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
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
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
28-a
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
28-b
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
28-c
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
28-d
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
28-e
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
28-f
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
28-g
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
28-h