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
WISCONSIN 39-0482000
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403
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(Address of principal executive offices) (Zip Code)
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Securities Registered pursuant to Section 12(g) of the Act:
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]
Approximately 62% of the outstanding shares are held by non-affiliates. The aggregate market value of these shares was approximately $516,911,550 based on the market price of $24.79 per share on June 18, 2002. The remaining outstanding shares are owned or controlled by or for directors, officers, employees, retired employees, and their families.
The number of shares outstanding of the registrant's Common Stock, $0.625 par value, was 33,631,638 at June 19, 2002.
An Exhibit index appears at pages 16-22 herein.
Portions of the following documents are incorporated by reference into the parts of this Form 10-K designated to the right of the document listed.
Incorporated Document Location in Form 10-K
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Annual Report to Shareholders for the
fiscal year ended March 31,2002 Part I of Form 10-K
(Items 1 and 3)
Part II of Form 10-K
(Items 7, 8)
Part IV of Form 10-K
(Item 14)
2002 Definitive Proxy Statement dated
June 7, 2002 Part III of Form 10-K
(Items 10, 11, 12, 13)
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Cover
Table of Contents
Part I
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Item 1 - Business
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General, Developments and Strategy,
Geographical Areas, Exports, Foreign
and Domestic Operations, Competitive
Position, Customer Dependence, Backlog
of Orders, Raw Materials, Patents,
Research and Development, Environmental,
Health and Safety Matters, Employees,
Seasonal Nature of Business, Working
Capital Items 5
Item 2 - Properties 11
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Item 3 - Legal Proceedings 11
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Item 4 - Submission of Matters To A Vote of
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Security Holders 12
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Part II
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Item 5 - Market for Registrant's Common Equity
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and Related Stockholder Matters 12
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Item 6 - Selected Financial Data 13
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Item 7 - Management's Discussion and Analysis
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of Financial Condition and Results of
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Operations 13
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Item 8 - Financial Statements and Supplementary Data 13
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10-K Pages
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Item 9 - Changes in and Disagreements with
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Accountants on Accounting and Financial
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Disclosure 13
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Part III
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Items 10 and 11 - Directors and Executive Officers
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of the Registrant; Executive Compensation 13
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Item 12 - Security Ownership of Certain Beneficial
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Owners and Management 15
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Item 13 - Certain Relationships and Related
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Transactions 15
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Part IV
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Item 14 - Exhibits, Financial Statement Schedules,
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and Reports on Form 8-K 15
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1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
Signatures 23
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Throughout this Report, the terms "Modine," the "Company" and/or the "Registrant" refer to Modine Manufacturing Company and consolidated subsidiaries.
Modine was incorporated under the laws of the State of Wisconsin on June 23, 1916.
Modine is an independent, worldwide leader in thermal management technology serving vehicular, industrial, commercial, electronic and building HVAC (heating, ventilating, air conditioning) markets. Modine develops, manufactures, and markets thermal management products, components and systems for use in various OEM (original equipment manufacturer) applications and for sale to the automotive aftermarket (as replacement parts) and to a wide array of building and other commercial markets. The primary markets consist of:
- Automobile, truck and bus manufacturers;
- Agricultural and construction equipment manufacturers;
- Heating and cooling equipment manufacturers;
- Construction contractors;
- Wholesalers of plumbing and heating equipment;
- Radiator repair shops;
- Wholesalers and installers of auto repair parts;
- Computer and server manufacturers;
- Telecommunications equipment manufacturers; and
- Industrial electronic equipment manufacturers.
We distribute our products through:
- Company salespersons;
- Independent manufacturers' representatives;
- Independent warehouse distributors;
- Mass merchandisers and
- National accounts.
Our operations are organized on the basis of market categories or geographical responsibility, as follows:
Original Equipment, which provides heat-transfer products, generally from business units in North America, to original equipment manufacturers of on-highway and off-highway vehicles, as well as to industrial and commercial equipment manufacturers, located primarily in North America.
Distributed Products, which provides heat-transfer products primarily for the North American and European vehicular replacement market and the building HVAC market, from business units located in North America and Europe, and electronics cooling products primarily for the computer and
telecommunications equipment markets in North America, Europe, and Asia from business units in these three areas.
European Operations, which provides heat-transfer products, primarily to European original equipment manufacturers of on- highway and off-highway vehicles and European industrial equipment manufacturers.
The Company has assigned specific business units to a segment based principally on these defined markets and their geographical locations.
The Company's three reportable segments offer a broad line of products that can be categorized generally as follows:
Years ended March 31
2002 2001 2000
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Modules/Packages 27% 22% 23%
Radiators & Radiator Cores 27% 29% 29%
Oil Coolers 15% 16% 15%
Charge-Air Coolers 9% 9% 9%
Vehicular Air Conditioning 7% 8% 10%
Building HVAC 7% 7% 7%
Electronics 4% 5% 3%
Miscellaneous 3% 4% 4%
EGR Coolers 1% 0% 0%
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We remain committed to the vision of creating value by focusing on customer partnerships and providing innovative solutions for our customer's thermal problems. We will continue to use our skills and resources to strengthen our position in key traditional markets. At the same time, we will leverage those strengths into new markets that need heat-transfer solutions to solve complex problems.
From a growth perspective, we are pursuing strategies to grow our best-performing core businesses while increasing our participation in new, non-traditional markets that offer attractive growth potential. In our traditional markets, we will increase our market penetration through longstanding customer relationships, superior technology, improved service, and increased content per vehicle. We are increasing market penetration and content per vehicle by continuing to move from components to systems and by utilizing just- in-sequence assembly plants to provide more value to our customers.
We are also focusing on the most promising new markets and new products. With the acquisition of Thermacore International, Inc., in April 2001, Modine gained entry into the electronics-cooling market. Thermacore competes as a leading supplier in this market, by designing, manufacturing and distributing thermal-management solutions for microprocessors and electronics applications in the computer, telecommunications, networking, and power-semiconductor
markets. We will continue our search for acquisitions that meet our criteria: significant growth potential, high returns and a reasonable valuation. In addition, we are actively pursuing our next phase of growth, by introducing exhaust gas recirculation (EGR) coolers, investigating multiple uses of CO2 as a refrigerant and capitalizing on the growth in vehicular and stationary fuel cells through our Fuel Cell Products Group.
Like growth, profitability and asset utilization also are critical focuses for Modine. We are concentrating heavily on managing our selling, general, and administrative expenses through numerous cost-saving initiatives, a continuing evaluation of our processes, and control of staff costs. In addition, we continue to evaluate the profitability of current product lines and plants, with the objective of improving our overall returns. Evidence of this is our announcement in October 2001 to take a restructuring charge for the closure and consolidation of several facilities.
Finally, we have made substantial investments in new, highly efficient plants and equipment along with state-of-the-art technical centers. All of these are critical to our strategy of generating growth through technological leadership.
We maintain administrative organizations in two regions - North America and Europe - to facilitate financial and statutory reporting and tax compliance on a worldwide basis and to support the three business units.
Our operations are located in the following countries:
North America Europe South America Central America Asia/Pacific
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Canada Austria Brazil El Salvador Japan
Mexico Belgium Korea
United States United Kingdom Taiwan
France
Germany
Hungary
Italy
Netherlands
Poland
Spain
Switzerland
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Our non-U.S. subsidiaries and affiliates manufacture and sell a number of vehicular, industrial and electronic products similar to those produced in the U.S. In addition to normal business risks, operations outside the U.S. are subject to others such as changing political, economic and social environments, changing governmental laws and regulations, currency revaluations and market fluctuations.
You can find more information in "Note 21. Segment and Geographic Information" on pages 35-36 of our 2002 Annual Report to Shareholders.
In addition, the Company exports to foreign countries and receives royalties from foreign licensees. Export sales as a percentage of total sales were 11%, 12% and 12% for fiscal years ended in 2002, 2001 and 2000 respectively. Estimated after-tax earnings on export sales as a percentage of total net earnings were 11%, 12% and 12% for fiscal years ended in 2002, 2001 and 2000, respectively. Royalties from foreign licensees as a percentage of total after-tax earnings were 13%, 25% and 5% for the last three fiscal years, respectively. Included in the royalty percentages reported for fiscal 2002, 2001 and 2000 are lump-sum payments received as partial settlement for past infringement of Modine's PF technology. As a percentage of total after-tax earnings these lump-sum payments were 0%, 21% and 1% for the last three fiscal years. Based upon an unfavorable decision by the Japanese patent office Board of Appeals in March 2002, Modine will no longer receive royalty payments in Japan related to its PF patents. Since July of 2000, Modine has been receiving royalty payments from certain Japanese competitors related to its PF patents, which expire in 2006. In fiscal 2002, these royalties accounted for approximately $1.8 million, or 8%, of after-tax earnings.
Modine believes its international presence has positioned the Company to share profitably in the anticipated long-term growth of the global vehicular and industrial markets. Modine is committed to increasing its involvement and investment in international markets in the years ahead.
Financial information relating to the Company's foreign and domestic operations is included in the Company's 2002 Annual Report to Shareholders and is incorporated herein by reference at Note 21 on pages 35-36 therein.
The Company competes with several manufacturers of heat transfer products, some of which are divisions of larger companies and some of which are independent companies. The Company also competes for business with parts manufacturing affiliates of some of its customers. The markets for the Company's products are increasingly competitive and have changed significantly in the past few years as the Company's traditional OEM customers in the United States, faced with dramatically increased international competition, have expanded their worldwide sourcing of parts to compete more effectively with lower-cost imports. These market changes have caused the Company to experience competition from suppliers in other parts of the world which enjoy economic advantages such as lower labor costs, lower health care costs, and other factors. In addition, our customers continue to ask the Company, as well as their other primary suppliers, to participate directly and more substantially in research and development, design, and validation responsibilities. That has resulted and should continue to result in stronger customer relationships and more partnership opportunities for the Company.
Ten customers accounted for approximately 51% of the Company's sales in the fiscal year ended March 31, 2002. These customers, listed alphabetically, were: BMW, Caterpillar, DaimlerChrysler, Fiat, John Deere, International Truck (formerly Navistar International), MAN Truck, NAPA, Paccar and Volkswagen. One of these customers, BMW, accounted for approximately 10.5% of total Company sales in fiscal 2002. These sales were made predominantly in the European Operations segment. Goods are supplied to these customers on the basis of individual purchase orders received from them. When it is in the customer's and the Company's best interests, the Company utilizes long-term sales agreements with customers to minimize investment risks and also to provide the customer with a proven source of competitively priced products. These contracts can be up to two to three years in duration and may include built -in pricing adjustments. There are no other relationships between the Company and its customers.
While the Company has a large backlog of orders, the backlog is not deemed significant or material; backlog historically has had little relation to shipments. Modine's products are produced from readily available materials such as aluminum, copper, brass, and steel and have a relatively short manufacturing cycle. The Company's operating units maintain their own inventories and production schedules. Current production capacity, reduced by planned plant closures in North America and Europe as part of a restructuring announced in the third quarter of fiscal 2002, is capable of handling the sales volumes expected in fiscal 2003.
Aluminum, copper, brass, steel, and solder, all essential to the business, are purchased regularly from several domestic and foreign producers. In general, the Company does not rely on any one supplier for these materials, which are for the most part available from numerous sources in quantities required by the Company. The Company normally does not experience material shortages within its operations and believes that producers' supplies of these materials will be adequate through the end of fiscal year 2003.
The Company, and certain of its wholly-owned subsidiaries, own outright or are licensed to produce products under a number of patents and licenses. These patents and licenses, which have been obtained over a period of years, will expire at various times. Because the Company is involved with many product lines, the Company believes that its business as a whole is not materially dependent upon any particular patent or license, or any particular group of patents or licenses. Modine considers
each of its patents, trademarks and licenses to be of value and aggressively defends its rights throughout the world against infringement.
The Company remains committed to its vision of creating value through technology. Company-sponsored research activities relate to the development of new products, processes and services, or the improvement of existing products, processes, and services. Research expenditures in fiscal 2002 amounted to $29,877,000; in fiscal 2001 amounted to $28,059,000; and in fiscal 2000 amounted to $23,011,000. There were no material expenditures on research activities that were customer-sponsored. Over the course of the last few years, the Company has become involved in a number of industry- or university- sponsored research organizations. These consortia conduct research and provide data on technical topics deemed to be of interest to the Company for practical applications in the markets the Company serves. The research and data developed is generally shared among the member companies. In addition, to achieve efficiencies and lower developmental costs, Modine's research and engineering groups work closely with Modine's customers on special projects and systems designs.
Modine is strengthening its commitment to the environment by implementing an Environmental Management System (EMS) at all its original equipment locations throughout the world. The system is based on the internationally recognized ISO 14000 standard for environmental management systems. Modine's EMS provides a common framework and the tools needed to conserve resources, improve manufacturing process efficiency, minimize liability exposure and reduce operational costs. Modine evaluates the performance of the Company's environmental programs through continuous monitoring, auditing and accounting systems.
In calendar year 2001, the Company's North American facilities reduced waste for a fifth consecutive year with a 21% year-over- year decrease (normalized for sales dollars). Overall, these facilities have achieved an impressive 51% reduction in waste/sales dollars since 1996. The reduced use of solvents, conversion to more environmentally-friendly chemicals, shift to returnable packaging, and the generation of less scrap contributed to this long-term, sustained waste reduction.
Modine's advances in reducing its impact on the environment are also evidenced by a marked reduction in its use of toxic chemicals. Each year, the United States Environmental Protection Agency ("USEPA") requires companies to report on their environmental releases of toxic chemicals, including air emissions, water discharges, and landfilled wastes. From 1995 to 2000, Modine's US locations achieved a 56% (532,000 pounds) reduction in environmental releases. This rate of reduction is better than the industry trend, and substantially better than the national trend, which decreased only 8% from 1995 to 1999.
Modine accrues for environmental remediation activities relating to past operations - including those under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), often referred to as "Superfund," and under the Resource Conservation and Recovery Act (RCRA) - when it is probable that a liability has been incurred and reasonable estimates can be made. In addition, an investigation and/or remediation obligation may arise when a facility is closed or sold. These expenditures most often relate to facilities and sites where past operations followed practices and procedures that were considered acceptable under then-existing regulations, but which now require investigative and/or remedial work to ensure sufficient protection to the environment.
Three of the Company's manufacturing facilities currently have been identified as requiring soil and/or groundwater remediation. Because of the liability of former landowners and contractual obligations, it is unlikely these remediation efforts will have a material effect on the Company's consolidated financial condition.
Although there are no currently known liabilities that might have a material effect on the Company's consolidated net assets, operating results or liquidity, the EPA has designated Modine as a potentially responsible party ("PRP") for remediation of six waste disposal sites. These sites are not company-owned and allegedly contain wastes attributable to Modine from past operations. For the six sites currently known, the Company's potential liability will be significantly less than the total site remediation because the percentage of material attributable to the Company is relatively low.
Environmental regulations, as well as the Company's policy to improve continuously upon its environmental management programs, will require capital equipment expenditures over the coming years. For the fiscal year ending March 31, 2002, capital expenditures related to environmental projects were $0.2 million. These expenditures included capital outlays to retrofit existing facilities, as well as those associated with new facilities and other compliance costs. Modine currently expects expenditures for environmentally-related capital projects to be about $0.5 million in fiscal year 2003.
Environmental expenses charged to current operations, including remediation costs, totaled about $3.8 million for the fiscal year ending March 31, 2002. These expenses related to solid waste disposal, operating and maintenance costs incurred in conducting routine compliance activities, and other matters. Operating expenses of some facilities, including environmentally-related plant closure costs, may increase during fiscal year 2003, but the competitive position of the Company is not expected to change materially. The Company has no reason to believe that environmental costs will vary significantly from similar costs incurred by other companies engaged in similar businesses.
The Health and Safety performance of the Company continues to move in a positive direction. Recordable and Lost Workday (LWDII) incident rates improved from the previous year by 23% and 30%, respectively. Over the past five years, Modine has experienced a 58% reduction in its recordable incident rate and a 53% reduction
in its LWDII rate. In addition, two of Modine's facilities, located in Lawrenceburg, TN and Buena Vista, VA, both reached milestones this year when they achieved five years without a lost time injury.
The Company's Richland, SC facility was the second Modine location to become a "STAR" plant. The Modine "STAR" is awarded to those facilities that achieve 100% compliance with the Company's 22 Health and Safety elements and attain recordable and LWDII rates below the General Industry Average for the preceding twelve month period. The Modine "STAR" program is modeled after the Occupational Safety and Health Administration's (OSHA) Voluntary Protection Program (VPP).
The Company also continues to make significant efforts to prevent Muscular Skeletal Disorders (MSD's). The Body Mechanic Job Observation Program is used by nearly all of our U.S. Original Equipment plants. This program involves the use of occupational therapists, who observe employees performing their jobs and provide coaching on proper body mechanics, stretching, and off- the-job safety. In addition, these specialists are actively involved in the improvement of ergonomics in both existing and planned production processes.
The number of persons employed by the Company as of March 31, 2002 was approximately 7,700.
Distributed Products may experience a degree of seasonality since the demand for aftermarket and HVAC products are affected by weather patterns, construction, and other factors. On an overall company basis, though, there is no significant degree of seasonality as indicated by the percentages below. Sales to original equipment and electronics manufacturers are dependent upon the demand for new vehicles and equipment. The following quarterly net- sales detail illustrates the degree of fluctuation for the past five years:
Fiscal Year Fiscal
Ended First Second Third Fourth Year
March 31 Quarter Quarter Quarter Quarter Total
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($ In Thousands)
2002 $280,631 $269,114 $270,433 $254,582 $1,074,760
2001 300,441 284,056 265,393 271,509 1,121,399
2000 291,388 296.161 291,298 296,109 1,174,956
1999 279,376 278,341 291,002 287,874 1,136,593
1998 262,213 266,951 274,714 262,237 1,066,115
Five-year 282,810 278,925 278,568 274,462 1,114,765
Average
Percent 25% 25% 25% 25% 100%
of Year
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The Company's products for the original equipment market are manufactured on an as-ordered basis, which makes large inventories of such products unnecessary. In addition, the Company does not experience a significant amount of returned products. In the HVAC and aftermarket areas, due to the extensive distribution systems and seasonal sales programs, varying levels of finished goods inventory are maintained. This inventory is managed efficiently and spread throughout the Company's distribution systems. In these areas, in general, the industry and the Company make use of extended terms of payment for customers on a limited and/or seasonal basis.
The Company's world headquarters, including general offices, and laboratory, experimental and tooling facilities, are maintained in Racine, Wisconsin. Additional technical support functions are located in Harrodsburg, Kentucky and Bonlanden, Germany. Almost all of the Company's manufacturing and larger distribution centers are owned outright. A few manufacturing facilities and numerous regional sales and service centers, distribution centers, and offices are occupied under various lease arrangements.
The Company's principal plants and other facilities during the fiscal year ended 2002, on an operating-segment basis, are as follows:
Type of Original Distributed European Corporate & Facility Equipment Products Operations Other Total -------- --------- ----------- ---------- ----------- ----- Manufacturing 16 13 9 -- 38 Distribution -- 5 -- -- 5 Sales & Service Centers/Offices 2 22 8 1 33 Joint Ventures 2 3 5 Total 18 40 19 4 81 |
Those same plants and facilities, on a geographic basis, are as follows:
Type of North South Asia/ Central Facility America Europe America Pacific America Total -------- ------- ------ ------- ------- ------- ----- Manufacturing 23 13 -- 2 -- 38 Distribution 4 1 -- -- -- 5 Sales & Service Centers/Offices 13 18 -- 1 1 33 Joint Ventures -- 2 2 1 -- 5 Total 40 34 2 4 1 81 |
The Company currently uses its facilities for the purposes as noted above.
The Company's facilities, in general, are well maintained and conform to the sales, distribution, or manufacturing operations for which they are being used. Their productive capacity is, from time to time, reduced or expanded as necessary to meet changing market conditions and Company needs. In the third quarter of fiscal 2002, the Company announced a restructuring which will reduce productive capacity in United States and Europe in fiscal 2003. Three manufacturing facilities will be closed in the United States and one manufacturing facility will be closed in Germany.
Certain information required hereunder is incorporated by reference from the Company's Annual Report to Shareholders, Page 37, Note 22.
Under the rules of the Securities and Exchange Commission, certain environmental proceedings are not deemed to be ordinary or routine proceedings incidental to the Company's business and are required to be reported in the Company's annual and/or quarterly reports. The Company is not currently a party to any such proceedings.
Omitted as not applicable.
The Company's Common Stock is quoted on the National Association
of Securities Dealers' Automated Quotation system ("NASDAQ") as a
National Market issue. The Company's trading symbol is "MODI."
The table below shows the range of high and low bid information
for the Company's Common Stock for fiscal years 2001-02 and 2000-
01. As of March 31, 2002, shareholders of record numbered
approximately 5,300; it is estimated that beneficial owners
numbered about 17,000.
2001-02 2000-01
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Quarter High Low Dividends High Low Dividends
First $29.00 $24.06 $ .250 $28.31 $19.94 $ .25
Second 32.00 19.50 .250 29.94 25.00 .25
Third 25.75 19.13 .250 29.38 19.63 .25
Fourth 29.08 22.10 .125 28.13 19.00 .25
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TOTAL $ .875 $1.00
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Certain of the Company's financing agreements require it to maintain specific financial ratios and place certain limitations on the use of retained earnings for the payment of cash dividends and the acquisition of treasury stock. Under the most restrictive covenant dividend payments may not exceed $50,000,000 in any fiscal year. Cash dividend payments made in fiscal 2002 totaled $28,981,000. Other loan agreements give certain existing unsecured lenders security equal to any future secured borrowing.
In October 1986, the Company adopted a shareholder rights plan and issued one right for each share of common stock. The rights are not currently exercisable but will become exercisable 10 days after a shareholder has acquired 20 percent or more, or commenced a tender or exchange offer for 30 percent or more, of the Company's common stock. Each right will initially entitle the holder to purchase a unit of 1/100 Preferred Series A Participating Stock. During fiscal 1996-1997, the Company amended the Plan increasing the price from $21.25 to $95.00 per unit. In the event of certain mergers, sales of assets, or self-dealing transactions involving a 20 percent or more shareholder, each right not owned by such 20 percent or more shareholder will be modified so that it will then be exercisable for common stock having a market value of twice the exercise price of the right. The rights are redeemable in whole by the Company, at a price of $0.0125 per right, at any time before 20 percent or more of the Company's common stock has been acquired. On January 18, 1995, the Board of Directors of the Company authorized an amendment to the Rights Agreement by extending the final expiration date of the Rights from October 27, 1996 to October 27, 2006. Accordingly, the Rights expire on October 27, 2006, unless previously redeemed.
Fiscal Year ended March 31
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2002 2001 2000 1999 1998
Sales (in
thousands) $1,074,760 $1,121,399 $1,174,956 $1,136,593 $1,066,115
Net earnings (in
thousands) 23,345 51,830 66,332 75,085 74,749
Total assets (in
thousands) 903,044 937,171 955,871 933,962 766,035
Long-term debt (in
thousands) 139,654 137,449 214,585 144,124 89,946
Dividends per share .875 1.00 .92 .84 .76
Net earnings per share
- Basic .70 1.61 2.05 2.31 2.30
- Assuming dilution .70 1.58 2.01 2.25 2.24
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Certain information required hereunder is incorporated by reference from the Company's 2002 Annual Report to Shareholders, pages 14-22.
The Consolidated Statements of Earnings, and the related Consolidated Balance Sheets, Statements of Cash Flows, Shareholders' Equity, Notes to Consolidated Financial Statements, and the report of PricewaterhouseCoopers LLP dated April 30, 2002 appearing on pages 23-38 of the Company's 2002 Annual Report to Shareholders are incorporated herein by reference. With the exception of the aforementioned information, no other data appearing in the 2002 Annual Report to Shareholders is deemed to be filed as part of this Annual Report on Form 10-K. Individual financial statements of the Registrant are omitted because the Registrant is primarily an operating company, and the subsidiaries included in the consolidated financial statements are wholly-owned.
There were no disagreements on accounting or financial disclosures between the Company and its auditors.
ITEMS 10 and 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE
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REGISTRANT; EXECUTIVE COMPENSATION.
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The information about directors and executive officers and executive compensation on pages 3-5 and pages 11, 12, 16, 17 and 18, of the Company's definitive Proxy Statement dated June 7, 2002 under the headings "Election of Directors," "Nominees to be Elected," "Directors Continuing in Service," "Executive Compensation," and Equity Compensation" is incorporated herein by reference, but excluding the Officer Nomination and Compensation Committee Report on Executive Compensation on page 12 of the Proxy Statement.
Executive Officers of Registrant
Officer
Name Age Position Since
---- --- -------- -------
D. R. Johnson* 60 Chairman and Chief Executive Officer 1988
D. B. Rayburn* 54 President and Chief Operating Officer 1991
D. R. Zakos** 48 Vice President, General Counsel and 1985
Secretary
E. T. Thomas 48 Senior Vice President and Chief Financial 1998
Officer
C. R. Katzfey 55 Group Vice President 2000
K. A. Feldmann 48 Group Vice President 2000
J. R. Rulseh*** 46 Group Vice President 2001
A. C. DeVuono 53 Vice President and Chief Technology 1996
Officer
R. L. Hetrick 60 Vice President, Human Resources 1989
R. W. Possehl 57 Vice President, Administration 1985
R. S. Bullmore 52 Corporate Controller 1983
G. A. Fahl 47 Environmental, Health & Safety Officer 1998
C. C. Harper 48 Chief Information Officer 1998
D. B. Spiewak 48 Treasurer 1998
M. C. Kelsey**** 37 Senior Counsel and Assistant Secretary 2002
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* D. R. Johnson was named Chairman and Chief Executive Officer, and D. B. Rayburn was named President and Chief Operating Officer on April 1, 2002. ** D. R. Zakos was promoted to Vice President, General Counsel and Secretary on April 1, 2001. *** J. R. Rulseh became an Officer/Group Vice President on April 1, 2001. Prior to April 1, 2001, Mr. Rulseh was General Manager of Modine's Heavy Duty and Industrial Division, and more recently, was Managing Director of Modine Europe Automotive Division. **** M. C. Kelsey became an officer on April 1, 2002. Prior to that, she was Senior Counsel.
Officer positions are designated in Modine's By-Laws and the persons holding these positions are elected annually by the Board at its first meeting after the annual meeting of shareholders in July of each year.
There are no family relationships among the executive officers and directors. All of the above officers have been employed by Modine in various capacities during the last five years, except E. T. Thomas, D. B. Spiewak and M. C. Kelsey.
Mr. Thomas joined Modine on August 3, 1998 as Group Vice President, Highway Products. Mr. Thomas previously worked at Eaton Corporation for nine years where he had been General Manager of the Fluid Power Division. Before that, he was General Manager of Eaton's Torque Control Products Division. He also served Eaton as a Plant Manager and Manager of Strategic Planning and Acquisition Analysis. Prior to joining Eaton, Mr. Thomas spent eleven years at General Motors as a member of the Corporate Financial Staff.
Mr. Spiewak joined Modine as Treasurer on September 21, 1998. Mr. Spiewak came to Modine from Alliant Foodservice, Inc., formerly a part of Kraft Foods. Prior to Alliant, Mr. Spiewak
spent eight years with Illinois Tool Works, Inc. as Manager, Treasury Systems.
Ms. Kelsey joined Modine as Senior Counsel on April 2, 2001. Ms. Kelsey came to Modine from Quarles & Brady, LLP, a large national law firm, where she was a partner. Ms. Kelsey was with Quarles & Brady for 12 years.
There are no arrangements or understandings between any of the above officers and any other person pursuant to which he was elected an officer of Modine.
Information relating to the employment agreements, termination and change-in-control arrangements is incorporated by reference from the Company's 2001-2002 definitive Proxy Statement dated June 7, 2002 at pages 19-20.
The Company's stock option and stock award plans contain certain provisions relating to change-in-control or other specified transactions that may, if authorized by the Officer Nomination and Compensation Committee of the board, accelerate or otherwise release shares granted or awarded under those plans.
The Company incorporates by reference the information relating to stock ownership on pages 5-7 of the Company's definitive Proxy Statement dated June 7, 2002 under the headings "Principal Shareholders and Share Ownership of Directors and Executive Officers, "Principal Shareholders," and "Securities Owned by Management."
The Company incorporates by reference the information contained in the Company's definitive Proxy Statement dated June 7, 2002 on page 20 under the heading "Transactions."
(a) The following documents are filed as part of this Report:
Consolidated Statements of Earnings for the years ended March 31, 2002, 2001, and 2000. 23
Consolidated Balance Sheets at March 31, 2002
and 2001. 24
Consolidated Statements of Cash Flows for the
years ended March 31, 2002, 2001, and 2000. 25
Consolidated Statements of Shareholders' Equity
for the years ended March 31, 2002, 2001, and
2000. 26
Notes to Consolidated Financial Statements. 27 - 37
Report of Independent Accountants. 38
* Incorporated by reference from the indicated
pages of the 2001-02 Annual Report to
Shareholders.
Page in
Form 10-K
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(2) Financial Statement Schedules:
Report of Independent Accountants on Financial
Statement Schedule for the three years ended
March 31, 2002. 23
Schedule II - Valuation and Qualifying Accounts
for the years ended March 31, 2002, 2001, and
2000. 24
(3) Consent of Independent Accountants. 28
(4) Exhibit Index. 16
(b) All other schedules have been omitted as they are not
applicable, not required, or because the required
information is included in the financial statements.
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The following exhibits are attached for information only unless specifically incorporated by reference in this Report:
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
2 Not applicable.
3(a) Restated Articles of Incorporation (as amended)
(filed by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1999).
*3(b) Restated By-Laws (as amended). 26
4(a) Specimen Uniform Denomination Stock Certificate
of the Registrant (filed by reference to the
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1998).
*4(b) Rights Agreement dated as of October 16, 1986 38
between the Registrant and First Chicago Trust
Company of New York (Rights Agent).
4(b)(i) Rights Agreement Amendment No. 1 dated as of
January 18, 1995 between the Registrant and
First Chicago Trust Company of New York
(Rights Agent) (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2000).
4(b)(ii) Rights Agreement Amendment No. 2 dated as of
January 18, 1995 between the Registrant and
First Chicago Trust Company of New York
(Rights Agent) (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2000).
4(b)(iii) Rights Agreement Amendment No. 3 dated as of
October 15, 1996, between the Registrant and
First Chicago Trust Company of New York
(Rights Agent) (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2001).
*4(b)(iv) Rights Agreement Amendment No. 4 dated as of 101
November 10, 1997 between the Registrant and
Norwest Bank Minnesota, N.A., [now known as
Wells Fargo Bank Minnesota, N.A.] (Rights
Agent).
*4(c) Bank One Credit Agreement dated April 17, 2002. 104
Note: The amount of long-term debt authorized
----
under any instrument defining the rights of
holders of long-term debt of the Registrant,
other than as noted above, does not exceed ten
percent of the total assets of the Registrant
and its subsidiaries on a consolidated basis.
Therefore, no such instruments are required to
be filed as exhibits to this Form. The
Registrant agrees to furnish copies of such
instruments to the Commission upon request.
9 Not applicable.
*10(a) Director Emeritus Retirement Plan (effective 186
April 1, 1992 and frozen as of July 1, 2000).
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
10(b) Employment Agreement between the Registrant
and D. R. Johnson (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2001).
10(c) Employment Agreement between the Registrant
and D. B. Rayburn (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2001).
10(d) Employment Agreement between the Registrant
and E. T. Thomas.
NOTE: This Employment Agreement is not
materially different from the Employment
Agreement between the Registrant and D. B.
Rayburn filed with Annual Report on Form 10-K
as Exhibit 10(c) for the fiscal year ended
March 31, 2001.
10(e) Employment Agreement between the Registrant
and A. C. DeVuono.
NOTE: This Employment Agreement is not
materially different from the Employment
Agreement between the Registrant and D. B.
Rayburn filed with Annual Report on Form
10-K as Exhibit 10(c) for the fiscal year
ended March 31, 2001.
*10(f) Change-in-Control Agreement between the 212
Registrant and D. R. Johnson.
10(g) Change-in-Control Agreement between the
Registrant and D. B. Rayburn.
NOTE: This Change-in-Control Agreement is
not materially different from the Change-in-
Control Agreement between the Registrant and
D. R. Johnson filed with this Annual Report
on Form 10-K as Exhibit 10(f).
10(h) Change-in-Control Agreement between the
Registrant and E. T. Thomas.
NOTE: This Change-in-Control Agreement is
not materially different from the Change-in-
Control Agreement between the Registrant and
D. R. Johnson filed with this Annual Report
on Form 10-K as Exhibit 10(f).
10(i) Change-in-Control Agreement between the
Registrant and A. C. DeVuono.
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
NOTE: This Change-in-Control Agreement is
not materially different from the Change-in-
Control Agreement between the Registrant and
D. R. Johnson filed with this Annual Report
on Form 10-K as Exhibit 10(f).
*10(j) 1985 Incentive Stock Plan (as amended). 227
10(k) 1985 Stock Option Plan for Non-Employee
Directors (as amended)(filed by reference
to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 31,
1999).
10(l) Pension and Disability Plan For Salaried
Employees of Modine Manufacturing Company
(as amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1999).
10(m) Executive Supplemental Retirement Plan (as
amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000).
10(n) Modine Manufacturing Company Executive
Supplemental Stock Plan (as amended) (filed
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 1999).
*10(o) 1994 Incentive Compensation Plan (as amended) 232
*10(p) 1994 Stock Option Plan for Non-Employee 244
Directors (as amended).
10(q) 1995 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan] (filed by reference to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000).
10(r) 1995 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors] (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000).
10(s) 1996 Stock Award Plan [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 2001).
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
10(t) 1996 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan] (filed by reference to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2001).
10(u) 1996 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors].
Note: The 1996 Stock Option Agreement is
----
not materially different from the 1995
Non-Employee Directors Stock Option
Agreement filed with Registrant's Annual
Report on Form 10-K as Exhibit 10(l) for
the fiscal year ended March 31, 2000.
10(v) 1997 Stock Award Plan [a part of
the 1994 Incentive Compensation Plan].
Note: The 1997 Stock Award Plan is not
----
materially different from the 1996 Stock
Award Plan filed with Annual Report on
Form 10-K as Exhibit 10(p) for the year
ended March 31, 2001.
10(w) 1997 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1997 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
Annual Report on Form 10-K as Exhibit
10(q) for the fiscal year ended March 31,
2001.
10(x) 1997 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors].
Note: The 1997 Stock Option Agreement is
----
not materially different from the 1995 Non-
Employee Directors Stock Option Agreement
filed with the Registrant's Annual Report
on Form 10-K as Exhibit 10(l) for fiscal
year ended March 31, 2000.
10(y) 1998 Stock Award Plan [a part of the 1994
Incentive Compensation Plan].
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
Note: The 1998 Stock Award Plan is not
----
materially different from the 1996 Stock
Award Plan filed with Registrant's Annual
Report on Form 10-K as Exhibit 10(p) for
the fiscal year ended March 31, 2001.
10(z) 1998 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan].
Note: The 1998 Stock Option Agreements are
----
not materially different from the 1996 Stock
Option Agreements filed with Annual Report
on Form 10-K as Exhibit 10(q) for the fiscal
year ended March 31, 2001.
10(aa) 1998 Stock Option Agreement [a part of the 1994
Stock Option Plan for Non-Employee Directors].
Note: The 1998 Stock Option Agreement is not
----
materially different from the 1995 Non-Employee
Directors Stock Option Agreement filed with
the Registrant's Annual Report on Form 10-K
as Exhibit 10(l) for the fiscal year ended
March 31, 2000.
10(ab) 1999 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1999 Stock Option Agreements are
----
not materially different from the 1996 Stock
Option Agreements filed with Annual Report on
Form 10-K as Exhibit 10(q) for the fiscal
year ended March 31, 2001.
10(ac) 1999 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors].
Note: The 1999 Stock Option Agreement is
----
not materially different from the 1995 Non-
Employee Directors Stock Option Agreement
filed with the Registrant's Annual Report
on Form 10-K as Exhibit 10(l) for the fiscal
year ended March 31, 2000.
10(ad) 2000 Stock Award Plan [a part of the 1994
Incentive Compensation Plan] (filed by
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended
March 31, 2000).
10(ae) 2000 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan] (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2000).
Note: The 2000 Stock Option Agreements are
----
not materially different from the 1996 Stock
Option Agreements filed with Annual Report on
Form 10-K as Exhibit 10(q) for the fiscal year
ended March 31, 2001.
10(af) 2000 Stock Option Plan for Non-Employee
Directors (filed by reference to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 2001).
10(ag) 2000 Stock Option Agreement [a part of the
2000 Stock Option Plan for Non-Employee
Directors] (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 2001).
10(ah) Modine Manufacturing Company Stock Option
Plan for Thermacore Employees under the DTX
Corporation 1995 Stock Option Plan (filed by
reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31,
2001).
10(ai) Modine Manufacturing Company Stock-Based
Compensation Plan for Thermacore Employees
under the DTX Corporation 1997 Plan (filed
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 2001).
10(aj) Modine Manufacturing Company Stock Option
Agreements pertaining to 10(ae) and 10(af)
of Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2001.
10(ak) 2001 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan]
Note: The 2001 Stock Option Agreements are
----
not materially different from the 1996 Stock
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
Option Agreements filed with Annual Report
on Form 10-K as Exhibit 10(q) for the fiscal
year ended March 31, 2001.
10(al) 2001 Stock Award Plan [a part of the 1994
Incentive Compensation Plan]
Note: The 2001 Stock Award Plan is not
----
materially different from the 2000 Stock
Award Plan filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000.
10(am) 2001 Stock Option Agreement [a part of
the 2000 Stock Option Plan for Non-
Employee Directors].
Note: The 2001 Stock Option Agreement is
----
not materially different from the 2000
Non-Employee Directors Stock Option
Agreement filed with Registrant's
Annual Report on Form 10-K for the
fiscal year ended March 31, 2001).
10(an) 2002 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan]
Note: The 2002 Stock Option Agreements are
----
not materially different from the 1996 Stock
Option Agreements filed with Annual Report
on Form 10-K as Exhibit 10(q) for the fiscal
year ended March 31, 2001.
10(ao) 2002 Stock Award Plan [a part of the 1994
Incentive Compensation Plan]
Note: The 2002 Stock Award Plan is not
----
materially different from the 2000 Stock
Award Plan filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000.
11 Not applicable.
12 Not applicable.
*13 2001 Annual Report to Shareholders. Except 252
for the portions of the Report expressly
incorporated by reference, the Report is
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Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
furnished solely for the information of
the Commission and is not deemed "filed"
as a part hereof.
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the Registrant. 296
22 Not applicable.
*23 Consent of independent accountants. 298
24 Not applicable.
28 Not applicable.
*99(a) Definitive Proxy Statement of the Registrant 299
dated June 7, 2002. Except for the portions
of the Proxy Statement expressly incorporated
by reference, the Proxy Statement is furnished
solely for the information of the Commission
and is not deemed "filed" as a part hereof.
*99(b) Appendix (filed pursuant to Item 304 of 337
Regulation S-T). Note: All Exhibits
----
filed herewith are current to the end of
the reporting period of the Form 10-K (unless
otherwise noted).
|
* Filed herewith.
No current Reports on Form 8-K were filed.
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.
Modine Manufacturing Company
Date: June 19, 2002 By: D. R. JOHNSON
-------------------------------
D. R. Johnson, Chairman and
Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated.
D. R. JOHNSON June 19, 2002 -------------------------------------------- ------------- D. R. Johnson, Chairman and Date Chief Executive Officer and Director D. B. RAYBURN June 19, 2002 -------------------------------------------- ------------- D. B. Rayburn, President and Chief Operating Date Officer E. T. THOMAS June 19, 2002 -------------------------------------------- ------------- E. T. Thomas, Senior Vice President, Finance Date and Chief Financial Officer D. R. ZAKOS June 19, 2002 -------------------------------------------- ------------- D. R. Zakos, Vice President, Date General Counsel and Secretary R. J. DOYLE June 19, 2002 -------------------------------------------- ------------- R. J. Doyle, Director Date F. P. INCROPERA June 19, 2002 -------------------------------------------- ------------- F. P. Incropera, Director Date F. W. JONES June 19, 2002 -------------------------------------------- ------------- F. W. Jones, Director Date D. J. KUESTER June 19, 2002 -------------------------------------------- ------------- D. J. Kuester, Director Date V. L. MARTIN June 19, 2002 -------------------------------------------- ------------- V. L. Martin, Director Date |
G. L. NEALE June 19, 2002 -------------------------------------------- ------------- G. L. Neale, Director Date M. C. WILLIAMS June 19, 2002 -------------------------------------------- ------------- M. C. Williams, Director Date M. T. YONKER June 19, 2002 -------------------------------------------- ------------- M. T. Yonker, Director Date |
Report of Independent Accountants on Financial Statement Schedules
To the Shareholders and Board of Directors Modine Manufacturing Company:
Our audits of the consolidated financial statements referred to in our report dated April 30, 2002 appearing in the 2002 Annual Report to Shareholders of Modine Manufacturing Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Chicago, Illinois April 30, 2002 |
MODINE MANUFACTURING COMPANY AND SUBSIDIARIES
(A Wisconsin Corporation)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended March 31, 2002, 2001 and 2000
($ In Thousands)
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Additions
(1) (2)
Balance at Balance
Beginning Charged to Charged to at
of Costs and Other End of
Description Period Expenses Accounts Deductions Period
----------- ---------- ---------- ---------- ---------- --------
2002:
Intangible Assets-
Accumulated
Amortization $35,302 $9,065 $(330)(B) $6,700(C) $37,337
------ ----- -------- -------- ------
Allowance for
Doubtful Accounts $2,459 $2,086 $(39)(B) $1,289(A) $3,217
----- ----- ------- -------- -----
Valuation
Allowance for
Deferred Tax Assets $592 $0 $(35)(B) $0 $557
--- - ------- - ---
2001:
Intangible Assets-
Accumulated
Amortization $31,232 $6,875 $(390)(B) $2,415(C) $35,302
------ ----- -------- -------- ------
Allowance for
Doubtful Accounts $4,474 $(1,311) $(54)(B) $650(A) $2,459
----- ------- ------- ------ -----
Valuation
Allowance for
Deferred Tax Assets $856 $(237)(E) $(27)(B) $0 $592
---- -------- ------- - ---
2000:
Intangible Assets-
Accumulated
Amortization $23,917 $8,488 $(1,093)(B) $80(C) $31,232
------ ----- ---------- ----- ------
Allowance for
Doubtful Accounts $3,845 $1,233 $(8)(B) $596(A) $4,474
----- ----- ------ ------ -----
Valuation
Allowance for
Deferred Tax Assets $5,154 $0 $0 $4,298(D) $856
----- - - -------- ---
|
Notes:
(A) Bad debts charged off during the year.
(B) Translation and other adjustments.
(C) Retirement of fully amortized intangibles
(D) Includes foreign operating losses and tax credit carryforwards.
(E) Includes the effect of new tax rate recently enacted in Germany.
EXHIBIT 3(b)
RESTATED
BY-LAWS
OF
MODINE MANUFACTURING COMPANY
(as adopted July 17, 1969)
(as amended September 17, 1970)
(as amended September 16, 1971)
(as amended May 4, 1972)
(as amended March 20, 1974)
(as amended September 18, 1974)
(as amended May 19, 1976)
(as amended July 21, 1976)
(as amended May 18, 1977)
(as amended July 20, 1977)
(as amended October 18, 1978)
(as amended May 16, 1979)
(as amended July 18, 1979)
(as amended October 17, 1979)
(as amended October 15, 1980)
(as amended May 1, 1981)
(as amended May 5, 1982 to be effective July 21, 1982)
(as amended August 17, 1982)
(as amended February 18, 1987)
(as amended March 18, 1987)
(as amended July 15, 1987)
(as amended February 15, 1989)
(as amended May 19, 1993)
(as amended October 20, 1993)
(as amended November 17, 1993)
(as amended March 16, 1994 to be effective July 20, 1994)
(as amended May 17, 1995 to be effective July 19, 1995)
(as amended October 16, 1996 to be effective October 16, 1996)
(as amended December 17, 1997)
(as amended March 18, 1998 to be effective July 15, 1998)
(as amended January 20, 1999)
(as amended March 17, 1999 to be effective July 21, 1999)
(as amended September 15, 1999)
(as amended March 15, 2000 to be effective July 19, 2000)
(as amended March 20, 2002)
(as amended May 15, 2002)
(a) Appointment of a proxy in writing by signing or causing the shareholder's signature to be affixed to an appointment form by any reasonable means, including, but not limited to, by facsimile signature.
(b) Appointment of a proxy by transmitting or authorizing the transmission of an electronic transmission of the appointment to the person who will be appointed as proxy or to a proxy solicitation firm, proxy support service organization or like agent authorized to receive the transmission by the person who will be appointed as proxy. Every electronic transmission shall contain, or be accompanied by, information that can be used to reasonably determine that the shareholder transmitted or authorized the transmission of the electronic transmission. Any person charged with determining whether a shareholder transmitted or authorized the transmission of the electronic transmission shall specify the information upon which the determination is made.
An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to tabulate votes. An appointment is valid for 11 months unless a different period is expressly provided in the appointment. An appointment of a proxy is revocable unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest. The presence of a shareholder who has
made an effective proxy appointment shall not of itself constitute a revocation. The Board of Directors shall have the power and authority to make rules that are not inconsistent with the Wisconsin Business Corporation Law as to the validity and sufficiency of proxy appointments.
The Board of Directors shall be divided into three classes:
each class consisting of three directors. The term of office of a
director shall be three years. The classes of directors shall be
staggered so that each expires in succeeding years. At each annual
meeting of stockholders, the number of directors equal to the number
of the class whose terms expire at the time of such meeting shall be
elected to hold office until the third succeeding annual meeting and
until their successors shall have been elected.
nor the purpose of any regular or special board of directors meeting need be specified in the notice or waiver of notice of the meeting.
A director may be removed from office during the term of such office but only upon a showing of good cause, such removal to be by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director and which removal may only be taken at a special meeting of stockholders called for that purpose.
A special meeting of the stockholders as herein referred to may only be held after a hearing on the matter of cause claimed to exist has been held by the full Board of Directors of the Company at which hearing the director or directors proposed for removal shall be given an adequate
opportunity for preparation and attendance in person (together with representation by counsel); provided, however, that such hearing shall be held only after written notice has been given to said director or directors proposed for removal specifying the matters of cause claimed to exist. The conclusions of said hearing shall be reported by the Board of Directors in writing accompanying the notice of the special stockholders' meeting sent to each stockholder eligible to vote at said special meeting.
Board of Directors which, to the extent provided in said resolution or resolutions, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation. Such committees shall have such names as may be determined from time to time by resolution adopted by the Board of Directors. A majority of the members of any such committee may determine its action unless the Board of Directors shall otherwise provide. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. The Board of Directors may elect one or more of its members as alternate members of any committee who may take the place of any absent member or members at any meeting of such committee.
The Chairman shall be the Chief Executive Officer of the Company, and subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Company. He shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Company as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the Chairman. He shall have authority to sign, execute and acknowledge, on behalf of the Company, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the Company's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize the President or any Vice President or other officer or agent of the Company to sign, execute and acknowledge such documents or instruments in his place and stead. In general he shall perform all duties incident to the office of Chairman and Chief Executive and such other duties as may be prescribed by the Board of Directors from time to time.
see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the Company and see that the seal of the Company is affixed to all documents the execution of which on behalf of the Company under its seal is duly authorized; (d) sign with the Chairman, President or a Vice President, certificates for shares of the Company, the issuance of which shall have been authorized by resolution of the Board of Directors; and (e) in general perform all duties incident to the office of Secretary as provided by the Wisconsin Business Corporation Law and have such other duties and exercise such authority as from time to time may be delegated or assigned to him by the Chairman, President or by the Board of Directors.
Any person made a party to or threatened with any civil, criminal, administrative or investigative action, suit or proceeding (other than an action by or in the right of the Company) by reason of the fact that he, his testator or intestate, is or was a Director, officer or employee of the Company or is or was serving at the request of the Company as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement, actually and necessarily incurred by him in connection with such action, suit or proceeding, or in connection with any appeal therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Such right of indemnification shall not be deemed exclusive of any other right to which such Director, officer, employee or agent may otherwise be entitled.
In case any officer who has signed, or whose facsimile signature has been placed upon a certificate has ceased to be an officer of the Company before such certificate has been issued, such certificate may, nevertheless, be adopted and issued and delivered by the Company as though the officer who signed such certificate or whose facsimile signature shall have been used thereon, had not ceased to be such officer with the same effect as if he were such office at the date of its issue.
on behalf of the Company, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages, contracts, promissory notes, and instruments of assignment or pledge made by the Company shall be executed in the name of the Company by the Chairman, President or one of the Vice Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers.
by the President or any Vice President of this Company who may be present, and (b) whenever, in the judgment of the Chairman, or in his absence, of the President or any Vice President, it is desirable for this Company to execute a proxy or written consent in respect to any shares for other securities issued by any other corporation and owned by this Company, such proxy or consent shall be executed in the name of this Company by the Chairman, President or one of the Vice Presidents of this Company, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Company shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Company the same as such shares or other securities might be voted by this Company.
These by-laws may be amended, repealed or altered in whole or in part by the affirmative vote of not less than two- third (2/3) of the shares of the Company entitled to vote thereon, or by the affirmative vote of not less than two-thirds (2/3) of the full Board of Directors of the Company, at any regular meeting of the stockholders or of the Board of Directors, or any special meeting of the stockholders or Board of Directors, provided that such action has been specified in the notice of any such meeting.
EXHIBIT 4(b)
MODINE MANUFACTURING COMPANY
AND
THE FIRST NATIONAL BANK OF CHICAGO
Rights Agent
Rights Agreement
Dated as of October 15, 1986
TABLE OF CONTENTS
Page
----
Section 1. Certain Definitions . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . 4
Section 3. Issue of Right Certificates . . . . . 5
Section 4. Form of Right Certificates. . . . . . 7
Section 5. Countersignature and Registration . . 7
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates . . . . . . 8
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . 9
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . 10
Section 9. Reservation and Availability of
Preferred Shares. . . . . . . . . . . 11
Section 10. Preferred Shares Record Date. . . . . 12
Section 11. Adjustment of Purchase Price,
Number of Shares or Number of
Rights. . . . . . . . . . . . . . . . 12
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . 24
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power . 25
Section 14. Fractional Rights and Fractional
Shares. . . . . . . . . . . . . . . . 26
Section 15. Rights of Action. . . . . . . . . . . 28
Section 16. Agreement of Right Holders. . . . . . 28
Section 17. Right Certificate Holder Not
Deemed a Shareholder. . . . . . . . . 29
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Page
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Section 18. Concerning the Rights Agent . . . . . 29
Section 19. Merger or Consolidation or Change
of Name of Rights Agent . . . . . . . 30
Section 20. Duties of Rights Agent. . . . . . . . 31
Section 21. Change of Rights Agent. . . . . . . . 34
Section 22. Issuance of New Right Certificates. . 35
Section 23. Redemption. . . . . . . . . . . . . . 35
Section 24. Notice of Certain Events. . . . . . . 36
Section 25. Notices . . . . . . . . . . . . . . . 37
Section 26. Supplements and Amendments. . . . . . 38
Section 27. Successors. . . . . . . . . . . . . . 38
Section 28. Benefits of This Agreement. . . . . . 38
Section 29. Severability. . . . . . . . . . . . . 39
Section 30. Governing Law . . . . . . . . . . . . 39
Section 31. Counterparts. . . . . . . . . . . . . 39
Section 32. Descriptive Headings. . . . . . . . . 39
Signatures . . . . . . . . . . . . . . . . . . . 39
Exhibit A - Form of Resolution Establishing
Series A Participating Preferred
Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase
Preferred Shares
|
RIGHTS AGREEMENT
THIS AGREEMENT, dated as of October 15, 1986, between Modine Manufacturing Company, a Wisconsin corporation (the "Company"), and The First National Bank of Chicago, a national banking association (the "Rights Agent");
WITNESSETH THAT:
WHEREAS, the Board of Directors of the Company has authorized and declared a dividend of one purchase right (a "Right") for each Common Share (as hereinafter defined) of the Company outstanding as of the close of business on October 27, 1986 (the "Record Date"), each Right representing the right to purchase one one-hundredth of a share of Series A Participating Preferred Stock, par value 5 cents per share, of the Company having the rights and preferences set forth in the form of the Resolution attached hereto as Exhibit A, upon the terms and subject to the conditions herein set forth, and further contemplates the issuance of one Right with respect to each Common Share that shall become outstanding between the Record Date and the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are defined in Sections 3 and 7 hereof);
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the Common Shares of the Company then outstanding, but shall not include the Company, any Subsidiary (as such term is hereinafter defined) of the Company or any employee benefit plan of the Company or any Subsidiary of the Company or any entity holding Common Shares of the Company for or pursuant to the terms of any such plan.
(b) "Affiliate" and "Associate" shall have the respective meanings assigned to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "beneficial owner" of and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or Associates directly or indirectly has the right to vote or dispose of or
"beneficial ownership" of (as defined in Rule 13d-3 of
the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement)
(except to the extent contemplated by the proviso to
Section 1(c)(ii)(B) hereof);
(iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B) hereof) or disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of Illinois are authorized or obligated by law or executive order to close.
(f) "Common Shares" when used with reference to the Company shall mean shares of common stock, par value $1.25 per share, of the Company. "Common Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person.
(g) "Continuing Director" shall have the meaning assigned to it in Section 23(a) hereof.
(h) the phrase "current per share market price" shall have the meaning assigned to it in Section 11(d) hereof.
(i) "Distribution Date" shall have the meaning assigned to it in Section 3 hereof.
(j) The phrase "equivalent preferred shares" shall have the meaning assigned to it in Section 11(b) hereof.
(k) "Final Expiration Date" shall have the meaning assigned to it in Section 7 hereof.
(l) "NASDAQ" shall have the meaning assigned to it in
Section 11(d) hereof.
(m) "Person" shall mean any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity.
(n) "Preferred Shares" shall mean shares of Series A Participating Preferred Stock, par value 5 cents per share, of the Company.
(o) "Purchase Price" shall have the meaning assigned to it in Section 4 hereof.
(p) "Redemption Date" shall have the meaning assigned to it in Section 7 hereof.
(q) "Redemption Price" shall have the meaning assigned to it in Section 23 hereof.
(r) "Right Certificate" shall have the meaning assigned to it in Section 3 hereof.
(s) "Share Exchange" shall have the meaning assigned to it in Section 11(a)(ii)(A) hereof.
(t) "Shares Acquisition Date" shall mean the first date of public announcement by the Company or an Acquiring Person that an Acquiring Person has become such.
(u) "Subsidiary" of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.
(v) "Summary of Rights" shall have the meaning assigned to it in Section 3(b) hereof.
(w) "Trading Day" shall have the meaning assigned to it in Section 11(d) hereof.
(a) Until the earlier of the close of business on (i) the tenth day after the Shares Acquisition Date or (ii) the tenth day after the date of the commencement of, or first public announcement of the intent of any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any entity holding Common Shares for or pursuant to the terms of any such plan) to commence, a tender or exchange offer the consummation of which would result in beneficial ownership by a Person of 30% or more of the outstanding Common Shares of the Company (including any such date which is after the date of this Agreement and prior to the issuance of the Rights; the earliest of such dates being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for Common Shares of the Company registered in the names of the holders thereof (which certificates shall also be deemed to be Right Certificates) and not by separate Right Certificates, and (y) the Rights will be transferable only in connection with the transfer of such Common Shares. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign for the purposes of authentication only, and the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to each record holder of Common Shares of the Company as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common Share of the Company so held. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in substantially the form attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage-prepaid mail, to each record holder of its Common Shares as of the Record Date, at the address of such holder shown on the records of the Company. With respect to certificates for Common Shares of the Company outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof. Until the Distribution Date (or the earlier of the Redemption
Date or Final Expiration Date), the surrender for transfer of any certificate for Common Shares of the Company outstanding on the Record Date, with or without a copy of the Summary of Rights attached thereto, shall also constitute the transfer of the Rights associated with the Common Shares represented thereby and certificates newly issued pursuant to such transfer shall have printed onto them the legend set forth in Section 3(c) hereof.
(c) Unless the Board of Directors of the Company by resolution adopted at the time of issuance of any Common Shares of the Company specifies to the contrary, Rights shall be issued in respect of all Common Shares of the Company which become outstanding (including, without limitation, reacquired Common Shares referred to in the last sentence of this paragraph (c)) after the Record Date, but prior to the earliest of the Distribution Date or the Redemption Date or the Final Expiration Date. Certificates for such Common Shares shall also be deemed to evidence such Rights, and shall have printed on them the following legend:
This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between Modine Manufacturing Company and The First National Bank of Chicago, dated as of October 15, 1986 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Modine Manufacturing Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Modine Manufacturing Company will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain circumstances, Rights beneficially owned by Acquiring Persons (as defined in the Rights Agreement), whether currently held by or on behalf of such person or by a subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the Distribution Date, the Rights associated with the Common Shares represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the Common Shares represented thereby. In the event that the Company purchases or acquires any of its Common Shares after the Record Date, but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associates with such Common Shares which are no longer outstanding.
summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed or of the National Association of Securities Dealers, Inc. or to conform to usage. Subject to the provisions of Section 22 hereof, the Right Certificates shall entitle the holders thereof to purchase such number of Preferred Shares as shall be set forth therein at the price per one one-hundredth of a Preferred Share set forth therein (the "Purchase Price"), but the number of such Preferred Shares and the Purchase Price shall be subject to adjustment as provided herein.
(a) The Right Certificates shall be executed on behalf of the Company by its President or any Vice Presidents and by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature, and have affixed thereto the Company's seal or a facsimile thereof. The Right Certificates shall not be valid for any purpose unless countersigned by the Rights Agent. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept for the Company, at the Rights Agent's principal offices in Chicago, Illinois, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of Preferred Shares as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender at the principal offices of the Rights Agent in Chicago, Illinois the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged. Thereupon the Rights Agent shall countersign and deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the principal offices of the
Rights Agent in Chicago, Illinois, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share as
to which the Rights are exercised, at or prior to the earlier of
(i) the close of business on October 27, 1996 (the "Final
Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption
Date").
(b) The Purchase Price for each one one-hundredth of a Preferred Share pursuant to the exercise of a Right shall initially be $85.00, shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof in cash or by certified check or cashier's check payable to the order of the Company or the Rights Agent, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or make available if the Rights Agent is the transfer agent) certificates for the number of Preferred Shares to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs the depositary agent to comply with all such requests, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and, (iv) when appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the beneficial owner (or former beneficial owner) thereof and of such beneficial owner's Affiliates and Associates as the Company shall reasonably request.
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.
(a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and non-assessable shares.
(c) The Company covenants and agrees that it shall take all necessary action (or use its best efforts to cause all necessary action to be taken) in connection with the issuance of the Preferred Shares (or other securities that may be issuable) upon exercise of the Rights to comply with any applicable requirements of the Securities Act of 1933, as amended, and the Exchange Act and to comply with any other applicable laws of any state or other jurisdiction.
(d) The Company covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery of certificates for the Preferred Shares in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or deliver any certificates for Preferred Shares upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due.
surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Shares transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Shares transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If
an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event
(A) any Acquiring Person or any Associate or Affiliate of any Acquiring Person, at any time after the date of this Agreement, directly or indirectly, (1) shall merge into the Company or otherwise combine with
the Company and the Company shall be the continuing or
surviving corporation of such merger or combination,
and the Common Shares of the Company shall remain
outstanding and not be changed into or exchanged for
stock or other securities of any other Person or the
Company or cash or any other property, (2) shall
participate in a statutory share exchange with the
Company pursuant to such provision therefor as may
hereafter be made in the Wisconsin Business Corporation
Law (a "Share Exchange") immediately following which
the Company is not a Subsidiary of any Acquiring Person
or any Associate or Affiliate of any Acquiring Person,
(3) shall, in one or more transactions, (i) other than
in connection with the exercise of Rights or in
connection with the exercise or conversion of
securities exchangeable for or convertible into capital
stock of the Company or any of its Subsidiaries, or
(ii) other than as part of a pro rata distribution to
all holders of such shares of any class of capital
stock of the Company or any of its Subsidiaries,
transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for
shares of any class of capital stock of the Company or
any of its Subsidiaries or for securities exercisable
for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class
of capital stock of the Company or any of its
Subsidiaries, (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
dispose of (in one or more transactions) to, from or
with, as the case may be, the Company or any of its
Subsidiaries, assets (including securities) on terms
and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (5) shall
receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-
time employment as a regular employee or director at
rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) shall receive the
benefit, directly or indirectly (except proportionately
as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantage provided by the Company
or any of its Subsidiaries, or
(B) during such time as there is an Acquiring Person, (1) there shall be any failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding preferred stock (including the Preferred Shares) of the Company (except to the extent such declaration or payment would be prohibited under the laws of the Company's jurisdiction of incorporation),
(2) there shall be any reduction in the annual rate of dividends paid on the Common Shares (except as necessary for valid business reasons or to reflect any subdivision of the Common Shares or as required under the laws of the Company's jurisdiction of incorporation), (3) there shall be a failure to increase the annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding Common Shares of the Company (except to the extent such increase in the rate of dividends would be prohibited under the laws of the Company's jurisdiction of incorporation), or (4) there shall be any reclassification of securities (including any reverse stock split) or recapitalization of the Company, or any merger or consolidation or Share Exchange of the Company with any of its Subsidiaries or any other transaction or series of transactions involving the Company or any Subsidiaries of the Company (whether or not with or into or otherwise involving an Acquiring Person) which has the effect, directly or indirectly, of increasing by more than 1% the proportionate share of the outstanding shares of any class of equity securities or of securities exercisable for or convertible into securities of the Company or any of its Subsidiaries which is directly or indirectly owned by any Acquiring Person or any Associate or Affiliate of any Acquiring Person,
then, and in each such case, proper provision shall be made
so that each holder of a Right, except as provided below,
shall thereafter have a right to receive, upon exercise
thereof, in accordance with the terms of this Agreement, in
lieu of Preferred Shares, such number of Common Shares of
the Company as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right
was exercisable immediately prior to the event described in
Section 11(a)(ii) necessitating such adjustment, and
dividing that product by (y) 50% of the current per share
market price of the Common Shares of the Company (determined
pursuant to Section 11(d) hereof) on the fifth day after the
earlier of the date of the occurrence or the date of the
first public announcement of any one of the events listed
above in this subparagraph (ii); provided, however, that if
the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant
to this Section 11(a)(ii). Notwithstanding the foregoing,
upon the occurrence of any of the events listed above in
this subparagraph (ii), any Rights that are or were on or
after the earlier of the Distribution Date or Shares
Acquisition Date beneficially owned by an Acquiring Person
(or any Associate or Affiliate of such Acquiring Person)
shall become void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any
provision of this Agreement. The Company shall not enter
into any transaction of the kind listed in this subparagraph
(ii) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or
any agreements or arrangements which, as a result of the
consummation of such transaction, would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Any Right Certificate issued
pursuant to Section 3 that represents Rights beneficially
owned by an Acquiring Person or any Associate or Affiliate
thereof and any Right Certificate issued at any time upon
the transfer of any Rights to an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate, and any Right
Certificate issued pursuant to Section 6, Section 7(d) or
Section 22 hereof, or this Section 11, upon transfer,
exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the
following legend:
The Rights represented by this Right Certificate were issued to a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are described in the Rights Agreement). This Right Certificate and the Rights represented hereby may become void in the circumstances specified in Section 11(a)(ii) of the Rights Agreement.
(iii) In the event that the Common Shares of the Company issued but not outstanding and the Common Shares of the Company authorized but unissued in the aggregate shall not be sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Company shall take all such action as may be necessary to authorize additional Common Shares of the Company for issuance upon exercise of the Rights.
(b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares having the same rights, privileges and preferences as the Preferred Shares ("equivalent preferred shares")) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the current per share market price of the Preferred Shares (as defined in Section 11(d) hereof) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and holders of the Rights. Preferred Shares owned by or held for the account of any Subsidiary of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a distribution to all holders of the Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in Preferred Shares) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the current per share market price of the Preferred Shares (as defined in Section 11(d) hereof) on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and holders of the Rights) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Preferred Share and the denominator of which shall be such current per share market price of the Preferred Shares. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.
the announcement by the issuer of such Common Shares of (x) a dividend or distribution on such Common Shares payable in such Common Shares or securities convertible into such Common Shares, or (ii) any subdivision, combination or reclassification of such Common Shares, and prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution or the record date for such subdivision, combination or reclassification, then, and in each such case, the current market price shall be appropriately adjusted to reflect the current market price per Common Share equivalent. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then in use, or, if on any such date the Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Board of Directors of the Company. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per share market price" of the Preferred Shares shall be determined in the same manner as set forth above for Common Shares in clause (i) of this Section 11(d). If the current per share market price of the Preferred Shares cannot be determined in the manner provided above, the "current per share market price" of the Preferred Shares shall be conclusively deemed to be the current per share market price of the Common Shares of the Company (appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof), multiplied by one hundred.
(iii) If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, "current per share market price" shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to
the shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13
hereof with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of Preferred Shares purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c) hereof, each
Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one one-
hundredths of a Preferred Share (calculated to the nearest
one one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to
the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the number of Preferred Shares issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-hundredth of a share and the number of shares which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one- hundredth of the then par value, if any, of the Preferred Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing, to the holder of any Right exercised after such
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision
of the Preferred Shares, issuance wholly for cash of any of
Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable
for Preferred Shares, dividends on Preferred Shares payable
in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in subsection (b) of this
Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the date of
this Agreement and prior to the Distribution Date, the
Company shall (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of
dividends in Common shares) into a greater or lesser number
of Common shares, then in any such case (i) the number of
one one-hundredths of a Preferred Share purchasable after
such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths
of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such
event and the denominator of which is the number of Common
Shares outstanding immediately after such event and (ii)
each Common Share outstanding immediately after such event
shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to
such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is
effected. If an event occurs which would require an
adjustment under Section 11(a)(ii) hereof and this Section
11(n), the adjustments provided for in this Section 11(n)
shall be in addition and prior to any adjustment required
pursuant to Section 11(a)(ii) hereof.
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take such steps (including, but not limited to, the reservation of a sufficient number of its Common Shares in accordance with Section 9 hereof) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the Common Shares thereafter deliverable upon the exercise of the Rights; and the Company shall not consummate any such consolidation, merger, Share Exchange, sale or transfer unless prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement so providing. The Company shall not enter into any transaction of the kind referred to in this Section 13 if at the time of such transaction there are any rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers.
(a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share)
upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares. In lieu of fractional
Preferred Shares that are not integral multiples of one one-
hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share
(as determined pursuant to the second sentence of clause (i) of
Section 11(d) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided above).
(a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal offices of the Rights Agent in Chicago, Illinois, duly endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Shares certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Shares certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and
(d) any restriction on transfer deemed to be imposed by this Agreement is valid and enforceable against the holder and any transferee of the holder.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for, or in respect of any action taken, suffered or omitted by it in connection with, its administration of this Agreement in reliance upon any Right Certificate or certificate for the Preferred Shares or Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper person or persons, or otherwise upon the advice of counsel as set forth in Section 20 hereof.
(a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the President, a Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13 or 23, or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice that such change or adjustment is required); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares will, when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the President, a Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof.
(j) In the event that any Person becomes an Acquiring Person, the Company shall notify the Rights Agent of such event and of the identity of such Person. The Rights Agent thereupon shall undertake a reasonable investigation to ascertain which Common Shares are held beneficially by such Acquiring Person, including Common Shares of the Company held by nominees of such Acquiring Person. If the Rights Agent undertakes such reasonable investigation on a continuing basis after notification by the Company as provided herein, the Rights Agent shall not be liable for its failure in good faith to insert the legend provided for in Section 11(a)(ii) hereof into Right Certificates owned by or transferred to such Acquiring Person or its nominees.
(k) The Rights Agent shall only be required to perform the duties expressly set forth herein and no implied duties or obligations shall be read into this Agreement against the Rights Agent.
its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Common Shares of the Company and Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares of the Company and Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of the State of Illinois (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Illinois), in good standing, having its principal offices in the State of Illinois, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares of the Company and Preferred Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
(a) The Board of Directors of the Company may, at its option, at any time prior to 5:00 P.M., Chicago time, on the earlier of (x) the thirtieth day following the Shares Acquisition Date or (y) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a redemption price of 5 cents per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"); provided, however, that in connection with a transaction to be accounted for as a pooling of interests, the Board of Directors shall have the option to pay the Redemption Price in securities or other property, and provided further, however, that for the purposes hereof the Board of Directors of the Company shall be entitled to so redeem the Rights only if such Board consists of a majority of Continuing Directors (as hereinafter defined). "Continuing Director" shall mean a director who either was a member of the Board of Directors of the Company prior to the Record Date, or who subsequently became a director of the Company and whose initial election or initial nomination for election by the Company's shareholders subsequent to such date was approved by a vote of a majority of the Continuing Directors then on the Board of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. Within 10 days after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the holders of the then outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares of the Company. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23, and other than in connection with the repurchase of Common Shares prior to the Distribution Date.
than a reclassification involving only the subdivision of outstanding Preferred Shares), or (d) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, or (e) to effect the liquidation, dissolution or winding up of the Company, or (f) to declare or pay any dividend on the Common Shares of the Company payable in Common Shares of the Company or to effect a subdivision, combination or consolidation of the Common Shares of the Company (by reclassification or otherwise than by payment of dividends in such Common Shares) then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 25 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Common Shares of the Company and/or Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (a) or (b) above at least 20 days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares of the Company and/or Preferred Shares, whichever shall be the earlier.
In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 25 hereof, a notice
of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.
Modine Manufacturing Co.
1500 DeKoven Avenue
Racine, Wisconsin 53401
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first- class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:
The First National Bank of Chicago One First National Plaza - Suite 0126 Chicago, Illinois 60670
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.
contract made under the laws of the State of Wisconsin and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
(SEAL)
MODINE MANUFACTURING COMPANY
Attest:
By: s/W. E. Pavlick By: s/F. W. Jones
------------------------- ----------------------------
Title: Secretary Title: Executive Vice President,
Administration
|
(SEAL)
THE FIRST NATIONAL BANK OF CHICAGO
Attest:
By: s/M. Phalen By: s/A. E. Grinton ------------------------- ---------------------------- Title: Ast. Secty. Title: Vice President |
FORM OF
RESOLUTION ESTABLISHING
SERIES A PARTICIPATING PREFERRED STOCK
of
MODINE MANUFACTURING COMPANY
RESOLVED, by the Board of directors of Modine Manufacturing Company (the "Corporation"), that pursuant to the authority granted to and vested in this Board (hereinafter called the "Board of Directors" the "Board") in accordance with the provisions of the Restated Articles of Incorporation, as amended, of the Corporation, there is hereby authorized the creation and establishment of a separate series of the Preferred Stock, par value 5 cents per share, of the Corporation (such class of Preferred Stock being hereinafter called the "Preferred Stock"), and the issuance of the shares constituting such series, with such series to have the designation, to be comprised of the number of shares, and to have the preferences, limitations and relative rights (in addition to the provisions set forth in the Restated Articles of Incorporation of the Corporation, as amended, which are applicable to the Preferred Stock of all series, and subject to the limitations prescribed by law) as follows:
(i) Subject to the prior and superior rights of the holders of any shares of any class or series of stock of the Corporation ranking prior and superior to the shares of Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of the Common Stock of the Corporation and of
any other junior stock of the Corporation, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $8.50 (payable in cash) or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount (payable in cash) of all cash dividends, and 100 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 of the Corporation or a subdivision of the outstanding shares of such Common Stock (by reclassification or otherwise), declared on the Common Stock of the Corporation since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time after the date hereof declare or pay any dividend on its Common Stock payable in shares of such Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of its Common Stock (by reclassification or otherwise than by payment of a dividend in shares of such 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 A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock of the Corporation 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.
(ii) The Corporation shall not declare and set aside for payment a dividend or distribution on its Common Stock (other than a dividend payable in shares of such Common Stock) until it shall declare and set aside for payment a dividend or distribution on the Series A Preferred Stock as provided in paragraph (i) of this Section. In the event no dividend or distribution shall have been declared on the Common Stock of the Corporation during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $8.50 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is 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 A 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 A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 50 days prior to the date fixed for the payment thereof.
(i) Each share of Series A Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the stockholders of the Corporation.
(ii) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one voting group on all matters submitted to a vote of stockholders of the Corporation.
(iii) The Restated Articles of Incorporation of the Corporation, as heretofore amended, shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A 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 A Preferred Stock, voting together as a single voting group.
(iv) Except as set forth herein or as otherwise provided by law or by the Restated Articles of Incorporation of the Corporation, holders of Series A Preferred Stock shall have no voting rights.
(i) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section B in this resolution are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(a) declare or pay, or set apart for payment, dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(b) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the aggregate amounts of the deficiencies in payments due to the respective series and classes of parity stock;
(c) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of 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.
(ii) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (i) of this Section D, purchase or otherwise acquire such shares at such time and in such manner,
or not declared, to the date of such payment plus an amount equal to the greater of (a) $85.00 per share and (b) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock of the Corporation, or (2) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the full preferential amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on Common Stock of the Corporation payable in shares of such Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock of the Corporation (by reclassification or otherwise than by payment of a dividend in shares of such Common Stock) into a greater or lesser number of shares of Common Stock, then for each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the provisions 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 of the Corporation outstanding immediately after such event and the denominator of which is the number of shares of Common Stock of the Corporation that were outstanding immediately prior to such event.
from time to time, at a cash price per share equal to (i) the greater of (a) $85.00 or, (b) subject to the provision for adjustment hereinafter set forth, the product of 100 times the Current Market Price, as such term is hereinafter defined, of the Common Stock of the Corporation, plus (ii) all dividends which on the redemption date have accrued on the shares to be redeemed and have neither been paid nor declared with a sum sufficient for the payment thereof set apart in trust for such purpose, without interest. The Corporation may, from time to time and to the extent allowed by law, purchase or otherwise acquire shares of Series A Preferred Stock provided, however, that if and whenever any quarterly dividend shall have accrued on the Series A Preferred Stock which has neither been paid nor declared with a sum sufficient for the payment thereof set apart in trust for such purpose, the Corporation may not purchase or otherwise acquire any shares of Series A Preferred Stock unless all shares of such stock at the time outstanding are so purchased or otherwise acquired. In the event the Corporation shall at any time after October 27, 1986 pay any dividend on Common Stock of the Corporation payable in shares of such Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock of the Corporation (by reclassification or otherwise than by payment of a dividend in shares of such Common Stock) into a greater or lesser number of shares of Common Stock of the Corporation, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under subsection (i) 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 of the Corporation outstanding immediately after such event and the denominator of which is the number of shares of Common Stock of the Corporation that were outstanding immediately prior to such event.
The "Current Market Price" shall be deemed to be the average of the daily closing prices per share of the Common Stock of the Corporation for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to the day before the redemption date; provided, however, that in the event that the Current Market Price per share of the Common Stock of the Corporation is determined during a period in whole or in part following the announcement by the Corporation of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock, or (B) any subdivision, combination or reclassification of such Common Stock, and prior to the ex-dividend date or record date (whichever first occurs) for such dividend, distribution, subdivision, combination or reclassification, then, and in each such case, the Current Market Price shall be properly adjusted to take into account ex-dividend trading prices. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of Common Stock of the Corporation are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of such Common Stock are listed or admitted to trading or, if the shares of Common Stock of the Corporation are not listed or admitted to trading on any national securities exchange, the average of
the last quoted high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock of the Corporation are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock of the Corporation selected by the Board of Directors. If on any such date no market maker is making a market in the Common Stock of the Corporation, the fair value of such shares on such date as determined in good faith by the Board of Directors shall be used. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Common Stock of the Corporation are listed or admitted to trading is open for the transaction of business or, if the shares of the Common Stock of the Corporation are not listed or admitted to trading on any national securities exchange, a business day.
Exhibit B
[Form of Right Certificate]
NOT EXERCISABLE AFTER OCTOBER 27, 1996
OR EARLIER IF REDEMPTION HAS TAKEN PLACE.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT 5 CENTS PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS (AS DESCRIBED IN SECTION 11(a)(ii)
OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE WERE ISSUED TO A PERSON
WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE
OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DESCRIBED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.]*
Right Certificate
Modine Manufacturing Company
number of Preferred Shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of October 27, 1986, based on the Rights and the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of Preferred Shares which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company and at the principal office of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may, but are not required to, be redeemed by the Company at a redemption price of 5 cents per Right.
No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders of the Company at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders of the Company (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent for purposes of authentication only.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of , 19 .
------------- -- ---
ATTEST Modine Manufacturing Company
----------------------- ------------------------------
Title: Title:
Countersigned (for purposes of
authentication):
--------------------------------
|
[Form of Reverse Side of Right Certificate]
(To be executed by the registered holder if such holder desires to transfer the Right Certificate)
Dated: , 19
----------------------- --
--------------------------------
Signature
|
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
[Form of Reverse Side of Right Certificate -- continued]
(To be executed if the registered holder desires to exercise the Right Certificate)
To: Modine Manufacturing Company
Please insert social Security
or other identifying number
If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
Dated: , 19
--------------------- --
--------------------------
Signature
|
[Form of Reverse Side of Right Certificate -- continued]
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States
The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).
The signatures in the foregoing Forms of Assignment and Election to Purchase must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Forms of Assignment and Election to Purchase is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the case of an Assignment, will affix a legend to that effect on any Right Certificates issued in exchange for this Right Certificate.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On October 15, 1986, the Board of Directors of Modine Manufacturing Company (the "Company") declared a dividend distribution of one preferred share purchase right (a "Right") for each outstanding share of common stock, $1.25 par value per share, of the Company (the "Common Shares"). The distribution is payable on October 27, 1986 to the shareholders of record on that date. The action by the Board of Directors contemplates that one Right also will be issued with respect to each Common Share that becomes outstanding between the record date for the dividend distribution and the Distribution Date (referred to below).
Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Participating Preferred Stock, par value 5 cents per share, of the Company (the "Preferred Shares") at a price of $85.00 per one one- hundredth of a Preferred Share (the "Purchase Price"), subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement") between the Company and The First National Bank of Chicago, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement that a person or group, other than a subsidiary of the Company or an employee benefit plan of the Company or a subsidiary (an "Acquiring Person"), has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding Common Shares or (ii) 10 days following the commencement or announcement of an intention to make a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group, other than a subsidiary of the Company or an employee benefit plan of the Company or a subsidiary, of 30% or more of such outstanding Common Shares (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced by the certificates for outstanding Common Shares. A copy of this Summary of Rights to Purchase Preferred Shares should be attached to the Common Share certificates which are outstanding on October 27, 1986. The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Common Shares. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Common Shares, with or without a copy of this Summary of Rights to Purchase Preferred Shares attached, will also constitute the transfer of the Rights associated with the Common Shares represented by such certificate. Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Share certificates issued after October 27, 1986 upon transfer or new issuance of the Common Shares will contain a notation incorporating the Rights Agreement by reference. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will expire on October 27, 1996 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed by the Company, in each case as described below.
The Purchase Price payable, and the number of Preferred Shares or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights or warrants to subscribe for Preferred Shares or convertible securities at less than the current market price of the Preferred Shares or (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings or dividends payable in Preferred Shares) or of subscription rights or warrants (other than those referred to above).
The number of one one-hundredths of a Preferred Share for which a Right is exercisable and the number of Rights outstanding are also subject to adjustment in the event of dividends on the Common Shares payable in Common Shares or subdivisions, combinations or consolidations of the Common Shares, occurring, in any such case, before the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will be redeemable in whole (but not in part) at any time at the option of the Company at a price per share equal to the greater of (i) $85.00 or (ii) 100 times the Current Market Price (as defined in the Rights Agreement) of the Common Shares, plus accrued but unpaid dividends. Such redemption price is subject to adjustment as provided in the Rights Agreement for the events referred to in the preceding paragraph. Each Preferred Share will have a minimum preferential quarterly dividend rate of $8.50 per share, but will be entitled to an aggregate dividend of 100 times the per share dividend declared on the Common Shares. In the event of liquidation, the holders of the Preferred Shares will be entitled to a minimum preferential liquidation payment of $85.00 per share but will be entitled to an aggregate payment 100 times the payment made per Common Share. Each Preferred Share will have one vote, voting together with the Common Shares. In the event of any merger, share exchange, consolidation or other transaction in which Common Shares are exchanged, each Preferred Share will be entitled to receive 100 times the amount received per Common Share. These rights are protected by customary anti- dilution provisions.
Because of the nature of the dividend and liquidation rights of the Preferred Shares, the value of a one one-hundredth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one Common Share.
In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power were sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two times the exercise price of the Right. In the event that the Company were the surviving corporation in a merger and the Common Shares were not changed or exchanged, or in the event that an Acquiring Person engages in one of a number of self-dealing transactions specified in the Rights Agreement, proper provisions will be made so that each holder of a Right, other than Rights that were beneficially owned by the Acquiring Person on the earlier of the Distribution Date or the date an Acquiring Person acquires 20% or more of the outstanding Common Shares (which Rights will thereafter be void), will thereafter have the right to receive upon exercise that number of Common Shares having a market value of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Preferred Shares will be issued (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Shares on the last trading date prior to the date of exercise.
At any time prior to 5:00 p.m. on the thirtieth day following a public announcement that a person or group (other than a subsidiary of the Company or an employee benefit plan of the Company or a subsidiary) has acquired a beneficial ownership of 20% or more of the outstanding Common Shares, the Company may redeem the Rights in whole, but not in part, at a price of 5 cents per Right (the "Redemption Price"). Immediately upon the action of the Board of Directors ordering redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, including an amendment to extend the Final Expiration Date, an amendment to extend the period in which the Rights may be redeemed, and other amendments that may be deemed necessary or advisable and which do not adversely affect the interests of the holders of the Rights, provided that no such amendment is permitted after the Distribution Date unless the majority of the members of the Company's Board of Directors approving the amendment are "Continuing Directors" (as defined in the Rights Agreement).
Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including, without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.
EXHIBIT 4(b)(iv)
MODINE MANUFACTURING COMPANY
AND
NORWEST BANK MINNESOTA, N.A.
Rights Agent
Amendment Number 4
to
Rights Agreement
Dated as of October 15, 1986
This Amendment, when executed, shall constitute a valid and binding amendment to that certain Rights Agreement dated as of October 15, 1986 by and between Modine Manufacturing Company, a Wisconsin corporation (the "Company"), and Norwest Bank Minnesota, a national banking association (the "Rights Agent").
Recitals
A. The Rights Agreement provides that the Company may discharge the Rights Agent and appoint a successor.
B. The Rights Agreement further provides that the Company and the Rights Agent may supplement or amend the Rights Agreement from time to time.
C. Norwest Bank Minnesota, N.A. was appointed by the Board of Directors of the Company on September 17, 1997 as Rights Agent in place of First Chicago National Bank of New York. The change of Rights Agent is effective as of November 10, 1997.
D. The Company and the Rights Agent desire to amend the Rights Agreement in accordance with the terms of this Amendment.
Agreement
1. In consideration of the Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Rights Agent agree, pursuant to the provisions set forth in the Rights Agreement, to amend the Rights Agreement as follows:
2. The Rights Agreement is amended by substituting, where applicable, "Norwest Bank Minnesota, N.A." in place of "First Chicago Trust Company of New York" as the Rights Agent.
3. This Amendment shall be effective as of November 10, 1997.
4. The Company and the Rights Agent agree that all other terms, provisions, covenants, or restrictions of the Rights Agreement, to the extent not inconsistent with this Amendment, shall remain unchanged and in full force and effect.
5. Capitalized terms which are not defined in this Amendment have the meanings given such terms in the Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and their respective corporate seals to be hereunto affixed and attested, as of the effective date hereof.
(SEAL)
MODINE MANUFACTURING COMPANY
Attest:
By s/W. E. Pavlick By s/D. R. Johnson
---------------------- -----------------------------
Title: Secretary Title: President and
Chief Operating Officer
|
(SEAL)
NORWEST BANK MINNESOTA, N.A.
Attest:
By s/Suzanne M. Swits By s/Ted Garrity
------------------------ ------------------------------
Title: Assistant Secretary Title: Corporate Officer
----------------------- --------------------------
|
EXHIBIT 4(c)
CREDIT AGREEMENT
DATED AS OF APRIL 17, 2002
AMONG
MODINE MANUFACTURING COMPANY,
THE LENDERS,
BANK ONE, NA
AS AGENT, AS LC ISSUER AND AS SWING LINE LENDER,
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND SOLE BOOK RUNNER,
SUNTRUST BANK
AND
WACHOVIA BANK, NATIONAL ASSOCIATION
AS SYNDICATION AGENTS
AND
M&I MARSHALL & ILSLEY BANK
AS DOCUMENTATION AGENT
TABLE OF CONTENTS
Page
----
CREDIT AGREEMENT 1
Article 1 DEFINITIONS 1
Article 2 THE CREDITS 18
Section 2.1 Commitment. 18
Section 2.2 Swing Line Loans. 18
Section 2.3 Determination of Dollar Amounts;
Required Payments; Termination. 20
Section 2.4 Ratable Loans. 20
Section 2.5 Types of Advances. 20
Section 2.6 Commitment Fee; Reductions in
Aggregate Commitment. 20
Section 2.7 Minimum Amount of Each Advance. 21
Section 2.8 Optional Principal Payments. 21
Section 2.9 Method of Selecting Types and
Interest Periods for New Advances. 21
Section 2.10 Conversion and Continuation of
Outstanding Advances. 22
Section 2.11 Method of Borrowing. 23
Section 2.12 Changes in Interest Rate, etc. 23
Section 2.13 Rates Applicable After Default. 23
Section 2.14 Method of Payment. 24
Section 2.15 Advances to Be Made in Euro. 25
Section 2.16 Noteless Agreement; Evidence of
Indebtedness. 25
Section 2.17 Telephonic Notices. 25
Section 2.18 Interest Payment Dates; Interest
and Fee Basis. 26
Section 2.19 Notification of Advances, Interest
Rates, Prepayments and Commitment
Reductions. 26
Section 2.20 Lending Installations. 26
Section 2.21 Non-Receipt of Funds by the Agent. 26
Section 2.22 Facility LCs. 27
Section 2.23 Market Disruption. 31
Section 2.24 Judgment Currency. 32
Section 2.25 Replacement of Lender. 32
Section 2.26 Inccrease of Aggregate Commitment. 33
Article 3 YIELD PROTECTION; TAXES 34
Section 3.1 Yield Protection. 34
Section 3.2 Changes in Capital Adequacy
Regulations. 35
Section 3.3 Availability of Types of Advances. 36
Section 3.4 Funding Indemnification. 36
Section 3.5 Taxes. 36
Section 3.6 Lender Statements; Survival of
Indemnity. 38
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Article 4 CONDITIONS PRECEDENT 38
Section 4.1 Initial Credit Extension. 38
Section 4.2 Each Credit Extension. 40
Article 5 REPRESENTATIONS AND WARRANTIES 41
Section 5.1 Corporate Existence and Power. 41
Section 5.2 Authorization. 41
Section 5.3 Binding Effect. 41
Section 5.4 No Conflict; Government Consent. 41
Section 5.5 Financial Statements; Material
Adverse Change. 42
Section 5.6 Litigation and Contingent Obligations. 42
Section 5.7 Compliance with ERISA. 42
Section 5.8 Taxes. 43
Section 5.9 Subsidiaries. 43
Section 5.10 Not an Investment Company. 43
Section 5.11 Ownership of Property; Liens. 43
Section 5.12 Material Agreements; Default. 43
Section 5.13 Full Disclosure. 43
Section 5.14 Environmental Matters. 44
Section 5.15 Insolvency. 44
Section 5.16 Compliance with Laws. 44
Section 5.17 Regulation U. 45
Section 5.18 Public Utility Holding Company Act. 45
Section 5.19 Post-Retirement Benefits. 45
Section 5.20 Insurance. 45
Section 5.21 Plan Assets; Prohibited Transactions. 45
Article 6 COVENANTS 45
Section 6.1 Information. 45
Section 6.2 Inspection of Property, Books and
Records. 47
Section 6.3 Restricted Payments. 47
Section 6.4 Loans or Advances. 47
Section 6.5 Investments and Acquisitions. 47
Section 6.6 Negative Pledge. 48
Section 6.7 Maintenance of Existence. 48
Section 6.8 Dissolution. 48
Section 6.9 Consolidations, Mergers and Sales
of Assets. 49
Section 6.10 Use of Proceeds. 49
Section 6.11 Compliance with Laws; Payment of
Taxes and Other Claims. 49
Section 6.12 Insurance. 50
Section 6.13 Change in Fiscal Year. 50
Section 6.14 Maintenance of Property. 50
Section 6.15 Environmental Matters. 50
Section 6.16 Indebtedness. 50
Section 6.17 Sale of Accounts. 51
Section 6.18 Financial Covenants. 51
Section 6.19 Guaranties and Material Foreign
Subsidiary Pledges. 51
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Section 6.20 Rate Management Transactions. 51
Section 6.21 Affiliates. 51
Section 6.22 Pledge Agreements. 52
Article 7 DEFAULTS 52
Article 8 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 54
Section 8.1 Acceleration; Facility LC Collateral
Account. 54
Section 8.2 Amendments. 56
Section 8.3 Preservation of Rights. 56
Article 9 GENERAL PROVISIONS 57
Section 9.1 Survival of Representations. 57
Section 9.2 Governmental Regulation. 57
Section 9.3 Headings. 57
Section 9.4 Entire Agreement. 57
Section 9.5 Several Obligations; Benefits of
this Agreement. 57
Section 9.6 Expenses; Indemnification. 57
Section 9.7 Numbers of Documents. 58
Section 9.8 Accounting. 58
Section 9.9 Severability of Provisions. 58
Section 9.10 Nonliability of Lenders. 58
Section 9.11 Confidentiality. 59
Section 9.12 Nonreliance. 59
Section 9.13 Disclosure. 59
Article 10 THE AGENT 59
Section 10.1 Appointment; Nature of Relationship. 59
Section 10.2 Powers. 60
Section 10.3 General Immunity. 60
Section 10.4 No Responsibility for Loans,
Recitals, etc. 60
Section 10.5 Action on Instructions of Lenders. 60
Section 10.6 Employment of Agents and Counsel. 61
Section 10.7 Reliance on Documents; Counsel. 61
Section 10.8 Agent's Reimbursement and
Indemnification. 61
Section 10.9 Notice of Default. 62
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Section 10.10 Rights as a Lender. 62
Section 10.11 Lender Credit Decision. 62
Section 10.12 Successor Agent. 62
Section 10.13 Agent and Arranger Fees. 63
Section 10.14 Delegation to Affiliates. 63
Section 10.15 Execution of Collateral Documents. 63
Section 10.16 Collateral Releases. 63
Article 11 SETOFF; RATABLE PAYMENTS 63
Section 11.1 Setoff. 63
Section 11.2 Ratable Payments. 64
Article 12 BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS 64
Section 12.1 Successors and Assigns. 64
Section 12.2 Participations. 65
Section 12.3 Assignments. 66
Section 12.4 Dissemination of Information. 67
Section 12.5 Tax Treatment. 67
Article 13 NOTICES 67
Section 13.1 Notices. 67
Section 13.2 Change of Address. 68
Article 14 COUNTERPARTS 68
Article 15 CHOICE OF LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL 68
Section 15.1 CHOICE OF LAW. 68
Section 15.2 CONSENT TO JURISDICTION. 68
Section 15.3 WAIVER OF JURY TRIAL. 68
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EXHIBITS
EXHIBIT A FORM OF OPINION
EXHIBIT B COMPLIANCE CERTIFICATE
EXHIBIT C ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT D LOAN/CREDIT RELATED MONEY TRANSFER
INSTRUCTION
EXHIBIT E NOTE
SCHEDULES
PRICING SCHEDULE
SCHEDULE 1 EUROCURRENCY PAYMENT OFFICES
OF THE AGENT
SCHEDULE 2 LENDING INSTALLATIONS
SCHEDULE 5.6 LITIGATION
SCHEDULE 5.9 SUBSIDIARIES
SCHEDULE 5.14(a) ENVIRONMENTAL MATTERS
SCHEDULE 5.14(b) HAZARDOUS MATERIALS
SCHEDULE 6.5 INVESTMENTS
SCHEDULE 6.16 INDEBTEDNESS AND LIENS
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CREDIT AGREEMENT
This Agreement, dated as of April 17, 2002, is among Modine Manufacturing Company, a Wisconsin corporation, the Lenders and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Swing Line Lender, as LC Issuer and as Agent. The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of
related transactions, consummated on or after the date of this
Agreement, by which the Borrower or any of its Subsidiaries
(i) acquires any going business or all or substantially all of
the assets of any firm, corporation or limited liability company,
or division thereof, whether through purchase of assets, merger
or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such
power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding
ownership interests of a partnership or limited liability
company.
"Advance" means a borrowing hereunder, (i) made by some or all of the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurocurrency Loans, in the same Agreed Currency and for the same Interest Period. The term "Advance" shall include Swing Line Loans unless otherwise expressly provided.
"Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.
"Agent" means Bank One in its capacity as contractual representative of the Lenders pursuant to Article 10, and not in its individual capacity as a Lender, and any successor Agent appointed pursuant to Article 10.
"Aggregate Commitment" means the aggregate of the Commitments of all the Lenders, as increased or reduced from time to time pursuant to the terms hereof. The initial Aggregate Commitment is $150,000,000.
"Aggregate Outstanding Credit Exposure" means, at any time, the aggregate of the Outstanding Credit Exposure of all the Lenders.
"Agreed Currencies" means (i) Dollars, (ii) so long as such currencies remain Eligible Currencies, Japanese Yen and the Euro, and (iii) any other Eligible Currency which the Borrower requests the Agent to include as an Agreed Currency hereunder and which is acceptable to all of the Lenders and, with respect to the issuance of Facility LCs in an Agreed Currency, the LC Issuer. For the purposes of this definition, "Japanese Yen" means the lawful currency of Japan.
"Agreement" means this credit agreement, as it may be amended or modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.5.
"Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Fee Rate" means, at any time and as the context may require, the percentage rate per annum at which (i) commitment fees are accruing on the Available Aggregate Commitment at such time, (ii) letter of credit fees are accruing on the undrawn stated amount of standby Facility LCs at such time or (iii) letter of credit fees are accruing on the undrawn stated amount of commercial Facility LCs at such time, in each case as set forth in the Pricing Schedule.
"Applicable Margin" means, with respect to Advances of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Advances of such Type as set forth in the Pricing Schedule.
"Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
"Approximate Equivalent Amount" of any currency with respect to any amount of Dollars shall mean the Equivalent Amount of such currency with respect to such amount of Dollars on or as of such date, rounded up to the nearest amount of such currency as determined by the Agent from time to time.
"Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner.
"Article" means an article of this Agreement unless another document is specifically referenced.
"Authorized Officer" means any of the Chief Financial Officer, Treasurer, or Controller of the Borrower, acting singly.
"Available Aggregate Commitment" means, at any time, the Aggregate Commitment then in effect minus the Aggregate Outstanding Credit Exposure at such time.
"Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors.
"Borrower" means Modine Manufacturing Company, a Wisconsin corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.9.
"Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York City for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in Dollars and the other Agreed Currencies are carried on in the London interbank market (and, if the Advances which are the subject of such borrowing, payment or rate selection are denominated in Euro, a day upon which such clearing system as is determined by the Agent to be suitable for clearing or settlement of the Euro is open for business), and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.
"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, and as it may be further amended from time to time, 42 U.S.C. Section 9601 et seq.
"Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term
obligations of, or fully guaranteed by, the United States of
America, (ii) with respect to Investments of a Foreign Subsidiary
only, direct obligations of such Foreign Subsidiary's Domestic
National Government maturing within one year, (iii) commercial
paper rated A-1 or better by S&P or P-1 or better by Moody's,
(iv) demand deposit accounts maintained in the ordinary course of
"Change in Control" means (a) with respect to any Person or group of Persons acting in concert which on the date of this Agreement owns 15% or more of the outstanding shares of voting stock of the Borrower, the acquisition by any such Person or group of Persons acting in concert of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Borrower; or (b) with respect to any other Person or group of Persons acting in concert, the acquisition by any such Person or group of Persons, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock of the Borrower; or (c) as of any date a majority of the Board of Directors of the Borrower consists of individuals who were not either (i) directors of the Borrower as of the corresponding date of the previous year, (ii) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (i), or (iii) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (i) and individuals described in clause (ii).
"Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.
"Collateral Agent" has the meaning given such term in the Intercreditor Agreement.
"Collateral Documents" means, collectively, each Foreign Subsidiary Pledge Agreement and each other agreement, instrument or document that may at any time secure all or any part of the Secured Obligations or any Guaranty.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Commitment" means, for each Lender, the obligation of such Lender to make Revolving Loans to, and participate in Facility LCs issued upon the application of, the Borrower in an
aggregate amount not exceeding the amount set forth opposite its signature below, as it may be modified as a result of any assignment that has become effective pursuant to Section 12.3(b), or as otherwise modified from time to time pursuant to the terms hereof.
"Computation Date" is defined in Section 2.3.
"Consolidated Interest Expense" means, as to any Person and with reference to any period, the interest expense of such Person and its Subsidiaries calculated on a consolidated basis for such period including, without limitation, such interest expense as may be attributable to Capitalized Leases, Receivables Transaction Financing Costs, the discount or implied interest component of Off-Balance Sheet Liabilities, all commissions, discounts and other fees and charges owed with respect to Letters of Credit and Net Mark-to-Market Exposure.
"Consolidated Net Income" means, as to any Person and with reference to any period, the net income (or loss) of such Person and its Subsidiaries calculated on a consolidated basis for such period, excluding any non-cash charges or gains which are unusual, non-recurring or extraordinary.
"Consolidated Net Worth" means as to any Person and at any time the consolidated stockholders' equity of such Person and
its Subsidiaries calculated on a consolidated basis as of such time.
"Consolidated Total Debt" means as to any Person and at any time Indebtedness of such Person and its Subsidiaries calculated on a consolidated basis.
"Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.
"Conversion/Continuation Notice" is defined in Section 2.10.
"Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code.
"Credit Extension" means the making of an Advance or the issuance of a Facility LC hereunder.
"Credit Extension Date" means the Borrowing Date for an Advance or the issuance date for a Facility LC.
"Default" means an event described in Article 7.
"Dollar Amount" of any currency at any date shall mean
(i) the amount of such currency if such currency is Dollars or
(ii) the equivalent in Dollars of such amount if such currency is
any currency other than Dollars, calculated on the basis of the
arithmetical mean of the buy and sell spot rates of exchange of
the Agent for such currency on the London market at 11:00 a.m.,
London time, on or as of the most recent Computation Date
provided for in Section 2.3.
"Dollars" and "$" shall mean the lawful currency of the United States of America.
"Domestic National Government" means, with respect to a Foreign Subsidiary, the national government of the country in which the Foreign Subsidiary's principal place of business is located.
"Domestic Subsidiary" means each Subsidiary of the Borrower which is organized under the laws of the United States of America or any state, territory or possession thereof.
"Eligible Currency" means any currency other than Dollars (i) that is readily available, (ii) that is freely
traded, (iii) in which deposits are customarily offered to banks
in the London interbank market, (iv) which is convertible into
Dollars in the international interbank market and (v) as to which
an Equivalent Amount may be readily calculated. If, after the
designation by the Lenders of any currency as an Agreed Currency,
(x) currency control or other exchange regulations are imposed in
the country in which such currency is issued with the result that
different types of such currency are introduced, (y) such
currency is, in the determination of the Agent, no longer readily
available or freely traded or (z) in the determination of the
Agent, an Equivalent Amount of such currency is not readily
calculable, the Agent shall promptly notify the Lenders and the
Borrower, and such currency shall no longer be an Agreed Currency
until such time as all of the Lenders agree to reinstate such
currency as an Agreed Currency and promptly, but in any event
within five Business Days of receipt of such notice from the
Agent, the Borrower shall repay all Loans in such affected
currency or convert such Loans into Loans in Dollars or another
Agreed Currency, subject to the other terms set forth in Article 2.
"Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof, including, without limitation, CERCLA.
"Environmental Liabilities" means all liabilities (including anticipated compliance costs) in connection with or relating to the business, assets presently or previously owned, leased or operated property, activities (including, without limitation, off-site disposal) or operations of the Borrower and each of its Subsidiaries, whether vested or unvested, contingent or fixed, actual or potential, known or unknown, which arise under or relate to matters covered by Environmental Laws.
"Environmental Proceeding" means any judicial or administrative proceeding arising from or in any way associated with any Environmental Law.
"Environmental Release" means releases as defined in CERCLA or under any other Environmental Law.
"Equivalent Amount" of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such other currency at 11:00 a.m., London time, on the date on or as of which such amount is to be determined.
"Equivalent Foreign Rating" means, with respect to a rating issued by Moody's, an equivalent rating issued by a
recognized rating agency comparable to S&P or Moody's and reasonably acceptable to the Lender.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.
"Euro" and/or "EUR" means the euro referred to in Council Regulation (EC) No. 1103/97 dated June 17, 1997 passed by the Council of the European Union, or, if different, the then lawful currency of the member states of the European Union that participate in the third stage of Economic and Monetary Union.
"Eurocurrency" means any Agreed Currency.
"Eurocurrency Advance" means an Advance which, except as otherwise provided in Section 2.13, bears interest at the applicable Eurocurrency Rate.
"Eurocurrency Loan" means a Loan which, except as otherwise provided in Section 2.13, bears interest at the applicable Eurocurrency Rate.
"Eurocurrency Rate" means, with respect to a
Eurocurrency Advance for the relevant Interest Period, the sum of
(i) the quotient of (a) the Eurocurrency Reference Rate
applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (ii) the Applicable Margin.
"Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (ii) the jurisdiction in which the Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced.
"Facility LC" is defined in Section 2.22(a).
"Facility LC Application" is defined in Section 2.22(c).
"Facility LC Collateral Account" is defined in Section 2.22(k).
"Facility Termination Date" means April 17, 2005 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.
"Floating Rate" means, for any day, a rate per annum equal to the sum of (i) the Alternate Base Rate for such day, plus (ii) the Applicable Margin, in each case changing when and as the Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.13, bears interest at the Floating Rate.
"Floating Rate Loan" means a Loan which, except as otherwise provided in Section 2.13, bears interest at the Floating Rate.
"Foreign Subsidiary" means each Subsidiary which is not a Domestic Subsidiary.
"Foreign Subsidiary Pledge Agreement" means an agreement, in form and substance satisfactory to the Agent and the Banks, whereby the Borrower or a Guarantor holding equity interests in a Material Foreign Subsidiary, pledges such equity interests (up to 65% of the aggregate equity interests in such Material Foreign Subsidiary) to the Collateral Agent as collateral for the Secured Obligations (or, if such pledgor is a Guarantor, such Guarantor's Guaranty) as well as obligations to the holders of notes under the Note Purchase Agreement, as such agreement may be amended or modified and in effect from time to time.
"Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
"Guarantor" means each Domestic Subsidiary that has executed and delivered a Guaranty and its successors and assigns.
"Guaranty" means a guaranty agreement, in form and substance satisfactory to the Agent and the Banks, whereby a Domestic Subsidiary guarantees the Secured Obligations, as such agreement may be amended or modified and in effect from time to time.
"Hazardous Materials" includes, without limitation, (i)
solid or hazardous waste, as defined in the Resource Conservation
and Recovery Act of 1980, or in any applicable state or local law
or regulation, (ii) hazardous substances, as defined in CERCLA,
or in any applicable state or local law or regulation, (iii)
gasoline, or any other petroleum product or by-product, (iv)
toxic substances, as defined in the Toxic Substances Control Act
of 1976, or in any applicable state or local law or regulation or
(v) insecticides, fungicides, or rodenticides, as defined in the
Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable state or local law or regulation, as each such
act, statute or regulation may be amended from time to time.
"Indebtedness" of a Person means, without duplication, such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (vi) Capitalized Lease Obligations, (vii) obligations in respect of Letters of Credit, (viii) Contingent Obligations in respect of Indebtedness of any other Person, (ix) Off-Balance Sheet Liabilities, (x) Receivables Transaction Attributed Indebtedness, and (xi) any other obligation for borrowed money or other financial accommodation which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency Agreement dated as of April 17, 2002, among the Agent, the LC Issuer, the Lenders, the holders of notes under the Note Purchase Agreement and Bank One, NA, as collateral agent, as such agreement may be amended, restated or otherwise modified from time to time.
"Interest Expense Coverage Ratio" means, as of any date of calculation, the ratio of (i) the Borrower's Consolidated EBIT for the then most recently ended four fiscal quarters to (ii) the Borrower's Consolidated Interest Expense for the then most recently ended four fiscal quarters.
"Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person.
"LC Fee" is defined in Section 2.22(d).
"LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One designated by Bank One) in its capacity as issuer of Facility LCs hereunder.
"LC Obligations" means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (ii) the aggregate unpaid amount at such time of all Reimbursement Obligations.
"LC Payment Date" is defined in Section 2.22(e).
"Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. Unless otherwise specified, the term "Lender" includes Bank One in its capacity as Swing Line Lender.
"Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio of (i) the Borrower's Consolidated Total Debt outstanding on such date to (ii) the Borrower's Consolidated Adjusted EBITDA for the then most recently ended four fiscal quarters.
"Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).
"Loan" means a Revolving Loan or a Swing Line Loan, as applicable.
"Loan Documents" means this Agreement, the Facility LC Applications, any Notes issued pursuant to Section 2.16, each Guaranty and the Collateral Documents.
"Material Adverse Effect" means a material adverse effect on (i) the business, Property, condition (financial or otherwise), results of operations, or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower or any Guarantor to perform its obligations under the Loan Documents to which it is a party, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent, the LC Issuer or the Lenders thereunder.
"Material Foreign Subsidiary" means, at any time, a Foreign Subsidiary that meets one or both of the following criteria: (i) such Foreign Subsidiary's total assets, determined on a consolidated basis with its Subsidiaries is greater than or equal to five percent (5%) of the consolidated total assets of the Borrower and its Subsidiaries; or (ii) such Foreign Subsidiary's Consolidated Adjusted EBITDA is greater than or equal to five percent (5%) of the Borrower's Consolidated Adjusted EBITDA.
"Modify" and "Modification" are defined in Section 2.22(a).
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions.
"National Currency Unit" means the unit of currency (other than a Euro unit) of each member state of the European Union that participates in the third stage of Economic and Monetary Union.
"Net Mark-to-Market Exposure" of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from
Rate Management Transactions. "Unrealized losses" means the fair market value of the cost to such Person of replacing such Rate Management Transaction as of the date of determination (assuming the Rate Management Transaction were to be terminated as of that date), and "unrealized profits" means the fair market value of the gain to such Person of replacing such Rate Management Transaction as of the date of determination (assuming such Rate Management Transaction were to be terminated as of that date).
"Non-U.S. Lender" is defined in Section 3.5(d).
"Note" means any promissory note issued pursuant to
Section 2.16 in the form of Exhibit E.
"Note Purchase Agreement" means the Note Purchase and Private Shelf Agreement, dated as of September 29, 2000, as from time to time in effect, by and between the Borrower, The Prudential Insurance Company of America and the "Purchasers" identified therein.
"Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent, the LC Issuer or any indemnified party arising under the Loan Documents.
"Off-Balance Sheet Liability" of a Person means (i) any
repurchase obligation or liability of such Person with respect to
accounts or notes receivable sold by such Person, (ii) any
liability under any Sale and Leaseback Transaction which is not a
Capitalized Lease, (iii) any liability under any so-called
"synthetic lease" transaction entered into by such Person, or
(iv) any obligation arising with respect to any other transaction
which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.
"Operating Lease" of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more.
"Operating Lease Obligations" means, as at any date of determination, the amount obtained by aggregating the present values, determined in the case of each particular Operating Lease by applying a discount rate (which discount rate shall equal the discount rate which would be applied under Agreement Accounting Principles if such Operating Lease were a Capitalized Lease) from the date on which each fixed lease payment is due under such Operating Lease to such date of determination, of all fixed lease payments due under all Operating Leases of the Borrower and its Subsidiaries.
"Other Taxes" is defined in Section 3.5(b).
"Outstanding Credit Exposure" means, as to any Lender at any time, the sum of (i) the aggregate principal Dollar Amount
"Participants" is defined in Section 12.2(a).
"Payment Date" means the last Business Day of each quarter.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.
"Permitted Encumbrances" means:
(a) Liens for taxes, assessments or governmental charges or levies on the Borrower's or a Subsidiary's Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on the books of the Borrower or such Subsidiary.
(b) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due.
(c) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation.
(d) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Subsidiaries.
(f) Liens incurred in connection with any transfer of an interest in accounts or notes receivable or related assets as part of a Qualified Receivables Transaction.
(g) Liens created after the date hereof by conditional sale or other title retention agreements (including Capitalized Leases) or in connection with purchase money Indebtedness with respect to equipment and fixtures acquired by the Borrower or its Subsidiaries in the ordinary course of business, involving the incurrence of an aggregate amount of Indebtedness of no more than $10,000,000 outstanding at any time for all such Liens (provided that such Liens attach only to the assets financed and such
Indebtedness is incurred within 30 days following such purchase and does not exceed 100% of the purchase price of the subject assets).
(h) Liens in favor of the Collateral Agent, for the benefit of the parties to the Intercreditor Agreement, granted pursuant to any Collateral Document.
"Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability.
"Pricing Schedule" means the Schedule attached hereto identified as such.
"Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate changed to any customer), changing when and as said prime rate changes.
"Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.
"Pro Rata Share" means, with respect to a Lender, a portion equal to a fraction the numerator of which is such Lender's Commitment and the denominator of which is the Aggregate Commitment.
"Purchasers" is defined in Section 12.3(a).
"Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Borrower or any Subsidiary pursuant to which the Borrower or any Subsidiary may sell, convey or otherwise transfer to a newly- formed Subsidiary or other special-purpose entity, or any other Person, any accounts or notes receivable and rights related thereto on a limited recourse basis, provided that (i) such sale, conveyance or transfer qualifies as a sale under Agreement Accounting Principles and (ii) the Receivables Transaction Attributed Indebtedness incurred in such transaction or series of transactions does not exceed fifteen percent (15%) of the total assets of the Borrower and its Subsidiaries on a consolidated basis at any one time outstanding.
"Rate Management Transaction" means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by the Borrower which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.
"Rate Management Obligations" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all Rate Management Transactions, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Management Transactions.
"Receivables Transaction Attributed Indebtedness" means the amount of obligations outstanding under the legal documents entered into as part of any Qualified Receivables Transaction on any date of determination that would be characterized as principal if such Qualified Receivables Transaction were structured as a secured lending transaction rather than as a purchase.
"Receivables Transaction Financing Cost" means such portion of the fees, service charges, and other costs, as well as all collections or other amounts retained by purchasers of accounts or notes receivable and rights related thereto pursuant to a Qualified Receivables Transaction, which are in excess of amounts paid to the Borrower and its Subsidiaries under any Qualified Receivables Transaction for the purchase of accounts or notes receivable and rights related thereto pursuant to such Qualified Receivables Transaction and are the equivalent of the interest component of the financing if the transaction were characterized as a secured lending transaction rather than as a purchase.
"Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means, at any time, the aggregate of all obligations of the Borrower then outstanding under Section 2.22 to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any one or more drawings under Facility LCs.
"Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such
"Reports" is defined in Section 9.6(a).
"Required Lenders" means Lenders in the aggregate having at least fifty-one percent (51%) of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least fifty-one percent (51%) of the Aggregate Outstanding Credit Exposure.
"Reserve Requirement" means, with respect to an
Interest Period, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves)
which is imposed under Regulation D on Eurocurrency liabilities.
"Restricted Payment" means, with respect to any Person,
(i) any dividend or other distribution on any shares of such
Person's capital stock (except dividends payable solely in shares
of its capital stock) or (ii) any net payment on account of the
purchase, redemption, retirement, acquisition or sale of (A) any
shares of such Person's capital stock or (B) any option, warrant
or other right to acquire shares of such Person's capital stock.
"Revolving Loan" means, with respect to a Lender, such Lender's loan made pursuant to its commitment to lend set forth in Section 2.1 (or any conversion or continuation thereof).
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee.
"Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another document is specifically referenced.
"Secured Obligations" means, collectively, (i) the Obligations and (ii) all Rate Management Obligations owing to one or more Lenders.
"Single Employer Plan" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group.
"Specified Domestic Subsidiary" means, at any time, each Domestic Subsidiary other than (i) Domestic Subsidiaries
that do not conduct a business of any kind and do not own or possess any assets and (ii) so long as they remain private charitable foundations, Modine Foundation, Inc., a Wisconsin corporation, and Modine Manufacturing Company Foundation, Inc., a Wisconsin corporation.
"Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the Borrower and its Subsidiaries, Property which represents more than 15% of the consolidated assets of the Borrower and its Subsidiaries or property which is responsible for more than 15% of the consolidated net sales or of the consolidated net income of the Borrower and its Subsidiaries, in each case, as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made (or if financial statements have not been delivered hereunder for that month which begins the twelve-month period, then the financial statements delivered hereunder for the quarter ending immediately prior to that month).
"Swing Line Borrowing Notice" is defined in Section 2.2(c).
"Swing Line Lender" means Bank One or such other Lender which may succeed to its rights and obligations as Swing Line Lender pursuant to the terms of this Agreement.
"Swing Line Limit" means $5,000,000.
"Swing Line Loan" means a Loan made available to the Borrower by the Swing Line Lender pursuant to Section 2.2.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurocurrency Advance and with respect to any Loan, its nature as a Floating Rate Loan or a Eurodollar Loan.
"Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued
benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.
ARTICLE 2
THE CREDITS
available its required Revolving Loan, in funds immediately
available in Chicago to the Agent at its address specified
pursuant to Article 13. Revolving Loans made pursuant to this
Section 2.2(e) shall initially be Floating Rate Loans and
thereafter may be continued as Floating Rate Loans or converted
into Eurocurrency Loans in the manner provided in Section 2.10
and subject to the other conditions and limitations set forth in
this Article 2. Unless a Lender shall have notified the Swing
Line Lender, prior to its making any Swing Line Loan, that any
applicable condition precedent set forth in Sections 4.1 or 4.2
had not then been satisfied, such Lender's obligation to make
Revolving Loans pursuant to this Section 2.2(e) to repay Swing
Line Loans shall be unconditional, continuing, irrevocable and
absolute and shall not be affected by any circumstances,
including, without limitation, (w) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have
against the Agent, the Swing Line Lender or any other Person, (x)
the occurrence or continuance of a Default or Unmatured Default,
(y) any adverse change in the condition (financial or otherwise)
of the Borrower, or (z) any other circumstances, happening or
event whatsoever. In the event that any Lender fails to make
payment to the Agent of any amount due under this Section 2.2(e),
the Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to
such Lender hereunder until the Agent receives such payment from
such Lender or such obligation is otherwise fully satisfied. In
addition to the foregoing, if for any reason any Lender fails to
make payment to the Agent of any amount due under this Section
2.2(e), such Lender shall be deemed, at the option of the Agent,
to have unconditionally and irrevocably purchased from the Swing
Line Lender, without recourse or warranty, an undivided interest
and participation in the applicable Swing Line Loan in the amount
of such Revolving Loan, and such interest and participation may
be recovered from such Lender together with interest thereon at
the Federal Funds Effective Rate for each day during the period
commencing on the date of demand and ending on the date such
amount is received. On the Facility Termination Date, the
Borrower shall repay in full the outstanding principal balance of
the Swing Line Loans.
(a) each Credit Extension as of the date three Business Days prior to (i) in the case of an Advance, the Borrowing Date or, if applicable, date of conversion/continuation of such Advance, and (ii) in the case of a Facility LC, the date for which the Borrower has requested issuance of such Facility LC, and
(b) all outstanding Credit Extensions on and as of the last Business Day of each month and on any other Business Day elected by the Agent in its discretion or upon instruction by the Required Lenders.
Each day upon or as of which the Agent determines Dollar Amounts as described in the preceding clauses (a) and (b) is herein described as a "Computation Date" with respect to each Credit Extension for which a Dollar Amount is determined on or as of such day. If at any time the Dollar Amount of the Aggregate Outstanding Credit Exposure (calculated, with respect to those Credit Extensions denominated in Agreed Currencies other than Dollars, as of the most recent Computation Date with respect to each such Credit Extension) exceeds the Aggregate Commitment, the Borrower shall immediately repay Advances in an aggregate principal amount sufficient to eliminate any such excess.
The Aggregate Outstanding Credit Exposure and all other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date.
(a) the Borrowing Date, which shall be a Business Day, of such Advance,
(b) the aggregate amount of such Advance,
(c) the Type of Advance selected, and
(d) in the case of each Eurocurrency Advance, the Interest Period and Agreed Currency applicable thereto.
(a) each such Eurocurrency Advance denominated in Dollars
shall be automatically converted into a Floating Rate Advance unless
(x) such Eurocurrency Advance is or was repaid in accordance with
Section 2.8 or (y) the Borrower shall have given the Agent a
Conversion/Continuation Notice (as defined below) requesting
that, at the end of such Interest Period, such Eurocurrency
Advance either continue as a Eurocurrency Advance for the same or
another Interest Period or be converted into a Floating Rate
Advance; and
(b) each such Eurocurrency Advance denominated in an Agreed Currency other than Dollars shall automatically continue as a Eurocurrency Advance in the same Agreed Currency with an Interest Period of one month unless (x) such Eurocurrency Advance is or was repaid in accordance with Section 2.8 or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurocurrency Advance continue as a Eurocurrency Advance for the same or another Interest Period.
(i) the requested date, which shall be a Business Day, of such conversion or continuation, and
(ii) the Agreed Currency, amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurocurrency Advance, the duration of the Interest Period applicable thereto.
(a) Each Advance shall be repaid and each payment of interest thereon shall be paid in the currency in which such Advance was made or, where such currency has converted to the Euro, in the Euro. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at (except as set forth in the next sentence) the Agent's address specified pursuant to Article 13, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, shall be initiated by 12:00 noon (local time) on the date when due and shall (except (i) in the case of Reimbursement Obligations for which the LC Issuer has not been fully indemnified by the Lenders, or (ii) with respect to repayments of Swing Line Loans, or (iii) as otherwise specifically required hereunder) be applied ratably by the Agent among the Lenders. All payments to be made by the Borrower hereunder in any currency other than Dollars shall be made in such currency on the date due in such funds as may then be customary for the settlement of international transactions in such currency for the account of the Agent, at its Eurocurrency Payment Office for such currency and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at, (x) with respect to Floating Rate Loans and Eurocurrency Loans denominated in Dollars, its address specified pursuant to Article 13 or at any Lending Installation specified in a notice received by the Agent from such Lender and (y) with respect to Eurocurrency Loans denominated in an Agreed Currency other than Dollars, in the funds received from the Borrower at the address of the Agent's Eurocurrency Payment Office for such currency. The Agent is hereby authorized to charge any account of the Borrower maintained with Bank One or any of its Affiliates for each payment of principal, interest, Reimbursement Obligations and fees as it becomes due hereunder. Each reference to the Agent in this Section 2.14 shall also be deemed to refer, and shall apply equally, to the LC Issuer, in the case of payments required to be made by the Borrower to the LC Issuer pursuant to Section 2.22(f).
(b) Notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other
than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Advance was made (the "Original Currency") no longer exists or the Borrower is not able to make payment to the Agent for the account of the Lenders in such Original Currency, then all payments to be made by the Borrower hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Amount (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrower take all risks of the imposition of any such currency control or exchange regulations.
(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(b) The Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period and selection of Agreed Currency with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, (c) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at any time, and (d) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof.
(d) Any Lender may request that its Loans be evidenced by a promissory note or, in the case of the Swing Line Lender, promissory notes representing its Revolving Loans and Swing Line Loans, respectively, substantially in the form of Exhibit E, with appropriate changes for notes evidencing Swing Line Loans (each, a "Note"). In such event, the Borrower shall prepare, execute and deliver to such Lender such Note or Notes payable to the order of such Lender. Thereafter, the Loans evidenced by each such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein
or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (a) and (b) above.
thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. Promptly after notice from the LC Issuer, the Agent will notify each Lender of the contents of each request for issuance of a Facility LC hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurocurrency Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate.
the Applicable Fee Rate for standby Facility LCs in effect from time to time on the average daily undrawn stated amount under such standby Facility LC, such fee to be payable in arrears on each Payment Date, and (ii) with respect to each commercial Facility LC, a letter of credit fee at a per annum rate equal to the Applicable Fee Rate for commercial Facility LCs in effect from time to time on the average daily undrawn stated amount under such commercial Facility LC, such fee to be payable in arrears on each Payment Date (each such fee described in this sentence an "LC Fee"). The Borrower shall also pay to the LC Issuer for its own account (x) at the time of issuance of each Facility LC, a fronting fee in an amount equal to 0.125% of the initial stated amount thereof, such fee to be payable on the date of such issuance, and (y) documentary and processing charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with the LC Issuer's standard schedule for such charges as in effect from time to time.
(i) The Borrower shall be irrevocably and unconditionally obligated to reimburse the LC Issuer on or before the applicable LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any Facility LC, without presentment, demand, protest or
(ii) If the Borrower at any time fails to repay
a Reimbursement Obligation on or before the applicable
LC Payment Date, such unpaid Reimbursement Obligation
shall at that time be automatically converted into an
obligation denominated in Dollars and the Borrower
shall be deemed to have elected to borrow Revolving
Loans from the Lenders, as of the date of the advance
giving rise to the Reimbursement Obligation, equal
in amount to the Dollar Amount of the unpaid
Reimbursement Obligation. Such Revolving Loans
shall be made as of the date of the payment giving
rise to such Reimbursement Obligation, automatically,
without notice and without any requirement to satisfy
the conditions precedent otherwise applicable to an
Advance of Revolving Loans. Such Revolving Loans shall
constitute a Floating Rate Advance, the proceeds of
which Advance shall be used to repay such Reimbursement
Obligation. If, for any reason, the Borrower fails to
repay a Reimbursement Obligation on the day such
Reimbursement Obligation arises and, for any reason,
the Lenders are unable to make or have no obligation
to make Revolving Loans, then such Reimbursement
Obligation shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to
the sum of two percent (2%) per annum plus the rate
applicable to Floating Rate Advances for such day
(or, in the case of a Reimbursement Obligation
denominated in an Agreed Currency other than Dollars,
at the rate determined by the LC Issuer in good faith
to represent the LC Issuer's cost of overnight or
short-term funds in the applicable Agreed Currency
plus the then effective Applicable Margin for
Eurocurrency Advances). The Borrower agrees to
indemnify the LC Issuer against any loss or expense
determined by the LC Issuer in good faith to have
resulted from any conversion pursuant to this
Section 2.22(f)(ii) by reason of the inability
of the LC Issuer to convert the Dollar Amount
received from the Borrower or from the Lenders,
as applicable, into an amount in the applicable
Agreed Currency of such Facility LC equal to the
amount of such Reimbursement Obligation.
(iii) The LC Issuer will pay to each Lender ratably in accordance with its Pro Rata Share all
amounts received by it from the Borrower for
application in payment, in whole or in part, of
the Reimbursement Obligation in respect of any
Facility LC issued by the LC Issuer, but only to
the extent such Lender has made payment to the LC
Issuer in respect of such Facility LC pursuant to
Section 2.22(e).
be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Facility LC.
issuance of such Facility LC that (i) it elects not to obtain such Credit Extension on such date or (ii) it elects to obtain such Credit Extension on such date in a different Agreed Currency, as the case may be, in which the denomination of such Credit Extension would in the opinion of the Agent, the Required Lenders and, if the requested Credit Extension is to be a Facility LC, the LC Issuer, be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice, Conversion/Continuation Notice or notice of a request for issuance of a Facility LC, as the case may be.
(b) In the event of such a requested increase in the Aggregate Commitment, then the Borrower shall consult with the Agent and the Arranger as to the number, identity and requested Commitments of financial institutions (which may or may not then be Lenders) which the Arranger may invite to participate in the Commitments.
(c) No Lender shall have any obligation to increase its Commitment pursuant to a request by the Borrower hereunder.
(d) In the event that the Borrower and one or more of the
Lenders (or other financial institutions) shall agree upon such
an increase in the aggregate Commitment (i) the Borrower, the
Agent and each Lender or other financial institution increasing
its Commitment or extending a new Commitment shall enter into an
amendment to this Agreement setting forth the amounts of the
Commitments, as so increased, providing that the financial
institutions extending new Commitments shall be Lenders for all
purposes of this Agreement, and setting forth such additional
provisions as the Agent shall consider reasonably appropriate and
(ii) the Borrower shall furnish, if requested, a new Note to each
financial institution that is extending a new Commitment or
increasing its Commitment. No such amendment shall require the
approval or consent of any Lender whose Commitment is not being
increased. Upon the execution and delivery of such amendment as
provided above, and upon satisfaction of such other condition as
the Agent may reasonably specify upon the request of the financial institutions that are increasing or extending new Commitments (including, without limitation, the Agent administering the reallocation of any outstanding Loans ratably among the Lenders after giving effect to such increase in the Aggregate Commitment, the delivery of certificates, evidence of corporate authority and legal opinions on behalf of the Borrower), this Agreement shall be deemed to be amended accordingly.
ARTICLE 3
YIELD PROTECTION; TAXES
(i) subjects any Lender or any applicable Lending Installation or the LC Issuer to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurocurrency Loans, Facility LCs or participations therein, or
(ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation or the LC Issuer (other than reserves and assessments taken into account in determining the interest rate applicable to Eurocurrency Advances), or
(iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation or the LC Issuer of making, funding or maintaining its Eurocurrency Loans (including, without limitation, any conversion of any Loan denominated in an Agreed Currency other than Euro into a Loan denominated in Euro), or of issuing or participating in Facility LCs, or reduces any amount receivable by any Lender or any applicable Lending Installation or the LC Issuer in connection with its Eurocurrency Loans, Facility LCs or participations therein, or requires any Lender or any applicable Lending Installation or the LC Issuer to make any payment calculated by reference to the amount of Eurocurrency Loans, Facility LCs or participations therein held or interest or LC Fees received by it,
by an amount deemed material by such Lender or the LC Issuer as the case may be,
and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation or the LC Issuer, as the case may be, of making or maintaining its Eurocurrency Loans (including, without limitation, any conversion of any Loan denominated in an Agreed Currency other than Euro into a Loan denominated in Euro) or Commitment or of issuing or participating in Facility LCs, or to reduce the return received by such Lender or applicable Lending Installation or the LC Issuer, as the case may be, in connection with such Eurocurrency Loans, Commitment or Facility LCs or participations therein, then, within 15 days of demand by such Lender or the LC Issuer, as the case may be, the Borrower shall pay such Lender or the LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received.
to make Loans and issue or participate in Facility LCs, as the case may be, hereunder (after taking into account such Lender's or the LC Issuer's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or the LC Issuer or any Lending Installation or any corporation controlling any Lender or the LC Issuer. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement.
(a) All payments by the Borrower to or for the account of any Lender, the LC Issuer or the Agent hereunder or under any Note or Facility LC Application shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, the LC Issuer or the Agent,
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this Section 3.5) such Lender,
the LC Issuer or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted
to the relevant authority in accordance with applicable law and
(iv) the Borrower shall furnish to the Agent the original copy of
a receipt evidencing payment thereof within 30 days after such
payment is made.
(b) In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or Facility LC Application or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note or Facility LC Application ("Other Taxes").
(c) The Borrower hereby agrees to indemnify the Agent, the LC Issuer and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Agent, the LC Issuer or such Lender as a result of its Commitment, any Credit Extension made by it hereunder, or otherwise in connection with its participation in this Agreement and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Agent, the LC Issuer or such Lender makes demand therefor pursuant to Section 3.6.
inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.
(f) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.
(g) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.5(g) shall survive the payment of the Obligations and termination of this Agreement.
disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurocurrency Loan shall be calculated as though each Lender funded its Eurocurrency Loan through the purchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining the Eurocurrency Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement.
ARTICLE 4
CONDITIONS PRECEDENT
(a) the Borrower has furnished to the Agent the following, each in form and substance satisfactory to the Lenders and with sufficient copies for the Lenders:
(i) Copies of the articles or certificate of incorporation of the Borrower, together with all amendments, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of the Borrower, of its by-laws and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which the Borrower is a party.
(iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of the Borrower authorized to sign the Loan Documents to which the Borrower is a party, upon which certificate the Agent, the LC Issuer and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower.
(iv) Copies of the articles or certificate of incorporation of each Guarantor, together with all amendments, and a certificate of good standing, certified by the appropriate governmental officer in its jurisdiction of incorporation.
(v) Copies, certified by the Secretary or Assistant Secretary of each Guarantor, of its by-laws and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which such Guarantor is a party.
(vi) An incumbency certificate, executed by the Secretary or Assistant Secretary of each Guarantor, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of such Guarantor authorized to sign the Loan Documents to which such Guarantor is a party, upon which certificate the Agent, the LC Issuer and the Lenders shall be entitled to rely until informed of any change in writing by such Guarantor.
(vii) A certificate, signed by an Authorized Officer of the Borrower, stating that on the initial Credit Extension Date no Default or Unmatured Default has occurred and is continuing.
(viii) A written opinion of the Borrower's and the Guarantors' counsel, addressed to the Agent, the Lenders and the LC Issuer in substantially the form of Exhibit A.
(ix) Any Notes requested by a Lender pursuant to
Section 2.16 payable to the order of each such requesting
Lender.
(x) Written money transfer instructions, in substantially the form of Exhibit D, addressed to the Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested.
(xi) A Guaranty executed by each Specified Domestic Subsidiary.
(xii) One or more Foreign Subsidiary Pledge Agreements executed by the Borrower and by each Domestic Subsidiary that holds shares in a Material Foreign Subsidiary, along with all certificates evidencing the shares pledged thereby duly endorsed or accompanied by executed stock powers and accompanied by such other documents, financing statements, opinions and information as the Agent or the Collateral Agent may require to assure the Collateral Agent's valid first priority Lien in the shares pledged thereby, free and clear of all other Liens (except as may be permitted in such Foreign Subsidiary Pledge Agreements).
(xiii) Evidence satisfactory to the Agent that (A) the Credit Agreement dated as of September 23, 1997, as from time to time in effect, by and between the Borrower and Wachovia Bank, N.A., and (B) the Credit Agreement dated as of January 13, 2000, as from time to time in effect, by and between the Borrower and Bank One, shall have been or shall simultaneously on the date of closing of this Agreement be terminated (except for those provisions that expressly survive the termination thereof) and all loans
outstanding and other amounts owed to the lenders or agents thereunder shall have been or shall simultaneously with the initial Credit Extension hereunder be paid in full.
(xiv) A consent under or agreement amending the Note Purchase Agreement such that the Credit Extensions and the pledge of shares in the Material Foreign Subsidiaries do not result in a breach of the Note Purchase Agreement, executed by the lenders under the Note Purchase Agreement.
(xv) The Intercreditor Agreement executed by each party thereto.
(xvi) Such other documents as any Lender or its counsel may have reasonably requested.
(b) Reserved.
(a) There exists no Default or Unmatured Default.
(b) The representations and warranties contained in Article 5 are true and correct as of such Credit Extension Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date.
(c) All legal matters incident to the making of such Credit Extension shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice or request for issuance of a Facility LC, or Swing Line Borrowing Notice, as the case may be, with respect to each such Credit Extension shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(a) and (b) have been satisfied. Any Lender may require a duly completed compliance certificate in substantially the form of Exhibit B as a condition to making a Credit Extension.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
(a) The consolidated financial statements of the Borrower and its Subsidiaries as of March 31, 2001 reported on by PricewaterhouseCoopers LLP and the unaudited consolidated financial statements of the Borrower and its Subsidiaries as of December 26, 2001, each heretofore delivered to the Lenders, were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared
and fairly present the consolidated financial condition and operations of the Borrower and its Subsidiaries at such date and the consolidated results of their operations for the period then ended.
(b) Since December 26, 2001, there has been no change in the business, Property, prospects condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
(a) The Borrower and each member of the Controlled Group (excluding Foreign Subsidiaries of the Borrower) have fulfilled their obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or a Plan under Title IV of ERISA.
(b) Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other member of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan.
(c) Neither the Borrower nor any member of the Controlled Group (excluding Foreign Subsidiaries of the Borrower) is or ever has been obligated to contribute to any Multiemployer Plan.
(d) Each Foreign Subsidiary of the Borrower: (i) has
fulfilled its funding obligations under any and all applicable laws,
regulations and similar requirements of governmental authorities
with respect to each employee benefit or pension plan; (ii) is in
compliance in all material respects with the presently applicable
provisions of such laws, regulations and requirements; and (iii)
except as disclosed in the financial statements referred to in
Section 5.5, has not incurred any liability, indebtedness or
obligation under or in connection with any employee benefit or
pension plan.
Adverse Effect. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any agreement, instrument or undertaking to which it is a party or by which it or any of its Property is bound (x) which default could reasonably be expected to have a Material Adverse Effect or (y) which agreement, instrument or undertaking evidences or governs Indebtedness. No Default or Unmatured Default has occurred and is continuing.
the meaning of 29 C.F.R. Section 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), the Borrower is an "operating company" as defined in 29 C.F.R. Section 2510-101(c), and neither the execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.
ARTICLE 6
COVENANTS
During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing:
(a) within 90 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in generally accepted accounting principles and required or approved by the Borrower's independent certified public accountants) audit report certified by PricewaterhouseCoopers LLP or other independent certified public accountants acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated and consolidating basis (consolidating statements need not be certified by such accountants) for itself and its Subsidiaries, including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows, accompanied by a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof;
(b) within 45 days after the close of the first three quarterly periods of each of its fiscal years, for itself and its Subsidiaries, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating profit and loss statements and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its Treasurer, Controller or Chief Financial Officer;
6.20 and 6.22 on the date of such financial statements and (ii) stating whether any Default or Unmatured Default exists on the date of such certificate and, if any Default or Unmatured Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;
(d) within five Business Days after the Borrower becomes aware of the occurrence of any Default or Unmatured Default or of the occurrence of any other development, financial or otherwise, that could reasonably be expected to have a Material Adverse Effect, a certificate of the Treasurer, Controller or Chief Financial Officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Borrower or any of its Subsidiaries shall have filed with the Securities and Exchange Commission;
(g) as soon as possible, and in any event within 10 days after any member of the Controlled Group (i) knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the Chief Financial Officer, Treasurer or Controller of the Borrower, describing said Reportable Event and the action which the Borrower proposes to take with respect thereto, along with a copy of any notice of such Reportable Event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA, a copy of such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Plan, a copy of such notice;
(h) promptly upon the execution and delivery thereof, notice of any waiver, consent, modification or amendment of or to the Note Purchase Agreement, together with a copy of the documentation relating thereto; and
(i) from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Lenders may reasonably request.
at such reasonable times and as often as may reasonably be desired; provided, however, that so long as no Default or Unmatured Default has occurred and is continuing, such visits and inspections shall not take place more often than once each fiscal year of the Borrower.
(a) The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Investments (including without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries and other Investments in existence on the date hereof and described in Schedule 6.5.
(iii) Investments comprised of capital contributions (whether in the form of cash, a note, or other assets) to a Subsidiary or other special-purpose entity created solely to engage in a Qualified Receivables Transaction.
(iv) Acquisitions for which the total purchase price, when aggregated with the total purchase price of all other Acquisitions during the preceding twelve (12) months, does not exceed $50,000,000; provided, however, that with respect to any proposed Acquisition for which the total consideration is $20,000,000 or more, prior to closing such Acquisition the Borrower shall deliver to the Agent a certificate of the Treasurer, Controller or Chief Financial Officer of the Borrower setting forth in reasonable detail financial calculations demonstrating that, after giving effect to such Acquisition, no Default or Unmatured Default will exist on a pro forma basis (assuming that such Acquisition (and any related incurrence of Indebtedness) had occurred on the first day of the four-fiscal quarter period ending at the last fiscal quarter-end).
(b) The Borrower and its Subsidiaries may make and have outstanding the following other Investments, in addition to the Investments permitted under Section 6.5(a): (i) loans and advances in the ordinary course of business between the Borrower and its Subsidiaries and between Subsidiaries, and (ii) other Investments, provided that at no time shall the aggregate outstanding amount of Investments existing and permitted under this Section 6.5(b)(ii) exceed $40,000,000.
(a) Subsidiaries of the Borrower may merge into the Borrower or a Wholly-Owned Subsidiary, and
(b) the foregoing limitation on the sale, lease or other transfer of assets and on the discontinuation or elimination of a business line or segment shall not prohibit:
(i) sales of inventory in the ordinary course of business;
(ii) leases, sales or other dispositions of Property that, together with all other Property of the Borrower and its Subsidiaries previously leased, sold or disposed of (other than inventory in the ordinary course of business) as permitted by this Section during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Borrower and its Subsidiaries;
(iii) any transfer of an interest in accounts or notes receivable and related assets as part of a Qualified Receivables Transaction; and
(iv) the liquidation and dissolution of Modine of Canada, Ltd., Industrial Airsystems, Inc. and Radman, Inc.
(a) The Loans and the Reimbursement Obligations.
(b) Indebtedness described in Schedule 6.16 not exceeding the commitment limits set forth therein.
(c) Receivables Transaction Attributed Indebtedness.
(d) Indebtedness, in addition to Indebtedness permitted pursuant to subsections (a)-(c) above, in an aggregate amount at any time outstanding not to exceed the greater of $50,000,000 or ten percent (10%) of the Borrower's Consolidated Net Worth.
Agent may require to assure the Collateral Agent's valid first priority Lien in the shares pledged thereby, free and clear of all other Liens (except as may be permitted in such Foreign Subsidiary Pledge Agreement).
ARTICLE 7
DEFAULTS
The occurrence of any one or more of the following events shall constitute a Default:
Section 7.1 The Borrower shall fail to pay when due any principal of any Loan, shall fail to pay within one Business Day
of when due any Reimbursement Obligation, or shall fail to pay when due any interest on any Loan or any LC Fee or other fee or other amount payable hereunder; or
Section 7.2 The Borrower shall fail to observe or perform any covenant contained in Section 6.1(d), Sections 6.3 through 6.10, inclusive, or Sections 6.16 through 6.21, inclusive; or
Section 7.3 The Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement (other than
those covered by Section 7.1 or 7.2 above), or the Borrower or any
Subsidiary shall fail to observe or perform any covenant or agreement
contained in any other Loan Document, for thirty (30) days after
the earlier of (i) the first day on which a responsible officer
of the Borrower or Subsidiary has knowledge of such failure, or
(ii) written notice thereof has been given to the Borrower or
Subsidiary by a Lender; or
Section 7.4 Any representation, warranty, certification or statement made or deemed made by or on behalf of the Borrower in Article 5 or by or on behalf of the Borrower or any Subsidiary in, under or in connection with any Loan Document, or any certificate, financial statement or other document delivered pursuant to any Loan Document, shall prove to have been incorrect in any material respect when made (or deemed made); or
Section 7.5 The Borrower or any Subsidiary shall fail to make any payment in respect of Indebtedness outstanding (other than the Loans) in an aggregate amount in excess of $10,000,000 when due or within any applicable grace period; or
Section 7.6 Any event or condition shall occur which results in the acceleration of the maturity of Indebtedness outstanding in an aggregate amount in excess of $10,000,000 of the Borrower or any Subsidiary or the purchase of such Indebtedness by the Borrower (or its designee) or such Subsidiary (or its designee) prior to the scheduled maturity thereof or enables (or, with the giving of notice or lapse of time or both, would enable) the holders of such Indebtedness or any Person acting on such holders' behalf to accelerate the maturity thereof or require the purchase thereof by the Borrower (or its designee) or such Subsidiary (or its designee) prior to the scheduled maturity thereof, without regard to whether such holders or other Person shall have exercised or waived their right to do so, or any Indebtedness outstanding in an aggregate amount in excess of $10,000,000 of the Borrower or any Subsidiary shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or
Section 7.7 The Borrower or any Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any Substantial Portion of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay, or shall admit in writing its inability to pay, its debts as they become due, or shall take any corporate action to authorize any of the foregoing, or shall fail to contest in good faith any appointment or proceeding described in Section 7.8; or
Section 7.8 An involuntary case or other proceeding shall be commenced against the Borrower or any Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any Substantial Portion of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 45 days; or an order for relief shall be entered against the Borrower or any Subsidiary under the federal bankruptcy laws as now or hereafter in effect; or
Section 7.9 The Borrower or any member of the Controlled
Group shall fail to pay when due any material amount which it shall
have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans to enforce
Section 515 or 4219(c)(5) of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition
shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must
be terminated; or
Section 7.10 One or more judgments or orders for the payment of money in an aggregate amount in excess of $10,000,000 (or the equivalent thereof in currencies other than Dollars), or one or more nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, shall be rendered against the Borrower or any Subsidiary, and such judgment(s) or order(s) shall continue unsatisfied and unstayed for a period of 45 days; or
Section 7.11 A federal tax lien shall be filed against the Borrower under Section 6323 of the Code or a lien of the PBGC shall be filed against the Borrower under Section 4068 of ERISA and in either case such lien shall remain undischarged for a period of 25 days after the date of filing, or the Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $10,000,000, or any Reportable Event shall occur in connection with any Plan; or
Section 7.12 Any Change in Control shall occur; or
Section 7.13 Nonpayment by the Borrower or any Subsidiary of any Rate Management Obligation when due or the breach by the Borrower or any Subsidiary of any term, provision or condition contained in any Rate Management Transaction; or
Section 7.14 Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other Property of
the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion; or
Section 7.15 Any Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of any Guaranty to which it is a party, or any Guarantor shall deny that it has any further liability under any Guaranty to which it is a party, or shall give notice to such effect; or
Section 7.16 Any Collateral Document shall for any reason fail to create a valid and perfected first priority security interest in any collateral purported to be covered thereby, except as permitted by the terms of any Collateral Document, or any Collateral Document shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Collateral Document, or the Borrower shall fail to comply with any of the terms or provisions of any Collateral Document.
ARTICLE 8
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
Section 8.1 Acceleration; Facility LC Collateral Account.
(a) If any Default described in Section 7.7 or 7.8 occurs
with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuer to
issue Facility LCs shall automatically terminate and the Obligations
shall immediately become due and payable without any election or
action on the part of the Agent, the LC Issuer or any Lender and
the Borrower will be and become thereby unconditionally obligated,
without any further notice, act or demand, to pay to the Agent an
amount in immediately available funds, which funds shall be held in
the Facility LC Collateral Account, equal to the difference of
(x) the amount of LC Obligations at such time, less (y) the amount
on deposit in the Facility LC Collateral Account at such time which
is free and clear of all rights and claims of third parties and has
not been applied against the Obligations (such difference, the
"Collateral Shortfall Amount"). If any other Default occurs, the
Required Lenders (or the Agent with the consent of the Required
Lenders) may (i) terminate or suspend the obligations of the
Lenders to make Loans hereunder and the obligation and power of
the LC Issuer to issue Facility LCs, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which the Borrower hereby
expressly waives, and (ii) upon notice to the Borrower and in
addition to the continuing right to demand payment of all amounts
payable under this Agreement, make demand on the Borrower to pay,
and the Borrower will, forthwith upon such demand and without any
further notice or act, pay to the Agent the Collateral Shortfall
Amount, which funds shall be deposited in the Facility LC Collateral
Account.
(b) If at any time while any Default is continuing, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on the Borrower to pay, and the Borrower will, forthwith upon such demand and without any further notice or act, pay to the Agent the Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account.
(c) The Agent may at any time or from time to time after funds are deposited in the Facility LC Collateral Account, apply such funds to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Borrower to the Lenders or the LC Issuer under the Loan Documents.
(d) At any time while any Default is continuing, neither the Borrower nor any Person claiming on behalf of or through the Borrower shall have any right to withdraw any of the funds held in the Facility LC Collateral Account. After all of the Obligations have been indefeasibly paid in full and the Aggregate Commitment has been terminated, any funds remaining in the Facility LC Collateral Account shall be returned by the Agent to the Borrower or paid to whomever may be legally entitled thereto at such time.
(e) If, within 30 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans and the obligation and power of the LC Issuer to issue Facility LCs hereunder as a result of any Default (other than any Default as described in Section 7.7 or 7.8 with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination.
(a) Extend the final maturity of any Loan, or extend the expiry date of any Facility LC to a date after the Facility Termination Date or forgive all or any portion of the principal amount thereof or any Reimbursement Obligation related thereto, or reduce the rate or extend the time of payment of interest or fees thereon or the Reimbursement Obligations related thereto.
(b) Reduce the percentage specified in the definition of Required Lenders.
(c) Extend the Facility Termination Date, or reduce the amount or extend the payment date for, the mandatory payments
required under Section 2.3, or, subject to Section 2.26, increase the amount of the Aggregate Commitment, of the Commitment of any Lender hereunder or the commitment to issue Facility LCs, or permit the Borrower to assign its rights under this Agreement.
(d) Release or terminate any Guaranty or, with respect to a Foreign Subsidiary that remains a Material Foreign Subsidiary, release or terminate a Foreign Subsidiary Pledge Agreement under which equity interests in such Foreign Subsidiary are pledged or release the Agent's security interest in any collateral pledged under such Foreign Subsidiary Pledge Agreement.
(e) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent, no amendment of any provision of this Agreement relating to the Swing Line Lender or any Swing Line Loans shall be effective without the written consent of the Swing Line Lender, and no amendment of any provision relating to the LC Issuer shall be effective without the written consent of the LC Issuer. The Agent may waive payment of the fee required under Section 12.3(b) without obtaining the consent of any other party to this Agreement.
ARTICLE 9
GENERAL PROVISIONS
(a) The Borrower shall reimburse the Agent and the Arranger for any costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, distribution (including, without limitation, via the internet), review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent, the LC Issuer, the Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, the LC Issuer, the Arranger and the Lenders, which attorneys may be employees of the Agent, the LC Issuer, the Arranger or the Lenders) paid or incurred by the Agent, the LC Issuer, the Arranger or any Lender in connection with the collection and enforcement of the Loan Documents. Expenses being reimbursed by the Borrower under this Section include, without limitation, costs and expenses incurred in connection with the Reports described in the following sentence. The Borrower acknowledges that from time to time Bank One may prepare and may distribute to the Lenders (but shall have no obligation or duty to prepare or to distribute to the Lenders) certain audit reports (the "Reports") pertaining to the Borrower's assets for internal use by Bank One from information furnished to it by or on behalf of
the Borrower, after Bank One has exercised its rights of inspection pursuant to this Agreement.
(b) The Borrower hereby further agrees to indemnify
the Agent, the LC Issuer, the Arranger and each Lender, their
respective affiliates, and each of their directors, officers and
employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all
reasonable expenses of litigation or preparation therefor whether
or not the Agent, the LC Issuer, the Arranger or any Lender or
any affiliate is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the
proceeds of any Credit Extension hereunder except to the extent
that they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this
Section 9.6 shall survive the termination of this Agreement.
competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent, the LC Issuer, the Arranger nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect, consequential or punitive damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.
ARTICLE 10
THE AGENT
obligor to furnish information directly to each Lender; (c) the
satisfaction of any condition specified in Article 4, except
receipt of items required to be delivered solely to the Agent;
(d) the existence or possible existence of any Default or
Unmatured Default; (e) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien
in any collateral security; or (g) the financial condition of the
Borrower or any guarantor of any of the Obligations or of any of
the Borrower's or any such guarantor's respective Subsidiaries.
The Agent shall have no duty to disclose to the Lenders information
that is not required to be furnished by the Borrower to the Agent
at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual
capacity).
ARTICLE 11
SETOFF; RATABLE PAYMENTS
payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate Outstanding Credit Exposure held by the other Lenders so that after such purchase each Lender will hold its Pro Rata Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their respective Pro Rata Shares of the Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made.
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Credit Extension (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Credit Extension.
on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Outstanding Credit Exposure under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and the transferor Lender shall be released with respect to the Commitment and Outstanding Credit Exposure assigned to such Purchaser without any further consent or action by the Borrower, the Lenders or the Agent. In the case of an assignment covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a Lender hereunder but shall continue to be entitled to the benefits of, and subject to, those provisions of this Agreement and the other Loan Documents which survive payment of the Obligations and termination of the applicable agreement. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 12.3 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.2. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3(c), the transferor Lender, the Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment.
ARTICLE 13
NOTICES
ARTICLE 14
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall
be effective when it has been executed by the Borrower, the Agent, the LC Issuer and the Lenders and each party has notified the Agent by facsimile transmission or telephone that it has taken such action.
ARTICLE 15
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer, the Swing Line Lender and the Agent have executed this Agreement as of the date first above written.
MODINE MANUFACTURING COMPANY
By: s/D. B. Spiewak
-----------------------------------
Title: Treasurer
1500 DeKoven Avenue
Racine, Wisconsin 53403-2552
|
Attention: D.B. Spiewak, Treasurer Telephone: (414-636-1288) FAX: (414-636-1818)
Commitments
-----------
$25,000,000 BANK ONE, NA (Main Office Chicago), as
the Agent, as the Swing Line Lender,
as the LC Issuer and as a Lender
By: s/A. F. Maggiore
----------------------------------
Anthony Maggiore
Title: Director
Banc One Capital Markets, Inc.
111 East Milwaukee Avenue, WI1-2042
Milwaukee, Wisconsin 53202
Attention: Anthony Maggioree
---------------------------
Telephone: 414-765-3111
FAX: 414-765-2625
$20,000,000 SUNTRUST BANK, as a Lender
By: s/William C. Humphries
-------------------------------------
William C. Humphries
Title: Director
303 Peachtree Street, NE, 10th Floor
Atlanta, Georgia 30308
Attention: William C. Humphries
Telephone: 404-724-3931
FAX: 404-588-8505
|
$20,000,000 WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By: s/LeAnne Phillips
---------------------------------
Title: Vice President
1339 Chestnut Street
Philadelphia, PA 19107
Attention: Robert McGill
Telephone: 267/321-6218
FAX: 267/321-6300
$20,000,000 M&I MARSHALL AND ILSLEY BANK, as a Lender
By: s/James R. Miller
----------------------------------
Title: Vice President
770 North Water Street,
Commerical Banking
18th Floor
Milwaukee, Wisconsin 53202
Attention: Commercial Banking
Telephone: 414 765-7779
FAX: 414 765-7625
$13,000,000 THE BANK OF NEW YORK, as a Lender
By: s/Joshua Feldman
----------------------------------
Joshua Feldman
Title: Vice President
One Wall Street, 22nd Floor
New York, New York 10286
Attention: Joshua Feldman
|
Telephone: 212 635-7906 FAX: 212 635-6434
$13,000,000 COMERICA BANK, as a Lender
By: s/Michael T. Shea
----------------------------------
Title: Vice President
500 Woodward MC 3265
Detroit, Michigan 48226
Attention: Michael T. Shea
Telephone: 313 222-2977
FAX: 313 222-3776
|
$13,000,000 U.S. BANK NATIONAL ASSOCIATION d/b/a
FIRSTAR BANK, N.A., as a Lender
By: s/ Caroline V. Krider
--------------------------------
Title: Vice President and Senior Lender
777 East Wisconsin Avenue
MK-FC-GLCB
Milwaukee, WI 53202
|
Attention: Caroline V. Krider Telephone: 414-765-5971 FAX: 414-765-4632
$13,000,000 NATIONAL CITY BANK, as a Lender
By: s/Stephen E. Green
----------------------------------
Stephen E. Green
Title: Vice President
1 North Franklin, Suite 3600
Chicago, Illinois 60606
|
Attention: Steve Green Telephone: 312 384-4611 FAX: 312 240-0301
$13,000,000 WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender
By: s/Mark H. Halldorson
---------------------------------
Mark H. Halldorson
Title: Assistant Vice President
By: s/ Chad Kortgard
---------------------------------
Chad M. Kortgard
Title: Assistant Vice President
Wells Fargo Bank, National
Association
MAC: N9305-031
Sixth and Marquette
Minneapolis, MN 55479
Attention: Mark H. Halldorson
|
Telephone: 612-667-2101 FAX: 612-667-2276
PRICING SCHEDULE
Applicable Level I Level II Level III Level IV Level V Margin Status Status Status Status Status ---------------------------------------------------------------------- Eurocurrency Rate .75% .875% 1.00% 1.25% 1.375% ---------------------------------------------------------------------- Floating Rate 0% 0% 0% 0% 0.125% ---------------------------------------------------------------------- Applicable Level I Level II Level III Level IV Level V Fee Rate Status Status Status Status Status ---------------------------------------------------------------------- Standby Letter .75% .875% 1.00% 1.25% 1.375% of Credit Fee ---------------------------------------------------------------------- Commercial Letter .375% .4375% .50% .625% .6875% of Credit Fee ---------------------------------------------------------------------- Commitment Fee .175% .20% .225% .25% .30% ---------------------------------------------------------------------- |
For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:
"Financials" means the annual or quarterly financial statements of the Borrower delivered pursuant to the Credit Agreement.
"Level I Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is less than or equal to 1.00 to 1.00.
"Level II Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials,
(i) the Borrower has not qualified for Level I Status and (ii) the Leverage
Ratio is less than or equal to 1.50 to 1.00.
"Level III Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials,
(i) the Borrower has not qualified for Level I Status or Level II Status
and (ii) the Leverage Ratio is less than or equal to 2.0 to 1.00.
"Level IV Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials,
(i) the Borrower has not qualified for Level I Status, Level II Status or
Level III Status and (ii) the Leverage Ratio is less than or equal 2.5 to
1.00.
"Level V Status" exists at any date if the Borrower has not qualified for Level I Status, Level II Status, Level III Status or Level IV Status.
"Status" means Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status.
The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower's Status as reflected in the then most recent Financials. As of the date of the Credit Agreement, the Borrower's Status shall be Level II. Adjustments,
if any, to the Applicable Margin or Applicable Fee Rate shall be effective five Business Days after the Agent has received the applicable Financials. If the Borrower fails to deliver the Financials to the Agent at the time required pursuant to the Credit Agreement, then the Applicable Margin and Applicable Fee Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth in the foregoing table until five days after such Financials are so delivered.
SCHEDULE 1
EUROCURRENCY PAYMENT OFFICES OF THE AGENT
Currency Eurocurrency Payment Office
-------------- ---------------------------
Dollars Bank One, NA
Chicago, Illinois
Euro Bank One, NA
Chicago, Illinois
Japanese Yen Bank One, NA
Chicago, Illinois
|
SCHEDULE 2
LENDING INSTALLATIONS
Lender Floating Rate Loans Eurocurrency Loans (list all)
------------- ------------------- -----------------------------
Bank One, NA Bank One, NA Bank One, NA
Chicago, Illinois Chicago, Illinois
(for all Agreed Currencies)
SunTrust Bank SunTrust Bank SunTrust Bank
Atlanta, Georgia Atlanta, Georgia
(for all Agreed Currencies)
Wachovia Wachovia Bank, Wachovia Bank, National
Bank, National Association Association
National Philadelphia, London, England
Association Pennsylvania (for all Agreed Currencies)
M&I Marshall M&I Marshall and M&I Marshall and Ilsley Bank
and Ilsley Ilsley Bank Milwaukee, Wisconsin
Bank Milwaukee, Wisconsin (for all Agreed Currencies)
The Bank of The Bank of New York The Bank of New York
New York New York, New York New York, New York
(for all Agreed Currencies)
Comerica Bank Comerica Bank Comerica Bank
Detroit, Michigan Detroit, Michigan
(for all Agreed Currencies)
U.S. Bank U.S. Bank National U.S. Bank National
National Association d/b/a Association d/b/a
Association Firstar Bank, N.A. Firstar Bank, N.A.
d/b/a Firstar Minneapolis, Minnesota Minneapolis, Minnesota
Bank, N.A. (for all Agreed Currencies)
National City National City Bank National City Bank
Bank Kalamazoo, Michigan Kalamazoo, Michigan
(for all Agreed Currencies)
Wells Fargo Wells Fargo Bank, Wells Fargo Bank,
Bank, National Association National Association
National San Francisco, San Francisco,
Association California California
(for all Agreed Currencies)
|
EXHIBIT 10(a)
MODINE MANUFACTURING COMPANY
DIRECTOR EMERITUS RETIREMENT PLAN
EFFECTIVE APRIL 1, 1992
MODINE MANUFACTURING COMPANY
DIRECTOR EMERITUS RETIREMENT PLAN
EFFECTIVE APRIL 1, 1992
WHEREAS, the Board of Directors of Modine Manufacturing Company has determined it to be in the best interest of the Company to establish a retirement plan for directors of the Company.
NOW, THEREFORE, effective as of April 1, 1992, Modine Manufacturing Company establishes this Modine Manufacturing Company Director Emeritus Retirement Plan with respect to directors of Modine who on or after April 1, 1992 retire, die or otherwise terminate their service as a director of Modine.
For the purposes of this retirement plan, the following words and phrases shall have the meanings indicated, unless a different meaning is clearly required by the context:
1.1 The term "Act" means the Employee Retirement Income Security Act of 1974.
1.2 The term "Actuarial Equivalent" means equality in value of the aggregate amount expected to be received under the Plan based on the discount rate and mortality assumptions applicable, as defined below:
1.3 The term "Beneficiary" means the person or persons designated by a Director or former Director as his beneficiary as provided in Section 3.5.
1.4 The term "Board" or "Board of Directors" means the current Board of Directors of the Company.
1.5 The term "Company" or "Modine" means Modine Manufacturing Company, a Wisconsin corporation, its corporate successors, and the surviving corporation resulting from any merger or consolidation of Modine Manufacturing Company with any other company or companies.
1.6 A "Director" means any person who is or becomes a director of Modine on or after April 1, 1992 regardless of whether such person is also an employee of Modine on or after such date.
1.7 The "Effective Date" means April 1, 1992.
1.8 The "Plan" means this Modine Manufacturing Company Director Emeritus Retirement Plan with all amendments and supplements hereafter made.
1.9 The "Plan Year" means the twelve-month period commencing April 1, 1992 and each April 1 thereafter.
1.10 "Retirement Benefit" means the amount of retirement benefit payable annually to a retired Director under the terms of the Plan.
1.11 "Surviving Spouse" shall mean and be limited to the person who (i) was the Director's or former Director's spouse at the time of his death, and (ii) was his spouse for at least one full year immediately prior to the date of his death.
1.12 "Retirement Date" means with respect to any Director, the last day of the calendar quarter in which he retires from his service as a Director of Modine.
1.13 "Survivor Benefit" means the amount of survivor benefit payable annually to the Surviving Spouse or Beneficiary of a former Director under the terms of the Plan.
1.14 "Termination Date" means with respect to any Director, the date upon which he terminates his service as a director of Modine.
(a) If a deceased Director, at the time of death, had not commenced receiving Retirement Benefit payments under the Plan, such deceased Director's Surviving Spouse or Beneficiary, as determined pursuant to Section 3.5 of the Plan, shall be eligible to receive a Survivor Benefit as provided in Sections 3.2(a) and 3.3(a) of the Plan.
(b) If a deceased former Director, prior to the time of death, had ceased his services as a Director and at the time of death was receiving or eligible to receive Retirement Benefit payments under the Plan, such deceased former Director's Surviving Spouse or Beneficiary, as determined pursuant to Section 3.5 of the Plan, shall be eligible to receive a Survivor Benefit as provided in Sections 3.2(b) and 3.3(b) of the Plan.
(a) The amount of Survivor Benefit payable to a deceased Director's Surviving Spouse or Beneficiary who is eligible for such benefit pursuant to Section 3.1(a) of the Plan shall be equal to the amount of Retirement Benefit that would have been paid to the Director determined in accordance with Section 2.2 of the Plan assuming he had not died but his services as a Director had ceased as of the date of his death.
(b) The amount of Survivor Benefit payable to a deceased former Director's Surviving Spouse or Beneficiary who is eligible for such benefit pursuant to Section 3.1(b) of the Plan shall be equal to the amount of Retirement Benefit that was being paid, or was due to be paid, to the deceased former Director at the time of his death.
(a) A Surviving Benefit payable to a deceased Director's Surviving Spouse or Beneficiary pursuant to Section 3.1(a) of the Plan shall be paid in four equal payments commencing with the first day of the first quarter following the calendar quarter in which the Director's death occurred and shall be payable on the first day of each succeeding calendar quarter until the period of time with respect to which the Surviving Spouse or Beneficiary is paid a Survivor Benefit under the Plan equals the period of time with respect to which the retired Director served as a Director of the Company.
(b) A Survivor benefit payable to a deceased former Director's Surviving Spouse or Beneficiary pursuant to Section 3.1(b) of the Plan shall be paid in four equal payments commencing with the first day of the first quarter following the calendar quarter in which the former Director's death occurred and shall be payable on the first day of each succeeding calendar quarter until the period of time with respect to which the Surviving Spouse or Beneficiary is paid a Survivor Benefit under the Plan when combined with the period of time with respect to which the deceased former Director was paid a retirement benefit pursuant to Section 2.3 of the Plan equals the period of time with respect to which the deceased former Director served as a Director of the Company.
Director is survived by a Surviving Spouse, such Survivor Benefit will be paid to such Surviving Spouse unless the deceased Director or deceased former Director not less than 10 days prior to his death has filed with Modine, as plan administrator, a designation, in form and substance satisfactory to Modine, designating a person or persons other than his Surviving Spouse as his Beneficiary for receiving Survivor Benefit payments under the Plan.
In the event a deceased Director or deceased former
Director is not survived by a Surviving Spouse and has not
designated a Beneficiary or no person designated as his
Beneficiary has survived the deceased Director or deceased
former Director, any Survivor Benefit payable pursuant to
Section 3.2(a) or 3.2(b) of the Plan shall be payable to
the estate of such deceased Director or deceased former
Director in a single lump sum on the first day of the first
calendar quarter following the death of such deceased
Director or deceased former Director, or as soon thereafter
as administratively practicable.
(a) Except as provided in Section 4.1(b) of the Plan, the rights and interests of any person under the Plan shall not be subject in any manner to sale, transfer, encumbrance, assignment, pledge, or alienation of any kind; nor may such rights or interests be resorted to, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings. No such person shall have power in any manner to sell, transfer, encumber, assign, pledge or alienate any of his interests or rights under the Plan and any attempt to do so shall be void.
(b) Notwithstanding the provisions of Section
4.1(a) of the Plan, all or any part of the
benefit of a Director under the Plan shall be
subject to and payable in accordance with the
applicable requirements of any Qualified Domestic
Relations Order, as that term is defined in
Section 206(d)(3) of the Employee Retirement
Income Security Act of 1974 (hereinafter referred
to in the Plan as the "Act"), and Modine shall
provide for payment in accordance with such order
and Section and all regulations promulgated under
such Section. All such payments pursuant to a
Qualified Domestic Relations Order shall be
subject to reasonable rules and regulations
promulgated by Modine; provided that such rules
and regulations are consistent with Section 206(d)(3) of the Act. If prior to the commencement of payment of a Director's Retirement Benefit, any amount attributable to his Retirement Benefit is allocated for, or paid to, an alternate payee or payees pursuant to a Qualified Domestic Relations Order, the amount of his Retirement Benefit shall be reduced by an amount equal to the Actuarial Equivalent of the amount so paid or allocated to an alternate payee or payees.
members of the Board of Directors of Modine, or by such member or members as may be designated by an instrument in writing, signed by all members thereof, as having authority to execute such documents on his behalf; or (ii) a person who becomes authorized to act for Modine in accordance with the provisions of Section 5.1 of the Plan. Subject to the provisions of Section 5.3 of the Plan, any action taken by Modine which is authorized, permitted or required under the Plan shall be final and binding upon Modine, and all persons who claim an interest under the Plan.
(a) The date on which the notice of denial of claim was received by the Claimant;
(b) The date on which the Claimant's request for review was filed with Modine; provided, however, that the date on which the Claimant's request for review was in fact filed with Modine shall control in the event the date of actual filing is later than the date started by the Claimant pursuant to this Section 5.4;
(c) The specific portions of the denial of his claim which the Claimant requests Modine to review;
(d) A statement by the Claimant setting forth the basis upon which he believes Modine should reverse its previous denial of his claim for benefits and accept his claim as made; and
(e) Any written material (including as exhibits) which the Claimant desires Modine to examine in its consideration of his position as stated pursuant to Section 5.4(d) of the Plan.
Within 60 days of the date determined pursuant to
Section 5.4(b) of the Plan, Modine shall conduct a full and
fair review of its decision denying the Claimant's claim for
benefits. Within ten days following the date of such review,
Modine shall send to the Claimant its written decision setting
forth, in a manner calculated to be understood by the Claimant,
a statement of the specific reasons for its decision, including
reference to the specific Section of the Plan relied upon.
For purposes of this Section 6.2, the amount to be paid to any individual hereunder shall be the Actuarial Equivalent of all of
the benefits payable under the Plan to such individual. Following the determination of the amount to be paid to any individual pursuant to this Section 6.2, such amount shall be paid in a single lump sum payment within 10 days after such determination.
Notwithstanding anything to the contrary contained herein, in no event will the amount to be paid pursuant to this Section 6.2 be determined and paid later than 30 days after the effective termination date of the Plan.
For purposes of this Section 7.2, the amount to be paid to any individual hereunder shall be an amount equal to the total of all quarterly benefit payments which otherwise would be payable under the Plan to such individual. Following the determination of the amount to be paid to any individual pursuant to this Section 7.2, such amount shall be paid in a single lump sum payment within 10 days after such determination.
Notwithstanding anything to the contrary contained herein, in no event will the amount to be paid pursuant to this Section 7.2 be determined and paid later than 30 days after the effective termination date of the Plan pursuant to Section 7.1 of the Plan.
(a) The acquisition (other than from the Company) by any person (as such term is defined in Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934" Act)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of thirty-five percent (35%) or more of the combined voting power of the Company's then outstanding voting securities; or
(b) The individuals who, as of April 1, 1992, are members of the Board of Directors of Modine (the "Incumbent Board"), cease for any reason to constitute a majority of the board, unless the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of a majority of the Incumbent Board, and such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; or
(c) Approval by stockholders of the Company of
(i) a merger or consolidation involving the
Company if the stockholders of the Company,
immediately before such merger or consolidation,
do not, as a result of such merger or
consolidation, own, directly or indirectly, more
than sixty-five percent (65%) of the combined
voting power of the then outstanding voting
securities of the Company resulting from such
merger or consolidation in substantially the same
proportion as their ownership of the combined
voting power of the voting securities of the
Company outstanding immediately before such
merger or consolidation, or (ii) a complete
liquidation or dissolution of the Company or an
agreement for the sale or other disposition of
all or substantially all of the assets of the
Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to Section 7.4(a) of the Plan, solely because thirty-five percent (35%) or more of the combined voting power of the Company's then outstanding securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Company or any of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the stockholders of the Company in the same proportion as their ownership of stock in the Company immediately prior to such acquisition.
(a) Each former Director who is receiving a Retirement Benefit under the Plan shall, at reasonable times and places as requested by any then current Director of the Company, be available for consultation concerning the business and affairs of the Company. Each such former Director shall attend such meeting or meetings of the Board of Directors as any person, who at the time is a member of the Chief Executive Office of the Company, requests.
(b) The foregoing notwithstanding, it is understood that a former Director providing service pursuant to Section 8.1(a) shall be reimbursed by the Company for any and all reasonable expenses which are incurred in providing the requested services or attending any meeting of the Board as requested.
(c) It is understood that any former Director while attending any meeting of the Board, since he is not a duly elected and qualified Director of the Company, shall not vote nor be counted in determining a quorum at any such meeting.
(a) Notwithstanding anything to the contrary contained in the Plan, in the event a former Director irrespective of whether he is receiving Retirement Benefit payments under the Plan engages directly or indirectly in activities which compete in any manner with the business or activities of the Company, the right of such former Director to receive any Retirement Benefit payments under the Plan and the right of any other person to receive any benefit payments under the Plan shall be immediately terminated and no Retirement Benefit or other benefit payments under the Plan shall be paid thereafter to the former Director or to any person who claims a benefit under or through him.
(b) For purposes of Section 8.2(a), a former Director shall not be deemed to have engaged in competition with the business or activities of the Company if such former Director's sole relationship with a competitor of the Company consists of his holding, directly or indirectly, an equity interest in such other company not
greater than two percent (2%) of such other company's outstanding securities.
EXHIBIT 10(f)
WHEREAS, Executive is currently employed by Employer as its Chief Executive Officer;
WHEREAS, Employer desires to provide security to Executive in connection with Executive's employment with Employer in the event of a Change in Control affecting Employer; and
WHEREAS, Executive and Employer desire to enter into this Agreement pertaining to the terms of the security Employer is providing to Executive with respect to his employment in the event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
(a) "Actual Bonus" shall mean the amount of Executive's incentive bonus compensation actually payable for a calendar year under an incentive compensation plan maintained by Employer; provided, however, that such amount shall in no event be less than the highest amount payable to Executive at any time during the Term.
(b) "Affiliate" or "Associate" shall have the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934.
(c) "Base Salary" shall mean Executive's per annum base salary at the rate in effect on the date of a
termination of employment under circumstances described in subsections 3(a) or (b) below; provided, however, that such rate shall in no event be less than the highest rate in effect for Executive at any time during the Term.
(d) "Beneficiary" shall mean the person or entity designated by Executive, by written instrument delivered to Employer, to receive the benefits payable under this Agreement in the event of his death. If Executive fails to designate a Beneficiary, or if no Beneficiary survives Executive, such death benefits shall be paid:
(i) to his surviving spouse; or
(ii) if there is no surviving spouse, to his living descendants per stirpes; or
(iii) if there is neither a surviving spouse nor descendants, to his duly appointed and qualified executor or personal representative.
(e) A "Change in Control" shall be deemed to take place on the occurrence of any of the following events:
(1) The commencement by an entity, person or group (other than Employer or an Affiliate or Associate) of a tender offer for at least 30% of the outstanding capital stock of Employer entitled to vote in elections of directors ("Voting Power");
(2) The effective time of (i) a merger or
consolidation of Employer with one or more other
corporations as a result of which the holders of the
outstanding Voting Power of Employer immediately prior
to such merger or consolidation (other than the
surviving or resulting corporation or any Affiliate or
Associate thereof) hold less than 50% of the Voting
Power of the surviving or resulting corporation, or
(ii) a transfer of 30% of the Voting Power, or a
Substantial Portion of the Property, of Employer other
than to an entity of which Employer owns at least 50%
of the Voting Power; or
(3) During any period of 24 months that ends during the Term, regardless of whether such period commences before or after the effective date of this Agreement, the persons who at the beginning of such 24- month period were directors of Employer cease for any reason to constitute at least a majority of the Board of Directors of Employer.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Defined Contribution Plan" shall mean any Retirement Plan that is a defined contribution plan as defined in Section 3(34) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(h) "Five-Year Average Actual Bonus" shall mean the average of Executive's Actual Bonuses (determined without reference to the proviso in subsection 2(a)) payable for the five-year period ending on December 31 of the calendar year immediately preceding the calendar year of Executive's termination of employment.
(i) "Five-Year Average Base Salary" shall mean the average of Executive's per annum Base Salary (determined without reference to the proviso in subsection 2(c)) payable for the five-year period ending on December 31 of the calendar year immediately preceding the calendar year of Executive's termination of employment.
(j) "Good Cause" shall be deemed to exist if, and only if:
(1) Executive engages in an act of dishonesty constituting a felony that results or is intended to result directly or indirectly in gain or personal enrichment at the expense of Employer; or
(2) Executive breaches any provision of Section 8 (relating to confidential information), and such breach results in a demonstrably material injury to Employer.
(k) "Pension Plan" shall mean any Retirement Plan that is a defined benefit plan as defined in Section 3(35) of ERISA.
(l) "Retirement Plan" shall mean any qualified or
supplemental employee pension benefit plan, as defined in
Section 3(2) of ERISA, currently or hereinafter made
available by Employer in which Executive is eligible to
participate.
(m) "Severance Period" shall mean the period beginning on the date Executive's employment with Employer terminates under circumstances described in subsection 3(a) and ending on the date 36 months thereafter.
(n) "Substantial Portion of the Property of Employer" shall mean 50% of the aggregate book value of the assets of Employer and its Affiliates and Associates as set forth on the most recent balance sheet of Employer, prepared on a consolidated basis, by its regularly employed, independent, certified public accountants.
(o) "Target Bonus" shall mean the amount of Executive's target annual incentive bonus compensation for the calendar year in which the date of a termination of employment under circumstances described in subsection 3(a) below occurs, under the incentive bonus compensation plan maintained by Employer for such year; provided, however, that such amount shall in no event be less than the highest amount in effect for Executive at any time during the term.
(p) "Welfare Plan" shall mean any health and dental plan, disability plan, survivor income plan or life
insurance plan, as defined in Section 3(1) of ERISA, currently or hereafter made available by Employer in which Executive is eligible to participate.
(1) Employer shall pay Executive an amount equal to three times the greater of: (A) the sum of Executive's Base Salary and Target Bonus, or (B) the sum of Executive's Five- Year Average Base Salary and Five-Year Average Actual Bonus. Such amount shall be paid to Executive in a lump sum within 60 days after his date of termination of employment.
(2) Employer shall pay Executive an amount equal to the pro rata portion of the Target Bonus that is applicable to the period commencing on the first day of the calendar year in which the employment of Executive is terminated and ending on the date of such termination. Such amount shall be paid to Executive in a lump sum within 60 days after his date of termination of employment.
(3) (A) Employer shall pay to Executive a monthly Supplemental Pension Benefit in an amount equal to the amount determined pursuant to clause (i) below less the amount determined pursuant to clause (ii) below:
(i) the aggregate monthly amount of the pension benefit ("Pension") that would have been payable to Executive under all Pension Plans if that Pension were computed (A) by treating the Severance Period as service for all purposes of the Pension Plans and (B) by considering his monthly compensation during the Severance Period to be one-twelfth of his Base Salary and one-twelfth of the Target Bonus for all purposes of the Pension Plans;
(ii) the aggregate monthly amount of any Pension actually paid to Executive under all Pension Plans.
(B) The Supplemental Pension Benefit payable to Executive hereunder shall be paid (i) commencing at the later to occur of the last day of the Severance Period or the date payment of his Pension commences under the Pension Plans; and (ii) in the same form as is applicable to the Pension payable to Executive under the Pension Plans.
(C) If Executive dies prior to commencement of payment to him of his Pension under the Pension Plans, under circumstances in which a death benefit under the Pension Plans is payable to his surviving spouse or other beneficiary, then Employer shall pay a monthly Supplemental
Death Benefit to Executive's surviving spouse or other beneficiary entitled to receive the death benefit payable with respect to Executive under the Pension Plans in an amount equal to the amount determined pursuant to clause (i) below less the amount determined pursuant to clause (ii) below:
(i) the aggregate monthly amount of the death benefit that would have been payable to the surviving spouse or other beneficiary of Executive under the Pension Plans if that death benefit were computed (A) by treating the Severance Period as service for all purposes of the Pension Plans and (B) by considering his monthly compensation during the Severance Period to be one-twelfth of his Base Salary and one-twelfth of the Target Bonus for all purposes of the Pension Plans;
(ii) the aggregate monthly amount of any death benefit actually paid to the surviving spouse or other beneficiary of Executive under the Pension Plans.
(D) The Supplemental Death Benefit payable with respect to Executive hereunder shall be payable at the same time, in the same form, and to the same persons as is applicable to the death benefit payable with respect to Executive under the Pension Plans.
(E) Notwithstanding the foregoing provisions, the
total of the actual years of service of Executive for
purposes of each of the Pension Plans and the years of
service for which credit is given pursuant to subparagraphs
(3)(A) and (C) shall not exceed the maximum number of years
of service, if any, that can be considered pursuant to the
terms of such Pension Plan.
(F) Any actuarial adjustments made under the Pension Plans with respect to the form or time of payment of a Pension or death benefit to Executive or his surviving spouse or other beneficiary under the Pension Plans shall also be applicable to the Supplemental Pension Benefit or Supplemental Death Benefit payable hereunder and shall be based upon the same actuarial assumptions as those specified in the Pension Plans.
(4) (A) For each calendar year ending during the Severance Period, Employer shall pay to Executive a Supplemental Defined Contribution Benefit in an amount equal to the amount determined pursuant to clause (i) below less the amount determined pursuant to clause (ii) below:
(i) the amount that would have been allocated to Executive's accounts under all Defined Contribution Plans ("Accounts") during such calendar year, assuming (A) that the amount of Executive's elective deferrals (as defined in Section 402(g)(3) of the Code) equals the amount of such elective deferrals Executive authorized in the calendar year immediately preceding the calendar year in which the date of commencement of
the Severance Period occurs; (B) that all Employer
contributions (except elective deferrals as defined in
Section 402(g)(3) of the Code) were allocated to
Executive's Accounts during such calendar year, in the
amount that would have been allocated on behalf of
Executive had Executive been actively employed during
such calendar year; and (C) that Executive's rate of
compensation (as defined in the applicable Defined
Contribution Plan for purposes of determining Employer
contributions) during such calendar year is identical
to such rate of compensation on the date immediately
preceding his termination of employment;
(ii) the amount, if any, actually allocated to Executive's Accounts during such year;
(B) Each Supplemental Defined Contribution Benefit shall be paid to Executive in a lump sum no later than 60 days after the end of each applicable calendar year during the Severance Period;
(C) In the event of Executive's death prior to the end of the Severance Period, the Supplemental Defined Contribution Benefit shall continue to accrue for the duration of the Severance Period on the same basis as if Executive had not died. Such Supplemental Defined Contribution Benefit shall be payable to Executive's Beneficiary at the same time and manner as such Benefit would have been paid to Executive.
(5) If upon the date of termination of Executive's employment Executive holds any options with respect to stock of Employer, all such options will immediately become vested and exercisable upon such date and will be exercisable for 36 months thereafter. Any restrictions on stock of Employer owned by Executive on the date of termination of his employment will lapse on such date.
(6) During the Severance Period, Executive and his spouse and other dependents will continue to be covered by all Welfare Plans maintained by Employer in which he and his spouse and other dependents were participating immediately prior to the date of his termination as if he continued to be an employee of Employer and Employer will continue to pay the costs of coverage of Executive and his spouse and other dependents under such Welfare Plans on the same basis as is applicable to active employees covered thereunder; provided that, if participation in any one or more of such Welfare Plans is not possible under the terms thereof, Employer will provide substantially identical benefits. For purposes of the continuation of Executive's group health plan coverage required under Code Section 4980B, to the extent permitted by the applicable group health plan, (i) the period of extended coverage referred to in Code Section 4890B(f)(2)(B)(i)(I) shall commence on the first date that follows the end of the Severance Period, and (ii) the applicable notice period provided under Code Section 4980B(f)(6)(B) shall commence on the first date that follows the end of the Severance Period.
(b) If the employment of Executive with Employer is terminated by Employer or Executive other than under circumstances set forth in subsection 3(a), Executive's Base Salary shall be paid through the date of his termination, and Employer shall have no further obligation to Executive or any other person under this Agreement. Such termination shall have no effect upon Employee's other rights, including but not limited to, rights under the Retirement Plans and the Welfare Plans.
(c) Notwithstanding anything herein to the contrary, in the event Employer shall terminate the employment of Executive for Good Cause hereunder, Employer shall give Executive at least thirty (30) days prior written notice specifying in detail the reason or reasons for Executive's termination.
(d) This Agreement shall have no effect, and Employer shall have no obligations hereunder, if Executive's employment terminates for any reason at any time other than during the 24 months following a Change in Control.
(b) Employer and Executive shall mutually and reasonably determine the amount of the Gross-Up Payment to be made to Executive pursuant to the preceding subsection. Prior to the making of any such Gross-Up Payment, either party may request a determination as to the amount of such Gross-Up Payment. If such a determination is requested, it shall be made promptly, at Employer's expense, by independent tax counsel selected by Executive and approved by Employer (which approval shall not unreasonably be withheld), and such determination shall be conclusive and binding on the parties. Employer shall provide such information as such counsel may reasonably request, and such counsel may engage accountants or other experts at Employer's expense to the extent that they deem necessary or advisable to
enable them to reach a determination. The term "independent tax counsel," as used herein, shall mean a law firm of recognized expertise in federal income tax matters that has not previously advised or represented either party. It is hereby agreed that neither Employer nor Executive shall engage any such firm as counsel for any purpose, other than to make the determination provided for herein, for three years following such firm's announcement of its determination.
(c) In the event the Internal Revenue Service subsequently adjusts the excise tax computation made pursuant to subsections 4(a) and (b) above, Employer shall pay to Executive, or Executive shall pay to Employer, as the case may be, the full amount necessary to make either Executive or Employer whole had the excise tax initially been computed as subsequently adjusted, including the amount of any underpaid or overpaid excise tax, and any related interest and/or penalties due to the Internal Revenue Service.
public or of information not considered confidential by persons engaged in the business conducted by the Employer or from disclosure required by law or court order. The Agreement herein made in this Section 8 shall be in addition to, and not in limitation or derogation of, any obligation otherwise imposed by law upon the Executive in respect of confidential information and trade secrets of the Employer and its Affiliates.
(b) There shall be no obligation on the part of the Employer to make any further payments or provide any benefits required under this Agreement if Executive shall, during the period that such payments are being made or benefits provided, engage in Competition with the Employer. "Competition" for purposes of this Agreement shall mean (i) taking a management position with or control of a business engaged in the design, development, manufacture, marketing or distribution of products, which constituted 5% or more of the sales of the Employer and its subsidiaries and affiliates during the last fiscal year of the Employer preceding the termination of the Executive's employment, in any geographical area in which the Employer, its subsidiaries or affiliates is at the time engaging in the design, development, manufacture, marketing or distribution of such products; provided, however, that in no event shall ownership of less than 5% of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons, standing alone, be deemed Competition with the Employer, (ii) soliciting any person who is a customer of the businesses conducted by the Employer, or any business in which Executive has been engaged on behalf of the Employer and its subsidiaries or affiliates at any time during the term of this Agreement on behalf of a business described in clause (i) next above, or (iii) inducing or attempting to persuade any employee of the Employer or any of its subsidiaries or affiliates to terminate his employment relationship in order to enter into employment with a business described in clause (i) of this subsection 8(b).
If to Employer: Modine Manufacturing Company
1500 DeKoven Avenue
Racine, WI 53403
Attention: Legal Department
If to Executive: Donald R. Johnson
5602 Five Mile Road
Racine, WI 53402
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MODINE MANUFACTURING COMPANY
By: s/D. B. Rayburn
---------------------------------
D. B. Rayburn
Title: Executive Vice President, OE
-----------------------------
s/Donald R. Johnson
--------------------------------
Donald R. Johnson, Executive
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EXHIBIT 10(j)
MODINE MANUFACTURING COMPANY
1985 INCENTIVE STOCK PLAN
(as amended July 19, 1989)
(as amended July 18, 1990)
(as amended January 15, 1997)
1. PURPOSE. The Modine Manufacturing Company 1985 Incentive Stock Plan (the "Plan") is intended to provide incentives which will attract and retain highly competent persons as officers and key employees of Modine Manufacturing Company (the "Company") and its majority owned subsidiaries, by providing them with opportunities to acquire Common Stock of the Company ("Common Stock") or monetary payments based on the value of such shares pursuant to the Benefits described herein.
2. ADMINISTRATION. The Board of Directors of the Company shall supervise and administer the Plan. Any questions of interpretation of the Plan or of any Benefits issued under it shall be determined by the Board and such determination shall be final and binding upon all persons. Any or all powers and discretion vested in the Board under this Plan (except the power to amend or terminate the Plan) may be exercised by a committee of at least two directors (the "Committee") authorized by the Board to do so. Composition of the Committee is intended to satisfy the requirements of Rule 16 b-3 of the Securities and Exchange Act of 1934 (the "Exchange Act") and Section 162(m) of the Internal Revenue Code. A majority of members of the Committee shall constitute a quorum, and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee under the Plan may be made without notice or meeting of the Committee, by a writing signed by a majority of the Committee members.
3. PARTICIPANTS. Participants will consist of such key employees (including officers) of the Company or any or all of its present or future majority owned subsidiaries as the Board of Directors in its sole discretion determines to be mainly responsible for the success and future growth and profitability of the Company and whom the Board of Directors may designate from time to time to receive Benefits under the Plan. Benefits may be granted under this Plan to persons who have received options or other Benefits under this or other plans of the Company.
4. TYPES OF BENEFITS. Benefits under the Plan may be granted in any one or a combination of (a) Stock Purchase Agreements; (b) Stock Awards or Bonuses; (c) Stock Options (incentive stock options and non-qualified stock options with or without tax offset bonuses and discounted stock options); (d) Stock Appreciation Rights; (e) Restricted Stock; (f) Performance Unit Plans; (g) Performance Share Plans; and (h) Book Value Stock Plans; all as generally described hereinafter and all subject to such features currently utilized in connection with such Benefits or as developed hereafter which comply with appropriate Internal Revenue Service, Securities and Exchange Commission, or other regulations, and such other terms and conditions all as the Board of Directors may deem appropriate.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for issuance under the Plan an aggregate of 2,250,000 shares of Common Stock (except as supplemented hereinafter provided in Paragraph 15), $0.625 par value, which may be authorized but heretofore unissued shares or shares reacquired by the Company, including shares purchased on the open market. Any shares subject to the options, rights, agreements, plans, or awards as described hereinafter or issued under such options, rights, agreements, plans or awards may thereafter be subject to new options, rights, agreements, plans or awards under this Plan if there is a lapse, expiration or termination of any such options, rights, agreements, plans or awards prior to issuance of the shares or payment of the equivalent or if shares are issued under such options, rights, agreements, plans or awards, and thereafter are reacquired by the Company pursuant to rights reserved by the Company upon issuance thereof.
6. STOCK PURCHASE AGREEMENTS. Stock Purchase Agreements will consist of agreements for the present or future sale of Common Stock by the Company to a participant at such prices and on such terms and conditions as the Board of Directors deems appropriate.
7. STOCK AWARDS. Stock Awards will consist of shares of Common Stock transferred to participants without other payment therefor as a bonus for service rendered to the Company and its majority owned subsidiaries.
8. STOCK OPTIONS. Stock Options will consist of options to purchase shares of Common Stock at purchase prices determined by the Committee at the date such option is granted. Except regarding Incentive Stock Options, such option price may be less than the fair market value of Modine Common Stock on the date of grant, but in no event shall the option price be less than the par value of the shares. Such options will be exercisable not later than ten years after the date they are granted and will terminate not later than three years after termination of employment for any reason other than death.
9. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights, granted in conjunction with a stock option, will consist of rights to receive an amount equal to the appreciation in fair market value since the date of grant in lieu of exercising the corresponding stock option.
10. RESTRICTED STOCK. Restricted Stock will consist of shares of Common Stock which are transferred to the employee but which carry restrictions such as a prohibition against disposition or an option to repurchase in the event of employment termination, and may be subject to a substantial risk of forfeiture. Shares of Restricted Stock may be granted to the employee at no charge, or they may be sold to him. Restrictions on the shares of stock may lapse over a period of time. As the restrictions lapse, the employee has unrestricted shares which he may sell or transfer. If, however, the restrictions are violated prior to their lapse, those shares still subject to such restrictions are forfeited by the employee, and must be returned to the Company.
11. PERFORMANCE UNIT PLANS. A Performance Unit Plan will provide for units, contingently granted, which entitle the employee to cash payments or their equivalent in shares of stock valued at the time of the grant (i.e., the unit value remains constant and does not fluctuate with changes in the market value of the stock), if predetermined objectives are met.
12. PERFORMANCE SHARE PLANS. A Performance Share Plan will provide for artificial shares, contingently granted, which entitle the employee to actual shares of Common Stock or their cash equivalent at the time of payment (i.e., the unit value may appreciate or decline depending on future market value of the stock), if predetermined objectives are achieved.
13. BOOK VALUE STOCK PLANS. A Book Value Stock Plan will permit the employee to purchase shares of Common Stock at book value. Such "book value" stock may be required to be resold to the Company upon termination of the employment relationship, or at other specified times at the then-book value of the stock.
14. FORM OF PAYMENT. Payments required, if any, upon a participant's exercise of Benefits under the Plan may be made in the form of: (a) cash; (b) Company stock; (c) a combination of Company stock and cash; or (d) such other forms or means which the Committee shall determine in its discretion and in such manner as is consistent with the Plan's purpose and applicable law.
15. ADJUSTMENT PROVISIONS. If the Company shall at any time change the number of issued shares of Common Stock without new consideration to the Company (by stock dividends, stock splits, or similar transactions), the total number of shares reserved for issuance under this Plan and the number of shares covered by each outstanding Benefit shall be adjusted so that the aggregate consideration payable to the Company, if any, and the value of each such Benefit shall not be changed. Benefits may also contain provisions for their continuation or for other equitable adjustments after changes in the Common Stock resulting from reorganization, sale, merger, consolidation or similar occurrences. If the Company acquires an entity which has issued and outstanding stock options or other rights, the Company may substitute stock options or rights for options or rights of such entity, including options or other rights to acquire stock at less than 100% of the fair market price of the stock at grant. The number and kind of such stock options and other rights shall be determined by the Committee and the total number of shares reserved for issuance under this Plan shall be appropriately adjusted consistent with such determination and in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the Benefits granted to, or available for, present or future participants of this Plan, but in no event shall the total number of shares reserved for issuance under this Plan be increased by more than an additional, 20% by reason of this provision.
16. NONTRANSFERABILITY. Each Benefit granted under the Plan to an employee shall not be transferable by him otherwise than by will or the laws of descent and distribution, and shall be exercisable, during his lifetime, only by him. In the event of
the death of a participant during employment or prior to the termination of any Benefit held by him hereunder, each Benefit theretofore granted to him shall be exercisable or payable to the extent provided therein but not later than one year after his death (and not beyond the stated duration of the Benefit). Any such exercise or payment shall be made only:
(a) By or to the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant's rights under the Benefit shall pass by will or the laws of descent and distribution; and
(b) To the extent, if any, that the deceased participant was entitled at the date of his death.
17. OTHER PROVISIONS. The award of any Benefit under the Plan may also be subject to such other provisions (whether or not applicable to the Benefit awarded to any other participant) as the Board of Directors determines appropriate, including without limitation, provisions for the installment purchase of Common Stock under such Benefits, provisions to assist the participant in financing the acquisition of Common Stock, provisions for prepayment at the participant's election of the purchase price of Common Stock under such Benefits, provisions for the forfeiture of, or restrictions on resale or other disposition of shares acquired under such Benefits, provisions giving the Company the right to repurchase shares acquired under any form of Benefits in the event the participant elects to dispose of such shares, provisions to comply with Federal and state securities laws, or understandings or conditions as to the participant's employment in addition to those specifically provided for under the Plan.
18. TENURE. A participant's right, if any, to continue to serve the Company and its subsidiaries as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his designation as a participant under the Plan.
19. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be
granted more than ten years after the date of adoption of this
Plan; provided, however, that the terms and conditions applicable
to any Benefit granted within such period may thereafter be
amended or modified by mutual agreement between the Company and
the participant or such other persons as may then have an
interest therein. Also, by mutual agreement between the Company
and a participant hereunder, or under any future plan of the
Company, Benefits may be granted to such participant in
substitution and exchange for, and in cancellation of, any
Benefits previously granted such participant under this Plan, or
any benefit previously or thereafter granted to him under any
future plan of the Company. The Board of Directors may amend the
Plan from time to time or terminate the Plan at any time.
However, no action authorized by this paragraph shall reduce the
amount of any existing Benefit or change the terms and conditions
thereof without the participant's consent. No amendment of the
Plan shall, without approval of the stockholders of the Company,
(i) increase the total number of shares which may be issued under
the Plan or increase the amount or type of Benefits that may be
granted under the Plan; (ii) change the minimum purchase price,
if any, of shares of Common stock which may be made subject to Benefits under the Plan; or (iii) modify the requirements as to eligibility for Benefits under the Plan.
20. SHAREHOLDER APPROVAL. The Plan has been adopted by the Board of Directors on January 16, 1985, subject to approval by the shareholders of the Company. Such adoption shall be null and void if shareholder approval is not obtained within twelve months of the adoption of the Plan by the Board of Directors.
21. SECTION 16 COMPLIANCE. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b- 3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. In addition, to the extent a participant (who is also a Reporting Person under Rule 16b-3 or its successors) engages in an opposite-way transaction within six months that jeopardizes the exemption, it shall be deemed null and void.
EXHIBIT 10(o)
MODINE MANUFACTURING COMPANY
1994 INCENTIVE COMPENSATION PLAN
(as amended January 15, 1997)
(as amended January 21, 1998)
1. PURPOSE. The Modine Manufacturing Company 1994 Incentive
Compensation Plan (the "Plan") is intended to provide incentives
which will attract and retain highly competent persons as
officers and key employees of Modine Manufacturing Company (the
"Company") and its majority owned subsidiaries by providing them
with opportunities to acquire Common Stock of the Company
("Common Stock") , receive monetary payments based on the value
of such shares pursuant to the stock-based benefits ("Benefits")
described herein, or receive cash or Common Stock bonuses upon
attainment of specified financial goals of the Company.
2. ADMINISTRATION.
shall supervise and administer the Plan. Any questions of
interpretation of the Plan or of any Benefits issued under it
shall be determined by the Board and such determination shall be
final and binding upon all persons.
in the Board under this Plan may be exercised by a committee of
at least two directors (the "Committee") authorized by the Board
to do so. Composition of the Committee is intended to satisfy
the requirements of Rule 16 b-3 of the Securities and Exchange
Act of 1934 (the "Exchange Act") and Section 162(m) of the
Internal Revenue Code. A majority of members of the Committee
shall constitute a quorum, and all determinations of the
Committee shall be made by a majority of its members. Any
determination of the Committee under the Plan may be made without
notice or meeting of the Committee, by a writing signed by a
majority of the Committee members.
the Plan, the Board shall have the authority, in its discretion:
(i) to grant or award Benefits under the Plan; (ii) to determine,
in accordance with the provisions of the Plan, the fair market
value of the Common Stock; (iii) to determine, in accordance with
the provisions of the Plan, the exercise price per share of
options to be granted; (iv) to determine the employees to whom,
and the time or times at which, options or other Benefits shall
be granted and the number of shares to be represented by each
option or other Benefit; (v) to interpret the Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to
the Plan; (vii) to determine the terms and provisions of each
option or other Benefit granted or awarded (which need not be
identical) and, with the consent of the holder thereof, modify or
amend each option or other Benefit; (viii) to reduce the exercise
price per share of outstanding and unexercised options; (ix) to
accelerate or defer (with the consent of the optionee) the
exercise date of any option; (x) to authorize any person to
execute on behalf of the Company any instrument required to
effectuate the grant or award of an option or other Benefit; and
(xi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
and interpretations of the Board, or the Committee, as the case
may be, shall be final and binding on all participants and any
other holders of any Benefits granted or awarded under the Plan.
subject to Section 16 of the Exchange Act, transactions under
this Plan are intended to comply with all applicable conditions
of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the Committee fails
to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee. In
addition, to the extent a participant (who is also a Reporting
Person under Rule 16b-3 or its successors) engages in an opposite-
way transaction within six months that jeopardizes the exemption,
it shall be deemed null and void.
3. PARTICIPANTS; GENERAL TERMS AND CONDITIONS.
employees (including officers) of the Company or any or all of
its present or future majority owned subsidiaries as the Board of
Directors in its sole discretion determines to be mainly
responsible for the success and future growth and profitability
of the Company and whom the Board of Directors may designate from
time to time to receive Benefits under the Plan. Benefits may be
granted under this Plan to persons who have received options or
other Benefits under this or other plans of the Company.
respect to which a Benefit may be granted or awarded to any
participant in any one year of the Company shall not exceed one
hundred fifty thousand (150,000) shares.
determine the time or times at which Benefits shall be granted or
awarded, the number of Benefits granted or awarded (subject to
the limitation of this Section 3(b) above), and such other terms
and conditions of the Benefits in addition to those set forth in
this Plan which comply with applicable Internal Revenue Service,
Securities and Exchange Commission, or other laws and
regulations, all as the Committee deems appropriate.
4. BENEFITS.
one or a combination of:
Agreements will consist of agreements for the present or future
sale of Common Stock by the Company to a participant at such
prices and on such terms and conditions as the Board or Committee
deems appropriate.
will consist of shares of Common Stock transferred to
participants with or without other payment therefor as a bonus
for services rendered or to be rendered to the Company and its
majority owned subsidiaries.
of options to purchase shares of Common Stock at purchase prices
determined by the Board or Committee at the date such option is
granted. Except regarding Incentive Stock Options, such option
price may be less than the fair market value of Common Stock on
the date of grant, but in no event shall the option price be less
than the par value of the shares. The fair market value shall be
the closing price per share of Common Stock on the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System on the date of grant. If the Common Stock
ceases to be listed on the NASDAQ National Market System, the
Board or Committee shall designate an alternative method of
determining the fair market value of the Common Stock.
later than ten years after the date they are granted and will
terminate not later than three years after termination of
employment for any reason other than death.
Rights, granted in conjunction with a stock option, will consist
of rights to receive an amount equal to the appreciation in fair
market value since the date of grant in lieu of exercising the
corresponding stock option.
of shares of Common Stock which are transferred to the participant
but which carry restrictions such as a prohibition against
disposition or an option to repurchase in the event of employment
termination, and may be subject to a substantial risk of forfeiture.
Shares of Restricted Stock may be granted to the participant at no
charge, or they may be sold to the participant. Restrictions on the
shares of stock may lapse over a period of time. As the restrictions
lapse, the participant has unrestricted shares which then may be sold
or transferred. If, however, the restrictions are violated prior to
their lapse, those shares still subject to such restrictions are
forfeited by the participant, and must be returned to the Company.
will provide for units, contingently granted, which entitle the
participant to cash payments or their equivalent in shares of
stock valued at the time of the grant (i.e., the unit value
remains constant and does not fluctuate with changes in the
market value of the stock), if predetermined objectives are met.
Plan will provide for artificial shares, contingently granted,
which entitle the participant to actual shares of Common Stock or
their cash equivalent at the time of payment (i.e., the unit
value may appreciate or decline depending on future market value
of the stock), if predetermined objectives are achieved.
will permit the participant to purchase shares of Common Stock at
book value. Such "book value" stock may be required to be resold
to the Company upon termination of the employment relationship,
or at other specified times at the then book value of the stock.
Stock or Cash Incentive Plan will allow the participant to receive,
in addition to the participant's base salary, annual stock or cash
bonuses (portions of which may be paid quarterly over the course of
the fiscal year) based upon the financial performance of the Company.
The performance measurement for the stock or cash bonus will be
determined by the Board or Committee. The maximum annual formula award
may be fixed at up to one hundred twenty percent of the participant's
base salary with the Board or Committee designating the percentage level
of participation and maximum bonus for each officer of the Company while
management designates the percentage level of participation and maximum
bonus for other participants. The Board or Committee will determine
whether the bonuses will be payable to participants in stock or cash or a
combination of stock and cash.
shall be evidenced by an appropriate written agreement, the form
of which shall be consistent with the terms and conditions of the
Plan and applicable law and shall be signed by an officer of the
Company and the participant.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved
for issuance under the Plan an aggregate of three million
(3,000,000) shares of Common Stock (except as supplemented
hereinafter provided in Section 8), $0.625 par value, which may
be newly-issued shares, authorized but heretofore unissued shares
or shares reacquired by the Company, including shares purchased
on the open market. Any shares subject to the options, rights,
agreements, plans, or awards as described hereinafter or issued
under such options, rights, agreements, plans, or awards may
thereafter be subject to new options, rights, agreements, plans
or awards under this Plan if there is a lapse, expiration or
termination of any such options, rights, agreements, plans or
awards prior to issuance of the shares or payment of the
equivalent or if shares are issued under such options, rights,
agreements, plans, or awards, and thereafter are reacquired by
the Company pursuant to rights reserved by the Company upon
issuance thereof; provided, however, issued shares reacquired by
the Company may only be subject to new options, rights,
agreements, plans, or awards if the participant received no
benefit of ownership from the shares.
6. FORM OF PAYMENT. Payments required, if any, upon a
participant's exercise of Benefits under the Plan may be made in
the form of: (a) cash; (b) Company stock; (c) a combination of
Company stock and cash; or (d) such other forms or means which
the Committee shall determine in its discretion and in such
manner as is consistent with the Plan's purpose and applicable
Internal Revenue Service, Securities and Exchange Commission, or
other laws or regulations.
7. WITHHOLDING TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the
participant for federal income tax purposes with respect to any
Benefit under the Plan or with respect to any exercise of any
stock option granted under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign
taxes of any kind required by law to be withheld. Such
withholding obligations may be settled with Common Stock,
including Common Stock that is part of the award or that is
received upon the exercise of the stock option that gives rise to
the withholding requirement. The obligations of the Company
under the Plan shall be conditional upon such payment or
arrangements, and the Company shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment
otherwise due to the participant. The Company may establish such
procedures as it deems appropriate, including the making of
irrevocable elections or the timing of the use of Common Stock,
for the settlement of its withholding obligations.
8. ADJUSTMENT PROVISIONS.
any time change the number of issued shares of Common Stock
without new consideration to the Company (by stock dividends,
stock splits, or similar transactions), the total number of
shares reserved for issuance under this Plan and the number of
shares covered by each outstanding Benefit shall be adjusted so
that the aggregate consideration payable to the Company, if any,
and the value of each such Benefit shall not be changed.
provisions for their continuation, acceleration, immediate
vesting, or for other equitable adjustments after changes in the
Common Stock resulting from reorganization, sale, merger,
consolidation, dissolution, liquidation, or similar occurrences.
acquires an entity which has issued and outstanding stock options
or other rights, the Company may substitute stock options or rights
for options or rights of such entity, including options or other
rights to acquire stock at less than 100% of the fair market price
of the stock at grant. The number and kind of such stock options
and other rights shall be determined by the Committee and the total
number of shares reserved for issuance under this Plan shall be
appropriately adjusted consistent with such determination and in such
manner as the Committee may deem equitable to prevent substantial
dilution or enlargement of the Benefits granted to, or available for,
present or future participants of this Plan. The number of shares
reserved for issuance pursuant to Section 5 may be increased by the
corresponding number of options or other benefits assumed and, in
the case of a substitution, by the net increase in the number of
shares subject to options or other benefits before and after the
substitution.
9. NONTRANSFERABILITY. Benefits (other than non-qualified
stock options) granted under the Plan to an employee shall not
be transferable by the participant otherwise than by will or the
laws of descent and distribution, or pursuant to a qualified
domestic relations order, and shall be exercisable, during the
participant's lifetime, only by the participant; non-qualified
stock options granted under the Plan to a participant may be
assignable or transferable by the participant to or for the
benefit of a member of the participant's family. In the event of
the death of a participant during employment or prior to the
termination of any Benefit held by the participant hereunder,
each Benefit theretofore granted to the participant shall be
exercisable or payable to the extent provided therein but not
later than one year after the participant's death (and not beyond
the stated duration of the Benefit). Any such exercise or
payment shall be made only:
(a) By or to the executor or administrator of the estate
of the deceased participant or the person or persons to whom the
deceased participant's rights under the Benefit shall pass by
will or the laws of descent and distribution; and
(b) To the extent, if any, that the deceased participant
was entitled at the date of the participant's death.
10. OTHER PROVISIONS. The award of any Benefit under the
Plan may also be subject to such other provisions (whether or not
applicable to the Benefit awarded to any other participant) as
the Board or Committee determines appropriate, including without
limitation, provisions for the installment purchase of Common
Stock under such Benefits, provisions to assist the participant
in financing the acquisition of Common Stock, provisions for
prepayment at the participant's election of the purchase price of
Common Stock under such Benefits, provisions for the forfeiture
of, or restrictions on resale or other disposition of shares
acquired under such Benefits, provisions giving the Company the
right to repurchase shares acquired under any form of Benefit in
the event the participant elects to dispose of such shares,
provisions to comply with federal and state tax or securities
laws, or understandings or conditions as to the participant's
employment in addition to those specifically provided for under
the Plan or written agreement.
11. TENURE. A participant's right, if any, to continue to
serve the Company and its subsidiaries as an officer, employee,
or otherwise, shall not be enlarged or otherwise affected by
designation as a participant under the Plan.
12. EMPLOYEES IN FOREIGN COUNTRIES. The Board or Committee
shall have the authority to adopt such modifications, procedures,
and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company
or its subsidiaries may operate to assure the viability of the
Benefits granted or awarded to employees employed in such
countries and to meet the objectives of the Plan.
13. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be
granted more than ten years after the date of adoption of this
Plan; provided, however, that the terms and conditions applicable
to any Benefit granted within such period may thereafter be
amended or modified by mutual agreement between the Company and
the participant or such other persons as may then have an
interest therein. Also, by mutual agreement between the Company
and a participant hereunder, or under any future plan of the
Company, Benefits may be granted to such participant in
substitution and exchange for, and in cancellation of, any
Benefits previously granted such participant under this Plan, or
any benefit previously or thereafter granted to him under any
future plan of the Company. The Board or Committee may amend the
Plan from time to time or terminate the Plan at any time.
However, no action authorized by this paragraph shall reduce the
amount of any existing Benefit or change the terms and conditions
thereof without the participant's consent. No amendment of the
Plan shall, without approval of the stockholders of the Company,
(i) increase the total number of shares which may be issued under
the Plan or increase the amount or type of Benefits that may be
granted under the Plan; (ii) change the minimum purchase price,
if any, of shares of Common stock which may be made subject to
Benefits under the Plan; or (iii) modify the requirements as to
eligibility for Benefits under the Plan.
14. UNFUNDED STATUS OF PLAN. It is presently intended that
the Plan constitute an "unfunded" plan for incentive
compensation. The Board or Committee may authorize the creation
of trusts or other arrangements to meet the obligations created
under the Plan to deliver Common Stock or make payments;
provided, however, that, unless the Board or Committee otherwise
determines, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
15. SHAREHOLDER APPROVAL. The Plan has been adopted by the
Board of Directors on March 15, 1994, and shall be effective upon
approval by the shareholders of the Company. Such adoption shall
be null and void if shareholder approval is not obtained within
twelve months of the adoption of the Plan by the Board of
Directors.
EXHIBIT 10(p)
MODINE MANUFACTURING COMPANY
1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended January 15, 1997)
1. PURPOSE. The Modine Manufacturing Company 1994 Stock
Option Plan for Non-Employee Directors (the "Directors' Plan") is
intended to promote the interests of Modine Manufacturing Company
(the "Company") and its stockholders by providing potential
compensation for the non-employee members of the Company's Board
of Directors, thereby assisting the Company in its efforts to
attract and retain well qualified individuals to serve as its
directors. Options granted under the Directors' Plan are
intended to be of a type that does not meet all of the
requirements of Section 422A of the Internal Revenue Code of 1954
as heretofore and hereafter amended, and the Directors' Plan
shall be construed so as to carry out that intention.
2. ADMINISTRATION.
administer the Plan; provided, however, that the Board may
appoint a committee (the "Committee") of two (2) or more
directors to administer the Plan if deemed necessary or advisable
in order to comply with the exemptive rules promulgated pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
amount, price, and timing of the awards to be granted will be
automatic as described in Section 5. However, all questions of
interpretation of the Plan will be determined by the Board or the
Committee, as applicable, and such determination will be final
and binding upon all parties.
Directors' Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange
Act. To the extent any provision of the Directors' Plan or
action by the Board or Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Board or Committee. In addition, to the extent
a participant (who is also a Reporting Person under Rule 16b-3 or
its successors) engages in an opposite way transaction that
jeopardizes the exemption, it shall be deemed null and void.
3. PARTICIPANTS. Participants shall consist of all present
or future directors of the Company who are not employees of the
Company.
4. SHARES RESERVED UNDER THE DIRECTORS' PLAN. There is
hereby reserved for issuance under the Directors' Plan an
aggregate of five hundred thousand (500,000) shares of Common
Stock, $0.625 par value, which may be newly-issued, authorized
but heretofore unissued shares or shares reacquired by the
Company, including shares purchased on the open market. Any
shares subject to Directors' Stock Options or issued under such
options may thereafter be subject to new options under this
Directors' Plan, if there is a lapse, expiration or termination
of any such options prior to issuance of the shares or if shares
are issued under such options, and thereafter are reacquired by
the Company pursuant to rights reserved by the Company upon
issuance thereof.
5. NUMBER OF SHARES TO BE GRANTED EACH ELIGIBLE DIRECTOR;
EXERCISE.
election or re-election to the Board of Directors by the
Company's stockholders, each director so elected or re-elected
shall be automatically granted an option for that number of
shares equal to the multiple of five thousand (5000) and the
number of years in the term to which he has been elected to the
Company's Board of Directors.
time or in part from time to time.
an appropriate written agreement, the form of which shall be
consistent with the terms and conditions of the Directors' Plan
and applicable law, and which shall be signed by one or more
designated members of the Board or Committee and the non-employee
director.
6. OPTION PRICE; TERM. Directors' Stock Options shall
consist of options to purchase shares of Common Stock at purchase
prices not less than 100 percent of the fair market value of the
shares on the date the option is granted. The fair market value
per share shall be the closing price per share of the Common
Stock on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System on the date of grant.
If the Common Stock ceases to be listed on the NASDAQ National
Market System, the Board shall designate an alternative method of
determining the fair market value of the Common Stock. Such
options will be exercisable not later than ten years after the
date they are granted and will terminate no later than three
years after termination of director status for any reason other
than death.
7. FORM OF PAYMENT. Payments required upon a particular
exercise of Directors' Stock Options under the Directors' Plan
may be made in the form of (a) cash; (b) Company Stock; (c) a
combination of Company Stock and cash; or (d) such other forms or
means which the Board or Committee shall determine at its
discretion and in such manner as is consistent with the
Directors' Plan's purpose and applicable Internal Revenue
Service, Securities Exchange Commission, or other laws or
regulations.
8. WITHHOLDING TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the
Participant for federal income tax purposes with respect to any
exercise of any Stock Option granted under the Plan, the
participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by
law to be withheld. Such withholding obligations may be settled
with Common Stock, including Common Stock that is received upon
the exercise of the Stock Option that gives rise to the
withholding requirement. The obligations of the Company under
the Plan shall be conditional upon such payment or arrangements,
and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to
the participant. The Board or Committee may establish such
procedures as it deems appropriate, including the making of
irrevocable elections or the timing of the use of Common Stock,
for the settlement of its withholding obligations.
9. ADJUSTMENT PROVISIONS.
any time change the number of issued shares of Common Stock
without new consideration to the Company (by stock dividends,
stock splits, or similar transactions), the total number of
shares reserved for issuance under this Directors' Plan and the
number of shares covered by each outstanding Director's Stock
Option shall be adjusted so that the aggregate consideration
payable to the Company, if any, and the value of each such option
shall not be changed.
may also contain provisions for their continuation, acceleration,
immediate vesting, or for other equitable adjustments after
changes in the Common Stock resulting from reorganization, sale,
merger, consolidation, dissolution, liquidation, or similar occurrences.
10. NONTRANSFERABILITY. Each Director's Stock Option granted
under the Directors' Plan to a participant shall not be
transferable by him otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic
relations order, and shall be exercisable, during his lifetime,
only by him. In the event of the death of a participant prior to
termination of any Director's Stock Options held by him
hereunder, each Director's Stock Option theretofore granted to
him shall be exercisable to the extent provided therein but not
later than one year after his death (and not beyond the stated
duration of the Director's Stock Option). Any such exercise
shall be made only:
(a) By the executor or administrator of the estate of the
deceased participant or the person or persons to whom the
deceased participant's rights under the Director's Stock Option
shall pass by will or the laws of descent and distribution; and
(b) To the extent, if any, that the deceased participant
was entitled at the date of his death.
11. OTHER PROVISIONS. The award of any Director's Stock
Option under the Directors' Plan may also be subject to such
other provisions (whether or not applicable to the Director's
Stock Option awarded to any other participant) as the Committee
determines appropriate, including without limitation, provisions
for the installment purchase of Common Stock under Directors'
Stock Options, provisions to assist the participant in financing
the acquisition of Common Stock, provisions for the forfeiture
of, or restriction on resale or other disposition of shares
acquired under Directors' Stock Options, provisions giving the
Company the right to repurchase shares acquired under Directors'
Stock Options in the event the participant elects to dispose of
such shares, provisions to comply with federal and state tax or
securities laws, or understandings or conditions as to the length
of the participant's term as a director in addition to those
specifically provided for under the Directors' Plan.
12. TENURE. A participant's right, if any, to continue to
serve the Company as a director shall not be enlarged or
otherwise affected by his designation as a participant under the
Directors' Plan.
13. TERM; TERMINATION; AMENDMENTS.
more than ten years after the date of adoption of this Directors'
Plan; provided, however, that the terms and conditions
applicable to Directors' Stock Options granted within such period
may thereafter be amended or modified by mutual agreement between
the Company and the participant or such other person as may then
have an interest therein. Also, by mutual agreement between the
Company and a participant hereunder, or under any future plan of
the Company, Directors' Stock Options may be granted to such
participant in substitution and exchange for and in cancellation
of, any Directors' Stock Options previously granted such
participant under this Directors' Plan.
by the Board or by the approval by the holders of a majority of
the shares of the Common Stock present, or represented, and
entitled to vote at a meeting held for such purpose.
Committee; provided however, that (i) no amendment shall be made
that would impair prior grants or rights of a participant without
his consent; (ii) no amendment shall be made more frequently than
once every six months, unless such amendment is required because
of changes in the Internal Revenue Code or the Employee
Retirement Income Security Act; (iii) no such amendment shall be
effective without the approval by the holders of a majority of
the shares of the Common Stock present, or represented, and
entitled to vote at a meeting held for such purpose, if such
amendment would materially (A) increase the benefits accruing to
participants under the Plan, (B) increase the number of
securities which may be issued under the Plan, or (C) modify the
requirements as to eligibility for participation in the Plan; and
(iv) no amendment shall be made which would prevent a
participant's participation in the Plan from being entitled to an
exemption from Section 16(b) of the Act.
14. SHAREHOLDER APPROVAL; EFFECTIVE DATE. The Directors'
Plan has been adopted by the Board of Directors on March 15,
1994, and shall be effective upon approval by the shareholders of
the Company. Such adoption shall be null and void if shareholder
approval is not obtained within 12 months of the adoption of the
Directors' Plan by the Board of Directors.
EXHIBIT 13
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Forward-looking statements include information concerning future financial results of Modine. Also, when words such as "intend," "anticipate," "believe," "expect," "plan," or similar expressions are used, these words indicate forward-looking statements. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to differ materially from the future results, performance, or achievements expressed or implied in the forward-looking statements. These factors include the ability of Modine to compete for business, the ability of various customers and suppliers to achieve projected sales and production levels, the cyclical nature of the vehicular industry, work stoppages at major customers, competitive pressures on sales and pricing, increases in production or material costs that cannot be recouped in product pricing, the ability to improve acquisitions' operations and international economic conditions. Modine does not assume any obligation to update any of these forward-looking statements.
In April 2001, Modine acquired Thermacore International, Inc. (Thermacore) in a merger accounted for as a pooling of interests. All information is presented to include Thermacore for all periods.
Modine Manufacturing Company's fiscal 2002 sales declined four percent to $1,074.8 million from $1,121.4 million a year ago. The company's current fiscal year results contained several one-time items relating to its restructuring, other closure-related costs, changes in workers' compensation reserves, the Thermacore acquisition and the sale of a long-term asset. In addition, Modine's prior fiscal year included pretax patent settlements totaling $17.0 million. Excluding one-time items in both fiscal 2001 and 2002, Modine's twelve-month fully diluted earnings per share declined 26 percent to $0.88 from $1.19.
Modine's fiscal year results were adversely affected by continued weakness in the aftermarket, heavy-duty truck, off- highway, and electronics markets. However, in the light vehicle market, Modine experienced strength during the year from the introduction of new automotive programs. Modine's aftermarket business is continuing to experience severe pricing pressure from new entrants and an excess supply of product.
In fiscal 2002, including exports from domestic businesses, 47 percent of total revenues were generated from sales to customers outside of the United States. Net sales generated by Modine's international operations were 36 percent of
total revenues, and exports from the United States were 11 percent of total revenues.
Modine's European Operations segment supplies products from business units in Europe primarily to European original equipment manufacturers (OEMs) of light and heavy-duty vehicles or engines. Sales in the European Operations declined one percent to $302.4 million from $305.0 million during the fiscal year. Operating income declined 25 percent to $23.3 million from $31.0 million earned in the previous year, as measured in U.S. dollars. Compared to the prior year, the weaker Euro had a negative translation effect of approximately $8.2 million on fiscal 2002 consolidated sales. Modine's European Operations experienced strength from the automotive area, but was hindered by weakness in the heavy-duty area.
The Distributed Products segment provides heat transfer products for the North American and European vehicular replacement markets and the North American building HVAC (heating, ventilating, and air conditioning) market. In addition, this segment provides cooling solutions for the global electronics markets. Distributed Products' sales declined ten percent to $381.3 million during fiscal 2002 from $425.0 million. Operating income declined 58 percent to $9.9 million from $23.7 million in the year ago period. This segment was adversely affected by a number of factors. The aftermarket portion continues to experience significant pricing pressure, resulting from soft demand, new competition and excess supply of product. In addition, the HVAC portion experienced general softness from a weakening economy and a mild winter. Lastly, electronics cooling sales have been adversely affected by a global slump in semiconductor sales and a telecommunications equipment industry that was off sharply from the previous year.
Modine's Original Equipment segment includes sales to North American light, medium, and heavy-duty OEMs. During the year, Original Equipment sales declined two percent to $457.0 million from $467.3 million. Operating income declined 19 percent to $66.2 million from $82.2 million in the previous year. Segment results were positively impacted by the introduction of new automotive programs. However, this improvement was more than offset by continued weakness in the heavy-duty truck, construction, and industrial markets.
Revenues from Modine's top ten customers accounted for 51 percent of the company's total sales. Modine's largest customer accounted for slightly more than ten percent of sales. Overall, Modine continues to have a well-diversified customer base.
SALES BY MARKET
This market segment accounted for approximately 25 percent of Modine's revenues in the prior year. The passenger car and light truck market continues to represent the largest portion of Modine's sales. The company's revenues from this market were up 14 percent from the previous year. The European passenger car and light-truck markets were flat with the previous year. Even though industry volumes were down slightly from the prior year, North American light vehicle sales resulted in the second best year on record. Modine's North American sales were strong as a result of the introduction of several new programs. During the year, Modine announced that it had been selected by DaimlerChrysler to supply the radiator module for the 2002 Dodge Ram. Modine also announced that it had been chosen by BMW to supply engine cooling modules for future vehicle programs. Modine remains enthusiastic about the passenger car and light-truck market as its new programs continue to ramp up. The company is also encouraged about the continued growth of diesel engines in the light vehicle market and the opportunities for exhaust gas recirculation (EGR) coolers.
reduce air pollutants. Most engine manufacturers are going to an exhaust gas recirculation (EGR) cooled engine. Modine is one of the industry's technological leaders in EGR coolers for the global engine market. The EPA's more stringent emission requirements require heavy truck cooling systems to be completely redesigned and afford Modine an opportunity to accelerate the conversion from copper/brass radiators to all-aluminum products. Moving forward, Modine expects further growth opportunities as the company expands its HVAC (heating, ventilating, and air conditioning) business in the truck market.
for gas-fired unit heaters and gas-fired duct furnaces declined by 20 percent and 11 percent, respectively. The infrared heater market declined 15 percent during the calendar year. Modine's HVAC group focused on continuous improvement activities and tight financial control. Also, despite the market decline, Modine was able to generate a revenue increase in its Hot Dawg residential garage heater line. For the next fiscal year, industry analysts expect the HVAC market to be flat with the previous year. As a result, Modine's building HVAC group is focusing on market share improvement and cost containment.
SALES BY PRODUCT
decline in aftermarket radiator sales. New competition, excess product supply, and mild weather contributed to another soft year for the aftermarket.
CRITICAL ACCOUNTING POLICIES
Financial Reporting Release No. 60 was issued by the Securities and Exchange Commission during 2001 and requires all registrants, including the company, to include a discussion of "critical" accounting policies or methods used in the preparation of financial statements. We believe the following critical accounting policies reflect our more significant judgements and estimates used in the preparation of our consolidated financial statements.
ACCOUNTING PRONOUNCEMENTS.
Details of the impact that the recently issued accounting standards will have on the financial statements of Modine can be found in Note 1 to the consolidated financial statements.
CAPITAL EXPENDITURES
Capital expenditures of $35.8 million in fiscal year 2002 were 51 percent lower than the prior year. Significant expenditures included: European administrative and technical center facilities, tooling for new products, equipment for
new customer programs, and process improvements at a number of facilities. Capital expenditures were financed primarily from cash generated internally. Outstanding commitments for capital expenditures at March 31, 2002 were approximately $14.4 million. Approximately $6.5 million of the commitments related to the European technical center and to European plant expansions and conversions as well as to programs for automotive and truck original equipment customers, process improvements, tooling for new products, and various new equipment. A year earlier, there were outstanding commitments of $25.8 million.
RESEARCH & DEVELOPMENT
In fiscal 2002, Modine increased its research and development spending by six percent to $29.9 million.The company ended the year with 1,459 worldwide patents, an increase of 148 patents over last year. Modine moved further towards utilizing computers to simulate engineering. Through the use of sophisticated software, Modine can predict component or system durability and overall performance. Modine's efforts in simulated engineering have resulted in substantial cost savings and faster product design cycles. Also during the year, Modine began to integrate its thermal management skills with those of Thermacore. The two companies collaborated on several key projects and are continuing to develop advanced electronics cooling technologies. In addition, Modine's Fuel Cell Products Group continued its development work on thermal solutions for stationary power and vehicular fuel cells. Modine is working with some of the industry's leading developers of fuel cells and has earned a strong reputation for its thermal management skills. Lastly, Modine made significant progress in its development of CO2 components and systems. CO2 systems, which can be used for both heating and cooling, are very efficient and environmentally friendly. Modine is currently exploring several commercial applications for its CO2 components and systems. As part of its long-term strategy, Modine retains its commitment to research and development. Since 1998, R&D expenditures have increased at an average annual rate of 13 percent. The company believes these investments will result in new products, new technologies, and opportunities to enter new growth markets.
QUALITY IMPROVEMENT
The Modine global quality management system has been implemented at all sites to help ensure that customers receive the same, high quality products and services from any facility worldwide. It also minimizes the risk associated with unacceptable product quality and serves to meet a Modine guiding principle of exceeding customer expectations. Continuous quality improvement is measured by nine quality indicators, some of which include first-pass yield, customer satisfaction, and supplier performance. Modine encourages and rewards continuous quality improvement throughout the company. Continuous improvement is formally recognized at Modine through various programs.
During the year, Modine's quality programs had many successes. The company's common, global quality system was refined to include global standard practices, ensuring that work done across the globe is according to a common standard. In the coming year, the global quality system will be expanded to include Thermacore.
In its second year, the President's Award for Corporate Excellence (PACE), stimulated 15 projects in North America and Europe. PACE is a quality award that recognizes administrative employees who develop projects to reduce waste, eliminate bureaucracy, improve processes and reduce errors.
In fiscal 2002, the McHenry, Illinois and Pliezhausen, Germany facilities earned the President's Award, the company's top honor for continuous improvement at manufacturing facilities. These facilities had outstanding performance in 15 separate categories, which include key elements of safety, environment, quality, delivery, cost, and productivity.
Also during the fiscal year, our Toledo, Ohio and Emporia, Kansas facilities were registered to QS-9000 and our Pontevico, Italy and Uden, The Netherlands facilities were registered to VDA 6.1. All Modine facilities that are required to be registered to ISO 9000, QS-9000 and/or VDA 6.1 are now registered. In 2001, our Camdenton and Joplin facilities, both in Missouri, were recognized by Caterpillar as Certified Suppliers.
ENVIRONMENTAL, HEALTH & SAFETY
Modine is strengthening its commitment to the environment by implementing the Environmental Management System (EMS) at all of its original equipment locations throughout the world. This system is based on the internationally recognized ISO 14000 standard for environmental management systems. Modine's EMS provides a common framework and the tools needed to conserve resources, improve manufacturing process efficiency, minimize liability exposure and reduce operational costs.
In calendar 2001, Modine's North American facilities reduced waste for a fifth consecutive year with a 21 percent year- over-year decrease (normalized for sales dollars). Overall, these facilities achieved an impressive 51 percent reduction in waste/sales dollars since 1996. The reduced use of solvents, conversion to more environmentally-friendly chemicals, shift to returnable packaging, and the generation of less scrap contributed to this long-term, sustained waste reduction achievement.
Modine accrues for environmental remediation activities
relating to past operations, including those under the
Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), often referred to as "Superfund",
and under the Resource Conservation and Recovery Act (RCRA)
- when it is probable that a liability has been incurred and
reasonable estimates can be made. An obligation may also arise when a Modine-owned facility is closed or sold. These expenditures most often relate to facilities and sites where past operations followed practices and procedures that were considered acceptable under then-existing regulations, but will now require investigative and/or remedial work to ensure sufficient protection to the environment. Three of the company's manufacturing facilities currently have been identified as requiring soil and/or groundwater remediation. Because of the joint liability of former landowners and contractual obligations, it is unlikely these remediation efforts will have a material effect on the company's consolidated financial condition.
Environmental regulations, as well as the company's policy to continuously improve upon its environmental management programs, will require capital equipment expenditures over the coming years. For the fiscal year ending March 31, 2002 capital expenditures related to environmental projects were $0.2 million. These environmental expenditures include capital outlays to retrofit existing facilities, as well as those associated with new facilities and other compliance costs. Modine currently expects expenditures for environmentally related capital projects to be about $0.5 million in fiscal 2003.
Environmental expenses charged to current operations, including remediation costs, totaled about $3.8 million for the fiscal year ending March 31, 2002. These expenses include solid waste disposal and operating and maintenance costs incurred in conducting environmental compliance activities. Although some of these environmental costs may be substantial, the Company has no reason to believe these costs vary significantly from costs incurred by other companies engaged in similar businesses.
Although there are currently no known liabilities that might have a material effect on the company's consolidated net assets, the Environmental Protection Agency has designated Modine as a potentially responsible party ("PRP") for remediation of six waste disposal sites. These sites are not company owned and allegedly contain wastes attributable to Modine from past operations. For the six sites currently known, the company's potential liability will be significantly less than the total site remediation because the percentage of material attributable to Modine is relatively low.
Success with health and safety is setting Modine apart from its competition. Health and safety performance continues to move in a positive direction. Recordable and Lost Workday (LWDII) incident rates improved from the previous year by 23 and 30 percent, respectively. Over the past five years, Modine has seen a 58 percent reduction in the recordable incident rate and a 53 percent reduction in the LWDII rate.
Modine's Richland facility was the second location to become a safety "Star" plant. The Modine "Star" is awarded to those facilities that achieve 100 percent compliance with 22
health and safety elements and attain a recordable and LWDII rate below the general industry average for a twelve-month period. The company expects to see more facilities reach "Star" level over the next few years.
HEDGING AND FOREIGN CURRENCY EXCHANGE CONTRACTS.
On a limited basis, Modine enters into foreign exchange options and forward contracts on foreign currencies as hedges against the impact of currency fluctuations. See Note 15 to the consolidated financial statements.
SALES
Sales of $1.07 billion for the year ended March 31, 2002, are discussed in detail in the preceding portion of Management's discussion & analysis.
For the year ended March 31, 2001, sales of $1.12 billion were down $53.6 million or five percent from the preceding year. Weaker European currencies had a negative translation effect on the sales of approximately $53.2 million compared with the prior year. Excluding the impact of the change in currency exchange rates, total worldwide consolidated sales were essentially unchanged. Sales in the Original Equipment North America segment fell 11 percent on lower heavy truck and light vehicle market sales. Distributed Products segment sales were down three percent with a soft North American aftermarket and negative translation effect on the segment's European operations being partially offset by stronger electronics cooling product sales. The European Operations segment produced increased sales to both OEM-automotive and off-highway markets but the translation effect offset much of the gain. Net sales from U.S. facilities accounted for 65 percent of consolidated revenues for the year, with approximately 18 percent of that amount being exported. Overall, 53 percent of net sales were to U.S. customers and 47 percent to non-U.S. customers.
Sales for the year ended March 31, 2000, of $1.17 billion were three percent higher than the previous year's $1.14 billion. Weaker European currencies had a negative translation effect of approximately $27.9 million compared with the prior year. Sales in the Distributed Products segment were up primarily due to a full year's operation of the Core Holdings, Inc., acquisition made mid-way through fiscal 1999 and higher electronics cooling sales. Net sales for the European Operations segment improved slightly with improved automotive-OEM sales and lower off-highway market sales. The Original Equipment (North America) segment declined marginally, with stronger sales to the truck market and lower sales to the construction and agricultural- equipment markets.
GROSS PROFIT
The current year gross profit of $264.5 million declined to 25 percent of sales from the $298.2 million or 27 percent of sales in the preceding year. Lower sales volumes,
significant pricing pressures, increasing purchased component content, and closure costs outside of the restructuring, all contributed to the lower return. Included in gross profit is a $4.2 million benefit from a reduction in workers' compensation insurance reserve estimates as a result of the company's improving experience. Gross profit, in dollars, was down all across the company, reflecting the weakened worldwide economies, except for the North American automotive market where the company has been able to gain additional business.
The fiscal 2001 gross profit of $298.2 million, (27 percent of sales) compares with $330.3 million (28 percent of sales) in the previous year. The principal factors responsible for the current margin reduction were the lower sales volume, increased material costs pursuant to higher commodity prices, continuing pricing pressures, incremental costs in support of new business, and the one-time costs of exiting an unprofitable product line in Europe. Improvements were recorded in the European Operations segment, despite the recognition of the exiting costs, but those gains were more than offset by lower gross-profit returns in the other reporting segments.
Gross profit was 28 percent of sales for fiscal 2000, the same percentage as in fiscal 1999. Improvements recorded in the truck and electronics divisions were generally offset by lower gross-profit returns, as a percent of sales, earned by the company's other operating units.
SELLING, GENERAL, AND ADMINISTRATIVE (SG&A) EXPENSES
In fiscal 2002, SG&A expense dropped $7.7 million to $221.7 but increased to 21 percent of sales from 20 percent in the prior year. Reductions in compensation and related benefit costs, along with lower sales promotion and distribution costs more than offset the $3.4 million in Thermacore acquisition costs and increases in depreciation and amortization, research and development expenditures, and the return to a more normal bad debt expense level.
SG&A expense of $229.4 million in fiscal 2001 was virtually identical to the preceding year and remained at 20 percent of sales. The year included substantially higher research and development expenditures, severance charges related to staffing reductions as the company reacted to the slowing economy, offset by a reduction in bad-debt expense and other expenses.
In fiscal 2000, SG&A expenses of $229.4 million grew by $25.8 million, to 20 percent of sales from 18 percent in the preceding year. Factors influencing the changes were the full-year effect of a large aftermarket distributor acquired in fiscal 1999, ongoing litigation costs to protect our patents, increased depreciation on the new technical center in Racine, upgrades to computer-related business systems, and expansion of the electronics cooling business outside of North America.
RESTRUCTURING CHARGES
In the third quarter of fiscal 2002, the company initiated a restructuring plan to reduce costs and increase future operating efficiency. Charges of $7.5 million were recognized for plans to close manufacturing facilities in North America and Europe and for other personnel reductions in both areas. Additional information is detailed in Note 11 to the consolidated financial statements.
INCOME FROM OPERATIONS
Income from operations in fiscal 2002 of $35.2 million declined $33.5 million from the preceding year. The reduction in gross profit discussed above carried down to operating income as the effect of the $7.7 million reduction in SG&A expense was offset by the $7.5 million restructuring charge.
In fiscal 2001, income from operations of $68.7 million declined $32.2 million from the previous year. The 32 percent reduction was driven primarily by lower sales volume, increased material costs pursuant to higher commodity prices, negative currency translation, incremental costs in support of new business, the costs of exiting an unprofitable product line in Europe, and staff-reduction costs.
Income from operations of $100.9 million for fiscal 2000 declined $14.1 million from the prior year. The 12 percent reduction was predominantly a result of higher SG&A costs, as discussed in the preceding section.
INTEREST EXPENSE
Interest expense of $7.8 million in fiscal 2002 was down $1.0 million from the preceding year. Reduced levels of short-term borrowing and lower interest rates provided the benefit which was partially offset by a $1.5 million reduction in the amount of interest capitalized.
In fiscal 2001, interest expense declined slightly from the previous year to $8.8 million. Higher interest rates offset most of the benefit from reductions in the level of debt outstanding and higher amounts of capitalized interest.
Interest expense of $8.9 million in fiscal 2000 increased $2.8 million over fiscal 1999. In addition to higher interest rates, the increase was also the result of increased financing for technical-center construction in the U.S. and in Europe, facility expansion in Europe, and the full-year effects of acquisition and equity investments made in the preceding year.
PATENT SETTLEMENTS
In fiscal 2001, agreements were reached with Showa Aluminum Corporation and Mitsubishi Motors, which resulted in $17.0 million of patent-settlement income for past use of Modine's PF (parallel flow) technology.
In fiscal 2000, a $1.0 million settlement for past use of Modine's PF technology was recognized.
OTHER INCOME, NET
In fiscal 2002, other income increased by $4.5 million to $12.7 million. The increase was primarily the result of a $3.5 million gain on the sale of one of the company's aircraft and the disposal of some excess real estate.
Other income in fiscal 2001 grew by $3.9 million to $8.2 million. The increase was driven by higher equity earnings from affiliates, the remaining gain from the earlier sale of a facility in Michigan, and increased profit from tooling sales.
Other income in fiscal 2000 of $3.7 million declined by $3.5 million from the previous fiscal year's total of $7.2 million, which included a gain relative to the earlier sale of a facility in Michigan.
PROVISION FOR INCOME TAXES
The effective tax rate for fiscal 2002 rose by 2.7 percentage points to 41.8 percent. This percentage increase over the preceding year was influenced by upward movement from nondeductible costs associated with the acquisition of Thermacore and increased nondeductible goodwill amortization, offset by downward pressure from foreign tax rate differentials.
The effective tax rate for fiscal 2001 rose by 7.7 percentage points to 39.1 percent. The significantly higher effective tax rate, compared with the year before, related to the prior year benefit from the implementation of a tax strategy relating to a net operating loss carryforward at a foreign subsidiary and to foreign tax rate differentials.
For fiscal 2000, the effective tax rate declined 6.0 percentage points to 31.4 percent. Foreign tax rate differentials and implementation of a tax strategy relating to a net operating loss carryforward at a foreign subsidiary were the main factors contributing to the change.
NET EARNINGS
Net earnings declined 55 percent in fiscal 2002 to $23.3 million ($0.70 per diluted share) from $51.8 million ($1.58 per diluted share). Return on average shareholders' equity (ROE) slipped to five percent and net earnings as a percent of sales to two percent. Reductions in SG&A expense, the additional North American automotive business and the favorable impact on the workers' compensation and the aircraft sale were more than offset by the lower sales volumes, pricing pressures, increased purchased component content, and the restructuring and other closure costs.
Excluding the one-time items of restructuring and other closure costs, the Thermacore acquisition costs, the
reduction in the workers' compensation reserve estimates and the aircraft sale from fiscal 2002 and the patent settlements in fiscal 2001, Modine's earnings per share would have declined 26 percent to $0.88 per fully diluted share in fiscal 2002 from $1.19 per fully diluted share in fiscal 2001.
Net earnings in fiscal 2001 fell 22 percent to $51.8 million ($1.58 per diluted share) from $66.3 million ($2.01 per diluted share). ROE declined to ten percent. Net earnings declined as a percent of sales to five percent in fiscal 2001. The reduction in net earnings was the result of the lower sales volume, pricing pressures, higher material costs as a percentage of sales, negative currency translation, incremental costs in support of new business, costs of exiting an unprofitable product line, and staff reduction costs, which were partially offset by the patent settlements received.
Net earnings declined 12 percent in fiscal 2000 to $66.3 million ($2.01 per diluted share) from $75.1 million ($2.25 per diluted share). Net earnings dipped to six percent of sales in fiscal 2000 and ROE slipped to 14 percent. Increased aftermarket distribution costs and pricing pressures, new-plant start-up costs, and the adverse effect of a stronger U.S. dollar on international results were the major factors leading to lower earnings.
CURRENT ASSETS
Cash and cash equivalents increased by $53.7 million to $75.4 million. Details of the sources and uses of funds can be found in management's discussion of cash flows and the accompanying consolidated statement of cash flows.
Trade receivables, net of allowances for doubtful accounts, at $162.5 million, were down $15.5 million from one year ago. Declines in year-over-year fourth-quarter sales in the Distributed Products and European Operations segments were the main factors leading to the overall decrease.
As a result of management's continuing focus on improving working capital, the company was able to reduce inventories by $31.4 million to $121.7 million, with a large portion of the change attributable to U.S. aftermarket operations. Additional reductions were achieved in all operating divisions except for the automotive division, which registered a small increase to accommodate its increased sales volume. The number of days of inventory on hand was reduced by twelve days from the prior year-end.
Deferred income taxes and other current assets declined by $8.8 million to $46.4 million. The largest item contributing to the change was a reduction in income tax prepayments of $4.9 million with a smaller impact from a reduction in the balance of unbilled tooling to customers.
The current ratio of 2.4-to-1 increased from last year's 1.9-to-1 as a result of the company's record cash flow from operations. An increase in cash along with reductions in
debt due within the next twelve months were offset in part by decreases in trade accounts receivable, inventories, and deferred income taxes and other current assets.
NONCURRENT ASSETS
Net property, plant, and equipment of $340.4 million decreased by $26.5 million in fiscal 2002. Depreciation expense of $53.6 million exceeded lower capital spending by $17.8 million. Major additions during the year included ongoing construction and equipment costs of a new technical center and administration building in Europe and preparation for the introduction of new customer-programs in the next several years.
Equity investments in affiliates of $25.0 million decreased $1.4 million in the current year. Equity earnings, net of goodwill amortization, for fiscal 2002 were more than offset by: unfavorable currency-translation impacts recognized on Modine's 50-percent equity investments in Radiadores Visconde, Ltda., in Brazil and Nikkei Heat Exchanger Co., Ltd. (NEX), in Japan and a dividend received from NEX.
Intangible assets of $55.1 million were $9.8 million lower than last year, largely as a result of annual amortization expense of $6.4 million, write-offs of impaired goodwill and heat battery technology totaling $2.7 million, and the impact of foreign currency translation.
Deferred charges and other noncurrent assets of $76.7 million increased $5.7 million over the prior period, primarily a result of a $4.1-million increase in the surplus of the company's over-funded pension plans and an increase in long-term deferred tax assets of $1.2 million.
CURRENT LIABILITIES
Short-term debt and the current portion of long-term debt,
totaling $10.8 million, decreased by $34.7 million.
Discretionary repayments of $26.5 million in short-term debt and
$7.3 million in the current portion of long-term debt, originally
secured during the construction of the company's Pontevico, Italy
manufacturing facility, were the primary factors responsible for
the decrease. The remaining decrease resulted from scheduled
repayments and foreign currency translation.
Accounts payable remained virtually unchanged from the prior year.
NONCURRENT LIABILITIES
Long-term debt increased by $2.2 million to $139.7 million at year-end. The components of the change include an increase of $10.5 million from Thermacore's short-term debt that was refinanced at the time of acquisition offset in part by a net reduction in outstanding borrowings of $4.2 million in the United States and $1.9 million in Europe. The remaining decrease is due to foreign currency translation.
As a percent of shareholders' equity, long-term debt was 27.1 percent at year-end. Total debt to equity was 29.1 percent, down 6.2 percentage points from fiscal 2001.
Other non-current liabilities at $40.8 million were $1.9 million higher than last year. The increase resulted primarily from advance royalty payments received from licensees, deferred revenue from extended warranty payments received from customers, and long-term environmental reserves established during the current year.
SHAREHOLDERS' EQUITY
Total shareholders' equity of $516.0 million decreased $2.7 million over the prior period. The major changes were from retained earnings, accumulated other comprehensive loss and treasury stock transactions. Retained earnings declined by $9.8 million from the prior year. Net earnings added $23.3 million in the year while dividend payments of $29.0 million reduced retained earnings and treasury stock issued to satisfy stock options exercised, stock awards, and employee stock- purchase plans resulted in a further $4.1 million reduction during the year.
Accumulated other comprehensive loss of $33.5 million increased $9.8 million over the prior year. The most significant component was the foreign-currency-translation adjustment, which increased $9.1 million. The Euro, which weakened against the dollar during the year, and translation losses recorded on the company's equity investment in its Brazilian affiliate were offset in part by the favorable foreign-currency effects on the company's foreign-denominated borrowings.
During fiscal 2002, $1.3 million was expended to acquire 46,000 treasury shares while $17.9 million of treasury stock (586,000 shares) was used to satisfy requirements for stock options and employee stock-purchase plans. In addition, 80,000 new shares of common stock were issued to satisfy stock options and employee stock-purchase plans. In April 2001, 3,327,000 common shares were issued in conjunction with the pooling transaction with Thermacore International, Inc. The number of shares of common stock outstanding at year-end increased to 33,471,000 shares.
During fiscal 2001, $5.2 million was expended to acquire 199,000 treasury shares while $16.0 million of treasury stock (468,000 shares) was used to satisfy requirements for stock options and employee stock-purchase plans. In addition, 426,000 new shares of common stock were issued to satisfy stock option exercises. The number of shares of common stock outstanding at year-end, including the shares issued in the pooling transaction mentioned above, totaled 32,851,000 shares.
During fiscal 2000, $12.1 million was expended to acquire 459,000 treasury shares, 300,000 shares of which were repurchased for $7.6 million under a buy-back program announced in October 1999. Another $5.9 million of treasury stock (195,000 shares) was used to satisfy requirements for stock options, stock awards,
and employee stock-purchase plans. Six thousand new shares of common stock were also issued to satisfy stock option exercises. The number of shares of common stock outstanding, including the shares issued in the pooling transaction in April 2001, at year- end dropped to 32,156,000 shares.
Book value per share declined two percent, or $0.37, during fiscal 2002 to $15.42.
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net cash provided by operating activities in fiscal 2002 was a record $131.4 million, up $5.6 million from the prior year. Major items contributing to the overall change were the reduced working-capital requirements as a result of the company's continued programs in this area, higher non-cash depreciation and amortization adjustments, being partially offset by lower earnings. Working-capital requirements included a one-time non-cash restructuring charge of $5.6 million. Further details regarding restructuring charges recorded in fiscal 2002 can be found in Note 11 to the consolidated financial statements.
Net cash provided by operating activities in fiscal 2001 was $125.8 million, up $35.7 million from the prior year. Major items contributing to the overall change were the reduced working-capital requirements as a result of the company's programs in this area and a favorable non-cash adjustment for deferred income taxes, both offset partially by lower earnings.
Net cash provided by operating activities in fiscal 2000 was $90.1 million, down $15.3 million from the prior year. Major items contributing to the overall change were lower earnings, a non-cash adjustment for deferred income taxes that moved in the opposite direction from the previous year, and working-capital demands that were higher in fiscal 2000, which were partially offset by higher non-cash depreciation and amortization adjustments.
CAPITAL EXPENDITURES
Capital expenditures for fiscal 2002 were $35.8 million, $37.1 million lower than prior year, a direct result of management's initiative to reduce capital spending. Major areas of capital spending included: on-going construction and equipment costs of a new technical center in Europe, continued production and administrative facility expansion in Europe, and costs associated with the purchase of equipment and tooling for new customer programs.
Capital expenditures for fiscal 2001 were $72.9 million, $20.3 million lower than prior year. They included: on- going construction and equipment costs of a new technical center in Europe, continued production and administrative facility expansion in Europe, costs associated with the purchase of equipment and tooling for new customer programs, facility improvements at existing locations, and additional equipment costs for the technical center in Racine.
Capital expenditures for fiscal 2000 were $93.2 million, slightly lower than prior year. They included: on-going construction and equipment costs of new technical centers in the U.S. and Europe, production and administrative facility expansion in Europe, replacement of two corporate aircraft, the migration to a new computer platform and implementation of new systems software in the United States, and the costs associated with equipment and tooling for new customer programs.
ACQUISITIONS AND INVESTMENTS IN AFFILIATES
During fiscal 2001, Modine invested $0.2 million to acquire the remaining 50 percent share of Daikin-Modine, Inc., a former joint venture between Modine and Daikin Industries, LTD. Separately, Modine received a return of capital of $0.5 million from another joint venture, Nikkei Heat Exchanger Company Ltd. (NEX). See Note 10 to the consolidated financial statements for further detail.
During fiscal 2000, Modine made an additional $2.7 million investment in Daikin-Modine, Inc. Modine's total investment in the 50-percent-owned joint venture at the end of fiscal 2000 was $4.2 million. See Note 10 to the consolidated financial statements for further detail.
PROCEEDS FROM THE DISPOSITION OF ASSETS
During fiscal 2002, Modine received proceeds from the disposition of assets of $6.6 million. The major items included the sale of an aircraft for $4.1 million and various real estate for $2.1 million.
CHANGES IN DEBT: SHORT- AND LONG-TERM
In fiscal 2002, company debt decreased $29.2 million, primarily due to discretionary repayments of $26.5 million of short-term debt and $2.7 million of long-term debt. Lower working capital and capital-expenditure requirements allowed for the reduction of outstanding debt. Total debt assumed as part of the Thermacore acquisition was $14.0 million. The majority was refinanced with available lines of credit at more favorable interest rates.
In fiscal 2001, company debt decreased $37.2 million, primarily due to discretionary repayments of $40.0 million of domestic long-term debt. The reduction in debt was a result of the patent settlement proceeds received and of reduced working-capital and capital-expenditure requirements.
In fiscal 2000, company debt increased $24.9 million, primarily to support working-capital and capital-expenditure requirements. During the year, Modine entered into a Euro 50.8 million ($53 million) term loan. Proceeds were used to pay down short-term European bank debt. The company also entered into a long-term $60 million multi-currency revolving- credit agreement which was used to replace short-term debt.
TREASURY STOCK
Treasury stock activity is detailed in the discussion of shareholders' equity and Note 17 to the consolidated financial statements.
DIVIDENDS PAID
Dividends for fiscal 2002 totaled $29.0 million, or 87.5 cents per share. This is a decrease of 12.5 cents per share over the previous year and includes one quarterly dividend at the new rate of 12.5 cents per quarter. Dividends in fiscal 2001 and 2000 were $29.3 and $27.1 million, respectively, representing rates of $1.00 and 92 cents per share, respectively, and those dividends increased 8 cents per share each year over the previous year.
LIQUIDITY
Future operating and capital-expenditure needs of the company are expected to be generated primarily through a combination of internally generated funds and external financing arrangements. The company believes that its internally generated liquidity, together with access to external resources, will be sufficient to satisfy existing commitments and plans. In addition, the company believes it is positioned to provide necessary financial resources to take advantage of potential strategic business opportunities that arise within fiscal 2003. In April 2002, subsequent to the fiscal year end, Modine entered into a new $150.0 million multi-currency, revolving credit facility. Initially, $64.0 million was borrowed against this new facility and used to pay down existing debt. See Note 14 to the consolidated financial statements for further detail.
The following tables represent our obligations and commitments to make future payments under contracts, such as debt and lease agreements, and under contingent commitments, such as debt guarantees, as of March 31, 2002.
CONTRACTUAL OBLIGATIONS
(in thousands)
-----------------------------------------------------------------------------
Less than 1-3 4-5 After 5
March 31, 2002 Total 1 year years years years
-----------------------------------------------------------------------------
Short-term borrowing $ 726 $ 726 $ -- $ -- $ --
Long-term debt 149,684 10,030 14,360 113,315 11,979
Capital lease obligations 23 23 -- -- --
Operating leases 25,142 8,342 9,650 4,441 2,709
Capital expenditure
commitments 14,398 14,398 -- -- --
Other long-term
obligations 3,258 34 68 68 3,088
-----------------------------------------------------------------------------
Total contractual
obligations $193,231 $ 33,553 $24,078 $117,824 $17,776
-----------------------------------------------------------------------------
|
OTHER COMMERCIAL COMMITMENTS
(in thousands)
-----------------------------------------------------------------------------
Less than 1-3 4-5 After 5
March 31, 2002 Total 1 year years years years
-----------------------------------------------------------------------------
Maximum loan
commitment $ 35,657 $ 657 $35,000 -- $ --
Standby letters of credit 3,259 -- -- -- 3,259
Maximum guarantees 16,588 -- -- -- 16,588
Surety bonds 4,795 4,795 -- -- --
-----------------------------------------------------------------------------
Total other commercial
commitments $ 60,299 $ 5,452 $35,000 -- $19,847
-----------------------------------------------------------------------------
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CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per-share amounts)
-------------------------------------------------------------------------------
For the years ended March 31 2002 2001 2000
-------------------------------------------------------------------------------
Net sales $1,074,760 $1,121,399 $1,174,956
Cost of sales 810,291 823,220 844,701
----------------------------------------
Gross profit 264,469 298,179 330,255
------------
Selling, general, and administrative
expenses 221,733 229,443 229,361
Restructuring charges 7,540 -- --
----------------------------------------
Income from operations 35,196 68,736 100,894
----------------------
Interest expense (7,793) (8,784) (8,913)
Patent settlements -- 16,959 1,000
Other income - net 12,707 8,152 3,733
----------------------------------------
Earnings before income taxes 40,110 85,063 96,714
----------------------------
Provision for income taxes 16,765 33,233 30,382
----------------------------------------
Net earnings $ 23,345 $ 51,830 $ 66,332
------------ ========================================
Net earnings per share of common
--------------------------------
stock:
-----
Basic $0.70 $1.61 $2.05
Assuming dilution $0.70 $1.58 $2.01
The notes to consolidated financial statements are an integral part of these
statements.
|
CONSOLIDATED BALANCE SHEETS
(In thousands, except per-share amounts)
----------------------------------------------------------------------------
March 31 2002 2001
----------------------------------------------------------------------------
Assets
Current assets:
--------------
Cash and cash equivalents $ 75,402 $ 21,744
Trade receivables, less allowance for
doubtful accounts of $3,217 and $2,459 162,462 177,972
Inventories 121,663 153,096
Deferred income taxes and other current assets 46,443 55,219
----------------------------------------------------------------------------
Total current assets 405,970 408,031
----------------------------------------------------------------------------
Noncurrent assets:
-----------------
Property, plant, and equipment - net 340,388 366,854
Investment in affiliates 24,981 26,403
Goodwill and other intangible assets - net 55,054 64,886
Deferred charges and other noncurrent assets 76,651 70,997
----------------------------------------------------------------------------
Total noncurrent assets 497,074 529,140
----------------------------------------------------------------------------
Total assets $903,044 $937,171
============================================================================
Liabilities and shareholders' equity
Current liabilities:
-------------------
Short-term debt $ 726 $ 27,281
Long-term debt - current portion 10,030 18,196
Accounts payable 80,112 80,028
Accrued compensation and employee benefits 46,797 49,161
Income taxes 4,799 6,115
Accrued expenses and other current liabilities 29,040 29,072
----------------------------------------------------------------------------
Total current liabilities 171,504 209,853
----------------------------------------------------------------------------
Noncurrent liabilities:
----------------------
Long-term debt 139,654 137,449
Deferred income taxes 35,127 32,263
Other noncurrent liabilities 40,760 38,909
----------------------------------------------------------------------------
Total noncurrent liabilities 215,541 208,621
----------------------------------------------------------------------------
Total liabilities 387,045 418,474
----------------------------------------------------------------------------
|
Shareholders' equity:
--------------------
Preferred stock, $0.025 par value, authorized
16,000 shares, issued - none -- --
Common stock, $0.625 par value, authorized 80,000
shares issued 33,743 and 33,663 shares 21,089 21,039
Additional paid-in capital 19,166 17,468
Retained earnings 518,900 528,653
Accumulated other comprehensive loss (33,494) (23,651)
Treasury stock at cost: 272 and 812 common shares (6,976) (23,564)
Restricted stock - unamortized value (2,686) (1,248)
----------------------------------------------------------------------------
Total shareholders' equity 515,999 518,697
----------------------------------------------------------------------------
Total liabilities and shareholders' equity $903,044 $937,171
============================================================================
The notes to consolidated financial statements are an integral part of
these statements.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
--------------------------------------------------------------------------------
For the years ended March 31 2002 2001 2000
--------------------------------------------------------------------------------
Cash flows from operating activities:
------------------------------------
Net earnings $ 23,345 $ 51,830 $ 66,332
Adjustments to reconcile net earnings with
cash provided by operating activities:
Depreciation and amortization 63,508 51,908 50,380
Pensions (3,257) (2,779) (2,686)
(Gain)/loss from disposition of property,
plant, and equipment (4,630) 2,505 582
Deferred income taxes 2,515 9,972 (2,125)
Provision for losses on accounts receivable 756 (2,087) 734
Undistributed (earnings)/losses of affiliates,
net of dividends received (1,827) (1,509) 800
Restructuring 5,609 -- --
Other - net 3,581 642 (97)
-------------------------------------------------------------------------------
89,600 110,482 113,920
-----------------------------------------------------------------------------
|
Change in operating assets and liabilities
excluding acquisitions:
Trade receivables 12,006 11,622 (12,470)
Inventories 28,362 17,300 3,477
Deferred income taxes and other current assets 9,395 (8,409) (6,116)
Accounts payable 1,353 (5,999) (8,685)
Accrued compensation and employee benefits (7,324) 860 (2,936)
Income taxes (1,316) (1,161) (1,303)
Accrued expenses and other current
liabilities (672) 1,069 4,190
-------------------------------------------------------------------------------
Net cash provided by operating activities 131,404 125,764 90,077
-------------------------------------------------------------------------------
Cash flows from investing activities:
------------------------------------
Expenditures for property, plant, and
equipment (35,763) (72,890) (93,212)
Acquisitions, net of cash acquired -- 249 --
Proceeds from dispositions of assets 6,605 815 2,140
Investments in affiliates 74 345 (2,641)
Increase in deferred charges and other
noncurrent assets (750) (1,492) (2,537)
Other - net -- (944) (80)
-------------------------------------------------------------------------------
Net cash used for investing activities 29,834) (73,917) (96,330)
-------------------------------------------------------------------------------
Cash flows from financing activities:
------------------------------------
Increase/(decrease) in short-term debt - net (26,532) 14,665 (60,414)
Additions to long-term debt 54,771 47,183 133,477
Reductions of long-term debt (57,479) (99,064) (48,142)
Issuance of common stock, including
treasury stock 12,447 10,607 2,965
Purchase of treasury stock (1,293) (5,167) (12,102)
Cash dividends paid (28,981) (29,307) (27,102)
Other - net -- -- (184)
-------------------------------------------------------------------------------
Net cash (used for)/provided by financing
activities (47,067) (61,083) (11,502)
-------------------------------------------------------------------------------
Effect of exchange-rate changes on cash (845) (262) (1,168)
-------------------------------------------------------------------------------
Net increase/(decrease) in cash and cash
equivalents 53,658 (9,498) (18,923)
Cash and cash equivalents at beginning of year 21,744 31,242 50,168
-------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 75,402 $ 21,744 $ 31,245
===============================================================================
Cash paid during the year for:
Interest, net of amounts capitalized $ 6,639 $ 8,467 $ 8,768
Income taxes $ 10,058 $ 29,674 $ 33,849
The notes to consolidated financial statements are an integral part of
these statements.
|
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per-share amounts)
---------------------------------------------------------------------------------------------------------------
Accumulated Restricted
For the years Additional other stock-
ended March 31, Common paid-in Retained comprehensive Treasury unamortized
2002, 2001, and 2000 stock capital earnings income/(loss) stock value Total
===============================================================================================================
Balance, March 31, 1999 $20,769 $15,390 $475,693 $(18,373) $(28,198) $(2,199) $463,082
---------------------------------------------------------------------------------------------------------------
Net earnings -- -- 66,332 -- -- -- 66,332
Other comprehensive (loss):
Foreign-currency translation -- -- -- (3,106) -- -- (3,106)
Minimum pension liability
(net of tax benefit of $5) -- -- -- (144) -- -- (144)
Total comprehensive income -- -- -- -- -- -- 63,082
Cash dividends, $0.92 per
share -- -- (27,102) -- -- -- (27,102)
Purchase of treasury stock -- -- -- -- (12,102) -- (12,102)
Stock options and awards
including related tax
benefits 4 315 (1,798) -- 3,719 (975) 1,265
Employee stock-purchase and
-ownership plans -- 2 (123) -- 2,187 -- 2,066
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 1,252 1,252
---------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 20,773 15,707 513,002 (21,623) (34,394) (1,922) 491,543
---------------------------------------------------------------------------------------------------------------
Net earnings -- -- 51,830 -- -- -- 51,830
Other comprehensive (loss):
Foreign-currency translation -- -- -- (2,288) -- -- (2,288)
Minimum pension liability
(net of tax benefit of
$149) -- -- -- 260 -- -- 260
Total comprehensive income -- -- -- -- -- -- 49,802
Cash dividends, $1.00 per
share -- -- (29,307) -- -- -- (29,307)
Purchase of treasury stock -- -- -- -- (5,167) -- (5,167)
Stock options and awards
including related tax
benefits 266 1,761 (5,028) -- 10,005 -- 7,004
Employee stock-purchase and
-ownership plans -- -- (1,844) -- 5,992 -- 4,148
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 674 674
---------------------------------------------------------------------------------------------------------------
Balance, March 31, 2001 21,039 17,468 528,653 (23,651) (23,564) (1,248) 518,697
---------------------------------------------------------------------------------------------------------------
|
Net earnings -- -- 23,345 -- -- -- 23,345 Other comprehensive (loss): Foreign-currency translation -- -- -- (9,131) -- -- (9,131) Minimum pension liability (net of taxes of $449) -- -- -- (712) -- -- (712) Total comprehensive income -- -- -- -- -- -- 13,502 Cash dividends, $0.875 per share -- -- (28,981) -- -- -- (28,981) Purchase of treasury stock -- -- -- -- (1,293) -- (1,293) Stock options and awards including related tax benefits 42 1,309 (2,577) -- 9,124 (2,294) 5,604 Employee stock-purchase and -ownership plans 8 389 (1,540) -- 8,757 -- 7,614 Amortization of deferred compensation under restricted stock plans -- -- -- -- -- 856 856 --------------------------------------------------------------------------------------------------------------- Balance, March 31, 2002 $21,089 $19,166 $518,900 $(33,494) $(6,976) $(2,686) $515,999 =============================================================================================================== The notes to consolidated financial statements are an integral part of these statements. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
owned subsidiaries. Material intercompany transactions and balances are eliminated in consolidation. Operations of subsidiaries outside the United States and Canada are included for periods ending one month prior to Modine's year end in order to ensure timely preparation of the consolidated financial statements. Investments in affiliated companies in which ownership is 20 percent or more are accounted for by the equity method. The investments are stated at cost plus or minus a proportionate share of the undistributed net income (loss). Modine's share of the affiliates' net income (loss) is reflected in net earnings.
In April 2001, Modine completed the acquisition of Thermacore International, Inc. (Thermacore) in a business combination accounted for as a pooling of interests. Accordingly, the historical consolidated financial statements and accompanying notes have been restated to include Thermacore for all periods presented. Also see Note 10.
and handling costs, primarily from the Distributed Products reporting segment, as part of selling, general and administrative expenses on the Consolidated Statements of Earnings. These costs include costs to physically move finished goods from the Company's distribution or manufacturing facilities to the customer, as well as costs incurred to move products between facilities within Modine's distribution system. For the years ended March 31, 2002, 2001, and 2000, these shipping and handling costs were $10,303,000, $12,202,000, and $13,043,000, respectively.
On April 1, 2001 Modine adopted Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement requires companies to recognize all derivatives as either assets or liabilities, with the instruments measured at fair value. The accounting for changes in fair value, gains, or losses depends on the intended use of the derivative and its resulting designation. No adjustments to the fiscal 2002 financial statements were necessary upon adoption of this statement.
SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets," were issued in June 2001. SFAS No. 141 and SFAS No. 142 are effective for Modine beginning April 1, 2002. Under these new standards, goodwill and intangible assets having indefinite lives will no longer be amortized but will be subject to annual impairment tests. Depreciation and amortization includes goodwill amortization of $5,523,000 in fiscal 2002 which will be discontinued in fiscal 2003 upon adoption of SFAS No. 142. Modine is in the process of performing the required impairment tests of goodwill and intangible assets as of April 1, 2002, and does not expect any material write-offs upon implementation of this standard.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," was issued in August 2001 and is effective beginning April 1, 2002. SFAS No. 144 provides a single, comprehensive accounting model for impairment and disposal of long-lived assets and discontinued operations. Adoption is not expected to result in any material effects on Modine's financial statements.
Research and development costs charged to operations totaled $29,877,000 in fiscal 2002, $28,059,000 in fiscal 2001, and $23,011,000 in fiscal 2000.
employees. The benefits provided are based primarily on years of service and average compensation for the salaried plans and some hourly plans. Other hourly plans are based on a monthly retirement benefit amount. Funding policy for domestic qualified plans is to contribute annually, not less than the minimum required by applicable law and regulation, nor more than the maximum amount that can be deducted for federal income-tax purposes. Plan assets principally consist of equity and fixed-income securities. As of March 31, 2002 and 2001, the plans held 993,000 and 993,000 shares, respectively, of Modine common stock.
Modine's foreign subsidiaries have defined-benefit plans and/or termination indemnity plans covering substantially all of their eligible employees. The benefits under these plans are based on years of service and final average compensation levels. Funding is limited to statutory requirements. In fiscal 2002, Modine changed the pension valuation date to December 31.
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $20,232,000, $19,360,000, and $6,314,000, respectively, as of March 31, 2002, and $16,128,000, $13,758,000, and $435,000, respectively, as of March 31, 2001.
Modine has several defined-contribution plans that cover most of its domestic employees. These 401(k) and savings plans provide company matching under various formulas. The cost of Modine's contributions to the plans (including retirement plans discussed in Note 20) for fiscal 2002, 2001, and 2000 were $3,300,000, $6,780,000, and $7,862,000, respectively.
The change in benefit obligations and plan assets as well as the funded status of Modine's pension and other postretirement plans were as follows:
(In thousands)
-----------------------------------------------------------------------------
Other
Pensions postretirement
------------------------------------------
Years ended March 31 2002 2001 2002 2001
=============================================================================
Change in benefit obligation:
Benefit obligation at
beginning of year $163,905 $152,034 $ 24,774 $ 23,135
Service cost 5,655 5,653 407 312
Interest cost 11,771 11,257 2,179 1,777
Plan amendments 1,776 171 -- --
Actuarial (gain)/loss (4,639) 1,569 5,394 1,558
Benefits paid (6,744) (6,562) (2,753) (2,421)
Settlement -- 458 -- --
Contributions by plan
participants -- -- 521 413
Currency-translation adjustment (610) (675) -- --
-----------------------------------------------------------------------------
Benefit obligation at
end of year $171,114 $163,905 $ 30,522 $ 24,774
-----------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at
beginning of year $207,458 $196,334 $ -- $ --
Actual return on plan assets (4,779) 13,801 -- --
Employer contributions 3,886 3,958 2,232 2,008
Contributions by plan
participants -- -- 521 413
Benefits paid (6,744) (6,562) (2,753) (2,421)
Currency-translation adjustment 49 (73) -- --
-----------------------------------------------------------------------------
Fair value of plan assets
at end of year $199,870 $207,458 $ -- $ --
-----------------------------------------------------------------------------
Funded status:
Funded status at end of year $ 28,756 $ 43,553 $(30,522) $(24,774)
Unrecognized net loss 21,879 2,400 5,956 867
Unrecognized prior service cost 3,391 2,756 (1,166) (1,629)
Unrecognized net transition
obligation 153 317 -- --
-----------------------------------------------------------------------------
Net amount recognized $ 54,179 $ 49,026 $(25,732) $(25,536)
-----------------------------------------------------------------------------
Amounts recognized in the
balance sheet consist of:
Prepaid benefit cost $ 66,621 $ 62,371 $ -- $ --
Accrued benefit liability (13,804) (14,265) (25,732) (25,536)
Intangible asset 73 537 -- --
Accumulated other comprehensive
income 1,289 383 -- --
-----------------------------------------------------------------------------
Net amount recognized $ 54,179 $ 49,026 $(25,732) $(25,536)
-----------------------------------------------------------------------------
|
Costs for Modine's pension and other postretirement benefit plans include the following components:
(In thousands)
---------------------------------------------------------------------------- Years ended March 31 2002 2001 2000 ---------------------------------------------------------------------------- Pensions: Components of net periodic benefit cost (gain): Service cost $ 5,655 $ 5,653 $ 5,875 Interest cost 11,771 11,257 10,630 Expected return on plan assets (19,712) (18,649) (17,567) Amortization of: Unrecognized net loss (gain) 53 (18) 95 Unrecognized prior service cost 504 371 380 Unrecognized net obligation 122 125 93 Adjustment for settlement/curtailment 881 660 574 ---------------------------------------------------------------------------- Net periodic benefit cost (gain) $ (726) $ (601) $ 80 ---------------------------------------------------------------------------- Other postretirement plans: Components of net periodic benefit cost: Service cost $ 407 $ 312 $ 374 Interest cost 2,179 1,777 1,629 Amortization of: Unrecognized net loss (gain) 305 (46) (46) Unrecognized prior service cost (462) (462) (473) ---------------------------------------------------------------------------- Net periodic benefit cost $ 2,429 $ 1,581 $ 1,484 ---------------------------------------------------------------------------- |
The following weighted-average assumptions were used to determine Modine's obligation under the plans:
-----------------------------------------------------------------------------
Years ended March 31 2002 2001
--------------------------------------------
Foreign Foreign
U.S. plans plans U.S. plans plans
-----------------------------------------------------------------------------
Pensions:
Discount rate 7.5% 7.2% 7.5% 7.5%
Expected return on plan assets 9.0% 11.3% 9.0% 13.8%
Rate of compensation increase 4.0% 3.1% 4.0% 3.2%
Other postretirement plans:
Discount rate 7.5% 7.5%
Rate of compensation increase 4.0% 4.0%
-----------------------------------------------------------------------------
|
With regards to the postretirement plans, for measurement purposes, a 10 percent healthcare cost trend rate was assumed for fiscal year 2002 for pre-65 benefits and for post-65 benefits.
Assumed healthcare cost trend rates affect the amounts reported for the healthcare plan. A one percentage point change in assumed healthcare cost trend rates would have the following effects:
(In thousands)
--------------------------------------------------------------------------
One percentage point
---------------------
Year ended March 31, 2002 increase decrease
--------------------------------------------------------------------------
Effect on total of service and interest cost $ 104 $ (99)
Effect on post-retirement benefit obligation 1,383 (1,313)
--------------------------------------------------------------------------
|
Modine leases various facilities and equipment. Rental expense under operating leases totaled $13,909,000 in fiscal 2002, $13,826,000 in fiscal 2001, and $15,385,000 in fiscal 2000.
2003 $8,342 2006 $ 2,411 2004 5,773 2007 2,030 2005 3,877 2008 and beyond 2,709 ------------------------------------------------------------------- Total future minimum rental commitments $25,142 ------------------------------------------------------------------- NOTE 5 INCOME TAXES ------ ------------ |
The U.S. and foreign components of earnings before income taxes and the income tax expense consist of:
(In thousands)
-------------------------------------------------------------------------- Years ended March 31 2002 2001 2000 -------------------------------------------------------------------------- Components of earnings before income taxes: United States $23,882 $62,100 $71,431 Foreign 16,228 22,963 25,283 -------------------------------------------------------------------------- Total earnings before income taxes $40,110 $85,063 $96,714 -------------------------------------------------------------------------- Income tax expense: Federal: Current $ 5,488 $ 9,954 $21,040 Deferred 2,401 6,674 2,540 State: Current 718 1,281 3,318 Deferred 251 729 539 Foreign: Current 8,640 12,221 8,392 Deferred (733) 2,374 (5,447) -------------------------------------------------------------------------- Totals charged to earnings $16,765 $33,233 $30,382 -------------------------------------------------------------------------- |
Income tax expense attributable to earnings before income taxes differed from the amounts computed by applying the statutory U.S. federal income tax rate as a result of the following:
---------------------------------------------------------------------- Years ended March 31 2002 2001 2000 ---------------------------------------------------------------------- Statutory federal tax 35.0% 35.0% 35.0% State taxes, net of federal benefit 1.9 1.7 2.8 Goodwill amortization 3.1 1.0 0.9 Nondeductible acquisition costs 2.4 -- -- Taxes on non-U.S. earnings and losses (1.4) (0.2) (7.9) Other 0.8 1.6 0.6 ---------------------------------------------------------------------- Effective tax rate 41.8% 39.1% 31.4% ---------------------------------------------------------------------- |
The significant components of deferred income tax expense attributable to earnings before income taxes are as follows:
(In thousands)
------------------------------------------------------------------------ Years ended March 31 2002 2001 2000 ------------------------------------------------------------------------ Pensions $2,028 $1,876 $ 1,707 Depreciation 2,781 3,322 3,622 Inventories (595) 1,148 (575) Employee benefits 1,910 (131) 679 Restructuring costs (1,679) -- -- Benefit of tax losses (1,098) (1,507) (7,185) Other (1,428) 5,069 (616) ------------------------------------------------------------------------ Totals charged to earnings $1,919 $9,777 $(2,368) ------------------------------------------------------------------------ |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
(In thousands)
------------------------------------------------------------------------
March 31 2002 2001
------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 892 $ 599
Inventories 5,134 4,671
Plant and equipment 995 1,104
Employee benefits 17,770 19,450
Net operating loss and tax credit carry forwards 8,395 7,781
Restructuring costs 1,673 --
Other 8,455 6,979
-----------------
Total gross deferred assets 43,314 40,584
Less valuation allowance 557 592
-----------------
Net deferred tax assets 42,757 39,992
-----------------
Deferred tax liabilities:
Pension 26,115 24,422
Plant and equipment 21,438 18,886
Other 3,337 3,195
-----------------
Total gross deferred tax liabilities 50,890 46,503
------------------------------------------------------------------------
Net deferred tax (liability)/asset $(8,133) $(6,511)
------------------------------------------------------------------------
|
The valuation allowance for deferred tax assets as of April 1, 2001, was $592,000. The valuation allowance decreased by $35,000 during the year and relates primarily to certain, foreign, net operating loss carryforward activities.
At March 31, 2002, the company had tax loss carryforwards of $24,024,000 existing in jurisdictions outside of the United States. If not utilized against taxable income, the tax losses will expire as follows:
2004 $ 761 2008 $ 969 2005 2,165 2009 207 2006 1,902 No expiration date 16,573 2007 1,447 ---------------------------------------------------------------- |
As of March 31, 2002, Modine has provided $321,000 of U.S. tax on undistributed earnings of certain subsidiaries and equity investment companies considered not permanently reinvested. Undistributed earnings considered permanently reinvested in foreign operations totaled $141,398,000 and no provision has been made for any U.S. taxes that would be payable upon the distribution of such earnings.
The computational components of basic and diluted earnings per share are as follows:
(In thousands, except per-share amounts)
-----------------------------------------------------------------------------
Years ended March 31 2002 2001 2000
-----------------------------------------------------------------------------
Net earnings per share of common stock:
Basic $0.70 $1.62 $2.05
Assuming dilution 0.70 1.58 2.01
Numerator:
Net earnings available to
common shareholders $23,345 $51,830 $66,332
Denominator:
Weighted average shares outstanding - basic 33,132 32,258 32,362
Effect of dilutive securities - options 274 601 701
----------------------------
Weighted average shares
outstanding - assuming dilution 33,406 32,859 33,063
There were outstanding options to purchase
common stock excluded from the dilutive
calculation because their prices exceeded
the average market price for the earnings
statement periods as follows:
Average market price per share $25.65 $25.19 $27.03
Number of shares 1,246 1,438 1,169
-----------------------------------------------------------------------------
|
Under Modine's cash management system, certain cash balances reflect credit balances to the extent that checks written have not yet been presented for payment. These credit balances, included in accounts payable, were approximately $8,398,000, $8,571,000, and $7,699,000 at March 31, 2002, 2001, and 2000, respectively.
All the short-term investments at March 31, 2002, 2001, and 2000, were of an initial duration of less than three months and were treated as cash equivalents, which approximate fair value.
NOTE 8 INVENTORIES
------ -----------
Inventories include:
(In thousands)
-----------------------------------------------------------------------
March 31 2002 2001
-----------------------------------------------------------------------
Raw materials $ 25,370 $ 32,774
Work in process 31,673 37,321
Finished goods 64,620 83,001
-----------------------------------------------------------------------
Total inventories $121,663 $153,096
-----------------------------------------------------------------------
|
Property, plant, and equipment is composed of:
(In thousands)
------------------------------------------------------------------------
March 31 Depreciable lives 2002 2001
------------------------------------------------------------------------
Land -- $ 7,384 $ 7,733
Buildings and improvements 10-40 years 196,663 170,586
Machinery and equipment 3-12 years 399,161 367,830
Office equipment 3-14 years 69,462 60,472
Transportation equipment 3-7 years 9,442 15,508
Construction in progress -- 20,783 74,934
------------------
702,895 697,063
Less accumulated depreciation 362,507 330,209
------------------------------------------------------------------------
|
Depreciation expense was $53,587,000, $44,359,000, and $40,640,000 for the fiscal years ended 2002, 2001, and 2000, respectively.
On April 27, 2001, Modine acquired Thermacore International, Inc. (Thermacore) in a business combination accounted for as a pooling of interests. Thermacore, which produces advanced cooling solutions for equipment in the computer, telecommunications, medical, aerospace, networking and power-semiconductor markets, became a wholly owned subsidiary of Modine through the initial exchange of approximately 3,327,000 shares of Modine common stock for all the outstanding common and preferred stock of Thermacore International, Inc. In addition, approximately 294,000 shares of Modine common stock were allocated to cover outstanding Thermacore stock options, which were converted to Modine stock options as part of the transaction. The accompanying financial statements are based upon the assumption that the companies were combined for fiscal 2002, and the financial statements of prior periods have been restated to give effect to the combination. Prior to the date of the combination, there were no business transactions between Modine and Thermacore. No significant adjustments have been made to conform the accounting policies of the companies. No adjustments to retained earnings were required to conform Thermacore to Modine's March 31 year-end. Previously reported results of operations have been consolidated by combining quarterly operating results reported by Thermacore for the periods April 1, 1999 - March 31, 2000 and April 1, 2000 - March 31, 2001.
Summarized results of operations of the separate companies for the period prior to acquisition, April 1, 2001 through April 27, 2001 and included in fiscal 2002 operations are as follows:
(In thousands)
---------------------------------------------------------------- April 1-27, 2001 Modine Thermacore Net sales $86,065 $ 3,496 Net earnings (loss) 3,368 (1,655) ---------------------------------------------------------------- |
Included in the operating results shown for April of 2001 are $351,000 and $2,209,000 in after-tax acquisition costs recorded for Modine and Thermacore, respectively.
Following is a reconciliation of the accounts of net sales and net earnings previously reported for the twelve-month periods ended March 31, 2001 and March 31, 2000 with the restated amounts.
(In thousands)
-------------------------------------------------------------------- Twelve Months ended March 31 2001 2000 -------------------------------------------------------------------- Net sales: Modine $1,065,395 $1,139,269 Thermacore 56,004 35,687 -------------------------------------------------------------------- Combined $1,121,399 $1,174,956 -------------------------------------------------------------------- Net earnings: Modine $ 47,605 $ 65,403 Thermacore 4,225 929 -------------------------------------------------------------------- Combined $ 51,830 $ 66,332 -------------------------------------------------------------------- |
In June of 2000, Modine purchased the remaining 50-percent share of Daikin-Modine, Inc., from its joint venture partner, Daikin Industries, Ltd. The joint venture was established in June of 1998 to develop, manufacture, and market commercial, unitary, air-conditioning systems. Investment capital provided by Modine in fiscal 2000 totaled $2,700,000. The purchase of the remaining 50 percent interest for $200,000 resulted in a "bargain purchase" and, as such, the value of the acquired property, plant, and equipment was reduced proportionately by the amount of the bargain element. The value of the assets acquired, after giving effect to the bargain element and excluding cash acquired of $449,000, was $1,186,000. Liabilities assumed in the transaction were $1,346,000. Net cash received from the acquisition was $249,000. The continuing operation has been integrated into Modine's Commercial HVAC&R Division and its operating results reported in the Distributed Products reporting segment since the purchase of the remaining 50 percent share. This investment, accounted for as a purchase transaction, did not have a material effect on the consolidated results of operations and, accordingly, pro-forma information is not presented.
In the third quarter of fiscal 2002, Modine initiated a restructuring plan to reduce costs and increase future operating efficiency by consolidating a portion of its operations. This restructuring plan includes the closure of three manufacturing plants in North America located in LaPorte, Indiana; Knoxville, Tennessee; and St. Paul, Minnesota. The manufacturing facilities located in LaPorte and Knoxville currently produce products for customers in the company's heavy-duty and industrial markets. The facility located in St. Paul manufactures products for the company's HVAC market. Modine is relocating the production of the majority of the products previously made in these facilities to other company
locations. It is however ceasing the production of air turnover units, building evaporator units, and indirect fired heating units previously produced at the St. Paul facility and also rationalizing certain customer relationships as part of the restructuring process. Separate personnel reductions were also initiated as part of the restructuring plan at three other U. S. facilities located in Harrodsburg, Kentucky; Trenton, Missouri; and the corporate headquarters in Racine, Wisconsin. Included in the European portion of the restructuring plan is a plant closure taking place in Bernhausen, Germany and personnel reductions at the company's manufacturing facility in Granada, Spain. Modine will be exiting the assembly of air conditioning equipment, previously performed at the Bernhausen facility, for off-highway equipment manufacturers as part of the restructuring. Personnel reductions and final phase out of the named manufacturing facilities have occurred, or are expected to occur, over the next nine months.
Anticipated staff reductions, as originally estimated in the third quarter, were determined to be approximately 400 employees. The planned reductions included 300 employees in the U.S. and 100 employees in Europe. In the fourth quarter, this estimate was revised downward by approximately 62 employees in Europe and eight employees in the U.S. These personnel were relocated to other company facilities or left the company prior to receiving separation benefits. As a result, anticipated termination costs of $5,938,000 established in the third quarter were reduced by $932,000 in Europe and $61,000 in the U.S. Of the total number of employees affected, 65 employees were terminated as of the end of the fiscal year and thus far have received benefit payments of $903,000.
In addition to the costs of terminating employees, the other principal costs of the restructuring plan include the $1,043,000 write-off of goodwill associated with the St. Paul facility, post- closing operating expenses for the facilities to be sold in LaPorte, Knoxville, and St. Paul, and other disposal costs. In total, these costs are approximately $2,569,000.
The following table displays the components of the accrued restructuring liability:
(In thousands)
-------------------------------------------------------------------
2002
-------------------------------------------------------------------
Termination Benefits:
Balance at November 1, 2001 $5,938
Adjustments (993)
Payments (903)
-------------------------------------------------------------------
Balance at March 31, 2002 $4,042
-------------------------------------------------------------------
Other Restructuring Charges:
Balance at November 1, 2001 $2,569
Non-cash Goodwill Impairment (1,043)
Payments --
-------------------------------------------------------------------
Balance at March 31, 2002 $1,526
-------------------------------------------------------------------
|
In addition to the restructuring costs, other closure-related and business rationalization costs recorded in the year were $881,000 in pension curtailment costs for the LaPorte and Knoxville facilities, $1,397,000 in accelerated depreciation in conjunction with the reduction of the useful lives of assets at the facilities to be closed, and $515,000 of inventory identified as obsolete. Other one-time items recorded in the year included a $1,851,000 asset impairment identified at one of the company's foreign facilities, consisting of a $804,000 reduction in the value of fixed assets, a $768,000 write-down of the inventory value and a $279,000 write-off of goodwill. Also recorded during the year was the write-down of the unitary air conditioning product line marketed by the company's HVAC division, consisting of $455,000 in obsolete inventory and $221,000 in fixed asset impairments. In addition, miscellaneous shut-down related costs of $110,000 have been incurred by the North American facilities.
The following table provides a summary of restructuring and one- time closure/business rationalization costs recorded:
(In thousands)
----------------------------------------------------------------------
Year Ended March 31 2002
----------------------------------------------------------------------
Restructuring Charges:
Employee severance and related benefits $ 4,971
Goodwill impairment 1,043
Post-closing operating expenses 845
Other disposal costs 681
-------
Total restructuring costs 7,540
-------
Other Closure Costs:
Assets impairments 2,072
Depreciation (change in useful lives) 1,397
Pension curtailment costs 881
Obsolete inventory charges 970
Miscellaneous other closure costs 110
-------
Total other closure costs 5,430
----------------------------------------------------------------------
Total restructuring and other closure costs $12,970
----------------------------------------------------------------------
NOTE 12 INTANGIBLE ASSETS
------- -----------------
Intangible assets include:
(In thousands)
-----------------------------------------------------------------------
March 31 2002 2001
-----------------------------------------------------------------------
Goodwill $85,984 $ 90,362
Patents and product technology 3,951 6,901
Other intangibles 2,456 2,925
-------------------
92,391 100,188
Less accumulated amortization 37,337 35,302
-----------------------------------------------------------------------
Net intangible assets $55,054 $ 64,886
-----------------------------------------------------------------------
|
Amortization expense for intangible assets was $9,065,000, $6,875,000, and $8,488,000 for the fiscal years ended 2002, 2001, and 2000, respectively.
Deferred charges and other noncurrent assets include:
(In thousands)
----------------------------------------------------------------------
March 31 2002 2001
----------------------------------------------------------------------
Prepaid pension costs -
qualified and nonqualified plans $66,622 $62,496
Other noncurrent assets 10,029 8,501
----------------------------------------------------------------------
Total deferred charges and other
noncurrent assets $76,651 $70,997
----------------------------------------------------------------------
|
Long-term debt at March 31, 2002 and 2001, includes:
(Dollars in thousands)
----------------------------------------------------------------------------
Interest rate Fiscal
percentage at year of
Type of issue March 31, 2002 maturity 2002 2001
----------------------------------------------------------------------------
Denominated in U.S. dollars:
Fixed rate -
Notes 5.00-8.87 2003-2004 $ 10,877 $ 14,938
Weighted average interest rate 5.09
Revenue bonds 7.50 2003 50 400
Variable rate -
Note 2.33 2006 25,000 15,161
Revenue bonds 1.70 2008 3,000 3,000
Denominated in foreign currency:
Fixed rate -
Notes and other debt 3.25-6.08 2004-2012 63,409 56,209
Weighted average interest rate 5.45
Variable rate -
Notes and other debt .29-7.25 2003-2010 47,348 65,937
Weighted average interest rate 3.42
------------------
149,684 155,645
Less current portion 10,030 18,196
----------------------------------------------------------------------------
Total $139,654 $137,449
----------------------------------------------------------------------------
|
Certain of Modine's financing agreements require it to maintain specific financial ratios and place certain limitations on dividend payments and the acquisition of treasury stock. Other loan agreements give certain existing unsecured lenders security equal to any future secured
borrowing. Modine is in compliance with these covenants at March 31, 2002.
The fair value of long-term debt is estimated by discounting the future cash flows at rates offered to the company for similar debt instruments of comparable maturities. At March 31, 2002 and 2001, the carrying value of Modine's long-term debt approximates fair value.
Long-term debt matures as follows:
2003 $10,030 2006 $110,244 2004 11,782 2007 3,071 2005 2,578 2008 and beyond 11,979 --------------------------------------------------------------------- |
Modine also maintains credit agreements with banks abroad. The foreign unused lines of credit at March 31, 2002, were approximately $16,588,000. Domestic unused lines of credit at March 31, 2002, were approximately $35,657,000. A maximum of $25,624,000 in short-term bank borrowings was outstanding during the year ended March 31, 2002. The weighted average interest rate on short-term borrowings was 5.05 percent at March 31, 2002, and 5.67 percent at March 31, 2001.
Interest expense charged to earnings was as follows:
(In thousands)
--------------------------------------------------------------------- Years ended March 31 2002 2001 2000 --------------------------------------------------------------------- Gross interest cost $8,013 $10,468 $10,426 Capitalized interest on major construction projects (220) (1,684) (1,513) --------------------------------------------------------------------- Interest expense $7,793 $ 8,784 $ 8,913 --------------------------------------------------------------------- |
Subsequent to the fiscal year end, on April 17, 2002, Modine entered into a new $150,000,000 multi-currency, revolving credit facility with a syndicate of banks that will mature in April 2005. Initially, Modine borrowed $64,000,000 against this new facility, which was used to pay off existing debt. At the same time, Modine terminated credit facilities with two separate banks. The indebtedness incurred by the company under the credit facility is secured by a guarantee from all domestic subsidiaries and a pledge of 65 percent of the voting stock of material foreign subsidiaries. The terms of this credit facility contain various restrictive financial covenants relating to maximum debt-to-EBITDA, minimum interest coverage ratio and minimum level of net worth. In addition, the credit facility contains limitations on investments, liens, dividends and other indebtedness. Borrowings under the credit facility bear interest at a rate of LIBOR plus a spread based on
certain financial criteria, or the prime rate at Modine's option. Financing fees will be amortized over the life of the facility.
Modine uses derivative financial instruments in a limited way as a tool to manage its financial risk. Their use is restricted primarily to hedging assets and obligations already held by Modine and they are used to protect cash rather than generate income or engage in speculative activity. Leveraged derivatives are prohibited by company policy.
Modine periodically enters into foreign currency exchange contracts, generally with terms of 90 days or less, to hedge specific foreign currency denominated transactions. The effect of this practice is to minimize the impact of foreign exchange rate movements on Modine's operating income. Modine's foreign currency exchange contracts do not subject it to significant risk due to exchange rate movements because gains and losses on these contracts offset gains and losses on the assets and liabilities being hedged.
As of March 31, 2002 and 2001, the parent company had approximately $662,000 and $2,467,000, respectively, in outstanding forward foreign exchange contracts denominated in Euros. The difference between these contracts' values and the fair value of these instruments in the aggregate was not material. Non-U.S. dollar financing transactions through intercompany loans or local borrowings in the corresponding currency generally are effective as hedges of long-term investments. See also Note 14.
NOTE 16 OTHER NONCURRENT LIABILITIES
------- ----------------------------
Other noncurrent liabilities include:
(In thousands)
------------------------------------------------------------------------
March 31 2002 2001
------------------------------------------------------------------------
Postretirement benefits other than pensions $22,818 $22,966
Pensions 13,274 13,381
Other 4,668 2,562
------------------------------------------------------------------------
Total other noncurrent liabilities $40,760 $38,909
------------------------------------------------------------------------
|
Following is a summary of common and treasury stock activity.
(In thousands)
----------------------------------------------------------------------------
Treasury stock
Common stock at cost
----------------------------------------------------------------------------
shares amount shares amount
----------------------------------------------------------------------------
Balance March 31, 1999 33,231 $20,769 (817) $(28,198)
Purchase of treasury stock -- -- (459) (12,102)
Stock options and awards including
related tax benefits 6 4 124 3,719
Employee stock-purchase and
-ownership plans -- -- 71 2,187
----------------------------------------------------------------------------
Balance March 31, 2000 33,237 20,773 (1,081) (34,394)
----------------------------------------------------------------------------
Purchase of treasury stock -- -- (199) (5,167)
Stock options and awards including
related tax benefits 426 266 296 10,005
Employee stock-purchase and
-ownership plans -- -- 172 5,992
----------------------------------------------------------------------------
Balance March 31, 2001 33,663 21,039 (812) (23,564)
----------------------------------------------------------------------------
Purchase of treasury stock -- -- (46) (1,292)
Stock options and awards including
related tax benefits 68 42 296 9,124
Employee stock-purchase and
ownership plans 12 8 290 8,756
----------------------------------------------------------------------------
Balance March 31, 2002 33,743 $21,089 (272) $ (6,976)
----------------------------------------------------------------------------
|
Modine has a shareholder rights plan to protect against coercive takeover tactics. Under the plan, each share of Modine's common stock carries one right that entitles the holder to purchase a unit of 1/100 Preferred Series A Participating Stock at $95.00 per unit. The rights are not currently exercisable, but will become exercisable 10 days after a shareholder has acquired 20 percent or more, or has commenced a tender or exchange offer for 30 percent or more, of Modine's common stock. In the event of certain mergers, sales of assets, or self-dealing transactions involving a 20-percent-or-more shareholder, each right not owned by such 20-percent-or-more holder will be modified so that it will then be exercisable for common stock having a market value of twice the exercise price of the right. The rights are redeemable in whole by Modine, at a price of $0.0125 per right, at any time before 20 percent or more of Modine's common stock has been acquired. The rights expire on October 27, 2006, unless previously redeemed.
The components of accumulated other comprehensive (loss), net of applicable income taxes, consist of:
(In thousands)
---------------------------------------------------------------------------- March 31 2002 2001 ---------------------------------------------------------------------------- Unrealized foreign-currency-translation adjustments $(32,489) $(23,358) Minimum pension-liability adjustments (1,005) (293) ---------------------------------------------------------------------------- Accumulated other comprehensive (loss) $(33,494) $(23,651) ---------------------------------------------------------------------------- |
Activity in the plans for fiscal 2002, 2001, and 2000 resulted in the purchase of 302,000, 468,000, and 487,000 shares of Modine common stock, respectively. These purchases were made from the employee pension plan trusts, private purchases, and treasury shares. It is anticipated that future purchases will be made from all three sources at the discretion of the plans' administrative committees. Costs of Modine's contributions to the plans for fiscal 2002, 2001, and 2000 were $3,137,000, $6,237,000, and $7,288,000, respectively.
and replaced with a new plan approved by the Board of Directors. This action was taken, in conjunction with a simultaneous decision to freeze the Directors Emeritus Retirement Plan effective July 1, 2000, with no further benefits accruing under that plan. In April of 2001, 294,000 shares of Modine common stock were allocated to cover the outstanding Thermacore options which were converted to Modine stock options as part of the business combination accounted for as a pooling transactions. Options granted under the Thermacore 1995 and 1997 incentive plans, which vest at 25% per year after the first year, are either non-qualified or incentive stock options and, in most cases, carry a price equal to the market price at the date of grant. Options granted under the 1985 and 1994 Modine plans, which vest immediately, are either nonqualified or incentive stock options and carry a price equal to the market price on the date of grant. Both incentive stock options and nonqualified stock options terminate 10 years after date of grant.
The 1985 and 1994 Incentive Stock Plans also provide for the granting of stock awards. Restricted stock awards were granted for 82,500 and 39,000 shares in fiscal 2002 and 2000, respectively. No restricted stock awards were granted in fiscal 2001. Shares are awarded at no cost to the employee and are placed in escrow until certain employment restrictions lapse. The value of shares awarded is amortized over the five-to-six year restriction period. The value of the Thermacore stock awards, which were converted to Modine shares as part of the pooling transaction, is also in escrow until certain employment restrictions lapse. These awards are being amortized over a four year to four and one-half year period. The amounts charged to operations in fiscal 2002, 2001, and 2000 were $856,000, $674,000, and $1,252,000, respectively.
Following is a summary of incentive and nonqualified option activity under the plans.
----------------------------------------------------------------------
Shares Weighted-average
in thousands) exercise price per share
----------------------------------------------------------------------
Outstanding March 31, 1999 2,798 $21.28
----------------------------------------------------------------------
Granted 423 22.86
Exercised (91) 10.21
Forfeitures (12) 9.53
----------------------------------------------------------------------
Outstanding March 31, 2000 3,118 21.86
----------------------------------------------------------------------
Granted 434 22.64
Exercised (723) 9.60
Forfeitures (74) 23.58
----------------------------------------------------------------------
Outstanding March 31, 2001 2,755 25.15
----------------------------------------------------------------------
Granted 571 23.44
Exercised (289) 16.73
Forfeitures (27) 29.25
----------------------------------------------------------------------
Outstanding March 31, 2002 3,010 $25.60
----------------------------------------------------------------------
|
Options outstanding and exercisable as of March 31, 2002:
-----------------------------------------------------------------------------
Weighted- Weighted-average
average exercise price per Shares
Range of exercise prices remaining life share (in thousands)
-----------------------------------------------------------------------------
$ 4.93 - 14.99 7.07 $10.18 225
15.00 - 24.99 7.36 22.26 1,043
25.00 - 34.99 5.55 29.58 1,742
-----------------------------------------------------------------------------
Total outstanding and
exercisable $25.60 3,010
-----------------------------------------------------------------------------
|
A further 703,000 shares were available for the granting of additional options or awards at March 31, 2002.
Modine continues to account for its stock options using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Since the exercise price of the options that have been awarded was equal to the market price on the date of the grant, no compensation expense was required to be recognized. If the fair-value based method of accounting for the 2002, 2001, and 2000 stock option grants had been applied in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," Modine's net earnings and net earnings per share would have been reduced as summarized below:
(In thousands, except per-share amounts)
------------------------------------------------------------------------- Years ended March 31 2002 2001 2000 ------------------------------------------------------------------------- Net earnings as reported $23,345 $51,830 $66,332 Net earnings pro forma 19,101 48,489 62,583 Net earnings per share (basic) as reported $0.70 $1.61 $2.05 Net earnings per share (basic) pro forma 0.57 1.51 1.93 ------------------------------------------------------------------------- |
The following assumptions were used to compute the fair value of the option grants in fiscal 2002, 2001, and 2000 using the Black-Scholes option-pricing model: a risk-free interest rate of 4.2-4.7 percent, 4.9-6.7 percent, and 5.8-6.7 percent, respectively, stock volatility of 33.1-38.3 percent, 28.5-33.3 percent, and 26.9-28.8 percent, respectively, a dividend yield of 2.8-3.1 percent, 2.5-2.8 percent, and 2.4-2.5 percent, respectively, and an expected option life of six years, five and one-half years, and five years, respectively.
Modine's product line consists of heat-transfer components and systems. Modine serves the vehicular, industrial, commercial, and building HVAC original equipment and replacement markets and
the electronics cooling markets. Modine operates in three business segments, which are organized on the basis of market categories or geographical responsibility. They are as follows: 1) Original Equipment, which provides heat-transfer products, generally from business units in North America, to original-equipment manufacturers of on-highway and off-highway vehicles, as well as to industrial and commercial equipment manufacturers, located primarily in North America; 2) Distributed Products, which provides heat-transfer products primarily for the North American and European vehicular replacement markets and the North American building HVAC market, from business units located in North America and Europe and electronics cooling products for the computer and telecommunications equipment markets in North America, Europe, and Asia from business units in those three areas; and 3) European Operations, which provides heat-transfer products, primarily to European original equipment manufacturers of on-highway and off- highway vehicles and industrial equipment manufacturers. Modine has assigned specific business units to a segment based principally on these defined markets and their geographical location. Each of Modine's segments is individually managed and has separate financial results reviewed by its chief operating decision makers. These results are used by management in evaluating the performance of each business segment, and in making decisions on the allocation of resources among the company's various businesses. Modine evaluates segment performance based on operating income and the return on capital employed. The significant accounting policies of the segments are the same as those of Modine as a whole.
Totals presented are inclusive of all adjustments needed to reconcile to the data provided in Modine's consolidated financial statements and related notes.
(In thousands)
----------------------------------------------------------------------------
Years ended March 31 2002 2001 2000
----------------------------------------------------------------------------
Sales:
Original Equipment $ 456,994 $ 467,289 $ 526,131
Distributed Products 381,309 424,981 437,152
European Operations 302,407 304,995 299,599
----------------------------------
Segment sales 1,140,710 1,197,265 1,262,882
Eliminations (65,950) (75,866) (87,926)
----------------------------------------------------------------------------
Total net sales $1,074,760 $1,121,399 $1,174,956
----------------------------------------------------------------------------
Operating income:
Original Equipment $ 66,237 $ 82,190 $ 102,290
Distributed Products 9,947 23,748 37,062
European Operations 23,331 30,959 23,764
-----------------------------------
Segment operating income 99,515 136,897 163,116
Corporate & administrative expenses (64,462) (68,292) (62,303)
Eliminations 143 131 81
Other items not allocated to segments 4,914 16,327 (4,180)
----------------------------------------------------------------------------
Earnings before income taxes $ 40,110 $ 85,063 $ 96,714
---------------------------------------------------------------------------
|
Intersegment sales are accounted for based on an established markup over production costs.
Operating income for the reportable segments excludes all
general corporate and administrative expenses except for
certain expenses allocated for use of the company aircraft,
technical center, and general building use. Functions
included in corporate and administrative expenses include:
certain research and development costs, the engine products
development group, information technology, quality
assurance, legal, finance, human resources, environmental,
amortization of goodwill from acquisitions that benefit the
entire company, and other general corporate expenses.
Other items not allocated to segments include patent settlements and running royalties, interest income and expenses, equity in the earnings of affiliates, gain on the sale of one of the company's aircraft and dividend income.
(In thousands)
------------------------------------------------------------------------------ Years ended March 31 2002 2001 2000 ------------------------------------------------------------------------------ Assets: Original Equipment $211,209 $201,906 $218,247 Distributed Products 222,267 260,439 267,876 European Operations 210,117 214,186 199,547 Corporate & administrative 276,749 274,575 264,658 Eliminations (17,298) (13,935) (7,920) ------------------------------------------------------------------------------ Total assets $903,044 $937,171 $942,408 ------------------------------------------------------------------------------ Capital expenditures: Original Equipment $ 40,616 $ 15,139 $ 20,253 Distributed Products 6,662 11,316 13,570 European Operations 21,923 28,159 33,206 Corporate & administrative (33,438) 18,276 26,272 Eliminations -- -- (89) ------------------------------------------------------------------------------ Total capital expenditures $ 35,763 $ 72,890 $ 93,212 ------------------------------------------------------------------------------ Depreciation and amortization expense: Original Equipment $ 21,946 $ 15,167 $ 17,070 Distributed Products 14,435 11,990 11,294 European Operations 12,745 11,569 11,213 Corporate & administrative 14,517 13,323 10,955 Eliminations (135) (141) (152) ------------------------------------------------------------------------------ Total depreciation and amortization expense $ 63,508 $ 51,908 $ 50,380 ------------------------------------------------------------------------------ |
Corporate assets include: cash and cash equivalents, accounts and notes receivable, investments in affiliates, intangibles, and significant long-lived assets. Eliminations consist primarily of intracompany loans and receivables.
Eliminations of capital expenditures are primarily due to sales between segments in excess of book value.
United States $ 688,676 $ 730,229 $ 786,658 Germany 222,322 221,642 212,474 Other countries 163,762 169,528 175,824 ---------------------------------------------------------------------------- Net sales $1,074,760 $1,121,399 $1,174,956 ---------------------------------------------------------------------------- Long-lived assets: United States $ 351,641 $ 383,909 $ 375,306 Germany 86,578 85,092 71,372 Other countries 59,523 60,913 66,622 Eliminations (668) (774) (898) ---------------------------------------------------------------------------- Total long-lived assets $ 497,074 $ 529,140 $ 512,402 ---------------------------------------------------------------------------- |
Net sales are attributed to countries based on the location of the selling unit.
Long-lived assets are primarily physical property, plant, and equipment, but also include investments, intangibles, and other long-term assets. Eliminations are primarily intracompany loans and sales of property, plant, and equipment.
from the Japanese patent office Board of Appeals in March of 2002, Modine will no longer receive royalty payments in Japan related to its PF technology. Since July of 2000, Modine has been receiving royalty payments from certain Japanese competitors related to its PF patents, which expire in 2006. Over the last twelve months, royalties from Japanese companies have accounted for approximately $2.9 million of pretax income. The company is reviewing its options regarding an appeal of the March of 2002 ruling. Over the last 10 years, Modine has been defending its PF technology in Japan. Modine had estimated a one-time royalty payment of approximately $29.9 million to cover past infringements if the validity of its PF patent in Japan was confirmed. Since this ruling does not effect Modine's royalty income outside of Japan, Modine will continue to collect royalties for PF products produced in Europe and the United States where, to date, its patents have been upheld.
In the normal course of business, Modine and its subsidiaries are named as defendants in various lawsuits and enforcement proceedings by private parties, the Occupational Safety and Health Administration, the Environmental Protection Agency, other governmental agencies, and others in which claims, such as personal injury, property damage, or antitrust and trade regulation issues, are asserted against Modine. Modine is also subject to other liabilities that arise in the ordinary course of its business. Many of the pending damage claims are covered by insurance and when appropriate Modine accrues for uninsured liabilities. While the outcomes of these matters, including those discussed above, are uncertain, Modine does not expect that any unrecorded liabilities that may result from these matters is reasonably likely to have a material effect on Modine's liquidity, financial condition or results of operations.
Quarterly financial data are summarized below:
(In thousands, except per-share amounts)
--------------------------------------------------------------------------- Fiscal 2002 quarters ended June Sept. Dec. March --------------------------------------------------------------------------- Net sales $280,631 $269,114 $270,433 $254,582 Gross profit 73,963 64,963 66,841 58,702 Net earnings (a) (b) (c) 10,218 6,829 1,252 5,046 Net earnings per share of common stock: Basic $0.31 $0.21 $0.04 $0.15 Assuming dilution 0.31 0.20 0.04 0.15 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Fiscal 2001 quarters ended June Sept. Dec. March ---------------------------------------------------------------------------- Net sales $300,441 $284,056 $265,393 $271,509 Gross profit 87,887 75,901 70,184 64,207 Net earnings (d) 19,213 20,363 7,059 5,195 Net earnings per share of common stock: Basic $0.60 $0.63 $0.22 $0.16 Assuming dilution 0.59 0.62 0.22 0.16 ---------------------------------------------------------------------------- |
(a) The 1st quarter of fiscal 2002 includes acquisition
expenses of $3,105,000 ($2,865,000 after-tax) related to the
Thermacore International, Inc. pooling transaction.
(b) The 3rd quarter of fiscal 2002 includes $12,333,000
($8,275,000 after-tax) in restructuring and other closure
expenses. Also recorded in the 3rd quarter was a reduction
to the workers compensation insurance reserves, due to a
change in accounting estimate, increasing earnings by
$6,504,000 ($3,974,000 after-tax).
(c) The 4th quarter of fiscal 2002 includes the gain on the
sale of one of the company's aircraft totaling $3,500,000
($1,879,000 after-tax). Also recorded in the 4th quarter
were additional restructuring and other closure expenses
totaling $637,000 ($375,000 after-tax).
(d) The 1st and 2nd quarters of fiscal 2001 include PF
patent settlements received increasing earnings by
$1,875,000 ($1,407,000 after-tax) and $15,084,000
($11,312,000 after-tax), respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
MODINE MANUFACTURING COMPANY
RACINE, WISCONSIN
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, cash flows, and shareholders' equity present fairly, in all material respects, the financial position of Modine Manufacturing Company and its subsidiaries at March 31, 2002 and March 31, 2001, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the company's management; our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements give retroactive effect to the merger of Thermacore International, Inc. on April 27, 2001 in a transaction accounted for as a pooling of interests, as described in Note 10 to the consolidated financial statements. We did not audit the financial statements of Thermacore International, Inc., which statements reflect total assets of $37,058,922 as of March 31, 2001 and total revenues of $56,005,487 and $35,687,000 for the years ended March 31, 2001 and 2000, respectively. Those statements were audited by other auditors which report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for Thermacore International, Inc., is based solely on the report of other auditors. We conducted our audits of these statements in accordance with auditing standards general accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
s/PricewaterhouseCoopers LLP April 30, 2002 |
EXHIBIT 21
Subsidiaries of the Registrant
The table below indicates each of the Registrant's subsidiaries, each subsidiary's jurisdiction of incorporation, and the percentage of its voting securities owned by the Registrant or its subsidiaries.
State or
country of Percentage
incorporation of voting
Subsidiaries or organizaiton securities Owned by
-------------------------------------------------------------------------------------
Industrial Airsystems, Inc. Minnesota 100% Registrant
Manufacturera Mexicana de
Partes de Automoviles,
S.A. ("Mexpar") Mexico 100% Registrant<F1>
Modine, Inc. Delaware 100% Registrant
Modine Acquisition Corp. Delaware 100% Registrant
Modine Aftermarket
Holdings, Inc. North Carolina 100% Registrant
Modine Asia K.K. Japan 100% Registrant
Modine Austria Ges.m.b.H Austria 100% Registrant
Modine Holding Ltda.<F2> Brazil 99.9% Modine, Inc.<F3>
Modine of Canada, Ltd. Canada 100% Registrant
Modine Climate Systems, Inc. Kentucky 100% Registrant
Modine Export Sales Corp. Barbados 100% Registrant
Modine Foundation, Inc. Wisconsin 100% Registrant
Modine Manufacturing
Company Foundation, Inc. Wisconsin 100% Registrant
Modine of Puerto Rico, Inc. Delaware 100% Registrant
Radman, Inc. Michigan 100% Registrant
Modine Holding GmbH Germany 100% Modine, Inc.
Modine Transferencia de
Calor, S.A. de C.V. Mexico 99.6% Modine, Inc.<F3>
NRF B.V. The Netherlands 100% Modine, Inc.
Modine Climate Systems GmbH Germany 100% Modine Climate
Systems Inc.
Modine Automobiltechnik GmbH Germany 100% Modine Holding GmbH
Modine Bernhausen GmbH Germany 100% Modine Holding GmbH
Modine Europe GmbH Germany 100% Modine Holding GmbH
Modine Grundstucksverwaltungs Germany 100% Modine Holding GmbH
GmbH
Modine Hungaria Kft. Hungary 100% Modine Holding GmbH
Modine Kirchentellinsfurt GmbH Germany 100% Modine Holding GmbH
Modine Montage GmbH Germany 100% Modine Holding GmbH
Modine Neuenkirchen GmbH Germany 100% Modine Holding GmbH
Modine Pontevico S.r.l. Italy 100% Modine Holding GmbH
_______________________________
<F1> Less than one percent of Mexpar is held by Modine, Inc.
<F2> Modine Holding Ltda. owns a 50% share of Radiadores Visconde
S/A, formerly known as Modine do Brasil Ltda.
<F3> Balance of voting securities held by the Registrant.
|
State or
country of Percentage
incorporation of voting
Subsidiaries or organizaiton securities Owned by
-------------------------------------------------------------------------------------
Modine Tubingen GmbH Germany 100% Modine Holding GmbH
Modine Uden B.V. The Netherlands 100% Modine Holding GmbH
NRF B.V.B.A. Belgium 100% NRF B.V.
NRF Deutschland GmbH Germany 100% NRF B.V.
NRF Espania S.A. Spain 100% NRF B.V.
NRF France SARL France 100% NRF B.V.
NRF Handelgesellschaft GmbH Austria 100% NRF B.V.
NRF Italia SRL Italy 100% NRF B.V.
NRF Poland Spolka Z.O.O. Poland 100% NRF B.V.
NRF Switzerland AG Switzerland 100% NRF B.V.
NRF UK Ltd. United Kingdom 100% NRF B.V.
Thermacore International, Inc. Pennsylvania 100% Registrant
Thermacore, Inc. Pennsylvania 100% Thermacore
International, Inc.
Thermal Corp. Delaware 100% Thermacore, Inc.
MR 1, Inc. Pennsylvania 100% Thermacore, Inc.
Thermal International Sales
Corp. Barbados 100% Thermacore, Inc.
Thermacore Korea, Ltd. Korea 100% Thermal Corp.
Thermacore Taiwan, Inc. Taiwan 50% Thermal Corp.
50% Thermacore, Inc.
Thermacore Europe Limited United Kingdom 100% Thermal Corp.
|
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Numbers 1-1373, 2- 63714, 2-86984, 2-87299, 2-86985, 33-1764, 33-58544, 2-55398, 33- 66436, 33-66438, 33-66442, 33-66440, 33-54719, 33-54721, 33- 54723, 33-54725, 333-29789, 333-52639, 333-78991, 333-78989, 333- 48294, 333-48296, 333-66111, 333-48290, 333-66115, 333-48298, 333- 66109, 333-48292, 333-71523, 333-40374, 333-63600, and 333-56648) of Modine Manufacturing Company of our report dated April 30, 2002 relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated April 30, 2002 relating to the financial statement schedule, which appears in this Form 10-K.
s/PricewaterhouseCoopers LLP Chicago, Illinois June 19, 2002 |
EXHIBIT 99(a)
notice
of meeting
and proxy
statement
annual meeting
2002
of shareholders
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Wednesday, July 17, 2002
Time: 9:30 a.m.
Place: 1500 DeKoven Ave.
Racine, WI 53403-2552
Record Date: May 28, 2002
|
Matters to be voted on:
1. To elect three directors;
2. To approve the adoption of the 2002 Incentive Compensation
Plan;
3. To consider one shareholder proposal; and
4. To consider any other matters properly brought before the
shareholders at the meeting.
By order of the Board of Directors,
D. R. ZAKOS
D. R. ZAKOS, Secretary
June 7, 2002
Contents
Page
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General Information About Voting 2
Proposal No. 1: Election of Directors 3
Proposal No. 2: Approval of the adoption of the
2002 Incentive ompensation Plan 20
Proposal No. 3: Shareholder Proposal 25
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PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote your shares of Common Stock by calling a toll-free telephone number or by completing the enclosed proxy card and returning it to us in the enclosed envelope. This proxy statement has information about the annual meeting and was prepared by the Company's management for the Board of Directors. This proxy statement was first mailed to shareholders on June 7, 2002.
PROXY STATEMENT
GENERAL INFORMATION ABOUT VOTING
You can vote your shares of common stock if our records show that you owned the shares on May 28, 2002. A total of 33,894,202 shares of common stock can vote at the annual meeting. You get one vote for each share of common stock. The holders of common stock do not have cumulative voting rights. The enclosed proxy card shows the number of shares you can vote.
Shareholders of record can give a proxy to be voted at the meeting by calling a toll-free telephone number or, if you prefer, you may mail the enclosed proxy card. Shareholders who hold their shares in "street name" will continue to vote their shares in the manner required by their brokers.
The telephone voting procedure has been set up for your convenience and has been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly.
The enclosed proxy card contains instructions for telephone and mail voting. Whichever method you use, the proxies identified on the back of the proxy card will vote your shares in accordance with your instructions. If you submit a proxy card without giving specific voting instructions, the proxies will vote those shares as recommended by the Board of Directors.
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors. The Board's recommendation is set forth together with the description of each item in this proxy statement. In summary, the Board recommends a vote:
For election of the nominated slate of directors (see Item 1);
For approval of the 2002 Incentive Compensation Plan (see Item 2);
and
Against approval of the shareholder proposal (see Item 3).
The matters described in this proxy statement are the only matters we know will be voted on at the annual meeting. If other matters are properly presented at the meeting, the proxyholders will vote your shares as they see fit.
You can revoke your proxy card by:
- Submitting a new proxy card;
- Giving written notice before the meeting to the Secretary of the
Company, stating that you are revoking your proxy card; or
- Attending the meeting and voting your shares in person.
If you decide to vote your shares in person, you should first revoke your prior proxy card in the same way you initially submitted it - that is, by telephone or mail.
Although we encourage you to complete and return the proxy card or vote by phone to ensure that your vote is counted, you can attend the annual meeting and vote your shares in person.
If your shares are held in the name of your broker, or other nominee, that party should give you instructions for voting your shares.
A majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum at the annual meeting. Abstentions and broker "non-votes" are counted as present for purposes of determining a quorum. A broker "non-vote" occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.
Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election, as long as a quorum is present. This means that the individuals who receive the largest number of votes are elected as directors. Therefore, shares not voted, whether by withheld authority, broker non-vote or otherwise, have no effect in the election of directors. Votes attempted to be cast against a candidate are not given legal effect and are not counted as votes cast in an election of directors.
If a quorum is present, the affirmative vote of the holders of a majority of the shares represented at the meeting, in person or by proxy, and entitled to vote thereon will be required for approval of the 2002 Incentive Compensation Plan and the Shareholder Proposal. Shares which are the subject of broker non-votes will be considered as not entitled to vote on these matters, and therefore broker non-votes will not affect the outcome. Abstentions will have the effect of votes against these matters.
Wells Fargo Bank Minnesota, NA, Shareowner Services, an independent tabulator, will count the vote and act as the Board appointed Inspectors of Election.
We do. In addition to sending you these materials, some of our employees may contact you by telephone, mail, or in person. None of these employees will receive any extra compensation for doing this. Further solicitation will be made in the same manner under the direction of Georgeson Shareholder Communications, Inc. at an anticipated cost of $10,000 plus expenses.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members.
This year the terms of Frank P. Incropera, Vincent L. Martin and Marsha C. Williams expire at the 2002 Annual Meeting of Shareholders. Messrs. Incropera and Martin and Ms. Williams have been nominated for a new three-year term expiring at the Annual Meeting in 2005.
While it is not anticipated that any of the nominees will be unable to take office, if such is the case, proxies will be voted in favor of such other person or persons as the Board of Directors may propose to fill the three directorships. In accordance with the Restated By-Laws, a director shall hold office until the Annual Meeting for the year in which his or her term expires and until his or her successor shall be elected and qualify, subject, however, to prior death, resignation, retirement, disqualification, or removal from office. Vacancies may be filled by the remaining directors.
The nominees for the Board of Directors, the directors whose terms will continue, their ages, other directorships, and their tenure and expiration dates of their terms are as follows:
FRANK P. INCROPERA Director since 1999
Dr. Incropera, 62, is the McCloskey Dean of the University of Notre Dame's College of Engineering, South Bend, Indiana, and has served in that position since 1998. Prior to that, he served as the Head of the School of Mechanical Engineering at Purdue University, West Lafayette, Indiana. Current term to expire in 2002.
VINCENT L. MARTIN Director since 1992
Mr. Martin, 62, is Chairman of the Board and a director of Jason Incorporated, a diversified manufacturing company based in Milwaukee, Wisconsin. Prior to June 30, 1999, he was also Chief
Executive Officer of Jason Incorporated. He is also a director of Crane Manufacturing & Service. Current term to expire in 2002.
MARSHA C. WILLIAMS Director since 1999
Ms. Williams, 51, is Chief Administrative Officer of Crate & Barrel, a privately held retailer of home furnishings and accessories headquartered in Northbrook, Illinois. Previously, Ms. Williams had been Vice President and Treasurer of Amoco Corporation and Carson Pirie Scott & Company, and Vice President of The First National Bank of Chicago. She is also a director of Chicago Bridge & Iron, Davis Funds and Selected Funds. Current term to expire in 2002.
DONALD R. JOHNSON Director since 1997
Mr. Johnson, 60, is Chairman and Chief Executive Officer of the Company effective April 1, 2002. He is also a director of Grede Foundries, Inc. and the M&I Marshall & Ilsley Bank. Current term to expire in 2004.
GARY L. NEALE Director since 1977
Mr. Neale, 62, is Chairman, President, Chief Executive Officer, and a director of NiSource, Inc., Hammond, Indiana, a holding company for gas and electric utilities and other energy-related subsidiaries. He is also a director of Chicago Bridge & Iron. Current term to expire in 2004.
RICHARD J. DOYLE Director since 1987
Mr. Doyle, 69, is retired. Prior to April 30, 1998, he was Chief Executive Officer and a director of three private electrical contracting corporations. Prior to January 1, 1989, Mr. Doyle was a Vice President of Borg-Warner Corporation, Chicago, Illinois, a diversified manufacturing and services company, and President and Chief Executive Officer of Borg-Warner Automotive, Inc., Troy, Michigan, a subsidiary of Borg-Warner Corporation. Current term to expire in 2004.
FRANK W. JONES Director since 1982
Mr. Jones, 62, is an independent management consultant in Tucson, Arizona. He is also a director of Star Cutter Co., Gardner Publications, Inc., and General Tool Co. Current term to expire in 2003.
DENNIS J. KUESTER Director since 1993
Mr. Kuester, 60, is President and Chief Executive Officer of Marshall & Ilsley Corporation, Chairman and Chief Executive Officer of M&I Marshall & Ilsley Bank, and Chairman of Metavante Corporation, a Milwaukee, Wisconsin bank holding company, bank, and banking services company, respectively. He is also a director of Metavante Corporation, M&I Marshall & Ilsley Bank, Marshall & Ilsley Corporation, Super Steel Products Corp., Krueger International, and Wausau/Mosinee. Current term to expire in 2003.
MICHAEL T. YONKER Director since 1993
Mr. Yonker, 59, is retired. Prior to June 15, 1998, he was President and Chief Executive Officer of Portec, Inc., Lake Forest, Illinois, a manufacturer of material handling equipment. He is also a director of Woodward Governor Company. Current term to expire in 2003.
The Board of Directors recommends a vote IN FAVOR OF all of the director-nominees: Mr. Incropera, Mr. Martin and Ms. Williams.
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of common stock beneficially owned by each person or entity who we know beneficially owns more than 5% of the common stock.
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership of Class
-------- ---------------------------- -------------------------- --------
Common Administrative Committee of 4,202,906** Power to vote 12.62%
Modine Employee Stock Plans' stock
Ownership Plan, 1500 DeKoven not voted by
Avenue, Racine, Wisconsin employees
53403-2552 Members: D. B. owning it
Spiewak, R. L. Hetrick and
D. R. Zakos*
Common Gabelli Funds, Inc. and 6,257,031*** Sole or 18.70%
affiliates shared voting
One Corporate Center and/or power
Rye, New York 10580-1434 to dispose
of stock
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* M&I Marshall and Ilsley Trust Company is trustee and holder of record of the Modine Contributory Employee Stock Ownership and Investment Plans, Employees' Retirement Trusts and 401(k) Retirement Plans stock, and is the escrow agent for participants' stock under the 1997 through 2002 Stock Award Plans. The Marshall
& Ilsley Trust Company, as custodian, may be viewed as having voting or dispositive authority in certain situations pursuant to Department of Labor regulations or interpretations or federal case law. Pursuant to SEC Rule 13d-4, inclusion of such shares in this statement shall not be construed as an admission that the Reporting Person or its subsidiaries are, for purposes of Sections 13(d) or 13(g) of the Act, the beneficial owners of such securities. D. J. Kuester is President and CEO of Marshall & Ilsley Corporation and Chairman and CEO of M&I Marshall & Ilsley Bank. M&I Marshall & Ilsley Corporation and its subsidiaries specifically disclaim beneficial ownership of stock held by these plans and trusts.
** As of March 31, 2002.
*** Based on a Schedule 13D dated November 15, 2001, by Gabelli Funds, Inc. and affiliates.
We know of no other person or group that is a beneficial owner of five percent (5%) or more of the Company's common stock.
The following table shows the number of shares of common stock beneficially owned as of March 31, 2002 by:
- each director;
- each executive officer named in the Summary Compensation Table
on page 11; and
- the directors and executive officers as a group.
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
-------- ---------------------- -------------------- --------
Common R. J. Doyle* 71,000(a) **
Common F. P. Incropera* 17,000(a) **
Common F. W. Jones* 85,819(a) **
Common D. J. Kuester* 54,000(b) **
Common V. L. Martin* 54,200(c) **
Common G. L. Neale* 84,322(a) **
Common M. C. Williams* 22,000(a) **
Common M. T. Yonker* 55,000(a) **
Common D. R. Johnson 389,052(d) 1.16%
Common E. T. Thomas 68,633(d) **
Common D. B. Rayburn 223,401(d) **
Common C. R. Katzfey 107,342(d) **
Common J. R. Rulseh 99,734(d) **
Common All executive officers
and directors as a
group (22 persons) 1,970,691(e) 5.89%
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* Non-employee directors have the right to acquire additional shares of common stock (not listed in the above table) through the exercise of options automatically granted upon re-election pursuant to the 2000 Stock Option Plan for Non-Employee Directors discussed on pages 10-11.
** Denotes less than one percent of shares outstanding.
(a) The 71,000 shares listed for Mr. Doyle include options to acquire 64,000 shares; the 17,000 shares listed for Dr. Incropera include options to acquire 17,000 shares; the 85,819 shares listed for Mr. Jones include options to acquire 48,000 shares; the 84,322 shares listed for Mr. Neale include options to acquire 64,000 shares; the 22,000 shares listed for Ms. Williams include options to acquire 22,000 shares and the 55,000 shares listed for Mr. Yonker include options to acquire 53,000 shares.
(b) The 54,000 shares listed for Mr. Kuester exclude shares held of record by M&I Marshall & Ilsley Bank. See footnote to the Five Percent Stock Ownership table. This number includes options to acquire 53,000 shares.
(c) The 54,200 shares listed for Mr. Martin include options to acquire 52,000 shares and include 200 shares held in trusts for his children with Mr. Martin as trustee.
(d) The 389,052 shares listed for Mr. Johnson include 2,288 shares held by Mr. Johnson's wife, options to acquire 295,000 shares, 17,000 restricted shares awarded to Mr. Johnson and 7,611.1033 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); the 68,633 shares listed for Mr. Thomas include options to acquire 60,000 shares, 6,500 restricted shares awarded to Mr. Thomas, and 1,791.3284 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); the 223,401 shares listed for Mr. Rayburn include options to acquire 192,000 shares, 10,800 restricted shares awarded to Mr. Rayburn and 6,759.8835 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); the 107,342 shares listed for Mr. Katzfey include options to acquire 83,605 shares, 5,900 restricted shares awarded to Mr. Katzfey and 1,550.9027 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component) and the 99,734 shares listed for Mr. Rulseh include options to acquire 83,000 shares, 5,000 restricted shares awarded to Mr. Rulseh and 753.7560 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component);
The awards granted pursuant to the 1997 through 1998 Stock Award Plans are subject to restrictions that lapse annually in fifths over a period commencing at the end of the second year from the date of grant. The awards granted pursuant to the 2000 through 2002 Stock Award Plans are subject to restrictions that lapse annually in fifths over a period commencing at the end of the first year from the date of grant.
(e) This number includes 639,186 shares held by officers (other than the five named executive officers) as a group (9 persons) and includes options to acquire 427,100 shares; 31,800 shares awarded pursuant to the 1997 through 1998 Stock Award Plans are subject to restrictions that lapse annually in fifths over a period commencing at the end of the second year from the date of grant while the awards granted pursuant to the 2000 through 2002 Stock Award Plans are subject to restrictions that lapse annually in fifths over a period commencing
at the end of the first year from the date of grant; and 10,079.1202
units held in the form of Modine Common Stock Fund Units (Modine
401(k) Retirement Plan and Deferred Compensation Plan) (each Unit
consisting of Modine common stock and a cash component).
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held eight regular meetings during the fiscal year. An additional eight meetings were held by standing Committees of the Board. The following chart describes the function and membership of each committee and the number of times it met in 2001-2002:
Audit Committee - 3 meetings
- recommends engagement of auditors;
- meets with independent auditors to:
- discuss plan and scope of audit;
- review results of audit;
- evaluates internal audit procedures and accounting controls;
- approves budget for non-audit services;
- reviews and approves audit and non-audit fees;
- reviews proposed significant changes in accounting or financial
reporting practices; and
- reviews required periodic financial statements and regulatory
reports and procedures.
R. J. Doyle, Chair
F. P. Incropera
F. W. Jones
V. L. Martin
G. L. Neale
M. C. Williams
Officer Nomination and Compensation Committee - 3 meetings
- reviews candidates for positions as Company officers;
- makes recommendations to Board on candidates;
- makes recommendations to Board on compensation for officers;
- administers the 1985 Incentive Stock Plan; and
- administers the 1994 Incentive Compensation Plan.
G. L. Neale, Chair
R. J. Doyle
D. J. Kuester
V. L. Martin
M. T. Yonker
Pension Committee - 2 meetings
- provides oversight for pension trust investments.
F. W. Jones, Chair
F. P. Incropera
D. J. Kuester
M. C. Williams
M. T. Yonker
The Board of Directors does not have a committee that nominates directors since nomination and review of director candidates is a function of the full Board. In addition, shareholders who wish to nominate candidates for election to the Board may do so.
All directors attended seventy-five percent or more of all Board meetings and meetings of Committees of which they were members during the fiscal year.
Generally, if a shareholder intends to propose business or make a nomination for the election of directors at an annual meeting, or make a nomination for the election of directors at a special meeting of shareholders, the Company must receive written notice of such intention. The deadline for shareholder nominations for directors and proposals at the 2002 Annual Meeting of Shareholders was February 8, 2002.
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.
The Audit Committee of the Board of Directors developed a written charter for the Committee, which was approved by the full Board on June 30, 1999. As set forth in the charter, the Audit Committee's primary responsibilities fall into four broad categories:
- the Committee oversees management's implementation of effective systems of internal controls, including review of policies relating to legal and regulatory compliance, ethics and conflicts of interests; and review of the activities and recommendations of the Company's internal auditing program;
- the Committee is charged with monitoring the preparation of quarterly and annual financial reports by the Company's management, including discussions with management and the Company's outside auditors about draft annual financial statements and key accounting and report matters;
- the Committee is responsible for matters concerning the relationship between the Company and its outside auditors, including recommending their appointment or removal; reviewing the scope of their audit services and related fees, as well as any other services being provided to the Company; and determining whether the outside auditors are independent (based in part on the annual letter provided to the Company pursuant to Independence Standards Board Standard No. 1); and
- the Committee annually reviews management's program to monitor compliance with the Company's Code of Conduct.
The Committee has implemented procedures to ensure that during the course of each fiscal year it devotes the attention that it deems necessary or appropriate to each of the matters assigned to it under the Committee's charter. To carry out its responsibilities, the Committee met three times during fiscal 2001-2002.
In overseeing the preparation of the Company's financial statements, the Committee met with both management and the Company's outside auditors to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Committee that all financial statements were prepared in accordance with generally accepted accounting principles. The Committee's review included discussion with the outside auditors of matters required to be discussed pursuant to Statement on Auditing Standards No. 61 (Communication With Audit Committees).
With respect to the Company's outside auditors, the Committee, among other things, discussed with PricewaterhouseCoopers LLP matters relating to its independence, including the disclosures made to the Committee as required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
Finally, the Committee continued to monitor the scope and adequacy of the Company's internal auditing program, including proposals for adequate staffing and to strengthen internal procedures and controls where appropriate.
On the basis of these reviews and discussions, the Committee recommended to the Board of Directors that the Board approve the inclusion of the Company's audited financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2002, for filing with the Securities and Exchange Commission.
R. J. Doyle, Chair V. L. Martin F. P. Incropera G. L. Neale F. W. Jones M. C. Williams |
Audit-related services (a) $281,051 Income tax compliance and related tax services $267,072 Other $ 12,905 |
(a) Audit related fees include fees for audits of the Company's employee benefit plans and statutory audits.
The Audit Committee has determined that the provisions of services rendered above for (a) financial information systems design and implementation fees, and (b) all other fees, is compatible with maintaining PricewaterhouseCoopers LLP's independence.
Non-employee directors receive:
- a retainer fee of $6,000 per quarter;
- $1,000 for each Board, committee and special meeting attended;
- a retainer fee of $3,000 per year for acting as Chair of a
Committee;
- reimbursement for travel, lodging, and related expenses incurred
in attending Board and committee meetings; and
- travel-accident and director and officer liability insurance.
Directors who are officers of the Company do not receive any fees in addition to their remuneration as officers.
Effective as of July 1, 2000, Directors of the Company who are not employees are eligible to participate in the 2000 Stock Option Plan for Non-Employee Directors (the "Directors' Plan") which is authorized to grant non-qualified stock options through June 30, 2010, on up to 500,000 shares of the Company's common stock. These options are granted at one hundred percent of the fair market value on the date of the grant. They will expire no later than ten years after the date they are granted and will terminate no later than three years after termination of director status for any reason other than death. Within 30 days after election or re-election to the Board, each director so elected or re-elected is automatically granted an option for that number of shares equal to the multiple of 6,000 and the number of years in the term to which such director has been so elected or re-elected. In addition, the 2000 Plan provides for a one-time grant of 2,000 shares to those directors elected or re-elected in 1999 and 1,000 shares to those directors elected or re-elected in 1998. The Directors' Plan may be administered by the Board or by a committee of two or more directors of the Company if deemed necessary or advisable in order to comply with the exemptive rules
promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended. Neither the Board nor any such committee shall have authority to administer the Directors' Plan with respect to the selection of participants under the plan or the timing, pricing, or amounts of any grants.
Prior to July 1, 2000, Directors of the Company who were not employees were eligible to participate in the 1994 Stock Option Plan for Non-Employee Directors (the "1994 Directors' Plan") which was authorized to grant non- qualified stock options through July 20, 2004, on up to 500,000 shares of the Company's common stock. These options were granted at one hundred percent of the fair market value on the date of the grant and will expire no later than ten years after the date they were granted and will terminate no later than three years after termination of director status for any reason other than death. Within 30 days after election or re-election to the Board, each director so elected or re-elected was automatically granted an option for that number of shares equal to the multiple of 5,000 and the number of years in the term to which such director had been so elected or re-elected. The Directors' Plan was administered by the Board or by a committee of two or more directors of the Company if deemed necessary or advisable in order to comply with the exemptive rules promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended. Neither the Board nor any such committee had authority to administer the Directors' Plan with respect to the selection of participants under the plan or the timing, pricing, or amounts of any grants. The 1994 Directors' Plan was terminated at the end of June 2000 and no additional grants have been made.
The Board of Directors adopted the Modine Manufacturing Company Director Emeritus Retirement Plan (the "Director Emeritus Retirement Plan") whereby any person (non-employee) who is or becomes a director of Modine on or after April 1, 1992, and who retires from the Board will be paid a retirement benefit equal to the annualized rate at which directors are being paid for their services to the Company as directors (including Board meeting attendance fees but excluding any applicable committee attendance fees) as in effect at the time such director ceases his service as a director. The retirement benefit will continue until the period of time the retirement benefit paid equals the period of time of the director's Board services. If a director dies before or after retirement, his or her spouse or other beneficiary will receive the applicable retirement benefit. In the event of a change in control (as defined in the Plan) of Modine, each eligible director, or his or her spouse or other beneficiary entitled to receive a retirement benefit through him or her, would be entitled to receive a lump-sum payment equal to the present value of the total of all benefit payments which would otherwise be payable under the Director Emeritus Retirement Plan. The retirement benefit is not payable if the director directly or indirectly competes with the Company or if the director is convicted of fraud or a felony and such fraud or felony is determined by disinterested members of the Board of Directors to have damaged Modine.
Effective July 1, 2000 the Director Emeritus Retirement Plan was frozen with no further benefits accruing under such Plan. All Directors Emeriti having retired prior to July 1, 2000 will continue to receive the benefits called for and currently being paid pursuant to the Directors Emeritus Retirement Plan as if this current action had not been taken. All current Directors eligible for participation accrued pension benefits pursuant to the Director Emeritus Retirement Plan until July 1, 2000.
EXECUTIVE COMPENSATION
The following table sets forth compensation awarded to, earned by, or paid to the Company's Chief Executive Officer and the four most highly compensated executive officers other than the Chief Executive Officer who were serving as executive officers as of March 31, 2002, for services rendered to the Company and its subsidiaries during fiscal 2001-2002. Also included is salary, bonus, restricted common stock awards, and stock option information for fiscal years ended March 31, 2001, and March 31, 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation (1) Long-Term Compensation
------------------------ -------------------------------------
Restricted Stock All Other
Year Name Principal Position Salary Bonus Stock (2) Options (3) Comp. (4)
--------------------------------------------------------------------------------------------------------------------------
2001/2002 D. R. Johnson President and Chief $640,000 $ 47,930 $217,500 50,000 $19,342
2000/2001 Executive Officer 580,000 53,200 0 35,000 35,902
1999/2000 500,000 220,000 187,500 35,000 33,792
2001/2002 D. B. Rayburn Executive Vice President $400,000 $ 32,919 $145,000 40,000 $12,019
2000/2001 Operations 355,000 36,521 0 25,000 21,250
1999/2000 305,000 111,833 125,000 25,000 20,137
2001/2002 E. T. Thomas Senior Vice President, $290,000 $ 23,232 $101,500 20,000 $ 9,046
& Chief Financial Officer
2000/2001 263,500 25,758 0 15,000 15,843
1999/2000 Group Vice President, 232,500 71,610 87,500 15,000 15,272
Highway Products
2001/2002 C. R. Katzfey Group Vice President $262,500 $ 19,517 $101,500 20,000 $ 7,960
2000/2001 235,000 21,630 0 15,000 14,027
1999/2000 General Manager, 193,000 48,121 87,500 12,000 12,749
Truck Division
2001/2002 J. R. Rulseh Group Vice President $220,000 $ 14,655 $101,500 20,000 $ 5,422
2000/2001 Europe - Automotive 190,000 16,228 0 9,000 6,544
1999/2000 Business Unit, 179,000 44,630 50,000 8,000 6,601
Managing Director
(1) Excludes "Other Annual Compensation" under Securities and Exchange
Commission regulations since such does not exceed the lesser of
$50,000 or 10% of each individual's combined salary and bonus.
(2) The total number of restricted shares outstanding and the aggregate
market value at March 31, 2002, were: Mr. Johnson - 17,000 shares
valued at $458,830; Mr. Rayburn - 10,800 shares valued at $291,492;
Mr. Thomas - 6,500 shares valued at $175,435; Mr. Katzfey - 5,900
shares valued at $159,241 and Mr. Rulseh - 5,000 shares valued at
$134,950 Dividends are paid on the restricted shares at the same
time and the same rate as dividends paid to shareholders of
unrestricted shares. Aggregate market value is based on a fair
market value of $26.99 at March 31, 2002.
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The stock awarded pursuant to the 1997 through 1998 Stock Award
Plans was granted to an employee at no cost and placed in escrow
until the beginning of the third, fourth, fifth, sixth, and
seventh years, respectively, at which time one-fifth of the shares
are released to the employee. The awards granted pursuant to the
2000 through 2002 Stock Award Plans are subject to restrictions
that lapse annually in fifths over a period commencing at the end
of the first year from the date of grant. In the event of
retirement, the shares may, if authorized by the Officer
Nomination and Compensation Committee of the Board, be released
at an earlier date. In the event of a change-in-control, the
share restrictions will lapse.
(3) The 1994 Incentive Compensation Plan authorized the Officer
Nomination and Compensation Committee of the Board to grant stock
options (incentive stock options and non-qualified stock options)
and other stock-based rights through July 20, 2004, on up to
3,000,000 shares of the Company's common stock. Incentive stock
options and non-qualified stock options granted are at one hundred
percent of the fair market value on the date of the grant and
will expire no later than ten years after the date of the grant.
Grants pursuant to the Plan may be made to such officers or
certain other employees as shall be determined by the Committee.
Upon the exercise of the option, the optionee may pay the
purchase price in cash, stock, optioned stock, or a combination
thereof. The optionee may also satisfy any tax withholding
obligation by using optioned stock. In the event of a sale,
merger, consolidation, or other specified transaction involving
the Company, the optionee will have the right to receive
(regardless of whether or to what extent the option would then
have been exercisable) the difference between the exercise price
and the fair market value of the stock.
(4) Includes employer matching contributions to the Company Tax Saver
(401(k)) Plan, Stock Purchase Plan, Executive Supplemental Stock
Plan, and, since January 1, 1999, the Modine 401(k) Retirement
Plan and the Modine Non-Qualified Deferred Compensation Plan.
The Company has a program (the Executive Supplemental Stock Plan
and, after January 1, 1999, the Modine Non-Qualified Deferred
Compensation Plan) to pay, out of general assets, an amount
substantially equal to the difference between the amount that
would have been allocated to a participant's account as Company
matching contributions, in the absence of legislation limiting
such allocations, and the amount actually allocated under the
plans. Payment of this amount and appreciation thereon is
deferred until termination of service or retirement. Because
the Company's contributions to the Executive Supplemental
Retirement Plan are actuarially based and are not allocated to
the individual named executive officers' accounts until
retirement, such contributions are not readily ascertainable
and are not included in this column. See page 18 herein
regarding the Pension Plan Table for additional information.
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The Officer Nomination and Compensation Committee has provided the following report on Executive Compensation:
The Company's executive compensation philosophy is designed to address the needs of the Company, its executives, and its shareholders.
The specific factors underlying the Committee's decisions with respect to compensation for each of the named executives for the last fiscal year are two-fold:
1. The first factor is the ability to accomplish the Company's goal of preserving and enhancing the shareholders' investment over the long term without bearing undue risk in the process. The Committee recognizes that there will be short-term fluctuations in the Company's business and is of the opinion that incentive compensation should be based primarily upon attainment of the Company's goals over a longer period of time. It is the Committee's intention to compensate the Company's executive officers appropriately for superior performance; however, inherent in attaining the Company's goal is the premise that shareholder assets will not be wasted by the payment of excessive compensation.
2. The second factor underlying the Committee's compensation decisions is that the foregoing Company goals can only be achieved by the retention of competent, highly skilled people. Accordingly, the design of the compensation package must include sufficient tools to assure retention of key individuals.
Numerous other criteria are considered in the compensation decisions, including high ethical standards, concern for employees, regard for the environment, and commitment to the highest levels of product quality and customer service. Each of these criteria is an intrinsic part of attaining the Company's long-term goals.
The Company's executive compensation program is composed of an annual cash component, consisting of salary and a bonus based on the financial performance of the Company or the considered discretion of the Board or Committee, and a long-term incentive component, currently consisting of stock awards and stock options.
For fiscal 2001-2002, the Company adopted the principles of Value- Based Management and used the measurement of Return on Assets Employed for determining bonus earned. Value-based management is a fundamental organizational belief and corresponding behavioral change that focuses management's strategy, decision-making and actions on increasing shareholder value. Value-based management represents a way of managing the business that considers the balance sheet and the income statement.
Under the 1994 Incentive Compensation Plan, Company executives can earn a cash bonus that increases at a linear rate with the Company's return on assets and is proportional with the executive's level of management responsibility. Under this plan the Chief Executive Officer (CEO) could earn a cash bonus equal to 120% of his base salary (the maximum payout under the plan). All other incentive awards are calculated as a percentage of the CEO's earned bonus. By doing so, the entire executive management team shares the risks and rewards of overall company performance.
For fiscal year 2001-2002, the Committee determined that several changes to the executive compensation program were appropriate, including base pay adjustments, granting of stock awards in an equal number of shares as granted in January 2000, based upon level of management responsibility, and a discretionary bonus at less than threshold value for certain named executive officers, to align compensation more closely with industry competition.
To further align the Company's executives' interests with those of the shareholders, the Compensation Committee utilizes long-term-based incentives in the form of stock options and stock awards. Individual stock option grants are determined based upon a subjective assessment of individual performance, contribution, and potential. The stock options currently granted are at market value and are exercisable within ten years of date of grant. The options may be rescinded at any time up until two years after exercise should the individual be terminated for cause, compete in any way against the Company, not fully comply with applicable laws and government regulations, fail to maintain high ethical standards, or breach the Company's policies such as Guidelines for Business Conduct, Antitrust Compliance, or confidentiality of proprietary technology and information.
The size of option grants is based upon many factors including (1) Company and individual performance, (2) previous grants of stock options and stock awards, and (3) the competitive market for long-term incentive compensation. As all grants are made at fair market value, it should be noted that executives receive no value from stock options unless all shareholders see an increase in the value of their holdings. Stock options granted in January 2002 reflect each of these factors, including the increased reliance on long-term incentives seen in the U.S. market.
For the plan prior to 1998-99, stock awards were grants of Company stock to a limited number of top executives at no cost. These awards vest only at the rate of 20% per year commencing at the end of the second year after grant, acting thereby as both a retention tool and a way of involving the executive in a longer-term stake in the Company. Stock awards not previously vested are terminated should the executive cease to be employed by the Company for any reason other than normal retirement or a change of control of the Company.
Beginning with the 1998-99 fiscal year and continuing for the 1999- 2000 and 2000-2001 fiscal years, stock awards were provided on the basis of meeting specified targets and vest 20% per year commencing at the end of the first year. Achievement is measured based on the fiscal year's performance of specified percentages of sales growth and earnings per share growth over the prior year's results. The sales growth and earnings per share growth achievements are calculated separately and carry equal weight. Target achievement for each element
earn half of the target awards so that full target awards are earned if both goals are achieved. Each element has a minimum, target, and maximum goal. No awards were earned in 2000-2001.
Beginning in fiscal year 2001-2002 the stock award plan will be revised to deliver compensation on two bases: retention and performance. To be competitive in the marketplace and retain management talent, the Company will grant one-third of the target awards annually to a limited number of top executives. At the conclusion of the year the balance of stock awards will be granted on the basis of performance against an earnings per share ("EPS") goal set at the beginning of the fiscal year. No awards on the basis of performance will be considered for the 2001-2002 fiscal year.
For future years awards will be granted as follows: A target number of shares that relates to market competitive pay will be selected for each level participant. A retention increment equal to one-third of the target will be granted in January. The performance portion earned on EPS will add to the retention portion to equate to 50% target at threshold, 100% at the targeted rate and 150% of target at maximum.
The Committee recognizes that effective management of the Company is a team effort, led by the CEO. The CEO and the named officers must possess the difficult-to-define qualities of leadership, ability to instill confidence in their actions, and the ability to inspire others to even greater effort. These qualities can only be determined through observation over a longer period of time and through the ultimate results attained. Accordingly, the CEO's and senior executive officers' team compensation decisions were not based solely on fiscal 2001-2002 annual financial results but were based on the compensation philosophy referenced above, on the Company's favorable return on shareholders' investment over the longer term and on the Committee's subjective assessment of the performance of the management team.
Since, as stated above, we believe that corporate management is a team effort, we also believe that it is appropriate for the CEO to select his team members and make a substantial contribution to the compensation decision for each of such team members. Accordingly, upon detailed consultation with the CEO, assessment of the experience, capabilities, and performance of each of the named executives toward attaining Company goals, and the policies and plans referenced above, compensation decisions were made. As a background for such decisions, the Compensation Committee reviewed several major compensation consultant databases with respect to compensation. The compensation consultant databases are large databases of industrial companies that the Committee believes appropriately reflect the broad labor market for Company executives. Within a range of acceptable total compensation for each individual, compensation is determined as described above.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over one million dollars paid to the Company's CEO and four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if certain requirements are met.
The Committee believes that it is generally in the Company's best interest to attempt to structure performance-based compensation, including stock option grants and annual bonuses, to executive officers who may be subject to Section 162(m) in a manner that satisfies the statute's requirements. However, the Committee also recognizes the need to retain flexibility to make compensation decisions that may not meet Section 162(m) standards when necessary to enable the Company to meet its overall objectives, even if the Company may not deduct all of the compensation. Accordingly, the Board and the Committee have expressly reserved the authority to award non-deductible compensation in appropriate circumstances. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding the Company's efforts, that compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) does in fact do so.
None of the Committee members is or has been a Company officer or employee. D. R. Johnson, the Company's President and Chief Executive Officer, serves on the compensation committee of Marshall & Ilsley Corporation, of which D. J. Kuester is an executive. No other Company executive officer currently serves on the compensation committee or any similar committee of another public company.
G. L. Neale, Chair
R. J. Doyle
D. J. Kuester
V. L. Martin
M. T. Yonker
The following graph compares the five-year cumulative total shareholder return on the Company's common stock as compared with the returns of the Standard & Poor's 500 Stock Index and the Nasdaq Industrials Stock Index (non-financial index). The graph assumes a $100 investment and reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period (Fiscal Year Covered) Modine S&P 500 NASDAQ --------------------- ------ ------- ------ Measurement Pt. 4/1/97 100 100 100 FYE 98 145.23 148.00 150.26 FYE 99 120.48 175.32 201.47 FYE 00 111.48 206.77 374.30 FYE 01 118.88 161.95 150.63 FYE 02 129.00 162.34 151.05 |
Equity Compensation Plan Information
The following table sets forth information about equity compensation plans, as required by amendments recently adopted by the SEC to its disclosure requirements found in Items 201 and 601 of Regulation S-K.
(a) (b) (c)
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Number of securities Number of securities
to be issued Weighted-average remaining available
upon exercise of exercise price of for future issuance
outstanding options, outstanding options, (excluding securities
Plan Category warrants or rights warrants and rights reflected Column (a))
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Equity Compensation Plans
-------------------------
approved by security holders 1
-------------------------------
1985 Incentive Stock Plan 239,642 $25.9479 0
1985 Stock Option Plan for
Non-Employee Directors
and Directors Emeriti 120,000 $22.59375 0
1994 Incentive Compensation Plan 2,135,460 $26.71 302,092
1994 Stock Option Plan for
Non-Employee Directors 190,000 $31.25657 0
2000 Stock Option Plan for
Non-Employee Directors 100,000 $28.5652 400,000
Modine Manufacturing Company
Stock Option Plan for Thermacore
Employees under the DTX
Corporation 1995 Stock Option Plan 6,090 $4.9325 0
Modine Manufacturing Company
Stock-Based Compensation Plan for
Thermacore Employees under the
DTX Corporation 1997 Plan 218,757 $10.32877 0
Equity Compensation Plans not N/A The N/A N/A
-----------------------------
approved by security holders Company has
----------------------------
no such plans.
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Total 3,009,949 $25.2094 702,092
1 The referenced plans contain standard anti-dilution provisions that
provide for adjustment of the number of shares covered by the plan in
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the event of stock dividends, stock splits or similar transactions or in the event the Company acquires an entity which has issued, and has outstanding, stock options or rights. Any such adjustments shall be made to prevent substantial dilution or enlargement of the benefits granted to, or available for, participants. The 2002 Incentive Compensation Plan, which is attached to this Proxy Statement as Exhibit A, contains such provisions in Paragraph 8. |
The following table sets forth information about stock option grants during the last fiscal year for the five executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation -
Individual Grants Appreciation for Option Term(1)(2)(3)
--------------------------------------------- ---------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted Employees Price Date 0% 5% 10%
---- ------- ---------- -------- ---------- -- -- ---
D. R. Johnson 50,000 9.80% $22.78 1/16/2012 $0 $ 717,570 $ 1,811,010
D. B. Rayburn 40,000 7.84% $22.78 1/16/2012 $0 $ 574,056 $ 1,448,808
E. T. Thomas 20,000 3.92% $22.78 1/16/2012 $0 $ 287,028 $ 724,404
C. R. Katzfey 20,000 3.92% $22.78 1/16/2012 $0 $ 287,028 $ 724,404
J. R. Rulseh 20,000 3.92% $22.78 1/16/2012 $0 $ 287,028 $ 724,404
All Optionees 508,000 100% $22.78 1/16/2012 $0 $ 7,290,511 $ 18,399,862
All Shareholders N/A N/A N/A N/A $0 $480,230,924 $1,323,011,380
(1) All options granted are immediately exercisable except within the
first year of employment. Holders may use shares previously owned
or received upon exercise of options to exercise options. The
Company may accept shares to cover withholding or other employee
taxes.
(2) The dollar amounts under these columns are the result of
calculations at zero percent and at the five-percent and ten-percent
rates set by the Securities and Exchange Commission and, therefore,
are not intended to forecast possible future appreciation, if any,
of the Company's stock price.
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(3) No gain to the optionee is possible without stock price appreciation,
which will benefit all shareholders commensurately. A zero percent
gain in stock price appreciation will result in zero dollars for the
optionee.
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The following table sets forth information with respect to the five executive officers named in the Summary Compensation Table concerning the number of option exercises and value of options outstanding at the end of the last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Total Value of
Total Number Unexercised
Number of of Unexercised In-the-Money
Shares Options Held Options Held at
Acquired on Value at Fiscal Year End (1) Fiscal Year End (1)
Name Exercise Realized Exercisable (2) Exercisable (2)
---- ----------- -------- ---------------------- -------------------
D. R. Johnson 0 $ 0 295,000 $787,790
D. B. Rayburn 4,375 $ 52,500 192,000 $541,190
E. T. Thomas 15,000 $ 88,650 60,000 $104,650
C. R. Katzfey 0 $ 0 83,605 $193,385
J. R. Rulseh 0 $ 0 83,000 $181,620
(1) All options granted are immediately exercisable except within the
first year of employment.
(2) Granted at fair market value on the date of Grant. Total value of
outstanding options is based on a fair market value of Company
stock of $26.99 as of March 31, 2002.
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The following table sets forth the estimated annual benefits payable upon retirement at normal retirement age for the years of service indicated under the Company's qualified and non-qualified defined benefit pension plan at the indicated remuneration levels (average of five years' earnings).
Average Annual Representative Years of Service
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
----------- -------- -------- -------- -------- --------
$125,000 $ 28,596 $ 38,128 $ 47,660 $ 57,192 $ 66,724
200,000 47,440 63,253 79,066 94,879 110,692
275,000 66,283 88,378 110,472 132,567 154,661
350,000 85,124 113,503 141,879 170,254 198,630
425,000 109,971 138,628 173,285 207,942 242,599
500,000 122,815 163,753 204,691 245,629 286,567
575,000 141,658 188,878 236,097 283,317 330,536
650,000 160,502 214,003 267,504 321,004 374,505
725,000 179,346 239,128 298,910 358,692 418,474
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The five executive officers named in the Summary Compensation Table participate on the same basis as other salaried employees in the non-contributory Modine Manufacturing Company Pension Plan for Non-Union Hourly-Paid Factory Employees and Salaried Employees. Because the Company's contributions to the plan are actuarially based on all eligible salaried employees and are not allocated to individual employee accounts, expenses for a specific person cannot readily be separately or individually calculated. Retirement benefits are based on an employee's earnings for the five highest consecutive of the last ten calendar years preceding retirement and on years of service. Applicable earnings include salary, bonuses, and any deferred amount under the Modine Tax Saver (401(k)) Plan or, since January 1, 1999, the Modine 401(k) Retirement Plan. They are approximately the same as cash compensation reported in the Summary Compensation Table, but on a calendar year rather than a fiscal year basis. A minimum of five years of service is required for eligibility. The principal benefit under the plan is a lifetime monthly benefit for the joint lives of participants and their spouses based on the employee's earnings and period of employment, and is not subject to offset by Social Security benefits. Employees can retire with unreduced early retirement benefits at age sixty-two or may be eligible for disability, deferred, or other early retirement benefits depending on age and years of service upon retirement or termination. In addition, an employee may elect to receive a lump-sum pension benefit if, upon retirement, the employee has accuumulated a sum of his/her age and years of employment of at least 85. Furthermore, if employed on and before March 31, 2001, an employee who reaches age sixty-two and who has accumulated thirty or more years of eligible service may request that the accrued benefit be paid immediately in a lump-sum amount, even if he/she elects not to retire at that time.
Assuming continued employment until age sixty-five, the estimated credited years of service under the plan for Messrs. Johnson, Rayburn, Thomas, Katzfey, and Rulseh are twenty-eight, twenty-two, twenty-one, twenty-five, and forty-three years, respectively.
Pension benefits under the plan are subject to possible limitations imposed by the Employee Retirement Income Security Act of 1974 and subsequent amendments thereto. To the extent that an individual employee's retirement benefit exceeds these limits, the excess will be paid from general operating funds of the Company.
Employees, including officers, may also qualify for long-term disability payments of approximately sixty percent of their base salary, up to a maximum of $15,000 per month, if they become disabled.
The Company entered into an employment contract effective May 16, 2001 with Mr. Johnson covering his employment for a thirty-six month term; applicable change-of-control provisions were last amended May 20, 1999. After the effective date, the employment contract automatically and continuously extends for an additional day, unless either party has given written notice of termination to the other party, in which case the term becomes a thirty-six month period beginning on the date such notice is received.
The Company may terminate the employment contract for "Cause," as
that term is defined in the contract and Mr. Johnson may terminate the
employment contract upon the occurrence of any of the following events:
failure to elect or re-elect him to the offices he holds; a significant
change in the scope of his authority, duties, or compensation; a breach
by the Company of any provision of the employment contract; and the
liquidation, dissolution, consolidation, or merger of the Company.
In the event of a termination, the Company will remit, as liquidated damages, severance pay to Mr. Johnson an amount equal to his "Average Annual Earnings" during the remainder of the period of employment. "Average Annual Earnings" means the arithmetic average of annual compensation includable in Mr. Johnson's gross income in the five taxable years preceding the taxable year of termination. Mr. Johnson will continue to receive all employee benefits plus supplements to his retirement pension and 401(k) benefits designed to provide him with benefits that otherwise are reduced by statutory limitations on qualified benefit plans. In the event of disability, salary continuation is provided at a level of one hundred percent for the first twelve months and up to sixty percent thereafter with no maximum dollar amount.
In the event of a "Change-in-Control," as defined in the Change-in- Control Agreement, as amended, at any time during the 24 months after a change in control occurs, if Mr. Johnson is terminated without "Good Cause" or if Mr. Johnson terminates the Agreement, a 36-month "Severance Period" is triggered during which Mr. Johnson is entitled to receive an amount equal to three times the greater of:
- the sum of his base salary and target bonus; or
- the sum of his five-year average base salary and five-year average
actual bonus payable in a lump sum within 60 days after the date
of termination of employment; and
- an amount equal to the pro-rata portion of the target bonus for
the calendar year in which his employment terminated; and
- applicable benefits and credited service for pension purposes for
the 36-month period.
In the event of Mr. Johnson's death, such amounts will be payable to his estate. Any stock options or stock awards will immediately vest, or restrictions lapse, as the case may be, on the date of termination. In the event a change in control occurs, and if payments made to Mr. Johnson are subject to the excise tax provisions of Section 4999 of the Internal Revenue Code, Mr. Johnson will be entitled to receive a lump-sum payment (the "Gross-up Payment"), sufficient to cover the full cost of such excise taxes and his federal, state and local income and employment taxes on the additional payment.
Mr. D. B. Rayburn and Mr. E. T. Thomas have similar employment contracts and "Change-in-Control" provisions on substantially the same terms and conditions as stated for Mr. Johnson. The employment contracts for Messrs. Rayburn and Thomas were entered into and effective May 16, 2001.
As of February 26, 1997, the Company entered into separate change- in-control agreements (the "Change-in-Control Agreements") with the named executive officers (except Mr. Johnson, described above, and Mr. Thomas, whose agreement is dated August 7, 1998) and certain other key employees.
The Change-in-Control Agreements were amended and restated May 20, 1999. In the event of a "Change-in-Control," as defined in those Agreements, as amended and restated, certain key executives (including the named executive officers other than Messrs. Johnson, Rayburn and Thomas, addressed above), if terminated by the Company for any reason other than "Good Cause," or if terminated by the executive for "Good Reason" within 24-months after the change in control occurs, or if terminated by the executive for any reason during the 13th month after the change in control, will trigger a 24-month "Severance Period" during which the executive is entitled to receive an amount equal to two times the greater of:
- the sum of the executive's base salary and target bonus; or
- the sum of the executive's five-year average base salary and
five-year average actual bonus payable in a lump sum within
60 days after the date of termination of employment; and
- an amount equal to the pro-rata portion of the target bonus
for the calendar year in which the executive's employment
terminated; and
- applicable benefits and credited service for pension purposes
for the 24-month period.
In the event of the executive's death, such amounts will be payable to the executive's estate. Any stock option or stock awards will immediately vest, or restrictions lapse, as the case may be, on the date of termination. In the event a change in control occurs, and if payments made to the executive are subject to the excise tax provisions of Section 4999 of the Internal Revenue Code, the executive will be entitled to receive a lump-sum payment (the "Gross-up Payment"), sufficient to cover the full cost of such excise taxes and the executive's federal, state, and local income and employment taxes on the additional payment.
In adidtion one other key executive has an employment contract that was entered into on May 16, 2001 as well as a Change-in-Control agreement dated February 26, 1997 and amended May 20, 1999. Those agreements are substantially identical to the previous contracts described for Messrs. Johnson, Rayburn and Thomas.
TRANSACTIONS
In the regular course of business since April 1, 2001, the Company has had transactions with corporations or other firms of which certain non-employee directors are executive officers or otherwise principally involved. Such transactions were in the ordinary course of business and at competitive prices and terms. The Company does not consider the amounts involved to be material. The Company anticipates that similar transactions will occur in fiscal year 2002-2003.
2. 2002 INCENTIVE COMPENSATION PLAN
The Board of Directors unanimously recommends approval of a new incentive compensation plan (hereinafter called the "2002 Plan") in the form attached as Exhibit A. The following statements with respect to the 2002 Plan are qualified by and made subject to the more complete information contained in Exhibit A.
It is the judgment of the Directors that stock option grants that have been made under the Company's previous plans (i.e., the 1964 and 1968 Qualified Stock Option Plans, the 1978 and 1985 Incentive Stock Plans and the 1994 Incentive Compensation Plan) have been effective and useful in attracting, holding and motivating key employees. No additional stock options or other stock rights may be granted under the 1964 and 1968 Qualified Stock Option Plans or the 1978 or 1985 Incentive Stock Plans. As of January 17, 2002, 302,092 shares of Common Stock remain available under the 1994 Incentive Compensation Plan for stock options, stock awards, or other stock-based compensation. It is believed that a new plan, providing for the issuance of incentive and non-qualified stock options, and other stock-related benefits, as hereinafter mentioned, should now be adopted so that the Company may continue to be competitive in its search for, and retention of, outstanding employees.
The Officer Nomination and Compensation Committee (the "Committee") of the Board of Directors will administer the 2002 Plan. The Committee is comprised of two or more members of the Board, who are "Non-employee Directors" as that term is defined in Rule 16b-3 of the Securities and Exchange Commission and Section 162(m) of the Internal Revenue Code. The Committee is authorized to interpret the 2002 Plan; establish and amend the rules for its administration; determine which key employees shall be granted options and/or other benefits, the number of shares and the type of options and/or other benefits to be granted to each employee; and amend the 2002 Plan subject to the terms and conditions contained therein. However, no amendment of the 2002 Plan shall, without approval of the stockholders of the Company: (1) increase the total number of shares which may be issued or increase the amount or type of benefits that may be granted, except in limited circumstances that are outlined in the Plan; (2) change the minimum purchase price, if any, of shares of Common Stock which may be made subject to benefits; or (3) modify the requirements as to eligibility for benefits.
It is not possible at this time to determine who may be selected to receive options and/or other benefits under the 2002 Plan or the amount of Common Stock to be optioned to any person. However, the 2002 Plan provides that any one employee may receive no more than 150,000 shares in any one year. It is expected however, that the Committee will make these determinations on the basis of the person's responsibilities and current and potential contributions to the success of the Company, and that among those who may qualify as recipients of options and/or related benefits will be officers and other key employees of the
Company and its majority-owned subsidiaries. In fiscal 2001-02 under the 1994 Incentive Compensation Plan, the Committee granted or awarded stock awards and/or stock options to a total of 111 employees, 14 of whom are executive officers, including each of the individuals named in the Cash Compensation Table. The stock option grants are set forth on Page 17.
Stock-based or cash benefits ("Benefits") under the 2002 Plan may be granted, awarded, or paid in any one or a combination of Stock Purchase Agreements, Stock Awards, Stock Options (incentive stock options and non-qualified stock options), Stock Appreciation Rights, Restricted Stock, Performance Unit Plans, Performance Share Plans, Book Value Stock Plans, and annual Stock or Cash Incentive Plans. There is reserved for issue under the 2002 Plan an aggregate of 3,000,000 shares of Common Stock, $0.625 par value, of which no more than twenty-five percent will be restricted stock. These aggregate shares may be newly- issued shares, authorized but unissued shares, or shares reacquired by the Company, including shares purchased on the open market. These shares are in addition to those shares remaining under the 1994 Incentive Compensation Plan. The aggregate amount is subject to proportionate adjustments for stock dividends, stock splits, and similar changes.
The Company may enter into agreements with employees for the present or future sale of shares to them at such prices as the Committee may determine. The shares subject to any such agreement may not be transferred to the employee (and the employee will have no ownership rights therein) until payment has been received in full. Agreements may contain restrictions on transferability for stated periods and/or provisions obligating the employee to resell his shares to the Company under stated circumstances. Such restrictions and obligations will normally lapse at stated intervals.
Stock awards will consist of shares issued to employees as a bonus for services rendered and without other payment. It is anticipated that such awards will be subject to restrictions on transferability for stated periods and/or forfeiture if the employee's employment with the Company terminates. Such restrictions and risk of forfeiture will normally lapse at stated intervals.
Stock options will consist of options (either incentive stock options or non-qualified stock options) to purchase shares of Common Stock. The Compensation Committee will establish the time or times at which options may be exercised and whether all of the options may be exercisable at one time or in increments over time. The option price or procedure for setting the option price shall be set by the Compensation Committee at the time of the granting of an option. For incentive stock options, the option price may not be less than the fair market value of the Company's stock on the date of grant. For non-qualified stock options, the option price may be less than, equal to, or greater than the fair market value of the Company's stock on the date of grant. However, options granted at less than fair market value may not qualify as performance-based compensation under existing tax laws, and might be partially or wholly non-deductible if exercised by individuals who are named executive officers in the Company's proxy statement for the taxable year of exercise. The Committee also has the authority to reset the price of any stock option after the original grant and before exercise. In the event of stock dividends, splits, and similar capital
changes, the 2002 Plan provides for appropriate adjustments in the number of shares available for options and the number and option prices of shares subject to outstanding options. The term of a stock option will be determined by the Committee; however, an incentive stock option will have a term of no more than ten years from the date of the grant. Under certain circumstances, extensions or other modifications to outstanding options might result in disqualification of an option as performance-based compensation and loss of deductions if the individual is a named executive officer in the year in which the option is exercised. The purchase price of option shares may be paid in cash, Company stock, a combination of Company stock and cash, or such other legal and appropriate forms or means that the Committee may determine. For non-qualified options, the option holder must also pay the Company, at the time of purchase, the amount of federal, state, and local withholding taxes required to be withheld by the Company. These taxes may be settled in cash or with Company stock, including stock that is part of the award or that is received upon exercise of the stock option that gives rise to the withholding requirement. Shares of the Company's Common Stock also may be used by participants for payment of the option price or satisfaction of withholding tax obligations. The Plan also permits other forms of payment if authorized by the Board and consistent with applicable law and regulations.
Stock appreciation rights may be granted under the 2002 Plan with respect to options granted concurrently or previously under the 2002 Plan. Each stock appreciation right will permit the holder thereof to receive up to 100%, or such lesser amount as set by the Committee, of the difference between the market price (on the date of exercise) of the shares to which it relates and the option price thereof. A stock appreciation right will be exercisable at the time and to the extent the option to which it relates is exercisable. Holders of stock appreciation rights will be permitted to exercise the right or the related option, but not both. Upon exercise, rights will be paid in Common Stock of the Company or cash, or a combination thereof, as determined by the Committee. Any exercise will reduce the shares issuable under the Plan under which the related option was granted by the number of shares with respect to which the right is exercised, even if payment is made partly or wholly in cash.
Restricted stock becomes vested in approximately equal installments over a period of time specified from the date of grant thereof, with each such installment to mature annually. Each installment becomes vested only if earned out by the recipient by remaining in the employment of the Company, subject to certain exceptions.
A Performance Unit Plan will provide for units, contingently granted, which entitle the employee to cash payments or their equivalent in shares of stock valued at the time of the grant (i.e., the unit value remains constant and does not fluctuate with changes in the market value of the stock), if predetermined objectives are met.
A Performance Share Plan will provide for artificial shares, contingently granted, which entitle the employee to actual shares of Common Stock or their cash equivalent at the time of payment (i.e., the unit value may appreciate or decline depending on future market value of the stock), if predetermined objectives are achieved.
A Book Value Stock Plan will permit the employee to purchase shares of Common Stock at book value. Such "book value" stock may be
required to be resold to the Company upon termination of the employment relationship, or at other specified times at the then-book value of the stock. On March 31, 2002, the book value of the Company's Common Stock was $15.42 per share.
An annual Stock or Cash Incentive Plan will allow the employee to receive, in addition to the employee's base salary, annual stock or cash bonuses (portions of which may be paid quarterly over the course of the fiscal year) based upon the financial performance of the Company or the considered discretion of the Committee. The financial performance measurement for the stock or cash bonus will be determined by the Board or Committee. The maximum annual formula bonus may be fixed at up to one hundred fifty percent (150%) of the employee's base salary (base salaries for the five named executive officers are as set forth in the Summary Compensation Table at page 11 herein) with the Board or Committee designating the percentage level of participation and maximum bonus for each officer of the Company while management designates the percentage level of participation and maximum bonus for other employees. The Board or Committee will determine whether the bonuses will be payable to employees in stock or cash or a combination of stock and cash.
In the event the Company at any time changes the number of issued shares of common stock without new consideration to the Company (by way of stock dividends, stock splits, or similar transactions), the total number of shares reserved for issuance under the Plan and the number of shares covered by each outstanding Benefit will be adjusted so that the aggregate consideration payable to the Company, if any, and the value of each such Benefit will not be changed.
In the event of a proposed reorganization, sale, merger, consolidation, dissolution, or liquidation of the Company, outstanding Benefits may also contain provisions for their continuation, acceleration, immediate vesting, or other equitable adjustments, unless otherwise provided by the Board or Committee. In addition, the Named Executive Officers and certain other key employees have Change-of- Control arrangements as set forth on Pages 19 and 20.
The Board or the Committee has the right to substitute or assume Benefits in connection with mergers, reorganizations, separations, or other transactions; provided such substitutions and assumptions are permitted by applicable provisions of the Internal Revenue Code and regulations promulgated thereunder. The number of shares reserved for the 2002 Plan may be increased by the corresponding number of options and other Benefits assumed and, in the case of a substitution, by the net increase and number of shares subject to options or other Benefits before and after the substitution.
The Board of Directors or the Committee may amend, alter or discontinue the 2002 Plan. However, no amendment, alteration or discontinuation of the 2002 Plan or any Benefit granted under the 2002 Plan may impair the rights of any participant under any Benefit, without the participant's consent.
The issuance of stock upon exercise of options or other grant or award of Benefits is subject to the registration with the Securities and Exchange Commission of the shares reserved by the Company for the Plan.
Benefits (other than non-qualified stock options) are not transferable other than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order; non-qualified stock options may be assignable or transferable to or for the benefit of a member of the employee's family.
The closing price of the Company's Common Stock on the NASDAQ National Market System on March 31, 2002, was $26.99 per share.
The 2002 Plan will be effective on the date it is approved by the shareholders. No stock options or other Benefits included in the 2002 Plan may be granted after July 17, 2012.
The federal income tax consequences of an employee's participation in the Plan are complex and subject to change. The following discussion is only a summary of the general rules applicable to stock based compensation.
If an option granted under the 2002 Plan is treated as an incentive stock option, the optionee will not recognize any income upon either the grant or the exercise of the option and the Company will not be allowed a deduction for federal tax purposes. Upon a sale of the shares, the tax treatment to the optionee and the Company will depend primarily upon whether the optionee has met certain holding period requirements at the time he or she sells the shares. In addition, as discussed below, the exercise of an incentive stock option may subject the optionee to alternative minimum tax liability.
If an optionee exercises an incentive stock option and does not dispose of the shares received within two years after the date of the grant of such option or within one year after transfer of the shares to him or her, any gain realized upon disposition will be characterized as long-term capital gain, and in such case, the Company will not be entitled to a federal tax deduction. If the optionee disposes of the shares either within two years after the date the option is granted or within one year after the transfer of the shares to him or her, such disposition will be treated as a disqualifying disposition and an amount equal to the lesser of (1) the fair market value of the shares on the date of exercise minus the purchase price, or (2) the amount realized on the disposition minus the purchase price, will be taxed as ordinary income to the optionee in the taxable year in which the disposition occurs. The excess, if any, of the amount realized upon disposition over the fair market value at the time of the exercise of the
option will be treated as long-term capital gain if the shares have been held for more than one year following the exercise of the option. In the event of a disqualifying disposition, the Company may withhold income taxes from the optionee's compensation with respect to the ordinary income realized by the optionee as a result of the disqualifying disposition.
The exercise of an incentive stock option may subject an optionee to alternative minimum tax liability because the excess of the fair market value of the shares at the time an incentive stock option is exercised over the purchase price of the shares is included in income for purposes of the alternative minimum tax. Consequently, an optionee may be obligated to pay alternative minimum tax in the year he or she exercises an incentive stock option.
In general, there will be no federal tax consequences to the Company upon the grant, exercise, or termination of an incentive stock option. However, in the event an optionee sells or disposes of stock received upon the exercise of an incentive stock option in a disqualifying disposition, the Company will be entitled to a deduction for federal income tax purposes in an amount equal to the ordinary income, if any, recognized by the optionee upon disposition of the shares, provided that the deduction is not allowed under the Code.
Non-qualified stock options granted under the Plan do not qualify as "incentive stock options" and will not qualify for any special tax benefits to the optionee. An optionee generally will not recognize any taxable income at the time he or she is granted a non-qualified option. However, upon its exercise, the optionee will recognize ordinary income for federal tax purposes measured by the excess of the then fair market value of the shares over the option price. The income realized by the optionee will be subject to income tax withholding.
The optionee's basis for determination of gain or loss upon the subsequent disposition of shares acquired upon the exercise of a non- qualified stock option will be the amount paid for such shares plus any ordinary income recognized as a result of the exercise of such option. Upon disposition of any shares acquired pursuant to the exercise of a non-qualified stock option, the difference between the sale price and the optionee's basis in the shares will be treated as a capital gain or loss and will be characterized as long-term capital gain or loss if the shares have been held for more than one year at the date of their disposition.
In general, there will be no federal tax consequences to the Company upon the grant or termination of a non-qualified stock option or a sale or disposition of the shares acquired upon the exercise of a non-qualified stock option. However, upon the exercise of a non- qualified stock option, the Company will be entitled to a deduction for federal income tax purposes equal to the amount of ordinary income that an optionee is required to recognize as a result of the exercise, provided that the deduction is not disallowed under the Code.
No income will be recognized by the recipient of a stock appreciation right until shares representing the amount of the
appreciation or the cash equivalent, if so elected, are transferred to the recipient pursuant to the exercise of the right. The amount of such income will be equal to the fair market value of such shares on the exercise date (or the cash equivalent), and will be ordinary income. Subject to the applicable provisions of the Code, the Company will be entitled to a deduction at the same time and in the same amount as the employee realizes ordinary income as a result of the exercise of the right.
Generally, at the time the substantial risk of forfeiture terminates with respect to a stock award, the then fair market value of the stock will constitute ordinary income to the employee. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to the Company in any amount equal to the compensation realized by the employee.
The grant of a performance unit award generally will result in taxable income to the employee on the earlier of actual receipt of compensation pursuant to the award or when such compensation is credited to the employee's account, or set apart, or otherwise made available. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to the Company in an amount equal to the compensation realized by the employee.
3. SHAREHOLDER PROPOSAL
GAMCO Investors, Inc., One Corporate Center, Rye, New York, 10590- 1435, has presented the following resolution for action at the Annual Meeting. The Company will provide the number of Company securities held by the proponent of this proposal promptly upon receipt of a request.
RESOLVED, That the shareholders of Modine Manufacturing Company (the "Company") hereby request that the Board of Directors redeem the Rights issued pursuant to the Rights Agreement, dated as of October 16, 1986 -- as subsequently amended -- unless the holders of a majority of the outstanding shares approve the issuance at a meeting of the shareholders held as soon as practical.
SHAREHOLDER'S SUPPORTING STATEMENT
In October 1986, the Board of Directors adopted a shareholder rights plan and issued one right for each share of common stock. Under the plan, shareholders may exercise the Rights 10 days after a shareholder has acquired 20 percent or more of Modine's stock, or has commenced a tender or exchange offer for 30 percent or more of Modine's stock. In the event of certain mergers, sales of assets, or other transactions, each Right not owned by such 20-percent-or-more holder will become exchangeable for common stock having a market value of twice the exercise price of the right. Modine can redeem the Rights at
a price of $0.0125 per right, at any time before a holder acquires 20 percent or more of Modine's common stock.
The Board issued the Rights to prevent acquisitions of Modine without Board consent. The Rights, unless redeemed, would vastly increase the cost to a potential bidder of effecting a merger or tender offer that is not approved by the Board of Directors. Adopting the Rights plan without shareholder input arrogated to the Board a nearly exclusive right to determine the price and terms of virtually any acquisition.
We believe the shareholders should retain the right to decide what represents a fair price for their holdings. As a consequence of the poison pill, however, potential bidders for the Company's stock must negotiate with management, and cannot take an offer directly to the shareholders even if an overwhelming majority of the shareholders would have accepted such an offer. A Board and management sometimes may have interests that conflict with the interests of shareholders. We believe that the shareholders should be able to weigh in each case whether they wish to entrust the Board with this enormous power.
By redeeming the Rights or putting this significant matter to a vote of shareholders, the Board will serve two important goals. First, it will encourage shareholder democracy by soliciting the views of its shareholder constituency about the advisability of anti-takeover devices. Second, it will allow shareholders to decide for themselves whether a Rights Plan improves or undermines shareholder value.
We urge Shareholders to vote for this resolution
THE COMPANY'S RESPONSE
Shareholder rights plans (often called "poison pills") are not uncommon, and they continue to be adopted. According to Thomson Financial Securities Data (now Thomson Financial Investment Banking and Capital Markets Group), 140 U.S. companies adopted shareholder rights plans or provisions in the first half of 2001, a figure that was up 45% from the same period during 2000. As of the end of 2001, over 1500 U.S. Companies had shareholder rights plans in place.
Modine's Plan is designed to protect Modine's shareholders against unsolicited attempts to take control of Modine that would not maximize shareholder value. Modine believes that its independent Board of Directors, which was elected by the shareholders, is in the best position to evaluate acquisition offers. The Plan allows the Board to conduct that evaluation and protect the shareholders from potential
takeover abuses, abuses often committed by those seeking short-term rewards with little regard for others negatively affected. Takeover abuses include "creeping" acquisitions of Modine's stock in the open market, hostile tender offers made at less than a fair price, and partial and two-tiered tender offers that often discriminate against late-tendering shareholders.
Today's global economy is a highly competitive one. Modine's Board and Management believe that the best way for Modine to compete in that economy is by a commitment to long-term strategic initiatives. Modine's shareholders deserve that kind of commitment. The shareholder rights plan is an important tool that enables the Board to carry out its business objectives.
Contrary to the suggestion advanced by the proponent, Modine's Plan itself does not give the Board absolute power over possible acquisitions of Modine or other business combinations. Rather, in maintaining the Plan, the Board is obligated by law to exercise its separate fiduciary obligations to the shareholders. Shareholder rights plans neither prevent unsolicited proposals from being made nor prevent companies from being acquired at prices that are fair and reasonable. In fact, a study of takeover data from 1992-1996 by Georgeson & Company, a nationally recognized proxy solicitation and investor relations firm, found that the presence of a shareholder rights plan neither increased the likelihood of defeat of an unsolicited takeover proposal nor reduced the likelihood of a company becoming a takeover target.
Some opponents of shareholder rights plans argue that such plans negatively impact shareholder value. Additional, compelling data compiled by Georgeson & Company supports the opposite view. According to Georgeson's research, from 1992 through 1996, the period under review, the takeover premium for a company with a shareholder rights plan averaged 8% more than for a company without such a plan. A follow- up study confirmed that the takeover premium for companies with shareholder rights plans was still significant. When translated into dollars, Georgeson's study showed that companies with shareholder rights plans benefited from an estimated $13 billion premium from 1992- 1996, while companies without such plans lost an estimated $14.5 billion in shareholder value.
In recommending a vote against the proposal, the Board of Directors is not suggesting that it will, without question, retain the Plan until its expiration by its terms in 2006. Any determination to retain, amend or revoke the Plan will be made only after careful deliberation, conducted in light of all reliable data and information available at that time, and in accordance with the Board's continuing fiduciary responsibilities to its shareholders. Those responsibilities include a determined effort to increase the return on your investment in Modine and to pursue that goal with the long-term interests of Modine's shareholders, its employees, and the communities in which its facilities are located squarely in mind. The Board takes its obligations to the shareholders very seriously, and believes it can best safeguard shareholder value and Modine's assets by retaining the flexibility granted by the presence of the Plan.
OTHER INFORMATION
PricewaterhouseCoopers LLP have been the Company's independent certified public accountants since 1935 and were selected as the Company's auditors for the fiscal year ended March 31, 2002. They are appointed by the Board of Directors of the Company and report to the Audit Committee. No representatives of PricewaterhouseCoopers LLP will be attending the 2002 Annual Meeting of Shareholders.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the National Association of Securities Dealers, Inc. Officers, directors, and greater-than-ten-percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the Company, the Company believes that, during the period April 1, 2001 to March 31, 2002, all Section 16(a) filing requirements applicable to its officers, directors, and greater-than-ten-percent beneficial owners were complied with.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters that will be presented for action at the 2002 annual meeting. Should any additional matters come before the meeting, the persons named in the enclosed proxy will vote on those matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 2003
If a shareholder wishes to present a proposal for consideration at next year's Annual Meeting of Shareholders, such proposal must be received at Modine's offices on or before February 7, 2003.
ANNUAL REPORT
The Annual Report of the Company, including financial statements for the fiscal year ended March 31, 2002, is enclosed.
D. R. ZAKOS, Secretary
APPENDIX
EXHIBIT A
MODINE MANUFACTURING COMPANY
2002 INCENTIVE COMPENSATION PLAN
1. PURPOSE. The Modine Manufacturing Company 2002 Incentive Compensation Plan (the "Plan") is intended to provide incentives which will attract and retain highly competent persons as officers and key employees of Modine Manufacturing Company (the "Company") and its majority owned subsidiaries by providing them with opportunities to acquire Common Stock of the Company ("Common Stock"), receive monetary payments based on the value of such shares pursuant to the stock-based benefits described herein, or receive cash or Common Stock bonuses, also described herein (collectively "Benefits").
2. ADMINISTRATION.
Benefit; and (xi) to make all other determinations deemed necessary or advisable for the administration of the Plan.
3. PARTICIPANTS; GENERAL TERMS AND CONDITIONS.
4. BENEFITS.
Stock by the Company to a participant at such prices and on such terms and conditions as the Board or Committee deems appropriate.
to cash payments or their equivalent in shares of stock valued at the time of the grant (i.e., the unit value remains constant and does not fluctuate with changes in the market value of the stock), if predetermined objectives are met.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for
issuance under the Plan an aggregate of three million (3,000,000)
shares of Common Stock (except as supplemented hereinafter provided in
Section 8), $0.625 par value of which no more than twenty-five percent
will be restricted stock. These aggregate shares may be newly-issued
shares, authorized but heretofore unissued shares or shares reacquired
by the Company, including shares purchased on the open market. Any
shares subject to the options, rights, agreements, plans, or awards as
described hereinafter or issued under such options, rights, agreements,
plans, or awards may thereafter be subject to new options, rights,
agreements, plans or awards under this Plan if there is a lapse,
expiration or termination of any such options, rights, agreements,
plans or awards prior to issuance of the shares or payment of the
equivalent or if shares are issued under such options, rights,
agreements, plans, or awards, and thereafter are reacquired by the
Company pursuant to rights reserved by the Company upon issuance thereof; provided, however, issued shares reacquired by the Company may only be subject to new options, rights, agreements, plans, or awards if the participant received no benefit of ownership from the shares.
6. FORM OF PAYMENT. Payments required, if any, upon a participant's exercise of Benefits under the Plan may be made in the form of: (a) cash; (b) Company stock; (c) a combination of Company stock and cash; or (d) such other forms or means which the Committee shall determine in its discretion and in such manner as is consistent with the Plan's purpose and applicable Internal Revenue Service, Securities and Exchange Commission, or other laws or regulations.
7. WITHHOLDING TAXES. No later than the date as of which an amount first becomes includible in the gross income of the participant for federal income tax purposes with respect to any Benefit under the Plan or with respect to any exercise of any stock option granted under the Plan, the participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld. Such withholding obligations may be settled with Common Stock, including Common Stock that is part of the award or that is received upon the exercise of the stock option that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional upon such payment or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the participant. The Company may establish such procedures as it deems appropriate, including the making of irrevocable elections or the timing of the use of Common Stock, for the settlement of its withholding obligations.
8. ADJUSTMENT PROVISIONS.
consistent with such determination and in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the Benefits granted to, or available for, present or future participants of this Plan. The number of shares reserved for issuance pursuant to Section 5 may be increased by the corresponding number of options or other benefits assumed and, in the case of a substitution, by the net increase in the number of shares subject to options or other benefits before and after the substitution.
9. NONTRANSFERABILITY. Benefits (other than non-qualified stock options) granted under the Plan to an employee shall not be transferable by the participant otherwise than by will or the laws of descent and distribution, or pursuant to a qualified domestic relations order, and shall be exercisable, during the participant's lifetime, only by the participant; non-qualified stock options granted under the Plan to a participant may be assignable or transferable by the participant to or for the benefit of a member of the participant's family. In the event of the death of a participant during employment or prior to the termination of any Benefit held by the participant hereunder, each Benefit theretofore granted to the participant shall be exercisable or payable to the extent provided therein but not later than one year after the participant's death (and not beyond the stated duration of the Benefit). Any such exercise or payment shall be made only:
(a) By or to the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant's rights under the Benefit shall pass by will or the laws of descent and distribution; and
(b) To the extent, if any, that the deceased participant was entitled at the date of the participant's death.
10. OTHER PROVISIONS. The award of any Benefit under the Plan may also be subject to such other provisions (whether or not applicable to the Benefit awarded to any other participant) as the Board or Committee determines appropriate, including without limitation, provisions for the installment purchase of Common Stock under such Benefits, provisions to assist the participant in financing the acquisition of Common Stock, provisions for prepayment at the participant's election of the purchase price of Common Stock under such Benefits, provisions for the forfeiture of, or restrictions on resale or other disposition of shares acquired under such Benefits, provisions giving the Company the right to repurchase shares acquired under any form of Benefit in the event the participant elects to dispose of such shares, provisions to comply with federal and state tax or securities laws, or understandings or conditions as to the participant's employment in addition to those specifically provided for under the Plan or written agreement.
11. TENURE. A participant's right, if any, to continue to serve the Company and its subsidiaries as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by designation as a participant under the Plan.
12. EMPLOYEES IN FOREIGN COUNTRIES. The Board or Committee shall have the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its subsidiaries
may operate to assure the viability of the Benefits granted or awarded to employees employed in such countries and to meet the objectives of the Plan.
13. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be granted more than ten years after the date of adoption of this Plan; provided, however, that the terms and conditions applicable to any Benefit granted within such period may thereafter be amended or modified by mutual agreement between the Company and the participant or such other persons as may then have an interest therein. Also, by mutual agreement between the Company and a participant hereunder, or under any future plan of the Company, Benefits may be granted to such participant in substitution and exchange for, and in cancellation of, any Benefits previously granted such participant under this Plan, or any benefit previously or thereafter granted to him under any future plan of the Company. The Board or Committee may amend the Plan from time to time or terminate the Plan at any time. However, no action authorized by this paragraph shall reduce the amount of any existing Benefit or change the terms and conditions thereof without the participant's consent. No amendment of the Plan shall, without approval of the stockholders of the Company, (i) increase the total number of shares which may be issued under the Plan or increase the amount or type of Benefits that may be granted under the Plan; (ii) change the minimum purchase price, if any, of shares of Common stock which may be made subject to Benefits under the Plan; or (iii) modify the requirements as to eligibility for Benefits under the Plan.
14. UNFUNDED STATUS OF PLAN. It is presently intended that the Plan constitute an "unfunded" plan for incentive compensation. The Board or Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Common Stock or make payments; provided, however, that, unless the Board or Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the "unfunded" status of the Plan.
15. SHAREHOLDER APPROVAL. The Plan has been adopted by the Board of Directors on March 20, 2002, and shall be effective upon approval by the shareholders of the Company. Such adoption shall be null and void if shareholder approval is not obtained within twelve months of the adoption of the Plan by the Board of Directors.
PROXY CARD
[Modine logo]
Annual Meeting of Shareholders
Wednesday, July 17, 2002
9:30 a.m. CDT Modine shareholders can build
their investments in Modine
through a no-cost plan for
automatically reinvesting
dividends and making additional
cash purchases of Modine stock.
Modine Manufacturing Company Systematic investments can be
established for your account by
1500 DeKoven Avenue authorizing direct deductions
from your bank account on a
Racine, Wisconsin 53403-2552 monthly basis. To receive
material and enrollment
information, call 800-813-3324.
The Modine Manufacturing Company
Dividend Reinvestment and
Direct Stock Purchase Plan
is administered by the
company's transfer agent,
Wells Fargo Shareowner
Services, 800-468-9716.
[Modine logo]
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Modine Manufacturing Company
1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 proxy
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints D. R. Johnson and D. R. Zakos, or either of them, with full power of substitution to each, as attorneys and proxies to represent the undersigned at the Annual Meeting of Shareholders of Modine Manufacturing Company to be held at the corporate offices of Modine Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 on the 17th day of July, 2002 at 9:30 a.m. CDT, and at any adjournment(s) thereof, and to vote all shares of Common Stock which the undersigned may be entitled to vote at said meeting as directed with respect to the proposals as set forth in the Proxy Statement. The Board of Directors does not know of any other business that may be presented for consideration at the Annual Meeting. If any other business should properly come before the Meeting, the shares represented by the proxies and voting instructions solicited thereby may be discretionarily voted on such business in accordance with the best judgment of the proxy holders.
You are encouraged to specify your choices by marking the appropriate boxes on the reverse side, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors' recommendations. The tabulator cannot vote your shares unless you sign, date and return this proxy card or vote by telephone.
See Reverse Side
Modine Manufacturing Company encourages you to take advantage of a new and convenient way by which you can vote your shares. You can vote your shares by telephone. This eliminates the need to return the proxy card.
To vote your shares by telephone you must use the control number printed in the box at the top of this page. The series of numbers that appear in the box above must be used to access the system.
To vote over the telephone:
- On a touch-tone telephone -- call 1-800-240-6326 -- 24 hours a day,
7 days a week, until 12:00 p.m. CDT on July 16, 2002.
- You will be prompted to enter your 3-digit Company Number and
your 7-digit Control Number which are located above.
- Follow the simple instructions the Voice provides you.
Your electronic vote authorizes the named Proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card.
Modine Employee Stock Ownership Plan and/or Modine 401(k) Retirement Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company N.A. for
the Annual Meeting of Shareholders
As a participant in the Modine Employee Stock Ownership Plan and/or Modine
401(k) Plan, you have the right to give instructions to the Plan Trustee
as to the voting of certain shares of Modine Manufacturing Company Common
Stock allocated to your account. The voting of those shares will occur at
the Annual Meeting of Shareholders or at any and all adjournments or post-
ponements of the Annual Meeting. In this regard, please indicate your
voting choices on this card, sign and date it, and return this card
promptly in the enclosed postage prepaid envelope or vote by phone. If
your instructions are not received at least five days prior to the Annual
Meeting, or if you do not respond, shares held in your account for which
a proxy is not received will be voted by the Trustee, Marshall & Ilsley
Trust Company N.A. in its own discretion and in accordance with ERISA.
PLEASE FOLD HERE
The Board of Directors Recommends a Vote FOR Item 1
1. Election 01 Frank P. Incropera / / Vote FOR all nominees / / WITHHOLD
of Directors 02 Vincent L. Martin listed (except as marked Authority
03 Marsha C. Williams contrary below) For All.
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
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The Board of Directors Recommends a Vote FOR Item 2
2. Approval of the adoption of the 2002 Incentive Compensation Plan / / For / / Against / / Abstain
The Board of Directors Recommends a Vote AGAINST Item 3
3. Shareholder Proposal / / For / / Against / / Abstain
* NOTE * To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST ITEM 3.
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Address Change? Mark Box / /
Indicate changes below:
Date_________________________, 2002
-----------------------------------
/ /
/ /
-----------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the proxy.
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EXHIBIT 99(b)
APPENDIX
Pursuant to Item 304 of Regulation S-T, the following is a narrative description of graphic or image material incorporated by reference from the Company's 2002 Annual Report to Shareholders at Item 7. Management's Discussions and Analysis of Financial Condition and Results of Operations.
Page 15 of Annual Report
Sales by Market
FYE 2002
Cars and Light Trucks 30%
Aftermarket 23%
Medium & Heavy Trucks 15%
Off-highway Equipment 11%
Industrial Equipment 9%
Building HVAC 7%
Electronics 4%
Miscellaneous 1%
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Page 15 of Annual Report
Sales by Product
FYE 2002
Modules/Packages 27%
Radiators 27%
Oil Coolers 15%
Charge-Air Coolers 9%
Vehicular Air Conditioning 7%
Building HVAC 7%
Electronics 4%
Miscellaneous 3%
EGR Coolers 1%
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