SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 26, 1997
WATTS INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Delaware 0-14787 04-2916536
(State or other jurisdiction (Commission (IRS
of incorporation) File Number) Employer
Identification No.)
Route 114 and Chestnut Street, North Andover, Massachusetts 01845
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 688-1811
N/A
(Former name or former address, if changed since last report.)
Item 5. Other Events.
Effective August 26, 1997, the Company and certain members of
the Horne family (or trusts for their benefit) who beneficially
own an aggregate of 7,680,300 shares of the Company's Class B
Common Stock, $.10 par value per share (the "Class B Common
Stock"), and who were parties to the Horne Family Voting Trust
Agreement_1991, dated as of October 31, 1991, as amended (the
"1991 Voting Trust"), agreed to withdraw their respective shares
of Class B Common Stock from the 1991 Voting Trust and entered
into the George B. Horne Voting Trust Agreement - 1997 (the "1997
Voting Trust"). In addition, on August 26, 1997, Mrs. Judith Rae
Horne entered into the 1997 Voting Trust, in her capacity as
trustee or custodian for her minor daughter, by depositing
157,740 shares of Class B Common Stock into the 1997 Voting
Trust. The total number of shares of Class B Common Stock
subject to the 1997 Voting Trust is 7,838,040. The terms of the
1997 Voting Trust (as summarized below), the change in the
parties to the 1991 Voting Trust and the deposit of shares of
Class B Common Stock into the 1997 Voting Trust resulted in
changes to the number of shares of the Company's capital stock
that certain members of the Horne family are deemed to
beneficially own, although such transactions did not alter their
actual ownership positions.
Beneficial Ownership of Principal and Management Stockholders
of the Company
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth as of August 26, 1997 (except as
otherwise indicated) certain information concerning shares of
Class A Common Stock and Class B Common Stock held by (i) all
beneficial owners of 5% or more of either class of the Company's
common stock, (ii) each Director or person nominated for election
as a Director of the Company and (iii) the Chief Executive
Officer, the four other most highly compensated executive
officers listed in the Summary Compensation Table and, as a
group, all executive officers, Directors and persons nominated
for election as Directors of the Company.
Number of
Shares
Beneficially Total Percent(1):
Name of Beneficial Owner(2) Owned(3) Equity Voting
Timothy P. Horne(4) 9,317,516(5)(6)(7) 34.3% 71.4%
Frederic B. Horne 3,324,163(7)(8) 12.3 24.7
George B. Horne(4)(9) 2,124,600(6)(9)(10) 7.9 16.7
Daniel W. Horne(4)(11) 1,335,840(6)(10)(11) 4.9 10.5
Deborah Horne(4)(12) 1,335,840(6)(10)(12) 4.9 10.5
Peter W. Horne(4)(13) 1,335,840(7)(13) 4.9 9.8
Noah T. Herndon 15,000(14)(15) * *
Wendy E. Lane 12,000(14)(16) * *
Daniel J. Murphy, III 15,900(14)(15) * *
Gordon W. Moran 13,000(14)(15) * *
David A. Bloss, Sr. 69,000(14)(17) * *
Kenneth J. McAvoy 49,000(14)(18) * *
William C. McCartney 38,200(14)(19) * *
All executive officers and Directors
as a group (12 persons) 11,682,890(20)(21) 42.5 86.5
_____________
* Less than 1%.
(1) The percentages have been determined as of August 26, 1997
in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). At that date, a total
of 27,035,587 shares were outstanding, of which 11,159,127 were
shares of Class B Common Stock entitled to ten votes per share
and 15,876,460 were shares of Class A Common Stock entitled to
one vote per share. Each share of Class B Common Stock is
convertible into one share of Class A Common Stock.
(2) The address of each stockholder in the table is c/o Watts
Industries, Inc., 815 Chestnut Street, North Andover,
Massachusetts 01845.
(3) "Beneficial ownership" means the sole or shared power to
vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the
power to dispose of, or to direct the disposition of, a
security). A person is deemed, as of any date, to have
"beneficial ownership" of any security that such person has the
right to acquire within 60 days after such date.
(4) Timothy P. Horne, George B. Horne, Daniel W. Horne, Deborah
Horne and Peter W. Horne, together with Tara Horne and Judith Rae
Horne (as trustee and custodian for her minor daughter), may be
deemed a "group" as that term is used in Section 13(d)(3) of the
Exchange Act.
Shares of Class B Common Stock of the Company beneficially
owned by each member of the Horne family named in the above table
and any voting trust certificates in respect thereof are subject
to a right of first refusal in favor of the other Horne family
members named in the table (other than George B. Horne) and other
Horne family members and trusts for their benefit not named in
the table. The Company has granted registration rights with
respect to the shares of Class B Common Stock beneficially owned
by such Horne family members.
(5) Includes (i) 2,751,220 shares of Class B Common Stock and
67,742 shares of Class A Common Stock, beneficially owned by
Timothy P. Horne (for purposes of this footnote, "Mr. Horne"),
(ii) 1,335,840 shares held for the benefit of Daniel W. Horne,
Mr. Horne's brother, under a revocable trust for which Mr. Horne
serves as sole trustee, (iii) 1,335,840 shares held for the
benefit of Deborah Horne, Mr. Horne's sister, under a trust for
which Mr. Horne serves as sole trustee, which trust is revocable
with the consent of the trustee, (iv) 1,235,840 shares held for
the benefit of Peter W. Horne, Mr. Horne's brother, under a
revocable trust for which Frederic B. Horne serves as sole
trustee, (v) 2,124,600 shares held for the benefit of George B.
Horne, Mr. Horne's father, under a revocable trust for which Mr.
Horne serves as co-trustee, (vi) 50,000 shares owned by Tara V.
Horne, Mr. Horne's daughter, (vii) 207,740 shares held by Judith
Rae Horne, Mr. Horne's wife, as trustee or custodian for Mr.
Horne's minor daughter, (viii) 30,200 shares held for the benefit
of Tara V. Horne, under an irrevocable trust for which Mr. Horne
serves as co-trustee, (ix) 22,600 shares held for the benefit of
Mr. Horne's minor daughter, under an irrevocable trust for which
Mr. Horne serves as co-trustee and (x) 155,894 shares issuable
upon the exercise of stock options exercisable currently or
within 60 days of August 26, 1997. The shares noted in clause
(iv) are held in a voting trust for which Mr. Horne serves as co-
trustee. See footnote 7. A total of 2,751,220 of the shares of
Class B Common Stock noted in clause (i), the shares noted in
clauses (ii) and (iii), 2,104,600 of the shares noted in clause
(v), and the shares noted in clauses (vi) through (ix) of this
footnote (7,838,040 shares in the aggregate) are held in a voting
trust for which Mr. Horne serves as trustee. See footnote 6. All
shares beneficially owned or which may be deemed beneficially
owned by Mr. Horne are Class B Common Stock except 67,742 of the
shares noted in clause (i) and all of the shares noted in clause
(x) of this footnote.
(6) All shares of Class B Common Stock held by Timothy P. Horne,
individually, all shares of Class B Common Stock held by trusts
for the benefit of Daniel W. Horne, Deborah Horne, Tara V. Horne
and Timothy P. Horne's minor daughter, 2,104,600 shares held by a
trust for the benefit of George B. Horne, and 50,000 shares of
Class B Common Stock held by Tara V. Horne (7,838,040 shares in
the aggregate) are subject to the terms of The George B. Horne
Voting Trust Agreement-1997 (the "1997 Voting Trust"). Under the
terms of the 1997 Voting Trust, the trustee (currently Timothy P.
Horne) has sole power to vote all shares subject to the 1997
Voting Trust. Timothy P. Horne, for so long as he is serving as
trustee of the 1997 Voting Trust, has the power to determine in
his sole discretion whether or not proposed actions to be taken
by the trustee of the 1997 Voting Trust shall be taken, including
the trustee's right to authorize the withdrawal of shares from
the 1997 Voting Trust (for purposes of this footnote, the
"Determination Power"). In the event that Timothy P. Horne ceases
to serve as trustee of the 1997 Voting Trust, no trustee
thereunder shall have the Determination Power except in
accordance with a duly adopted amendment to the 1997 Voting
Trust. Under the terms of the 1997 Voting Trust, in the event
Timothy P. Horne ceases to serve as trustee of the 1997 Voting
Trust, then Noah T. Herndon, a director of the Company, John R.
LeClaire, whose professional corporation is a partner in the law
firm of Goodwin, Procter & Hoar LLP, and Walter J. Flowers, a
partner in the law firm of Flowers and Lichtman (each, a
"Successor Trustee" and collectively, the "Successor Trustees"),
shall thereupon become co-trustees of the 1997 Voting Trust. At
any time, Timothy P. Horne, if then living and not subject to
incapacity, may designate up to two additional persons, one to be
designated as the primary designee (the "Primary Designee") and
the other as the secondary designee ("Secondary Designee"), to
serve in the stead of any Successor Trustee who shall be unable
or unwilling to serve as a trustee of the 1997 Voting Trust.
Such designations are revocable by Timothy P. Horne at any time
prior to the time at which such designees become a trustee. If
any of the Successor Trustees is unable or unwilling or shall
otherwise fail to serve as a trustee of the 1997 Voting Trust, or
after becoming a co-trustee shall cease to serve as such for any
reason, then a third person shall become a co-trustee with the
remaining two trustees, in accordance with the following line of
succession: first, any individual designated as the Primary
Designee, next, any individual designated as the Secondary
Designee, and then, an individual appointed by the holders of a
majority in interest of the voting trust certificates then
outstanding. In the event that the Successor Trustees shall not
concur on matters not specifically contemplated by the terms of
the 1997 Voting Trust, the vote of a majority of the Successor
Trustees shall be determinative. No trustee or Successor Trustee
shall possess the Determination Power unless it is specifically
conferred upon such trustee pursuant to the provisions of the
1997 Voting Trust.
The 1997 Voting Trust expires on August 26, 2021, subject to
extension on or after August 26, 2019 by stockholders (including
the trustee of any trust stockholder, whether or nor such trust
is then in existence) who deposited shares of Class B Common
Stock in the 1997 Voting Trust and are then living or, in the
case of shares in the 1997 Voting Trust the original depositor of
which (or the trustee of the original depositor of which) is not
then living, the holders of voting trust certificates
representing such shares. The 1997 Voting Trust may be amended
by vote of the holders of a majority of the voting trust
certificates then outstanding and by the number of trustees
authorized to take action at the relevant time or, if the
trustees (if more than one) do not concur with respect to any
proposed amendment at any time when any trustee holds the
Determination Power, then by the trustee having the Determination
Power. In certain cases (i.e., changes to the extension,
termination and amendment provisions), each individual depositor
must also approve amendments. Shares may not be removed from the
1997 Voting Trust during its term without the consent of the
trustees. Voting trust certificates are subject to any
restrictions on transfer applicable to the stock which they
represent.
Timothy P. Horne holds 35.1% of the total beneficial interest
in the 1997 Voting Trust (the "Beneficial Interest")
individually, 17.04% of the Beneficial Interest as trustee of a
revocable trust, 17.04% of the Beneficial Interest as trustee of
a trust revocable with the consent of the trustee, 26.9% of the
Beneficial Interest as co-trustee of a revocable trust and 0.7%
of the Beneficial Interest as co-trustee of two irrevocable
trusts (representing an aggregate of 96.78% of the Beneficial
Interest). George B. Horne holds 27.53% of the Beneficial
Interest as co-trustee of a revocable trust and two irrevocable
trusts. Tara V. Horne, individually and as beneficiary of an
irrevocable trust holds 1% of the Beneficial Interest, and Judith
Rae Horne, as trustee or custodian for Timothy P. Horne's minor
daughter, holds 2.65% of the Beneficial Interest.
(7) Includes 1,235,840 shares of Class B Common Stock
beneficially owned by Frederic B. Horne, as trustee of a
revocable trust for the benefit of Peter W. Horne, which are
subject to the terms of the Horne Family Voting Trust Agreement-
1991 (the "1991 Voting Trust"). Under the terms of the 1991
Voting Trust, the two trustees (currently Timothy P. Horne and
Frederic B. Horne) have sole power to vote all shares subject to
the 1991 Voting Trust. However, as long as Timothy P. Horne and
Frederic B. Horne are serving as trustees of the 1991 Voting
Trust, Timothy P. Horne generally has the right to vote all
shares subject to such trust in the event that the trustees do
not concur with respect to any proposed action, including any
exercise of the trustee's right to authorize the withdrawal of
shares from the 1991 Voting Trust (for purposes of this
footnote, the "Determination Power"). The sole exception to the
Determination Power is that the concurrence of Timothy P. Horne
and Frederic B. Horne is required for the voting of shares in
connection with any vote involving the election or removal of
directors of the Company. Under the terms of the 1991 Voting
Trust, Timothy P. Horne, the Chairman of the Board of Directors
and Chief Executive Officer of the Company, Frederic B. Horne, a
Corporate Vice President and a director of the Company, and
George B. Horne, the father of Timothy P. Horne and Frederic B.
Horne, may designate up to two successor trustees to succeed
Timothy P. Horne and Frederic B. Horne, one to be designated as
the primary designee and the other as the secondary designee. If
eitherTimothy P. Horne or Frederic B. Horne ceases for any
reason to serve as a trustee, first the primary designee and then
the secondary designee (if any) would become a co-trustee with
the remaining Horne brother. Under such circumstances the
remaining Horne brother would generally have the Determination
Power except that (i) the concurrence of the remaining Horne
brother and the co-trustee would be required in connection with
any vote involving the election or removal of directors of the
Company, (ii) the designated successor would vote those shares
owned by the departed Horne brother and (iii) the designated
successor would have sole authority with respect to withdrawals
of shares beneficially owned by the departed Horne brother. If
both Timothy P. Horne and Frederic B. Horne cease to serve as
trustees, first the primary designee and then the secondary
designee would remain as the sole trustees for the term of the
1991 Voting Trust. If designated successors become trustees but
do not survive whichever of Timothy P. Horne or Frederic B.
Horne is still serving as trustee, that trustee would remain as
the sole trustee absent an amendment to the 1991 Voting Trust.
If each of Timothy P. Horne and Frederic B. Horne and the two
designated successors cease to serve as trustees for any reason,
the holders of a majority of the voting trust certificates then
outstanding have the right to designate successor trustees as
necessary under the terms of the 1991 Voting Trust. Pursuant to
the power of designation described above, Timothy P. Horne,
Frederic B. Horne and George B. Horne have designated Noah T.
Herndon, a director of the Company, as the primary designee and
John R. LeClaire, whose professional corporation is a partner in
the law firm of Goodwin, Procter & Hoar LLP, as the secondary
designee, should either Timothy P. Horne or Frederic B. Horne
cease to serve as a trustee under the 1991 Voting Trust. Timothy
P. Horne, Frederic B. Horne and George B. Horne can collectively
agree to revoke the designation of any successor before he begins
to serve or to appoint a new designated successor. If one or more
of such Horne family members are unable to take such action,
this power rests in the survivor or survivors of them.
The 1991 Voting Trust expires on October 31, 2001, subject to
extension on or after October 31, 1999 by stockholders
(including the trustee of any trust stockholder, whether or nor
such trust is then in existence) who deposited shares of Class B
Common Stock in the 1991 Voting Trust, are then living and
continue to hold voting trust certificates under the 1991 Voting
Trust or, in the case of shares in the 1991 Voting Trust the
original depositor of which (or the trustee of the original
depositor of which) is not then living, the holders of voting
trust certificates representing such shares. The 1991 Voting
Trust may be amended or terminated by vote of the holders of a
majority of the voting trust certificates then outstanding and,
while one or more of Timothy P. Horne, Frederic B. Horne and
their successor designated as described in the preceding
paragraph is serving as trustee, the trustees. Shares may not be
removed from the trust during its term without the consent of
the trustees.
Frederic B. Horne, as sole trustee of a revocable trust for the
benefit of Peter W. Horne beneficially owns 100% of the total
beneficial interest in the 1991 Voting Trust.
(8) Includes (i) 1,865,323 shares of Class B Common Stock and
154,000 shares of Class A Common Stock, beneficially owned by
Frederic B. Horne (for purposes of this footnote, "Mr. Horne"),
(ii) 1,235,840 shares beneficially owned by a revocable trust
for the benefit of Peter W. Horne for which Mr. Horne serves as
sole trustee, (iii) 22,600 shares held for the benefit of Mr.
Horne's minor daughter, under an irrevocable trust for which Mr.
Horne serves as co-trustee, (iv) 11,000 shares beneficially owned
by Mr. Horne's minor daughter for which Mr. Horne is custodian
and (v) 35,400 shares issuable upon the exercise of stock
options exercisable currently or within 60 days of August 26,
1997. The shares noted in clause (ii) above are held in the 1991
Voting Trust. See footnote 7. All shares beneficially owned or
which may be deemed beneficially owned by Mr. Horne are Class B
Common Stock except 154,000 of the shares noted in clause (i) and
all of the shares noted in clause (v) of this footnote.
(9) Consists of 2,124,600 shares held in a revocable trust for
which Timothy P. Horne and George B. Horne
serve as co-trustees. A total of 2,104,600 of such shares are
subject to the 1997 Voting Trust. See footnote 6.
(10) All shares are Class B Common Stock.
(11) Shares are held in a revocable trust for which Timothy P.
Horne serves as sole trustee, and are subject to the 1997 Voting
Trust. See footnote 6.
(12) Shares are held in a trust for which Timothy P. Horne
serves as sole trustee, which trust is revocable with the
consent of the trustee, and are subject to the 1997 Voting Trust.
See footnote 6.
(13) All shares are Class B Common Stock except for 100,000
shares of Class A Common Stock. The shares of Class B Common
Stock are held in a revocable trust for which Frederic B. Horne
serves as sole trustee, and are subject to the 1991 Voting Trust.
See footnote 7.
(14) All shares are shares of Class A Common Stock or options
to purchase Class A Common Stock which are exercisable currently
or within 60 days of August 26, 1997.
(15) Includes 12,000 shares of Class A Common Stock issuable
upon the exercise of stock options under the 1991 Non-Employee
Directors' Nonqualified Stock Option Plan.
(16) Includes (i) 6,000 shares of Class A Common Stock issuable
upon the exercise of stock options under the 1991 Non-Employee
Directors' Nonqualified Stock Option Plan, (ii) 2,000 shares of
Class A Common Stock held by Ms. Lane as trustee or custodian for
her minor children and (iii) 4,000 shares of Class A Common
Stock.
(17) Includes (i) 60,000 shares of Class A Common Stock
issuable upon the exercise of stock options which are exercisable
currently or within 60 days of August 26, 1997, (ii) 1,000 shares
of Class A Common Stock held by Mr. Bloss' spouse and (iii) 8,000
shares of Class A Common Stock.
(18) Represents 49,000 shares of Class A Common Stock issuable
upon the exercise of stock options which are exercisable
currently or within 60 days of August 26, 1997.
(19) Represents 38,200 shares of Class A Common Stock issuable
upon the exercise of stock options which are exercisable
currently or within 60 days of August 26, 1997.
(20) Includes (i) 10,997,153 shares of Class B Common Stock,
(ii) 245,743 shares of Class A Common Stock, and (iii) 439,994
shares of Class A Common Stock issuable upon the exercise of
stock options which are exercisable currently or within 60 days
of August 26, 1997.
(21) Shares of Class B Common Stock of the Company held by
members of management other than Horne family members are subject
to a right of first refusal in favor of the Company.
George B. Horne Voting Trust Agreement - 1997
All shares of Class B Common Stock held by Timothy P.
Horne, individually, all shares of Class B Common Stock held
by trusts for the benefit of Daniel W. Horne, Deborah Horne,
Tara V. Horne and Timothy P. Horne's minor daughter,
2,104,600 shares held by a trust for the benefit of George
B. Horne, and 50,000 shares of Class B Common Stock held by
Tara V. Horne (7,838,040 shares in the aggregate) are
subject to the terms of The George B. Horne Voting Trust
Agreement-1997 (the "1997 Voting Trust"). Under the terms
of the 1997 Voting Trust, the trustee (currently Timothy P.
Horne) has sole power to vote all shares subject to the
1997 Voting Trust. Timothy P. Horne, for so long as he is
serving as trustee of the 1997 Voting Trust, has the power
to determine in his sole discretion whether or not proposed
actions to be taken by the trustee of the 1997 Voting Trust
shall be taken, including the trustee's right to authorize
the withdrawal of shares from the 1997 Voting Trust (for
purposes of this footnote, the "Determination Power"). In
the event that Timothy P. Horne ceases to serve as trustee
of the 1997 Voting Trust, no trustee thereunder shall have
the Determination Power except in accordance with a duly
adopted amendment to the 1997 Voting Trust. Under the
terms of the 1997 Voting Trust, in the event Timothy P.
Horne ceases to serve as trustee of the 1997 Voting Trust,
then Noah T. Herndon, a director of the Company, John R.
LeClaire, whose professional corporation is a partner in the
law firm of Goodwin, Procter & Hoar LLP, and Walter J.
Flowers, a partner in the law firm of Flowers and Lichtman
(each, a "Successor Trustee" and collectively, the
"Successor Trustees"), shall thereupon become co-trustees of
the 1997 Voting Trust. At any time, Timothy P. Horne, if
then living and not subject to incapacity, may designate up
to two additional persons, one to be designated as the
primary designee (the "Primary Designee") and the other as
the secondary designee ("Secondary Designee"), to serve in
the stead of any Successor Trustee who shall be unable or
unwilling to serve as a trustee of the 1997 Voting Trust.
Such designations are revocable by Timothy P. Horne at any
time prior to the time at which such designees become a
trustee. If any of the Successor Trustees is unable or
unwilling or shall otherwise fail to serve as a trustee of
the 1997 Voting Trust, or after becoming a co-trustee shall
cease to serve as such for any reason, then a third person
shall become a co-trustee with the remaining two trustees,
in accordance with the following line of succession: first,
any individual designated as the Primary Designee, next, any
individual designated as the Secondary Designee, and then,
an individual appointed by the holders of a majority in
interest of the voting trust certificates then outstanding.
In the event that the Successor Trustees shall not concur on
matters not specifically contemplated by the terms of the
1997 Voting Trust, the vote of a majority of the Successor
Trustees shall be determinative. No trustee or Successor
Trustee shall possess the Determination Power unless it is
specifically conferred upon such trustee pursuant to the
provisions of the 1997 Voting Trust.
The 1997 Voting Trust expires on August 26, 2021, subject
to extension on or after August 26,2019 by stockholders
(including the trustee of any trust stockholder, whether or
nor such trust is then in existence) who deposited shares of
Class B Common Stock in the 1997 Voting Trust and are then
living or, in the case of shares in the 1997 Voting Trust
the original depositor of which (or the trustee of the
original depositor of which) is not then living, the holders
of voting trust certificates representing such shares. The
1997 Voting Trust may be amended by vote of the holders of a
majority of the voting trust certificates then outstanding
and by the number of trustees authorized to take action at
the relevant time or, if the trustees (if more than one) do
not concur with respect to any proposed amendment at any
time when any trustee holds the Determination Power, then by
the trustee having the Determination Power. In certain cases
(i.e., changes to the extension, termination and amendment
provisions), each individual depositor must also approve
amendments. Shares may not be removed from the 1997 Voting
Trust during its term without the consent of the trustees.
Voting trust certificates are subject to any restrictions on
transfer applicable to the stock which they represent.
Timothy P. Horne holds 35.1% of the total beneficial
interest in the 1997 Voting Trust (the "Beneficial
Interest") individually, 17.04% of the Beneficial Interest
as trustee of a revocable trust, 17.04% of the Beneficial
Interest as trustee of a trust revocable with the consent of
the trustee, 26.9% of the Beneficial Interest as co-trustee
of a revocable trust and 0.7% of the Beneficial Interest as
co-trustee of two irrevocable trusts (representing an
aggregate of 96.78% of the Beneficial Interest). George B.
Horne holds 27.53% of the Beneficial Interest as co-trustee
of a revocable trust and two irrevocable trusts. Tara V.
Horne, individually and as beneficiary of an irrevocable
trust holds 1% of the Beneficial Interest, and Judith Rae
Horne, as trustee or custodian for Timothy P. Horne's minor
daughter, holds 2.65% of the Beneficial Interest.
Item 7(c). Exhibits.
9.1 George B. Horne Voting
Trust Agreement_1997 dated as of
August 26, 1997 among Watts
Industries, Inc., Timothy P. Horne,
George B. Horne and Tara V. Horne,
individually, Timothy P. Horne and
George B. Horne as trustees of the
George B. Horne Trust - 1982,
Timothy P. Horne as trustee of the
Daniel W. Horne Trust - 1980,
Timothy P. Horne as trustee of the
Deborah Horne Trust - 1976, Timothy
P. Horne and George B. Horne as
trustees of The George B. Horne
Grandchildren's Trust -1995 f/b/o
Tara V. Horne, Timothy P. Horne and
George B. Horne as trustees of The
George B. Horne Grandchildren's
Trust -1995 f/b/o Tiffany R. Horne,
Judith Rae Horne as trustee of The
Tiffany Rae Horne Trust - 1984 and
Judith Rae Horne as custodian for
Tiffany R. Horne.
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
WATTS INDUSTRIES, INC.
\s\ Kenneth J. McAvoy
By:
Kenneth J. McAvoy,
Chief Financial Officer,
Treasurer and Secretary (Principal
Financial and Accounting Officer)
Date: September 10, 1997
EXHIBIT INDEX
The following documents are contained in this Report as
Exhibits:
Exhibit No. Description
9.1 George B. Horne Voting Trust Agreement_1997
dated as of August 26, 1997 among Watts Industries,
Inc., Timothy P. Horne, George B. Horne and Tara V. Horne,
individually, Timothy P. Horne and George B. Horne as
trustees of the George B. Horne Trust - 1982, Timothy P.
Horne as trustee of the Daniel W. Horne Trust - 1980,
Timothy P. Horne as trustee of the Deborah Horne Trust -
1976, Timothy P. Horne and George B. Horne as trustees of
The George B. Horne Grandchildren's Trust -1995 f/b/o Tara
V. Horne, Timothy P. Horne and George B. Horne as trustees
of The George B. Horne Grandchildren's Trust -1995 f/b/o
Tiffany R. Horne, Judith Rae Horne as trustee of The Tiffany
Rae Horne Trust - 1984 and Judith Rae Horne as custodian for
Tiffany R. Horne.
Exhibit 9.1
THE GEORGE B. HORNE VOTING TRUST AGREEMENT - 1997
THIS AGREEMENT is made as of the 26th day of August 1997,
by and among TIMOTHY P. HORNE, as the Trustee having
Determination Power (as hereinafter defined), and as the
initial trustee hereunder hereinafter referred to, together
with his successors in trust as provided herein, as the
"Trustees", WATTS INDUSTRIES, INC., a Delaware corporation
(the "Company"), TIMOTHY P. HORNE, as trustee of The George
B. Horne Trust - 1982, as Restated and Republished from time
to time, as a depositor of shares and recipient and holder
of voting trust certificates hereunder (in such capacity
hereinafter sometimes referred to, together with any other
person or persons who hereafter might deposit shares in this
voting trust and thereby become holders of voting trust
certificates hereunder, individually as a "Depositor" and
collectively as the "Depositors"), and GEORGE B. HORNE
individually (in such capacity hereinafter sometimes
referred to, together with the Depositors and any other
person or persons who are or hereafter become parties hereto
as "Beneficiaries" hereunder or subject hereto as holders of
voting trust certificates, individually as a "Beneficiary"
and collectively as the "Beneficiaries").
WITNESSETH:
WHEREAS, the parties hereto desire to enter into this
Agreement, effective as of the date hereof, with a view
toward promoting and enhancing the long-term stability and
growth of the Company; and
WHEREAS, the parties hereto agree that, pursuant to this
Agreement and on the terms and conditions set forth herein,
the Trustees shall be granted the sole and exclusive voting
power in all matters with respect to those shares of capital
stock of the Company which are subject to this Agreement as
set forth herein, together with the other rights and powers
specified herein; and
WHEREAS, the parties hereto intend that this Agreement
will satisfy the requirements of Section 218(a) of the
Delaware General Corporation Law, as amended (the "DGCL"),
and be treated as a voting trust thereunder; and
WHEREAS, the Trustees have consented to act under this
Agreement for the purposes hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto mutually promise,
covenant, undertake and agree as follows:
1. Transfer of Stock to Trustees. The Depositor is,
contemporaneously with the execution of this Agreement,
depositing with the Trustees one or more certificates
representing that number of shares of the Class B Common
Stock of the Company held by such Depositor as set forth
opposite such Depositor's name on Schedule A attached
hereto, and each Beneficiary shall deposit with the Trustees
immediately upon receipt certificates representing any
shares of capital stock of the Company having voting powers
which such Beneficiary hereafter acquires or receives during
the term of this Agreement other than (i) shares of Class A
Common Stock of the Company acquired by such Beneficiary
under any stock purchase, savings, option, bonus, stock
appreciation, profit-sharing, thrift, incentive, pension or
similar plan of the Company, or acquired by such Beneficiary
in any open market purchase, (ii) any shares of Class B
Common Stock listed on Schedule A as not being held pursuant
to and subject to this Agreement, if any, and (iii) shares
of capital stock of the Company issued as a stock dividend
or pursuant to a stock split in respect of any shares of
capital stock of the Company held by such Beneficiary which
are not subject to this Agreement. All such stock
certificates shall be so endorsed, or accompanied by such
instruments of transfer, as to enable the Trustees to cause
such certificates to be transferred into the names of the
Trustees after the filing of this Agreement as required by
law, which the Trustees shall forthwith cause to be done as
hereinafter provided. Upon receipt by the Trustees of the
certificates for any such shares of stock and the transfer
of the same into the names of the Trustees, the Trustees
shall hold the same subject to the terms of this Agreement
and shall issue and deliver to the depositors of shares of
stock hereunder voting trust certificates representing their
interests in such stock deposited pursuant to this
Agreement. Except as specifically provided in this
Agreement, and without limitation of the voting rights of
the Trustees including in connection with any merger or
other sale of the Company, the Trustees shall not sell,
assign, donate, pledge, encumber, grant any security
interest with respect to, hypothecate, or otherwise transfer
or dispose of any of the capital stock of the Company held
pursuant to this Agreement.
During the term of this Agreement, no shares subject
to this voting trust may be withdrawn except in the manner
provided below in this Section 1. Any such withdrawal by a
registered holder of voting trust certificates shall be
effected only by a written amendment to this Agreement in
the form of Schedule B attached hereto executed by the
requisite number of Trustees then serving as such hereunder
then required to take action under Section 10. The Trustee
having the Determination Power shall have the right to
consent to such amendment and withdrawal in his sole
discretion and approval by such Trustee having the
Determination Power with respect to such amendment and
withdrawal shall be deemed to constitute approval of all
Trustees at any time serving. If TIMOTHY P. HORNE is not
then serving as a Trustee hereunder, then consent to such
amendment and withdrawal shall be by the holders of a
majority in interest of the voting trust certificates
hereunder then outstanding. Upon the surrender by such
holder to the Trustees of the voting trust certificate or
certificates designated in such amendment, the Trustees are
authorized to deliver or cause to be delivered to such
holder (i) a certificate or certificates for the shares of
the capital stock of the Company so withdrawn, with any
appropriate restrictive legends, and (ii) a new voting trust
certificate in respect of the remaining shares held
hereunder, if any signed in the manner contemplated by the
terms of this Agreement. Shares withdrawn from this voting
trust, when so withdrawn, shall be free of any restrictions
imposed by this Agreement, but shall remain subject to any
and all restrictions imposed by other agreements or by law.
Nothing in this Section 1 or in any such amendment shall
modify, amend, limit or terminate any other restrictions
contained in. or be construed as a consent to any transfer
of shares subject to this Agreement under, any other
agreement or instrument, unless such amendment specifically
refers to such other agreement or instrument and satisfies
all requirements for amendment or waiver thereof (including
execution and delivery by appropriate parties).
The other provisions of this Section 1 notwithstanding,
removal of shares from this Voting Trust shall be required
if the removal and liquidation of such shares is needed to
enable the Estate of a deceased holder of voting trust
certificates to pay its federal and/or state death or estate
tax, and the other assets of such estate are insufficient to
pay such tax.
Any depositor may request that he or she be allowed to
withdraw one or more shares of stock from the trust by
filing a written request for withdrawal with the Trustee of
the Trust. Such written request shall set forth the number
of shares that the depositor wishes to withdraw from the
trust and shall state the intended purpose for the requested
withdrawal of shares from the trust. Any request for
withdrawal of shares may be approved by the Trustee, within
the Trustee's absolute discretion, provided that the Trustee
in his discretion shall have determined that approval of the
request for withdrawal shall not be adverse to the best
interests of Watts Industries, Inc. or its successors and
provided that the Trustee shall have determined that the
request for withdrawal, if approved, shall be in the best
interests of the Class B Stockholders. All such shares so
withdrawn for any reason in accordance with these provisions
shall be subject to any restrictions imposed upon the said
Class B Shares of the Common Stock of Watts Industries,
Inc., in accordance with any Stock Restriction Agreement
entered by or on behalf of such Holder during his or her
lifetime.
2. Agreement. Copies of this Agreement and of every
agreement supplemental hereto or amendatory hereof shall be
provided to the Trustees and to the Company, and shall,
prior to the issuance of voting trust certificates
hereunder, be filed with and maintained in the registered
office of the Company in Delaware and at such other place as
the Trustees shall designate, and shall be open to
inspection daily during business hours by any Beneficiary.
All voting trust certificates shall be issued, received and
held subject to all of the terms of this Agreement. All
persons and entities who accept a voting trust certificate
issued hereunder shall be bound by the provisions of this
Agreement with the same effect as if they were parties to
this Agreement.
All certificates for the Company's capital stock
transferred and delivered to the Trustees pursuant hereto
shall be surrendered by the Trustees to the Company and
canceled and new certificates therefor shall be issued to
and held by the Trustees in their own names in their
capacities as Trustees hereunder and shall bear a legend
indicating that the shares represented by such certificate
are subject to this Agreement (which fact shall also be
stated in the stock ledger of the Company).
3. Voting Trust Certificates. Each voting trust
certificate to be issued and delivered by the Trustees in
respect of the capital stock of the Company, as hereinbefore
provided, shall state the number of shares which it
represents, shall be signed by the Trustees then in office,
and shall be in substantially the form of Schedule C
attached hereto and bear the restrictive legend set forth
thereon, it being understood that during any period in which
a Trustee has the Determination Power (as hereinafter
defined), voting trust certificates issued hereunder may be
signed by that Trustee alone and such Trustee's signature
shall be deemed for all purposes to constitute the signature
and authorization of all Trustees hereunder and to evidence
conclusively that the issuance of the related certificate is
the act of all Trustees then serving.
4. Transfer of Certificates; Restrictions. The
transfer of any voting trust certificate (including without
limitation any sale, assignment, donation, pledge,
encumbrance, grant of a security interest, hypothecation or
other transfer or disposition) shall be subject to any
restrictions, conditions and other provisions applicable to
it or to the stock which it represents, whether imposed by
law, specified on the relevant certificate or specified in
the Restated Certificate of Incorporation of the Company, as
amended (the "Restated Certificate") (provided that any
transfer of voting trust certificates without a transfer of
the underlying stock held in this voting trust shall in no
way affect the voting rights of such underlying stock,
consistent with the terms of the Restated Certificate), this
Agreement or any other agreement. Any attempted transfer in
violation of such restrictions, conditions and other
provisions shall be void ab initio and the Trustees shall
not register such transfer or recognize the intended
transferee as the holder of the voting trust certificate for
any purpose. To the extent permitted by law, voting trust
certificates shall not be subject to attachment,
garnishment, judicial order, levy, execution or similar
process, however instituted, for satisfaction of a judgment
or otherwise.
Subject to the foregoing provisions, the voting trust
certificates shall be transferable on the books of the
Trustees, at such office as the Trustees may designate, by
the registered owner thereof, either in person or by
attorney duly authorized, upon surrender thereof, according
to the rules established for that purpose by the Trustees,
and the Trustees may treat the registered holder as the
owner thereof for all purposes whatsoever, but they shall
not be required to deliver new voting trust certificates
hereunder without the surrender of such existing voting
trust certificates for cancellation by the Trustees at the
time of their issuance of new voting trust certificates.
If a voting trust certificate is lost, stolen,
mutilated or destroyed, the Trustees, in their discretion,
may issue a duplicate of such certificate upon receipt of
(a) evidence of such fact satisfactory to them; (b)
indemnity satisfactory to them; (c) the existing
certificate, if mutilated; and (d) their reasonable fees and
expenses in connection with the issuance of a new trust
certificate.
5. Termination Procedure. Upon the termination of the
voting trust at any time, as hereinafter provided, the
Trustees shall mail written notice of such termination to
the registered owners of the outstanding voting trust
certificates at the address appearing on the transfer books
of the Trustees. From the date specified in any such notice
(which date shall be fixed by the Trustees) the voting trust
certificates shall cease to have any effect, and the holders
of such voting trust certificates shall have no further
rights under this voting trust other than to receive
certificates for shares of stock of the Company or other
property distributable under the terms hereof upon the
surrender of such voting trust certificates.
Within 30 days after the termination of this voting
trust, the Trustees shall deliver to the registered holders
of all voting trust certificates outstanding as of the date
of such termination, stock certificates for the number of
shares of such class or classes of the Company's capital
stock represented thereby as to which they shall be entitled
upon the surrender for cancellation of such voting trust
certificates, properly endorsed or accompanied by properly
endorsed instruments of transfer, if appropriate, at the
place designated by the Trustees, and after payment, if the
Trustees so require, by the persons entitled to receive such
stock certificates, of a sum sufficient to cover any stamp
tax or governmental charge in respect of the transfer or
delivery of such stock certificates. Such certificates or
shares shall bear such legend referring to the restrictions
on transfer of such shares as may be required by this
Agreement, by law or otherwise. Thereupon, all liability of
the Trustees for delivery of such certificates of shares
shall terminate, and the voting trust certificates
representing the beneficial interest in the shares so
delivered by the Trustees shall be null and void.
If upon such termination, one or more registered
holders of outstanding voting trust certificates shall fail
to surrender such voting trust certificates, or the Trustees
for any reason shall be unable to comply with the provisions
of the preceding paragraph, the Trustees may, at any time
subsequent to 30 days after the termination of this
Agreement, deposit with the Company stock certificates
representing the number of shares of capital stock
represented by such voting trust certificates, together with
written instructions authorizing the Company to deliver such
stock certificates in exchange for voting trust certificates
representing a like interest in the capital stock of the
Company; and upon such deposit, all further liability of the
Trustees for the delivery of such stock certificates and the
delivery or payment of dividends upon surrender of the
voting trust certificates shall cease, and the Trustees
shall not be required to take any further actions hereunder.
Notwithstanding anything herein to the contrary, upon
any extension of this voting trust as contemplated by
Section 13 hereof, the shares of stock held herein with
respect to which this voting trust is being extended shall
continue to be held by the Trustees and/or their successor
Trustees rather than being transferred to the registered
holders of voting trust certificates in respect thereof for
recontribution, and in such event no transfer of such shares
shall be deemed to have occurred for any purpose.
6. Dividends. If any dividend in respect of the stock
deposited with the Trustee is paid, in whole or in part, in
stock of the Company having voting powers, the Trustees
shall likewise hold, subject to the terms of this Agreement,
the stock certificates which are received by them on account
of such dividend, and the holder of each outstanding voting
trust certificate representing stock on which such dividend
has been paid shall be entitled to receive a voting trust
certificate issued under this Agreement for the number of
shares and class of stock received as such dividend with
respect to the shares represented by such voting trust
certificate. Holders entitled to receive the voting trust
certificates issued in respect of such dividends shall be
those registered as such on the transfer books of the
Trustees at the close of business on the record date for
such dividend.
If any dividend in respect of the stock deposited
with the Trustees is paid other than in capital stock of the
Company having voting powers, then the Trustees shall
promptly distribute the same to the holders of outstanding
voting trust certificates registered as such at the close of
business on the record date for such distribution. Such
distribution shall be made to such holders of voting trust
certificates ratably, in accordance with the number of
shares represented by their respective voting trust
certificates.
In lieu of receiving cash dividends upon the capital
stock of the Company deposited with the Trustees and paying
the same to the holders of outstanding voting trust
certificates pursuant to the preceding paragraph, the
Trustees may instruct the Company in writing to pay such
dividends directly to the holders of the voting trust
certificates specified by the Trustees. Such instructions
are deemed given hereby and until receipt of written
instructions to the contrary from the Trustees, the Company
agrees to pay such dividends directly to the holders of the
voting trust certificates. The Trustees may at any time
revoke such instructions and by written notice to the
Company direct it to make dividend payments to the Trustees.
The Company shall not be liable to any holder of a voting
trust certificate or any person claiming to be entitled to
any such dividends by reason of adhering to any written
instructions of the Trustees.
7. Subscription Rights. If any stock or other securities
of the Company are offered for subscription to all of the
holders of any class of the Company's captial stock
depostied hereunder, the Trustees promptly, upon receipt of
notice of such offer, shall mail a copy thereof to each
registered holder of the outstanding voting trust
certificates representing such class of capital stock. Upon
receipt by the Trustees, at least five days prior to the
last day fixed by the Company for subscription and payment,
of a request for any such registered holder of voting trust
certificates to subscribe for such shares on behalf of such
registered holder, accompanied by the sum of money required
to pay for such stock or other securities, the Trustees
shall make such subscription and payment, and upon receipt
from the Company of the certificates for shares or other
securities so subscribed for, shall issue to such registered
holder a voting trust certificate representing such shares
if the same be stock of the Company having voting powers,
but if the same be shares or other securities other than
stock having voting powers, the Trustees shall mail or
deliver such securities to the voting trust certificate
holder in whose behalf the subscription was made, or may
instruct the Company to make delivery directly to the voting
trust certificate holder entitled thereto.
8. Dissolution of the Company. In the event of the
dissolution or total or partial liquidation of the Company
(other than in the event of a transaction described in
Section 9 below), whether voluntary or involuntary, the
Trustees shall receive the moneys, securities, rights or
property to which the holders of outstanding shares of the
Company's captial stock deposited hereunder are entitled,
and shall distribute the same among the registered holders
of voting trust certificates in proportion to their
interests, as shown by the transfer books of the Trustees,
or the Trustees may in their discretion deposit such moneys,
securities, rights or property with any bank or trust
company with authority and instructions to distribute the
same as above provided, and upon such deposit, all further
obligations or liabilities of the Trustee in respect of such
moneys, securities, rights or property so deposited shall
cease.
9. Reorganization or Sale of the Company. In the
event that there occurs (i) any merger or consolidation
transaction involving the Company and one or more other
entities, or a transaction in which all or substantially all
of the assets of the Company are transferred to another
entity or (ii) a transaction in which stockholders of the
Company transfer or exchange shares held by them wholly or
partially for capital stock of another entity having voting
powers, and in any such transaction securities of such
entity having voting powers are received by the Trustees in
respect of the shares subject to this voting trust, it being
understood that in connection with any such transaction or
otherwise all voting powers in respect of shares subject to
this voting trust shall be exercised by the Trustees in
accordance with the terms hereof and that shares may be
removed from this voting trust only in accordance with
Section 1, thus giving the Trustees all power and authority
to vote all shares subject hereto in connection with any
such transaction, then in connection with any such
transaction the term "Company" for all purposes of this
Agreement shall include such successor entity, and the
Trustees shall receive and hold under this Agreement any
such capital stock of such successor entity received on
account of the ownership, as Trustees hereunder, of the
stock held hereunder immediately prior to such transaction.
Voting trust certificates issued and outstanding under this
Agreement at the time of such transaction may remain
outstanding or the Trustees may, in their discretion,
substitute for such voting trust certificates new voting
trust certificates in appropriate form and with appropriate
modifications to reflect the number of shares of other
securities then held, and the terms, "stock" and "capital
stock" as used herein shall be taken to include any
securities which may be received by the Trustees in lieu of
all or any part of the capital stock of the Company.
In the event that there occurs any transaction
described in the preceding paragraph and in connection
therewith the Trustees receive assets other than capital
stock having voting powers, the Trustees shall distribute
such assets to the registered holders of the outstanding
voting trust certificates hereunder pro rata on the basis of
their respective interests in the shares held hereunder and,
if such consideration shall consist wholly of such assets,
this Agreement shall thereafter terminate.
10. Rights, Powers and Duties of Trustees. Until the
actual delivery to the holders of voting trust certificates
issued hereunder of stock certificates in exchange therefor,
and until the surrender of such voting trust certificates
for cancellation, in each case in accordance with the terms
of this Agreement, title to all of the Company's stock
deposited hereunder shall be vested in the Trustees, who
shall be deemed the holders of record of such shares for all
purposes, and the Trustees shall have the sole and exclusive
right, acting as hereinafter provided and subject to such
limitations as are set forth herein, to exercise, in person
or by their nominees or proxies, all of the rights and
powers in respect of all stock deposited hereunder,
including the right to vote such stock and to take part in
or consent to any corporate or stockholders' action of any
kind whatsoever, whether ordinary or extraordinary, subject
to the provisions hereinafter set forth. The right to vote
shall include the right to vote in connection with the
election of directors and other resolution or proposed
action of any character whatsoever which may be presented at
any meeting or require the consent of stockholders of the
Company. It is expressly understood and agreed that the
holders of voting trust certificates in their capacities as
such shall not have any right, either under said voting
trust certificates or under this Agreement, or under any
agreement or doctrine or concept of law, express or implied,
or otherwise, with respect to any shares held by the
Trustees hereunder to vote such shares or to take part in or
consent to any corporate action, or to do or perform any
other act or thing which the holders of the Company's common
stock of any class are now or may hereafter become entitled
to do or perform.
No Trustee shall incur any responsibility in his
capacity as trustee, individually or otherwise, in voting
the shares held hereunder or in any matter or act committed
or omitted to be done under or in connection with this
Agreement, or for any vote or act committed or omitted to be
done by any predecessor or successor Trustee, except for
such Trustee's willful malfeasance.
The Trustees shall at all times keep, or cause to be
kept, complete and accurate records of all stock deposited
with them hereunder, the identity, addresses and ownership
of the Depositors and Beneficiaries, and all voting trust
certificates issued by the Trustee. Such records shall be
open to inspection by any Depositor or Beneficiary under
this Agreement on reasonable notice given to the Trustees at
their usual place of business during their normal business
hours.
Whenever action is required of the Trustees, such
action may be taken by written consent signed by the
requisite number of Trustees or by vote of the requisite
number of Trustees at a meeting of the Trustees. So long as
there are two (2) or more Trustees hereunder, the
concurrence of both (if there are two (2) Trustees) or a
majority (if there are more than two (2) Trustees) of the
Trustees then serving shall be necessary and sufficient for
the validity of any action taken by the Trustees, and if at
any time there is one Trustee hereunder (subject to Section
11) such Trustee's action shall be necessary and sufficient
for the validity of any action taken by the Trustees.
Notwithstanding the foregoing, if at any time TIMOTHY P.
HORNE and or any other person shall serve as co-Trustees
hereunder, and if for any reason the Trustees shall fail to
concur with respect to any action proposed to be taken by
the Trustees under or pursuant to this Agreement (including
without limitation any voting decision, any amendment in
connection with the withdrawal of shares as contemplated by
Section 1, any other trust amendment or trust termination),
then TIMOTHY P. HORNE, for so long as he is serving as a
Trustee hereunder, shall have the power (such power being
herein called the "Determination Power") to determine in his
sole discretion, whether or not such proposed action is to
be taken and upon his approval such action when and if taken
shall have the same force and effect as if both or all of
the Trustees had agreed with respect thereto. Any and all
documents or instruments executed by or on behalf of the
Trustees hereunder (including without limitation voting
trusting certificates) may be executed by Timothy P. Horne
alone and his signature shall evidence conclusively the
authorization and all of the Trustees hereunder.
In the event that TIMOTHY P. HORNE shall cease to
serve as a Trustee hereunder, then no Trustee hereunder
shall have the Determination Power, except in accordance
with a duly-published amendment to this Agreement adopted in
accordance with the terms hereof, provided, however, that
the foregoing shall not be deemed to limit the authority of
any person serving as a sole Trustee under and in accordance
with this Agreement.
11. Remaining Trustees; Successor Trustees; Successors'
Determination Power At least one (1) individual shall serve
as a Trustee hereunder during any period in which TIMOTHY P.
HORNE serves as a Trustee hereunder. The said TIMOTHY P.
HORNE shall have full discretionary authority to serve as
the sole Trustee until such time as he shall determine that
he is unwilling or unable to so serve and shall have
resigned by written instrument, or until his death or
permanent incapacity or disability. During any period
following TIMOTHY P. HORNE's service as a Trustee hereunder
(subject to the further provisions of this Section 11 as set
forth in the second paragraph hereof), there shall be at
least two (2) Trustees hereunder. Notwithstanding the
preceding two sentences or any other provisions of this
Agreement or otherwise to the contrary, if at any time no
Trustee shall be serving hereunder for any reason (as a
result, for example, of the deaths of the Trustees), then
this Agreement and the voting trust created hereby shall
nevertheless remain in existence and in full force and
effect until a new Trustee shall be appointed in accordance
with this Section 11. All Trustees hereunder shall be
individuals. Trustees shall in no event be subject to
removal for any reason and any Trustee hereunder shall serve
until his or her resignation, death, permanent disability or
incapacity (as hereinafter defined). Any Trustee hereunder
may resign by a signed instrument delivered to the remaining
Trustee or Trustees, if any, or otherwise to the registered
holders of the outstanding voting trust certificates.
The following provisions shall govern the succession
of Trustees hereunder. In the event TIMOTHY P. HORNE shall
cease to serve as a Trustee hereunder, then Attorney WALTER
J. FLOWERS, NOAH T. HERNDON, and Attorney JOHN R. LECLAIRE
shall thereupon become Co-Trustees hereunder if they are
then living and willing and able to serve as such. In the
event that either WALTER J. FLOWERS, NOAH T. HERNDON, or
JOHN R. LECLAIRE shall be unwilling or unable to serve as a
Co-Trustee, then a Primary Designee or a Secondary Designee
(as defined hereinbelow) shall be appointed to serve in the
stead of a named Co-Trustee who shall be unwilling or unable
to serve in that capacity. In the event that any one of
WALTER J. FLOWERS, NOAH T. HERNDON, JOHN R. LECLAIRE or any
Primary Designee or Secondary Designee is unable or
unwilling or shall otherwise fail to serve as a Trustee
hereunder at the time he would otherwise become such, or
after becoming a Co-Trustee shall cease to serve as such for
any reason, then there shall continue to be two (2) trustees
hereunder, and a person or the persons indicated below (if
available) shall become a Co-Trustee or Trustees in
accordance with the following line of succession in order
that there will ultimately be three (3) Co-Trustees to serve
in such office in accordance with the terms of this Trust:
(1) First, any individual designated as the "Primary
Designee" in accordance with the following paragraph of this
Section 11;
(2) Next, any individual designated as the "Secondary
Designee" in accordance with the following paragraph of this
Section 11; and
(3) Then, one (1) or two (2) individuals (as applicable)
appointed by the holders of a majority in interest of the
voting trust certificates then outstanding,
such that in the event the individual or individuals
contemplated to serve as a Trustee or Trustee(s) hereunder
for any reason fail or are unable to serve as such at the
time he or they would otherwise be a Trustee or Trustees
hereunder or thereafter cease to serve as such for any
reason, or if no designation of a Primary Designee and/or a
Secondary Designee shall be in effect, then the next
available individual in the line of succession shall become
a Trustee hereunder, provided, however, that if for any
reason there shall ever be a single Trustee hereunder during
any period following TIMOTHY P. HORNE's service as a Trustee
hereunder, then such sole Trustee shall be authorized to
take all actions on behalf of the Trustee until such time as
another Trustee shall be appointed, provided that the party
or parties authorized to designate a successor or successors
shall endeavor to do so promptly. In the event of any
disagreement between the Co-Trustees with regard to any
issue involving the Trust, the majority vote of the Trustees
then in office shall be determinative of any issue which
shall be considered by the Trustees.
At any time TIMOTHY P. HORNE, if then living and
not then subject to any incapacity (as hereinafter defined)
may by written instrument signed and filed with the
registered office of the Company in Delaware, designate (i)
an individual to serve as Primary Designee in the line of
succession contemplated by this Section 11 (the "Primary
Designee"), and (ii) if he so elects, an additional
individual to succeed, or to serve in lieu of or with the
Primary Designee as a trustee hereunder (the "Secondary
Designee") as also contemplated by this Section 11. Any
such designation shall also be revocable by a written
instrument signed by TIMOTHY P. HORNE if then living and not
then subject to any incapacity (as hereinafter defined), and
filed with the registered office of the Company in Delaware
at any time prior to the time at which a designated
successor becomes a Trustee hereunder. It is understood
that the provisions of this Section 11 are intended to
permit the designation of up to two individuals to become
Trustees in accordance with the line of succession as
Trustees hereunder, and while designations of particular
individuals may be revoked and a new individual designated
in his or her place (such as in the case of a designee's
death, for example), no more than two individuals may become
Trustees hereunder pursuant to a designation as a Primary or
Secondary Designee absent an amendment to this Agreement, it
being understood that in event a Secondary Designee becomes
a Trustee hereunder because a Primary Designee shall have
failed to serve as a Trustee hereunder, then the individual
who becomes a Trustee hereunder shall be deemed the Primary
Designee and the individuals so empowered in this paragraph
may thereafter name a new Secondary Designee in accordance
with the terms hereof. In the event that TIMOTHY P. HORNE
dies or becomes subject to any incapacity (as hereinafter
defined), the power designated in this paragraph shall
become personal to and may be exercised only by the
individuals named in this paragraph in accordance with the
terms hereof. The provisions of this paragraph are intended
to be permissive and shall authorize, but not require, the
appointment of a Primary or Secondary Designee.
In the event of the permanent disability or
incapacity of a Trustee, he shall cease to serve in that
capacity as provided in this paragraph. For purposes of
this Agreement, "permanent disability" shall mean any
physical or mental disability or incapacitation that
precludes a Trustee from performing his responsibilities
under this Agreement and which is not capable of cure or
correction, and "incapacity" shall mean any mental state by
reason of which the individual in question would not be
deemed competent under the law of his state of principal
residence. If permanent disability or incapacity is claimed
with respect to a Trustee or other person, said permanent
disability or incapacity shall be evidenced by a written
certification (a "Certification") signed by two doctors
attending such Trustee or other person, which doctors shall
be licensed to practice medicine in the state of the
relevant person's principal residence, and , in the case of
a Trustee, such Trustee shall cease to serve in such
capacity upon receipt by a co-Trustee, successor Trustee or
the registered holders of the voting trust certificates then
outstanding, as the case may be, of a Certification. Absent
a Certification, the individual in question shall be
presumed to be not subject to any permanent disability or
incapacity and he shall be recognized as a duly-appointed
Trustee of this Trust.
The rights, powers and privileges of each of the
Trustees named hereunder shall be possessed by any successor
Trustee with the same effect as though such successor had
originally been a party to this Agreement; provided,
however, that no Trustee or successor Trustee hereunder
shall possess the Determination Power referred to in Section
10 unless it is specifically conferred upon such Trustee
pursuant to the provisions hereof.
In any other circumstance, no Trustee hereunder other
than TIMOTHY P. HORNE shall have the Determination Power.
In the event that there shall be more than one Trustee
serving at any time, and in the event that the Trustees
shall not concur on matters not specifically contemplated by
the terms of this Agreement, the Trustees shall consider
such matter and they shall vote among them to determine the
disposition of the issue among them, [bearing in mind the
relative interests of the Shareholders, the Corporation, and
the Depositors into this Trust]. The majority vote of the
Trustees shall be determinative and shall resolve the matter
after giving due consideration to the purposes of this
Trust.
Each Trustee shall affix his signatures to this
Agreement and each successor Trustee appointed pursuant to
this Section 11 shall accept appointment or election
hereunder by affixing his signature to this Agreement at the
time he becomes a Trustee hereunder. By affixing their
signatures to this Agreement, the Trustees and each
successor Trustee agree to be bound by the terms hereof.
Reference in this Agreement to "Trustees" means
the Trustee or Trustees at the time acting in that capacity,
whether an original Trustee or any additional or successor
Trustee, as the context requires.
12. Compensation and Reimbursement of Trustees. Each
Trustee shall serve without compensation. The Trustees
shall have the right to incur and to pay such reasonable
expenses and charges and to employ and pay such agents,
attorneys and counsel as they may deem necessary and proper.
Any such expenses or charges incurred by and due to the
Trustees may be deducted from the dividends, proceeds or
other moneys or property received by the Trustees in respect
of the stock deposited hereunder or may be payable by the
Company in its discretion. Nothing herein contained shall
disqualify any Trustee or any successor Trustee, including
without limitation any person named as a Primary or
Secondary Designee, or any firm in which he is interested,
from serving the Company or any of its subsidiaries as an
officer or director or in any other capacity(including
without limitation as legal counsel, financial adviser or
lender), holding any class of stock in the Company, becoming
a creditor of the Company or otherwise dealing with it in
good faith, depositing his stock in trust pursuant to this
Agreement, voting for himself as a director of the Company
in any election thereof, or taking any other action as a
Trustee hereunder in connection with any matter in which
such Trustee has any direct or indirect interest. The
provisions of the foregoing notwithstanding, each Trustee
shall be entitled to be fully indemnified by the assets of
the voting trust and the holders of outstanding voting trust
certificates, pro rata in accordance with their interests at
the time of the relevant payment, against all costs,
charges, expenses, loss, liability and damage (except for
damage caused by his own willful malfeasance) incurred by
him in the administration of this trust or in the exercise
of any power conferred upon the Trustees by this Agreement.
13. Amendment; Termination. This Agreement may be
amended by a written amendment signed by the number of
Trustees authorized to take action at the relevant time
under Section 10, or, if the Trustees (if more than one) do
not concur with respect to any proposed amendment at any
time when any Trustee holds the Determination Power, then by
the Trustee having the Determination Power, which approval
shall constitute approval of all of the Trustees then
serving and, except as contemplated by Section 1, by
registered holders of a majority of the voting trust
certificates then outstanding; provided, however, that no
such amendment shall modify or amend the provisions of the
following two paragraphs without the written consent of each
individual Depositor or the Trustee of each Trust Depositor
who is living at the time of such proposed amendment. For
all purposes of this Agreement, references to percentages of
voting trust certificates outstanding shall refer to the
number of votes represented by the shares of stock of the
Company represented by such voting trust certificates.
This Agreement may be terminated only by a written
instrument signed by the number of Trustees authorized to
take action at the relevant time under Section 1 or, if the
Trustees (if more than one) do not concur with respect to
any proposed termination at any time when any Trustee holds
the Determination Power, then by the Trustee having the
Determination Power, which approval shall constitute
approval of all of the Trustees, registered holders of a
majority of the voting trust certificates then outstanding
and each individual Depositor or the Trustee of each Trust
Depositor who is living at the time of the proposed
termination.
If not previously terminated in accordance with
the terms hereof (including under the circumstances
contemplated by the provisions of Section 9) this Agreement
shall terminate on the day which is twenty-four (24) years
after the date first entered above upon this GEORGE B. HORNE
VOTING TRUST AGREEMENT - 1997, provided, however, that at
any time within two (2) years prior to such date (or prior
to any subsequent date of termination fixed in accordance
with the provisions hereof and of applicable law), one or
more of the persons designated in the following provisions
of this Section 13 may, by written agreement, extend the
duration of this Agreement for an additional term not
exceeding twenty-four (24) years from the expiration date as
originally fixed or as last extended. The foregoing right
of extension shall be exercisable in respect of particular
shares subject hereto by (i) the individual Depositor who
originally deposited the relevant shares, if the Depositor
is then living and is not subject to any incapacity at the
time of the proposed extension, and if so exercised such
extension shall be binding upon any and all holders of
voting trust certificates in respect of the shares deposited
hereunder by such individual Depositor, (ii) the trustee of
any trust Depositor which deposited the relevant shares,
including without limitation any trust Depositor which is a
revocable trust, which trustee is then living and not
subject to any incapacity at the time of the proposed
extension, and regardless of whether such trust is then
still in existence, and if so exercised shall be binding
upon any and all holders of voting trust certificates in
respect of shares deposited hereunder by such trust
Depositor and any and all beneficiaries thereof or
successors in interest thereto, and (iii) the holder of any
voting trust certificate representing shares not covered by
either of the preceding clauses (i) or (ii), and if so
exercised shall be effective with respect to all shares
represented by such voting trust certificate, it being
understood that the provisions only of clauses (i) or (ii)
of this paragraph and not of clause (iii) shall govern any
extension with respect to shares referred to therein if and
to the extent a Depositor referred to therein is available
to consent to such extension. Any such action to extend
this Agreement shall be binding upon the Trustees and
Depositor and upon all holders of the related voting trust
certificates (including without limitation trustees,
officers, beneficiaries and owners of any trust or other
entity which is such a holder thereof) and any and all
successors in interest of any of the foregoing (including
without limitation any holder of voting trust certificates
representing shares deposited by any Depositor consenting or
on whose behalf consent is given by the relevant trustee to
such extension in the manner provided above, and any
Beneficiary or successor of a Beneficiary of any trust
Depositor. Extensions in accordance with this Section 13
shall not be deemed to constitute the commencement of a new
voting trust for purposes of the DGCL, (ii) shall be filed
with the registered office of the Company in Delaware, as
provided by law, and (iii) shall not involve or require any
transfer of shares as contemplated by the last provisions of
Section 5.
14. Notices; Distributions. Unless otherwise
specifically provided in this Agreement, any notice to or
communication with any holder of any voting trust
certificate or other party hereunder shall be deemed to be
sufficiently given or made if mailed, postage prepaid, to
such holder at his or her address appearing on the books of
the trust, which shall in all cases be deemed to be the
address of such holder for all purposes under this
Agreement, without regard to what other or different
addresses of which the Trustees may have notice. Every
notice so given shall be effective, whether or not received,
and the date of mailing shall be the date such notice is
deemed given for all purposes.
Any notice to any Trustee hereunder shall be
sufficient if mailed, postage prepaid, by certified or
registered mail to him, with a copy sent to the Company at
Watts Industries, Inc.,. Route 114 and Chestnut Street,
North Andover, Massachusetts 01845.
Subject to Section 6 hereof, all distributions of
cash, securities, or other property hereunder by the
Trustees to the holders of voting trust certificates may be
made, in the discretion of the Trustees, by mail (regular,
registered or certified mail, as the Trustees may deem
advisable), in the same manner as hereinabove provided for
the giving of notices to the holders of voting trust
certificates.
15. Construction. This Agreement is to be construed
as a Delaware contract, is to take effect as a sealed
instrument, and is binding upon and inures to the benefit of
the parties hereto and their heirs, executors,
administrators, representatives, successors and permitted
assigns. In case any one or more of the provisions or parts
of a provisions contained in this Agreement or in any voting
trust certificate hereunder shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceablitity shall not affect
any other provision or part of a provision hereof or
thereof, but this Agreement and such voting trust
certificates shall be construed as if such invalid or
illegal or unenforceable provision or part of a provision
had never been contained herein, and the parties will use
their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable,
implements the purposes and intents thereof.
16. Gender. Words used in this Agreement, regardless
of the number and gender specifically used, shall be deemed
and construed to include any other number, singular or
plural (and all references to the `Trustees' shall refer to
the Trustee then serving if only one Trustee is then
serving), and any other gender, masculine, feminine, or
neuter, as the context requires.
17 Execution. This Agreement may be executed in
any number of counterparts, each of which, when executed,
shall be deemed to be an original and all of which together
shall constitute but one and the same instrument.
END
IN WITNESS WHEREOF, the parties hereof have executed
this Agreement under seal, all as of this day and year first
above written.
Timothy P. Horne, as Trustee George B. Horne,
Individually, and as the
Depositor, as Beneficiary of the GBH Trust -
1982, as Currently Republished
Timothy P. Horne, as Trustee of the Watts Industries, Inc.
George B. Horne Trust - 1982
as Currently Republished
By:
SCHEDULE A (see Schedule A continuation at end of document)
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No. Trust (if any)
Timothy P. Horne
as Trustee of 2,104,600 20,000
The George B. Horne
Trust - 1982 as
Currently Republished
SCHEDULE B
AMENDMENT TO VOTING TRUST AGREEMENT
WHEREAS, [ ] and [ ] are
Trustees under a Voting Trust Agreement dated as of August
1997, such Voting Trust Agreement, being referred to herein as the
"Agreement"); and
WHEREAS, [ ] desires to withdraw [ ( ]
shares of Class B Common Stock of Watts Industries, Inc., a
Delaware corporation.
WHEREAS, the Trustees and the holders of not less than a majority
in interest of the voting trust certificates outstanding hereunder
desire to consent and agree to the above-described transactions.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
The parties hereto do hereby consent to the withdrawal of such shares and
to amend Schedule A to the Agreement by amending and restating
Schedule A in its entirety to read as follows:
SCHEDULE A
Number of Class B Stock
Name Shares Certificate No.
[Name of Registered Holders] [ ] [ ]
2. Except as hereinabove provided, the parties ratify and confirm the
Agreement in all respects.
The parties hereto have executed this Amendment to the Agreement in
one or more counterparts under seal as of the [ ] th day of [ ],
19 [ ].
[Signatures to be added per the terms of
the
Agreement]
SCHEDULE C
FORM OF
VOTING TRUST CERTIFICATE
This Voting Trust Certificate has not been registered under the
Securities Act of 1933, as amended, and may not be sold or otherwise
transferred unless (a) covered by an effective registration statement under
the Securities Act of 1933, as amended, or (b) the trustees and the Company
have been furnished with an opinion of counsel satisfactory to them to the
effect that no registration is legally required for such transfer.
This Voting Trust Certificate has been issued under, and is subject
to, a certain Voting Trust Agreement, dated as of August , 1997,
by and among the Company and Timothy P. Horne as Trustee, and certain other
persons, (as identified on Schedule A of said Agreement as amended), a copy
of which will be furnished by the Company to the holder of this Voting
Trust Certificate upon written request and without charge, and this Voting
Trust Certificate can only be transferred subject to, and in accordance
with, such Agreement.
This Voting Trust Certificate is subject to restrictions on transfer
contained in the Company's Restated Certificate of Incorporation, as
amended, a copy of which restrictions will be provided to the holder of
this Voting Trust Certificate upon request and without charge.
The shares represented by this Voting Trust Certificate are subject
to restrictions on transfer pursuant to a Stock Restriction Agreement, a
copy of which will be furnished by the Company to the holder of this Voting
Trust Certificate upon written request and without charge.
No. Shares:
This certificate that the undersigned trustee has received a
certificate or certificates in the name of evidencing
ownership of shares of the [Class B Common Stock of Watts
Industries, Inc., a Delaware corporation (the "Company"),] and that said
shares are held subject to all of the terms and conditions of a certain
Voting Trust Agreement dated as of the day of August, 1997 (the
"Agreement"), and are entitled to all of the benefits set forth in the
Agreement. Copies of the Agreement and of every amendment and supplement
thereto are on file at the office of the Company and shall be available for
the inspection of every Beneficiary thereof or party thereto during normal
business hours. The holder of this Certificate, which is issued, received
and held under the Agreement, by acceptance hereof, assents to and is bound
by the Agreement with the same effect as if the Agreement has been signed
by him in person.
The shares of stock represented by this Certificate bear the legend:
"These shares are subject to a certain Voting Trust Agreement,
dated as of August , 1997, by and among the Company and Timothy P. Horne
as trustee, and certain other persons, [as amended] a copy of which will
be furnished by the Company to the holder of this Certificate upon written
request and without charge, and these shares can only be transferred
subject to, and in accordance with , such Agreement."
Subject to the provisions of the foregoing and the Agreement, this
Certificate is transferable only on the books of the Trustees by the
registered holder in person or his duly authorized attorney, and the holder
hereof, by accepting this certificate, manifests his consent that the
trustees may treat the registered holder hereof as the true owner for all
purposes, except the delivery of stock certificates, which delivery shall
not be made without the surrender of this certificate or otherwise pursuant
to the Agreement.
IN WITNESS WHEREOF, [and ],
trustee, [have] [has] executed this certificate as of this th day of
, 19 .
, as Trustee
(Schedule A continuation from above)
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not
Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Timothy P. Horne 2,751,220
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No. Trust (if any)
Timothy P. Horne
as Trustee of 1,335,840
The Daniel W. Horne
Trust - 1980
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Timothy P. Horne
as Trustee of 1,335,840
The Deborah Horne
Trust - 1976
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Tara V. Horne 50,000
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Timothy P. Horne
as Trustee of 30,200
The George B. Horne
Grandchildren Trust - 1995
F/B/O Tara V. Horne
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Timothy P. Horne
as Trustee of 22,600
The George B. Horne
Grandchildren Trust - 1995
F/B/O Tiffany Horne
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Judith Rae Horne
as Trustee of 163,520
The Tiffany Horne
Trust - 1984
SCHEDULE A
No. of Shares
No. of Shares Class B Stock Not Subject to
Depositor Subject to Trust Certificate No.
Trust (if any)
Judith Rae Horne
as Custodian for 44,220
Tiffany Rae Horne
under the MA Uniform
Gifts to Minors Act