SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1994 Commission File No. 0-2504
MINE SAFETY APPLIANCES COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0668780
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
121 Gamma Drive
RIDC Industrial Park
O'Hara Township
Pittsburgh, Pennsylvania 15238
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412/967-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
As of July 31, 1994, there were outstanding 5,933,832 shares of common stock
without par value.
PART I FINANCIAL INFORMATION
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
(Thousands of dollars, except shares data)
June 30 December 31
1994 1993
ASSETS
Current assets
Cash $ 10,761 $ 10,953
Temporary investments, at cost plus accrued interest 39,317 35,481
Accounts receivable, less allowance (1994 - $2,722;
1993 - $2,516) 82,384 81,897
Inventories:
Finished products 30,204 30,409
Work in process 17,644 20,001
Raw materials and supplies 25,260 31,044
--------- ---------
Total inventories 73,108 81,454
--------- ---------
Other current assets 16,153 14,824
--------- ---------
Total current assets 221,723 224,609
--------- ---------
Property, plant and equipment 316,399 306,691
Accumulated depreciation (163,253) (153,162)
--------- ---------
Net property 153,146 153,529
--------- ---------
Other assets 27,668 29,746
--------- ---------
TOTALS $ 402,537 $ 407,884
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes and accounts payable $ 25,853 $ 27,219
Federal, foreign, state and local income taxes (2,264) (3,474)
Other current liabilities 35,751 36,665
--------- ---------
Total current liabilities 59,340 60,410
--------- ---------
Long-term debt 20,482 27,476
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits
62,020 60,254
Shareholders' equity
Preferred stock, 4-1/2% cumulative - authorized
100,000 shares of $50 par value; issued 71,373
shares, callable at $52.50 per share 3,569 3,569
Second cumulative preferred voting stock - authorized
1,000,000 shares of $10 par value; none issued
Common stock - authorized 20,000,000 shares of no par
value; issued 6,713,503 and 6,713,503 (outstanding
5,935,021 and 6,011,628) 8,048 8,048
Cumulative translation adjustments (3,415) (5,749)
Retained earnings 289,162 287,286
Less treasury shares, at cost:
Preferred - 47,775 and 47,268 shares (1,548) (1,532)
Common - 778,482 and 701,875 shares (35,121) (31,878)
--------- ---------
Total shareholders' equity 260,695 259,744
--------- ---------
TOTALS $ 402,537 $ 407,884
========= =========
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Thousands of dollars, except earnings per share and shares outstanding)
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
Net sales $ 115,133 $ 107,840 $ 224,655 $ 212,703
Other income 1,810 952 3,242 2,058
---------- ---------- ---------- ----------
116,943 108,792 227,897 214,761
---------- ---------- ---------- ----------
Costs and expenses
Cost of products sold 71,559 67,571 142,072 134,661
Selling, general and administrative 31,867 30,255 61,454 60,196
Depreciation 4,946 4,394 9,831 8,345
Interest 786 410 1,394 808
Currency exchange (gains)/losses 1,697 1,064 2,353 988
---------- ---------- ---------- ----------
110,855 103,694 217,104 204,998
---------- ---------- ---------- ----------
Income from operations
before income taxes 6,088 5,098 10,793 9,763
Income taxes 2,620 2,135 4,765 4,284
---------- ---------- ---------- ----------
Net income $ 3,468 $ 2,963 $ 6,028 $ 5,479
========== ========== ========== ==========
Earnings per common share (1) $ 0.57 $ 0.48 $ 1.00 $ 0.89
========== ========== ========== ==========
Weighted average number of common
shares outstanding 5,963,238 6,096,385 5,963,238 6,096,385
========== ========== ========== ==========
Dividends paid on preferred stock $ 13 $ 14 $ 27 $ 28
========== ========== ========== ==========
(1) Computed after dividends paid on preferred stock. Common shares reserved
for outstanding options under the stock option and incentive plans would have
a negligible dilutive effect on earnings per common share.
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Thousands of dollars)
Six Months Ended
June 30
1994 1993
OPERATING ACTIVITIES
Income from operations $ 6,028 $ 5,479
Depreciation 9,831 8,345
Deferred taxes,pensions, and other non-cash
charges/(credits) 801 1,197
Changes in operating assets and liabilities (1,128) (8,275)
Other - principally currency exchange adjustments 2,771 (588)
--------- ---------
Cash flow from operating activities 18,303 6,158
--------- ---------
INVESTING ACTIVITIES
Property additions (9,295) (8,879)
Property disposals 1,009 286
Acquisitions and other investing 5,839 159
--------- ---------
Cash flow from investing activities (2,447) (8,434)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 1,629 415
Reductions of long-term debt (8,978) (846)
Cash dividends (2,774) (2,837)
Purchases of company's stock (3,259) (739)
Changes in notes payable and short term debt 346 249
--------- ---------
Cash flow from financing activities (13,036) (3,758)
--------- ---------
Effect of exchange rate changes on cash 824 (534)
--------- ---------
Increase/(decrease) in cash and cash equivalents 3,644 (6,568)
Beginning cash and cash equivalents 46,434 55,409
--------- ---------
Ending cash and cash equivalents $ 50,078 $ 48,841
========= =========
Note 1 - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
include all adjustments, which are, in the opinion of management of the
registrant, necessary for a fair statement of the operating results for the six
month periods ended June 30, 1994 and 1993. These financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and changes in cash flows in
conformity with generally accepted accounting principles.
MINE SAFETY APPLIANCES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Most of the sales increase was due to the inclusion of HAZCO Services,
Inc., Dayton, Ohio, which was acquired in the last half of 1993. This
acquisition added equipment rental services and a significant presence in the
hazardous materials/ environmental market. U.S. commercial safety equipment
sales have been essentially flat, while sales of gas detection and monitoring
instruments and specialty chemicals have maintained robust growth. Shipments
of gas masks to the U.S. military have continued at reduced levels, although
some modest improvement in the second half of this year is expected. Sales by
the company's German and selected European affiliates remained depressed by
economic conditions. Business grew particularly in Asia and Australia, while
overall sales in other international markets have been firm.
The increase in other income in the second quarter of 1994 was primarily
due to an increase in rental income.
The major contributors to the earnings increase were HAZCO, the U.S.
Instrument Division and certain international operations. Operating earnings
trends in 1994 in the U.S. were meaningfully better than net profit movement
due to transitional expenses to reengineer the company's customer
communications, distribution and cost management processes. European
operations, although depressed by economic conditions, have improved as a
result of restructuring. Earnings have shown encouraging growth in Canada,
Australia and Asia to historically high levels. Latin American results,
though, remain unsatisfactory. Earnings per share have benefitted from higher
net income and reduced shares outstanding as a result of the share repurchase
program.
These results represent another step along the journey to return MSA to a
satisfactory level of performance with a good way yet to travel. The company
continues its strategy of particularly emphasizing innovation in products,
services and business processes with the goals of improved customer response
and lower cost. This will enhance growth in expanding markets and improve
profitability in weak markets. We will also continue selective geographic
extension of MSA's activities. The company has made progress in overcoming
some unfavorable economic and market trends. We will continue to move forward
in our journey. If external factors become neutral or more favorable, our
speed along the way could accelerate.
Comparative foreign currency exchange losses charged to income are as
follows:
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
(Thousands of dollars)(Thousands of dollars)
Transaction (gains)/losses 437 125 548 (301)
Translation (gains)/losses 1,260 939 1,805 1,289
--------- --------- --------- ---------
1,697 1,064 2,353 988
========= ========= ========= =========
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant second quarter
1994 translation gains relate primarily to Germany, Australia,and Italy. Year
to date 1993 translation losses relate primarily to Spain and Italy.
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
(Thousands of dollars)(Thousands of dollars)
Translation (gains)/losses (2,048) (2,625) (2,335) 818
Available credit facilities along with internal cash resources are
adequate to provide for ensuing capital requirements. The company's financial
position and liquidity continue to be adequate. The current ratio and term
debt in relation to capital as of June 30, 1994 were 3.7 and 8.2%,
respectively, as compared to 3.7 and 11.0% at December 31, 1993.
PART II OTHER INFORMATION
MINE SAFETY APPLIANCES COMPANY
Item 1. Legal Proceedings
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) April 27,1994 - Annual Meeting
(b) Directors elected at Annual Meeting:
Calvin A. Campbell, Jr.
G. Donald Gerlach
John T. Ryan, Jr.
Directors whose term of office continued after the meeting:
Helen Lee Henderson
John T. Ryan III
Leo N. Short, Jr.
John M. Arthur
Joseph L. Calihan
(c) Election of three Directors for a term of three years
Calvin A. Campbell, Jr. For 5,523,828
Withhold 24,743
Broker Nonvotes -0-
G. Donald Gerlach For 5,525,028
Withhold 23,543
Broker Nonvotes -0-
John T. Ryan, Jr. For 5,539,478
Withhold 9,093
Broker Nonvotes -0-
Amendment to the Company's 1990 Non-Employee Directors'
Stock Option Plan to increase annual stock option grants
under the plan from 200 to 500 shares of Common Stock per
non-employee director.
For 5,310,324
Against 55,605
Abstain 182,642
Broker Nonvotes -0-
Selection of Price Waterhouse as Auditors for the year
ending December 31, 1994
For 5,104,670
Against 3,503
Abstain 440,398
Broker Nonvotes -0-
(d) Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(i) Restated Articles of Incorporation as amended
to April 27, 1989.
10(a)* 1990 Non-Employee Directors' Stock Option Plan
as amended to April 27, 1994.
10(b)* Executive Insurance Program
(b) Reports on Form 8-K
No reports of Form 8-K were filed during the
quarter ended June 30, 1994.
* The exhibits marked by an asterisk are compensatory plans or arrangements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MINE SAFETY APPLIANCES COMPANY
Date: AUGUST 10, 1994 By S/James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
EXHIBIT 3(i)
ARTICLES OF AMENDMENT
To: The Corporation Bureau
Department of State
Commonwealth of Pennsylvania
In compliance with the requirements of Article VIII of the
Business Corporation Law, approved the 5th day of May, 1933, P.L. 364 as
amended, the applicant, MINE SAFETY APPLIANCES COMPANY, desiring to amend its
Restated Articles, hereby certifies under its corporate seal that:
1. The name of the corporation is MINE SAFETY
APPLIANCES COMPANY, and the location of its registered office in the
Commonwealth of Pennsylvania is 121 Gamma Drive, RIDC Industrial Park, O'Hara
Township, Pittsburgh, Allegheny County, Pennsylvania 15238.
2. The corporation was incorporated on January 25, 1917
under the Act of the General Assembly of the Commonwealth of Pennsylvania,
approved April 29, 1874, P.L. 73, and the several supplements hereto, and is
now subject to the provisions of the Business Corporation Law.
3. The meeting of the shareholders of the corporation
at which the amendment was adopted was held on April 19, 1989 at 10:00 a.m.,
local Pittsburgh time, at the corporation's Executive Offices, 121 Gamma Drive,
RIDC Industrial Park, O'Hara Township,
Pittsburgh, Pennsylvania, pursuant to written notice mailed on March 13, 1989.
4. At the time of the action of the shareholders (a)
the total number of shares outstanding was 6,578,314 shares of common stock,
without par value, and 26,290 shares of 4 1/2% cumulative preferred stock, par
value $50 per share, and (b) the number of shares entitled to vote on the
proposed amendment was 6,578,314 shares of common stock.
5. In the action taken by the shareholders, the number
of shares voted for the proposal to amend was 5,036,017 shares of common stock,
and the number of shares voted against the proposal to amend was 478,137 shares
of common stock.
6. The amendment adopted by the shareholders was to add
to Article 7th of the restated Articles of the corporation a new Section 7.9 to
read as set forth in full below:
7.9. Applicability of BCL Section 910; Suspension of
Article 7th. Section 910 of the Pennsylvania Business Corporation Law ("BCL
Section 910") shall be applicable to the Company, and the provision of the
By-Laws providing to the contrary is hereby repealed. For so long as BCL
Section 910 as in effect on the date of approval by the Board of Directors of
this Section 7.9 (the "Approval Date") or amendatory or replacement legislation
substantially equivalent in effect thereto shall remain in effect and
applicable to the Company, Sections 7.1 through 7.8 of this Article 7th shall
be suspended. In the event that the Disinterested Directors by majority vote
shall determine (the date of any such determination being referred to herein as
the "Determination Date") that BCL Section 910 has been repealed in whole or in
part or invalidated in whole or in part by any court or amended or replaced by
other legislation such that provisions
substantially equivalent in effect to BCL Section 910 as in effect on the
Approval Date shall not be applicable to the Company, then unless and until
such determination shall be rescinded (whether by reason of further legislation
or court decisions or otherwise) by a majority vote of the Disinterested
Directors, Sections 7.1 through 7.8 of this Article 7th shall no longer be
suspended and shall apply in the event that any Acquiring Person is on the
Determination Date or thereafter becomes a 40% Shareholder. In the event that
the Company has received prior to the Determination Date credible notice that
an Acquiring Person has become a 40% Shareholder, then, notwithstanding Section
7.1, the term "Effective Date" as used in this Article 7th shall mean the
Determination Date. In determining whether provisions substantially equivalent
in effect to those of BCL Section 910 on the Approval Date remain in effect and
applicable to the Company, the Disinterested Directors may consider, in
addition to whether any legislation then applicable to the Company provides
substantially equivalent or greater rights to the shareholders of the Company,
whether such legislation contains exclusions from the coverage of such
legislation which are in practical effect substantially equivalent in coverage
to those provided in clauses (a), (b) and (c) of BCL Section 910(B)(2)(ii) as
in effect on the Approval Date. Nothing contained in this Section 7.9 shall
prevent the Board of Directors from exercising any right provided by any
amendment to BCL Section 910 or any replacement or other legislation to opt out
from coverage of such legislation and, if appropriate, determining on such
basis that the suspension of Articles 7.1 through 7.8 provided for herein has
been terminated.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by its President and its corporate seal,
duly attested by its Secretary, to be affixed onto this document this 25th day
of April, 1989.
[Corporate Seal] MINE SAFETY APPLIANCES COMPANY
Attest s/Charles L. Albright, Jr. By s/L. N. Short,
Charles L. Albright, Jr. L. N. Short,
Secretary President
Filed in the Department of the State on the 27th day of April, 1989.
Secretary of the Commonwealth
s/James J. Haggerty
James J. Haggerty
ARTICLES OF AMENDMENT
To: The Corporation Bureau
Department of State
Commonwealth of Pennsylvania
In compliance with the requirements of Article VIII of the Business
Corporation Law, approved the 5th day of May, 1933, P.L. 364 as amended, the
applicant, MINE SAFETY APPLIANCES COMPANY, desiring to amend its Restated
Articles, hereby certifies under its corporate seal that:
1. The name of the corporation is MINE SAFETY APPLIANCES COMPANY, and
the location of its registered office in the Commonwealth of Pennsylvania is
201 North Braddock Avenue, Pittsburgh, Allegheny County, Pennsylvania 15208.
2. The corporation was incorporated on January 25, 1917 under the Act
of the General Assembly of the Commonwealth of Pennsylvania, approved April 29,
1874, P.L. 73, and the several supplements hereto, and is now subject to the
provisions of the Business Corporation Law.
3. The meeting of the shareholders of the corporation at which the
amendment was adopted was held on April 24, 1987 at 10:00 a.m., local
Pittsburgh time, at the corporation's Executive Offices, 121 Gamma Drive, RIDC
Industrial Park, O'Hara Township, Pittsburgh, Pennsylvania, pursuant to written
notice mailed on March 23, 1987.
4. At the time of the action of the shareholders (a) the total number
of shares outstanding was 6,632,523 of common stock, without par value, and
28,793 shares of 4 1/2% cumulative preferred stock, par value $50 per share,
and (b) the number of shares entitled to vote on the proposed amendment was
6,632,523 shares of common stock.
5. In the action taken by the shareholders, the number of shares
voted for the proposal to amend was 5,824,369 shares of common stock, and the
number of shares voted against the proposal to amend was 57,860 shares of
common stock.
6. The amendment adopted by the shareholders, which shall be new
Article 14th of the Restated Articles of the corporation, is set forth in full
below:
Article 14th. Personal Liability of Directors.
(a) To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on January 27, 1987 or as thereafter
amended, permit elimination or limitation of the liability of
directors, no Director of the Company shall be personally liable for
monetary damages as such for any action taken, or any failure to take
any action, as a Director.
(b) This Article 14th shall not apply to any actions filed prior
to January 27, 1987, nor to any breach of performance of duty or any
failure of performance of duty by any Director of the Company
occurring prior to January 27, 1987. The provisions of this Article
shall be deemed to be a contract with each
Director of the Company who serves as such at any time while this
Article is in effect and each such Director shall be deemed to be
doing so in reliance on the provisions of this Article. Any amendment
or repeal of this Article or adoption of any other By-law or
provision of the Articles of the Company which has the effect of
increasing Director liability shall operate prospectively only and
shall not affect any action taken, or any failure to act, prior to
the adoption of such amendment, repeal,other By-law or provision.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by its Chairman of the Board and its
corporate seal, duly attested by its Secretary, to be affixed onto this
document this 24th day of April, 1987.
[Corporate Seal] MINE SAFETY APPLIANCES COMPANY
Attest S/Charles L. Albright By S/John T. Ryan, Jr.
Charles L. Albright, John T. Ryan, Jr.
Secretary Chairman of the Board
Filed in the Department of the State on the 27th day of April, 1987.
S/James J. Haggerty
James J. Haggerty
Secretary of the Commonwealth
ARTICLES OF AMENDMENT
To: The Corporation Bureau
Department of State
Commonwealth of Pennsylvania
In compliance with the requirements of Article VIII of the Business
Corporation Law, approved the 5th day of May, 1933, P.L. 364 as amended, the
applicant, Mine Safety Appliances Company, desiring to amend its Articles,
hereby certifies under its corporate seal that:
1. The name of the corporation is MINE SAFETY APPLIANCES COMPANY
and the location of its registered office in the Commonwealth is 201 North
Braddock Avenue, Pittsburgh, Allegheny County, Pennsylvania 15208.
2. The corporation was incorporated on January 25, 1917 under the Act
of the General Assembly of the Commonwealth of Pennsylvania, approved April 29,
1874, P.L. 73, and the several supplements hereto, and is now subject to the
provisions of the Business Corporation Law.
3. The meeting of the shareholders of the corporation at which the
amendments were adopted was held on May 23, 1986 at 10:00 a.m., local
Pittsburgh time, at 600 Penn Center Boulevard, Pittsburgh, Pennsylvania 15235,
pursuant to written notice mailed on April 14, 1986.
4. At the time of the action of the shareholders:
(a) the total number of shares outstanding was 6,653,712 shares of
common stock, par value $.83 1/3 and 29,881 shares of 4 1/2% cumulative
preferred stock, par value $50 per share.
(b) the number of shares entitled to vote proposed amendments was
6,653,712 shares of common stock.
5. On the action taken by the shareholders, the numbers of shares
voted for the proposals to amend were:
Proposal A to add new Articles
10th and 12th and related
definitions in Article 6th: 5,520,518 shares of common stock
Proposal B to add new Article
11th and related definitions in
Article 6th: 5,238,914 shares of common stock
Proposal C to add new Article
7th and related definitions
in Article 6th: 5,318,497 shares of common stock
Proposel D to amend
Article 5th: 5,458,430 shares of common stock
Proposal to restate the
Articles as amended: 5,238,914 shares of common stock
The number of shares voted against the amendment was:
Proposal A to add new Articles
10th and 12th and related
definitions in Article 6th: 275,201 shares of common stock
Proposal B to add new Article
11th and related definitions in
Article 6th: 437,131 shares of common stock
Proposal C to add new Article
7th and related definitions
in Article 6th: 366,545 shares of common stock
Proposal D to amend
Article 5th: 221,375 shares of common stock
Proposal to restate the
Articles as amended: -0- shares of common stock
6. The amendments adopted by the shareholders are set forth in
the Restated Articles in Exhibit A attached.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by its Chairman of the Board and its
corporate seal, duly attested by its Secretary, to be affixed onto this
document this 23rd day of May, 1986.
[Corpoate Seal] MINE SAFETY APPLIANCES COMPANY
Attest: S/Charles L. Albright, Jr. By S/John T. Ryan, Jr.
Charles L. Albright, Jr. John T. Ryan, Jr.
Secretary Chairman of the Board
Filed in the Department of the State on the 23rd day of May, 1986.
S/Robert A. Gleason, Jr.
Robert A. Gleason, Jr.
Secretary of the Commonwealth
RESTATED ARTICLES
OF
MINE SAFETY APPLIANCES COMPANY
Article 1st. The name of the corporation is MINE SAFETY APPLIANCES COMPANY
(hereinafter the "Company").
Article 2nd. The location and post office address of its current
registered office in this Commonwealth is 201 North Braddock Avenue,
Pittsburgh, Allegheny County, Pennsylvania 15208.
Article 3rd. The Company is organized under the provisions of the Business
Corporation Law for the following purposes, which shall be construed
independently of each other:
(a) To manufacture, develop, prepare, install, buy, sell, maintain,
service, lease as lessor and lessee, import, export and otherwise deal in
and with all types of appliances, equipment, apparatus, instruments,
systems, clothing, chemicals, materials and other articles of commerce for
industry and mines, both in this country and in foreign countries and
territories;
(b) To purchase, lease or otherwise acquire, invest in, own,
mortgage, pledge, lease, sell, assign and transfer or otherwise dispose
of, trade, deal in and deal with real property and goods, wares,
merchandise and other personal property of every class and description;
(c) To engage in mercantile, manufacturing, processing, research,
development, trading and service businesses of any kind and character; and
(d) To invest in, and to aid by loans, by making guarantees and in
any other manner, any business enterprise affiliated with the Company, or
in which the Company has any direct or indirect interest, or the business
of which is a direct or indirect benefit to the Company.
The Company shall also have unlimited power to engage in and to do any lawful
act concerning any or all lawful business for which corporations may be
incorporated under the Business Corporation Law.
Article 4th. The term of its existence is perpetual.
Article 5th. The aggregate number of shares which the Company shall have
authority to issue shall be 21,100,000 shares, divided into three classes so
that 100,000 shares shall be 4 1/2% Cumulative Preferred Stock of the par value
of $50 per share (hereinafter referred to as the "4 1/2% Preferred Stock"),
1,000,000 shares shall be Second Cumulative Preferred Stock of the par value of
$10 per share (hereinafter referred to as the "Second Preferred Stock"), and
20,000,000 shares shall be Common Stock without par value.
A description of said classes of stock and a statement of the preferences,
qualifications, privileges, limitations, options, conversion rights, and other
special or relative rights granted to or imposed upon the shares of each class
are as follows:
Section I. 4 1/2% Cumulative Preferred Stock.
A. DIVIDENDS. The holders of 4 1/2% Preferred Stock shall be entitled to
receive and the Company shall be required to pay, when and as declared by the
Board of Directors, out of any assets or funds of the Company available for the
payment of dividends in accordance with law, dividends at the rate of 4 l/2% per
annum payable quarterly upon the first day of March, June, September and
December in each year. Dividends on the 4 1/2% Preferred Stock shall be
cumulative from the first day of the quarterly dividend period in which such
shares are issued, whether or not earned or declared, but arrears in payment
thereof shall not bear interest. The said 4 1/2% Preferred Stock shall be
preferred over the shares of all other classes of the Company's stock
(hereinafter referred to as "Junior Stock"). No dividends shall be paid upon,
nor shall any distribution be ordered or made, in respect of the Junior Stock
of the Company in any year while any dividends are accumulated and unpaid upon
the 4 1/2% Preferred Stock and unless and until dividends at the rate aforesaid
for the current year shall have been declared and paid or set apart for the 4
1/2% Preferred Stock. So long as any of the 4 1/2% Preferred Stock shall be
outstanding, the Company shall not pay or declare any dividend (except
dividends payable in its shares of a class ranking junior to the 4 1/2%
Preferred Stock as to dividends and assets) on any shares of Junior Stock which
will reduce the earned surplus of the Company below an amount equal to 50% of
the par value of the shares of said 4 1/2% Preferred Stock outstanding as of
the time any such calculation is required to be made.
B. REDEMPTION. On and after December 1, 1955, the Board of Directors of
the Company, at its option, may redeem at any time or from time to time the
whole or any part of the 4 1/2% Preferred Stock at the redemption price of
$52.50 per share plus all accrued and unpaid dividends on such shares at the
date fixed for redemption. Notice of each such intended redemption shall be
given by publication at least once in each of two successive calendar weeks, in
each case on any day of the week, in a daily newspaper of general circulation
in the City of Pittsburgh, Allegheny County, Pennsylvania, the first
publication to be made not less than thirty (30) days nor more than sixty (60)
days prior to the date fixed for such redemption. A similar notice shall be
mailed by the Company, postage prepaid, not less than thirty (30) days nor more
than sixty (60) days prior to the date fixed for such redemption, to the
holders of record of the shares to be redeemed, addressed to each such
shareholder at his address as the same appears upon the stock transfer books of
the Company, but failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the proceedings for the
redemption of any shares of the 4 1/2% Preferred Stock to be redeemed, and the
mailing of such notice shall not be a condition of such redemption. In case of
redemption of only a part of the outstanding shares of the 4 1/2% Preferred
Stock, the shares to be redeemed shall be selected by lot or pro rata as the
Board of Directors shall determine. On or after the date of redemption stated
in such notice, each holder of the shares of the 4 1/2% Preferred Stock called
for redemption shall surrender his certificate for such shares to the Company
at the place designated in such notice, and shall thereupon be entitled to
receive payment of the redemption price. In case less than all the shares
represented by such surrendered certificate are redeemed, a new certificate
shall be issued representing the non-redeemed shares. If the aforesaid notice
of redemption shall have been duly published, and if, on or before the
redemption date specified in such notice, the funds necessary for such
redemption shall have been deposited in trust for such purpose with a bank or
trust company in good standing, designated in such notice, doing business in
the City of Pittsburgh, Pennsylvania, from and after the date of redemption so
designated, notwithstanding that any certificate for shares of 4 1/2% Preferred
Stock so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby so called for redemption shall no
longer be deemed outstanding, the dividends on the number of shares called for
redemption represented thereby shall cease to accrue, and all rights with
respect to the shares of 4 1/2% Preferred Stock so called for redemption shall
forthwith after such redemption date cease and determine, except only the right
of the holder to receive out of the moneys so deposited the redemption price,
but without interest thereon. None of the 4 1/2% Preferred Stock so redeemed by
the Company shall be reissued, and no 4 1/2% Preferred Stock shall be issued in
lieu thereof or in exchange therefor, and the Company shall from time to time
cause all of such 4 1/2% Preferred Stock so redeemed to be cancelled and its
capital reduced in the manner provided by law.
Nothing in this Subparagraph B contained shall prevent the purchase by the
Company of the whole or any part of the 4 1/2% Preferred Stock, so long as
dividends thereon are not in arrears, at public or private sale, or upon call
for tender, upon such terms as the Board of Directors may prescribe, and at
prices not to exceed the redemption price thereof and all accrued and unpaid
dividends on the shares so purchased to the date of purchase.
C. DISTRIBUTION ON LIQUIDATION OR DISSOLUTION. The 4 1/2% Preferred Stock
shall be preferred over all shares of Junior Stock as to assets, and in the
event of any liquidation or dissolution or winding up of the Company, the
holders of such stock shall be entitled to receive out of the assets of
the Company available for distribution to its shareholders, whether from
capital, surplus or earnings, the preferential amounts hereinafter provided for
each share held by them before any distribution of the assets shall be made to
the holders of shares of Junior Stock, but the holders of such 4 1/2% Preferred
Stock shall be entitled to no other or further amounts. Upon liquidation,
dissolution or winding up of the Company, the holders of the 4 1/2% Preferred
Stock shall be entitled to receive the sum of $50 per share if such
liquidation, dissolution or winding up be involuntary, and the redemption price
of such stock hereinbefore provided if such liquidation, dissolution or winding
up be voluntary, together in either case with all accrued and unpaid dividends
on such shares to the date fixed for payment of such preferential amounts.
D. VOTING RIGHTS. Except as otherwise herein provided or otherwise
required by law, the entire voting power of the Company shall be vested
exclusively in the holders of its Junior Stock. If at any time dividends
payable on the 4 1/2% Preferred Stock shall be accrued and unpaid in an amount
equivalent to or exceeding six quarterly dividends then, and in such event, the
holders of the 4 1/2% Preferred Stock shall be entitled, voting separately as a
class, to elect two directors, at all elections of directors, in addition to
the directors to be elected by the holders of the Junior Stock, but such voting
power and the terms of office of any directors so elected by the holders of the
4 l/2% Preferred Stock shall continue only until, and shall cease when, all
accrued and unpaid dividends on such stock to the beginning of the then current
dividend period shall have been paid in full or funds for the payment thereof
shall have been set apart, subject always to the same provisions for the
revesting of such voting power in the case of any similar future default or
defaults. In such election, the holders of 4 1/2% Preferred Stock shall be
entitled to one vote per share. A meeting of the holders of the 4 1/2%
Preferred Stock having voting power may be called upon notice to such holders
similar to that provided in the By-Laws for shareholders' meetings, at the
expense of the Company at any time after the accrual of such voting power and
prior to the next annual meeting of shareholders (and the termination of such
voting power), by the holders of not less than 10% of the 4 1/2% Preferred
Stock then outstanding.
E. RESTRICTION ON CORPORATE ACTION. Except upon the affirmative vote or
written consent of the holders of record of at least 60% of the aggregate
number of shares of the 4 1/2% Preferred Stock at the time outstanding (in
addition to any other vote or consent at the time required by law) the Company
shall not in any manner, whether by amendment of the Articles, by sale of all
or substantially all the Company's assets or business, by merger or
consolidation, or otherwise.
(a) amend, alter or repeal any of the provisions of the Articles
so as to affect adversely the relative rights, preferences or powers of
the 4 1/2% Preferred Stock; or
(b) authorize, or increase the authorized amount of, the 4 1/2%
Preferred Stock or any class or series of stock ranking senior to or on a
parity with the 4 1/2% Preferred Stock in the payment of dividends or the
preferential distribution of assets;
Provided, however, that no such vote or consent shall be required for any
sale of all or substantially all the Company's assets or business or for any
merger or consolidation if (i) such holder of shares of 4 1/2% Preferred Stock
immediately prior thereto shall thereafter and in connection therewith continue
to hold or shall receive the same number of shares of preferred stock, with the
same relative rights, preferences and powers, of such acquiring, surviving or
resulting corporation, or (ii) the authorized capital stock of the acquiring,
surviving or resulting corporation immediately thereafter shall include only
classes of stock for which no such vote or consent would have been required for
the authorization thereof under clauses (a) or (b) above; and Provided Further,
However, that no such consent shall be required under the provisions of this
Subparagraph E if, at or prior to the time when the act with respect to which
such vote would otherwise be required shall be effected, provision is made in
accordance with the Articles for the redemption of all shares of 4 1/2%
Preferred Stock at the time outstanding.
For the purpose of obtaining the affirmative vote or written consent of
the holders of any specified number of shares of 4 1/2% Preferred Stock at the
time outstanding there shall be excluded, in computing the number of shares
outstanding, and there shall be excluded from voting, all shares of such stock
owned directly or indirectly by or for the account of the Company.
Section II. Second Cumulative Preferred Stock.
A. AUTHORITY OF BOARD; VARIATIONS IN SERIES. The shares of Second
Preferred Stock may be divided into and issued in series. Authority is hereby
expressly vested in the Board of Directors of the Company, at any time or from
time to time, by resolution to divide any or all of the shares of the Second
Preferred Stock into series, and to fix and determine the designation and the
relative rights and preferences of any series so established, to the fullest
extent now or hereafter permitted by the laws of the Commonwealth of
Pennsylvania, including, but not limited to, the variations between different
series in the following respects:
(i) the rate of dividend upon the shares of such series;
(ii) the price or prices at which, and the terms and conditions on
which, the shares of such series may be redeemed at the option of the
Company;
(iii) the amount or amounts payable upon the shares of such series in
the event of voluntary or involuntary liquidation;
(iv) the obligation, if any, of the Company to purchase, redeem
and/or retire shares of such series pursuant to a sinking fund;
(v) the terms and conditions upon which shares of such series may be
converted, in the event that the shares of such series are issued with the
privilege of conversion;
(vi) the voting rights, if any, of the holders of shares of such
series; and
(vii) the relative seniority, parity or junior rank of such series
with respect to other series of Second Preferred Stock then or thereafter
to be issued.
The Board of Directors is hereby expressly authorized (a) to fix the
number of shares which shall constitute any series of Second Preferred Stock,
which number may at any time or from time to time be increased or decreased
(but not below the number of shares thereof then outstanding), unless the Board
of Directors shall have otherwise provided in establishing such series; (b) to
fix the dates in each year on which dividends upon any such series shall be
payable, and the date or dates from which such dividends shall be cumulative;
and (c) to fix and determine such other terms, limitations and relative rights
and preferences, if any, of any such series as it may now or hereafter lawfully
do under the laws of the Commonwealth of Pennsylvania.
B. VOTING RIGHTS. (i) Except as otherwise provided in these Articles or in
the resolution or resolutions establishing any series of Second Preferred
Stock, the holders of Common Stock shall exclusively have the sole voting power.
(ii) If at the time of any annual meeting of shareholders a default in
preference dividends on the Second Preferred Stock, as hereinafter defined,
shall exist, the number of directors constituting the Board of Directors of the
Company shall be increased by two, and the holders of the Second Preferred
Stock, voting separately as a class without regard to series, shall, to the
exclusion of the holders of the 4 1/2% Preferred Stock (whose voting rights upon
default in dividends are hereinabove described in Section I) and the holders of
Common Stock, have the right at such meeting to elect two directors of the
Company to fill such newly created directorships. Such right shall continue
until there are no dividends in arrears upon the Second Preferred Stock. Each
director elected by the holders of the Second Preferred Stock, voting as a
class as aforesaid (herein called a Second Preferred Director), shall continue
to serve as such director for the full term for which he shall have been
elected, notwithstanding that prior to the end of such term a default in
preference dividends shall cease to exist. Any Second Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of Second Preferred Stock, voting separately
as a class without regard to series, at a meeting of the shareholders, or of
the holders of shares of Second Preferred Stock, called for the purpose. So
long as a default in any preference dividends on the Second Preferred Stock
shall exist any vacancy in the office of a Second Preferred Director may be
filled either by an instrument in writing signed by the remaining Second
Preferred Director and filed with the Company or by the vote of the holders of
the outstanding Second Preferred Stock, voting separately as a class without
regard to series. Whenever the term of office of the Second Preferred Directors
shall end and a default in preference dividends shall no longer exist, the
number of directors shall be the number otherwise specified without reference
to the provisions of this Subparagraph B. For the purposes of this Subpara-
graph B, a default in preference dividends on the Second Preferred Stock shall
be deemed to have occurred whenever the amount of dividends accrued or in
arrears upon any series of the Second Preferred Stock shall be equivalent to
six full quarter-yearly (or three full semi-annual) dividends or more, and,
having so occurred, such default shall be deemed to exist thereafter until all
dividends accrued or in arrears on all shares of Second Preferred Stock then
outstanding, of each series, shall have been paid to the end of the last
preceding quarterly dividend period.
(iii) Except upon the affirmative vote of the holders of at least 60% of
the aggregate number of shares of Second Preferred Stock at the time
outstanding (in addition to any other vote at the time required by law), the
Company shall not in any manner, whether by amendment of the Articles, by sale
of all or substantially all the Company's assets or business by merger or
consolidation, or otherwise,
(a) amend, alter or repeal any of the provisions of the Articles so
as to affect adversely the relative rights, preferences or powers of the
Second Preferred Stock, or
(b) authorize, or increase the authorized amount of, the Second
Preferred Stock or any class or series of stock ranking senior to or on a
parity with the Second Preferred Stock in the payment of dividends or the
preferential distribution of assets;
Provided, However, that no such vote shall be required for any sale of all
or substantially all the Company's assets or business or for any merger or
consolidation if (x) each holder of shares of Second Preferred Stock
immediately prior thereto shall thereafter and in connection therewith continue
to hold or shall receive the same number of shares of preferred stock, with the
same relative rights, preferences and powers, of such acquiring, surviving or
resulting corporation, and (y) the authorized capital stock of the acquiring,
surviving or resulting corporation immediately thereafter shall include only
classes of stock for which no such vote would have been required for the
authorization thereof under clauses (a) or (b) above; and Provided Further,
However, that no such vote shall be required under the provisions of clause
(iii) of this Subparagraph B if, at or prior to the time when the act with
respect to which such vote would otherwise be required shall be effected,
provision is made in accordance with the Articles for the redemption of all
shares of Second Preferred Stock at the time outstanding.
Section III. Preemptive Rights.
No holder of any shares of any class of stock shall be entitled to have
any right, as such holder, to subscribe for or to purchase
(a) any part of any issue of shares of any class whatsoever, which
the Company may hereafter issue or sell; or
(b) any obligations or securities of whatsoever kind and character
which the Company may hereafter issue or sell, convertible into or
exchangeable for any shares of the Company of any other class or classes,
or to which shall be attached or shall appertain any warrant or warrants
or other instruments which shall confer upon the holder or owner thereof
the right to subscribe for or purchase from the Company any of its shares
of any class or classes;
whether such shares, obligations or securities hereafter issued shall be part
of the number of shares authorized by the Articles as now or hereafter amended,
or whether such shares, obligations or securities hereafter issued shall be
part of any new or additional issue of shares, obligations or securities of any
class whatsoever. The approval of this amendment shall be effective to
eliminate and deny any preemptive rights which may have existed in respect of
any outstanding shares.
Section IV. Non-Cumulative Voting of Second Preferred Stock and Common Stock.
No holder of Second Preferred Stock and no holder of Common Stock shall
have any right to cumulate his votes and cast them for one candidate or
distribute them among two or more candidates in any election of directors.
Article 6th. Definitions; Interpretation.
6.1. Definitions. As used in Articles 6th, 7th, 10th, 11th and 12th of the
Articles of the Company, the following terms shall have the following meanings:
(a) The term "Acquiring Person" at any particular time shall mean any
Person (other than the Company or any Subsidiary of the Company or a trustee
holding stock for the benefit of the employees of the Company or any of its
Subsidiaries pursuant to one or more employee benefit plans or arrangements)
which
(i) Beneficially Owns, or any Person which is a member of a group
acting in concert which Beneficially Owns in the aggregate, shares
representing 20% or more of the Voting Power of the outstanding Voting
Stock of the Company;
(ii) is at such time a director of the Company and at any time within
the two-year period immediately prior to such time was the Beneficial
Owner of shares representing 20% or more of the Voting Power of the
outstanding Voting Stock of the Company; or
(iii) is at such time an assignee of or otherwise has succeeded to
the Beneficial Ownership of any shares of Voting Stock which were at any
time within the two-year period immediately prior to such time
Beneficially Owned by any Acquiring Person, if such assignment or
succession shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act of 1933;
except that the term "Acquiring Person" shall not include a Person or group
which on February 14, 1986, Beneficially Owned 20% or more of the Voting Power
of the outstanding Voting Stock of the Company. A group shall be deemed to
continue in existence, and not to have become a new group, notwithstanding the
addition or deletion of particular Persons owning shares of Voting Stock to an
existing group. With respect to any particular transaction, the term "Acquiring
Person" means any Acquiring Person involved in such transaction, any Affiliate
or Associate of such Acquiring Person, and any other member of a group acting
in concert with such Person. Where any reference is made to a transaction
involving, or ownership of securities by, an Acquiring Person, it shall mean
and include one or more transactions involving different Persons all included
within the definition of"Acquiring Person", or ownership of securities by any
or all of such Persons.
(b) An "Affiliate" of, or a Person "Affiliated" with, a specific Person
means a Person (other than the Company or a Subsidiary of the Company) that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified.
(c) The term "Associate", used to indicate a relationship with any Person,
means (i) any director, officer or partner of, or the Beneficial Owner of 10%
or more of any class of equity securities of, such Person or any of its
Affiliates, (ii) any corporation or organization (other than the Company or a
Subsidiary of the Company) of which such Person is a director, officer or
partner or is the Beneficial Owner of 10% or more of any class of equity
securities, (iii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, (iv) any relative or spouse of such Person, or
any relative of such spouse, who has the same home as such Person or who is a
director or officer of the Company or any of its Subsidiaries or (v) any
investment company registered under the Investment Company Act of 1940 for
which such Person or any Affiliate or Associate of such Person serves as
investment advisor.
(d) A Person shall be a "Beneficial Owner" of any Voting Stock:
(i) which such Person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) which such Person or any of its Affiliates or Associates has (A)
the right to acquire (whether or not such right is exercisable
immediately) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or
options, revocation of a trust, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by any
other Person with which such Person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Voting Stock.
For the purpose of determining whether a Person is an Acquiring Person
pursuant to paragraph (a) of this Section 6.1, the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed owned by such Person
through application of this paragraph (d) but shall not include any other
shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants
or options, or otherwise.
(e) The term "Business Combination" shall mean:
(i) any merger, consolidation or share exchange of the Company or a
Subsidiary of the Company with an Acquiring Person or into or with another
Person which is or after such merger, consolidation or share exchange
would be an Affiliate or an Associate of an Acquiring Person, in each case
without regard to which entity is the surviving entity;
(ii) any sale, lease, exchange or other disposition (whether in one
transaction or a series of related transactions), including without
limitation a mortgage or any other security device, of all or any
Substantial Part of the assets of the Company (including without
limitation any voting securities of a Subsidiary of the Company) or of a
Subsidiary of the Company to an Acquiring Person or of all or any
Substantial Part of the assets of an Acquiring Person to the Company or a
Subsidiary of the Company;
(iii) the issuance, transfer or delivery of any securities of the
Company or a Subsidiary of the Company by the Company or any of its
Subsidiaries to an Acquiring Person, or of any securities of an Acquiring
Person by the Acquiring Person to the Company or a Subsidiary of the
Company (other than issuance or transfer of securities which is effected
or offered on a pro rata basis to all shareholders of the Company or of
the Acquiring Person, as the case may be):
(iv) any recapitalization, reorganization, reclassification of
securities (including any reverse stock split) or other transaction or
series of related transactions involving the Company that would have the
effect, directly or indirectly, of increasing the voting power of an
Acquiring Person; or
(v) the adoption of any plan or proposal for the liquidation or
dissolution of the Company in which an Acquiring Person owning shares of
any class of the Company is treated differently from other shareholders
of the same class (other than dissenting shareholders exercising
statutory appraisal rights).
As used in this definition, a "series of related transactions" shall be
deemed to include not only a series of transactions with the same Acquiring
Person but also a series of separate transactions with different Persons all
included in the definition of Acquiring Person.
(f) The Term "Disinterested Director" at any time shall mean any director
of the Company at the time in office except that if at any time there exists an
Acquiring Person, then the term shall mean a director of the Company who is
unaffiliated with and not a representative of any Acquiring Person and either
(i) was a director of the Company immediately prior to the time that the
Acquiring Person became an Acquiring Person or (ii) shall have been recommended
for election by a majority of the then Disinterested Directors. Where any
provision in the Articles calls for a determination, recommendation or approval
by a majority of the Disinterested Directors, if there is at any particular
relevant time no Disinterested Director in office, then such provision shall be
deemed to be satisfied if the Board, by a two-thirds vote of all the Directors
in office, makes or gives such determination, recommendation or approval.
(g) The term "Fair Market Value" means: (i) in the case of stock, the
highest closing sale price on the date in question of a share of such stock on
the Composite Tape for the New York Stock Exchange Listed Stocks, or, if not so
quoted, on the New York Stock Exchange, or if not so listed, on the principal
United States securities exchange registered under the Securities Exchange Act
of 1934 on which such stock is listed, or, if not so listed, the closing sale
or, if none, the closing bid quotation with respect to a share of such stock on
the date in question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no such quotations
are available, the fair market value on the date in question of a share of such
stock without regard to any depreciation thereof in consequence of any Business
Combination then proposed, as determined by a majority of the Disinterested
Directors in good faith; and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in question as
determined by a majority of the Disinterested Directors in good faith.
(h) The term "Person" shall mean any individual, partnership, corporation,
group or other entity. When two or more Persons act as a partnership, limited
partnership, syndicate, association or other group for the purpose of
acquiring, holding or disposing of shares of stock, such partnership,
syndicate, association or group shall be deemed a "Person". As used herein, the
pronouns "which", "that" and "it" in relation to Persons that are individuals
shall be construed to mean who" or"whom", "he" or "she", and "him" or "her", as
appropriate.
(i) The term "Subsidiary" of any Person shall mean any corporation of
which a majority of the Voting Power of the Voting Stock is Beneficially Owned
by such Person directly or indirectly through other Subsidiaries of such Person.
(j) The term "Substantial Part" of the assets of any Person shall mean
assets having a book value or Fair Market Value, whichever is greater, equal to
10% or more of the total assets reflected on any balance sheet of such Person
and its Subsidiares as of a date no earlier than six months prior to the time
the determination is being made.
(k) A specified percentage of "Voting Power", with reference to any matter
being voted upon by the shareholders, shall mean such number of shares of stock
as shall enable the holders thereof to cast such percentage of the total number
of votes entitled to be cast by holders of shares entitled to vote thereon.
(I) The term "Voting Stock'' at any time shall mean outstanding shares of
capital stock of a corporation entitled to vote at its next annual election of
directors (without consideration of the rights of any class of stock other than
the Common Stock to elect directors by a separate class vote).
6.2. Authority of Disinterested Directors. The Disinterested Directors, by
a majority vote, are authorized to determine on the basis of information known
to them after reasonable inquiry: (i) whether a Person is an Acquiring Person,
(ii) the number of shares of Voting Stock Beneficially Owned by any Person,
(iii) whether a Person is an Affiliate or Associate of another, (iv) whether
certain assets constitute a Substantial Part of the assets of any Person and
(v) any other fact required to be determined in the application of Articles
6th, 7th, 10th, 11th or 12th of the Articles of the Company. The Disinterested
Directors, by a majority vote, are authorized to interpret all the terms and
provisions of Articles 6th, 7th, 10th, 11 th or 12th of the Articles of the
Company. Any such determination or interpretation made in good faith shall be
binding and conclusive on all parties.
6.3. Fiduciary Obligations. Nothing contained in Articles 6th, 7th, 10th,
11th or 12th of the Articles shall be construed to relieve any Acquiring Person
from any fiduciary obligation imposed by law.
Article 7th. Repurchase Rights.
7.1. Triggering Events. Except as provided below, in the event that any
Acquiring Person (hereinafter referred to as a "40% Shareholder") becomes the
Beneficial Owner of shares representing more than forty percent of the Voting
Power of the outstanding Voting Stock of the Company, each Person who is a
holder of shares of Voting Stock of the Company at any time until and including
the 90th day following the date the notice referred to in Section 7.2 below is
mailed, other than the 40% Shareholder or a transferee of the 40% Shareholder,
shall have the right, until and including such 90th day, to have some or all of
the shares of Voting Stock held by such holder repurchased by the Company at
the Repurchase Price and in the manner set forth in this Article 7th. Any
holder of securities convertible into shares of Voting Stock, or of options,
warrants or rights to acquire shares of Voting Stock, other than the 40%
Shareholder or a transferee of the 40% Shareholder, who converts such
securities or exercises such options, warrants or rights after such an event
and on or prior to the 90th day following the date the notice aforesaid is
mailed, shall have the same right (except as provided below) to have the shares
of Voting Stock to be received upon such conversion or exercise repurchased at
the Repurchase Price. No person shall have any right to have shares of Voting
Stock repurchased by the Company pursuant to this Article (i) if a
determination that the acquisition of shares by the 40% Shareholder is in the
best interests of the Company and its shareholders shall have been expressly
made by a resolution duly adopted by a majority vote of the Disinterested
Directors within 20 days following the date on which the Company receives
credible notice that an Acquiring Person has become a 40% Shareholder (the
"Effective Date"), or (ii) if such repurchase is at the time prohibited by the
general corporate law of the Company's state of incorporation.
7.2. Notice. If holders of shares of Voting Stock become entitled to have
their shares repurchased as provided in Section 7.1, then not later than 90
days following the Effective Date, the Company shall give written notice, by
first class mail, postage prepaid, at the address shown on the records of the
Company, to each holder of record of shares of Voting Stock other than the 40%
Shareholder (and to any other person known by the Company to have rights to
demand repurchase pursuant to Section 7.1 as of any date on or after the
Effective Date), advising each such holder or other person of the right to have
shares repurchased and the procedures for such repurchase, and setting forth
the Repurchase Price. In the event that the Company fails to give notice as
required by this Section 7.2, any Person entitled to receive such notice may
within twenty days thereafter serve written demand upon the Company to give
such notice. If within twenty days after the receipt of written demand the
Company fails to give the required notice, such Person may at the expense and
on behalf of the Company take reasonable action as may be appropriate to give
notice or to cause notice to be given pursuant to this Section 7.2.
7.3. Repurchase Price. The Repurchase Price shall be the greater amount
determined by a majority vote of the Disinterested Directors on either of the
following bases, but in no event shall the Repurchase Price be less than the
amount of its involuntary liquidation preference, in the case of preferred
stock, and otherwise the amount of shareholders' equity per share of the
particular class or series as determined in accordance with generally accepted
accounting principles and as reflected in any report published by the Company
or filed with any governmental agency as at the end of the latest fiscal
quarter for which such a report has been published or filed prior to the notice
to shareholders referred to in Section 7.2:
(i) the highest per share price (including any brokerage commissions,
transfer taxes, dealer management compensation and soliciting dealers'
fees) that can be determined to have been paid by the 40% Shareholder for
any shares of Voting Stock of the particular class or series acquired by
it at any time; for this purpose, if the consideration paid in any such
acquisition of shares by a 40% Shareholder consisted, in whole or in part,
of consideration other than cash, the Disinterested Directors by a
majority vote shall take such action as in their judgment they deem
appropriate to establish the cash value of such consideration, but such
valuation shall not be less than the cash value, if any, ascribed to such
consideration by the 40% Shareholder; and
(ii) the highest Fair Market Value per share of the particular class
or series at any time during the three months prior to the Effective Date.
The determination to be made pursuant to this Section 7.3, when made by the
Disinterested Directors acting in good faith on the basis of such information
and assistance as was then reasonably available for such purpose, shall be
conclusive and binding upon the Company and its shareholders, including any
Person referred to in Section 7.1.
7.4. Repurchase Agent. If holders of shares of Voting Stock become
entitled to have their shares repurchased as provided in Section 7.1, the Board
of Directors shall designate a Repurchase Agent, which shall be a corporation
or association (i) organized and doing business under the laws of the United
States or any State, (ii) subject to supervision or examination by Federal or
State authority, (iii) having combined capital and surplus of at least
$50,000,000 and (iv) having the power to exercise corporate trust powers.
7.5. Election to Have Shares Repurchased. For a period of 90 days from the
date of the mailing of the notice, holders of shares of Voting Stock and other
persons entitled to have shares of Voting Stock repurchased pursuant to this
Article 7th may, at their option, deposit certificates representing all or less
than all shares of Voting Stock held of record by them with the Repurchase
Agent together with written notice that the holder elects to have all or a
specified number of such shares repurchased pursuant to this Article 7th.
Repurchase of shares evidenced by certificates deposited in proper form with
the Repurchase Agent shall be deemed to have been effected at the close of
business on the 90th day after the date of the mailing of the notice.
7.6. Deposit and Payment of Repurchase Price. Promptly after the end of
the 90-day period referred to in Section 7.5, the Company shall deposit in
trust with the Repurchase Agent cash in an amount equal to the aggregate
Repurchase Price of all of the shares of Voting Stock deposited with the
Repurchase Agent for purposes of repurchase. As soon as practicable after
receipt by the Repurchase Agent of the cash deposit, the Repurchase Agent shall
issue checks payable to the order of the persons entitled to receive the
Repurchase Price of the shares of Voting Stock in respect of which such cash
deposit was made.
7.7. Pro Rata Repurchase. If the Company is unable to repurchase all
shares deposited for repurchase because of limitations upon repurchase
contained in the general corporation law of the Company's state of
incorporation, the Company shall promptly deposit with the Repurchase Agent
cash in the maximum amount which may be used for the repurchase of shares of
Voting Stock. In the event of deposit of less than the full aggregate
Repurchase Price pursuant to the provisions of this Section 7.7, the Repurchase
Agent shall use the amount so deposited to repurchase the deposited shares pro
tanto, in proportion to the Repurchase Price of the shares deposited by each
shareholder for repurchase. Certificates representing all shares which remain
unpurchased shall be returned to the depositors thereof as soon as practicable
thereafter and there shall be no further repurchase rights with respect to such
shares arising in connection with the transactions already completed.
7.8. Vote Needed to Amend. In addition to any vote required by any other
provisions of law, the Articles or the By-Laws of the Company, the affirmative
vote of the holders of at least a majority of the outstanding Voting Power of
the Voting Stock which is not Beneficially Owned, directly or indirectly, by an
Acquiring Person, shall be required to amend, alter, change or repeal, or adopt
any provision inconsistent with, this Article 7th (including the provisions in
Article 6th which are applicable to this Article 7th), unless such action has
been previously approved by a majority vote of the Disinterested Directors.
Article 8th. Except as provided in subparagraph B below, no corporate
action of a character described in subparagraph A below, and no agreement, plan
or resolution providing therefor, shall be valid or binding upon the Company
unless such corporate action shall have been approved in compliance with all
applicable provisions of the Business Corporation Law and these Articles and
shall have been authorized by the affirmative vote of at least seventy-five
percent of the outstanding shares of Common Stock entitled to vote, given in
person or by proxy, at a meeting called for such purpose.
A. Corporate actions subject to the voting requirements of this Article
8th shall be:
(i) any merger or consolidation to which the Company and an
interested person (as defined in subparagraph C of this Article 8th) are
parties; or
(ii) any sale, lease, exchange or other disposition, in a single
transaction or series of related transactions, of all or substantially all
or a substantial part of the properties or assets of the Company to an
interested person; or
(iii) any transaction of a character described in clause (i) or (ii)
above involving an affiliate or an associate of an interested person or
involving an associate of any such affiliate or involving an affiliate of
an associate of an interested person; or
(iv) removal of the entire Board of Directors or any member of the
Board of Directors without cause.
B. The voting requirements of this Article shall not apply to any
transaction of a character described in clause (i), (ii) or (iii) of
subparagraph A above should any of the following obtain with respect to the
transaction:
(a) The Board of Directors shall have approved the transaction upon
the vote of not less than a majority prior to the time the interested
person referred to in subparagraph A above became an interested person.
(b) The Board of Directors shall have approved the transaction prior
to consummation thereof upon the vote of not less than a majority
disregarding the vote of each director who was an interested person
referred to in subparagraph A above, or an affiliate, associate or agent
of such interested person, or an associate or agent of any such affiliate.
C. For purposes of this Article 8th of these Restated Articles of
Incorporation (as amended), the following definitions shall apply:
(i) "Affiliate" shall mean a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with another person.
(ii) "Associate" shall mean any corporation or organization of which
a person is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class of securities of that
corporation or organization; or any trust or other estate in which a
person has a ten percent or larger beneficial interest or as to which a
person serves as a trustee or in a similar fiduciary capacity; or any
relative or spouse of a person and any relative of a spouse, who had the
same residence as such person.
(iii) "Beneficial Ownership" shall mean all shares directly or
indirectly owned by a person and all shares which a person has the right
to acquire through the exercise of any option, warrant or right (whether
or not currently exercisable), through the conversion of a security,
pursuant to the power to revoke a trust, discretionary account or similar
arrangement, pursuant to automatic termination of a trust, discretionary
account or similar arrangement or otherwise. All shares shall be deemed
indirectly owned by a person as to which such person enjoys benefits
substantially equivalent to those of ownership by reason of any contract,
understanding, relationship, agreement or other arrangement, including
without limitation any written or unwritten agreement to act in concert.
(iv) "Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of a person, whether through ownership of voting securities, by contract
or otherwise.
(v) "Interested Person" shall mean any person who beneficially owns
twenty percent or more of the outstanding shares of Common Stock of the
Company.
(vi) "Person" shall mean an individual, a corporation, a partnership,
an association, a jointstock company, a trust, any unincorporated
organization, a government or political subdivision thereof and any other
entity.
(vii) "Substantial Part" shall mean more than twenty percent of the
total consolidated assets of the Company, as shown on its consolidated
balance sheet as of the end of the most recent fiscal year
D. The affirmative vote of the holders of at least seventy-five percent of
the outstanding shares of Common Stock entitled to vote shall be required to
amend or repeal this Article 8th or Article 9th hereof.
Article 9th. The Board of Directors of the Company, when evaluating any
proposal
(i) involving a tender or exchange offer for any securities of the
Company,
(ii) to merge or consolidate the Company with another corporation or
other person, or
(iii) to purchase or otherwise acquire all or substantially all or a
substantial part of the properties or assets of the Company,
shall, in connection with the exercise of its judgment in determining what is
in the best interests of the Company and its shareholders, give due
consideration to all relevant factors, including without limitations, the
economic effect, both immediate and long-term, upon the Company's shareholders,
including shareholders, if any, not to participate in the transaction, and the
social and economic effect on the employees, suppliers and customers of, and
other dealing with, the Company and its subsidiaries and on the communities in
which the Company and its subsidiaries operate or are located. The definitions
set forth in subparagraph C of Article 8th shall apply to this Article 9th.
Article 10th. Classification of the Board of Directors and Related Matters.
10.1. Number, Election, etc. The business and affairs of the Company shall
be managed by or under the direction of a Board of Directors comprised as
follows:
(a) Number. The whole Board of Directors shall consist of such number
of persons, not less than 5 nor more than 15, as may from time to time be
determined by the Board pursuant to a resolution adopted by a majority
vote of the Disinterested Directors then in office.
(b) Classes; Election and Terms. Beginning with the Board of
Directors to be elected at the annual meeting of shareholders to be held
in 1986, the directors shall be classified in respect of the time for
which they shall severally hold office by dividing them into three
classes, as nearly equal in number as possible. If the classes of
directors are not equal, the Board of Directors by a majority vote of the
Disinterested Directors then in office shall determine which class shall
contain an unequal number of directors. At the annual meeting of
shareholders to be held in 1986, separate elections shall be held for the
directors of each class, the term of office of directors of the first
class to expire at the first annual meeting after their election; the term
of office of the directors of the second class to expire at the second
annual meeting after their election; and the term of office of the
directors of the third class to expire at the third annual meeting after
their election. At each succeeding annual meeting, the shareholders shall
elect directors of the class whose term then expires, to hold office until
the third succeeding annual meeting. Each director shall hold office for
the term for which elected and until his or her successor shall be elected
and shall qualify.
(c) Removal of Directors. Any directors, any class of directors or
the entire Board of Directors may be removed from office by shareholder
vote at any time, without assigning any cause, but only if shareholders
entitled to cast at least 80% of the votes which all shareholders would be
entitled to cast at an annual election of directors or of such class of
directors shall vote in favor of such removal; provided, however, that the
shareholders shall have such power of removal without cause only if and so
long as the general corporate law of the Company's state of incorporation
specifically mandates such power. If such power of removal without cause
is not mandated by statute, the shareholders may remove a director or
directors from office at any time only for cause and only if, in addition
to any vote required by any other provision of law, the Articles or the
ByLaws of the Company, such removal is approved by the affirmative vote of
at least a majority of the Voting Power of the outstanding shares of
Voting Stock of the Company which are not Beneficially Owned by an
Acquiring Person..
(d) Vacancies. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of directors, shall be
filled only by a majority vote of the Disinterested Directors then in
office, though less than a quorum, except as otherwise required by law.
All directors elected to fill vacancies shall hold office for a term
expiring at the annual meeting of shareholders at which the term of the
class to which they have been elected expires. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of
an incumbent director.
(e) Nominations of Director Candidates. Nominations for the election
of directors may be made only by the Board of Directors or a committee
appointed by the Board of Directors or by any holder of record of stock
entitled to vote in the election of the directors to be elected; but a
nomination may be made by a shareholder only if written notice of such
nomination has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Company not later than 90
days in advance of the meeting at which the election is to be held. Each
such notice shall set forth: (a) the name and address of the shareholder
who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the shareholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the shareholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (d) such
other information regarding each nominee proposed by such shareholder as
would be required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission, had the nominee
been nominated by the Board of Directors; and (e) the consent of each
nominee to serve as a director of the Company if so elected.
(f) Exception for Directors Elected by Preferred Stock. Whenever the
holders of any class or series of stock having a preference over the
Common Stock of the Company as to dividends or assets shall have the
right, voting separately as a class, to elect one or more directors of the
Company, none of the foregoing provisions of this Section 10.1 shall apply
with respect to the director or directors elected by such holders of
preferred stock.
10.2. Vote Needed to Amend. In addition to any vote required by any other
provisions of law, the Articles or the By-Laws of the Company, the affirmative
vote of the holders of at least a majority of the Voting Power of the Voting
Stock of the Company which is not Beneficially Owned, directly or indirectly,
by an Acquiring Person, shall be required to amend, alter, change or repeal, or
adopt any provision inconsistent with, this Article 10th (including the
provisions in Article 6th which are applicable to this Article 10th), unless
such action has been previously approved by a majority vote of the
Disinterested Directors.
Article 11th. Extraordinary Vote for Business Combinations.
11.1. Votes Required. In addition to any vote required by any other
provisions of law, the Articles or the By-Laws of the Company, the affirmative
vote of the holders of at least a majority of the Voting Power of the Voting
Stock of the Company which is not Beneficially Owned by an Acquiring Person
shall be required for the approval or authorization of (i) any Business
Combination or (ii) any proposal to amend, alter, change or repeal, or adopt
any provision inconsistent with, this Article 11th (including the provisions
in Article 6th which are applicable to this Article 11th); provided, however,
that the foregoing voting requirements shall not be applicable if the Board of
Directors of the Company shall have approved the Business Combination or
proposal upon the vote of not less than a majority of the Disinterested
Directors.
Article 12th. Amendments to Articles of Incorporation or By-Laws;
Shareholder Action.
12.1. Amendments to By-Laws. The Board of Directors, by vote of a majority
of the Disinterested Directors, may adopt, amend and repeal the By-Laws with
respect to those matters which are not, by statute, reserved exclusively to the
shareholders. No By-Law may be adopted, amended or repealed by the shareholders
unless, in addition to any vote required by any other provisions of law, the
Articles or the By-Laws of the Company, such action is approved by the holders
of a majority of the Voting Power of the Voting Stock of the Company which is
not Beneficially Owned by an Acquiring Person, unless such action has been
previously approved by a majority vote of the Disinterested Directors.
12.2. Amendments to Articles of Incorporation. Except in a case where it
is specifically provided that this Article 12.2 does not apply to an amendment
or deletion of another provision of the Articles, the approval of the holders
of a majority of the Voting Power of the Voting Stock of the Company which is
not Beneficially Owned by an Acquiring Person, in addition to any vote required
by any other provisions of law, the Articles or the By-Laws of the Company,
shall be required to amend the Articles or delete any provision thereof, unless
such action has been previously approved by a majority vote of the
Disinterested Directors.
12.3 Shareholder Action--Meetings; Special Meetings. Any action required
or permitted to be taken by the shareholders of the Company must be effected at
a duly called annual or special meeting of such holders and may not be effected
without a meeting by any consent in writing by such holders. Except as
otherwise required by law and subject to the rights of the holders of any class
or series of preferred stock with respect to any vote of the holders of such
class or series when voting by class, special meetings of shareholders of the
Company may be called only by the Board of Directors pursuant to a resolution
approved by a majority vote of the Disinterested Directors.
Article 13th. Articles Defined. Henceforth, the Articles as defined in the
Business Corporation Law shall not include any prior documents.
EXHIBIT 10(a)
MINE SAFETY APPLIANCES COMPANY
1990 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(As amended April 27, 1994)
The purposes of the 1990 Non-Employee Directors' Stock Option Plan (the
"Plan") are to promote the long-term success of Mine Safety Appliances Company
(the "Company") by creating a long-term mutuality of interests between the
non-employee Directors and shareholders of the Company, to provide an
additional inducement for such Directors to remain with the Company and to
provide a means through which the Company may attract able persons to serve as
Directors of the Company.
SECTION 1
Administration
The Plan shall be administered by a Committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board") and consisting of not
less than two members of the Board. The Committee shall keep records of action
taken at its meetings. A majority of the Committee shall constitute a quorum
at any meeting, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the Committee, shall be the acts of the Committee.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. All questions of interpretation and
application of the Plan, or as to stock options granted under the Plan, shall
be subject to the determination of the Committee, which shall be final and
binding.
Notwithstanding the above, the selection of the Directors to whom stock
options are to be granted, the timing of such grants, the number of shares
subject to any stock option, the exercise price of any stock option, the
periods during which any stock option may be exercised and the term of any
stock option shall be as hereinafter provided, and the Committee shall have no
discretion as to such matters.
SECTION 2
Shares Available under the Plan
The aggregate number of shares which may be issued and as to which grants
of stock options may be made under the Plan is 50,000 shares of the Common
Stock, without par value, of the Company (the "Common Stock"), subject to
adjustment and substitution as set forth in Section 5. If any stock option
granted under the Plan is cancelled by mutual consent or terminates or expires
for any reason without having been exercised in full, the number of shares
subject thereto shall again be available for purposes of the Plan. The shares
which may be issued under the Plan may be either authorized but unissued shares
or treasury shares or partly each, as shall be determined from time to time by
the Board.
SECTION 3
Grant of Stock Options
On the third business day following the day of each annual meeting of the
shareholders of the Company, each person who is then a member of the Board and
who is not then an employee of the Company or any of its subsidiaries (a
"non-employee Director") shall automatically and without further action by the
Board or the Committee be granted a "nonstatutory stock option" (i.e., a stock
option which does not qualify under Section 422 of the Internal Revenue Code of
1986 (the "Code")) to purchase 500 shares of Common Stock, subject to
adjustment and substitution as set forth in Section 5. If the number of shares
then remaining available for the grant of stock options under the Plan is not
sufficient for each non-employee Director to be granted an option for 500
shares (or the number of adjusted or substituted shares pursuant to Section 5),
then each non-employee Director shall be granted an option for a number of
whole shares equal to the number of shares then remaining available divided by
the number of non-employee Directors, disregarding any fractions of a share.
SECTION 4
Terms and Conditions of Stock Options
Stock options granted under the Plan shall be subject to the following
terms and conditions:
(A) The purchase price at which each stock option may be exercised
(the "option price") shall be one hundred percent (100%) of the fair
market value per share of the Common Stock covered by the stock option on
the date of grant, determined as provided in Section 4(G).
(B) The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including
check, bank draft or money order); provided, however, that in lieu of
such cash the person exercising the stock option may pay the option price
in whole or in part by delivering to the Company shares of the Common
Stock having a fair market value on the date of exercise of the stock
option, determined as provided in Section 4(G), equal to the option
price for the shares being purchased; except that (i) any portion of the
option price representing a fraction of a share shall in any event be
paid in cash and (ii) no shares of the Common Stock which have been held
for less than one year may be delivered in payment of the option price of
a stock option. The date of exercise of a stock option shall be
determined under procedures established by the Committee, and as of the
date of exercise the person exercising the stock option shall be
considered for all purposes to be the owner of the shares with respect to
which the stock option has been exercised. Payment of the option price
with shares shall not increase the number of shares of the Common Stock
which may be issued under the Plan as provided in Section 2.
(C) No stock option shall be exercisable by a grantee during the
first six months of its term except in case of death or disability as
provided in Section 4(E). Subject to the terms of Section 4(E) providing
for earlier termination of a stock option, no stock option shall be
exercisable after the expiration of ten years from the date of grant. A
stock option to the extent exercisable at any time may be exercised in
whole or in part.
(D) No stock option shall be transferable by the grantee otherwise
than by Will, or if the grantee dies intestate, by the laws of descent and
distribution of the state of domicile of the grantee at the time of
death. All stock options shall be exercisable during the lifetime of the
grantee only by the grantee or the grantee's guardian or legal
representative.
(E) If a grantee ceases to be a Director of the Company for any
reason, any outstanding stock options held by the grantee shall be
exercisable and shall terminate according to the following provisions:
(i) If a grantee ceases to be a Director of the Company for any
reason other than resignation, removal for cause or death, any then
outstanding stock option held by such grantee shall be exercisable
by the grantee (but only to the extent exercisable by the grantee
immediately prior to ceasing to be a Director) at any time prior to
the expiration date of such stock option or within two years after
the date the grantee ceases to be a Director, whichever is the
shorter period, provided that, in the case of a grantee who is
disabled within the meaning of Section 22(e)(3) of the Code (a
"Disabled Grantee"), any then outstanding stock option shall be
exercisable in full whether or not exercisable by the grantee
immediately prior to ceasing to be a Director;
(ii) If during his term of office as a Director a grantee resigns
from the Board or is removed from office for cause, any outstanding
stock option held by the grantee which is not exercisable by the
grantee immediately prior to resignation or removal shall terminate
as of the date of resignation or removal, and any outstanding stock
option held by the grantee which is exercisable by the grantee
immediately prior to resignation or removal shall be exercisable by
the grantee at any time prior to the expiration date of such stock
option or within 90 days after the date of resignation or removal,
whichever is the shorter period;
(iii) Following the death of a grantee during service as a
Director of the Company, any outstanding stock option held by the
grantee at the time of death (whether or not exercisable by the
grantee immediately prior to death) shall be exercisable by the
person entitled to do so under the Will of the grantee, or, if the
grantee shall fail to make testamentary disposition of the stock
option or shall die intestate, by the legal representative of the
grantee at any time prior to the expiration date of such stock
option or within two years after the date of death, whichever is
the shorter period;
(iv) Following the death of a grantee after ceasing to be a
Director and during a period when a stock option is exercisable,
any outstanding stock option held by the grantee at the time of
death shall be exercisable by such person entitled to do so under
the Will of the grantee or by such legal representative (but only
to the extent the stock option was exercisable by the grantee
immediately prior to the death of the grantee) at any time prior to
the expiration date of such stock option or within one year after
the date of death, whichever is the shorter period.
A stock option held by a grantee who has ceased to be a Director
of the Company shall terminate upon the expiration of the
applicable exercise period, if any, specified in this Section 4(E).
Whether a grantee is a Disabled Grantee shall be determined, in its
discretion, by the Committee, and any such determination by the
Committee shall be final and binding.
(F) All stock options shall be confirmed by an agreement, or an
amendment thereto, which shall be executed on behalf of the Company by
the Chief Executive Officer (if other than the President), the President
or any Vice President and by the grantee.
(G) Fair market value of the Common Stock shall be the mean between
the following prices, as applicable, for the date as of which fair market
value is to be determined as quoted
in The Wall Street Journal (or in such other reliable publication
as the Committee, in its discretion, may determine to rely upon): (a) if
the Common Stock is listed on the New York Stock Exchange, the highest
and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (b) if the Common
Stock is not listed on such exchange, the highest and lowest sales prices
per share of Common Stock for such date on (or on any composite index
including) the principal United States securities exchange registered
under the Securities Exchange Act of 1934 (the "1934 Act") on which the
Common Stock is listed, or (c) if the Common Stock is not listed on any
such exchange, the highest and lowest sales prices per share of the
Common Stock for such date on the National Association of Securities
Dealers Automated Quotations System or any successor system then in use
("NASDAQ"). If there are no such sale price quotations for the date as
of which fair market value is to be determined but there are such sale
price quotations within a reasonable period both before and after such
date, then fair market value shall be determined by taking a
weighted average of the means between the highest and lowest sales prices
per share of the Common Stock as so quoted on the nearest date before and
the nearest date after the date as of which fair market value is to be
determined. The average should be weighted inversely by the respective
numbers of trading days between the selling dates and the date as of
which fair market value is to be determined. If there are no such sale
price quotations on or within a reasonable period both before and after
the date as of which fair market value is to be determined, then fair
market value of the Common Stock shall be the mean between the bona fide
bid and asked prices per share of Common Stock as so quoted for such date
on NASDAQ, or if none, the weighted average of the means between such
bona fide bid and asked prices on the nearest trading date before and the
nearest trading date after the date as of which fair market value is to be
determined, if both such dates are within a reasonable period. The
average is to be determined in the manner described above in this Section
4(G). If the fair market value of the Common Stock cannot be determined
on the basis previously set forth in this Section 4(G) for the date as of
which fair market value is to be determined, the Committee shall in good
faith determine the fair market value of the Common Stock on such date.
Fair market value shall be determined without regard to any restriction
other than a restriction which, by its terms, will never lapse.
(H) The obligation of the Company to issue shares of the Common Stock
under the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares, if deemed necessary or appropriate by counsel for
the Company, (ii) the condition that the shares shall have been listed
(or authorized for listing upon official notice of issuance) upon each
stock exchange, if any, on which the Common Stock shares may then be
listed and (iii) all other applicable laws, regulations, rules and orders
which may then be in effect.
Subject to the foregoing provisions of this Section 4 and the other
provisions of the Plan, any stock option granted under the Plan may be subject
to such restrictions and other terms and conditions, if any, as shall be
determined, in its discretion, by the Committee and set forth in the agreement
referred to in Section 4(F), or an amendment thereto.
SECTION 5
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the Common
Stock payable in shares of the Common Stock, the number of shares of the Common
Stock set forth in Section 3, the number of shares of the Common Stock then
subject to any outstanding stock options and the number of shares of the Common
Stock which may be issued under the Plan but are not then subject to
outstanding stock
options shall be adjusted by adding thereto the number of shares of the Common
Stock which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the shareholders entitled to
receive such stock dividend or distribution.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock set forth in Section 3, for each share of the Common
Stock subject to any then outstanding stock option, and for each share of the
Common Stock which may be issued under the Plan but which is not then subject
to any outstanding stock option, the number and kind of shares of stock or
other securities into which each outstanding share of the Common Stock shall be
so changed or for which each such share shall be exchangeable.
In case of any adjustment or substitution as provided for in this Section
5, the aggregate option price for all shares subject to each then outstanding
stock option prior to such adjustment or substitution shall be the aggregate
option price for all shares of stock or other securities (including any
fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 5 shall require
the Company to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
SECTION 6
Effect of the Plan on the Rights of Company and Shareholders
Nothing in the Plan, in any stock option granted under the Plan, or in any
stock option agreement shall confer any right to any person to continue as a
Director of the Company or interfere in any way with the rights of the
shareholders of the Company or the Board of Directors to elect and remove
Directors.
SECTION 7
Amendment and Termination
The right to amend the Plan at any time and from time to time and the
right to terminate the Plan at any time are hereby specifically reserved to the
Board; provided always that no such termination shall terminate any outstanding
stock options granted under the Plan; and provided further that no amendment of
the Plan shall (a) be made without shareholder approval if shareholder approval
of the amendment is at the time required for stock options under the Plan to
qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule
16b-3 or by the rules of the NASDAQ National Market System or any stock
exchange on which the Common Stock may then be listed, (b) amend more than once
every six months the provisions of the Plan relating to the selection of the
Directors to whom stock options are to be granted, the timing of such grants,
the number of shares subject to any stock option, the exercise price of any
stock option, the periods during which any stock option may be exercised and
the term of any stock option other than to comport with changes in the Code or
the rules and regulations thereunder or (c) otherwise amend the Plan in any
manner that would cause stock
options under the Plan not to qualify for the exemption provided by Rule 16b-3.
No amendment or termination of the Plan shall, without the written consent of
the holder of a stock option theretofore awarded under the Plan, adversely
affect the rights of such holder with respect thereto.
Notwithstanding anything contained in the preceding paragraph or any other
provision of the Plan or any stock option agreement, the Board shall have the
power to amend the Plan in any manner deemed necessary or advisable for stock
options granted under the Plan to qualify for the exemption provided by Rule
16b-3 (or any successor rule relating to exemption from Section 16(b) of the
1934 Act), and any such amendment shall, to the extent deemed necessary or
advisable by the Board, be applicable to any outstanding stock options
theretofore granted under the Plan notwithstanding any contrary provisions
contained in any stock option agreement. In the event of any such amendment to
the Plan, the holder of any stock option outstanding under the Plan shall, upon
request of the Committee and as a condition to the exercisability of such
option, execute a conforming amendment in the form prescribed by the Committee
to the stock option agreement referred to in Section 4(F) within such
reasonable time as the Committee shall specify in such request.
SECTION 8
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be December 17,
1990, the date of adoption of the Plan by the Board, provided that on or prior
to December 31, 1991 such adoption of the Plan by the Board is approved by the
affirmative vote of the holders of at least a majority of the outstanding
shares of voting stock of the Company represented in person or by proxy at a
duly called and convened meeting of such holders. Notwithstanding any other
provision contained in the Plan, no stock option granted under the Plan may be
exercised until after such shareholder approval.
EXHIBIT 10(b)
MINE SAFETY APPLIANCES COMPANY
EXECUTIVE INSURANCE PROGRAM
As Amended June 24, 1992
Section 1 - Purpose
The purpose of the Executive Insurance Program ("EIP" or
"Plan" is to enable Mine Safety Appliances Company (the "Company")
to assist certain of the Company's senior management employees in
providing life insurance benefits for their families and dependents
during their working career with the Company and to provide them
with additional flexibility and post-employment benefits upon their
retirement from active employment with the Company. This result is
to be accomplished by substituting, for eligible employees, all but
$50,000 of group term life insurance with permanent life insurance.
The major portion of the premium cost will be paid by the Company
and the balance will be paid by the Participant.
Section 2 - Definitions
The following definitions shall apply for purposes of the Plan
unless another meaning is clearly required by the context.
"Beneficiary" shall mean any person, persons or entity who or
which may be designated by a Participant as the recipient of any
benefits to which the same may be entitled under the terms of the
Plan upon the death of the Participant.
"Board" shall mean the Board of Directors of the Company as it
may be constituted from time to time.
"Company" shall mean Mine Safety Appliances Company, including
any subsidiaries or affiliates, or any successor thereto.
"Death Benefit" shall mean the gross amount payable by an
Insurer under the terms of a policy issued hereunder upon the death
of a Participant. A portion of the Death Benefit, referred to as
the "Insurance Amount" (as listed in the "Table of Insurance
Amounts" attached hereto), will be paid to the Participant's
Beneficiaries and the balance paid to the Company.
"Insurer" shall mean the Connecticut Mutual Life Insurance
Company and/or any other insurance carrier selected by the Company
to issue Policies hereunder and which is authorized to do business
in the Commonwealth of Pennsylvania.
"Participant" shall mean any member of senior management of
the Company authorized by the Board to participate in the Plan.
"Plan" shall mean the Executive Insurance Program described
herein.
"Policy" shall mean an insurance contract issued by an Insurer
on the life of a Participant.
"Retired Participant" shall mean a Participant who has
terminated his active employment as an employee of the Company,
under conditions which would then entitle the Participant to
immediate receipt of either an Early, Normal, or Postponed
Retirement benefit under the Company's Non-Contributory Pension
Plan.
Section 3 - Eligibility
Those members of management who are eligible to
participate in the Executive Insurance Program shall be the
President of the Company and such other key members of senior
management as shall be designated from time to time by the
President of the Company and approved for participation by the
Board of Directors.
Section 4 - Amount and Effective Date of Coverage
The initial amount of life insurance coverage provided
under the Plan to those selected for participation as of the
effective date of the Plan shall be as described in the "Table of
Insurance Amounts" attached hereto. The amount of life insurance
provided to executives who are selected for participation after the
effective date of the Plan shall be in an amount determined by the
President and approved by the Board at the time of their selection.
The effective date of insurance coverage hereunder shall
be the later of the date of the employee's selection for
participation herein or acceptance by the Insurer as a standard
risk. The cancellation of a Participant's group term life
insurance in excess of $50,000, and his actual participation in
this Plan shall be conditioned upon his insurability in a standard
risk category for the benefit to be provided herein or, if not
insurable in a standard risk category, the acceptance by the
Company of the non-standard risk category proposed by the Insurer.
The Board reserves the right to change the amount of
insurance on the life of any Participant from time to time, and any
such change in the level of insurance shall be effective as of the
later of the first day of the month coincident with or next
following the effective date of the change or the date of
acceptance by the Insurer of the new insurance amount at standard
rates, or acceptance by the Company of an offer of insurance made
by the Insurer at non-standard rates.
Section 5 - Payment for Coverage
The cost of the applicable amount of life insurance shall
be borne jointly by the Company and the Participant as follows.
The Company shall pay, not later than the due date
therefor (including any "grace period"), the gross amount of
premium due under each Policy issued to fund the benefits of the
Plan. Thereafter, each Participant shall reimburse the Company, by
direct payment in cash or through payroll deduction, an amount
equal to the Imputed Cost of Benefit ("ICOB"). The ICOB shall be
determined by multiplying the Participant's Insurance Amount
(expressed in one thousand dollar increments) by the "Unit Price"
determined pursuant to "Table of Unit Values" attached hereto,
based upon the age of the Participant as of the Policy anniversary
date. Alternatively, there shall be substituted for the applicable
Unit Price, the Insurer's initial issue, one-year term insurance
standard risk rate, but only if such rate is lower than the
otherwise applicable Unit Price.
Section 6 - Payment of Proceeds Upon Death Prior to Retirement
In the event of the death of the Participant prior to his
retirement from the Company, the gross death benefit payable under
the Policy shall be split between the Company and the Participant's
Beneficiary. The Beneficiary shall receive an amount equal to the
Insurance Amount and the Company shall receive the difference
between the gross Death Benefit and the Insurance Amount. The
amounts payable to the Company and the Beneficiary shall be paid
directly to each payee by the Insurer directly from the Insurer.
Section 7 - Options Upon Retirement of a Participant
On or before the date on which a Participant becomes a
Retired Participant, he shall be given the right to elect one of
the following options with respect to his Insurance Amount.
(1) Maintain the Existing Arrangement. Under this
option the Executive Insurance Program would remain as it existed
prior to the Participant's retirement except that the Retired
Participant will not be required to reimburse the Company for any
cost associated with the post-retirement coverage. For federal
income tax purposes, however, a Retired Participant will be deemed
to have received taxable income equal to the "Imputed Cost of
Benefit" described in Section 5, but the Death Benefit received by
the Participant's Beneficiary will not be subject to federal income
tax.
(2) Company-Paid Post-Retirement Death Benefit.
Alternatively, the Participant can elect not to continue the
Executive Insurance Program, but in lieu thereof, can elect a non-
insured post-retirement death benefit equal to the Insurance Amount
in effect at the date of the Participant's retirement. Under this
Option there is not imputed "cost of benefit" to the Retired
Participant but the Death Benefit paid to the Participant's
Beneficiary by the Company will be subject to federal income tax
when received.
(3) Supplemental Retirement Benefits. Rather than a
continuation of the Death Benefit described in either Option 1 or
Option 2 above, a Retired Participant can elect to receive a series
of supplemental retirement payments which, in the aggregate, equal
three-quarters (75%) of the pre-retirement Insurance Amount.
Payment of the supplemental retirement benefits shall be made in a
series of approximately equal monthly payments over a period of 15
years.
The Supplemental Retirement Benefit Option may be elected
by a Participant at any time on or after August 1, 1991. It shall
be available to any Participant who retires on or after that date
as well as to any previously Retired Participant who had previously
elected either Option 1 or Option 2. If the supplemental
retirement payments of Option 3 are elected, and in the event of
the death of the Retired Participant prior to the completion of the
15-year payment period, the then unpaid installments shall continue
to be paid to the Retired Participant's Beneficiary or, at the
discretion of the Board, may be commuted and paid to such
Beneficiary in a single sum.
Section 8 - Administration, Amendment, Termination
The Board, or its delegate, shall be the "Administrator"
of this Plan, and shall have full power and authority to interpret,
construe and administer the same. Any such interpretation and
construction shall be final and binding upon any and all parties in
interest. In addition, the Board shall have the right to amend
this Plan from time to time, and to terminate it at any time.
Section 9 - Miscellaneous Matters
(a) No Right to Assets. No Participant, Beneficiary or
other person or entity claiming entitlement to any benefit from or
through such person shall have any right to or title in any policy
or any other asset obtained by the Company for the purpose of
funding the benefits provided hereunder except as otherwise
expressly provided herein.
(b) Alienation. Except with respect to the designation
of a Beneficiary to be the recipient of any death benefits
hereunder, or the assignment of the incidents of ownership of any
death benefits hereunder, the interest of Participants and their
Beneficiaries under the Plan are not in any way subject to their
debts or other obligations and may not be voluntarily or
involuntarily sold, transferred, assigned, alienated or encumbered,
and any attempt to do so shall be void.
(c) Construction. The Plan shall be construed and
administered according to the laws of the Commonwealth of
Pennsylvania and any federal laws which may from time to time be
applicable. Whenever any words are used herein in the masculine
gender, they shall be construed as though they were also used in
the feminine gender in all cases where they would apply, and
whenever any words are used in the singular form, they shall be
construed as though they were also used in the plural form in all
cases where they would so apply. Headings of sections of this
instrument are inserted for convenience of reference only and as
such they constitute no part of this Plan and are not to be
considered in the construction hereof.
(d) Limitation of Benefit. All benefits hereunder
except those described in Options 2 and 3 of Section 7 shall be
payable solely by the Insurer(s) under the Policies issued
hereunder, and the Company does not assume any liability or
responsibility therefor or guarantee such benefits. The liability
and responsibility of the Company are strictly limited to the
provisions of this Plan.
