UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
---
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-483
-------------------------------
MALLINCKRODT INC.
(Exact name of registrant as specified in its charter)
New York 36-1263901
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
675 McDonnell Boulevard
St. Louis, Missouri 63134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 314-654-2000
------------------------------
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 .
Applicable Only To Issuers Involved In Bankruptcy
Proceedings During The Preceding Five Years:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. Yes .
No .
Applicable Only To Corporate Issuers:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
71,285,133 shares excluding 15,839,640 treasury shares as of
January 31, 1999.
<PAGE>
(*) Indicates registered trademark
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
The accompanying interim condensed consolidated financial statements
of Mallinckrodt Inc. (the Company or Mallinckrodt) do not include all
disclosures normally provided in annual financial statements. These
financial statements, which should be read in conjunction with the
consolidated financial statements contained in Mallinckrodt's Annual
Report on Form 10-K/A No. 1 for the year ended June 30, 1998 and the
condensed consolidated financial statements contained in
Mallinckrodt's Quarterly Report on Form 10-Q/A No. 1 for the three
months ended September 30, 1998, are unaudited but include all
adjustments which Mallinckrodt's management considers necessary for a
fair presentation. These adjustments consist of normal recurring
accruals except as discussed in Notes 1, 2 and 3 of the Notes to
Condensed Consolidated Financial Statements. Interim results are not
necessarily indicative of the results for the fiscal year. All
references to years are to fiscal years ended June 30 unless
otherwise stated.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31,
------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 636.7 $ 607.3 $1,227.9 $1,061.9
Operating costs and expenses:
Cost of goods sold 347.7 395.8 666.0 671.6
Selling, administrative and
general expenses 182.2 177.1 354.6 296.1
Purchased research and
development 306.3
Research and development expenses 37.4 36.7 71.3 64.4
Other operating income, net (5.3) (.8) (5.3) (2.3)
------- --------- --------- ---------
Total operating costs and expenses 562.0 608.8 1,086.6 1,336.1
------- --------- --------- ---------
Operating earnings (loss) 74.7 (1.5) 141.3 (274.2)
Interest and other nonoperating
income (expense), net (.2) 2.3 .7 11.5
Interest expense (22.5) (29.0) (43.1) (47.3)
------- --------- --------- ---------
Earnings (loss) from continuing
operations before income taxes 52.0 (28.2) 98.9 (310.0)
Income tax provision (benefit) 16.9 (8.8) 32.1 .3
------- --------- --------- ---------
Earnings (loss) from continuing
operations 35.1 (19.4) 66.8 (310.3)
Discontinued operations 14.5 22.6 14.5
-------- --------- --------- ---------
Earnings (loss) before cumulative
effect of accounting change 35.1 (4.9) 89.4 (295.8)
Cumulative effect of accounting
change (8.4)
-------- --------- --------- ---------
Net earnings (loss) 35.1 (4.9) 89.4 (304.2)
Preferred stock dividends (.1) (.1) (.2) (.2)
-------- --------- --------- ---------
Available for common shareholders $ 35.0 $ (5.0) $ 89.2 $ (304.4)
======== ========= ========= =========
Basic earnings per common share:
Earnings (loss) from continuing
operations $ .49 (.27) $ .93 $ (4.28)
Discontinued operations .20 .31 .20
Cumulative effect of accounting
change (.11)
-------- --------- --------- ---------
Net earnings (loss) $ .49 $ (.07) $ 1.24 $ (4.19)
======== ========= ========= =========
Diluted earnings per common share:
Earnings (loss) from continuing
operations $ .49 $ (.27) $ .92 $ (4.28)
Discontinued operations .20 .31 .20
Cumulative effect of accounting
change (.11)
-------- --------- --------- ---------
Net earnings (loss) $ .49 $ (.07) $ 1.23 $ (4.19)
======== ========= ========= =========
</TABLE>
(See Notes to Condensed Consolidated Financial Statements on pages 4
through 7.)
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share amounts)
December 31, June 30,
1998 1998
------------- ----------
Assets
Current assets:
Cash and cash equivalents $ 57.2 $ 55.5
Trade receivables, less allowances
of $19.4 at December 31 and $16.7
at June 30 482.9 486.3
Inventories 521.6 470.0
Deferred income taxes 110.4 95.2
Other current assets 65.9 61.5
Net current assets of discontinued
operations 4.8
--------- ---------
Total current assets 1,238.0 1,173.3
Investments and other noncurrent
assets, less allowances of $8.0 at
December 31 and $5.8 at June 30 151.1 154.5
Property, plant and equipment, net 899.7 894.9
Goodwill, net 967.5 987.0
Technology, net 349.7 364.3
Other intangible assets, net 270.5 282.1
Net noncurrent assets of discontinued
operations 12.4
Deferred income taxes 4.8 4.6
--------- ---------
Total assets $3,881.3 $3,873.1
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 415.8 $ 311.4
Accounts payable 190.8 215.0
Accrued liabilities 458.8 532.0
Income taxes payable 67.0 122.3
Deferred income taxes 3.6 1.4
--------- ---------
Total current liabilities 1,136.0 1,182.1
Long-term debt, less current maturities 944.3 944.5
Deferred income taxes 405.8 396.2
Postretirement benefits 172.8 169.2
Other noncurrent liabilities and deferred
credits 181.7 175.2
--------- ---------
Total liabilities 2,840.6 2,867.2
--------- ---------
Shareholders' equity:
4 Percent cumulative preferred stock 11.0 11.0
Common stock, par value $1, authorized
300,000,000 shares; issued 87,124,773
shares 87.1 87.1
Capital in excess of par value 314.8 315.2
Reinvested earnings 1,105.3 1,039.7
Accumulated other comprehensive expense (63.3) (72.6)
Treasury stock, at cost (414.2) (374.5)
--------- ---------
Total shareholders' equity 1,040.7 1,005.9
--------- ---------
Total liabilities and shareholders' equity $3,881.3 $3,873.1
========= =========
(See Notes to Condensed Consolidated Financial Statements on pages 4
through 7.)
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Six Months Ended
December 31,
---------------------
1998 1997
--------- ---------
Cash Flows - Operating Activities
Net earnings (loss) $ 89.4 $ (304.2)
Adjustments to reconcile net earnings
(loss) to net cash provided (used)
by operating activities:
Depreciation 58.9 58.8
Amortization 42.2 35.2
Postretirement benefits 3.6 6.1
Gains on asset disposals (40.1) (15.9)
Deferred income taxes (3.1) (25.8)
Write-off of purchased research and
development 308.3
Sale of inventory stepped up to fair
value at acquisition 75.4
Write-off of pre-operating costs 12.5
--------- ---------
150.9 150.4
Changes in operating assets and
liabilities:
Trade receivables 13.3 27.2
Inventories (49.3) (25.8)
Other current assets 2.6 47.7
Accounts payable, accrued liabilities
and income taxes payable, net (162.6) (193.6)
Other noncurrent liabilities and
deferred credits 4.5 23.0
Other, net (1.9) (1.4)
--------- ---------
Net cash provided (used) by operating
activities (42.5) 27.5
--------- ---------
Cash Flows - Investing Activities
Capital expenditures (56.2) (70.0)
Proceeds from asset disposals 70.7 29.5
Acquisition spending (1,786.4)
Other, net 2.7
--------- ---------
Net cash provided (used) by investing
activities 14.5 (1,824.2)
--------- ---------
Cash Flows - Financing Activities
Increase in short-term debt 107.5 1,121.1
Payments on long-term debt (7.8) (1.2)
Issuance of Mallinckrodt common stock .6 13.1
Acquisition of treasury stock (46.8) (9.7)
Dividends paid (23.8) (24.2)
--------- ---------
Net cash provided by financing activities 29.7 1,099.1
--------- ---------
Increase (decrease) in cash and cash
equivalents 1.7 (697.6)
Cash and cash equivalents at beginning
of period 55.5 808.3
--------- ---------
Cash and cash equivalents at end of period $ 57.2 $ 110.7
========= =========
(See Notes to Condensed Consolidated Financial Statements on pages 4
through 7.)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. On August 28, 1997, the Company acquired Nellcor Puritan Bennett
Incorporated (Nellcor) through an agreement to purchase for cash
all the outstanding shares of common stock of Nellcor. The
aggregate purchase price of the Nellcor acquisition was
approximately $1.9 billion. The acquisition was accounted for
under the purchase method of accounting and, accordingly, the
results of operations of Nellcor have been included in the
Company's consolidated financial statements since September 1,
1997. The purchase price of the acquisition was allocated to the
assets acquired and liabilities assumed based upon generally
accepted accounting principles and estimated fair values at the
date of acquisition.
In connection with the Company's filing of a shelf registration
for debt securities in December 1997, Mallinckrodt was engaged in
discussions with the staff of the Securities and Exchange
Commission (SEC) regarding the purchase price allocation related
to the acquisition of Nellcor. On January 26, 1999, the Company
concluded these discussions with the SEC and, as a result, has
agreed to recalculate and restate the amount of purchase price
allocated to purchased research and development under a
methodology preferred by the SEC as articulated publicly in an
SEC letter to the American Institute of Certified Public
Accountants (AICPA) in September 1998. The amount of
purchased research and development charged to operations in the
first quarter of 1998 of $398.3 million has been reduced by $90
million to $308.3 million. Of this amount, $306.3 million
related to ongoing operations and $2.0 million related to
operations classified as discontinued operations. This one-time
noncash acquisition-related cost had no tax benefit. A
corresponding $90 million increase in goodwill is being amortized
on a straight-line basis over the previously established 30-year
amortization period beginning in September 1997.
The sale of Nellcor inventories, which were stepped up to fair
value in connection with the allocation of purchase price,
resulted in charges of $56.6 million, $35.0 million net of taxes
and $75.4 million, $46.7 million net of taxes for the quarter and
six months ended December 31, 1997, respectively. Of the pre-tax
amounts, $55.8 million and $74.4 million related to ongoing
operations for the quarter and six months ended December 31,
1997, respectively, and the remainder related to operations
classified as discontinued operations. In addition, results for
the quarter ended December 31, 1997 included Nellcor integration
charges of $6.7 million, $4.3 million net of taxes.
During 1998, in connection with management's plan to integrate
Mallinckrodt and Nellcor into one company, the Company recorded
additional purchase liabilities of $50.1 million, $30.8 million
net of related tax benefit, which were included in the
acquisition cost allocation and related goodwill. The principal
actions of the plan included Nellcor employee severance of $37.2
million, Nellcor employee relocation costs of $3.8 million and
the elimination of contractual obligations of Nellcor, which had
no future economic benefit, of $9.1 million. Approximately $34.9
million of cash expenditures have been incurred through
December 31, 1998 and liabilities of $15.2 million related to the
Nellcor integration plan remained in accrued liabilities at
December 31, 1998. The majority of the remaining cash
expenditures will occur in 1999 and, although none are expected,
reductions in the estimated liability for these integration
activities will be offset against the related goodwill.
During 1998, the Company recorded a pretax charge of $19.1
million associated with exiting certain activities related to
Mallinckrodt operations that were identified in the Nellcor
integration plan. The charge included $17.1 million related to
Mallinckrodt employee severance costs and facility exit costs of
$2.0 million. Approximately $6.9 million of cash expenditures
have been incurred through December 31, 1998. The majority of
the remaining cash expenditures will occur in 1999 and no
material adjustments to the original reserve are anticipated.
2. The Company sold certain chemical additive product lines in the
second quarter of 1998. In the fourth quarter of 1998, the
Company sold its catalyst business and Aero Systems division. In
June 1998, the Company committed to the sale of the remaining
chemical additives business of the catalysts and chemical
additives division, and closing of the sale occurred on July 31,
1998. The transaction resulted in a $37.0 million gain on sale,
$22.6 million net of taxes, which was included in discontinued
operations for the six months ended December 31, 1998. Earnings
from operations were zero for the one month of operations.
Included in prior year discontinued operations are the earnings
from operations of the catalysts and chemical additives and Aero
Systems divisions, which included $6.9 million of after-tax
earnings from operations, $2.6 million of after-tax acquisition
accounting charges, and a gain of $10.2 million after taxes
resulting from the sale of chemical additive product lines.
3. The Company elected to early adopt the provisions of the American
Institute of Certified Public Accountants SOP 98-5, "Reporting on
the Costs of Start-Up Activities" (SOP 98-5), in its financial
statements for the year ended June 30, 1998. The effect of
adoption of SOP 98-5 was to record a charge of $8.4 million, net
of taxes, for the cumulative effect of an accounting change to
expense costs that had previously been capitalized prior to
July 1, 1997.
4. On October 6, 1994, Augustine Medical, Inc. (Augustine) commenced
a patent infringement litigation against Mallinckrodt Inc. and
its wholly owned subsidiary, Mallinckrodt Medical, Inc.
(collectively, the Company) in the U.S. District Court for the
District of Minnesota. Specifically, Augustine alleged that the
Company's sale of all five models of its convective warming
blankets infringes certain claims of one or more of Augustine's
patents. The Company filed counterclaims against Augustine in
connection with the above actions alleging unfair competition,
antitrust violations, and invalidity of the asserted patents,
among other things.
The liability phase of the case was tried to a jury in August
1997 and the verdict was that the Company's blankets infringe
certain Augustine patents under the doctrine of equivalents, but
do not literally infringe the patents. There was also a finding
of no willful infringement. On September 22, 1997, the jury
awarded damages in the amount of $16.8 million for the period
ended September 30, 1997 and the judge put in place an injunction
which stopped the Company from manufacturing and selling blankets
in the United States. The Company appealed the jury verdicts of
liability and damages to the Court of Appeals for the Federal
Circuit (a special court for patent appeals that does not involve
a jury). The Court of Appeals has stayed the injunction pending
the outcome of the Company's appeal, and the Company continues to
sell and manufacture blankets in the United States. With the
advice of outside counsel, the Company believes there was
insufficient evidence of equivalents presented and, consequently,
for this and other reasons the verdicts were in error. The
Company is working vigorously in the Appeals Court to overturn
the verdicts and believes that it has strong arguments that its
blankets do not infringe Augustine's patents. Based on all the
facts available to management, the Company believes that it is
reasonably possible but not probable that the jury verdict and
the trial court injunction will be upheld on appeal. If damages
were assessed in the same manner as determined by the jury for
sales subsequent to September 30, 1997 plus interest on the
estimated total, the total liability would approximate $27.5
million at December 31, 1998. The Company has not recorded an
accrual for payment of the damages, because an unfavorable
outcome in this litigation is, in management's opinion,
reasonably possible but not probable. See Part II, Item 1 "Legal
Proceedings" for additional information about this and related
claims by Augustine against the Company.
5. The Company is subject to various investigations, claims and
legal proceedings covering a wide range of matters that arise in
the ordinary course of its business activities. In addition, the
Company is in varying stages of active investigation or
remediation of alleged or acknowledged contamination at 23
currently or previously owned or operated sites and at 15 off-
site locations where its waste was taken for treatment or
disposal. See Part II, Item 1 "Legal Proceedings" for additional
information about legal proceedings involving the Company.
Once the Company becomes aware of its potential environmental
liability at a particular site, the measurement of the related
environmental liabilities to be recorded is based on an
evaluation of currently available facts such as the extent and
types of hazardous substances at a site, the range of
technologies that can be used for remediation, evolving standards
of what constitutes acceptable remediation, presently enacted
laws and regulations, engineers and environmental specialists'
estimates of the range of expected clean-up costs that may be
incurred, prior experience in remediation of contaminated sites,
and the progress to date on remediation in process. While the
current law potentially imposes joint and several liability upon
each party at a Superfund site, the Company's contribution to
clean up these sites is expected to be limited, given the number
of other companies which have also been named as potentially
responsible parties and the volumes of waste involved. A
reasonable basis for apportionment of costs among responsible
parties is determined and the likelihood of contribution by other
parties is established. If it is considered probable that the
Company will only have to pay its expected share of the total
clean-up, the recorded liability reflects the Company's expected
share. In determining the probability of contribution, the
Company considers the solvency of the parties, whether
responsibility is disputed, existence of an allocation agreement,
status of current action, and experience to date regarding
similar matters. Current information and developments are
regularly assessed by the Company, and accruals are adjusted on a
quarterly basis, as required, to provide for the expected impact
of these environmental matters.
The Company has established accruals only for those matters that
are in its view probable and estimable. Based upon information
currently available, management believes that existing accruals
are sufficient to satisfy any known environmental liabilities,
and that it is not reasonably possible at this time that any
additional liabilities will result from the resolution of these
matters that would have a material adverse effect on the
Company's consolidated results of operations or financial
position.
6. The following table sets forth the computation of basic and
diluted earnings (loss) from continuing operations per common
share (in millions, except shares and per share amounts).
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Earnings (loss) from
continuing operations $ 35.1 $ (19.4) $ 66.8 $(310.3)
Preferred stock
dividends (.1) (.1) (.2) (.2)
--------- --------- --------- --------
Numerator for basic
and diluted earnings
(loss) per share--
income (loss)
available to common
shareholders $ 35.0 $ (19.5) $ 66.6 $(310.5)
========= ========= ========= ========
Denominator:
Denominator for basic
earnings (loss) per
share--weighted-
average shares 71,349,208 72,957,721 72,133,170 72,716,625
Potential dilutive
common shares--
employee stock options 229,031 157,899
---------- ---------- ---------- ----------
Denominator for diluted
earnings (loss) per
share--adjusted
weighted-average
shares 71,578,239 72,957,721 72,291,069 72,716,625
========== ========== ========== ==========
Basic earnings (loss)
from continuing
operations per common
share $ .49 $ (.27) $ .93 $ (4.28)
======== ========= ======== =========
Diluted earnings (loss)
from continuing
operations per common
share $ .49 $ (.27) $ .92 $ (4.28)
======== ========= ======== =========
</TABLE>
The diluted share bases for the quarter and six months ended
December 31, 1997 excluded incremental shares related to employee
stock options of 777,875 and 734,493, respectively. These shares
were excluded due to their antidilutive effect as a result of the
Company's loss from continuing operations during these periods.
7. The components of inventory included the following as of
December 31, 1998:
(In millions)
Raw materials and supplies $ 231.4
Work in process 51.0
Finished goods 239.2
--------
$ 521.6
========
8. The Company has authorized and issued 100,000 shares, 98,330
outstanding at December 31, 1998, of par value $100, 4 percent
cumulative preferred stock. The Company has authorized
1,400,000 shares, par value $1, of series preferred stock, none
of which was outstanding during 1999 and 1998. Shares included
in treasury stock were:
December 31, June 30,
1998 1998
------------ ----------
Common stock 15,787,427 13,941,638
4 Percent cumulative preferred stock 1,670 1,670
9. Common shares reserved at December 31, 1998 consisted of the
following:
Exercise of common stock purchase rights 82,090,855
Exercise of stock options and granting
of stock awards 10,753,509
----------
92,844,364
==========
10. Supplemental cash flow information for the six months ended
December 31 included:
(In millions)
1998 1997
------ ------
Interest paid $ 42.8 $ 39.2
Income taxes paid 106.0 57.8
Noncash investing and financing activities:
Assumption of liabilities related
to an acquisition 458.1
Issuance of stock for investment plan match 6.0 9.8
Restricted stock and directors' plan awards .1 10.1
11. Effective July 1, 1998, the Company adopted Financial Accounting
Standards Board Statement No. 130, "Reporting Comprehensive
Income" (SFAS 130). SFAS 130 establishes new rules for the
reporting and display of comprehensive income and its components.
Comprehensive income includes net income and other comprehensive
income/(expense). Other comprehensive income/(expense) includes
foreign currency translation adjustments and unrealized gains and
losses on investments which prior to adoption were reported
separately in shareholders' equity. A comparison of
comprehensive income and its components follows:
(In millions)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net earnings (loss) $ 35.1 $ (4.9) $ 89.4 $(304.2)
Other comprehensive
income/(expense):
Currency translation
adjustment (8.5) (8.8) 12.7 (15.8)
Net unrealized loss on
investment securities (1.7) (4.8) (5.4) (1.4)
Tax benefit related to
items of other
comprehensive income .6 2.0
-------- -------- -------- --------
Other comprehensive income
(expense), net of tax (9.6) (13.6) 9.3 (17.2)
-------- -------- -------- --------
Total comprehensive income
(loss) $ 25.5 $ (18.5) $ 98.7 $(321.4)
======== ======== ======== ========
</TABLE>
As of December 31, 1998, the cumulative balances for currency
translation adjustment loss and the unrealized loss on investment
securities were $58.4 million and $4.9 million, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. (1)
All references to years are to fiscal years ended June 30 unless
otherwise stated. Certain amounts in the prior year have been
reclassified to conform to the current year presentation. All
earnings per share amounts are calculated on a diluted basis unless
otherwise stated.
Results of Operations
Overview
- --------
As disclosed in previous filings, in connection with the Company's
filing of a shelf registration for debt securities, Mallinckrodt was
engaged in discussions with the staff of the SEC regarding the
purchase price allocation related to the acquisition of Nellcor. The
Company has concluded these discussions with the SEC and, as a
result, has agreed to recalculate and restate the amount of purchase
price allocated to purchased research and development under a
methodology preferred by the SEC as articulated publicly in an SEC
letter to the AICPA in September 1998. The amount of purchased
research and development charged to operations in the first quarter
of 1998 of $398.3 million has been reduced by $90 million to $308.3
million. A corresponding $90 million increase in goodwill is being
amortized on a straight-line basis over the previously established
30-year amortization period beginning in September 1997. The effects
of this change on previously reported consolidated financial
statements are shown in the Company's Annual Report on Form 10-K/A
No. 1 for the year ended June 30, 1998, and the effects of this
change on previously reported condensed consolidated financial
statements are shown in the Company's Quarterly Report on Form 10-Q/A
No. 1 for the three months ended September 30, 1998. Management's
Discussion and Analysis of Financial Condition and Results of
Operations reflects these adjustments in all the periods of 1999 and
1998 presented and discussed below.
- -----------------------------------
(1) CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: Our discussion and analysis in this quarterly
report contain some forward-looking statements. Forward-looking
statements do not relate strictly to historical or current facts, but
rather give our current expectations or forecasts of future events.
Forward-looking statements may be identified by their use of words
such as "plans," "expects," "will," "anticipates," "believes," and
other words of similar meaning. Such statements may address, among
other things, the Company's strategy for growth, product development,
regulatory approvals, the outcome of contingencies such as legal
proceedings, market position, expenditures, and financial results.
Forward-looking statements are based on current expectations of
future events. Such statements involve risks and uncertainties and
actual results could differ materially from those discussed. Among
the factors that could cause actual results to differ materially from
those projected in any such forward-looking statements are as
follows: the effect of business and economic conditions; the impact
of competitive products and continued pressure on prices realized by
the Company for its products; constraints on supplies of raw
materials used in manufacturing certain of the Company's products;
capacity constraints limiting the production of certain products;
difficulties or delays in the development, production, testing, and
marketing of products; difficulties or delays in receiving required
governmental or regulatory approvals; market acceptance issues,
including the failure of products to generate anticipated sales
levels; difficulties in rationalizing acquired businesses and in
realizing related cost savings and other benefits; the effects of and
changes in trade, monetary, and fiscal policies, laws, and
regulations; foreign exchange rates and fluctuations in those rates;
the costs and effects of legal and administrative proceedings,
including environmental proceedings and patent disputes involving the
Company; difficulties or delays in addressing "Year 2000" problems in
the Company's operations, or the inability of a major supplier or
customer to continue operations due to such problems (as discussed in
Item 2, Management's Discussion and Analysis of Financial Condition
and Results of Operations); and the risk factors reported from time
to time in the Company's SEC reports. The Company undertakes no
obligation to update any forward-looking statements as a result of
future events or developments.
<PAGE>
General
- -------
The Company recorded earnings from continuing operations of $35.1
million, or 49 cents per share for the quarter ended December 31,
1998. Earnings from continuing operations for the same quarter last
year were $19.5 million, or 26 cents per share, before charges
related to the acquisition and integration of Nellcor. With these
charges, the Company recorded a loss from continuing operations in
the second quarter of 1998 of $19.4 million, or 27 cents per share.
Acquisition and integration charges for the quarter ended December
31, 1997 were composed of a cost of goods sold charge of $55.8
million, $34.6 million net of taxes, related to the sale of
inventories stepped up to fair value, and a charge for integration
activities of $6.7 million, $4.3 million net of taxes.
The acquisition of Nellcor was accounted for under the purchase
method of accounting and, accordingly, the results of operations of
Nellcor have been included in the Company's consolidated financial
statements since September 1, 1997. The purchase price of the
acquisition was allocated to the assets acquired and liabilities
assumed based upon generally accepted accounting principles and
estimated fair values at the date of acquisition.
Actual revenues of some significant acquired in-process projects have
experienced shortfalls when compared to revenue estimates developed
as of the acquisition date. These shortfalls are primarily
attributable to delays in receiving regulatory clearance to market
and/or problems with production ramp up activities which often occur
at the early stages of manufacturing a new product. Such revenue
shortfalls experienced to date are not indicative of any expected
inability of these products to meet customer needs or their long-term
revenue expectations. These delays/problems can have an impact on
sales for the first several quarters versus the plan established at
the date of acquisition because of the typically steep increase in
sales which occurs with the introduction of a new product; however,
such delays are usually inconsequential over the life of the product.
Thus, management believes the delays/problems experienced to date of
some significant products will not reduce the expected long-term
revenues of these products, but only the timing of the receipt of
these revenues.
Net earnings for the second quarter of 1999 were $35.1 million, or 49
cents per share as compared to a net loss of $4.9 million, or 7 cents
per share for the same period of 1998. The net loss for the second
quarter in 1998 included earnings from discontinued operations of
$14.5 million, or 20 cents per share representing a gain on the sale
of a chemical additives business and after-tax earnings from
operations for the period associated with the catalysts and chemical
additives and Aero Systems divisions which were reclassified to
discontinued operations in 1998. Net sales for the quarter ended
December 31, 1998 were $636.7 million or 5 percent greater as
compared to $607.3 million for the same period a year earlier.
For the six months ended December 31, 1998, the Company recorded
earnings from continuing operations of $66.8 million, or 92 cents per
share. For the same period of 1998, the Company recorded a loss from
continuing operations of $310.3 million, or a loss of $4.28 per
share. The loss included pretax acquisition and integration charges
of $387.4 million associated with the Nellcor acquisition. These
charges included a one-time charge of $306.3 million for the write-
off of purchased research and development at the date of acquisition,
which had no offsetting tax benefit, a cost of goods sold charge of
$74.4 million, $46.1 million net of taxes recognized during the first
and second quarters related to the sale of inventories stepped up to
fair value, and a charge related to integration activities of $6.7
million, $4.3 million net of taxes recorded in the second quarter.
Excluding the acquisition and integration charges, earnings from
continuing operations for the first half of 1998 were $46.4 million,
or 63 cents per share.
Net earnings for the first six months of 1999 were $89.4 million, or
$1.23 per share. This result included a gain of $22.6 million, or 31
cents per share, on the sale of the remaining chemical additives
business of the catalysts and chemical additives division which was
reclassified to discontinued operations in 1998. For the first half
of 1998, the Company recorded a net loss of $304.2 million, or $4.19
per share. In addition to the loss from continuing operations in
1998 discussed above, the Company recorded earnings from discontinued
operations of $14.5 million, or 20 cents per share, representing a
gain on the sale of a chemical additives business and after-tax
earnings from operations associated with the catalysts and chemical
additives and Aero Systems divisions which were reclassified to
discontinued operations. In addition, the net loss for the period
ended December 31, 1997 included an after-tax charge of $8.4 million,
or 11 cents per share related to the cumulative effect of an
accounting change discussed in Note 3 of the Notes to Condensed
Consolidated Financial Statements.
Net sales for the first half of 1999 were $1.23 billion, up 16
percent from the $1.06 billion in the same period last year, which
included only four months of operations of Nellcor. Sales to
customers outside the United States during the six months ended
December 31, 1998 were $395 million, or 32 percent of total sales.
A comparison of sales and operating earnings follows:
(In millions)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales
Respiratory $ 290.3 $ 275.7 $ 546.5 $ 417.6
Imaging 195.2 189.1 378.1 366.4
Pharmaceuticals 151.2 142.5 303.3 277.9
--------- --------- --------- ---------
$ 636.7 $ 607.3 $1,227.9 $1,061.9
========= ========= ========= =========
Operating earnings (loss)
Respiratory $ 34.3 $ 29.0 $ 56.7 $ 51.2
Imaging 28.8 26.0 59.5 49.1
Pharmaceuticals 17.1 13.1 37.6 25.5
--------- --------- --------- ---------
80.2 68.1 153.8 125.8
Corporate expense (5.5) (7.1) (12.5) (12.6)
--------- --------- --------- ---------
74.7 61.0 141.3 113.2
Acquisition and integration
charges (62.5) (387.4)
--------- --------- --------- ---------
$ 74.7 $ (1.5) $ 141.3 $ (274.2)
========= ========= ========= =========
</TABLE>
Operating earnings for the quarter ended December 31, 1998 were $74.7
million, which is a 22 percent improvement over the $61.0 million
recorded in the same period of last year before the inclusion of
acquisition and integration charges associated with the acquisition
of Nellcor which were discussed previously. Operating earnings for
the first half of 1999 were $141.3 million, or 25 percent greater
than those reported for the first half of 1998 before acquisition and
integration charges.
The Respiratory Group, of which Nellcor is now a part, had sales for
the quarter ended December 31, 1998 of $290.3 million, or 5 percent
greater than the sales recorded for the same period last year. The
year-to-year sales improvement was attributable to volume growth of 6
percent or $18 million offset by price erosion of one percent. The
volume growth of pulse oximetry, ventilation, service, blood
analysis, and anesthesiology and respiratory disposables as a group
exceeded 12 percent. Oxygen therapy, sleep, portable ventilation and
other product lines had a volume decline primarily due to delayed
product introductions and competitive pressures associated with cost
reimbursement on existing products in these businesses. These
pressures will continue until the new products are introduced over
the next several quarters. Operating earnings of this Group for the
second quarter were $34.3 million, or 18 percent greater than the
$29.0 million reported in the comparable period of 1998. The year-
to-year improvement is primarily attributable to the higher sales
volumes which occurred in those product lines generating the highest
margins.
For the first six months of 1999, Respiratory Group sales increased
31 percent over the same period of last year. The prior year
included only four months of Nellcor sales and operating results.
The Group's sales increase of $128.9 million was attributable to
volume growth of 33 percent, of which 24 percent was due to the
inclusion of only four months of Nellcor revenue in 1998 and 14
percent was due to volume growth for pulse oximetry, ventilation,
service, blood analysis, and anesthesiology and respiratory
disposables as group, partially offset by price declines and lower
volumes in sleep, portable ventilation and other product lines for
the reasons discussed above. Operating earnings for the Respiratory
Group for the first half of 1999 were $56.7 million, or 11 percent
above the comparable prior year period. In spite of the benefits of
increased sales, the earnings comparison with prior year was
negatively impacted by two months of additional expenses, including
additional amortization of intangibles and goodwill of $8.4 million.
The Imaging Group had sales for the second quarter of $195.2 million,
3 percent or $6.1 million above the comparable prior year results.
The sales improvement was primarily attributable to a $9.3 million
increase in sales of nuclear medicine products, which more than
offset the decline in x-ray contrast media revenues. Operating
earnings for the three-month period ended December 31, 1998 were
$28.8 million, or 11 percent above the comparable prior year period
which is primarily attributable to volume growth and increased
manufacturing efficiencies, partially offset by higher rebates.
The Imaging Group's year-to-date sales were $378.1 million, or 3
percent above the sales for the same six-month period last year. The
growth is primarily attributable to increased sales of nuclear
medicine products ($16 million). Operating earnings for the same
period were $59.5 million, which is a 21 percent improvement as
compared to the prior year. The operating earnings improvement over
prior year is driven by the same factors noted for the second
quarter. Although price declines in the x-ray contrast media portion
of the business were a less significant factor in the Group's results
for the first half as compared to price declines experienced in 1998
and 1997, it is probable that this will be a factor having a greater
impact on results in the third and fourth quarters of 1999. The
demand for price discounts is expected to increase and reduce
profitability in 1999, but at a lower rate than was experienced in
1998 and 1997.
The Pharmaceuticals Group's sales for the quarter ended December 31,
1998 were $151.2 million, or 6 percent above sales in the comparable
prior year period of $142.5 million. The sales increase of $8.7
million was primarily attributable to volume increases in narcotics
and drug chemicals of $7.3 million and $2.1 million, respectively,
offset by volume declines in acetaminophen. Price increases
generated 3 percent, or one half of the sales growth. Operating
earnings for this Group were $17.1 million, or 31 percent greater
than those recorded in the comparable period last year. The
operating earnings improvement was primarily attributable to
increased sales volumes of higher margin narcotic products and price
increases.
The Pharmaceuticals Group's sales for the six-month period ended
December 31, 1998 were $303.3 million, or 9 percent above the
revenues generated during the comparable period last year. The sales
increase of $25.4 million was primarily attributable to volume
increases in narcotics and drug chemicals of $28.5 million, which is
an increase of 23 percent. Sales volumes of acetaminophen and
laboratory and microelectronic chemicals declined 10 percent and 4
percent, respectively. The decline in acetaminophen sales is due to
a late flu season in the U.S. Price increases generated a 3 percent
increase in sales for the Group when compared with the first half of
last year.
Corporate Matters
Corporate expense is down 23 percent and 1 percent for the second
quarter and first half of the year compared to the respective prior
year periods.
Interest and other nonoperating income, net was $.7 million for the
first six months of 1999, and $11.5 million for the same period last
year. In the prior year, the Company generated interest income on
cash proceeds from 1997 divestitures invested in interest bearing
securities. These cash equivalents were utilized to acquire Nellcor
at the end of August 1997.
The Company's effective tax rates were 32.5 percent and 31.2 percent
for the three-month periods ended December 31, 1998 and 1997,
respectively. The Company's effective tax rate for the first half of
1999 was 32.5 percent. For the first six months of the prior year,
the Company had a loss from continuing operations of $310.3 million
including the one-time noncash write-off of purchased research and
development of $306.3 million, which had no tax benefit.
Financial Condition
The Company's financial resources are expected to continue to be
adequate to support existing businesses. Since June 30, 1998, cash
and cash equivalents increased $1.7 million. Operations utilized
$42.5 million of cash, while capital spending totaled $56.2 million.
The Company received $70.7 million in proceeds from asset disposals.
The Company's current ratio at December 31, 1998 was 1.1:1. Debt as
a percentage of invested capital was 56.7 percent.
In December 1997, the Company filed a $500 million shelf debt
registration statement which has not, as yet, been declared
effective.
At December 31, 1998, the Company has a $1.0 billion private
placement commercial paper program. The program is backed by a $1.0
billion revolving credit facility expiring September 12, 2002. The
revolving credit facility was reduced from $1.6 billion to $1.0
billion in September 1998. There was no borrowing outstanding under
the revolving credit facility at December 31, 1998. Commercial paper
borrowings under this program were $390.5 million as of December 31,
1998. Non-U.S. lines of credit totaling $154.1 million were also
available, and borrowings under these lines amounted to $20.4 million
at December 31, 1998. The non-U.S. lines are cancelable at any time.
The Company's Board of Directors previously authorized repurchase of
47 million shares of common stock and additional repurchases not to
exceed cash outlays of $250 million. Share repurchases under these
authorizations have totaled 38.9 million shares, including 2.1
million shares during the six months ended December 31, 1998.
Estimated capital spending for the year ending June 30, 1999 is
approximately $140 million.
Year 2000 Update
- ----------------
The Year 2000 issue is the result of date-sensitive devices, systems
and computer programs that were deployed using two digits rather than
four to define the applicable year. Any such technologies may
recognize a year containing "00" as the year 1900 rather than the
year 2000. If left unaddressed, this could result in a system
failure or miscalculations causing disruptions of operations
including, among other things, a temporary inability to process
transactions or engage in similar normal business activities.
The Company has completed its assessment of its information systems
which support business applications and is in the final stages of
modifying or replacing and testing those portions of the software
that are required. The assessment of products sold to customers has
also been completed. Compliance status and applicable remediation
steps for known currently and previously marketed products have been
communicated via the Internet using a dedicated web page.
Development and testing of modifications necessary to achieve
remediation for such products are substantially complete, and such
modifications are available to customers in accordance with the above
communicated remediation steps. Assessment and remediation of
research and development, manufacturing process and facility
management systems are well underway. All of these modification,
replacement or conversion efforts should be substantially complete
during the first quarter of calendar 1999, which is prior to any
anticipated significant impact on Mallinckrodt's operations.
The Company is also assessing the readiness of its key suppliers and
business partners to be Year 2000 compliant. Information requests
have been distributed and replies are being evaluated. To supplement
these evaluations, the Company plans to perform more detailed reviews
of certain of its key suppliers and business partners. To date, no
matters have been identified from the replies received that would
appear to materially affect the operations of the Company's
businesses.
To further recognize potential adverse impact, the Company is
developing operating contingency plans to address unanticipated
interruptions that could occur in processes, systems and devices that
have been assessed, remediated and considered Year 2000 ready by
Mallinckrodt and its key suppliers and business partners. Such
operating contingency plans are expected to be substantially complete
before June 30, 1999.
Both internal and external resources are being used to reprogram or
replace non-compliant technologies, and to appropriately test Year
2000 modifications. Such modifications are being funded through
operating cash flows. The project to address Year 2000 has been
underway since February 1997. The pretax costs incurred for this
effort were approximately $7 million and $1 million in 1998 and 1997,
respectively. The Company anticipates expenses of approximately $13
million will be incurred in 1999 to substantially complete the
effort.
The cost of the project and the date on which the Company believes it
will substantially complete Year 2000 modifications are based on
management's best estimates. Such estimates were derived using
software surveys and programs to evaluate calendar date exposures and
numerous assumptions of future events, including the continued
availability of certain resources and other factors. Because none of
these estimates can be guaranteed, actual results could differ
materially from those anticipated. Specific factors that might cause
such differences include, but are not limited to, the availability
and cost of personnel trained in this area, the ability to locate and
correct all relevant computer codes, and similar uncertainties.
If the modifications and conversions are not made or are not
completed timely and operating contingency plans developed do not
work as anticipated, the result could be an interruption, or a
failure, of certain normal business activities or operations. Such
failures could materially impact and adversely affect the Company's
results of operations, liquidity and financial condition.
Readers are cautioned that forward looking statements contained in
this Year 2000 Update should be read in conjunction with the
Company's disclosures under the heading "CAUTIONARY STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995" on page 7.
European Monetary Union (EMU)
- -----------------------------
The euro was introduced on January 1, 1999, at which time the eleven
participating EMU member countries established fixed conversion rates
between their existing currencies (legacy currencies) and the euro.
The legacy currencies will continue to be valid as legal tender
through June 30, 2002; thereafter, the legacy currencies will be
canceled and euro bills and coins will be used for cash transactions
in the participating countries.
The Company's European sales offices and various manufacturing and
distribution facilities affected by the euro conversion have
established plans to address the systems issues raised by the euro
currency conversion. The Company is cognizant of the potential
business implications of converting to a common currency; however, it
is unable to determine, at this time, the ultimate financial impact
of the conversion on its operations, if any, given that the impact
will be dependent upon the competitive situations which exist in the
various regional markets in which the Company participates and the
potential actions which may or may not be taken by the Company's
competitors and suppliers.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company has determined that its market risk exposures, which
arise primarily from exposures to fluctuations in interest rates and
foreign currency rates, are not material to its future earnings, fair
value and cash flows.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the
ordinary course of its business activities. In addition, in
connection with laws and regulations pertaining to the protection of
the environment, the Company is actively involved in the
investigation or remediation of alleged or acknowledged contamination
at 23 currently or previously owned or operated sites and at 15 off-
site locations where its waste was taken for treatment or disposal.
These actions are in various stages of development and generally
include demands for reimbursement of previously incurred costs, or
costs for future investigation and/or for remedial actions. In many
instances, the dollar amount of the claim is not specified. For some
sites, other potentially responsible parties may be jointly and
severally responsible, along with the Company, to pay for any past
remediation and other related expenses. For other sites, the Company
may be solely responsible for remediation and related costs. The
Company anticipates that a portion of these costs will be covered by
insurance or third party indemnities. A number of the currently
pending matters relate to historic and formerly owned operations of
the Company. Each of these matters is subject to various
uncertainties, and it is possible that some of these matters will be
decided unfavorably against the Company.
Previously Reported Matters
- ---------------------------
The following is a brief discussion of material developments in
proceedings previously reported in the Company's Annual Report on
Form 10-K for the year ended June 30, 1998, as amended by the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
Environmental Matters
- ---------------------
Animal Health Business Properties - Schering-Plough Corporation has
notified the Company that it intends to pursue investigations at the
South American facilities that were transferred as part of the sale
of the Company's animal health business. The Company is currently
evaluating whether any investigations are necessary.
Orrington, ME - The Company has completed additional supplemental
work which was required before submitting the final Site
Investigation Plan to the EPA and the State of Maine. The Company
submitted the supplemental Site Investigation Plan on December 29,
1998 to the EPA and the State of Maine.
St. Louis, MO/CT Decommissioning - The Company met with the Nuclear
Regulatory Commission (NRC) in December 1998 to discuss the Phase I
Decommissioning and Decontamination Plan (Phase I Plan). The NRC
published notice in the Federal Register regarding the Company's
submission of the Phase I Plan. The Company expects any comments on
the Phase I Plan in February. The Company requested an extension of
time to submit the Phase II Decommissioning and Decontamination Plan
(Phase II Plan) to the NRC. This Phase II Plan is now due in June
2000. The NRC asked the Company to submit a financial assurance plan
for the Phase I Plan and the Phase II Plan. The financial assurance
plan is due April 1999.
Raleigh, NC - The Company has worked with federal and state
agencies to complete the Resource Conservation Recovery Act Facility
Investigation (RFI) and identified certain Solid Waste Management
Units (SWMUs). Final approval of the RFI was granted and field work
has been completed. The Company's Phase I RFI report will be
submitted to the North Carolina Department of Environment, Health and
Natural Resources in mid-February 1999.
Springville, UT - The parties met with the Utah Department of
Environmental Quality (DEQ) in January 1998 to update DEQ on the
progress of the off-site remedial activities and the progress of RCRA
Corrective Action activities at the site. The Ensign-Bickford
Company submitted the Revised RFI Work Plan (Plan) to the DEQ in
December 1998. This Plan is undergoing review by the DEQ. Approval
is anticipated in late February 1999.
The allocation consultant hired by the parties has been reviewing
documents in connection with historic practices at the site in order
to assist the parties in developing a final allocation. The
allocation consultant is going to prepare company profiles for all
parties at the site. These profiles will be used by the parties to
negotiate a final allocation.
In October 1996, a resident with property bordering the Springville
site filed suit against Ensign Bickford Industries (EBI) in the U.S.
District Court for the District of Utah (Don Henrichsen, et al v. The
----------------------------
Ensign-Bickford Company, et al) alleging nuisance and trespass for
- ------------------------------
contamination that allegedly migrated onto the resident's property.
On January 31, 1997, the Company was added as a defendant.
Depositions are being completed and expert reports have been
generated. Plaintiffs have made settlement overtures, but the
Company has rejected such proposals. A trial date has been set for
this matter in August 1999.
The Ensign-Bickford Company (EBCo) and the Company received notice of
a threatened lawsuit in this matter by Howard and Kay Ruff. EBCo and
the Company received a draft complaint which alleged property damage
and personal injury from using allegedly contaminated water for
irrigation purposes. EBCo, the Company and the plaintiffs have
entered into a tolling agreement and are discussing these potential
claims. The lawsuit has not been filed to date.
The Company has also received another letter in connection with this
matter from the children of David Nemelka and Kent Stephens who had
previously settled a lawsuit with the Company and EBCo. In this
letter, counsel for the children of these individuals has made a
demand for payment to address various illnesses alleged to have been
caused by contaminants originating at the Springville, Utah plant
site. The Company and EBCo are currently evaluating these claims.
Other Litigation
- ----------------
OPTISON(*) Patent Litigation -
Sonus Litigation - The Company anticipates that reexamination
proceedings in the United States Patent Office will conclude
shortly with the confirmation of patentability of some of the
claims in the two Sonus Pharmaceuticals, Inc. patents under
reexamination. Thus, the District Court has been asked to lift
the previously granted stay so that pretrial discovery can
resume. The Company will continue to challenge the validity of
the Sonus patents in this litigation.
Nycomed Litigation - On October 13, 1998, Mallinckrodt Medical
B.V., through counsel, appeared in court in response to the legal
action filed by Nycomed Imaging AS in the District Court of The
Hague, the Netherlands. The other named defendants, Mallinckrodt
Medical GmbH, Mallinckrodt Medizintechnik GmbH, Mallinckrodt
Chemical GmbH, Mallinckrodt Medical Holdings GmbH, Mallinckrodt
Chemical Holdings GmbH, and Molecular Biosystems Inc., were not
as yet served and did not appear. For Nycomed to proceed with
the action, it must formally serve the six unserved defendants
outside the Netherlands under The Hague Convention.
Augustine Medical, Inc. -
United States - A hearing before the Court of Appeals for the
Federal Circuit was held on December 9, 1998. A decision by the
Court of Appeals is expected in the second quarter of calendar
year 1999.
Europe - Trial of this action before the District Court of The
Hague occurred on December 4, 1998. A decision by the Court is
expected in February 1999.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The following matters were voted upon at the Annual Meeting of
Shareholders held on October 21, 1998, and received the votes set
forth below:
1. All of the following persons nominated were elected to serve as
directors and received the number of votes set opposite their
names:
For 3-year Terms Votes For Votes Withheld
---------------- ---------- --------------
Roberta S. Karmel 58,948,380 82,693
William L. Davis 58,951,954 79,119
Brian M. Rushton 58,947,638 83,435
For a 1-year Term
-----------------
Daniel R. Toll 58,945,767 85,306
In addition, the holders of 869,149 shares withheld authority to
vote for all of the above-named nominees.
2. A proposal to ratify the appointment of independent public
accountants received 59,640,182 votes FOR and 162,938 votes
AGAINST, with 97,102 abstentions.
3. A proposal to amend the Restated Certificate of Incorporation and
By-Laws of the Company to reduce the minimum required number of
directors from 10 to 8 received 55,529,023 votes FOR and
4,220,526 AGAINST, with 150,673 abstentions.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
- ------- ----------------------------------------------------------
3.1 (a) Restated Certificate of Incorporation of Mallinckrodt,
dated June 22, 1994 (filed with this electronic submission)
3.1 (b) Certificate of Amendment of the Certificate of
Incorporation of Mallinckrodt, dated October 16, 1996
(filed with this electronic submission)
3.1 (c) Certificate of Amendment of the Certificate of
Incorporation of Mallinckrodt, dated October 30, 1998
(filed with this electronic submission)
3.2 By-Laws of Mallinckrodt as amended through October 21, 1998
(filed with this electronic submission)
10.30 Agreement, dated November 9, 1998, between Mallinckrodt and
Mack G. Nichols (filed with this electronic submission) (1)
27 Financial data schedule for the quarter ended December 31,
1998 (filed with this electronic submission)
- ----------------------
(1) Management contract or compensatory plan required to be filed
pursuant to Item 601 of Regulation S-K.
(b) Reports on Form 8-K.
Not applicable.
* * * * * * * * * * * * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Mallinckrodt Inc.
- -----------------------------
Registrant
By: s/s MICHAEL A. ROCCA By: /s/ DOUGLAS A. MCKINNEY
------------------------- --------------------------
Michael A. Rocca Douglas A. McKinney
Senior Vice President and Vice President and Controller
Chief Financial Officer
Date: February 15, 1999
Exhibit 3.1(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
Mallinckrodt Group Inc.
-------
Under Section 807 of the Business Corporation Law
Pursuant to Section 807 of the Business Corporation Law, the
undersigned hereby certify:
I. That the name of the corporation is Mallinckrodt Group Inc.
and the name under which it was formed is International Agricultural
Corporation.
II. That the Certificate of Incorporation of the corporation
(under the name of International Agricultural Corporation) was
originally filed under the Business Corporation Law of the State of
New York by the Department of State, Albany, New York on the 14th day
of June, 1909.
III. That Article Fourth of the Certificate of Incorporation of
Mallinckrodt Group Inc. is hereby amended to change the address to
which the secretary of state shall mail a copy of any process against
the corporation served upon him.
IV. That the above-described amendment to the Certificate of
Incorporation was authorized by vote of the board of directors of the
corporation without a vote of the shareholders, as authorized by
Section 803(b)(2) of the Business Corporation Law.
V. That the text of the Certificate of Incorporation of said
Mallinckrodt Group Inc. is hereby restated as amended to read as
herein set forth in full:
CERTIFICATE OF INCORPORATION
of
Mallinckrodt Group Inc.
We, the undersigned, all being persons of full age and at least
two-thirds being citizens of the United States and at least one of us
a resident of the State of New York, desiring to form a stock
corporation pursuant to the Business Corporation Law of the State of
New York, do hereby make, sign, acknowledge and file this certificate
for that purpose, as follows:
FIRST: The name of the corporation is
Mallinckrodt Group Inc.
SECOND: The purposes of the Corporation are as follows:
1. To manufacture, mine, extract, process, construct,
develop, assemble, and produce in any way, to sell, lease,
supply, export, import, and store, transport, distribute,
market or dispose of in any way, to purchase, lease, and
acquire in any way, to own, operate, experiment with, deal
or trade in, finance, provide services for or in respect
of, and use in any way minerals, metals, chemicals,
fertilizers, foods, beverages, timber and other forestry
products, energy sources, materials, equipment, apparatus,
appliances, devices, structures, facilities, processes,
information, tangible and intangible property, services and
systems of every kind, nature and description, in any part
of the world for any application or purpose whatsoever,
including but not limited to industrial, mining,
agricultural, consumer, defense, governmental, scientific,
educational, cultural, financial, recreational,
transportation, construction, publication, and
communication applications or purposes.
2. To conduct studies and research and development, and
to engage in any other activity relating to the
development, application and dissemination of information
concerning science, technology, and other fields of
endeavor.
3. To acquire by purchase, lease, subscription or
otherwise all or any part of any interest in the property,
good will, business, franchises or assets of any
corporation, association, firm or individual and undertake
either wholly or in part the liabilities of any
corporation, association, firm or individual and to take up
any business as a going concern or otherwise (a) by
purchase of the assets thereof wholly or in part; (b) by
acquisition of the capital stock or any part thereof; or
(c)in any other manner, and to pay for the same in cash or
in the stock or bonds of the Corporation or otherwise; to
hold, maintain and operate, or in any manner deal in or
dispose of the whole or any part of any interest in the
property, good will, business, franchises, or assets so
acquired, and to conduct in any lawful manner the whole or
any part of any business so acquired; and without limiting
the generality of the foregoing, to apply for, acquire,
hold and operate under or to dispose of, mining and
prospecting permits or leases from any government anywhere
in the world or from any department or authority of any
thereof.
4. To do any and all of the things herein set forth to
the same extent as natural persons might or could do and in
any part of the world, as principals, agents, contractors,
or otherwise; and in general, to engage in any part of the
world, directly or indirectly, in any activity which may
promote the interests of the Corporation, or enhance the
value of its property to the fullest extent permitted by
applicable law, and in furtherance of the foregoing
purposes, to exercise all powers now or hereafter granted
or permitted by applicable law, including the powers
specified in the New York Business Corporation Law.
The foregoing clauses shall be construed as objects and
powers as well as purposes, and it is hereby expressly
provided that enumeration herein of specific purposes,
objects and powers shall not be held to limit or restrict
in any way the general powers of the Corporation.
Third: The aggregate number of shares which the Corporation
shall have authority to issue is 301,500,000 divided into 100,000
shares of 4% Cumulative Preferred Stock of the par value of $100 per
share (hereinafter called "Preferred Stock"), 1,400,000 shares of
Series Preferred Stock of the par value of $1 per share (hereinafter
called "Series Preferred Stock") and 300,000,000 shares of Common
Stock of the par value of $1 per share (hereinafter called "Common
Stock"). All of such shares shall be issued as full-paid and
non-assessable shares, and the holders thereof shall not be liable
for any further payments in respect thereto.
The Series Preferred Stock shall rank subordinate to the
Preferred Stock in respect of the payment of dividends and on any
distribution upon dissolution, liquidation or winding up of the
Corporation, and in respect of the rights of the Preferred Stock.
A statement of the designations, preferences, privileges and
voting powers of the shares of each class and the restrictions and
qualifications thereof shall be as follows:
(a) PREFERRED STOCK
1. DIVIDENDS: The holders of the Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors,
out of the assets or funds of the Corporation legally available
therefor, dividends at the fixed rate of four percent (4%) per annum
and no more, payable quarterly on the thirtieth day of March, June,
September and December of each year (the periods between such dates,
commencing on such dates, being herein designated as "dividend
periods"). Dividends on the Preferred Stock shall be cumulative from
and after the first day of April, 1942. Such dividends on the
Preferred Stock shall be declared and paid or set apart for payment
before any dividends shall be declared or paid or set apart for
payment on the Series Preferred Stock or the Common Stock and shall
be cumulative as above provided, so that if in any quarterly dividend
period dividends at the rate of four percent (4%) per annum shall not
have been declared and paid or set apart for payment on all
outstanding shares of Preferred Stock for such quarterly dividend
period and all preceding quarterly dividend periods from and after
the first day of the quarterly dividend period from which dividends
are cumulative, then the aggregate deficiency shall be declared and
fully paid or set apart for payment, but without interest, before any
dividends shall be declared or paid or set apart for payment on the
Series Preferred Stock or the Common Stock.
After full cumulative dividends on all shares of Preferred Stock
outstanding shall have been declared and paid or set apart for
payment for all previous dividend periods and for the current
quarterly dividend period, as above provided, then, and not otherwise
so long as any shares of the Preferred Stock shall remain
outstanding, dividends may be declared and paid or set apart for
payment on the Series Preferred Stock and the Common Stock out of the
assets or funds of the Corporation legally available therefor.
2. VOTING RIGHTS: The holders of the Preferred Stock shall be
entitled to one vote for each share held. So long as the Preferred
Stock shall be outstanding, the Corporation shall not, without the
affirmative vote or written consent of the holders of at least
two-thirds (2/3) thereof, amend the Certificate of Incorporation of
the Corporation in such manner as to alter or change the preferences,
special rights or powers of the Preferred Stock so as to affect such
class of stock adversely, or to increase or decrease the amount of
the authorized stock of such class or to increase or decrease the par
value thereof. At any time when six (6) quarterly dividends on such
Preferred Stock shall be in default, the holders of the Preferred
Stock at such time or times outstanding shall be entitled, at the
next annual meeting of stockholders for the election of directors,
and until payment in full of all such dividends then in default, or
provision therefor by the declaration and setting aside thereof,
voting as a class, to the exclusion of the holders of the Common
Stock and the holders of the Series Preferred Stock to vote for and
elect two members of the Board of Directors of the Corporation; and,
subject to any voting rights with respect to any series of Series
Preferred Stock, the holders of the Common Stock, voting as a class,
to the exclusion of the holders of Preferred Stock, shall be entitled
to vote for and elect the balance of the Board of Directors.
Directors elected by any class of stock voting separately as a class,
may be removed only by a majority vote of such class, voting
separately as a class, so long as the voting power of such class
shall continue.
3. LIQUIDATION: The holders of the Preferred Stock, upon any
dissolution, liquidation or winding up of the Corporation, will be
entitled to receive, out of the assets and funds of the Corporation,
whether from capital or surplus, if such dissolution, liquidation or
winding up be voluntary, $110 per share, or if such dissolution,
liquidation or winding up be involuntary, $100 per share, in either
case with an amount equal to all accrued and unpaid dividends, before
any distribution is made to the holders of Series Preferred Stock or
the Common Stock.
If, upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation shall
be insufficient to permit the payment in full of the amounts payable
as aforesaid to the holders of the Preferred Stock, then, to the
exclusion of the holders of the Series Preferred Stock and the
holders of the Common Stock, the holders of the Preferred Stock shall
share ratably, in proportion to the amounts which they are
respectively entitled to receive in such event, in the distribution
of assets, according to the number of shares of Preferred Stock which
they respectively hold.
4. REDEMPTION: The Preferred Stock shall be subject to
redemption in whole or in part at any time and from time to time at
the option of the Corporation upon payment of $110 per share and in
addition thereto a sum equal to all accrued and unpaid dividends
thereon to the date fixed for redemption, provided, however, that a
notice specifying the shares to be redeemed, and the time and place
of redemption (and, if less than the total outstanding shares are to
be redeemed, specifying the certificate numbers and number of shares
to be redeemed) shall be published once in a daily newspaper printed
in the English language and published and of general circulation in
the Borough of Manhattan, the City of New York, and shall be mailed,
addressed to the holders of record of the Preferred Stock to be
redeemed at their respective addresses as the same shall appear upon
the books of the Corporation, not less than thirty (30) days previous
to the date fixed for redemption. If less than the whole amount of
outstanding Preferred Stock is to be redeemed, the shares to be
redeemed shall be selected by lot or pro rata in any manner
determined by resolution of the Board of Directors to be fair and
proper. From and after the date fixed in any such notice as the date
of redemption (unless default shall be made by the Corporation in
providing moneys at the time and place of redemption for the payment
of the redemption price) all dividends upon the Preferred Stock so
called for redemption shall cease to accrue, and all rights of the
holders of said Preferred Stock as stockholders of the Corporation,
except the right to receive the redemption price upon surrender of
the certificates representing the Preferred Stock so called for
redemption, duly endorsed for transfer, if required, shall cease and
determine. With respect to any shares of Preferred Stock so called
for redemption, if, before the redemption date, the Corporation shall
deposit with a bank or trust company in the Borough of Manhattan,
City of New York, having a capital and surplus of at least $5,000,000
funds necessary for such redemption, in trust, to be applied to the
redemption of the shares of Preferred Stock so called for redemption,
then from and after the date of such deposit, all rights of the
holders of such shares of Preferred Stock, so called for redemption,
shall cease and determine, except the right to receive, on and after
the redemption date, the redemption price upon surrender of the
certificates representing such shares of Preferred Stock, so called
for redemption, duly endorsed for transfer, if required. Any interest
accrued on such funds shall be paid to the Corporation from time to
time. Any funds so deposited and unclaimed at the end of six (6)
years from such redemption date shall be released or repaid to the
Corporation, after which the holders of such shares of Preferred
Stock so called for redemption shall look only to the Corporation for
payment of the redemption price.
(b) SERIES PREFERRED STOCK
1. BOARD AUTHORITY: The Series Preferred Stock may be issued
from time to time by the Board of Directors as herein provided in one
or more series. The designations, relative rights, preferences and
limitations of the Series Preferred Stock, and particularly of the
shares of each series thereof, may be similar to or may differ from
those of any other series. The Board of Directors of the Corporation
is hereby expressly granted authority, subject to the provisions of
this ARTICLE THIRD, to issue from time to time Series Preferred Stock
in one or more series and to fix from time to time before issuance
thereof, by filing a certificate pursuant to the Business Corporation
Law, the number of shares in each such series of such class and all
designations, relative rights (including the right to convert into
shares of any class or into shares of any series of any class),
preferences and limitations of the shares in each such series,
including but without limiting the generality of the foregoing, the
following:
(i) The number of shares to constitute such series (which
number may at any time, or from time to time, be increased or
decreased by the Board of Directors, notwithstanding that shares
of the series may be outstanding at the time of such increase or
decrease, unless the Board of Directors shall have otherwise
provided in creating such series) and the distinctive
designation thereof;
(ii) The dividend rate on the shares of such series, and the
date or dates, if any, from which dividends thereon shall be
cumulative;
(iii) Whether or not the shares of such series shall be
redeemable, and, if redeemable, the date or dates upon or after
which they shall be redeemable, the amount per share (which
shall be, in the case of each share, not less than its
preference upon involuntary liquidation, plus an amount equal to
all dividends thereon accrued and unpaid, whether or not earned
or declared) payable thereon in the case of the redemption
thereof, which amount may vary at different redemption dates;
(iv) The right, if any, of holders of shares of such series
to convert the same into, or exchange the same for Common Stock,
and the terms and conditions of such conversion or exchange, as
well as provisions for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
(v) The amount per share payable on the shares of such series
upon the voluntary and involuntary liquidation, dissolution or
winding up of the Corporation;
(vi) Whether the holders of shares of such series shall have
voting power, full or limited, in addition to the voting powers
provided by law, and in case additional voting powers are
accorded to fix the extent thereof; and
(vii) Generally to fix the other rights and privileges and
any qualifications, limitations or restrictions of such rights
and privileges of such series, provided, however, that no such
rights, privileges, qualifications, limitations or restrictions
shall be in conflict with the Certificate of Incorporation of
the Corporation or with the resolution or resolutions adopted by
the Board of Directors, as hereinabove provided, providing for
the issue of any series for which there are shares then
outstanding.
All shares of Series Preferred Stock of the same series shall be
identical in all respects, except that shares of any one series
issued at different times may differ as to dates, if any, from which
dividends thereon may accumulate or accrue. All shares of Series
Preferred Stock of all series shall be of equal rank and shall be
identical in all respects except that to the extent not otherwise
limited in this ARTICLE THIRD any series may differ from any other
series with respect to any one or more of the designations, relative
rights, preferences and limitations described or referred to in
subparagraphs (I) to (vii) inclusive above.
2. DIVIDENDS: Dividends on the outstanding Series Preferred
Stock of each series shall be declared and paid or set apart for
payment before any dividends shall be declared and paid or set apart
for payment on the Common Stock with respect to the same quarterly
dividend period. Dividends on any shares of Series Preferred Stock
shall be cumulative only if and to the extent set forth in a
certificate filed pursuant to law. After dividends on all shares of
Series Preferred Stock (including cumulative dividends if and to the
extent any such shares shall be entitled thereto) shall have been
declared and paid or set apart for payment with respect to any
quarterly dividend period, and subject to the provisions of the
Preferred Stock with respect to dividends as above provided, then and
not otherwise so long as any shares of the Preferred Stock or Series
Preferred Stock shall remain outstanding, dividends may be declared
and paid or set apart for payment with respect to the same quarterly
dividend period on the Common Stock out of the assets or funds of the
Corporation legally available therefor.
All shares of Series Preferred Stock of all series shall be of
equal rank, preference and priority as to dividends irrespective of
whether or not the rates of dividends to which the same shall be
entitled shall be the same and when the stated dividends are not paid
in full, the shares of all series of the Series Preferred Stock shall
share ratably in the payment thereof in accordance with the sums
which would be payable on such shares if all dividends were paid in
full, provided, however, that any two or more series of the Series
Preferred Stock may differ from each other as to the existence and
extent of the right to cumulative dividends, as aforesaid.
3. VOTING RIGHTS: Except as otherwise specifically provided
herein or in the certificate filed pursuant to law with respect to
any series of the Series Preferred Stock, or as otherwise provided by
law, the Series Preferred Stock shall not have any right to vote for
the election of directors or for any other purpose and the Preferred
Stock and the Common Stock shall have the exclusive right to vote for
the election of directors and for all other purposes; provided,
however, that at any time when six (6) quarterly dividends on any one
or more series of Series Preferred Stock entitled to receive
cumulative dividends shall be in default, the holders of all such
cumulative series at the time or times outstanding as to which such
default shall exist shall be entitled, at the next annual meeting of
stockholders for the election of directors, voting as a class,
whether or not the holders thereof shall be entitled otherwise to
vote by certificate filed pursuant to law, to the exclusion of the
holders of Common Stock, Preferred Stock and any series of
noncumulative Series Preferred Stock, to vote for and elect two (2)
members of the Board of Directors of the Corporation, and provided,
further, that at any time when six (6) quarterly dividends on any one
or more series of noncumulative Series Preferred Stock shall be in
default, the holders of all such noncumulative series at the time or
times outstanding as to which such default shall exist shall be
entitled, at the next annual meeting of stockholders for the election
of directors, voting as a class, whether or not the holders thereof
shall be entitled otherwise to vote by certificate filed pursuant to
law, to the exclusion of the holders of Common Stock, Preferred Stock
and any series of cumulative Series Preferred Stock, to vote for and
elect two (2) members of the Board of Directors of the Corporation.
All rights of all series of Series Preferred Stock to participate in
the election of directors pursuant to this paragraph 3 shall continue
in effect, in the case of all series thereof entitled to receive
cumulative dividends, until cumulative dividends have been paid in
full or set apart for payment on each cumulative series which shall
have been entitled to vote at the previous annual meeting of
stockholders, or in the case of all series of noncumulative Series
Preferred Stock, until noncumulative dividends have been paid in full
or set apart for payment for four consecutive quarterly dividend
periods on each noncumulative series which shall have been entitled
to vote at the previous annual meeting of stockholders. Directors
elected by any class of stock, voting separately as a class, may be
removed only by a majority vote of such class, voting separately as a
class, so long as the voting power of such class shall continue.
Subject to the voting rights of the Preferred Stock and the voting
rights, if any, specifically provided in a certificate filed pursuant
to law in respect of any series of Series Preferred Stock, the
holders of the Common Stock, voting as a class, to the exclusion of
the holders of such series so entitled to vote for and elect members
of the Board pursuant to this paragraph 3, shall be entitled to vote
for and elect the balance of the Board of Directors.
Each stockholder entitled to vote at any particular time in
accordance with the foregoing provisions shall not have more than one
vote for each share of stock held of record by him and at the time
entitled to voting rights.
4. LIQUIDATION: In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, each
series of Series Preferred Stock shall have preference and priority
over the Common Stock for payment of the amount to which each
outstanding series of Series Preferred Stock shall be entitled in
accordance with the provisions thereof and each holder of Series
Preferred Stock shall be entitled to be paid in full such amounts, or
have a sum sufficient for the payment in full set aside, before any
payments shall be made to the holders of Common Stock, provided,
however, that each holder entitled to receive any preferential
amounts provided by certificate filed pursuant to law with respect to
any series of the Series Preferred Stock shall not be entitled to
receive for each share so held, if such liquidation, dissolution or
winding up be voluntary, more than $55.00 per share, or if such
liquidation, dissolution or winding up be involuntary, more than
$50.00 per share plus in either case an amount equal to all dividends
thereon accrued and unpaid. If, upon liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation or
proceeds thereof, distributable among the holders of the shares of
all series of the Series Preferred Stock, shall be insufficient to
pay in full the preferential amount aforesaid, then such assets, or
the proceeds thereof, shall be distributed among such holders ratably
in accordance with the respective amounts which would be payable if
all amounts payable thereon were paid in full. After the payment to
the holders of Series Preferred Stock of all such amounts to which
they are entitled, as above provided, and subject to rights with
respect to the Preferred Stock upon any such liquidation, dissolution
or winding up as above provided, the remaining assets and funds of
the Corporation shall be divided and paid to the holders of the
Common Stock.
5. REDEMPTION: In the event that the Series Preferred Stock of
any series shall be made redeemable as provided in clause (iii) of
paragraph 1 of section (b) of this ARTICLE THIRD, the Corporation, at
the option of the Board of Directors, may redeem at any time or
times, and from time to time, all or any part of any one or more
series of Series Preferred Stock outstanding upon notice duly given
as hereinafter specified, by paying for each share the then
applicable redemption price fixed by the Board of Directors
(including an amount equal to accrued and unpaid dividends to the
date fixed for redemption); provided, however, that a notice
specifying the shares to be redeemed, and the time and place of
redemption (and, if less than the total outstanding shares are to be
redeemed, specifying the certificate numbers and number of shares to
be redeemed) shall be published once in a daily newspaper printed in
the English language and published and of general circulation in the
Borough of Manhattan, The City of New York, and shall be mailed,
addressed to the holders of record of the Series Preferred Stock to
be redeemed at their respective addresses as the same shall appear
upon the books of the Corporation, not less than thirty (30) days
previous to the date fixed for redemption. If less than the whole
amount of any outstanding series of Series Preferred Stock is to be
redeemed, the shares of such series to be redeemed shall be selected
by lot or pro rata in any manner determined by resolution of the
Board of Directors to be fair and proper. From and after the date
fixed in any such notice as the date of redemption (unless default
shall be made by the Corporation in providing moneys at the time and
place of redemption for the payment of the redemption price) all
dividends upon the Series Preferred Stock so called for redemption
shall cease to accrue, and all rights of the holders of said Series
Preferred Stock as stockholders in the Corporation, except the right
to receive the redemption price upon surrender of the certificate
representing the Series Preferred Stock so called for redemption,
duly endorsed for transfer, if required, shall cease and determine.
With respect to any shares of Series Preferred Stock so called for
redemption, if, before the redemption date, the Corporation shall
deposit with a bank or trust company in the Borough of Manhattan, The
City of New York, having a capital and surplus of at least
$5,000,000, funds necessary for such redemption, in trust, to be
applied to the redemption of the shares of Series Preferred Stock so
called for redemption, then from and after the date of such deposit,
all rights of the holders of such shares of Series Preferred Stock so
called for redemption shall cease and determine, except the right to
receive, on and after the redemption date, the redemption price upon
surrender of the certificates representing such shares of Series
Preferred Stock so called for redemption, duly endorsed for transfer,
if required. Any interest accrued on such funds shall be paid to the
Corporation from time to time. Any funds so deposited and unclaimed
at the end of six (6) years from such redemption date shall be
released and repaid to the Corporation, after which the holders of
such shares of Series Preferred Stock so called for redemption shall
look only to the Corporation for payment of the redemption price.
Notwithstanding the foregoing, no redemption of any shares of any
series of Series Preferred Stock shall be made by the Corporation (1)
which as of the date of mailing of the notice of such redemption
would, if such date were the date fixed for redemption, reduce the
net assets of the Corporation remaining after such redemption below
the aggregate amount payable upon voluntary or involuntary
liquidation, dissolution or winding up to the holders of shares
having rights senior or equal to the Series Preferred Stock in the
assets of the Corporation upon liquidation, dissolution or winding
up; or (2) unless all cumulative dividends for the current and all
prior dividend periods have been declared and paid or declared and
set apart for payment on all shares of the Corporation having a right
to cumulative dividends; or (3) at a redemption price in excess of
$55.00 per share plus all accrued and unpaid dividends thereon to the
date fixed for redemption. No sinking funds shall be created for the
redemption, purchase or reacquisition otherwise of any shares of any
series of Series Preferred Stock not called for redemption as above
provided.
(c) COMMON STOCK
1. DIVIDENDS: Subject to all of the rights of the Preferred
Stock and the Series Preferred Stock, dividends may be declared and
paid or set apart for payment upon the Common Stock out of any assets
or funds of the Corporation legally available for the payment of
dividends.
2. VOTING RIGHTS: Except as otherwise expressly provided with
respect to the Preferred Stock and the Series Preferred Stock or with
respect to any series of the Series Preferred Stock, the Preferred
Stock and the Common Stock shall have the exclusive right to vote for
the election of directors and for all other purposes, each holder of
the Preferred Stock and the Common Stock being entitled to one vote
for each share thereof held.
3. LIQUIDATION: Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, and after the
holders of the Preferred Stock and holders of the Series Preferred
Stock of each series shall have been paid in full the amounts to
which they respectively shall be entitled, or an amount sufficient to
pay the aggregate amount to which the holders of the Preferred Stock
and the Series Preferred Stock of each series shall be entitled shall
have been deposited with a bank or trust company having its principal
office in the Borough of Manhattan, The City of New York, and having
a capital, surplus and undivided profits of at least Twenty-Five
Million Dollars ($25,000,000) as a trust fund for the benefit of the
holders of such Preferred Stock and Series Preferred Stock, the
remaining net assets of the Corporation shall be distributed pro rata
to the holders of the Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of
such Preferred Stock, and Series Preferred Stock.
(d) GENERAL PROVISIONS
Shares of Preferred Stock of the Corporation redeemed as
hereinabove provided shall be deemed retired and extinguished and may
not be reissued.
A consolidation or merger of the Corporation with or into
another corporation or corporations or a sale, whether for cash,
shares of stock, securities or properties, of all or substantially
all of the assets of the Corporation shall not be deemed or construed
to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Article.
No holder of Common Stock, Preferred Stock or Series Preferred
Stock of the Corporation shall be entitled, as such, as a matter of
right, to subscribe for or purchase any part of any new or additional
issue of stock of any class or series whatsoever or of securities
convertible into stock of any class whatsoever, whether now or
hereafter authorized and whether issued for cash or other
consideration, or by way of dividend.
FOURTH: The office of the Corporation shall be located in the
City, County and State of New York. The address to which the
Secretary of State shall mail a copy of process in any action or
proceeding against the Corporation which may be served upon him is
7733 Forsyth Boulevard, St. Louis, Missouri 63105.
FIFTH: The duration of the Corporation shall be perpetual.
SIXTH: The Secretary of State of New York is designated as the
agent of the Corporation upon whom process in any action or
proceeding against it may be served. In addition, CT Corporation
System, 1633 Broadway, New York, New York 10019, is designated as the
registered agent of the Corporation upon whom process in any action
or proceeding against it may be served.
SEVENTH: The following provisions are inserted for the
regulation and conduct of the affairs of the Corporation, and it is
expressly provided that they are intended to be in furtherance and
not in limitation or exclusion of the powers conferred by statute.
(a) The Board of Directors may by resolution passed by
two-thirds of the whole Board designate three or more of its
number to constitute an Executive Committee, which shall have and
exercise, subject to such limitations, if any, as may be
prescribed by the By-Laws or by resolution of the Board of
Directors, the powers of the Board of Directors in the management
of the business and affairs of the Corporation, provided such
Executive Committee shall act only at such times as the Board of
Directors is not in session and in no case to the exclusion of the
right of the Board of Directors at any time to act as a Board upon
any business of the Corporation.
(b) Subject to the provisions of the By-Laws, meetings of the
stockholders and directors of the Corporation for all purposes may
be held at any place within the State of New York and, unless
otherwise provided by law, at any place without such State.
(c) All corporate powers, including the sale, mortgage,
hypothecation and pledge of the whole or any part of the corporate
property, shall be exercised by the Board of Directors, except as
otherwise expressly provided by law.
(d) The Board of Directors is hereby expressly authorized to
apply in its discretion such portion of the net income of the
Corporation as it deems advisable to the redemption or purchase
for retirement of the Preferred Stock at an amount not exceeding
the redemption price thereof, whether or not there are dividends
in arrears on the Preferred Stock and whether or not any dividends
have been paid on the Common Stock.
(e) The Corporation may have one or more offices within or
without the State of New York and may keep the books of the
Corporation, subject to the provisions of the laws of the State of
New York, at such place or places within or without the State of
New York as the Board of Directors shall from time to time
determine.
(f) The Board of Directors shall from time to time decide
whether and to what extent and at what times and under what
conditions and requirements the accounts and books of the
Corporation, or any of them, except the stock book, shall be open
to the inspection of the stockholders, and no stockholder shall
have any right to inspect any books or documents of the
Corporation except as conferred by the laws of the State of New
York or authorized by the Board of Directors.
(g) A director of the Corporation shall not, in the absence of
fraud, be disqualified by his office from dealing with or
contracting with the Corporation either as vendor, purchaser or
otherwise, nor, in the absence of fraud, shall any transaction or
contract of the Corporation be void or voidable or affected by
reason of the fact that any director or any firm, of which any
director is a member, or any corporation, of which the director is
an officer, director or stockholder, is in any way interested in
such transaction or contract; provided that at the meeting of the
Board of Directors or of the Committee thereof having authority in
the premises to authorize or confirm said contract or transaction,
the interest of such director, firm or corporation is disclosed or
known, and there shall be present a quorum of directors or of the
directors constituting such Committee not so interested or
connected, and such contract or transaction shall be approved by a
majority of such quorum, which majority shall consist of directors
not so interested or connected. Nor shall any director or
directors so interested or connected be liable to the Corporation
or to any stockholders or creditor thereof or to any other person
for any loss incurred by it under or by reason of any such
contract or transaction. Nor shall any such director or directors
be accountable for any gains or profits realized thereon; always
provided, however, that such contract or transaction shall at the
time it was entered into have been a reasonable one to have been
entered into and shall have been upon terms that at the time were
fair.
(h) Any contract, transaction or act of the Corporation or of
the Board of Directors or of the Executive Committee or of any
other duly constituted committee and of which disclosure shall be
made in the notice of the meeting and which shall be approved or
ratified by a majority in interest of a quorum of the stockholders
of the Corporation having voting power at any annual or any
special meeting called for such purpose shall, except as otherwise
specifically provided herein or provided by the laws of the State
of New York, be as valid and as binding as though approved or
ratified by every stockholder of the Corporation; provided,
however, that any failure of the Stockholders to approve or ratify
such contract, transaction or act, when and if submitted, shall
not be deemed in any way to invalidate the same or to deprive the
Corporation, its directors or officers of their right to proceed
with such contract, transaction or action. Any director of the
Corporation may vote upon any contract or other transaction
between the Corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a
director of such subsidiary or affiliated corporation.
(i) The Board of Directors shall have power from time to time
to fix and to determine and vary the amount of the working capital
of the Corporation, and to direct and determine the use and
disposition of any surplus or net profits over and above the
capital stock paid in; and in its discretion the Board of
Directors may use and apply any such surplus or accumulated
profits in purchasing or acquiring bonds or other obligations of
the Corporation, to such extent and in such manner and upon such
terms as the Board of Directors shall deem expedient.
(j) Directors may be removed at any time by a majority vote of
the stockholders entitled to vote, except that directors elected
by any class of stock, voting separately as a class, may be
removed only by a majority vote of such class, voting separately
as a class, so long as the voting power of such class shall
continue.
(k) A person who is or was a director of the Corporation shall
not be liable to the Corporation or its stockholders for damages
for any breach of duty in such capacity occurring after the
adoption of this paragraph (k), except that the foregoing
provisions shall not eliminate or limit liability where such
liability is imposed, from time to time, by the law of New York
State, provided, however, that nothing in this paragraph shall
directly or indirectly increase the liability of any such person
based upon acts or omissions occurring before the adoption hereof.
EIGHTH: The Corporation hereby reserves the right to amend,
alter, change or repeal any provision contained in this Certificate
of Incorporation as now stated and as hereafter amended, altered or
changed in the manner now or hereafter prescribed by the laws of the
State of New York, and all rights and powers conferred by this
Certificate of Incorporation on stockholders, directors, or officers
of the Corporation are hereby granted subject to this reservation;
provided that the provisions of this Certificate of Incorporation, as
so amended, changed, altered or repealed, shall contain such
provisions as shall be lawful.
NINTH: The number of directors of the Corporation, exclusive of
directors, if any, to be elected by the holders of 4% Cumulative
Preferred Stock or the holders of one or more series of Series
Preferred Stock pursuant to the provisions of Paragraph 2 of Section
(a) or Paragraph 3 of Section (b), respectively, of ARTICLE THIRD
herein, shall be not less than ten nor more than sixteen. Subject to
such limitation, such number may be fixed by the By-Laws, or by
action of the stockholders or of the Board under the specific
provisions of a By-Law adopted by the stockholders. The directors of
the Corporation shall be divided into three classes as nearly equal
in number as possible. There shall be at least three directors in
each class. The term of office of the first class shall expire at the
first annual meeting of stockholders succeeding the initial
classification of directors, the term of the office of the second
class shall expire at the second annual meeting succeeding such
classification and that of the third class at the third annual
meeting succeeding such classification. At each annual meeting,
directors to replace those whose terms expire at such annual meeting
shall be elected to hold office until the third succeeding annual
meeting. If the number of directors is changed, any newly created
directorships or decrease in directorships shall be so apportioned
among the classes as to make all classes as nearly equal in number as
possible. If the number of directors is increased by the Board of
Directors and any newly created directorships are filled by the
Board, there shall be no classification of the additional directors
until the next annual meeting of stockholders. Notwithstanding the
foregoing, if the holders of 4% Cumulative Preferred Stock or the
holders of one or more series of Series Preferred Stock shall become
entitled to elect two members of the Board pursuant to the provisions
of Paragraph 2 of Section (a) or Paragraph 3 of Section (b),
respectively, of ARTICLE THIRD herein, the terms of all members of
the Board of Directors previously elected shall expire at the time of
such election and the entire Board of Directors shall be elected in
the manner specified in said Paragraph 2 of Section (a) or said
Paragraph 3 of Section (b) of ARTICLE THIRD, each director to serve
until the next meeting of stockholders at which directors are
elected; and whenever neither the holders of the 4% Cumulative
Preferred Stock nor the holders of any series of Series
Preferred Stock is any longer entitled to vote for the election of
two directors as provided in said Paragraph 2 of Section (a) or said
Paragraph 3 of Section (b) of ARTICLE THIRD, the directors shall be
elected at the next annual meeting of stockholders held for such
purpose in the manner provided in the first eight sentences of this
ARTICLE. Subject to the foregoing, at each annual meeting of
stockholders the successors to the class of directors whose term
shall then expire shall be elected to hold office for a term of three
years. No amendment to the Certificate of Incorporation of the
Corporation shall amend, alter, change or repeal any of the
provisions of this ARTICLE NINTH unless the amendment effecting such
amendment, alteration, change or repeal shall receive the affirmative
vote of the holders of two-thirds of the shares of all classes of
stock of the Corporation entitled to vote in elections of directors,
considered for the purposes of this ARTICLE NINTH as one class.
TENTH: (a) The affirmative vote of the holders of not less than
a majority of the Voting Stock (as hereinafter defined) of the
Corporation shall be required before the Corporation may purchase any
outstanding shares of Common Stock of the Corporation at a price
known by the Corporation to be above Market Price (as hereinafter
defined) from a person known by the Corporation to be a Selling
Shareholder (as hereinafter defined), unless the purchase is made by
the Corporation on the same terms and as a result of a duly
authorized offer to purchase any and all of the outstanding shares of
Common Stock of the Corporation.
(b) For purposes of ARTICLE TENTH:
(1) The term "Voting Stock" shall mean the outstanding shares
of stock of the Corporation entitled to vote in elections of
directors of the Corporation considered as one class.
(2) The majority vote required by Section (a), when
applicable, shall be in addition to any lesser vote or no vote
required or permitted by law or this Certificate of
Incorporation exclusive of this Article Tenth and the shares of
the Selling Shareholder shall, for this purpose, be counted as
having abstained regardless of how they have been voted.
(3) The term "Market Price" shall mean the highest closing
sale price, during the 30-day period immediately preceding the
date in question, of a share of the Common Stock of the
Corporation on the Composite Tape for New York Stock Exchange
Issues, or, if such stock is not quoted on the Composite Tape or
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.
(4) The term "Selling Shareholder" shall mean and include any
person who or which is the beneficial owner of in the aggregate
more than three percent of the outstanding shares of Common
Stock of the Corporation and who or which has purchased or
agreed to purchase any of such shares within the most recent
two-year period.
(5) A "person" shall mean any individual, firm, partnership,
corporation or other entity.
(6) A person shall be the "beneficial owner" of any shares of
Common Stock of the Corporation:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns,
directly or indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right
is conditional or 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 (b)
the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) 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 thereof.
(7) The terms "Affiliate" and "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 July 1, 1984.
(8) For the purposes of determining whether a person is a
Selling Shareholder, the number of shares of Common Stock deemed
to be outstanding and the number of shares beneficially owned by
the person shall include shares respectively deemed owned
through application of paragraph (6) of this Section (b) but
shall not include any other shares of Common Stock which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants
or options, or otherwise, or shares of the Selling Shareholder
whose acquisition of more than three percent of the outstanding
shares of Common Stock of the Corporation within the most recent
two-year period results from other than a purchase or agreement
to purchase or vote shares of the Corporation.
(9) Nothing contained in this ARTICLE TENTH shall be construed
to relieve any Selling Shareholder from any fiduciary obligation
imposed by law.
(10) The Board of Directors of the Corporation shall have the
power to determine the application of or compliance with this
ARTICLE TENTH, including, without limitation, (1) whether a
person is a Selling Shareholder; (2) whether a person is an
Affiliate or Associate of another; (3) whether Section (a) is or
has become applicable in respect of a proposed transaction;
(4) what is the Market Price and whether a price is above Market
Price; and (5) when or whether a purchase or agreement to
purchase any share or shares of Common Stock of the Corporation
has occurred and when or whether a person has become a
beneficial owner of any share or shares of Common Stock of the
Corporation. Any decision or action taken by the Board of
Directors arising out of or in connection with the construction,
interpretation and effect of this ARTICLE TENTH shall lie within
their absolute discretion and shall be conclusive and binding
except in circumstances involving bad faith.
ELEVENTH: Section 1. VOTE REQUIRED FOR CERTAIN BUSINESS
COMBINATIONS.
A. HIGHER VOTE FOR CERTAIN BUSINESS COMBINATIONS. In addition
to any affirmative vote required by law or this Certificate of
Incorporation, and except as otherwise expressly provided in
Section 2 of this ARTICLE ELEVENTH, any transaction or contract
which involves or includes:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Shareholder (as hereinafter defined) or (b) any other
corporation (whether or not itself an Interested Shareholder)
which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested Shareholder;
or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder or any
Affiliate of any Interested Shareholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value of $50,000,000 or more; or
(iii) 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 Shareholder or any Affiliate of any Interested
Shareholder in exchange for cash, securities (to the extent the
acquisition thereof does not come within the requirements of
Article Tenth) or other property (or a combination thereof)
having an aggregate Fair Market Value of $50,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of
any Interested Shareholder or any Affiliate of any Interested
Shareholder; or
(v) 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 Shareholder) which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
Equity Security (as hereinafter defined) of the Corporation or
any Subsidiary which is directly or indirectly owned by any
Interested Shareholder or any Affiliate of any Interested
Shareholder:
shall require the affirmative vote of the holders of at least 80%
of the voting power of the then outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors (the "Voting Stock"), voting together as a
single class. 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 this Certificate of
Incorporation exclusive of this ARTICLE ELEVENTH.
B. DEFINITION OF "BUSINESS COMBINATION". The term "Business
Combination" used in this ARTICLE ELEVENTH shall mean any
transaction or contract which is referred to in any one or more of
clauses (I) through (v) of Paragraph A of this Section 1.
Section 2. WHEN HIGHER VOTE IS NOT REQUIRED
The provisions of Section 1 of this ARTICLE ELEVENTH 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 provision of this Certificate of Incorporation,
if all of the conditions specified in either of the following
Paragraphs A or B are met:
A. APPROVAL BY DIRECTORS. The Business Combination shall have
been approved by the Board of Directors in accordance with the
requirements of ARTICLE SEVENTH.
B. PRICE AND PROCEDURE REQUIREMENTS. All of the following
conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value
(as hereinafter defined), 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 the
following:
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Shareholder for any
shares of Common Stock acquired by it (1) within the two-year
period immediately prior to the first public announcement of
the terms of the proposed Business Combination (the
"Announcement Date") or (2) in the transaction in which it
became an Interested Shareholder, whichever is higher; or
(b) The Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter date
is referred to in this ARTICLE ELEVENTH as the "Determination
Date"), whichever is higher;
(ii) 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 shares of any other class of outstanding
Voting Stock shall be at least equal to the higher of the
following (it being intended that the requirements of this
paragraph B (ii) shall be required to be met with respect to
every class of outstanding Voting Stock, whether or not the
Interested Shareholder has previously acquired any shares of a
particular class of Voting Stock):
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Shareholder for any
shares of such class of Voting Stock acquired by it (1) within
the two-year period immediately prior to the Announcement Date
or (2) in the transaction in which it became an Interested
Shareholder, whichever is higher;
(b) (if applicable) the highest preferential amount per
share to which the holders of shares of such class of Voting
Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; and
(c) The Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the Determination
Date, whichever is higher.
(iii) 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
Shareholder has previously paid for shares of such class of
Voting Stock. If the Interested Shareholder 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. The price determined in accordance
with paragraph B (I) and B (ii) of this Section 2 shall be
subject to appropriate adjustment in the event of any stock
dividend, stock split, combination of shares or similar event.
(iv) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination: (a) except as approved by the Board of
Directors in accordance with the requirements of ARTICLE
SEVENTH, there shall have been no failure to declare and pay at
the regular date therefor any full quarterly dividends (whether
or not cumulative) on any outstanding stock having preference
over the Common Stock as to dividends or upon liquidation; (b)
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 the Board of Directors in accordance with the requirements of
ARTICLE SEVENTH, 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 the Board of Directors in accordance with the
requirements of ARTICLE SEVENTH; and such Interested Shareholder
shall not have become the beneficial owner of any additional
shares of Voting Stock or securities convertible into Voting
Stock except as part of the transaction which results in such
Interested Shareholder becoming an Interested Shareholder.
(v) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received
the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in anticipation
of or in connection with such Business Combination or otherwise.
(vi) 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 public shareholders 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).
Section 3. CERTAIN DEFINITIONS. For the purpose of this ARTICLE
ELEVENTH:
A. A "person" shall mean any individual, firm, corporation or
other entity.
B. "Interested Shareholder" shall mean any person (other than
the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of 20% or
more of the voting power of the outstanding Voting Stock; or
(ii) 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 20% or more
of the voting power of the then outstanding Voting Stock; or
(iii) 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 Shareholder, 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.
C. A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns directly or
indirectly; or
(ii) which such person or any of its Affiliates or Associates
has (a) 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 (b) the right to vote pursuant to any agreement,
arrangement or understanding; or
(iii) 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.
D. For the purpose of determining whether a person is an
Interested Shareholder pursuant to paragraph B of this Section 3,
the number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned through application of paragraph
C of this Section 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.
E. "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 July 1, 1984.
F. "Subsidiary" means any corporation of which a majority 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 Shareholder set forth in paragraph B of
this Section 3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of Equity Security
is owned, directly or indirectly, by the Corporation.
G. "Fair Market Value" means: (I) 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 issues, 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 of Directors in
good faith; and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by the Board of Directors in good faith.
H. In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash to
be received" as used in paragraphs B (I) and (ii) of Section 2 of
this ARTICLE ELEVENTH 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.
I. "Equity Security" shall have the meaning ascribed to such
term in Section 3(a)(11) of the Securities Exchange Act of 1934,
as in effect on July 1, 1984.
Section 4. POWERS OF THE BOARD OF DIRECTORS. The Board of
Directors, in accordance with the requirements of ARTICLE SEVENTH,
shall have the power to interpret all of the terms and provisions of
this ARTICLE ELEVENTH, including, without limitation, and on the
basis of information known to the Board after reasonable inquiry (a)
whether a person is an Interested Shareholder, (b) the number of
shares of Voting Stock beneficially owned by any person, (c) whether
a person is an Affiliate or Associate of another, (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 $50,000,000 or
more.
Section 5. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED
SHAREHOLDERS. Nothing contained in this ARTICLE ELEVENTH shall be
construed to relieve any Interested Shareholder from any fiduciary
obligation imposed by law.
Section 6. AMENDMENT, REPEAL, ETC. notwithstanding any other
provisions of this Certificate of Incorporation or the By-Laws (and
notwithstanding the fact that a lesser percentage may be specified by
law, this Certificate of Incorporation or the By-Laws or otherwise)
the affirmative vote or consent of the holders of 80% or more of the
outstanding Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provisions inconsistent
with, this ARTICLE ELEVENTH or any provision hereof.
VI: That the restatement of the Certificate of Incorporation
and the amendment to Article Fourth contained therein were authorized
by a vote of the majority of directors present at a meeting of the
Board at which a quorum was present.
IN WITNESS WHEREOF, we have made, subscribed and verified the
Certificate this 22nd day of June, 1994.
Mallinckrodt Group Inc.
/s/ C. RAY HOLMAN
- --------------------------
C. Ray Holman
President and
Chief Executive Officer
/s/ ROGER A. KELLER
- --------------------------
Roger A. Keller
Vice President, Secretary and
General Counsel
(CORPORATE SEAL)
State of Missouri )
)ss.:
County of St. Louis )
C. Ray Holman, being duly sworn, deposes and says that: he is
President and Chief Executive Officer of Mallinckrodt Group Inc., the
corporation named in and described in the foregoing certificate; he
has read the foregoing certificate and knows the contents thereof;
and the same is true of his own knowledge, except as to the matters
therein stated to be alleged upon information and belief, and as to
those matters he believes to be true.
/s/ C. RAY HOLMAN
- --------------------------
C. Ray Holman
Sworn to before me this _____ day of __________, 1994.
__________________________
Notary Public
My Commission Expires: _________________________.
Exhibit 3.1(b)
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MALLINCKRODT GROUP INC.
************************************
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
************************************
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MALLINCKRODT GROUP INC.
-----------------------------------------------------------
Under Section 805 of the Business Corporation Law
-----------------------------------------------------------
Pursuant to Section 805 of the Business Corporation Law, the
undersigned, C. Ray Holman, Chairman of the Board and Chief Executive
Officer, and Roger A. Keller, Vice President and Secretary, hereby
certify as follows:
I. The name of the Corporation is Mallinckrodt Group Inc.
II. The Certificate of Incorporation of the Corporation (under
the name of International Agricultural Corporation) was originally
file by the Department of State, Albany, New York, on the 14th day of
June, 1909.
III. The Certificate of Incorporation of the Corporation shall be
amended to change the name of the corporation, and to effect such
change, ARTICLE FIRST is hereby amended to read as follows:
FIRST: The name of the Corporation is Mallinckrodt Inc.
IV. This amendment to ARTICLE FIRST was authorized by the
unanimous affirmative vote of the Board of Directors of the
Corporation, followed by the affirmative vote of the holders of a
majority of the outstanding shares of the Corporation's 4% Cumulative
Preferred Stock and Common Stock voting as one class entitled to vote
thereon at the annual meeting of the stockholders of the Corporation
held on October 16, 1996.
IN WITNESS WHEREOF, we have made and subscribed the Certificate
this 16th day of October, 1996, and the Chairman of the Board and
Chief Executive Officer of the Corporation has also verified this
Certificate.
Mallinckrodt Group Inc.
/s/ C. RAY HOLMAN
----------------------
C. Ray Holman, Chairman
of the Board and Chief Executive
Officer
/s/ ROGER A. KELLER
-----------------------
Roger A. Keller, Vice President
and Secretary
(Corporate Seal)
STATE OF MISSOURI )
)
COUNTY OF ST. LOUIS )
C. Ray Holman, being duly sworn, deposes and says that he is
Chairman of the Board and Chief Executive Officer of Mallinckrodt
Group Inc., the corporation named and described in the foregoing
Certificate of Amendment; that he has read the foregoing Certificate
of Amendment and knows the contents thereof; and, that the same are
true of his own knowledge, except as to the matters therein stated to
be alleged upon information and belief, and as to those matters he
believes them to be true.
/s/ C. RAY HOLMAN
-------------------------
C. Ray Holman, Chairman of the Board
and Chief Executive Officer
Sworn to before me this
16th day of October, 1996
- ----------------------------
Notary Public
My commission expires:
Exhibit 3.1(c)
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MALLINCKRODT INC.
-------------------------------------------------------------
Under Section 805 of the Business Corporation Law
-------------------------------------------------------------
Pursuant to Section 805 of the Business Corporation Law, the
undersigned, C. Ray Holman, Chairman of the Board and Chief Executive
Officer, and Roger A. Keller, Vice President and Secretary, hereby
certify as follows:
I. The name of the Corporation is Mallinckrodt Inc.
II. The Certificate of Incorporation of the Corporation (under
the name of International Agricultural Corporation) was originally
filed by the Department of State, Albany, New York, on the 14th day
of June, 1909.
III. The Certificate of Incorporation of the Corporation shall
be amended to reduce the minimum required number of directors of the
Corporation from ten to eight, and to effect such change, ARTICLE
NINTH of the certificate of incorporation shall be amended by
revising the first four sentences to read as follows, with the
balance of the article remaining unchanged:
The number of directors of the Corporation, exclusive of
directors, if any, to be elected by the holders of 4%
Cumulative Preferred Stock or the holders of one or more series
of Series Preferred Stock pursuant to the provisions of
Paragraph 2 of Section (a) or Paragraph 3 of Section (b) ,
respectively, of ARTICLE THIRD herein, shall be not less than
eight nor more than sixteen. Subject to such limitation, such
number may be fixed by the By-Laws, or by action of the
stockholders or of the Board under the specific provisions of a
By-Law adopted by the stockholders. The directors of the
Corporation shall be divided into three classes as nearly equal
in number as possible. There shall be at least two directors
in each class.
IV. This amendment to Article Ninth was authorized by the
unanimous affirmative vote of the Board of Directors of the
Corporation, followed by the affirmative vote of the holders of more
than two-thirds of the outstanding shares of the Corporation's 4%
Cumulative Preferred Stock and Common Stock voting as one class
entitled to vote thereon at the annual meeting of the stockholders of
the Corporation held on October 21, 1998.
IN WITNESS WHEREOF, we have made and subscribed the Certificate
of Amendment this 30 day of October, 1998, and the Chairman of the
Board and Chief Executive Officer of the Corporation has also
verified this Certificate.
MALLINCKRODT INC.
(CORPORATE SEAL)
/s/ C. RAY HOLMAN
------------------------------------
C. Ray Holman, Chairman of the Board
and Chief Executive Officer
/s/ ROGER A. KELLER
------------------------------------
Roger A. Keller, Vice President
and Secretary
STATE OF MISSOURI )
) ss
COUNTY OF ST. LOUIS )
C. Ray Holman, being duly sworn, deposes and says that he is
Chairman of the Board and Chief Executive Officer of Mallinckrodt
Inc., the corporation named and described in the foregoing
Certificate of Amendment; that he has read the foregoing Certificate
of Amendment and knows the contents thereof; and that the same are
true of his own knowledge, except as to the matters therein stated to
be alleged upon information and belief, and as to those matters he
believes them to be true.
/s/ C. RAY HOLMAN
------------------------------------
C. Ray Holman, Chairman of the Board
and Chief Executive Officer
Sworn to before me this
30 day of October, 1998
- ---------------------------
Notary Public
My commission expires:
Exhibit 3.2
BY-LAWS OF MALLINCKRODT GROUP INC.
- ---------------------------------------------------------------------
(As Amended through April 15, 1992)
Article I
---------
Meetings of Stockholders
Section 1. The Annual meeting of Stockholders of this Corporation for
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the election of directors and the transaction of such other business
as may properly come before the meeting shall be held on such day in
September, October or November of each year and at such place and
hour as may be fixed by the Board of Directors prior to the giving of
the notice of the date, place and object of such meeting, or if no
other date, place and hour has been so fixed, on the third Wednesday
in October and in the office of the Corporation, 421 East Hawley
Street, Mundelein, Illinois 60060, at 10:00 o'clock a.m. Chicago
time. Notice of the time, place and object of such meeting shall be
given by mailing at least ten days previous to such meeting, postage
prepaid, a copy of such notice addressed to each stockholder at his
residence or place of business as the same shall appear on the books
of the Corporation.
Section 2. Special meetings of the stockholders other than those
- ---------
regulated by statute may be called at any time by the Chairman of the
Board, the President or by a majority of directors. Notice of every
special meeting stating the time, place and object thereof, shall be
given by mailing, postage prepaid, at least ten days before such
meeting, a copy of such notice addressed to each stockholder at his
post office address as the same appears on the books of the
Corporation.
Section 3. At all meetings of stockholders a majority of the capital
- ---------
stock outstanding, either in person or by proxy, shall constitute a
quorum, excepting as may be otherwise provided by law.
Section 4. The Board of Directors may fix a date not more than fifty
- ---------
days prior to the day of holding any meeting of stockholders as the
day as of which stockholders entitled to notice of and to vote at
such meeting shall be determined.
Section 5. At all meetings of stockholders all questions shall be
- ---------
determined by a majority vote of the stockholders entitled to vote
present in person or by proxy, except as otherwise provided by law.
Section 6. Except as may otherwise be required by applicable law or
- ---------
regulation, a stockholder may make a nomination or nominations for
director of the Corporation at an annual meeting of stockholders or
at a special meeting of stockholders called for the purpose of
electing directors or may bring up any other matter for consideration
and action by the stockholders at an annual meeting of stockholders
only if the provisions of Subsections A, B and C hereto shall have
been satisfied. If such provisions shall not have been satisfied,
any nomination sought to be made or other business sought to be
presented by a stockholder for consideration and action by the
stockholders at the meeting shall be deemed not properly brought
before the meeting, is and shall be ruled by the chairman of the
meeting to be out of order, and shall not be presented or acted upon
at the meeting.
A. The stockholder must, not less than seventy days and not more
than ninety-five days before the day of the meeting, deliver or cause
to be delivered a written notice to the Secretary of the Corporation;
provided, however, that in the event that less than eighty days'
notice or prior public disclosure of the date of the meeting is given
or made to the stockholders by the Corporation, notice by the
stockholder to the Secretary of the Corporation, to be timely, must
be received not later than the close of business on the tenth day
following the day on which such notice or prior public disclosure was
made. Notice by the Corporation shall be deemed to have been given
more than eighty days in advance of the annual meeting if the annual
meeting is called for the third Wednesday in October without regard
for when the notice or public disclosure thereof is actually given or
made. The stockholders' notice shall specify (a) the name and
address of the stockholder as they appear on the books of the
Corporation; (b) the class and number of shares of the Corporation
which are beneficially owned by the stockholder; (c) any interest of
the stockholder in the proposed business described in the notice
which is in the interest of a business or object other than the
business of the Corporation; (d) if such business is a nomination for
director, each nomination sought to be made and a statement signed by
each proposed nominee indicating his or her willingness so to serve
if elected and disclosing the information about him or her that is
required by the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder to be disclosed in the proxy
materials for the meeting involved if he or she were a nominee of the
Corporation for election as one of its directors, and (e) if such
business is other than a nomination for director, a brief description
of such business and the reasons it is sought to be submitted for a
vote of the stockholders.
B. Notwithstanding satisfaction of the provisions of Subsection
A, the proposed business described in the notice may be deemed not to
be properly brought before the meeting if, pursuant to state law or
to any rule or regulation of the Securities and Exchange Commission,
it was offered as a stockholder proposal and was omitted, or had it
been so offered, it could have been omitted, from the notice of, and
proxy material for, the meeting (or any supplement thereto)
authorized by the Board of Directors.
C. In the event such notice is timely given and the business
described therein is not disqualified because of Subsection B, such
business (a) may nevertheless not be presented or acted upon at a
special meeting of stockholders unless in all other respects it is
properly before such meeting; and (b) may not be presented except by
the stockholder who shall have given the notice required by
Subsection A or a representative of such stockholder who is qualified
under the law of New York to present the proposal on the
stockholder's behalf at the meeting.
Article II
----------
Directors
Section 1. The number of directors of the Corporation may be
- ---------
determined from time to time by resolution adopted by a majority of
the entire Board of Directors, except that such number shall not be
less than eight nor more than sixteen, exclusive of directors, if
any, to be elected by the holders of 4% Cumulative Preferred Stock or
the holders of one or more series of Series Preferred Stock pursuant
to the provisions of Article Third of the Certificate of
Incorporation of the Corporation. Until the first such resolution is
adopted, the Board shall consist of sixteen directors. As provided
in the Certificate of Incorporation and subject to the provisions of
the ninth sentence of Article Ninth thereof, (i) the directors shall
be divided into three classes as nearly equal in number as possible;
(ii) at each annual meeting directors to replace those whose terms
expire at such annual meeting shall be elected to hold office until
the third succeeding annual meeting and until their successors are
chosen; (iii) if the number of directors is changed, any newly
created directorships or decrease in directorships shall be so
apportioned among the classes as to make all classes as nearly equal
in number as possible; and (iv) if the number of directors is
increased by the Board of Directors and any newly created
directorships are filled by the Board, there shall be no
classification of the additional directors until the next annual
meeting of stockholders. No decrease in the Board shall shorten the
term of any incumbent director. As used in these By-Laws, "entire
Board of Directors" means the total number of directors which the
Corporation would have if there were no vacancies. Vacancies
occurring in the Board of Directors may be filled for the unexpired
term by a majority vote of the remaining directors. The Board of
Directors shall adopt such rules and regulations for the conduct of
the meetings and management of the affairs of the Corporation as they
may deem proper, not inconsistent with the laws of the State of New
York or these By-Laws. This By-Law may be amended only by the
affirmative vote of the holders of two-thirds of the shares of all
classes of stock of the Corporation entitled to vote in elections of
directors, considered for the purposes of this By-Law as one class.
Section 2. The directors shall elect one of their members, who may or
- ---------
may not be an officer of the Corporation, to act as Chairman of the
Board. He shall preside, when present, at all meetings of the Board
of Directors and stockholders.
Section 3. As soon as practicable after the Annual Meeting of
- ---------
Stockholders, the newly elected Board of Directors shall hold its
first meeting for the purpose of organization and the transaction of
business. At such organizational meeting the Board of Directors
shall elect the officers of the Corporation and shall prepare a
schedule fixing the time and place of all regular meetings of the
Board of Directors to be held during the next ensuing calendar year.
All such regular meetings of the Board of Directors may be held
without further notice to any director who shall have attended the
organizational meeting. Notice of the time and place fixed for such
regular meetings shall be given by personal notice or by mail or
telegraph to each director who shall not have attended the
organizational meeting at least ten days prior to the first Board of
Directors' meeting after such organizational meeting which such
director shall be eligible to attend. The Board of Directors shall
have authority to change the time and place of any regular meeting
previously fixed, provided that the foregoing provisions as to notice
thereof shall apply to any such changed regular meeting. The
Chairman of the Board of Directors or the President may, and at the
request of a majority of the Board of Directors in writing must, call
a special meeting of the Board of Directors, not less than
twenty-four hours' notice of which must be given by personal notice
or by mail, telephone, telegraph, facsimile (FAX), or other form of
communication. Nothing herein contained shall prevent a waiver of
notice of meeting by directors.
Section 4. At all meetings of the Board of Directors one-third of the
- ---------
entire Board of Directors as from time to time fixed under these
By-Laws shall constitute a quorum.
Article III
-----------
Officers
Section 1. The officers of the Corporation shall be a President
- ---------
(subject to Section 4 of this Article III), one or more Vice
Presidents, a Secretary, a Controller, a Treasurer, such Assistant
Secretaries, Assistant Controllers and Assistant Treasurers as the
Board of Directors may deem necessary, a Chairman of the Board if the
Board deems this necessary, and a Vice Chairman of the Board if there
is a Chairman and the Board deems a Vice Chairman necessary. Any two
offices, excepting those of Chairman of the Board and Secretary, and
President and Secretary, may be held by one person.
Section 2. The Chairman of the Board or the President, as designated
- ---------
by the Board of Directors, shall be the Chief Executive Officer of
the Corporation and subject to the control and direction of the Board
of Directors shall exercise the powers and perform the duties usual
to the chief executive officer, have general charge of the affairs of
the Corporation, see that all orders and resolutions of the Board are
carried into effect, and do and perform such other duties as from
time to time may be assigned to him by the Board of Directors or
these By-Laws.
Section 3. The Chairman of the Board shall preside at all meetings of
- ---------
the Board of Directors and of the stockholders and perform such other
duties as from time to time may be assigned to that office by the
Board or, when he is not the Chief Executive Officer, by the Chief
Executive Officer, or by these By-Laws.
Section 4. The President shall perform such duties as from time to
- ---------
time may be assigned to him by the Board of Directors, or when he is
not the Chief Executive Officer, by the Chief Executive Officer, or
by these By-Laws, and if there is no Chairman, or in the absence or
disability of the Chairman, the President shall perform the duties of
that office. When the Chairman of the Board is the Chief Executive
Officer, the Board need not designate a President and the duties of
President may be performed by the Chief Executive Officer or in part
by such officer and in part by another officer or officers of the
Corporation, as specified by the Board.
Section 5. The Vice Presidents, one or more of whom may be designated
- ---------
Executive or Senior Vice Presidents, shall perform such duties in
such capacities or as heads of their respective operating units as
may be assigned by the Board of Directors, or by the Chief Executive
Officer. In the absence or disability of the President, and in the
absence or disability of the Chairman when there is no President as
such, the duties of the respective office shall be performed by the
Vice Presidents in the order of priority established by the Board,
and unless and until the Board of Directors shall otherwise direct.
Section 6. The Controller shall be the chief accounting officer of
- ---------
the Corporation and shall be in charge of its books of account,
accounting records and accounting and internal auditing procedures.
He shall be responsible for the verification of all of the assets of
the Corporation and the preparation of all tax returns and other
financial reports to governmental agencies by the Corporation and
shall have such other duties and powers as shall be designated from
time to time by the Board of Directors or the Chairman of the Board.
The Controller shall be responsible to and shall report to the Board
of Directors, but in the ordinary conduct of the Corporation's
business shall be under the supervision of the Chairman of the Board
or such other officer as the Board of Directors shall designate.
Section 7. The Treasurer, subject to the direction and supervision of
- ---------
such officer and to such limitations on his authority as the Board of
Directors may from time to time designate or prescribe, shall have
the care and custody of the funds and securities of the Corporation,
sign checks, drafts, notes and orders for the payment of money, pay
out and dispose of the funds and securities of the Corporation and in
general perform the duties customary to the office of Treasurer.
Section 8. The Secretary shall keep the minutes of meetings of the
- ---------
Board of Directors and the minutes of the stockholders' meetings and
have the custody of the seal of the Corporation and affix and attest
the same to certificates of stock, contracts and other documents when
proper and appropriate. He shall perform all of the other duties
usual to that office.
Section 9. The Assistant Secretaries, Assistant Controllers and
- ---------
Assistant Treasurers shall perform such duties as may be assigned by
the Board of Directors.
Section 10. Each officer elected by the Board of Directors shall hold
- ----------
office until the next annual meeting of the Board of Directors and
until his successor is elected. Any officer may be removed at any
time with or without cause by a vote of a majority of the members of
the Board of Directors. A vacancy in any office caused by the death,
resignation or removal of the person elected thereto or because of
the creation of a new office or for any other reason, may be filled
for the unexpired portion of the term by election of the Board of
Directors at any meeting. In case of the absence or disability, or
refusal to act of any officer of the Corporation, or for any other
reason that the Board of Directors shall deem sufficient, the Board
may delegate, for the time being, the powers and duties, or any of
them of such officer to any other officer or to any director.
Article IV
----------
Capital Stock
Section 1. Subscriptions to the capital stock must be paid to the
- ---------
Treasurer at such time or times, and in such installments as the
Board of Directors may by resolution require.
Section 2. The certificate for shares of the Corporation shall be in
- ---------
such forms as shall be approved by the Board of Directors and shall
be signed by the Chairman of the Board or the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, and shall be sealed with the
seal of the Corporation or a facsimile thereof. The signatures of
the officers upon a certificate may be facsimiles if the certificate
is countersigned by a transfer agent or registered by a registrar
other than the Corporation itself or its employee. In case any
officer has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer at the date of issue.
Section 3. Registration of transfers of shares shall be made upon the
- ---------
books of the Corporation by the registered holder in person or by
power of attorney, duly executed and filed with the Secretary or
other proper officer of the Corporation, and on surrender of the
certificate or certificates for such shares, properly assigned for
transfer.
Article V
---------
Committees of the Board
Section 1. The Board of Directors may elect from among its members,
- ---------
by resolution adopted by two-thirds of the entire Board of Directors,
an Executive Committee consisting of the Chairman of the Board and
three or more other members of the Board. From such Committee
members, the Board shall elect a Chairman of such Committee.
Section 2. During the intervals between meetings of the Board of
- ---------
Directors, the Executive Committee shall, subject to any limitations
imposed by law or the Board of Directors, possess and may exercise
all the powers of the Board of Directors in the management and
direction of the Corporation in such manner as the Executive
Committee shall deem best for the interests of the Corporation, in
all cases in which specific directions shall not have been given by
the Board of Directors.
Section 3. The Board of Directors may also elect from among its
- ---------
members, by resolutions adopted by a majority of the entire Board of
Directors, such other committee or committees as the Board of
Directors shall determine, each such committee to consist of at least
three members of the Board. The Board shall elect a Chairman of each
such committee, shall fix the number of and elect the other members
thereof, and shall establish the duties and authority thereof,
subject to such limitations as may be required by law.
Section 4. The Board of Directors shall fill any vacancies on any
- ---------
committee established under this Article, with the objective of
keeping the membership of each such committee full at all times.
Section 5. All action by any committee of the Board of Directors
- ---------
shall be referred to the Board of Directors at its meeting next
succeeding such action, and shall be subject to revision or
alteration by the Board of Directors provided that no rights or acts
of third parties shall be affected by any such revision or
alteration. Subject to such applicable resolutions as may be adopted
by the Board, each committee shall fix its own rules of procedure and
shall meet where and as provided in such rules, but in any case the
presence of a majority shall be necessary to constitute a quorum.
Article VI
----------
Meetings by Consent
Section 1. Any action required or permitted to be taken by the Board
- ---------
of Directors or any committee thereof may be taken without a meeting
if all members of the Board or of the committee consent in writing to
the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the Board or
committee shall be filed with the minutes of the proceedings of the
Board of committee.
Section 2. Any one or more members of the Board or any committee
- ---------
thereof may participate in a meeting of the Board or such committee
by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear
each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
Article VII
-----------
Indemnification
Section 1. The Company shall, to the fullest extent permitted by
- ---------
applicable law, indemnify any person who is or was made, or
threatened to be made, a party to any action or proceeding, whether
civil or criminal, whether involving any actual or alleged breach of
duty, neglect or error, any accountability, or any actual or alleged
misstatement, misleading statement or other act or omission and
whether brought or threatened in any court or administrative or
legislative body or agency, including an action by or in the right of
the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any director or officer of the
Company is serving or served in any capacity at the request of the
Company, by reason of the fact that he, his testator, or intestate,
is or was a director or officer of the Company, or is serving or
served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement, and costs, charges and
expenses, including attorney's fees, or any appeal therein; provided,
however, that no indemnification shall be provided to any such person
if a judgment or other final adjudication adverse to the director or
officer establishes that (i) his acts were committed in bad faith or
were the result of active and deliberate dishonesty and, in either
case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to
which he was not legally entitled.
Section 2. The Company may indemnify any other person to whom the
- ---------
Company is permitted to provide indemnification or the advancement of
expenses by applicable law, whether pursuant to rights granted
pursuant to, or provided by, the New York Business Corporation Law or
other rights created by (i) a resolution of shareholders, (ii) a
resolution of directors, or (iii) an agreement providing for such
indemnification, it being expressly intended that these by-laws
authorize the creation of other rights in any such manner.
Section 3. The Company shall, from time to time, reimburse or advance
- ---------
to any person referred to in Section 1 the funds necessary for
payment of expenses, including attorney's fees, incurred in
connection with any action or proceeding referred to in Section 1,
upon receipt of a written undertaking by or on behalf of such person
to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were
committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action
so adjudicated, or (ii) he personally gained in fact a financial
profit or other advantage to which he was not legally entitled.
Section 4. Any director or officer of the Company serving (i) another
- ---------
corporation, of which a majority of the shares entitled to vote in
the election of its directors is held by the Company, or (ii) any
employee benefit plan of the Company or any corporation referred to
in clause (i), in any capacity shall be deemed to be doing so at the
request of the Company.
Section 5. Any person entitled to be indemnified or to the
- ---------
reimbursement or advancement of expenses as a matter of right
pursuant to this Article may elect to have the right to
indemnification (or advancement of expenses) interpreted on the basis
of the applicable law in effect at the time of the occurrence of the
event or events giving rise to the action or proceeding, to the
extent permitted by law, or on the basis of the applicable law in
effect at the time indemnification is sought.
Section 6. The right to be indemnified or to the reimbursement or
- ---------
advancement of expenses pursuant to this Article (i) is a contract
right pursuant to which the person entitled thereto may bring suit as
if the provisions hereof were set forth in a separate written
contract between the Company and the director or officer, (ii) is
intended to be retroactive and shall be available with respect to
events occurring prior to the adoption hereof, and (iii) shall
continue to exist after the rescission or restrictive modification
hereof with respect to events occurring prior thereto.
Section 7. If a request to be indemnified or for the reimbursement or
- ---------
advancement of expenses pursuant hereto is not paid in full by the
Company within thirty days after a written claim has been received by
the Company, the claimant may at any time thereafter bring suit
against the Company to recover the unpaid amount of the Claim and, if
successful in whole or in part, the claimant shall be entitled also
to be paid the expenses of prosecuting such claim. Neither the
failure of the Company (including its Board of Directors, independent
legal counsel, or its shareholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in
the circumstances, nor an actual determination by the Company
(including its Board of Directors, independent legal counsel, or its
shareholders) that the claimant is not entitled to indemnification or
to the reimbursement or advancement of expenses, shall be a defense
to the action or create a presumption that the claimant is not so
entitled.
Section 8. A person who has been successful, on the merits or
- ---------
otherwise, in the defense of a civil or criminal action or proceeding
of the character described in Section 1 shall be entitled to
indemnification only as provided in Sections 1 and 3, notwithstanding
any provision of the New York Business Corporation Law to the
contrary.
Article VIII
------------
Amendments
Section 1. These By-Laws may be amended at any stockholders' meeting
- ---------
by a majority of the votes cast at such meeting by the holders of
shares entitled to vote thereon, represented either in person or by
proxy.
Section 2. Subject to the limitations, if any, from time to time
- ---------
prescribed in By-Laws made by stockholders, the Board of Directors at
any regular or special meeting, by the vote of a majority of the
directors may make, alter, amend and repeal any By-Laws, but any
By-Laws made by the Board of Directors may be altered or repealed by
the stockholders.
Exhibit 10.30
AGREEMENT
THIS AGREEMENT is agreed upon and entered into effective seven
days after the acceptance date indicated below by and between
MALLINCKRODT INC., a New York corporation (the "Company"), with
offices at 675 McDonnell Blvd., P.O. Box 5840, St. Louis, Missouri
63134, and MACK G. NICHOLS ("Nichols") who resides at 12300 Halsgame,
Creve Coeur, Missouri 63141.
WITNESSETH:
WHEREAS, Nichols has been in the employ of the Company for many
years, most recently as the Chief Operating Officer and President of
the Company; and
WHEREAS, the parties wish to establish and agree upon the terms
and conditions in which the Company shall retain consulting services
of Nichols effective with the date of Nichols' retirement from the
Company on October 31, 1998 ("Retirement Date" as described below)
for a two year period ending October 31, 2000 ("the Consultancy");
NOW, THEREFORE, in consideration of the mutual undertakings of
the parties, it is agreed as follows:
1. Retirement. Mr. Nichols agrees that he retired and resigned
----------
as a member of the Board of Directors of the Company effective with
the 1998 Annual Meeting and will retire and resigns all of his
positions with the Company and its affiliates effective October 31,
1998, which date, October 31, 1998, shall be his "Retirement Date."
At that time, upon and following his Retirement Date, Mr. Nichols
will make available his services as a consultant to the Company as
described in paragraph 11. Mr. Nichols acknowledges that he is an
employee at will of the Company.
2. Compensation. Until December 31, 1998, the Company shall
------------
continue to pay Nichols' compensation in accordance with its usual
and customary compensation practices at the rate of Nichols' current
base salary of $517,512 per year.
3. Annual Incentive Payment. Nichols shall be entitled to
------------------------
participate in the Company's Management Incentive Compensation Plan
("MICP") for the fiscal year ending June 30, 1999, with a target
annual incentive award of $142,315.80 (equal to (1/2) (55%) of
Nichols' annual base salary of $517,512). The actual amount of
Nichols' MICP payment, if any, for fiscal 1999 shall be as awarded by
the Board of Directors in its discretion and in accordance with MICP
terms at the conclusion of fiscal 1999. Payment of the fiscal 1999
MICP award, if any, shall be made following the close of fiscal year
1999 pursuant to the terms of the MICP.
4. Pension Benefit. (a) Until his termination from
---------------
employment, Nichols will participate in the Mallinckrodt Inc.
Retirement Plan (the "Qualified Plan") and the Supplemental Executive
Retirement Life Plan of Mallinckrodt Inc. (the "SERP") according to
their terms.
(b) Upon Nichols' termination of employment, he shall be
entitled to receive Pension Benefits under the Qualified Plan in
accordance with its terms as they exist at that time based upon his
actual Credited Service and Final Average Compensation under that
Plan and based only upon Nichols' actual employment with the Company.
(c) Upon his termination of employment, he shall also be
entitled to receive Retirement Benefits under the SERP. However, in
determining SERP benefits: (i) the Company shall consider solely for
purposes of calculating his SERP benefit and under SERP Section
4.1.3., that Mr. Nichols' Continuous Service shall equal the period
of his employment plus an additional twelve years (for a total of 31
years and 3 months at October 31, 1998), (ii) if Nichols commences
receipt of his SERP benefit prior to age 62, no reduction in that
benefit shall be imposed because of benefit commencement before age
62, and (iii) if Nichols elects a lump sum form of payment, the
assumptions used to determine actuarial equivalence shall be the same
as used under the Qualified Plan to value similar lump sum payments.
(d) Upon his Retirement Date and in addition to the pension
benefits provided for in paragraph 4(a), the Company shall pay
Nichols a supplemental benefit of One Million Dollars ($1,000,000)
payable to Nichols before December 31, 1998.
5. Retirement Medical Benefits. Nichols shall be eligible to
---------------------------
participate under the Mallinckrodt Retiree Medical Plan in accordance
with the Plan's terms as amended from time to time. Nichols may elect
dental and vision coverage in accordance with the Plan's terms until
Nichols turns age 65.
6. Stock Options and Awards.
------------------------
a) In regard to options previously granted prior to 1998
under the 1973 Stock Option and Award Plan, during the term of his
Consultancy as described in Paragraph 11 below, such options shall
continue to be exercisable or become exercisable in accordance with
their terms as provided in the 1973 Stock Option and Award Plan, and
Nichols shall have three years from the expiration of his
Consultancy, but not more than ten years from the date of grant of
such options, to exercise any options which are exercisable at the
expiration of the Consultancy.
b) On October 21, 1998, the Board of Directors granted
Nichols, under the Company's 1997 Equity Incentive Plan, 5-year non-
qualified options to purchase Fifty-Three Thousand Four Hundred Sixty
(53,460) shares of the Company's common stock at a price of $26-9/32
per share. The options expire on October 31, 2003. The options
shall vest and be exercisable in accordance with their terms as
provided in the 1997 Equity Incentive Plan.
7. Additional Benefits and Executive Perquisites. Following
---------------------------------------------
his Retirement Date, in addition to retiree medical benefits, Nichols
shall accrue all other retiree benefits then provided to salaried
retirees of the Company in accordance with the terms of those plans
and programs as they may be amended from time to time. Nichols shall
also continue to receive, at the Company's expense, executive tax and
estate planning benefits until July 1, 1999, at an annual cost not to
exceed the cost of such benefits allotted to Mr. Nichols under the
Company's policies and procedures.
8. Life Insurance. Following his Retirement Date, the Company
--------------
shall continue to provide life insurance coverage under an
endorsement split dollar arrangement on Nichols' life at a level of
four times his annual base salary of $517,512. This life insurance
coverage includes the benefit formerly provided under the Company's
SLIP Program. If the policy is not in effect on the date of his
death, the benefit will be payable by the Company equating to four
times his annual base salary of $517,512, offset by any other life
insurance benefits the Company may maintain, at its cost, on his life
that are payable to his beneficiary.
9. Supplemental Annual Incentive Award. Nichols was awarded
-----------------------------------
$434,412 by the Board of Directors under the Supplemental Annual
Incentive Award ("SAIA") Program. Payment of the SAIA award shall be
made to Nichols before December 31, 1998.
10. Termination. Subject to the provisions of Section 12 and
-----------
the terms of the applicable benefit plans and programs, the
obligations of the Company to pay and otherwise provide compensation
and benefits to Nichols as provided in Section 2, 3, 6, 7 and 9,
shall also cease upon the death of Nichols.
11. Consultancy. Upon Nichols' Retirement Date, the Company
-----------
shall retain him as a consultant until October 31, 2000, to perform
special projects, if any, which from time to time may be mutually
agreed upon between Nichols and the Chief Executive Officer of the
Company. Nichols agrees that prior to his becoming a consultant, he
shall execute a Consultant Invention and Secrecy Agreement, a copy of
which is attached hereto as Exhibit A. From his Retirement Date, the
Company shall pay an annual retainer of $5,000 for consulting
services plus $275 per each hour Nichols actually performs consulting
services. Any self-employment tax or taxes payable by Nichols on
account of his Consultancy, shall be paid by Nichols. Nichols shall
provide to the Chief Executive Officer a statement detailing his
consulting services and the time spent in the performance thereof for
each month in which such services are rendered. Nichols shall be
reimbursed for reasonable expenses incurred by him in rendering such
consulting services upon receipt by the Chief Executive Officer of a
statement of itemized expenses with substantiating documentation.
The parties agree that in providing such services, Nichols is
not a Company employee but is an independent contractor. While
performing these services, Nichols is not entitled to participate in
or obtain benefits under any Company employee benefit or compensation
plan or program, except as a retiree according to the terms of those
plans and programs. Nichols agrees that even if it is determined (by
a governmental agency, judicial body or otherwise) that while
performing consulting services he was a common law employee, he will
not be entitled to any compensation or benefits by reason of such
services except as described above and he specifically waives and
releases all rights to any other rights under any Company's employee
benefit and compensation programs by reason of his consulting
services.
12. Payment Upon Death. Notwithstanding anything in this
------------------
Agreement to the contrary, Nichols' spouse, beneficiary or estate, as
the case may be, shall be entitled to compensation and benefits
pursuant to the terms of the Company's applicable employee benefit
and compensation plans and programs, as may be provided for upon
Nichols' death, together with the following additional provisions and
benefits unless previously paid to Nichols:
(a) Nichols' MICP, as discussed in Section 3 above, shall
be paid in the amount as specified in Section 3 above.
(b) Nichols' Supplemental Retirement Benefit as discussed
in Section 4(d) above, shall be paid as specified in
Section 4(d) above.
(c) Nichols' Supplemental Annual Incentive Award as
discussed in Section 9 above, shall be paid as
specified in Section 9 above.
13. Noncompete and Confidentiality. During the Consultancy,
------------------------------
Nichols agrees (a) not to become an employee or proprietor of,
consultant to, or partner in, any entity which is or becomes, during
the term hereof, a direct competitor of any primary or developing
product lines within the primary or developing market areas of any
business of the Company or any of its wholly-owned subsidiaries or
that he knows has the intention of becoming such a direct competitor,
without the prior written consent of the Company, which shall not be
unreasonably withheld, (b) not to directly or indirectly: (i) induce
any customers of the Company or any of its businesses to patronize
any competing business, (ii) canvass, solicit or accept (for himself
or any other person or entity) any business relationships from any
customers of the Company or any of its businesses and (iii) cause,
request or advise any customers of the Company or any of its
businesses to withdraw, curtail or cancel any business relationship
with the Company or any of its businesses, and (c) not to divulge or
appropriate for his own use or the use of others any secret or
confidential information pertaining to the business of the Company or
any of its subsidiaries obtained during his employment by or
Consultancy with the Company. The latter obligation shall not apply
when and to the extent any of such information is or becomes
publicly known or available, other than because of Nichols' act or
omission. Notwithstanding the foregoing, any existing
confidentiality, nondisclosure or proprietary rights agreement
between the Company and Nichols shall remain in full force and effect
in accordance with its terms including, without limitation, Exhibit A
hereto. In the event that Nichols violates the provisions of this
Section 13, the Company shall, in addition to any other rights and
remedies available to it, be entitled to injunctive relief issued by
a court of competent jurisdiction enjoining restraining him from
competing with the Company, and Nichols consents to the issuance of
such injunction, and Nichols agrees that the Company shall not be
required to prove actual damages to obtain such injunctive relief.
14. Miscellaneous.
-------------
A. This Agreement may be amended only in writing signed by
both parties and shall be binding upon all persons
entitled to receive payments hereunder, and their
respective heirs, executors or administrators and upon the
Company, its successors and assigns.
B. Any payment(s) required to be made by the Company
pursuant to this Agreement to a person who is under a legal
disability may be made by the Company to or for the benefit
of such person in such of the following ways as the Company
shall determine: (i) directly to such person, (ii) to the
legal representative of such person, (iii) to some near
relative of such person to be used for the latters'
benefit, or (iv) directly in payment of expenses in
support, maintenance or education of such person. The
Company shall not be required to see to the application by
any third party of any payment(s) made pursuant hereto.
The Company and its agents shall be relieved from all
further liability for any amounts upon their payment as
described above.
C. All questions in respect of this Agreement, including
those pertaining to its validity, interpretation and
performance, shall be determined by the laws of the State
of Missouri. The Chairman and Board of Directors of the
Company are each fully authorized and given discretion to
interpret the provisions of this Agreement and make all
determinations and take all actions hereunder, unless
otherwise stated, and their decisions will be final and
will be given maximum deference by any reviewing court or
agency.
D. This Agreement supersedes and replaces any other
agreement or commitment which Nichols may have from the
Company and any negotiations or representations regarding
its subject matter except that the terms of all employee
benefit and compensation or other plans pursuant to which
amounts may be paid under this agreement shall continue to
apply.
E. If any provision of this Agreement is for any reason
invalid or unenforceable, such invalidity or illegality
shall not affect the remaining provisions. Rather, each
provision shall be fully severable, and the Agreement shall
be construed and enforced as if any invalid or illegal
provision had not been included.
15. Waiver and Release. In consideration of the benefits
------------------
outlined above, Nichols, on behalf of himself, his heirs, assigns and
legal representatives, hereby releases and forever discharges the
Company and its officers, directors, insurers and employees and
employee benefit plans from any and all claims, demands, damages,
causes of action or suits of whatever type under any state, federal
or local laws, including, but not limited to, the Age Discrimination
in Employment Act and other laws prohibiting employment
discrimination, as well as claims at common law or equity and in
contract or in tort and whether known or unknown, that Nichols may
have, has had or may acquire of whatever nature from the beginning of
time to the date of this Agreement or through the end of the period
of Consultancy based upon any known or unknown fact, condition or
incident occurring through the date of this Agreement or the end of
the period of Consultancy including any fact or event related to
Nichols' employment or separation from employment with the Company.
Nichols agrees not to make any claim for damages or personal
recovery by administrative charge, lawsuit or other proceeding
related to any of the above and will not seek or accept money damages
or personal relief upon the filing of any administrative claim or
judicial charge or claims. If any party brings any claim or action
which is contrary to the above release, then the party defendant to
that action shall be entitled to reimbursement for costs and
attorneys' fees incurred in the defense thereof. This release does
not discharge the Company from obligations that it otherwise has
under this Agreement and the Company's employee benefit and
compensation plans for benefits accrued to Nichols.
Nichols acknowledges that by signing this Agreement, he waives
all claims arising under the Age Discrimination in Employment Act of
1967 (ADEA) and that:
(a) This waiver of ADEA rights does not waive any ADEA
rights and claims which arise after the date of this Agreement and
this waiver is given in exchange for payment of sums and the
Consultancy, which are more than Nichols is otherwise entitled to
receive;
(b) Employee has been advised to consult an attorney
before signing this Agreement and has twenty-one (21) days to
consider it which period commenced on October 30, 1998;
(c) If Nichols executes this Agreement, it will not become
effective for seven (7) days thereafter. During this seven (7) day
period, he may revoke this release and waiver provided he submits
written notification of such revocation to the undersigned prior to
the expiration of the revocation period. If Nichols revokes this
Agreement during that period, then the Company has no duty to pay any
sums or provide any benefits described herein except for amounts
which would be payable under plans or programs by their terms without
consideration of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement be
executed on its behalf by a duly authorized officer and Nichols, to
evidence his acceptance thereof, has set his hand and seal effective
as of the date first above-written.
MALLINCKRODT INC.
By: /s/ C.R. HOLMAN
----------------------------
C. Ray Holman
Chairman & Chief Executive Officer
ACCEPTED BY:
/s/ M.G. NICHOLS
- -----------------
Mack G Nichols
Date: 11/9/98
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the consolidated balance sheets and consolidated statements
of operations of the Company's Form 10-Q, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 57
<SECURITIES> 0
<RECEIVABLES> 502
<ALLOWANCES> 19
<INVENTORY> 522
<CURRENT-ASSETS> 1238
<PP&E> 1472
<DEPRECIATION> 573
<TOTAL-ASSETS> 3881
<CURRENT-LIABILITIES> 1136
<BONDS> 944
0
11
<COMMON> 87
<OTHER-SE> 943
<TOTAL-LIABILITY-AND-EQUITY> 3881
<SALES> 1228
<TOTAL-REVENUES> 1228
<CGS> 666
<TOTAL-COSTS> 1087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> 99
<INCOME-TAX> 32
<INCOME-CONTINUING> 67
<DISCONTINUED> 23
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.23
</TABLE>
