Inventories (27.7) (64.4) (18.0)
Other current assets 19.7 (19.5) 7.8
Accounts payable .9 28.0 43.7
Accrued expenses (2.8) 88.6 (16.5)
Income taxes 5.0 42.0 (24.3)
--------- ------- -------
$ (81.0) (42.6) (131.6)
========= ======= =======
|
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Emerson Electric Co. and Subsidiaries
(Dollars in millions except per share amounts)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its controlled affiliates. All significant intercompany transactions, profits
and balances are eliminated in consolidation. Other investments of 20 to 50
percent are accounted for by the equity method. Investments of less than 20
percent are carried at cost.
Foreign Currency Translation
The functional currency of nearly all of the Company's non-U.S. subsidiaries
is the local currency. Adjustments resulting from the translation of
financial statements are reflected as a separate component of stockholders'
equity.
Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities
of three months or less.
Inventories
Inventories are stated at the lower of cost or market. The majority of
inventory values are based upon standard costs which approximate average
costs, while the remainder are principally valued on a first-in, first-out
basis. Standard costs are revised at the beginning of the fiscal year, and
variances incurred during the year are allocated between inventories and cost
of sales.
Property, Plant and Equipment
The Company records investments in land, buildings, and machinery and
equipment at cost. Depreciation is computed principally using the straight-
line method over estimated service lives. Service lives for principal assets
are 30 to 40 years for buildings and 8 to 12 years for machinery and
equipment.
Excess of Cost Over Net Assets of Purchased Businesses Assets and liabilities related to business combinations accounted for as purchase transactions are recorded at their respective fair values. Excess of cost over net assets of purchased businesses is amortized on a straight-line basis to other deductions over the periods estimated to be benefited, not exceeding 40 years. Long-lived assets are reviewed for impairment whenever events and changes in business circumstances indicate the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values.
Revenue Recognition
The Company recognizes nearly all of its revenues from the sale of
manufactured products as shipped.
Financial Instruments
The net amount to be paid or received under interest rate swap agreements is
accrued over the life of the agreement as a separate component of interest
expense. Gains and losses on purchased currency option and forward exchange
contracts that qualify for deferral accounting are recognized in income with
the underlying hedged transactions; otherwise, the contracts are recorded in
the balance sheet, and changes in fair value are recognized immediately in
other deductions, net. Currency fluctuations on non-U.S. dollar obligations
that have been designated as hedges of non-U.S. net asset exposures are
included in cumulative translation adjustments.
Income Taxes
No provision is made for U.S. income taxes on the undistributed earnings of
non-U.S. subsidiaries (approximately $950 at September 30, 1998), primarily
because retention of a significant portion of these earnings is considered
essential for continuing operations. In those cases in which distributions
have been made, additional income taxes, if any, have been minimal due to
available foreign tax credits.
Financial Statement Presentation
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual
results could differ from those estimates. All share and per share data
reflect the 1997 two-for-one stock split.
(2) Acquisitions and Divestitures
Cash paid in connection with the Company's purchase acquisitions, which include several smaller businesses, follows:
1998 1997 1996
------ ----- -----
Fair value of assets acquired............................. $947.0 359.4 402.1
Less liabilities assumed.................................. 214.5 38.2 79.3
Less notes and common stock issued to sellers............. 159.6 2.0 23.0
------ ----- -----
Cash paid (net of cash and equivalents acquired)........ $572.9 319.2 299.8
====== ===== =====
|
During the first quarter of 1998, the Company purchased Computational Systems, Inc. ("CSI") for approximately $160, primarily in common stock. CSI is a supplier of condition monitoring and diagnostic products and services for motors and other rotational equipment. During the fourth quarter of 1998, Astec (BSR) Plc, a subsidiary of Emerson, purchased the Advanced Power Systems ("APS") business from Northern Telecom Limited for approximately $325. APS manufactures power conversion products for a wide variety of telecommunications applications. In addition, the Company purchased Plaset SpA, a European manufacturer of appliance drain pumps, and acquired a majority interest in Hiross, an Italian manufacturer of precision environmental control and site monitoring products. Several smaller businesses were also purchased in 1998. The companies acquired in 1998 had annualized sales of approximately $775.
During the second quarter of 1997, Emerson acquired a majority interest in Astec (BSR) Plc through additional share purchases and began consolidating its results. Astec had annual sales of approximately $600 in calendar 1996. During the fourth quarter of 1997, the Company purchased InterMetro Industries for approximately $275 and acquired Clairson International Corporation. These two companies produce free-standing and wall-mounted ventilated shelving and specialty storage products. Emerson previously owned a controlling interest in Clairson through Vermont American Corporation ("V.A."), the Company's joint venture with Robert Bosch GmbH. InterMetro and Clairson had combined annual sales of more than $300. Several smaller businesses were also purchased or sold in 1997.
In addition, in the fourth quarter of 1997, the Company and General Signal Corporation formed a joint venture combining Emerson's Appleton Electric operations and General Signal's Electrical Group. Emerson holds a controlling interest in this venture, and the transaction resulted in a pretax gain of approximately $80, which was substantially offset by costs arising from relocation of several production facilities, asset impairments and litigation.
Emerson began consolidating V.A. in the second quarter of 1996 as a result of an agreement in which Emerson acquired control over the venture. At September 30, 1998, Emerson had guaranteed V.A.'s indebtedness of approximately $255. If required to perform under the guarantee, the Company will be indemnified for up to approximately $90 by Bosch. In addition, the Company purchased Kop-Flex, Inc., a manufacturer of flexible couplings, and Dieterich Standard, a manufacturer of flow measurement sensors, along with several smaller businesses in 1996.
In the fourth quarter of 1996, Emerson received $200 from the disposition of its fifty-percent interest in the S-B Power Tool Company joint venture. The transaction resulted in a pretax gain of $78 in 1996, which was substantially offset by costs arising from divestiture of operations, write-off of discontinued product line assets and relocation of several production facilities.
The results of operations of these businesses have been included in the Company's consolidated results of operations since the respective dates of the acquisitions and prior to the dates of divestiture.
(3) Short-term Borrowings and Lines of Credit
Short-term borrowings consist of commercial paper, notes issued to sellers in connection with business combinations and non-U.S. bank borrowings as follows:
United States Non-U.S.
---------------- -------------
1998 1997 1998 1997
-------- ----- ----- -----
Borrowings at year end.........................$1,005.5 907.1 505.0 411.1
Weighted average interest rate at year end..... 5.7% 5.9% 4.4% 4.1%
|
In 1998, the Company entered into an interest rate agreement which caps the rate on $250 of commercial paper at 6.0 percent through September 1999. In 1997, the Company entered into a five-year interest rate swap which fixed the rate on $250 of commercial paper at 6.1 percent. The Company had 152 million and 163 million of British pound notes with a weighted average interest rate of 7.5 and 6.7 percent swapped to $257 and $260 at U.S. commercial paper rates at September 30, 1998 and 1997, respectively.
The Company and its subsidiaries maintained lines of credit amounting to $1,800 with various banks at September 30, 1998, to support commercial paper and to assure availability of funds at prevailing market interest rates. Lines of credit totaling $900 are effective until 2003 with the remainder through June 1999. There were no borrowings against U.S. lines of credit in the last three years. The Company's non-U.S. subsidiaries maintained bank credit facilities in various currencies approximating $835 ($585 unused) at September 30, 1998. In some instances, borrowings against these credit facilities have been guaranteed by the Company to assure availability of funds at favorable interest rates. In addition, as of September 30, 1998, the Company could issue up to $500 of additional debt securities under its shelf registration with the Securities and Exchange Commission. Subsequent to year end, the Company issued $175 of 5%, 10-year notes which were used to reduce outstanding U.S. commercial paper, and increased its shelf registration to $1 billion.
(4) Long-term Debt
Long-term debt is summarized as follows:
1998 1997
-------- -----
Commercial paper with a weighted average interest rate of
5.5 percent at September 30, 1998......................... $ 252.6 255.5
6.3% notes due 2006......................................... 250.0 250.0
5 1/2% notes due 2008....................................... 250.0 --
Term loan due 2000 through 2003 with a weighted average
interest rate of 6.0 percent at September 30, 1998........ 200.0 --
7 7/8% Eurodollar notes due 1998............................ -- 100.0
8% convertible subordinated debentures due through 2011..... 9.5 14.0
Other....................................................... 108.4 78.1
-------- -----
1,070.5 697.6
Less current maturities..................................... 13.9 126.9
-------- -----
Total..................................................... $1,056.6 570.7
======== =====
|
The Company has the ability to refinance commercial paper on a long-term basis through its credit lines, and the obligation is included in long-term debt.
The 7 7/8% Eurodollar notes and $55 of U.S. commercial paper were effectively exchanged for non-U.S. dollar obligations due in 1998. The non-U.S. dollar obligations had an effective weighted average interest rate of 4.7 percent at September 30, 1997, and were composed of 136 million Dutch guilders, 5 billion Japanese yen and 27 million Swiss francs. These non-U.S. dollar obligations were designated as a partial hedge of the Company's non-U.S. dollar net asset exposure.
Long-term debt maturing during each of the four years after 1999 is $62.9, $61.1, $73.5 and $310.6, respectively. Total interest paid related to short-term borrowings and long-term debt was approximately $138, $108 and $120 in 1998, 1997 and 1996, respectively.
(5) Financial Instruments
The Company selectively uses derivative financial instruments to manage interest costs and minimize currency exchange risk. The Company does not hold derivatives for trading purposes. No credit loss is anticipated as the counterparties to these agreements are major financial institutions with high credit ratings.
As part of its currency hedging strategy, the Company utilizes purchased option and forward exchange contracts to minimize the impact of currency fluctuations on transactions, cash flows and firm commitments. The Company and its subsidiaries had approximately $335 and $575 of contracts (primarily options) outstanding at September 30, 1998 and 1997, respectively. These contracts for the sale or purchase of European and other currencies generally mature within one year, and deferred gains and losses are not material.
Fair values of the Company's financial instruments are estimated by reference to quoted prices from market sources and financial institutions, as well as other valuation techniques. At September 30, 1998 and 1997, respectively, the market value of the Company's convertible debentures was $44 and $60, compared to the related carrying value of $10 and $14. Common stock has been reserved for the conversion of these debentures (see note 8). The fair values of derivative financial instruments were not material at September 30, 1998 and 1997, and the estimated fair value of each of the Company's other classes of financial instruments approximated the related carrying value at September 30, 1998 and 1997.
(6) Retirement Plans
The Company sponsors retirement plans covering substantially all employees. Benefits are provided to employees under defined benefit pay-related and flat- dollar plans which are primarily noncontributory. Annual contributions to retirement plans equal or exceed the minimum funding requirements of the Employee Retirement Income Security Act or applicable local regulations.
The Company also sponsors defined contribution plans and participates in multiemployer plans for certain union employees. Benefits are determined and funded annually based on terms of the plans or as stipulated in collective bargaining agreements.
Retirement plan expense includes the following components:
U.S. Plans Non-U.S. Plans
------------------------ -------------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
Defined benefit plans:
Service cost (benefits earned during the period)............ $ 33.2 31.7 30.1 7.9 8.0 8.3
Interest cost............................................... 106.1 94.3 88.1 16.4 16.3 15.9
Actual return on plan assets................................ 23.5 (182.3) (185.0) (27.6) (37.8) (25.4)
Net amortization and deferral............................... (178.0) 44.1 60.1 9.9 19.7 9.2
-------- ------ ------ ----- ----- -----
Net periodic pension expense (income)..................... (15.2) (12.2) (6.7) 6.6 6.2 8.0
Defined contribution and multiemployer plans.................. 54.6 48.5 43.4 9.4 8.1 7.4
-------- ------ ------ ----- ----- -----
Total retirement plan expense............................... $ 39.4 36.3 36.7 16.0 14.3 15.4
======== ====== ====== ===== ===== =====
|
The actuarial present value of benefit obligations and the funded status of the Company's defined benefit pension plans follow:
U.S. Plans Non-U.S. Plans
------------------- ---------------
1998 1997 1998 1997
-------- ------- ----- -----
Accumulated benefit obligation........................................ $1,247.1 1,065.1 226.9 199.0
======== ======= ===== =====
Vested benefits included in accumulated benefit obligation............ $1,180.4 1,003.9 192.7 167.6
======== ======= ===== =====
Projected benefit obligation.......................................... $1,437.9 1,248.4 263.2 231.1
Plan assets at fair value (primarily corporate equity
and fixed income securities)........................................ 1,515.5 1,544.1 232.6 205.3
-------- ------- ----- -----
Plan assets in excess of (less than) projected benefit obligation. 77.6 295.7 (30.6) (25.8)
Unamortized transition amount......................................... (29.2) (36.4) (2.0) (2.4)
Unrecognized net loss (gain).......................................... 89.3 (143.3) (32.4) (31.4)
Unrecognized prior service costs...................................... 23.7 20.2 1.6 1.9
-------- ------- ----- -----
Pension asset (liability) recognized in the balance sheet........... $ 161.4 136.2 (63.4) (57.7)
======== ======= ===== =====
|
In 1998, the Company changed the measurement date for the defined benefit pension plans from September 30 to June 30 to improve administrative efficiencies and the timeliness and accuracy of its financial reporting and planning process. The effect of the change on retirement plan expense was immaterial. The fair value of plan assets decreased approximately $145 in the quarter ended September 30, 1998, reflecting the impact of the equity market decline; this change will be offset by an increase in the unrecognized net loss.
For 1998, the assumed discount rate, rate of increase in compensation levels and expected long-term rate of return on plan assets used in the actuarial calculations were, respectively, 7.5 percent, 4.0 percent and 10.5 percent for U.S. plans; and an average of 6.8 percent, 3.7 percent and 8.6 percent for non-U.S. plans. For 1997, the assumed discount rate, rate of increase in compensation levels and expected long-term rate of return on plan assets were, respectively, 8.0 percent, 5.0 percent and 10.5 percent for U.S. plans; and an average of 7.4 percent, 4.1 percent and 8.7 percent for non-U.S. plans.
(7) Postretirement Plans
The Company sponsors unfunded postretirement benefit plans (primarily health care) for U.S. retirees and their dependents. Net postretirement plan expense for the years ended September 30, 1998, 1997 and 1996, follows:
1998 1997 1996
----- ---- ----
Service cost......................................... $ 4.1 3.6 4.0
Interest cost........................................ 20.2 19.0 18.4
Net amortization and deferral........................ (3.6) (4.2) (4.4)
----- ---- ----
$20.7 18.4 18.0
===== ==== ====
|
The actuarial present value of accumulated postretirement benefit obligations as of September 30, 1998 and 1997, follows:
1998 1997
------ -----
Retirees............................................. $181.2 167.0
Fully eligible active plan participants.............. 19.8 18.7
Other active plan participants....................... 78.6 74.3
------ -----
Accumulated postretirement benefit obligation...... 279.6 260.0
Unrecognized net gain................................ 25.0 39.9
Unrecognized prior service benefit................... 8.2 9.6
------ -----
Postretirement benefit liability recognized in
the balance sheet................................ $312.8 309.5
====== =====
|
The assumed discount rate used in measuring the obligation as of September 30, 1998, was 7.25 percent; the initial assumed health care cost trend rate was 7.0 percent, declining to 4.5 percent in the year 2004. The assumed discount rate used in measuring the obligation as of September 30, 1997, was 7.75 percent; the initial assumed health care cost trend rate was 8.0 percent, declining to 5.0 percent in the year 2004. A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the obligation as of September 30, 1998, by approximately 4 percent and increase the 1998 postretirement plan expense by approximately 5 percent.
(8) Common Stock
The Company has various stock option plans which permit certain officers and employees to purchase common stock at specified prices. Options are granted at 100% of the market value of the Company's common stock on the date of grant, vest one-third each year and expire ten years from the date of grant. At September 30, 1998, 8.3 million options were available for grant under these plans. Changes in the number of shares subject to option during 1998, 1997 and 1996, follow (shares in thousands):
1998 1997 1996
--------------- --------------- ---------------
Average Average Average
Price Shares Price Shares Price Shares
------- ------ ------ ------ ------- ------
Beginning of year........................ $34.77 6,698 $25.47 4,523 $22.39 4,483
Options granted........................ 57.71 974 45.09 3,398 38.54 791
Assumed options of acquired company.... 26.08 330 -- -- -- --
Options exercised...................... 25.91 (1,198) 22.55 (794) 19.60 (662)
Options canceled....................... 45.23 (196) 41.02 (429) 30.20 (89)
----- ----- -----
End of year.............................. 39.02 6,608 34.77 6,698 25.47 4,523
----- ----- -----
Exercisable at year end.................. 3,479 2,727 2,614
===== ===== =====
|
Summarized information regarding stock options outstanding and exercisable at September 30, 1998, follows (shares in thousands):
Outstanding Exercisable
-------------------------------------- ------------------
Range of Average Average Average
Exercise Prices Shares Contractual Life Price Shares Price
--------------- ------ ---------------- ------- ------ -------
up to $25.................. 911 2.8 years $ 15.87 911 $ 15.87
$26 to 43.................. 1,809 5.9 30.98 1,649 30.30
$44 to 65.................. 3,888 8.3 48.18 919 45.14
------ ------
Total.................. 6,608 6.9 39.02 3,479 30.44
====== ======
|
The Company's Incentive Shares Plans authorize the distribution of common stock to key management personnel. At September 30, 1998, 2,321,098 shares are outstanding with restriction periods of three to ten years, including 371,000 shares issued in 1998. In addition, 2,287,854 rights to receive common shares have been awarded, including 213,543 shares awarded in 1998, which are contingent upon accomplishing certain objectives by 2001. Upon accomplishment of the five-year performance objectives, 2,688,444 shares were distributed to participants in 1998, including 685,983 shares paid in cash and 972,674 shares subject to a three-year restriction period. At September 30, 1998, approximately 6 million shares remained available for award under these plans.
The Company applies Accounting Principles Board Opinion No. 25 in accounting for its stock plans. The compensation expense charged against income for the Company's incentive shares plans was immaterial. Had compensation expense for the Company's stock plans been determined in accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," net earnings and diluted earnings per common share, respectively, would have been $1,215 and $2.74 per share in 1998, $1,110 and $2.47 per share in 1997, and $1,017 and $2.25 per share in 1996. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants: risk-free interest rate of 5.7%, 6.4% and 6.0%, dividend yield of 2.0%, 2.4% and 2.7%, expected volatility of 16%, 16% and 17% for 1998, 1997 and 1996, respectively, and expected life of 5 years for all years. The weighted average fair value of options granted was $12.01, $9.46 and $7.59 for 1998, 1997 and 1996, respectively.
At September 30, 1998, 23,931,571 shares of common stock were reserved, including 23,223,493 shares for issuance under the Company's stock plans and 708,078 shares for conversion of the outstanding 8% convertible subordinated debentures at a price of $13.49 per share. During 1998, 8,384,870 treasury shares were acquired and 5,805,368 treasury shares were issued.
Approximately 1.2 million preferred shares are reserved for issuance under a
Preferred Stock Purchase Rights Plan. Under certain conditions involving
acquisition of or an offer for 20 percent or more of the Company's common
stock, all holders of Rights, except an acquiring entity, would be entitled
(i) to purchase, at an exercise price of $260, common stock of the Company or
an acquiring entity with a value twice the exercise price, or (ii) at the
option of the Board, to exchange each Right for one share of common stock. The
Rights remain in existence until November 1, 2008, unless earlier redeemed (at
one-half cent per Right), exercised or exchanged under the terms of the plan.
(9) Earnings Per Common Share
In the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," (SFAS 128) which establishes standards for computing and presenting earnings per share. Basic earnings per common share considers only the weighted average of common shares outstanding while diluted earnings per common share considers the dilutive effects of stock options, incentive shares and convertible securities. Previously reported earnings per share amounts have been restated to conform to SFAS 128 requirements. Reconciliations of basic earnings per common share and diluted earnings per common share follow (shares in millions):
1998 1997 1996
------------------------------ ------------------------------ ------------------------------
Weighted Earnings Weighted Earnings Weighted Earnings
Average Per Average Per Average Per
Earnings Shares Share Earnings Shares Share Earnings Shares Share
-------- -------- -------- -------- -------- -------- -------- -------- --------
Basic........................ $1,228.6 439.2 $ 2.80 $1,121.9 445.0 $ 2.52 $1,018.5 448.1 $ 2.27
======== ======== ========
Convertible debt............. .6 .9 .9 1.3 1.5 2.4
Stock plans.................. 4.0 3.2 2.3
-------- -------- -------- -------- -------- --------
Diluted...................... $1,229.2 444.1 $ 2.77 $1,122.8 449.5 $ 2.50 $1,020.0 452.8 $ 2.25
======== ======== ======== ======== ======== ======== ======== ======== ========
|
(10) Income Taxes
The principal components of income tax expense follow:
1998 1997 1996
------- ------ -----
Federal:
Current......................................................... $ 453.4 447.8 393.0
Deferred........................................................ 35.9 10.1 7.4
State and local................................................... 51.4 48.2 53.0
Non-U.S........................................................... 154.2 155.6 137.1
------- ------ -----
Income tax expense.............................................. $ 694.9 661.7 590.5
======= ====== =====
|
The federal corporate statutory rate is reconciled to the Company's effective income tax rate as follows:
1998 1997 1996
-------- ------- ------
Federal corporate statutory rate.................................. 35.0% 35.0% 35.0%
State and local taxes, less federal tax benefit................. 1.7 1.8 2.1
Other........................................................... (.6) .3 (.4)
-------- ------- ------
Effective income tax rate......................................... 36.1% 37.1% 36.7%
======== ======= ======
|
The principal components of deferred tax assets (liabilities) follow:
1998 1997
------- ------
Property, plant and equipment and intangibles..................... $(344.1) (321.3)
Leveraged leases.................................................. (185.4) (191.1)
Pension........................................................... (69.3) (62.2)
Accrued liabilities............................................... 255.9 237.6
Postretirement and postemployment benefits........................ 129.1 128.9
Employee compensation and benefits................................ 99.4 108.8
Other............................................................. 84.0 92.7
------- ------
Total deferred tax assets (liabilities)......................... $ (30.4) (6.6)
======= ======
|
At September 30, 1998 and 1997, respectively, net current deferred tax assets were $248.3 and $268.3, and net noncurrent deferred tax liabilities were $278.7 and $274.9. Total income taxes paid were approximately $665, $645 and $575 in 1998, 1997 and 1996, respectively.
(11) Other Financial Data
Items charged to earnings during the years ended September 30, 1998, 1997 and 1996, included the following:
1998 1997 1996
------- ------ -----
Research, new product development and product improvement costs... $ 491.3 445.1 398.7
Rent expense...................................................... 170.4 156.9 144.8
Amortization of intangibles....................................... 122.8 114.0 104.1
|
The Company leases computers, transportation equipment and various other property under operating lease agreements. The minimum annual rentals under noncancelable long-term leases, exclusive of maintenance, taxes, insurance and other operating costs, will approximate $88 in 1999 and decline substantially thereafter.
Other assets include an investment in leveraged leases of $187.5 and $190.9 at September 30, 1998 and 1997, respectively. Accrued expenses include employee compensation of $295.2 and $344.2, and other liabilities include minority interests in consolidated subsidiaries of $619.9 and $523.1 at September 30, 1998 and 1997, respectively.
(12) Contingent Liabilities and Commitments
At September 30, 1998, there were no known contingent liabilities (including guarantees, pending litigation, taxes and other claims) that management believes will be material in relation to the Company's financial position, nor were there any material commitments outside the normal course of business.
(13) Industry Segment Information
The Company is engaged principally in the worldwide design, manufacture and sale of a broad range of electrical, electromechanical and electronic products and systems. The products manufactured by the Company are classified into the following industry segments: Commercial and Industrial Components and Systems, and Appliance and Construction-Related Components. The Commercial and Industrial segment includes process control instrumentation, valves and systems; industrial motors and drives; industrial machinery, equipment and components; and electronics. Products of this segment are sold to commercial and industrial distributors and end-users for manufacturing and commercial applications. The Appliance and Construction-Related segment consists of fractional motors and appliance components; heating, ventilating and air conditioning components; and tools. This segment includes components sold to distributors and original equipment manufacturers for inclusion in end products and systems (ultimately sold through commercial and residential building construction channels), and construction-related products which retain their identity and are sold through distributors to consumers and the professional trades. Summarized information about the Company's operations in each industry segment and geographic area follows:
Industry Segments
(See note 2)
Net Sales to Income Before
Unaffiliated Customers Income Taxes Total Assets
--------------------------- ----------------------- --------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
------- ------ ------ ----- ----- ----- ------ ------ ------
Commercial and Industrial.................... $ 8,102 7,365 6,635 1,123 1,013 910 7,769 6,879 6,336
Appliance and Construction-
Related.................................... 5,345 4,934 4,515 940 813 742 4,396 4,100 3,544
Corporate and other items.................... -- -- -- 13 79 84 495 484 601
Interest expense............................. -- -- -- (152) (121) (127) -- -- --
------- ------ ------ ----- ----- ----- ------ ------ ------
Total...................................... $13,447 12,299 11,150 1,924 1,784 1,609 12,660 11,463 10,481
======= ====== ====== ===== ===== ===== ====== ====== ======
|
Depreciation and Capital
Amortization Expense Expenditures
-------------------- --------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
Commercial and Industrial............................................................ $325 300 280 279 252 236
Appliance and Construction-Related................................................... 230 206 179 309 305 246
Corporate and other items............................................................ 8 6 6 15 18 32
---- --- --- --- --- ---
Total.............................................................................. $563 512 465 603 575 514
==== === === === === ===
|
Geographic Areas
(By origin)
Net Sales to Income Before
Unaffiliated Customers Income Taxes Total Assets
--------------------------- ----------------------- --------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
------- ------ ------ ----- ----- ----- ------ ------ ------
United States................................ $ 9,028 8,108 7,168 1,570 1,342 1,193 7,638 7,147 6,159
Europe....................................... 3,205 2,951 2,919 337 318 316 3,416 2,947 3,023
Other areas.................................. 1,214 1,240 1,063 156 166 143 1,469 1,199 913
Corporate and other items.................... -- -- -- 13 79 84 495 484 601
Interest expense............................. -- -- -- (152) (121) (127) -- -- --
Eliminations................................. -- -- -- -- -- -- (358) (314) (215)
------- ------ ------ ----- ----- ----- ------ ------ ------
Total...................................... $13,447 12,299 11,150 1,924 1,784 1,609 12,660 11,463 10,481
======= ====== ====== ===== ===== ===== ====== ====== ======
|
(14) Quarterly Financial Information (Unaudited)
Financial Results
Net Sales Gross Profit Net Earnings
-------------------- ----------------- ----------------
1998 1997 1998 1997 1998 1997
--------- -------- ------- ------- ------- -------
First Quarter...... $ 3,171.5 2,830.6 1,141.7 1,025.2 282.3 254.9
Second Quarter..... 3,382.4 3,103.5 1,222.7 1,116.1 307.6 280.4
Third Quarter...... 3,465.2 3,208.4 1,254.1 1,141.4 324.8 296.6
Fourth Quarter..... 3,428.1 3,156.1 1,233.1 1,150.3 313.9 290.0
--------- -------- ------- ------- ------- -------
Fiscal Year...... $13,447.2 12,298.6 4,851.6 4,433.0 1,228.6 1,121.9
========= ======== ======= ======= ======= =======
|
Basic Diluted
Earnings per Earnings per Dividends per
Common Share Common Share Common Share
------------ ------------ -------------
1998 1997 1998 1997 1998 1997
----- ---- ---- ---- ---- ----
First Quarter...... $ .64 .57 .64 .57 .295 .27
Second Quarter..... .70 .63 .69 .62 .295 .27
Third Quarter...... .74 .67 .73 .66 .295 .27
Fourth Quarter..... .72 .65 .71 .65 .295 .27
----- ---- ---- ---- ---- ----
Fiscal Year...... $2.80 2.52 2.77 2.50 1.18 1.08
===== ==== ==== ==== ==== ====
|
See Note 2 for information regarding non-recurring items and the Company's acquisition and divestiture activities.
Stock Prices
Price Range Per Common Share
----------------------------------------
1998 1997
------------------- -----------------
High Low High Low
--------- ------- ------ -------
First Quarter...................... $ 58 1/4 49 3/4 51 3/4 43 3/4
Second Quarter..................... 66 1/4 55 1/2 52 5/8 45
Third Quarter...................... 67 7/16 58 9/16 57 1/2 45
Fourth Quarter..................... 63 3/4 54 1/2 60 3/8 52 5/16
Fiscal Year...................... $ 67 7/16 49 3/4 60 3/8 43 3/4
|
Emerson Electric Co. common stock (Symbol EMR) is listed on the New York Stock Exchange and Chicago Stock Exchange.
Independent Auditors' Report
The Board of Directors and Stockholders Emerson Electric Co.:
We have audited the accompanying consolidated balance sheets of Emerson Electric Co. and subsidiaries as of September 30, 1998 and 1997, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended September 30, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Emerson Electric Co. and subsidiaries as of September 30, 1998 and 1997, and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 1998, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP St. Louis, Missouri November 2, 1998 |
Safe Harbor Statement
This Annual Report contains various forward-looking statements and includes assumptions concerning Emerson's operations, future results and prospects. These forward-looking statements are based on current expectations, are subject to risk and uncertainties and Emerson undertakes no obligation to update any such statement to reflect later developments. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, Emerson provides the following cautionary statement identifying important economic, political and technological factors, among others, the absence of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions.
Such factors include the following: (i) continuation of the current and
projected future business environment, including interest rates and capital
and consumer spending; (ii) competitive factors and competitor responses to
Emerson initiatives; (iii) successful development and market introductions of
anticipated new products; (iv) stability of government laws and regulations,
including taxes; (v) stable governments and business conditions in emerging
economies; (vi) successful penetration of emerging economies; (vii)
continuation of the favorable environment to make acquisitions, domestic and
foreign, including regulatory requirements and market values of candidates and
(viii) timely resolution of the Year 2000 issues by the Company, its customers
and suppliers.
EXHIBIT 21
SUBSIDIARIES OF EMERSON ELECTRIC CO.
SEPTEMBER 30, 1998
Jurisdiction
of
Legal Name Incorporation
---------- -------------
ADI Control Techniques Drives, Inc. California
Alco Controls S.A. de C.V. Mexico
Applied Concepts, Inc. Pennsylvania
Astec (BSR) PLC UK
Astec Advanced Power Systems B.V. Netherlands
Astec Advanced Power Systems Limited Canada
Astec America Inc. Delaware
AAI Export Inc. Barbados
BI Technologies Corporation Delaware
BI Technologies S.A. de C.V. Mexico
ENI Technology Inc. Delaware
Semiconductor Circuits Inc. California
Astec America de Mexico, S.A. de C.V. Mexico
Astec Electronics (Malaysia) Sdn Bhd Malaysia
Astec Germany GmbH Germany
Astec International Limited Hong Kong
Astec Agencies Limited Hong Kong
Astec Custom Power (Hong Kong) Limited Hong Kong
Astec Custom Power (Philippines) Inc. Philippines
Astec Custom Power (Singapore) Pte Ltd Singapore
Astec Electronics Company Limited China
Astec Electronics (Luoding) Co. Ltd. China
Astec Japan Limited Japan
Astec Pekan Sdn Bhd Malaysia
Astec Power Supply (Shenzhen) Co. Ltd. China
BI Technologies Corporation Malaysia
BI Technologies Pte Ltd. Singapore
ENI Taiwan Limited Taiwan
Northern Telecom Industries Sdn Bhd Malaysia
Northern Telecom Penang Sdn Bhd Malaysia
Astec Power Inc. BVI
BI Technologies GmbH Germany
BI Technologies Japan Limited Japan
BI Technologies S.r.l. Italy
ENI Japan Limited Japan
Stourbridge Holdings (UK) Limited UK
BI Technologies Limited UK
Brandenburg Limited UK
Mirroware Manufacturing Limited UK
Astec Europe Ltd. UK
Astec France S.A.R.L. France
BI Technologies S.A.R.L. France
Astec International PLC UK
Branson Ultrasonic S.A. Switzerland
Buehler Ltd. Illinois
Buehler Holdings Delaware
Wirtz-Buehler Corporation Delaware
Clairson International Corp. Florida
Clairson, Inc. Delaware
Clairson de Mexico, S.A. de C.V. Mexico
Clairson (Hong Kong) Limited Hong Kong
Commercial Cam Co., Inc. Delaware
Compania de Motores Domesticos S.A. de C.V. Mexico
Computational Systems, Incorporated Tennessee
CSI Delaware I, Inc. Delaware
CSI Delaware II, Inc. Delaware
CSI International, Inc. Tennessee
CSI Real Property, LLC Tennessee
CSI Services, Inc. Tennessee
CSI Technology, Inc. Delaware
CTL Japan Japan
Canada Systems de Mexico Mexico
Computational Systems, Inc. Europe Belgium
Computational Systems, Ltd. UK
STATUS Technologies, Inc. Tennessee
Controles Electromecanicos de Mexico Mexico
Control Techniques (USA) Inc. Delaware
Control Techniques Drives, Inc. Delaware
Control Techniques Drives Limited Canada
Control Techniques Iberia S.A. Spain
Copeland Electric Corporation Delaware
Digital Appliance Controls Manufacturing (Singapore) Pte Ltd. Singapore
DACM SDN BHD Malaysia
Digital Appliance Controls (UK) Limited UK
EECO, Inc. Delaware
Apple JV Holding Corp. Delaware
EGS Electrical Group LLC Delaware
Appleton Electric LLC Delaware
Appleton Electric, S.A. de C.V. Mexico
Appleton Holding Corp. Delaware
Easy Heat Limited Canada
Easy Heat Holding B.V. Netherlands
East Heat Europe B.V. Netherlands
Easy Heat Polska
Sp. z.o.o. Poland
EGS Electrical Group Canada, Ltd. Canada
EGS Holding S.A.R.L. France
ATX S.A. France
Easy Heat, Inc. Delaware
GSEG LLC Delaware
Dual-Lite Manufacturing, Inc. Delaware
O-Z Gedney LLC Delaware
Terasaki Nelson Limited Japan
Emersub 1 LLC Delaware
Conameter Corporation New Jersey
Copeland Corporation Delaware
CDP International, Inc. Delaware
Computer Process Controls, Inc. Georgia
Copeland Access +, Inc. Delaware
Copeland de Mexico S.A. de C.V. Mexico
Copeland International, Inc. Ohio
Copeland Redevelopment Corporation Missouri
Electro-Test, Inc. California
Bath Electrical, Inc. Delaware
Bath Electrical Systems, Inc. Texas
El-O-Matic USA, Inc. Delaware
Emerson Electric (U.S.) Holding Corporation Delaware
Automatic Switch Company Delaware
Asco Investment Corp. New Jersey
Angar Scientific Company, Inc. New Jersey
Asco Controls A.G. Switzerland
Asco Controls B.V. Netherlands
Asco Mideast B.V. Netherlands
Asco Gmbh Hungary
Asco/Joucomatic SP. z.o.o. Poland
Asco/Joucomatic Czech Republic Czech Republic
Asco/Joucomatic Zuid Afrika B.V. Netherlands
Asco Electrical Products Co., Inc. New Jersey
Ascomation Pty. Ltd. Australia
Ascomation (NZ) Limited N. Zealand
Asco Sweden AB Sweden
Asco (Japan) Company Ltd. Japan
Asco Services, Inc. New Jersey
Ascomatica S.A. de C.V. Mexico
Ascoval Industria E Commercio Ltda. Brazil
Firetrol, Inc. North Carolina
Hanover Advertising Services, Inc. New Jersey
Joucomatic Controls, Inc. North Carolina
Branson Ultrasonics Corporation Delaware
American Technology, Inc. Connecticut
Amtech S.a.r.L. France
Branson Korea Co., Inc. Korea
Branson Ultrasonics S.A. Sweden
Branson Ultrasonidos S.A.E. Spain
Branson Ultrasons S.A. France
Krautkramer France S.A. France
Camco Vertriebs-GmbH Germany
Camco Vertriebs-GmbH & Co. Germany
Chromalox GmbH Germany
Copeland GmbH Germany
Copeland France S.A. France
Copeland Corporation Limited UK
Copeland Italia S.a.R.l. Italy
Copeland Iberica CIB S.A. Spain
Copeland Refrigeration Europe S.A. Belgium
Copeland S.A. Belgium
El-O-Matic GmbH Germany
Emerson Electric GmbH Germany
Emerson Electric GmbH & Co. Germany
Emerson Electric Overseas Finance Corp. Delaware
Emerson Electric de Colombia, LTDA Colombia
Motores U.S. de Mexico, S.A. Mexico
U.S.E.M. de Mexico S.A. de C.V. Mexico
Emerson Technologies Verwaltungs-GmbH Germany
Emerson Technologies GmbH & Co. Germany
Fisher-Rosemount GmbH Germany
Fisher-Rosemount GmbH & Co. Germany
Heraeus Sensor GmbH Germany
Krautkramer GmbH Germany
Krautkramer GmbH & Co. Germany
Liebert GmbH Germany
Liebert A.G. Switzerland
PEPT Investment Corporation Delaware
Skil Europe Corporation Delaware
Reglerwerk Dresden GmbH Germany
Ridge Tool GmbH Germany
Ridge Tool GmbH & Co. Germany
RIDGID Peddinghaus Werkzeug GmbH Germany
Rosemount Inc. Minnesota
Dieterich Standard, Inc. Delaware
Dieterich Technology Holding Corp. Delaware
Fisher-Rosemount AS (Norway) Norway
Fisher-Rosemount, S.A. Spain
Rosemount Portugal Instrumentos Lda. Portugal
Fisher-Rosemount Holding AG Switzerland
Fisher-Rosemount AG Switzerland
Fisher Rosemount Proses Kontrol
Ticaret Limited Sirketi Turkey
Rosemount Spo Czech Republic
Fisher-Rosemount A/S Denmark
Fisher-Rosemount Ges. M.B.H. Austria
Rosemount Poland Ltd. Poland
Fisher-Rosemount Instruments Pty. Ltd. Australia
Emerson Electric Co. Pty. Ltd. Australia
Rosemount Instruments Ltd. New Zealand
Fisher-Rosemount Instruments Taiwan, Ltd. Taiwan
Fisher-Rosemount Japan Co. Ltd. Japan
Fisher-Rosemount Korea Ltd. Korea
Fisher-Rosemount Middle East, Inc. Delaware
Fisher-Rosemount Singapore Private Limited Singapore
P I Components Corp. Texas
Rosemount AB Sweden
Rosemount Shanghai International
Trade Co. Ltd. China
Rosemount Analytical Inc. Delaware
Rosemount China Inc. Minnesota
Rosemount Mexicana S.A. de C.V. Mexico
Rosemount Nuclear Instruments Delaware
Rosemount Shanghai Co. Ltd. China
Tekmar Company Ohio
Wirtz-Buehler GmbH Germany
Xomox Corporation Ohio
Fisher-Rosemount do Brasil
Industria e Comerco Ltda. Brazil
Fisher-Rosemount S.A. de C.V. Mexico
Flow Technology, Inc. (Taiwan) Ohio
Flow Technology S.A. de C.V. Mexico
Inversiones Xomox Venezuela
Xomox France S.A. France
Xomox A.G. Switzerland
Xomox Chihuahua S.A. de C.V. Mexico
Xomox Corporation de Venezuela, C.A. Venezuela
Xomox South America S.A. Uruguay
Xomox Uruguay S.A. Uruguay
Xomox International GmbH Germany
Fisher-Gulde GmbH Germany
Fisher-Gulde GmbH & Co. Germany
Xomox International GmbH & Co. Germany
Pfannenschmidt GmbH Germany
Emerson Power Transmission Corporation Delaware
Emerson Chain, Inc. Delaware
Emerson Motion Control, Inc. Minnesota
Emerson Power Transmission Drives and
Components, Inc. Delaware
Emerson Power Transmission Ithaca, Inc. Delaware
McGill Manufacturing Company, Inc. Indiana
Emerson Power Transmission Bearings, Inc. Delaware
Emerson Power Transmissions
Manufacturing, L.P. Missouri
McGill International, Inc. Taiwan
Environmental Remediation Management, Inc. Delaware
Krautkramer-Branson, Incorporated Connecticut
Stresstel Corporation California
Liebert Corporation Ohio
Atlas Asia Ltd. Hong Kong
Control Concepts Corporation Delaware
Edco, Inc. of Florida Florida
Emerson Computer Power (Thailand) Company Limited Thailand
Emersub XXV, Inc. Delaware
Computersite-Preparations, Inc. Ohio
Global Energy Services, Inc. Delaware
Liebert Asia Ltd. Hong Kong
Liebert Corporation Australia Pty, Ltd. Australia
Atlas Air Australia Pty. Ltd. Australia
Rougemont Enterprises Pte. Ltd. Australia
Liebert Far East Pte. Ltd. Singapore
Atlas Air (S.E.A.) Pte Ltd. Singapore
Liebert (Malaysia) Sdn. Bhd. Malaysia
Liebert International B.V. Netherlands
Liebert Property Holdings, LLC Delaware
Liebert Tecnologia Ltda. Brazil
Northeast Electrical Testing, Inc. Delaware
Micro Motion, Inc. Colorado
Ridge Tool Company Ohio
Emerson Electric SRL Italy
Ridge Tool (Australia) Pty., Ltd. Australia
Ridge Tool Manufacturing Company Delaware
Ridge Tool Pattern Company Delaware
Ridge Werkzeuge AG Switzerland
Therm-O-Disc, Incorporated Ohio
Componentes Avanzados de Mexico, S.A. de C.V. Mexico
Controles de Temperatura S.A. de C.V. Mexico
E.G.P. Corporation Delaware
Electronic Control Systems, Inc. W. Virginia
Fairmont Building and Investment Corp. W. Virginia
Emermex S.A. de C.V. Mexico
Emerson Electric (Asia) Limited Hong Kong
Branson Ultrasonics (Asia Pacific) Co. Ltd. Hong Kong
Emerson Electric (South Asia/Pacific) Pte. Ltd. Singapore
Emerson Electric II, C.A. Venezuela
Emerson Electric, C.A. Venezuela
Emerson Electric Foreign Sales Corporation Virgin Islands
Emerson Electric International, Inc. Delaware
Emerson Electric Ireland Ltd. Bermuda
Emersub Treasury Ireland Ireland
Emerson Electric Nederland B.V. Netherlands
Branson Ultrasonics B.V. Netherlands
Brooks Instrument B.V. Netherlands
Emerson Computer Power B.V. Netherlands
Capax Electrische Apparatenfabriek B.V. Netherlands
Crouzet Appliance Controls D.O.O. Slovenia
Emerson Electric RG Russia
Emerson Electric Slovakia Limited Slovakia
Vuma a.s Czech Republic
Emerson Electric, SpoL, s.r.o. Czech Republic
Fisher-Rosemount B.V. Netherlands
Fusite, B.V. Netherlands
Heraeus Sensor B.V. Netherlands
New-Tech Cuijk B.V. Netherlands
El-O-Matic B.V. Netherlands
El-O-Matic Valve Actuators (F.E.) Pte. Ltd. Singapore
El-O-Matic S.A. (Proprietary) Ltd. South Africa
Skil AG Switzerland
Emerson Electric Puerto Rico, Inc. Delaware
Emerson Puerto Rico, Inc. Delaware
Emerson Electric (Taiwan) Company Limited Taiwan
Emerson Finance Co. Delaware
Emersub XIX, Inc. Delaware
Emerson Global Finance Company Missouri
Emerson Middle East, Inc. Delaware
Emerson Sice S.p.A. Italy
C.E. Set S.R.L. Italy
CODI S.p.A. Italy
Plaset, S.p.A. Italy
Branson Ultrasuoni S.P.A. Italy
Fisher-Rosemount Italia S.R.L. Italy
Hiross Holding AG Austria
Hiross International Corporation BV Netherlands
Hiross Management SA Switzerland
Hiross S.p.A. Italy
Hiross AG Switzerland
Hiross Ltd. UK
Hiross SA France
Hiross Austria GmbH Austria
Hiross Hungaria Kft Hungary
Hiross Batliboi Ltd. India
Hiross Deutschland GmbH Germany
Hiross Flexible Space System S.r.l. Italy
Mecanotronic GmbH Austria
Xomox Italia S.R.L. Italy
Emerson Pacific Pte. Ltd. Singapore
Emersub XXXVI, Inc. Delaware
Control Techniques plc UK
Control Techniques (Holding) GmbH Germany
Control Techniques GmbH Germany
INAG Industrielle Antriebssysteme GmbH Germany
Reta Anlagenbau GmbH Germany
Reta Elektronic GmbH Germany
Control Techniques Asia-Pacific Pte. Ltd. Singapore
Control Techniques Drives (Malaysia) Sdn Bhd Malaysia
Control Techniques Singapore Pte Limited Singapore
Control Techniques (Thailand) Limited Thailand
PT Kontroltek Indopratama Indonesia
Control Techniques Australia Pty Ltd. Australia
Control Techniques Bermuda Limited Bermuda
Control Techniques Drives Limited UK
K.T.K. (Newtown) Limited UK
Control Techniques Dynamics Limited UK
Evershed Powerotor Limited UK
Moore Reed & Company Limited UK
Control Techniques Italia srl Italy
Control Techniques Precision Systems Limited UK
Control Techniques SpA Italy
Electric Drives Limited Ireland
Electric Drives Manufacturing Limited Ireland
CT Stafford Park 4 Limited UK
Control Techniques Worldwide BV Netherlands
ASI Control Techniques A/B Norway
Control Technika Kft. Hungary
Control Techniques Automation BV Netherlands
Control Techniques BV Netherlands
Control Techniques BV/SA Belgium
Control Techniques Denmark A/S Denmark
Control Techniques East Asia Pte Limited Hong Kong
Control Techniques Endustriyel Kontrol
Sistemleri Sanayii Ve Ticaret A.S. Turkey
Control Techniques GesmbH Austria
Control Techniques India Limited India
Control Techniques Elpro
Automation Limited India
Control Techniques Vietnam Limited Vietnam
Control Techniques Vues s.r.o. Czech Republic
CTS Control Techniques Antriebsregelungen
GmbH Switzerland
SKS Arlacon Oy Finland
Siliconics (Pty) Ltd. S. Africa
Styrkonsult Drives AB Sweden
Emersub XXXVIII, Inc. Delaware
Emersub XLIV, Inc. Delaware
Emersub XLV, Inc. Delaware
Valycontrol, S.A. de C.V. Mexico
Filcore, Inc. Texas
Emersub XLVI, Inc. Nevada
Wilson Investment 2, Inc. Delaware
Copesub, Inc. Delaware
Alliance Compressors Delaware
Emersub LII, Inc. Delaware
Emersub LIV, Inc. Delaware
Emersub LXIV, Inc. Delaware
Emersub LXVI, Inc. Nevada
Emersub LXVIII, Inc. Delaware
Emersub LXX, Inc. Delaware
Emersub LXXI, Inc. Delaware
Emersub LXXII, Inc. Delaware
EMR Holdings, Inc. Delaware
Branson de Mexico, S.A. de C.V. Mexico
Digital Appliance Controls, S.A. de C.V. Mexico
EMR Manufacturing (M) Sdn Bhd Malaysia
Emerson Argentina S.A. Argentina
Emerson Electric Canada Limited Canada
Ascolectric Limited Canada
Fisher Controls Inc. (Controles Fisher Inc.) Canada
Fisher-Rosemount Instruments Ltd. Canada
KVT Technologies, Inc. Canada
Therm-O-Disc (Canada) Limited Canada
Xomox Canada Ltd. Canada
Emerson Electric (China) Holdings Ltd. China
Beijing Rosemount Far East Instrument Co., Ltd. China
Clairson (Jiangmen) Storage Limited China
Emerson Electric (Suzhou) Co. Ltd. China
Emerson Electric (Tianjin) Co., Ltd. China
Emerson Engineering System (Shanghai) Co., Limited China
Emerson Electric (Shenzhen) Co., Ltd. China
Emerson Machinery & Equipment (Shenzhen) Co., Ltd. China
Emerson Trading (Shanghai) Co. Ltd. China
Emerson White-Rodgers Electric (Xiamen) Co., Ltd. China
Hangzhou LiShi Ridge Tool Co., Ltd. China
Shanghai Branson Ultrasonics Co., Ltd. China
Shenyang Copeland Refrigeration Co., Ltd. China
Emerson Electric de Mexico S.A. de C.V. Mexico
Ascotech, S.A. de C.V. Mexico
Motores Reynosa, S.A. de C.V. Mexico
Emerson Electric do Brasil Ltda Brazil
Emerson Electric Hungary Ltd. Hungary
Emerson Electric Korea Ltd. Korea
Emerson Electric (M) SDN BHD Malaysia
Emerson Electric (Mauritius) Ltd. India
Emerson Electric Company India Private Ltd. India
Emerson Electric Poland Sp. z.o.o. Poland
Emerson Electric (Thailand) Limited Thailand
Emerson Europe S.A. France
Asco Joucomatic S.A. France
Asco Joucomatic GmbH Germany
Asco Joucomatic GmbH & Co. Germany
Fluidocontrol S.A. Spain
Joucomatic Controls Ltd. New Zealand
Joucomatic Controls Pty. Limited Australia
AscoJoucomatic S.p.A. Italy
AscoJoucomatic N.V. Belgium
Sotrac S.r.l. Italy
Crouzet Appliance Controls S.A. France
Crouzet Appliance Controls SpA Italy
Francel S.A. France
Leroy-Somer S.A. France
Bertrand Polico S.A. France
Constructions Electriques DeBeaucourt S.A. France
Comercial Leroy-Somer Ltda. Chile
Electronique du Sud-Quest S.A. France
Andre Cocard S.A.R.L. France
Atelier de Bobinage de Moteurs Electriques
S.a.r.L. France
Construction Electriques du Nord S.A. France
Electro Maintenance Courbon S.A. France
Establissements Belzon & Richardot S.A.R.L. France
Establissements J. Michel S.A. France
Establissements Suder et Fils S.A.R.L. France
Houssin S.A.R.L. France
Lorraine Services Electrique
Electromecanique S.A.R.L. France
M.I.S. Kerebel Provence S.A.R.L. France
M.I.S. Poitouraine S.A.R.L. France
M.I.S. Societe Peaucelle D'Installations
et Reparations Electriques S.A.R.L. France
M.L.S. Holice Spol. s.r.o. Czech Republic
Maintenance Industrie Services
Rennes S.a.r.L. France
Maintenance Industrie Services Rhone-
Alpes S.A.R.L. France
Maintenance Industrie Services Toulouse
S.a.r.L. France
Marcel Oury S.A.R.L. France
Mezierres S.A. France
Navarre Services S.A.R.L. France
Ouest Electro Service S.A.R.L. France
Poteau Moderne du Sud-Ouest S.A. France
Radiel Bobinage S.A.R.L. France
Societe Nouvelle Paillet Services S.A.R.L. France
Societe Nouvelle Silvain S.A.R.L. France
Societe DeReparation Electro-Mecanique
S.A.R.L. France
Sud Bobinage S.A.R.L. France
Viet Services S.A.R.L. France
Etablissements Sevenier S.A. France
Etablissements Trepeau S.A. France
Girard Transmissions S.A. France
IMI Kft Hungary
La Francaise de Manutention S.A. France
Leroy-Somer AB Sweden
Leroy-Somer A/S Denmark
Leroy-Somer A/S Norway
Leroy-Somer BV Netherlands
Leroy Somer N.V. Belgium
Leroy-Somer Elektroantriebe GmbH Austria
Leroy-Somer Elektromotoren GmbH Germany
Leroy-Somer Ltd. UK
Leroy-Somer OY Finland
Leroy-Somer Pty. Ltd. South Africa
Leroy-Somer (Pty) Ltd. Australia
Leroy-Somer S.A. Switzerland
Leroy-Somer S.A. Spain
Leroy-Somer S.p.A. Italy
Leroy-Somer Maroc S.A. Morocco
Leroy-Somer Motores E Sistemas
Electromecanicos Ltda. Portugal
Leroy-Somer (SEA) Pte. Ltd. Singapore
MLS Industries Inc. Delaware
Yorba Linda International Inc. Delaware
Maintenance Industrielle de Vierzon S.A. France
Motadour S.A. France
Moteurs Leroy-Somer S.A. France
Moteurs Patay S.A. France
Societe Anonyme de Mecanique et D'outillage
du Vivarais S.A. France
Societe Confolentaise de Metalurgie S.A. France
Societe Commerciale des Ateliers de
Constructions Electriques Dorleans S.A. France
Societe de Mecanique et D'Electrothermie
des Pays de L'Adour S.A. France
Liebert France S.A. France
Ridgid France S.A. France
Emerson Holding Company Limited UK
Asco Joucomatic Ltd. UK
Joucomatic Controls Ltd. UK
Copeland Ltd. N. Ireland
El-O-Matic Limited UK
Emerson Electric (U.K.) Limited UK
Fisher-Rosemount Limited UK
Xomox U.K. Limited UK
Liebert Ltd. UK
Liebert Swindon Ltd. UK
Pactrol Controls Limited UK
Switched Reluctance Drives Ltd. (SDRL) UK
Reluctance Motors Ltd. UK
Emerson Laminaciones de Acero de Monterrey, S.A. de C.V. Mexico
F-R Tecnologias de Flujo, S.A. de C.V. Mexico
Fisher-Rosemount Hungary Ltd. Hungary
Fisher-Rosemount Manufacture Ltd. Hungary
Liebert Europe Espana S.A. Spain
Motoreductores U.S., S.A. de C.V. Mexico
Rotores S.A. de C.V. Mexico
Termotec de Chihuahua S.A. de C.V. Mexico
Wilson Investment 1, Inc. Delaware
F.G. Wilson L.L.C. Delaware
F.G. Wilson (Engineering) Limited UK
Everton Engineering (N.I.) Limited UK
F.G. Wilson Australia PTY Limited Australia
F.G. Wilson Engineering (Dublin) Limited UK
F.G. Wilson (Engineering) HK Limited Hong Kong
F.G. Wilson Engineering Vertriebs-GmbH Germany
F.G. Wilson Inc. Delaware
F.G. Wilson (Proprietary) Limited S. Africa
F.G. Wilson S.A. France
F.G. Wilson Singapore Pte Limited Singapore
F.G. Wilson Technology India Pvt. Ltd. India
Genrent Limited UK
F.G. Wilson (USA) LLC Delaware
Etirex S.A. France
Fisher Controls International, Inc. Delaware
Con-Tek Valves, Inc. Georgia
Exac Corporation California
Fisher Controles Industria E Commercio Ltda. Brazil
Fisher-Rosemount Do Brasil Ltda. Brazil
Fisher-Rosemount Asia Pacific Ltd. Delaware
Fisher Controls De Mexico, S.A. de C.V. Mexico
Fisher-Rosemount China Limited Hong Kong
Tianjin Fisher Controls Valve Co. Ltd. China
Fisher Controls Pty. Limited Australia
Fisher Service Company Delaware
Fisher-Rosemount Manufacturing (M) SDN BHD Malaysia
Fisher-Rosemount Systems, Inc. Delaware
Westinghouse Process Control, Inc. Delaware
Fisher-Rosemount de Venezuela S.A. Venezuela
Fro-Mex, S.A. de C.V Mexico
H.D. Baumann Inc. Delaware
Nippon Fisher Company Ltd. Japan
Fisco Ltd. (Fisco Kabushiki Kaisha) Japan
Fisher Rosemount, Inc. Delaware
Fisher-Rosemount N.V./S.A. Belgium
Senpro N.V. Belgium
Fisher-Rosemount S.A. France
Rosemount Portugal Instrumentos Lta. Portugal
Fusite Corporation Ohio
Emerson Japan, Ltd. Japan
Okura Intex Co. Ltd. Japan
Taiyo Emerson Ltd. Japan Japan
Fusite Land Company Delaware
High Voltage Maintenance Corporation Ohio
Innoven III Corporation Delaware
Intellution, Inc. Massachusetts
Intellution Asia Pte. Ltd. Singapore
Intellution Australia Pty Ltd. Australia
Intellution GmbH Germany
Intellution Korea Limited Korea
Intellution K.K. (Japan) Incorporated Japan
Intellution SARL France
Intellution Limited UK
Wizdom Controls, Inc. Delaware
Kop-Flex, Inc. Delaware
Kop-Flex Canada Limited Canada
Kop-Flex International, Inc. Virgin Islands
Lipe-Rollway Corporation New York
Lipe-Rollway International Ltd. Delaware
Lipe-Rollway Australia Pty. Ltd. Australia
Lipe-Rollway de Mexico, S.A. de C.V. Mexico
Lipe-Rollway Deutschland GmbH Germany
Lipe-Rollway Ltd. Canada
Lipe-Rollway N.V. Belgium
Lipe-Rollway Technology, Inc. New York
Rollway Bearing Ltd. Delaware
Louisville Ladder Holding Corp.-Nevada Nevada
Louisville Holding Corp.- Delaware Delaware
Louisville Ladder Group LLC Delaware
Escaleras Holding LLC Delaware
Louisville Ladder Group International, Inc. Delaware
Metaloy, Inc. Massachusetts
Metropolitan International, Inc. Nevada
InterMetro Industries Corporation Nevada
InterMetro Industries Corporation Delaware
Metro Industries, Inc. Nevada
Metropolitan Wire (Canada) Ltd. Canada
Metropolitan Wire Corporation Pennsylvania
Motores Hermeticos del Sur, S.A. de C.V. Mexico
PC & E, Inc. Missouri
Ridge Tool Europe NV Belgium
Ridgid Scandinavia A/S Denmark
Ridge Tool Europe S.A. Belgium
Ridgid Vaerktoj A/S Denmark
Ridgid Ferramentas E. Maquinas, Ltda. Brazil
SWECO Europe, S.A. Belgium
Termocontroles de Juarez S.A. de C.V. Mexico
The Sulton Company, Inc. Delaware
Transmisiones de Potencia Emerson S.A. de C.V. Mexico
Vermont American Corporation Delaware
Credo Tool Company Delaware
Carbide Blast Joints, Inc. Texas
DML Industrial Products, Inc. North Carolina
Vermont American Corporation, Fountain Inn Delaware
Primark DML, Inc. North Carolina
VAC Data Management, Inc. Delaware
VAC Services LP Kentucky
Gilmour Enterprises, Inc. Delaware
Gilmour Manufacturing Company Pennsylvania
Gilmour, Inc. Delaware
VA Export, Ltd. Virgin Islands
VA Holding Delaware
VA (Hong Kong) Limited Hong Kong
Vermont American Asia-Pacific, Inc. Delaware
Vermont American (Australia) Ltd. Nevada
Vermont American Canada Inc. Canada
Vermont Westa Werkzeugbau GmbH Germany
Western Forge Corporation Delaware
Wiegand S.A. de C.V. Mexico
|
Exhibit 23
The Board of Directors
Emerson Electric Co.:
We consent to incorporation by reference in Registration Statement Nos. 333-46919, 333-44163, 33-60055, 33-57161, 33-38805, 33-34948, 33-34633, 33-57985, 33-60399, 33-2739 and 2-76653 on Form S-8 and Registration Statement Nos. 333-66865, 33-62545 and 33-39109 on Form S-3 of Emerson Electric Co. of our report dated November 2, 1998, relating to the consolidated balance sheets of Emerson Electric Co. and subsidiaries as of September 30, 1998 and 1997, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended September 30, 1998, which report is incorporated by reference in the September 30, 1998 annual report on Form 10-K of Emerson Electric Co.
/s/ KPMG PEAT MARWICK LLP St. Louis, Missouri December 22, 1998 |
Exhibit 24
POWER OF ATTORNEY
The undersigned members of the Board of Directors and
Executive Officers of Emerson Electric Co., a Missouri corporation
with principal offices at 8000 West Florissant Avenue, St. Louis,
Missouri 63136, hereby appoint W. J. Galvin as their Attorney-in-
Fact for the purpose of signing Emerson Electric Co.'s Securities
and Exchange Commission Form 10-K (and any and all amendments
thereto) for the fiscal year ended September 30, 1998.
Dated: October 6,1998.
-----------------
Signature Title
--------- -----
/s/C. F. Knight Chairman of the Board and Chief Executive
----------------------------- Officer and Director
C. F. Knight
/s/W. J. Galvin Senior Vice President of Finance and Chief
----------------------------- Financial Officer
W. J. Galvin
/s/J. G. Berges Director
-----------------------------
J. G. Berges
/s/L. L. Browning, Jr. Director
-----------------------------
L. L. Browning, Jr.
/s/A. A. Busch, III Director
-----------------------------
A. A. Busch, III
/s/D. C. Farrell Director
-----------------------------
D. C. Farrell
|
/s/J. A. Frates Director ----------------------------- J. A. Frates /s/R. B. Horton Director ----------------------------- R. B. Horton /s/G. A. Lodge Director ----------------------------- G. A. Lodge /s/R. B. Loynd Director ----------------------------- R. B. Loynd /s/V. R. Loucks, Jr. Director ----------------------------- V. R. Loucks, Jr. /s/R. L. Ridgway Director ----------------------------- R. L. Ridgway /s/R. W. Staley Director ----------------------------- R. W. Staley /s/A. E. Suter Director ----------------------------- A. E. Suter /s/G. W. Tamke Director ----------------------------- G. W. Tamke /s/W. M. Van Cleve Director ----------------------------- W. M. Van Cleve /s/E. E. Whitacre, Jr. Director ----------------------------- E. E. Whitacre, Jr. |
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998 EMERSON ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED BALANCE SHEET FILED WITH THE COMPANY'S 1998 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | SEP 30 1998 |
| PERIOD END | SEP 30 1998 |
| CASH | 209,700 |
| SECURITIES | 0 |
| RECEIVABLES | 2,470,700 |
| ALLOWANCES | 54,600 |
| INVENTORY | 1,996,500 |
| CURRENT ASSETS | 5,001,300 |
| PP&E | 6,070,700 |
| DEPRECIATION | 3,059,100 |
| TOTAL ASSETS | 12,659,800 |
| CURRENT LIABILITIES | 4,021,700 |
| BONDS | 1,056,600 |
| COMMON | 238,300 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| OTHER SE | 5,565,000 |
| TOTAL LIABILITY AND EQUITY | 12,659,800 |
| SALES | 13,447,200 |
| TOTAL REVENUES | 13,447,200 |
| CGS | 8,595,600 |
| TOTAL COSTS | 8,595,600 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 151,700 |
| INCOME PRETAX | 1,923,500 |
| INCOME TAX | 694,900 |
| INCOME CONTINUING | 0 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 1,228,600 |
| EPS PRIMARY | 2.80 |
| EPS DILUTED | 2.77 |