FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-7833
CBI INDUSTRIES, INC.
Incorporated in Delaware IRS Identification Number: 36-3009343
Principal Executive Offices: 800 Jorie Boulevard
Oak Brook, Illinois 60521-2268
Telephone Number: (708) 572-7000
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of a single class of common stock as of
September 30, 1994 - 38,061,886.
1 of 16
CBI INDUSTRIES, INC. AND SUBSIDIARIES
Table of Contents
PART I.FINANCIAL INFORMATION
Financial Statements: Page
Statements of Income
Nine Months Ended September 30, 1994 and 1993............... 3
Balance Sheets
September 30, 1994 and December 31, 1993.................... 4
Statements of Cash Flows
Nine Months Ended September 30, 1994 and 1993............... 5
Notes to Financial Statements............................... 6
Management's Discussion and Analysis of Operating
Performance and Financial Condition......................... 9
PART II.OTHER INFORMATION............................................14
SIGNATURE PAGE..........................................................16
2
<TABLE>
PART I - FINANCIAL INFORMATION
CBI INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
<CAPTION>
Three Months Nine Months
Thousands of dollars, except per share amounts Ended September 30,Ended September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues
Industrial Gases $233,226 $201,950 $658,989 $598,966
Contracting Services 210,701 177,033 593,717 541,715
Investments 45,264 29,389 108,358 93,459
Total Revenues 489,191 408,372 1,361,064 1,234,140
Costs of Services and Products Sold
Industrial Gases 161,472 142,985 457,210 422,450
Contracting Services 196,979 153,356 522,295 479,248
Investments 35,744 24,172 86,805 78,485
Total Costs of Services and Products Sold 394,195 320,513 1,066,310 980,183
Gross Profit from Operations 94,996 87,859 294,754 253,957
Selling and Administrative Expense
Industrial Gases 36,712 32,500 111,241 97,699
Contracting Services 19,732 18,738 60,258 57,259
Investments 1,598 1,064 4,324 2,978
Corporate 4,103 4,034 14,293 13,595
Total Selling and Administrative Expense 62,145 56,336 190,116 171,531
Income from Operations 32,851 31,523 104,638 82,426
Interest Expense (11,085) (7,329) (28,887) (19,689)
Income before Income Taxes and Minority Interest 21,766 24,194 75,751 62,737
Provision for Income Taxes (9,500) (11,800) (35,200) (30,700)
Income before Minority Interest 12,266 12,394 40,551 32,037
Minority Interest in Income (2,874) (2,097) (7,915) (7,738)
Net Income 9,392 10,297 32,636 24,299
Dividends on Preferred Shares (1,521) (1,446) (4,529) (4,373)
Net Income to Common Shareholders $7,871 $8,851 $28,107 $19,926
Net Income per Common Share
Primary $0.20 $0.24 $0.74 $0.54
Fully Diluted $0.20 $0.22 $0.69 $0.50
Average Common Shares Outstanding (thousands)
Primary 37,913 37,344 37,795 37,096
Fully Diluted 43,199 42,728 43,081 42,480
Dividends on Common Shares
Amount $4,557 $4,482 $13,636 $13,336
Per Share $0.12 $0.12 $0.36 $0.36
<F1>
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
<CAPTION>
Thousands of dollars Sept. 30, Dec. 31,
1994 1993
<S> <C> <C>
Current Assets
Cash $5,722 $6,224
Temporary Cash Investments 38,250 17,005
Accounts Receivable, less allowances
of 11,100 and 11,500 292,768 283,952
Contracts in Progress with Earned Revenues
exceeding related Progress Billings 68,401 61,823
Inventories (Note 2) 80,100 63,644
Other Current Assets 40,728 38,626
525,969 471,274
Other Assets
Notes Receivable 35,474 33,057
Real Estate Properties 27,086 26,721
Equity in and Advances to Unconsolidated Affiliates 49,336 65,506
Intangible Assets 76,545 78,278
Other Non-Current Assets 64,839 64,444
253,280 268,006
Property and Equipment 1,838,896 1,699,852
Accumulated Depreciation (628,376) (568,887)
1,210,520 1,130,965
Total Assets $1,989,769 $1,870,245
Current Liabilities
Notes Payable $75,019 $43,472
Current Maturities of Long-Term Debt (Note 3) 15,320 25,226
Accounts Payable 76,264 66,558
Dividends Payable 669 2,790
Accrued Liabilities 123,926 137,871
Contracts in Progress with Progress Billings
exceeding related Earned Revenues 55,149 52,198
Income Taxes Payable 23,526 16,955
369,873 345,070
Long-Term Debt and Other Liabilities
Long-Term Debt (Note 3) 680,190 607,579
Other Non-Current Liabilities 125,514 130,494
Deferred Income Taxes 40,424 42,867
Minority Interest in Subsidiaries 65,520 67,623
Capital Stock
Preferred Stock
Series C (Note 4) 116,214 120,318
Unallocated ESOP Shares (Note 6) (914) (3,654)
Unamortized ESOP Debt (Note 6) (78,726) (83,584)
36,574 33,080
Common Stock
Common Stock (Note 5) 99,459 99,459
Additional Paid-in Capital 214,320 214,320
Retained Earnings 447,535 427,828
Unamortized Restricted Stock Awards (10,952) (8,498)
Unallocated ESOP Shares (Note 6) (233) (931)
Unamortized ESOP Debt (Note 6) (17,527) (18,609)
Cost of Reacquired Common Stock (Note 5) (35,292) (45,353)
Cumulative Translation Adjustment (25,636) (24,684)
671,674 643,532
Total Liabilities and Capital Stock $1,989,769 $1,870,245
<F1>
The accompanying notes are an integral part of these financial statements
</TABLE>
4
<PAGE>
<TABLE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months
Thousands of dollars Ended September 30,
1994 1993
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $32,636 $24,299
Depreciation 78,086 72,162
110,722 96,461
(Increase) in Accounts Receivable (3,002) (19,023)
(Increase)/Decrease in Contracts in Progress, net (2,668) 4,705
(Decrease) in Accounts Payable,
Accrued Liabilities and Income Taxes, net (975) (32,930)
(Decrease) in Deferred Income Taxes (2,289) (6,921)
Decrease in Undistributed Earnings
of Unconsolidated Affiliates 352 3,146
Other, net 413 (964)
Total Cash Flows from Operating Activities 102,553 44,474
Cash Flows from Capital Investment Activities
Purchase of Property and Equipment (168,286) (143,095)
Cost of Business Acquisitions, net of cash acquired (19,151)
Disposition of Property and Equipment 11,860 10,624
Decrease in Other Assets, net 367 96
Other, net 4,029 5,103
Total Cash Flows from Capital Investment Activities (152,030) (146,423)
Cash Flows from Financing and Shareholder Activities
Issuance of Debt 122,169 151,930
Repayment of Debt (32,004) (33,202)
90,165 118,728
Sale of Common Stock 3,978 3,026
Purchase of Common Stock (2,012) (1,511)
Dividends Paid (21,911) (21,918)
Total Cash Flows from Financing and Shareholder Activities 70,220 98,325
Increase/(Decrease) in Cash and Temporary Cash Investments $20,743 ($3,624)
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
CBI INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Financial Statements
September 30, 1994
Thousands of dollars
(1) Additional Information
The consolidated financial statements included herein have been prepared
by CBI Industries, Inc. and Subsidiaries (CBI), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such
rules and regulations, although CBI believes that the disclosures are
adequate to make the information presented not misleading. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
1993 annual report on Form 10-K of CBI.
In the opinion of CBI, all adjustments necessary to present fairly the
financial position of CBI as of September 30, 1994 and the results of
its operations and cash flows for the period then ended have been
included. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
(2) Inventories
Inventories by component and valuation method at September 30, 1994:
Raw materials and supplies $31,154
Work in process 9,443
Finished goods 39,503
-------
Total inventories $80,100
=======
Average cost method $54,545
First-in, first-out method 25,555
-------
Total inventories $80,100
=======
6
(3) Long-Term Debt
Summary of long-term debt at September 30, 1994:
Commercial Paper and Other Similar Borrowings with a weighted
average quarter-end interest rate of 5.1% $247,778
Senior ESOP Notes with a quarter-end interest rate of 8.354%,
maturing in 1995 through 2002 94,273
6-1/4% Notes, $75,000 face amount, due 2000 74,747
6-5/8% Notes, $75,000 face amount, due 2003 74,498
Variable Rate Unsecured Notes with a weighted average quarter-
end interest rate of 5.6%, maturing in 1994 through 1999 107,080
Variable Rate Secured Notes with a weighted average quarter-
end interest rate of 5.3%, maturing in 1994 through 2000 61,600
Fixed Rate Medium-Term Notes, Series A, with a weighted average
quarter-end interest rate of 7.7%, maturing in 1999 and 2004 31,000
Other 4,534
--------
695,510
Less: current maturities (15,320)
--------
$680,190
========
Commercial paper and other similar borrowings, which would normally be
classified as current debt, have been classified as long-term debt since
this debt is supported by unused commitments under an existing $300,000
unsecured three-year extendible revolving credit agreement. The
agreement has a present termination date of December 31, 1996, which is
extendible annually for one additional year by mutual consent. Amounts
borrowed under the agreement may be repaid under certain options and a
commitment fee is payable on any unused portion.
Minimum annual principal payments of long-term debt are as follows:
October 1 through December 31, 1994 $ 2,576
Year ending December 31, 1995 17,725
Year ending December 31, 1996 270,984
Year ending December 31, 1997 28,711
Year ending December 31, 1998 27,697
Year ending December 31, 1999 110,473
After 1999 237,344
--------
$695,510
========
7
(4) Preferred Stock
Preferred stock - $1.00 par value; authorized - 20,000,000 shares.
Series A - No shares have been issued. 800,000 shares are reserved as
Series A Junior Participating Preferred Stock.
Series C - 3,586,858 shares are issued as Convertible Voting Preferred
Stock, Series C, at September 30, 1994 and 3,713,519 shares at December
31, 1993. The annual dividend is $2.27 per share.
(5) Common Stock
Common stock - $2.50 par value; authorized - 120,000,000 shares; issued -
39,783,614 shares at September 30, 1994 and December 31, 1993.
Reacquired stock - The number of reacquired shares of common stock was
1,721,728 at September 30, 1994 and 2,273,761 at December 31, 1993.
(6) Employee Stock Ownership Plan (ESOP)
Unallocated ESOP shares - Shares received and purchased from the
transfer of the surplus assets from the terminated and restructured
defined benefit pension plans are reflected as unallocated ESOP shares.
These shares are being allocated to eligible employees over a period of
eight years ending in 1994. As of September 30, 1994, 61,657 common
shares and 86,332 Series C preferred shares are subject to future
allocation.
Unamortized ESOP debt - The Senior ESOP Notes, which were issued in
1988, in an amount of $125,000, were initially offset by a like amount
of unamortized ESOP debt in capital stock. As company contributions
plus the dividends on the shares held by the ESOP are used to meet
interest and principal payments on the loan over its 14-year term,
shares acquired with the loan proceeds are allocated to eligible
employees. As of September 30, 1994, 804,211 common shares and
2,033,148 Series C preferred shares are subject to future allocation.
8
Management's Discussion and Analysis
of Operating Performance and Financial Condition
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and accompanying notes.
OPERATING PERFORMANCE
Overview. Consolidated net income for the third quarter ended September 30,
1994 was $9.4 million ($0.20 per common share) as compared to $10.3 million
($0.24 per common share) for the third quarter of 1993. For the nine months
ending September 30, 1994, CBI's consolidated net income was $32.6 million
($0.74 per common share) compared to $24.3 million ($0.54 per common share)
for the comparable 1993 period.
Revenues of $489.2 million for the quarter were $80.8 million (19.8%) greater
than the $408.4 million of third quarter 1993 revenues. Approximately 15% of
the increase in revenues is attributable to the consolidation, beginning in
the second quarter of 1994, of certain Canadian industrial gas
distributorships previously accounted for under the equity method. All three
segments of the company realized nine percent or greater increases in revenues
compared to the previous year's third quarter, even excluding the Canadian
consolidation. For the nine months to date, revenues of $1,361.1 million
exceeded those of 1993 by 10.3%.
Gross profit for the quarter of $95.0 million (19.4% of revenues) compared to
$87.9 million (21.5% of revenues) in the third quarter of 1993. For the year
to date, 1994's gross profit of $294.8 million (21.7% of revenues) was 16.1%
better than the $254.0 million (20.6% of revenues) in the previous year,
reflecting both the increase in revenues and improved margins in all three
segments.
Selling and administrative expense increased $5.8 million from the third
quarter of 1993 to the current quarter, of which approximately half of the
increase was due to the consolidation of the Canadian distributorships. For
the first nine months of 1994, selling and administrative expense was $190.1
million, compared to $171.5 million for the same 1993 period. Excluding the
effect of the consolidation of the Canadian distributorships, selling and
administrative expenses year-to-year have increased less than 4%.
Income from operations of $32.9 million (6.7% of revenues) for 1994's third
quarter was up modestly from the $31.5 million (7.7% of revenues) in the
comparable 1993 quarter. Net income declined from the amount reported in the
third quarter of 1993 due to higher levels of interest expense and an increase
in the minority interest in such income. For the year to date, income from
operations of $104.6 million (7.7% of revenues) exceeded the $82.4 million
(6.7% of revenues) recorded in 1993. Cash flow from operations for the quarter
and year to date was $53.8 million and $201.3 million, respectively, compared
to $65.5 million and $175.3 million in 1993.
CBI's comparative operating performance (before interest and taxes) for the
third quarters of 1994 and 1993 and for the first nine months of those years
is as follows (dollars in thousands):
Three Months Nine Months
1994 1993 1994 1993
Revenues $489,191 $408,372 $1,361,064 $1,234,140
Costs 394,195 320,513 1,066,310 980,183
-------- -------- ---------- ----------
Gross profit 94,996 87,859 294,754 253,957
Gross profit-% 19.4% 21.5% 21.7% 20.6%
Selling and administrative 62,145 56,336 190,116 171,531
-------- -------- ---------- ----------
Income from operations 32,851 31,523 104,638 82,426
Income from operations-% 6.7% 7.7% 7.7% 6.7%
Depreciation 27,303 24,413 78,086 72,162
Other non-cash charges (6,395) 9,604 18,624 20,734
-------- -------- ---------- ----------
Cash flow from operations$ 53,759 $ 65,540 $ 201,348 $ 175,322
======== ======== ========== ==========
9
Industrial Gases. Liquid Carbonic's performance for the periods ending
September 30, 1994 and 1993 is as follows (dollars in thousands):
Three Months Nine Months
1994 1993 1994 1993
Revenues $233,226 $201,950 $658,989 $598,966
Costs 161,472 142,985 457,210 422,450
-------- -------- -------- --------
Gross profit 71,754 58,965 201,779 176,516
Gross profit-% 30.8% 29.2% 30.6% 29.5%
Selling and administrative 36,712 32,500 111,241 97,699
-------- -------- -------- --------
Income from operations $ 35,042 $ 26,465 $ 90,538 $ 78,817
Income from operations-% 15.0% 13.1% 13.7% 13.2%
======== ======== ======== ========
Revenues in the Industrial Gases segment in the third quarter of 1994
increased approximately nine percent over the comparable quarter of 1993,
excluding revenues of certain Canadian distributorships first consolidated in
the second quarter of 1994. For the year to date, revenues increased
approximately four percent on a similar basis. Revenues outside the United
States and Canada were up 20.0% in the third quarter and 9.7% for the year to
date, compared to 1993, due principally to improvements in the Brazilian and
Thai economies, and to a full nine months of benefit from the acquisition of
two Polish atmospheric gas companies in the second quarter of 1993. The 1993
results included approximately $4.8 million in the third quarter and $12.3
million for the nine month period of revenues in product lines since
discontinued or sold.
Income from operations for the quarter improved 32.4% from 1993 to 1994 and
was up 14.9% for the nine months to date. In North America, revenues,
operating income and margins were higher as improved economic conditions led
to volume growth in carbon dioxide and atmospheric gases. Increased shipments
of specialty and process gases also contributed to record sales. Selling and
administrative expenses in the United States in 1994 were lower as a result of
Liquid Carbonic's ongoing restructuring program.
Outside the United States and Canada, income from operations for the third
quarter was up significantly due mainly to volume growth in Brazil, Thailand,
Mexico and Argentina. In the quarter, reported operating income was affected
by the accounting impacts of Brazil's successful economic program which
reduced that country's inflation rate dramatically commencing in July. While
net income was unchanged by the accounting treatment, both reported operating
income and the company's tax provision were reduced in the quarter as compared
to that which would have been reported under previous hyper-inflationary
conditions. For the year to date, income from operations outside the U.S. and
Canada was up approximately 10% compared to the previous year, while operating
margins remained constant.
10
Contracting Services. The operating results of Chicago Bridge and Iron
Company for the three and nine months ending September 30, 1994 are as follows
(dollars in thousands):
Three Months Nine Months
1994 1993 1994 1993
Revenues $210,701 $177,033 $593,717 $541,715
Costs 196,979 153,356 522,295 479,248
-------- -------- -------- --------
Gross profit 13,722 23,677 71,422 62,467
Gross profit-% 6.5% 13.4% 12.0% 11.5%
Selling and administrative 19,732 18,738 60,258 57,259
-------- -------- -------- --------
Income from operations $ (6,010) $ 4,939 $ 11,164 $ 5,208
Income from operations-% (2.9)% 2.8% 1.9% 1.0%
======== ======== ======== ========
Revenues for the Contracting Services segment increased 19.0% in the third
quarter of 1994, compared to the same 1993 quarter, and 9.6% for the year to
date. Revenues grew at double-digit rates in the United States during the
quarter and internationally during both the quarter and year to date, due to
the execution of major contracts by the domestic union company and in the
Caribbean and Southeast Asian areas.
Gross profit and income from operations in the third quarter were adversely
affected in the United States by a reduction in the margins due in large part
to the continuing slow pace of capital expenditures for new or replacement
vessels for the refining, chemical, and pulp and paper industries. Outside the
United States, gross profit and income from operations were negatively
affected by previously announced costs associated with a project which
requires additional resources in order to assure successful completion. In
comparing results for the year to date, the effects of the above on gross and
operating margins were counterbalanced by the effects of reserves established
in the first half of 1993 for costs associated with the closing of a
fabrication facility.
New contract awards during the third quarter of 1994 amounted to $149.9
million, a 31.7% reduction from the $219.5 million of new business recorded in
the third quarter of 1993, when three major contracts totalling almost $80
million were awarded. Contract awards in the third quarter were up 9.6% from
the previous quarter. New orders for the nine-month period in 1994 were $508.6
million compared to $507.3 million in the same period in 1993. The backlog of
work to be executed in the future amounted to $325.5 million as of September
30, 1994, as compared to $424.9 million at December 31, 1993 and $292.0
million at September 30, 1993.
11
Investments. The operating results of Statia Terminals and the contributions
from financial investments, which together comprise the Investments segment,
are as follows for the periods ending September 30, 1994 and 1993 (dollars in
thousands):
Three Months Nine Months
1994 1993 1994 1993
Revenues $45,264 $29,389 $108,358 $93,459
Costs 35,744 24,172 86,805 78,485
------- ------- -------- -------
Gross profit 9,520 5,217 21,553 14,974
Gross profit-% 21.0% 17.8% 19.9% 16.0%
Selling and administrative 1,598 1,064 4,324 2,978
------- ------- -------- -------
Income from operations $ 7,922 $ 4,153 $ 17,229 $11,996
Income from operations-% 17.5% 14.1% 15.9% 12.8%
======= ======= ======== =======
Revenues for the current quarter increased 54.0% compared to the same 1993
quarter principally due to a significant increase in the supply of bunkering
products and services to ships calling at the St. Eustatius facility of Statia
Terminals and to revenues generated by Statia's Point Tupper terminal, which
became operational in the second quarter of 1994. Revenues for the 1994 year
to date increased 15.9% over the previous year, reflecting principally the
activation of Point Tupper. Statia Terminals' revenues otherwise were
essentially level with 1993, although a change in the mix of products and
services improved gross margins in 1994.
Selling and administrative expenses increased for both the quarter and year to
date due in part to the opening of Point Tupper and in part to the
reclassification in 1994 of certain charges previously included in costs of
revenues.
Operating profits of the Investments segment were also favorably impacted in
both the quarter and year to date by increases in income from short-term
investments and investments in affiliated companies.
12
Other Income Statement Matters. Interest expense for the third quarter and
first nine months of 1994 amounted to $11.1 million and $28.9 million,
respectively, compared to $7.3 million and $19.7 million, respectively, in the
comparable 1993 periods, as a result of both higher debt levels and the
issuance of $150 million of long-term debt in 1993. The estimated effective
income tax rate for 1994 is 46.5%, compared to 48.9% in 1993. CBI's effective
income tax rate continues to be higher than the statutory U.S. tax rate
because its taxable domestic earnings remain low relative to earnings from its
international operations.
Fully diluted earnings per share, assuming the conversion of the company's
Series C Convertible Voting Preferred Stock, as required by accounting
disclosure rules, was $0.20 for the third quarter of 1994 and $0.69 for the
year to date, compared to $0.22 and $0.50, respectively, in 1993.
FINANCIAL CONDITION
Balance Sheet. CBI's financial position and capital resources are adequate to
permit the financing of its operations. Cash and short-term investments
totalled $44.0 million at September 30, 1994, up from $23.2 million at
December 31, 1993. Working capital increased from $126.2 million at the end
of 1993 to $156.1 million. Total debt (notes payable plus current and non-
current long-term debt) increased from $676.3 million at December 31, 1993 to
$770.5 million as a result of the company's ongoing program of capital
investment (see below). The ratio of total debt to total capitalization (total
debt plus capital stock) was 52.1% at September 30, 1994, up from 50.0% at the
end of 1993 and 44.9% at September 30, 1993. With CBI's ESOP debt considered
as equity, which will occur as the common and preferred shares held by the
ESOP Trust are allocated to eligible employees, debt as a percent of
capitalization was 45.7% at September 30, 1994, compared to 42.4% at December
31, 1993 and 37.2% at September 30, 1993.
Capital Expenditures. Expenditures for new plant and equipment in the third
quarter totalled $45.9 million and aggregated $168.3 million for the first
nine months of 1994. Of the totals, $22.9 million in the third quarter and
$106.3 million for the year to date represent investments in increased
capacity, primarily within Liquid Carbonic. Capital expenditures in the first
nine months of 1993 amounted to $143.1 million.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Marathon/Texas City Litigation. On October 30, 1987, CBI Na-Con, Inc.
("CBI Na-Con") was working in the Marathon Petroleum Company refinery in
Texas City, Texas. While a lift was being made by a crane supplied and
operated by others, the crane became unstable, causing the operator to
drop the load on a hydrofluoric acid tank which released part of its
contents into the atmosphere. The community surrounding the refinery was
evacuated after the incident, and a substantial number of persons
evacuated sought medical attention. CBI Na-Con has reached settlements
with all but about 12 of the 4,300 (approximate) third-party plaintiffs
who brought suit as a result of the incident. The Company believes that
the outcome of this remaining litigation will not have a material
adverse effect on the Company's consolidated financial position.
CBI Na-Con also was a defendant in a lawsuit brought in 1989 by Marathon
for damage to Marathon's property, lost profits and cost of repair. In
1993 the lawsuit was amended to include reimbursement for Marathon's
expenditures relating to the incident, including emergency response
costs, third party legal fees and claims payments. This lawsuit went to
trial in March, 1994, and after a trial that lasted approximately four
weeks, a jury in Harris County, Texas returned a verdict against CBI Na-
Con. Judgment on the verdict in the amount of approximately $31,500,000,
which includes prejudgment interest, was entered on April 6, 1994,
against CBI Na-Con. This judgment was revised to $33,500,000 on May 6,
1994, as a result of a different calculation of prejudgment interest.
The result in this case was totally unexpected by CBI Na-Con. After
filing and arguing posttrial motions and participating in court directed
mediation, this case was settled during the third quarter. The
settlement amount was within the Company's available reserves.
After CBI's insurers declined to indemnify CBI for this incident based
on their interpretation of certain pollution exclusions contained in
CBI's insurance policies, CBI filed suit in Harris County, Texas against
its insurers seeking a court ruling that the policies covered the
incident. The Trial Court, on the insurers' preliminary motion,
sustained the insurers' position that coverage did not exist. The Texas
Court of Appeals reversed the Trial Court and found that CBI should be
allowed to proceed with its lawsuit and related discovery against the
insurers. The insurers immediately appealed the Court of Appeals
decision in CBI's favor to the Texas Supreme Court. The case was argued
before the Texas Supreme Court on September 20, 1994 and the parties are
waiting for the Court's decision. It is CBI's position that it was not
the intent of the pollution exclusions in the policies to exclude an
incident of this kind.
Antitrust Matters. A subsidiary of the company, Liquid Carbonic
Industries Corporation ("Liquid Carbonic"), has been or is currently
involved in civil litigation and governmental proceedings relating to
antitrust matters. In this regard, since April 1992, several lawsuits
have been filed against Liquid Carbonic and various competitors. These
cases have been consolidated in the United States District Court for the
Middle District of Florida, Orlando Division. The lawsuits allege
generally that, beginning not later than 1968 and continuing through
October, 1992, defendants conspired to allocate customers, fix prices
and rig bids for carbon dioxide in the United States in violation of the
antitrust laws. On April 19, 1993, the court certified a class in the
consolidated cases consisting of direct purchasers of carbon dioxide
from defendants in the continental United States for the period from
January 1, 1968, to and including October 26, 1992.
Plaintiffs seek from defendants unspecified treble damages, civil
penalties, injunctive relief, costs and attorneys' fees. In addition,
suits have been brought against Liquid Carbonic and others under the
antitrust laws of the States of Alabama and California based upon the
foregoing allegations. The Company believes that the allegations made
against Liquid Carbonic in these lawsuits are without merit, and Liquid
Carbonic intends to defend itself vigorously. Liquid Carbonic and its
subsidiaries also from time to time furnish documents and witnesses in
connection with governmental investigations of alleged violations of the
antitrust laws.
14
Item 1. Legal Proceedings (Continued)
While the outcome of any particular lawsuit or governmental
investigation cannot be predicted with certainty, the Company believes
that these antitrust matters will not have a materially adverse effect
on its operations or financial condition.
Environmental Litigation. Chicago Bridge & Iron Company ("Chicago
Bridge") was a minority shareholder from 1934 to 1954 in a company which
owned or operated at various times several wood treating facilities at
sites in the United States, some of which are currently under
investigation, monitoring or remediation under various environmental
laws. Chicago Bridge is involved in litigation concerning environmental
liabilities, which are currently undeterminable, in connection with
certain of those sites. Chicago Bridge denies any liability for each
site and believes that the successors to the wood treating business are
responsible for cost of remediation of the sites. Chicago Bridge has
reached settlements for environmental clean-up at most of the sites. The
Company believes that any remaining potential liability will not have a
materially adverse effect on its operations or financial condition.
Other Litigation. In addition to the above lawsuits, CBI is a defendant
in a number of lawsuits arising from the conduct of its business. While
it is impossible at this time to determine with certainty the ultimate
outcome of any litigation, CBI's management believes that adequate
provisions have been made for probable losses with respect thereto as
best as can be determined at this time and that the ultimate outcome,
Zafter provisions therefor, will not have a material adverse effect on
the financial position of CBI. The adequacy of reserves applicable to
the potential costs of being engaged in litigation and potential
liabilities resulting from litigation are reviewed as developments in
the litigation warrant.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3. (i) Certificate of Incorporation
As restated September 27, 1994
11. Computation of Earnings per Common Share
27. Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed under Item 5, Other Events. The date of
that report was August 17, 1994.
A Form 8-K was filed under Item 5, Other Events and Item 7,
Financial Statements and Exhibits. The date of that report was
October 7, 1994.
15
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.
CBI INDUSTRIES, INC.
BY /s/ George L. Schueppert
_________________________________
George L. Schueppert
Executive Vice President - Finance
and Chief Financial Officer
Date: November 10, 1994
16
RESTATED
CERTIFICATE OF INCORPORATION
OF
CBI INDUSTRIES, INC.
Originally Incorporated on February 23, 1979
CBI Industries, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is CBI Industries, Inc. and
its original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on February 23,
1979.
2. Pursuant to a resolution of the board of directors
adopted August 10,1994 and pursuant to Section 245 of the
General Corporation Law of the State of Delaware, a
Restated Certificate of Incorporation has been adopted which
only restates and integrates and does not further amend the
provisions of its original Certificate of Incorporation as
heretofore amended or supplemented, and there is no
discrepancy between those provisions and the provisions of
this Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation is hereby
restated to read in its entirety as follows:
RESTATED
CERTIFICATE OF INCORPORATION
OF
CBI INDUSTRIES, INC.
Originally Incorporated on February 23, 1979
FIRST: Name. The name of the corporation is:
CBI INDUSTRIES, INC.
SECOND: Registered Agent. The address of the corporation's
registered office in the State of Delaware is 1209 Orange Street
in the City of Wilmington, County of New Castle. The name of the
corporation's registered agent at such address is The Corporation
Trust Company.
THIRD: Purposes. The purpose of the corporation is to
engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH: Authorized Capital. The total number of shares of
stock of all classes which the corporation shall have authority
to issue is One Hundred Forty Million (140,000,000), of which One
Hundred Twenty Million (120,000,000) shares shall be Common
Stock, with a par value of Two Dollars and Fifty Cents ($2.50)
per share, and Twenty Million (20,000,000) shares shall be
Preferred Stock, with a par value of One Dollar ($1.00) per
share.
The designations and the powers, preferences and rights, and
the qualifications, limitations or restrictions of the shares of
each class shall be as follows:
Part 1. Common Stock Provisions
1.1 Dividend rights. Subject to provisions of law and the
preferences of the Preferred Stock and of any other stock ranking
prior to the Common Stock as to dividends, the holders of the
Common Stock shall be entitled to receive dividends at such time
and in such amounts as may be determined by the board of
directors.
1.2 Voting rights. Except as provided by law and in or
pursuant to this Article FOURTH, the holders of the Common Stock
shall have one vote for each share on each matter submitted to a
vote of the stockholders of the corporation. Except as otherwise
provided by law, by the certificate of incorporation or by
resolution or resolutions of the board of directors providing for
the issue of any series of Preferred Stock, the holders of the
Common Stock shall have sole voting power.
1.3 Liquidation rights. In the event of any liquidation,
dissolution or winding up of the corporation, whether voluntary
or involuntary (sometimes referred to as liquidation), after
payment or provision for payment of the debts and other
liabilities of the corporation and the preferential amounts to
which the holders of any stock ranking prior to the Common Stock
in the distribution of assets shall be entitled upon liquidation,
the holders of the Common Stock and the holders of any other
stock ranking on a parity with the Common Stock in the
distribution of assets upon liquidation shall be entitled to
share in the remaining assets of the corporation according to
their respective interests.
Part 2. Preferred Stock Provisions
2.1 Authority of the board of directors to issue in series.
The Preferred Stock may be issued from time to time in one or
more series. All shares of any one series of Preferred Stock
shall be identical except as to the dates of issue and the dates
from which dividends on shares of the series issued on different
dates shall cumulate (if cumulative). Subject to the certificate
of incorporation, authority is expressly granted to the board of
directors to authorize the issue of one or more series of
Preferred Stock, and to fix by resolution or resolutions
providing for the issue of each such series the voting powers,
designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or
restrictions thereof, of such series, to the full extent now or
hereafter permitted by law, including but not limited to the
following:
(a) The number of shares of such series, which may
subsequently be increased (except as otherwise provided by
the resolution or resolutions of the board of directors
providing for the issue of such series) or decreased (to a
number not less than the number of such shares then
outstanding) by resolution or resolutions of the board of
directors, and the distinctive designation thereof;
(b) The dividend rights of such series, the
preferences, if any, over any other class or series of
stock, or of any other class or series of stock over such
series, as to dividends, the extent, if any, to which shares
of such series shall be entitled to participate in dividends
with shares of any other series or class of stock, whether
dividends on shares of such series shall be fully, partially
or conditionally cumulative, or a combination thereof, and
any limitations, restrictions or conditions on the payment
of such dividends;
(c) The rights of such series, and the preferences, if
any, over any other class or series of stock, or of any
other class or series of stock over such series, in the
event of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation and the extent,
if any, to which shares of any such series shall be entitled
to participate in such event with any other series or class
of stock;
(d) The time or times during which, the price or
prices at which, and the terms and conditions on which, the
shares of such series may be redeemed;
(e) The terms of any purchase, retirement or sinking
fund which may be provided for the shares of such series;
(f) The terms and conditions, if any, upon which the
shares of such series shall be convertible into or
exchangeable for shares of any other series, class or
classes, or any other securities, to the full extent now or
hereafter permitted by law; and
(g) The voting powers, if any, of such series in
addition to the voting powers provided by law.
2.2 Limitation on dividends. No holders of any series of
the Preferred Stock shall be entitled to receive any dividends
thereon other than those specifically provided for by the
certificate of incorporation or the resolution or resolutions of
the board of directors providing for the issue of such series of
Preferred Stock, nor shall any accumulated dividends on the
Preferred Stock bear any interest.
2.3 Limitation on liquidation distributions. In the event
of any liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of Preferred Stock
of each series shall be entitled to receive only such amount or
amounts as shall have been fixed by the certificate of
incorporation or by the resolution or resolutions of the board of
directors providing for the issue of such series. A
consolidation or merger of the corporation with or into one or
more other corporations or a sale, lease or exchange of all or
substantially all of the assets of the corporation shall not be
deemed to be a voluntary or involuntary liquidation, dissolution
or winding up, within the meaning of this part 2.
FIFTH: Incorporators. (Deleted)
SIXTH: Directors. The number of directors shall be twelve
or such other number, not less than 9 nor more than 18, as may be
from time to time determined by the board of directors.
The directors elected at the Annual Meeting of Stockholders
in 1983 shall be divided by the board of directors into three
classes, as nearly equal in number as possible, with the term of
office of the first class to expire at the 1984 Annual Meeting of
Stockholders, the term of office of the second class to expire at
the 1985 Annual Meeting of Stockholders and the term of office of
the third class to expire at the 1986 Annual Meeting of
Stockholders. After each Annual Meeting of Stockholders
following such initial classification, directors elected to
succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting
of Stockholders after their election. Any director elected to a
particular term of office by the stockholders or directors shall
be eligible, upon resignation, to be elected to a different class
to facilitate the orderly application of the corporation's
retirement policy for directors.
SEVENTH: Cumulative Voting. (Deleted)
EIGHTH: By-Laws. In furtherance and not in limitation of
the powers conferred by statute, the board of directors is
expressly authorized to make, alter and repeal the by-laws of the
corporation. Adoption, amendment or repeal of the by-laws by the
stockholders of the corporation shall require the favorable vote
of the holders of at least two-thirds of the outstanding stock
entitled to vote thereon.
NINTH: No Pre-Emptive Rights. No holder of stock of any
class of the corporation nor of any security convertible into,
nor of any warrant, option or right to purchase, subscribe for or
otherwise acquire, stock of any class of the corporation, whether
now or hereafter authorized, shall, as such holder, have any pre-
emptive right whatsoever to purchase, subscribe for or otherwise
acquire, stock of any class of the corporation nor of any
security convertible into, nor of any warrant, option or right to
purchase, subscribe for or otherwise acquire, stock of any class
of the corporation, whether now or hereafter authorized.
TENTH: Merger, Consolidation, Dissolution, Sale of Assets,
Charter Amendment. Except as otherwise provided in this
Certificate of Incorporation, the corporation shall not take any
of the following actions, except upon the affirmative vote of
holders of not less than two-thirds (2/3) of the outstanding
Common Stock of the corporation entitled to vote and the
affirmative vote of not less than two-thirds (2/3) of each series
of shares of Preferred Stock of the corporation entitled to vote
as a class on such issue, or, where the Board of Directors has
recommended such action, upon the affirmative vote of holders of
a majority of the outstanding Common Stock of the corporation
entitled to vote and the affirmative vote of a majority of each
series of the outstanding shares of Preferred Stock of the
corporation entitled to vote as a class on such issue:
(a) a merger or consolidation (except where this
corporation owns at least 90% of the voting securities of a
corporation which merges into this corporation or, unless
prohibited by this Certificate of Incorporation, except
where the Board of Directors is authorized under the law of
Delaware to approve a merger without shareholder approval);
(b) dissolution or liquidation;
(c) sale or other disposition of all or substantially
all of the assets of the corporation; or
(d) amendment of the Certificate of Incorporation.
ELEVENTH: Authority to Issue Stock. Except as otherwise
provided in the certificate of incorporation, the board of
directors shall have authority to authorize the issuance, from
time to time without any vote or other action by the
stockholders, of any or all shares of stock of the corporation of
any class or series at any time authorized, any securities
convertible into or exchangeable for any such shares so
authorized, and any warrant, option or right to purchase,
subscribe for or otherwise acquire, shares of stock of the
corporation of any class or series at any time authorized, in
each case to such persons and for such consideration and on such
terms as the board of directors from time to time in its
discretion lawfully may determine; provided, however, that the
consideration for the issuance of shares of stock of the
corporation having par value shall not be less than such par
value. Stock so issued, for which the consideration has been
paid to the corporation, shall be fully paid stock, and the
holders of such stock shall not be liable to any further call or
assessments thereon.
TWELFTH: Written Ballot Not Required. Election of
directors need not be by written ballot unless the by-laws of the
corporation so provide.
THIRTEENTH: Reservation. The corporation reserves the
right to amend, alter, change or repeal any provision contained
in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon
the stockholders herein are granted subject to this reservation.
FOURTEENTH: Stockholder Action. Any action required or
permitted to be taken by the stockholders of the corporation
shall be taken only at a duly called annual or special meeting.
Such action may not be taken by written consent of the
stockholders.
FIFTEENTH: Business Combinations.
Part 1. Vote Required for Certain Business Combinations
1.1 Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or any other
Article of this Certificate of Incorporation, and except as
otherwise expressly provided in Part 2 of this Article FIFTEENTH:
(a) any merger or consolidation of the corporation or
any Subsidiary (as hereinafter defined) with (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions) to or with any Interested
Stockholder or any Affiliate of any Interested Stockholder
of any assets of the corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of
$1,000,000 or more; or
(c) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or a series of transactions)
of any securities of the corporation or any Subsidiary to
any Interested Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an
aggregate Fair Market Value of $1,000,000 or more; or
(d) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or
on behalf of an Interested Stockholder or any Affiliate of
any Interested Stockholder; or
(e) any reclassification of securities (including any
reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the
corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote by the holders of at least 80%
of the then outstanding shares of Common Stock of the corporation
entitled to vote and the affirmative vote of at least 80% of each
series of the outstanding shares of Preferred Stock of the
corporation entitled to vote as a class on such issue (the
"Voting Stock"). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by law or in any agreement
with any national securities exchange or otherwise.
1.2 Definition of "Business Combination". The term
"Business Combination" as used in this Article FIFTEENTH shall
mean any transaction which is referred to in any one or more of
clauses (a) through (e) of paragraph 1.1.
Part 1.1 . When Higher Vote is Not Required
The provisions of Part 1 of this Article FIFTEENTH shall not
be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote as
is required by law and any other Article of this Certificate of
Incorporation, if all of the conditions specified in either of
the following paragraphs 2.1 and 2.2 are met:
1.2 Approval by Continuing Directors. The Business
Combination shall have been approved by a majority of the
Continuing Directors (as hereinafter defined).
1.3 Price and Procedure Requirements. All of the following
conditions have been met:
(a) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such
Business Combination shall be at least equal to the higher
of (i) the highest price previously paid for any share of
such Common Stock by any person who is an Interested
Stockholder at the time of the first public announcement of
the proposal of the Business Combination, or (ii) the
highest per share closing public market price within the two
year period immediately prior to the time of the first
public announcement of the proposal of the Business
Combination for any share of such Common Stock by the
Interested Stockholder. The price paid for any share of
Common Stock shall be the amount of cash plus the Fair
Market Value of any other consideration paid therefor,
determined at the time of payment thereof.
(b) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as the
Interested Stockholder has previously paid for shares of
such class of Voting Stock. If the Interested Stockholder
has paid for shares of any class of Voting Stock with
varying forms of consideration, the form of consideration
for such class of Voting Stock shall be either cash or the
form used to acquire the largest number of shares of such
class of Voting Stock previously acquired by it.
(c) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such
Business Combination: (i) there shall have been (1) no
reduction in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the
Continuing Directors, and (2) an increase in such annual
rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the
Continuing Directors; and (ii) such Interested Stockholder
shall have not become the beneficial owner of any additional
shares of Voting Stock except as part of the transaction
which results in such Interested Stockholder becoming an
Interested Stockholder.
(d) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall
not have received the benefit, directly or indirectly
(except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
corporation, whether in anticipation of or in connection
with such Business Combination or otherwise.
(e) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall
be mailed to all stockholders of the Corporation at least 30
days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent
provisions).
Part 2. Certain Definitions
For the purposes of this Article FIFTEENTH:
2.1 A "person" shall mean an individual, firm, corporation
or other entity.
2.2 "Interested Stockholder" shall mean any person (other
than the corporation or any Subsidiary) who or which:
(a) is the beneficial owner, directly or indirectly,
of more than 10% of the voting power of the outstanding
Voting Stock; or
(b) is an Affiliate of the corporation and at any time
within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly,
of 10% or more of the voting power of the then outstanding
Voting Stock; or
(c) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Interested Stockholder, 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.
2.3 A person shall be a "beneficial owner" of any Voting
Stock:
(a) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns,
directly or indirectly; or
(b) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or
(c) which are 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.
2.4 For the purposes of determining whether a person is an
Interested Stockholder pursuant to paragraph 3.2, the number of
shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of paragraph 3.3 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.
2.5 "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as in effect on January 1, 1983.
2.6 "Subsidiary" means any corporation of which more than
48% of any class of equity security is owned, directly or
indirectly, by the corporation; provided, however, that for the
purposes of the definition of Interested Stockholder set forth in
paragraph 3.2, the term "Subsidiary" shall mean only a
corporation of which more than 48% of each class of equity
security is owned, directly or indirectly, by the corporation.
2.7 "Continuing Director" means any member of the Board of
Directors of the corporation (the "Board") who is unaffiliated
with the Interested Stockholder and was a member of the Board
prior to the time that the Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing
Director who is unaffiliated with the Interested Stockholder and
is recommended to succeed a Continuing Director by a majority of
Continuing Directors then on the Board.
2.8 "Fair Market Value" means: (a) in the case of stock,
the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such
stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite Tape, on
the New York Stock Exchange, or, if such stock is not listed on
such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which
such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a
share of such stock during the 30-day period preceding 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 as determined by the
Board in good faith; and (b) 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 the Board in good faith.
2.9 In the event of any Business Combination in which the
corporation survives, the phrase "other consideration to be
received" as used in paragraphs 2.2(a) and (b) shall include the
shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
Part 3. Directors' Duty to Determine Certain Facts
The directors of the corporation shall have the power and
duty to determine for the purpose of this Article FIFTEENTH, on
the basis of information known to them after reasonable inquiry,
(A) whether a person is an Interested Stockholder, (B) the number
of shares of Voting Stock beneficially owned by any person, (C)
whether a person is an Affiliate or Associate of another, and (D)
whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the
issuance or transfer of securities by the corporation or any
Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $1,000,000 or more.
Part 4. No Effect on Fiduciary Obligations of Interested
Stockholders
Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Part 5. Amendment, Repeal, Inconsistent Provisions
Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws of the corporation (and
notwithstanding the fact that a lesser percentage may be
specified by law, this Certificate of Incorporation or the By-
Laws of the corporation), the affirmative vote of the holders of
80% or more of the shares of the then outstanding Voting Stock,
voting together as a single class, shall be required to amend or
repeal, or adopt any provisions inconsistent with, this Article
FIFTEENTH of this Certificate of Incorporation.
SIXTEENTH: Elimination of Liability of Directors. To the
fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended,
a director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
No amendment to or repeal of this Article SIXTEENTH shall
apply to or have any effect on the liability or alleged liability
of any director of the corporation for or with respect to any
acts or omissions of such director occurring prior to the
effective date of such amendment or repeal.
IN WITNESS WHEREOF, the Company has caused this Restated
Certificate of Incorporation to be duly executed on its behalf by
its undersigned Chairman of the Board, President and Chief
Executive Officer and attested to by its Secretary this 22nd day
of September, 1994.
/s/ John E. Jones
John E. Jones
Chairman of the Board,
President and Chief
Executive Officer
[Corporate Seal]
Attest:
/s/ Charlotte C. Toerber
Charlotte C. Toerber, Secretary<PAGE>
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CBI INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, William A. Pogue, Chairman of the Board, President and
Chief Executive Officer, and Donald H. Craigmile, Secretary, of
CBI Industries, Inc.. a corporation organized and existing under
the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation,
the Board of Directors on March 4, 1986, and on June 10, 1992
adopted the following resolution creating a series of eight
hundred thousand (800,000) shares of Preferred Stock designated
as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation in accordance with the provisions
of its Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences
and relative, participating, optional or other special rights of
the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Participating
Preferred Stock" and the number of shares constituting such
series shall be 800,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series
A Junior Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends
payable in cash on the last day of March, June, September and
December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on
the Common Stock, $2.50 par value per share, of the Corporation
(the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred
Stock. In the event the Corporation shall at any time declare or
pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock
as provided in paragraph (A) above immediately after it declares
a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $10.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred
Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series A Junior Participating
Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series
A Junior Participating Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
A Junior Participating Preferred Stock shall have the following
voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of
Common Stock; or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to
which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred
Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During
each default period, the holders of Preferred Stock, voting
as a class, irrespective of Series, shall have the right to
elect two (2)Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock
may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting
right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the
holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of
Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting to elect two
(2) Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right, subject
to the limitation on number of directors set forth in the
Certificate of Incorporation of the Corporation, to make
such increase in the number of Directors as shall be
necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default
period and during the continuance of such period, the number
of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may
order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total
number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the Chairman of the
Board, the Vice Chairman of the Board, the President, a
Vice-President or the Secretary of the Corporation. Notice
of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record
of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such
order or request; or in default of the calling of such
meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder
or stockholders owning in the aggregate not less than 10% of
the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii),
no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the
next annual meeting of the stockholders.
(iv) In any default period the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall
continue in office until their successors shall have been
elected by such holders or until the expiration of the
default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of
this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of
the class of stock which elected the Director whose office
shall have become vacant. References in this paragraph (C)
to Directors elected by the holders of a particular class of
Stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a
class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred Stock as a
class shall terminate, and (z) the number of Directors shall
be such number as may be provided for in the certificate of
incorporation or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (C)(ii)of this
Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the
certificate of incorporation or by-laws). Any vacancies in
the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock,
or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Junior Participating Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon
any voluntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall
have received $75 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders
of shares of Series A Junior Participating Preferred Stock shall
be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders
of Common Stock, or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Junior Participating Preferred
Stock, except distributions made ratably on the Series A Junior
Participating Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or
pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of
shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under the proviso in
clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series A Junior Participating Preferred Stock shall
at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 9. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Stock so as
to affect them adversely without the affirmative vote of the
holders of two thirds or more of the outstanding shares of Series
A Junior Participating Preferred Stock, voting separately as a
class.
Section 10. Fractional Shares. Series A Junior
Participating Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in liquidating distributions and to have
the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
penalties of perjury this 5th day of March, 1986.
/s/ William A. Pogue
Name: William A. Pogue
Title: Chairman of the Board,
President and Chief
Executive Officer
Attest:
/s/ Donald H. Craigmile
Name: Donald H. Craigmile
Title: Secretary
<PAGE>
CBI INDUSTRIES, INC.
Certificate of Designations
Convertible Voting
Preferred Stock, Series C
Par Value $1.00 Per Share
______________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
______________________
The undersigned, Executive Vice President & Chief Financial
Officer of CBI Industries, Inc., a Delaware corporation
(hereinafter called the "Corporation"), DOES HEREBY CERTIFY that
the following resolution has been duly adopted by a duly
authorized special committee of the Board of Directors of the
Corporation (with Sections 6 and 7 of said resolution having been
previously determined and authorized by resolution of the Board
of Directors):
RESOLVED, that pursuant to the authority expressly granted
to and vested in the Board of Directors of the Corporation (the
"Board of Directors") by the provisions of the Certificate of
Incorporation of the Corporation, there hereby is created, out of
the 20,000,000 shares of preferred stock of the Corporation
authorized in Article Fourth of its Certificate of Incorporation
(the "Preferred Stock"), a series of Preferred Stock of the
Corporation consisting of 3,945,000 shares, which series shall
have the following powers, designations, preferences and
relative, participating, optional or other rights, and the
following qualifications, limitations and restrictions (in
addition to the powers, designations, preferences and relative,
participating, optional or other rights, and the qualifications,
limitations and restrictions, set forth in the Certificate of
Incorporation of the Corporation which are applicable to the
Preferred Stock):
1. Designation; Number of Shares; Par Value; Rank.
The shares of such series shall be designated as
"Convertible Voting Preferred Stock, Series C" (the "Series C
Preferred Stock"). The number of shares of Series C Preferred
Stock shall be limited to 3,945,000. The par value of the Series
C Preferred Stock shall be $1.00 per share. The Series C
Preferred Stock shall rank senior to the Common Stock and the
Series A Junior Participating Preferred Stock of the Corporation
(the "Series A Preferred Stock"), and shall rank on a parity with
the $3.50 Convertible Exchangeable Preferred Stock, Series B of
the Corporation (the "Series B Preferred Stock"), in each case as
to payment of dividends and upon liquidation, dissolution and
winding up.
2. Dividends.
(a) The holders of shares of Series C Preferred Stock shall
be entitled to receive, when and as declared by the Board of
Directors or a duly authorized committee thereof (an "Authorized
Board Committee"), out of funds legally available for the payment
of dividends, cumulative cash dividends in the amount of $2.27
per share per annum, and no more. Dividends shall accumulate and
be payable semiannually on the first day of March and September
in each year (each a "Dividend Payment Date" or collectively,
"Dividend Payment Dates"), commencing September 1, 1988, except
that if any Dividend Payment Date is not a business day in
Chicago, Illinois, then such semiannual dividend shall be payable
on the next succeeding business day and such next succeeding
business day shall be the Dividend Payment Date. Dividends on
the shares of Series C Preferred Stock shall accrue and be
cumulative from the date of their original issue and will be
payable on each Dividend Payment Date to stockholders of record
on the record date, which shall be not more than 45 days nor less
than 10 days preceding such Dividend Payment Date, fixed for such
purpose by the Board of Directors or an Authorized Board
Committee in advance of such Dividend Payment Date. The amount
of dividends payable on shares of Series C Preferred Stock for
each full semiannual dividend period shall be computed by
dividing $2.27 by two. Dividends payable on the Series C
Preferred Stock for the initial dividend period and for any
period less than a full semiannual period shall be computed on
the basis of a 360-day year of twelve 30-day months. Dividends
paid on shares of Series C Preferred Stock in an amount less than
the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding.
(b) So long as any share of Series C Preferred Stock is
outstanding, unless all accumulated dividends on all outstanding
shares of Series C Preferred Stock have been paid or
contemporaneously are declared and paid through the last Dividend
Payment Date, no dividends shall be paid or declared and set
apart for payment or any other distribution made upon the Common
Stock or the Series A Preferred Stock or any other stock of the
Corporation ranking junior to the Series C Preferred Stock as to
payment of dividends (other than dividends paid or other
distributions made in stock of the Corporation ranking junior to
the Series C Preferred Stock as to payment of dividends and upon
liquidation, dissolution or winding up), nor shall any Common
Stock, Series A Preferred Stock or any other stock of the
Corporation ranking junior to the Series C Preferred Stock as to
payment of dividends be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of such
stock) by the Corporation (except by conversion of such junior
stock into or exchange of such junior stock for stock of the
Corporation ranking junior to the Series C Preferred Stock as to
payment of dividends and upon liquidation, dissolution or winding
up).
(c) Except as hereinafter provided, no dividends shall be
paid or declared and set apart for payment or any other
distribution made (other then dividends paid or other
distributions made in stock of the Corporation ranking junior to
the Series C Preferred Stock as to payment of dividends and upon
liquidation. dissolution or winding up) on the Preferred Stock of
any other series ranking on a parity with the Series C Preferred
Stock as to payment of dividends for any period unless all
accumulated dividends on all outstanding shares of Series C
Preferred Stock have been paid or declared and set apart for
payment or contemporaneously are paid or declared and set apart
for payment through the last Dividend Payment Date and no
dividends shall be paid or declared and set apart for payment or
any other distribution made (other then dividends paid or other
distributions made in stock of the Corporation ranking junior to
the Series C Preferred Stock as to payment of dividends and upon
liquidation, dissolution or winding up) on the Series C Preferred
Stock unless all accumulated dividends on all outstanding shares
of Preferred Stock of all other series ranking on a parity with
the Series C Preferred Stock as to payment of dividends have been
paid or declared and set apart for payment or contemporaneously
are paid or declared and set apart for payment to the last date
to which such dividends are payable. Whenever all accumulated
dividends are not paid in full upon the Series C Preferred Stock
or any other series of Preferred Stock ranking on a parity with
the Series C Preferred Stock as to payment of dividends, all
dividends declared or other distributions made upon shares of
Series C Preferred Stock and any other series of Preferred Stock
ranking on a parity with the Series C Preferred Stock as to
payment of dividends shall be declared or made pro rata so that
the amount of dividends declared or other distributions made per
share on the Series C Preferred Stock and such other series of
Preferred Stock shall in all cases bear to each other the same
ratio that accumulated and unpaid dividends per share on the
shares of Series C Preferred Stock and such other series of
Preferred Stock bear to each other. Any dividend paid upon the
Series C Preferred Stock at a time when any accumulated dividends
for any prior period are delinquent shall be expressly declared
as a dividend in whole or partial payment of the accumulated
dividend for the earliest period for which dividends are then
delinquent, and shall be so designated to each stockholder to
whom payment is made.
(d) Whenever all accumulated dividends are not paid in full
upon the Series C Preferred Stock, no stock of the Corporation
ranking on a parity with the Series C Preferred Stock as to
payment of dividends may be redeemed (pursuant to a sinking fund
or otherwise), purchased or otherwise acquired for any
consideration by the Corporation except (i) by means of a
redemption pursuant to which all outstanding shares of the Series
C Preferred Stock and all Preferred Stock of the Corporation
ranking on a parity with the Series C Preferred Stock as to
payment of dividends are redeemed or pursuant to which a pro rata
redemption is made from all holders of the Series C Preferred
Stock and all Preferred Stock of the Corporation ranking on a
parity with the Series C Preferred Stock as to payment of
dividends, the amount allocable to each series of such stock
being determined on the basis of the aggregate liquidation
preference of the outstanding shares of each series and the
shares of each series being redeemed only on a pro rata basis, or
(ii) by conversion of such parity Preferred Stock into, or
exchange of such parity Preferred Stock for, stock of the
Corporation ranking junior to the Series C Preferred Stock as to
payment of dividends and upon liquidation, dissolution or winding
up.
(e) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraphs (a)-(d) of this Section 2, purchase or
otherwise acquire such shares at such time and in such manner.
3. Optional Redemptions.
(a) The Corporation may, at its option, at any time and
from time to time on or after May 1, 1990, redeem all, or any
number less than all, of the outstanding shares of Series C
Preferred Stock. Any redemption of shares of Series C Preferred
Stock shall be effected at the prices set forth below:
If Redeemed During the Redemption Price
Twelve Month Period Beginning Per Share
May 1, 1990 $34.02
May 1, 1991 $33.70
May 1, 1992 $33.37
May 1, 1993 $33.05
May 1, 1994 $32.72
and thereafter at $32.40 per share plus, in each case, an amount
equal to all dividends (whether or not declared or due) accrued
and unpaid on such share of Series C Preferred Stock to the date
fixed for redemption.
(b) Notwithstanding the foregoing provisions of this
Section 3, and subject to the provisions of Section 2 hereof,
whenever all accumulated dividends are not paid in full upon the
Series C Preferred Stock, no shares of the Series C Preferred
Stock may be redeemed, purchased or otherwise acquired for any
consideration by the Corporation, except by means of a redemption
pursuant to which all outstanding shares of the Series C
Preferred Stock are simultaneously redeemed or pursuant to which
the outstanding shares of the Series C Preferred Stock are
redeemed on a pro rata basis.
(c) Notice of any proposed redemption of shares of Series C
Preferred Stock pursuant to this Section 3 shall be given by the
Corporation by mailing a copy of such notice no less than 30 days
nor more than 60 days prior to the date fixed for such redemption
to holders of record of the shares of Series C Preferred Stock to
be redeemed at their respective addresses appearing on the books
of the Corporation. Such notice shall specify (i) the shares
called for redemption, (ii) the redemption price and (iii) the
place at which and the date on which the shares called for
redemption will, upon presentation and surrender of the
certificates of stock evidencing such shares, be redeemed and the
redemption price therefor paid. Subject to the provisions of
paragraph 3(b) hereof, in the case of the redemption of less than
all the outstanding shares of Series C Preferred Stock, the
Corporation will select the shares to be redeemed among all then
outstanding shares of Series C Preferred Stock in such manner as
may be prescribed by the Board of Directors or an Authorized
Board Committee. From and after the date fixed in any such
notice as the date of redemption of shares of Series C Preferred
Stock, unless the Corporation shall default in providing monies
at the time and place specified for the payment of the redemption
price (including any accrued and unpaid dividends) pursuant to
such notice, all dividends on the Series C Preferred Stock
thereby called for redemption shall cease to accrue, such shares
of Series C Preferred Stock shall no longer be deemed to be
outstanding and all rights of the holders thereof as stockholders
of the Corporation, except the right to receive the redemption
price (including any accrued and unpaid dividends), shall cease
and terminate.
(d) The holder of any shares of Series C Preferred Stock
redeemed pursuant to this Section 3 upon any exercise of the
Corporation's redemption right shall not be entitled to receive
payment of the redemption price for such shares until such holder
shall cause to be delivered to the place specified in the notice
given with respect to such redemption (i) the certificate or
certificates representing such shares of Series C Preferred Stock
and (ii) transfer instrument(s) satisfactory to the Corporation
and sufficient to transfer such shares of Series C Preferred
Stock to the Corporation free of any adverse interest. No
interest shall accrue on the redemption price of any share of
Series C Preferred Stock after the date fixed for its redemption.
(e) All shares of Series C Preferred Stock which shall at
any time have been redeemed shall, after such redemption, have
the status of authorized but unissued shares of Preferred Stock,
without designation as to series, and the number of shares of
Preferred Stock which the Corporation shall have authority to
issue shall not be decreased by the redemption of shares of
Series C Preferred Stock.
4. Conversion Rights.
(a) Each share of Series C Preferred Stock shall be
convertible at the option of the holder thereof at any time
(except that if any such share shall have been called for
redemption, then, as to such share, such right shall terminate at
the close of business on the date two business days prior to the
date fixed for such redemption, unless default shall be made by
the Corporation in making the payment due upon redemption) into
fully paid and nonassessable shares of Common Stock. The number
of shares of Common Stock issued upon conversion of each share of
Series C Preferred Stock shall be equal to $32.40 divided by the
Conversion Price then in effect. The Conversion Price initially
shall be $32.40; provided, however, that the Conversion Price
shall be subject to adjustment from time to time in certain
instances as hereinafter provided.
(b) The Common Stock deliverable upon conversion of Series
C Preferred Stock shall be Common Stock of the Corporation, par
value $2.50 per share, as constituted at the date of this
certificate, except as otherwise provided in subparagraphs (i)
and (vii) of paragraph 4(e), and in paragraph 4(f).
(c) In order for any holder of Series C Preferred Stock to
convert the same into Common Stock, such holder shall surrender
the certificate or certificates for such Series C Preferred Stock
at the office of the Transfer Agent for the Series C Preferred
Stock during usual business hours, which certificate or
certificates, if the Corporation shall so request, shall be duly
endorsed to the Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, and shall
give written notice to the Corporation at such office that he
elects so to convert such Series C Preferred Stock, and state in
writing therein the name or names in which he wishes the
certificate or certificates for Common Stock to be issued.
(d) The Corporation will, as soon as practicable after such
deposit of certificates for Series C Preferred Stock accompanied
by the written notice and the statement above prescribed, deliver
at said office, to the person for whose account such Series C
Preferred Stock was so surrendered, or to his nominee or
nominees, certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid, together with any
cash adjustment of any fraction of a share as hereinafter
provided. Subject to the following provisions of this paragraph,
such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of
the Series C Preferred Stock to be converted, and the person or
persons entitled to receive the Common Stock deliverable upon
conversion of such Series C Preferred Stock shall be treated for
all purposes as the record holder or holders of such Common Stock
on such date. The Corporation shall not be required to convert
any shares of Series C Preferred Stock while the stock transfer
books of the Corporation are closed for any purpose; but the
surrender of Series C Preferred Stock for conversion during any
period while such books are so closed shall become effective for
conversion upon reopening of such books, as if the surrender had
been made immediately prior to the close of business on the date
of such reopening, and conversion shall be at the Conversion
Price in effect at such date.
(e) The Conversion Price shall be subject to adjustment as
follows:
(i) In case the Corporation shall (A) pay a dividend
on its Common Stock in shares of its Common Stock, (B)
subdivide its outstanding shares of Common Stock into a
greater number of shares, or (C) combine its outstanding
shares of Common Stock into a smaller number of shares, the
Conversion Price in effect at the time of the record date of
such dividend, or the effective date of such subdivision or
combination, as the case may be, shall be proportionately
adjusted so that the holder of any Series C Preferred Stock
surrendered for conversion after such time shall be entitled
to receive the number and kind of shares which he would have
owned or have been entitled to receive had such Series C
Preferred Stock been converted immediately prior to such
time. Such adjustment shall be made successively whenever
any event listed above shall occur and shall become
effective retroactively to immediately after the record date
of such dividend or immediately after the effective date of
such subdivision or combination.
(ii) Unless the holders of shares of Series C
Preferred Stock shall be permitted to subscribe for or
purchase shares of Common Stock on the same basis as if
theretofore converted into Common Stock, in case the
Corporation shall issue rights (other than those rights (the
"Rights") issued pursuant to that certain Rights Agreement
dated as of March 4, 1986, between the Corporation and
Morgan Guaranty Trust Company of New York, as Rights Agent)
or warrants to all holders of its Common Stock entitling
them (for a period expiring within 45 days after the record
date for the determination of stockholders entitled to
receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less
than the Current Market Price (as defined below) per share
of Common Stock on such record date, then in each such case
the Conversion Price shall be adjusted to equal the price
determined by dividing the Conversion Price in effect
immediately prior to such record date by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription
or purchase pursuant to such rights or warrants and of which
the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of
shares of Common Stock which the aggregate offering price of
the total number of shares so offered pursuant to such
rights or warrants would purchase at such Current Market
Price. Such adjustment shall be made successively whenever
such rights or warrants are issued, and shall become
effective retroactively to immediately after the record date
for the determination of stockholders entitled to receive
such rights or warrants; provided, however, in the event
that all the shares of Common Stock offered for subscription
or purchase are not delivered upon the exercise of such
rights or warrants, upon the expiration of such rights or
warrants the Conversion Price shall be readjusted to the
Conversion Price which would have been in effect had the
numerator and the denominator of the foregoing fraction and
the resulting adjustment been made based upon the number of
shares of Common Stock actually delivered upon the exercise
of such rights or warrants rather than upon the number of
shares of Common Stock offered for subscription or purchase.
For the purposes of this subparagraph (ii), the number of
shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Corporation but
shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common
Stock.
(iii) In case the Corporation shall distribute to all
holders of its Common Stock shares of its capital stock
(other than Common Stock), evidences of indebtedness or
assets of the Corporation (excluding dividends paid in, or
distributions of, cash from the retained earnings of the
Corporation) or subscription rights or warrants to subscribe
for or purchase securities of the Corporation (excluding
those referred to in subparagraph (ii) above and excluding
the Rights as defined in subparagraph (ii) above), then in
each such case the Conversion Price shall be adjusted to
equal the price determined by dividing the Conversion Price
in effect immediately prior to the record date for the
determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be
the Current Market Price per share of the Common Stock on
such record date and of which the denominator shall be such
Current Market Price per share of Common Stock less the fair
market value (as determined by the Board of Directors or an
Authorized Board Committee thereof, whose determination
shall be conclusive) of the portion of the capital stock,
evidences of indebtedness, assets or subscription rights or
warrants distributed applicable to one share of Common
Stock. Such adjustment shall be made successively whenever
any such distribution is made, and shall become effective
retroactively to immediately after such record date.
(iv) For the purpose of any computation under
subparagraphs (ii) and (iii) above, the "Current Market
Price" per share of Common Stock on any date shall be deemed
to be the average of the daily Closing Prices for the thirty
consecutive trading days commencing forty-five business days
before such date. The "Closing Price" for each day shall be
the reported last sale price regular way or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either
case as reported on the New York Stock Exchange Composite
Tape, or, if at any time the Common Stock is not listed or
admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading, or if the Common Stock is not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System, or, if the
Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on such National
Market System, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected from time to
time by the Board of Directors or an Authorized Board
Committee for such purpose.
(v) In any case in which this paragraph 4(e) shall
require that an adjustment as a result of any event becomes
effective retroactively to immediately after a record date
or effective date for such event, the Corporation may elect
to defer until after the occurrence of such event (A)
issuing to the holder of any shares of Series C Preferred
Stock converted after such record date and before the
occurrence of such event the additional shares of Common
Stock issuable upon such conversion over and above the
shares of Common Stock issuable upon such conversion on the
basis of the Conversion Price prior to adjustment and (B)
paying to such holder any amount in cash in lieu of a
fractional share of Common Stock pursuant to paragraph 4(g)
below; and, in lieu of the shares the issuance of which and
the cash the payment of which is so deferred, the
Corporation will cause its Transfer Agent to issue due bills
or other appropriate evidence of the right to receive such
shares and such cash.
(vi) No adjustment to the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Conversion Price; provided,
however, that the Corporation may make any such adjustment
at its election; and provided further, however, that any
adjustments which by reason of this subparagraph (vi) are
not made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this
paragraph 4(e) shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
Anything in this paragraph 4(e) notwithstanding, the
Corporation shall be entitled to make such decreases in the
Conversion Price, in addition to those required by this
paragraph 4(e), as it in its discretion shall determine to
be advisable in order that any stock dividend, subdivision
or combination of shares, distribution of rights or warrants
to purchase stock or securities, or distribution of
Securities convertible into or exchangeable for stock
hereafter made by the Corporation to its stockholders shall
not be taxable.
(vii) In the event that any of the Rights (as defined
in subparagraph 4(e)(ii)) are at any time exercised by the
holders thereof and such exercise equitably requires an
adjustment in the Conversion Price or in the kind of
securities issuable upon conversion of the Series C
Preferred Stock, such adjustment shall be made by the Board
of Directors. In such case, the determination of the Board
of Directors as to whether an adjustment in the Conversion
Price or in the kind of securities issuable upon conversion
of the Series C Preferred Stock is required, the amount and
nature of any such adjustment, and the effective date of any
such adjustment shall be conclusive.
(viii) If the Corporation makes any distribution,
dividend, issuance of rights or warrants or subdivision,
combination or reclassification of or on the Common Stock,
or any security to which the conversion right addressed in
this Section 4 then applies, which is not covered by any of
the preceding provisions of this paragraph (e) and which
equitably requires an adjustment in the Conversion Price,
such adjustment shall be made as determined by the Board of
Directors of the Corporation. In such case, the
determination of the Board of Directors as to whether an
adjustment in the Conversion Price is required, the amount
of any such adjustment, and the effective date of any such
adjustment shall be conclusive.
(f) In case of any consolidation of the Corporation into,
or merger of the Corporation with or into, any other corporation
(other than a consolidation or merger in which the Corporation is
the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common
Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, or in case of
any reclassification or change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination, but including any reclassification of
the Common Stock into two or more classes), or in case of any
statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a
third corporation into the Corporation), the holder of each share
of Series C Preferred Stock then outstanding shall have the right
thereafter to convert such share into the kind and amount of
shares of stock and other securities, cash and other property
receivable upon such consolidation, merger, sale, transfer,
reclassification, change or statutory exchange by a holder of the
number of shares of Common Stock of the Corporation into which
such share of Series C Preferred Stock might have been converted
immediately prior to such consolidation, merger, sale, transfer,
reclassification, change or statutory exchange (assuming that the
holder of such share of Series C Preferred Stock, as a holder of
Common Stock prior to such transaction, would not have exercised
any rights of election as a holder of Common Stock as to the kind
or amount of shares of stock and other securities, cash and other
property receivable upon such consolidation, merger, sale,
transfer, reclassification, change or statutory exchange;
provided, that if the kind or amount of shares of stock and other
securities, cash and other property receivable upon such
consolidation, merger, sale, transfer, reclassification, change
or statutory exchange is not the same for each non-electing share
of Common Stock, then the kind and amount of shares of stock and
other securities, cash and other property receivable shall be
deemed to be the kind and amount so receivable by a plurality of
the non-electing shares). In any such event, effective provision
shall be made, in the articles or certificate of incorporation of
the resulting or surviving corporation or other corporation
issuing or delivering such shares, other securities, cash or
other property or otherwise, so that the provisions set forth
herein for the protection of the conversion rights of the Series
C Preferred Stock shall thereafter be applicable, as nearly as
reasonably may be, to any such other shares of stock and other
securities, cash and other property deliverable upon conversion
of the Series C Preferred Stock remaining outstanding or other
convertible stock or securities received by the holders of the
Series C Preferred Stock in place thereof; and any such resulting
or surviving corporation or other corporation issuing or
delivering such shares, other securities, cash and other property
shall expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares, securities,
cash and other property as the holders of the Series C Preferred
Stock remaining outstanding, or other convertible stock or
securities received by the holders of the Series C Preferred
Stock in place thereof, shall be entitled to receive, pursuant to
the provisions hereof, and to make provision for the protection
of the conversion right as above provided. In case shares of
stock, securities, cash or other property other than Common Stock
shall be issuable or deliverable upon conversion as aforesaid,
then all references to Common Stock in this paragraph 4 shall be
deemed to apply, so far as provided and as nearly as is
reasonable, to any such shares, other securities, cash or other
property. The above provisions shall similarly apply to
successive consolidations, mergers, sales, transfers,
reclassifications, changes or statutory exchanges.
(g) No fractional interests in Common Stock shall be issued
upon conversion of shares of Series C Preferred Stock. If more
than one share of Series C Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full
shares of Common Stock issuable by the Corporation upon
conversion thereof shall be computed on the basis of the
aggregate number of shares of Series C Preferred Stock so
surrendered. Instead of any fractional share of Common Stock
which would otherwise be issuable upon conversion of any share
of Series C Preferred Stock, the Corporation will pay a cash
adjustment in respect of such fractional interest in an amount
equal to the same fraction of the Closing Price per share of
Common Stock determined as of the business day preceding the date
of conversion.
(h) Whenever any adjustment is required in the Conversion
Price or the number or type of shares of stock or other
securities, cash or other property into which each share of
Series C Preferred Stock is convertible, the Corporation shall
forthwith (A) file with each of the Transfer Agent for the Series
C Preferred Stock and the Transfer Agent for the Common Stock a
statement describing in reasonable detail the adjustment in the
Conversion Price or conversion right, the date on which the
adjustment became effective and the facts requiring such
adjustment and (B) cause a copy of such statement to be mailed to
the holders of record of the Series C Preferred Stock.
(i) Upon any conversion of shares of Series C Preferred
Stock, the shares so converted shall have the status of
authorized and unissued shares of Preferred Stock, without
designation as to series, and the number of shares of Preferred
Stock which the Corporation shall have authority to issue shall
not be decreased by the conversion of shares of Series C
Preferred Stock. The Corporation shall at all times reserve and
keep available, free from preemptive rights, out of its
authorized and unissued stock or stock held as treasury stock,
solely for the purpose of effecting the conversion of the Series
C Preferred Stock, such number of shares of its Common Stock, and
such number of Rights, as shall from time to time be sufficient
to effect the conversion of all shares of Series C Preferred
Stock at such time outstanding. For the purpose of this
paragraph 4(i), the full number of shares of Common Stock, and
the full number of Rights, issuable upon the conversion of all
outstanding shares of Series C Preferred Stock shall be computed
as if at the time of computation of such number of shares of
Common Stock and such number of Rights all outstanding shares of
Series C Preferred Stock were held by a single holder. The
Corporation shall from time to time, in accordance with the laws
of the State of Delaware, increase the authorized number of
shares of its Common Stock if at any time the authorized number
of shares of its Common Stock not outstanding shall not be
sufficient to permit the conversion of all the then outstanding
Series C Preferred Stock.
(j) The Corporation will pay any and all issue or other
taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Series C Preferred Stock
pursuant hereto. The Corporation shall not, however, be required
to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of Common Stock in a name other
than that in which the Series C Preferred Stock so converted was
registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Corporation the amount of such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(k) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value
of the Common Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully
paid and nonassessable shares of Common Stock at the Conversion
Price as so adjusted.
(1) In case: (i) the Corporation shall declare a dividend
(or any other distribution) on its Common Stock (other than cash
dividends paid out of the retained earnings of the Corporation
and dividends payable in Common Stock); or (ii) the Corporation
shall authorize the granting to the holders of its Common Stock
of rights or warrants to subscribe for or purchase any shares of
stock of any class or of any other rights or warrants; or (iii)
of any reclassification or change of the Common Stock of the
Corporation (other than a subdivision or combination of its
outstanding Common Stock (but including any reclassification of
the Common Stock into two or more classes), or a change in par
value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the
Corporation is a party or of any statutory exchange of securities
with another corporation and for which approval of any
stockholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the assets of the
Corporation; or (iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; then, in each such
case, the Corporation shall mail to each holder of Series C
Preferred Stock at least fifteen days prior to the applicable
date hereinafter specified, a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend,
distribution of rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution or rights or
warrants are to be determined, or (B) the date on which such
reclassification, change, consolidation, merger, sale, transfer,
statutory exchange, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, change,
consolidation, merger, sale, transfer, statutory exchange,
dissolution, liquidation or winding up. Failure to give such
notice, or any defect therein, shall not, however, affect the
legality or validity of any action described in clauses (i),
(ii), (iii) or (iv) of this paragraph 4(1).
(m) Immediately upon the Trustee (or any successor) of the
CBI Salaried Employee Stock Ownership Trust (1987) (the
"Trustee") ceasing to be the holder of record of any share of
Series C Preferred Stock (except in the case of the redemption or
repurchase of shares by the Corporation), such share of Series C
Preferred Stock will automatically, without any act or deed on
the part of the Corporation or any other person, be converted
into the number of shares of Common Stock (or, if by virtue of
subparagraphs 4(e)(i) or 4(e)(vii), or paragraph 4(f), such share
of Series C Preferred Stock is then convertible into securities
or assets other than Common Stock, then the number or amount of
such other securities or assets), together with any cash
adjustment required by paragraph 4(g), into which it would then
be convertible if such share were voluntarily presented for
conversion in accordance with the other provisions of this
Section 4. To the extent applicable, the other provisions of
this Section 4 shall govern any automatic conversion pursuant to
this paragraph 4(m), subject to the following:
(i) any share surrendered for transfer by the Trustee
shall be deemed to have been surrendered for conversion by
the transferee prior to the close of business on the day
such share is transferred into the transferee's name on the
books of the Corporation;
(ii) no notice of conversion need be submitted by
either the Trustee or its transferee in order to effect the
automatic conversion provided for hereby;
(iii) notwithstanding any provision of paragraph 4(a),
each share of Series C Preferred Stock is subject to
automatic conversion pursuant to this paragraph 4(m) at any
time prior to such share having been redeemed or otherwise
purchased by the Corporation; and
(iv) notwithstanding the provisions of paragraph 4(j),
the Corporation shall be responsible for the payment of any
tax payable in connection with any transfer of shares of
Series C Preferred Stock which results in the automatic
conversion of such shares pursuant to this paragraph 4(m).
5. Liquidation Rights.
Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
Series C Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to
stockholders, an amount per share equal to, $32.40, plus in each
case an amount equal to all dividends (whether or not declared or
due) on such shares accrued and unpaid thereon to the date of
final distribution, before any payment or distribution shall be
made on the Common Stock, the Series A Preferred Stock or on any
other class or series of stock ranking junior to the Series C
Preferred Stock with respect to distributions upon liquidation,
dissolution or winding up. For purposes of this Section 5, the
merger or consolidation of the Corporation or the sale of all or
substantially all of the Corporation's assets shall not be deemed
to be a liquidation, dissolution or winding up of the
Corporation. In the event the assets of the Corporation
available for distribution to the holders of shares of the Series
C Preferred Stock upon any dissolution, liquidation or winding up
of the Corporation shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to this
Section 5, no such distributions shall be made upon account of
any shares of Series C Preferred Stock or of any other class or
series of stock of the Corporation ranking on a parity with the
shares of the Series C Preferred Stock upon such dissolution,
liquidation or winding up unless proportionate distributive
amounts shall be paid on account of the shares of the Series C
Preferred Stock, ratably, in proportion to the full distributable
amounts to which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or
winding up. After the payment to the holders of the shares of
the Series C Preferred Stock of the full preferential amounts
provided for in this Section 5, the holders of the Series C
Preferred Stock as such shall have no right or claim to any of
the remaining assets of the Corporation.
6. Voting Rights.
(a) In addition to any voting rights provided by applicable
law or elsewhere in this Section 6, the holders of shares of
Series C Preferred Stock shall be entitled to vote upon all
matters upon which the holders of Common Stock are entitled to
vote and shall vote together with the holders of shares of Common
Stock (and of any other class or series which may similarly be
entitled to vote with the shares of Common Stock, if any) as a
single class. For the purpose of any vote contemplated by this
paragraph 6(a), each share of Series C Preferred Stock shall be
entitled to the number of votes equal to the number of shares of
Common Stock into which such share of Series C Preferred Stock
could then be converted (including for such purpose any
fractional share into which it could then be converted were it
not for the provisions of paragraph 4(g)) pursuant to the
provisions of Section 4 hereof on the record date for the
determination of stockholders entitled to vote on such matters.
(b) If at any time dividends payable on the Series
C Preferred Stock, or on any one or more other series of
Preferred Stock of the Corporation entitled to receive cumulative
preferred dividends, are in arrears and unpaid in an amount equal
to or exceeding the amount of dividends payable thereon for six
quarterly dividend periods (assuming for this purpose only that
dividends on the Series C Preferred Stock are paid quarterly
rather than semiannually), the number of members of the Board of
Directors shall increase by two, and the holders of the
outstanding shares of Preferred Stock will have the exclusive
right, voting separately as a class, to elect such two directors
of the Corporation at the next regular or special meeting of
stockholders of the Corporation. Such voting right will continue
for the Preferred Stock until all dividends on the Series C
Preferred Stock and on such other series have been paid in full,
at which time such voting right of the holders of Preferred Stock
will terminate, subject to re-vesting in the event of a
subsequent arrearage. Upon any termination of the aforesaid
voting right, the term of office of all the directors elected by
holders of Preferred Stock voting separately as a class will
terminate and the number of members of the Board of Directors
shall decrease by two.
7. Amendment.
The Certificate of Incorporation of the Corporation
(including this Certificate of Designations) shall not be
amended, altered or repealed in any manner which would adversely
alter or change the powers, preferences or special rights of the
Series C Preferred Stock without the affirmative vote or consent
of the holders of a majority of the outstanding shares of Series
C Preferred Stock, voting separately as a series; provided, that
any increase in the authorized Preferred Stock or the creation
and issuance of any other class or series of Preferred Stock
ranking on a parity with or junior to the Series C Preferred
Stock as to payment of dividends and upon liquidation,
dissolution or winding up or any decrease in the number of shares
which constitute the Series C Preferred Stock (but not below the
number of shares thereof then outstanding) shall not be deemed to
adversely alter or change such powers, preferences or special
rights.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designations to be duly executed on its behalf by
its undersigned Executive Vice President & Chief Financial
Officer and attested to by its Secretary this 18th day of April,
1988.
/s/ George L. Schueppert
George L. Schueppert,
Executive Vice President &
Chief Financial Officer
[Corporate Seal]
ATTEST:
/s/ Donald H. Craigmile
Donald H. Craigmile, Secretary
<TABLE>
EXHIBIT 11
CBI INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months Nine Months
Thousands of dollars, except per share amounts Ended September 30, Ended September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Primary Earnings Per Common Share
Net income to common shareholders $7,871 $8,851 $28,107 $19,926
Weighted average number of common shares outstanding 37,913 37,344 37,795 37,096
Primary net income per common share $0.20 $0.24 $0.74 $0.54
Fully Diluted Earnings Per Common Share
Net income $7,871 $8,851 $28,107 $19,926
Add back expenses included in net income that pertain to ESOP
Series C preferred dividends 2,035 2,109 6,153 6,361
Common dividends on unallocated reverted shares 7 16 31 57
Company contributions (after utilization of common dividends
of $202, $204, $608, $608 charged to retained earnings) 1,981 1,861 6,004 5,780
ESOP debt amortization (212) (527) (636) (1,580)
Tax effect included in net income related to debt service (1,551) (1,481) (4,696) (4,312)
Net income adjusted to exclude ESOP debt service 10,131 10,829 34,963 26,232
Adjustments to reflect the servicing of ESOP debt (required for this
calculation), based on the assumption all Series C preferred shares
were converted to common shares:
Common dividends on unallocated reverted shares (23) (56) (83) (148)
Company contribution (after utilization of common dividends
of $827, $935, $2,487, $2,186 charged to retained earnings) (3,375) (3,199) (10,226) (10,472)
ESOP debt amortization 212 527 636 1,580
Tax effect included in net income related to debt service 1,406 1,288 4,258 3,905
Fully diluted net income to common shareholders $8,351 $9,389 $29,548 $21,097
Weighted average number of common shares outstanding 37,913 37,344 37,795 37,096
Add common stock equivalents of stock option plan 111 112 111 112
Add common stock equivalents of leveraged Series C preferred shares 4,380 4,539 4,380 4,539
Add common stock equivalents of reverted allocated Series C
preferred shares 795 733 795 733
Fully diluted weighted average number of common shares outstanding 43,199 42,728 43,081 42,480
Fully diluted net income per common share $0.20 $0.22 $0.69 $0.50
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1994 AND THE STATEMENT OF INCOME FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> $43,972
<SECURITIES> 0
<RECEIVABLES> 303,868
<ALLOWANCES> (11,100)
<INVENTORY> 80,100
<CURRENT-ASSETS> 525,969
<PP&E> 1,838,896
<DEPRECIATION> (628,376)
<TOTAL-ASSETS> $1,989,769
<CURRENT-LIABILITIES> $369,873
<BONDS> 680,190
<COMMON> 313,779
0
36,574
<OTHER-SE> 357,895
<TOTAL-LIABILITY-AND-EQUITY> $1,989,769
<SALES> 0
<TOTAL-REVENUES> $1,361,064
<CGS> 0
<TOTAL-COSTS> $1,066,310
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,887
<INCOME-PRETAX> 75,751
<INCOME-TAX> 35,200
<INCOME-CONTINUING> 32,636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $28,107
<EPS-PRIMARY> $.74
<EPS-DILUTED> $.69
</TABLE>
