<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
F O R M 1 0 - Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 1-3579
PITNEY BOWES INC.
State of Incorporation IRS Employer Identification No.
Delaware 06-0495050
World Headquarters
Stamford, Connecticut 06926-0700
Telephone Number: (203) 356-5000
The Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____
Number of shares of common stock, $2 par value, outstanding as of June
30, 1996 is 149,118,964.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 2
Pitney Bowes Inc.
Index
Page Number
Part I - Financial Information:
Consolidated Statement of Income - Three and Six
Months Ended June 30, 1996 and 1995 3
Consolidated Balance Sheet - June 30, 1996
and December 31, 1995 4
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 13
Part II - Other Information:
Item 1: Legal Proceedings 14
Item 4: Submission of Matters to a Vote of
Security Holders 14 - 15
Item 6: Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 3
Part I - Financial Information
Pitney Bowes Inc.
Consolidated Statement of Income
(Unaudited)
<TABLE>
(Dollars in thousands, except per share data)
<CAPTION> Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue from:
Sales $ 410,649 $ 371,405 $ 794,653 $ 734,801
Rentals and financing 415,266 381,939 824,344 751,878
Support services 117,022 109,259 230,205 214,836
Total revenue 942,937 862,603 1,849,202 1,701,515
Costs and expenses:
Cost of sales 258,039 233,551 496,803 446,277
Cost of rentals and financing 114,575 106,591 240,327 212,802
Selling, service and administrative 320,091 287,327 631,107 577,892
Research and development 20,637 21,643 39,347 41,982
Interest, net 47,399 59,876 95,983 118,961
Total costs and expenses 760,741 708,988 1,503,567 1,397,914
Income from continuing operations
before income taxes 182,196 153,615 345,635 303,601
Provision for income taxes 63,663 55,266 120,593 109,263
Income from continuing operations 118,533 98,349 225,042 194,338
Discontinued operations - 10,675 - 20,997
Net income $ 118,533 $ 109,024 $ 225,042 $ 215,335
Income per common and common equivalent
share:
Income from continuing operations $ .79 $ .65 $ 1.49 $ 1.28
Discontinued operations - .07 - .14
Net income $ .79 $ .72 $ 1.49 $ 1.42
Average common and common equivalent
shares outstanding 150,945,114 152,253,551 151,171,536 152,172,775
Dividends declared per share of common
stock $ .345 $ .30 $ .69 $ .60
Ratio of earnings to fixed charges 3.89 3.12 3.73 3.11
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 4
Pitney Bowes Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
June 30, December 31,
(Dollars in thousands) 1996 1995
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 92,787 $ 85,352
Short-term investments, at cost which
approximates market 996 3,201
Accounts receivable, less allowances:
6/96, $13,880; 12/95, $13,050 356,750 386,727
Finance receivables, less allowances:
6/96, $38,155; 12/95, $37,699 1,346,815 1,208,532
Inventories (Note 2) 289,310 311,271
Other current assets and prepayments 104,269 106,014
Total current assets 2,190,927 2,101,097
Property, plant and equipment, net
(Note 3) 494,218 495,001
Rental equipment and related
inventories, net (Note 3) 789,665 773,337
Property leased under capital
leases, net (Note 3) 7,815 7,876
Long-term finance receivables, less
allowances:
6/96, $70,830; 12/95, $75,807 3,289,823 3,390,597
Investment in leveraged leases 589,966 570,008
Goodwill, net of amortization:
6/96, $33,646; 12/95, $30,504 211,840 208,698
Other assets 314,204 298,034
Total assets $7,888,458 $7,844,648
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
liabilities $ 741,690 $ 818,122
Income taxes payable 236,440 232,794
Notes payable and current portion of
long-term obligations 2,390,441 2,138,065
Advance billings 325,509 312,595
Total current liabilities 3,694,080 3,501,576
Deferred taxes on income 654,741 612,811
Long-term debt 801,455 1,048,515
Other noncurrent liabilities 399,670 410,646
Total liabilities 5,549,946 5,573,548
Preferred stockholders' equity in a
subsidiary company 200,000 200,000
Stockholders' equity:
Cumulative preferred stock, $50 par
value, 4% convertible 47 47
Cumulative preference stock, no par
value, $2.12 convertible 2,457 2,547
Common stock, $2 par value 323,338 323,338
Capital in excess of par value 26,908 30,299
Retained earnings 2,308,528 2,186,996
Cumulative translation adjustments (49,397) (46,991)
Treasury stock, at cost (473,369) (425,136)
Total stockholders' equity 2,138,512 2,071,100
Total liabilities and stockholders'
equity $7,888,458 $7,844,648
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 5
Pitney Bowes Inc.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
(Dollars in thousands)
Six Months Ended June 30,
<CAPTION> 1996 1995(*)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 225,042 $ 215,335
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 135,337 129,492
Net change in the strategic focus
initiative (9,871) (20,481)
Increase in deferred taxes on
income 41,748 29,546
Change in assets and liabilities:
Accounts receivable 29,588 12,575
Sales-type lease receivables (23,534) (32,047)
Inventories 21,449 (19,853)
Other current assets and
prepayments 3,487 5,002
Accounts payable and accrued
liabilities (66,059) (117,748)
Income taxes payable 3,548 30,552
Advance billings 13,336 10,397
Other, net (44,401) (35,155)
Net cash provided by operating
activities 329,670 207,615
Cash flows from investing activities:
Short-term investments 2,161 (746)
Net investment in fixed assets (134,749) (158,870)
Net investment in direct-finance
lease receivables (13,163) (140,168)
Investment in leveraged leases (22,391) (29,616)
Proceeds from sale of subsidiary - 127,000
Net cash used in investing
activities (168,142) (202,400)
Cash flows from financing activities:
Increase (decrease) in notes payable 12,117 (308,402)
Proceeds from long-term obligations - 275,000
Principal payments on long-term
obligations (8,114) (24,322)
Proceeds from issuance of stock 21,251 19,128
Stock repurchases (75,339) (14,932)
Proceeds from preferred stock issued
by a subsidiary - 200,000
Dividends paid (103,510) (90,748)
Net cash (used in) provided by
financing activities (153,595) 55,724
Effect of exchange rate changes on cash (498) 760
Increase in cash and cash equivalents 7,435 61,699
Cash and cash equivalents at beginning
of period 85,352 75,106
Cash and cash equivalents at end of
period $ 92,787 $ 136,805
Interest paid $ 103,700 $ 130,437
Income taxes paid $ 77,075 $ 60,976
</TABLE>
[FN]
(*) Certain prior year amounts have been reclassified to conform with the
1996 presentation.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 6
Pitney Bowes Inc.
Notes to Consolidated Financial Statements
Note 1:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of Pitney Bowes Inc. ("the company"), all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the financial position of the company as of June 30, 1996 and the
results of its operations and cash flows for the six months ended June
30, 1996 and 1995 have been included. Operating results for the six
months ended June 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. These
statements should be read in conjunction with the financial statements
and notes thereto included in the company's Annual Report to
Stockholders and Form 10-K Annual Report for the year ended December 31,
1995.
Note 2:
<TABLE>
Inventories are comprised of the following:
<CAPTION>
(Dollars in thousands) June 30, December 31,
1996 1995
<S> <C> <C>
Raw materials and work in process $ 64,892 $ 57,203
Supplies and service parts 90,560 87,863
Finished products 133,858 166,205
Total $289,310 $311,271
</TABLE>
Note 3:
<TABLE>
Fixed assets are comprised of the following:
<CAPTION>
(Dollars in thousands) June 30, December 31,
1996 1995
<S> <C> <C>
Property, plant and equipment $1,086,105 $1,072,229
Accumulated depreciation (591,887) (577,228)
Property, plant and equipment, net $ 494,218 $ 495,001
Rental equipment and related
inventories $1,638,478 $1,591,321
Accumulated depreciation (848,813) (817,984)
Rental equipment and related
inventories, net $ 789,665 $ 773,337
Property leased under capital
leases $ 26,143 $ 25,468
Accumulated amortization (18,328) (17,592)
Property leased under capital
leases, net $ 7,815 $ 7,876
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 7
Note 4:
The company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" on January 1, 1996. The company periodically
reviews the fair value of long-lived assets the result of which has had
no material affect on the company's reported results.
The company adopted Statement of Financial Accounting Standards No.
122, "Accounting for Mortgage Servicing Rights" (FAS 122) on January 1,
1996. FAS 122 requires that capitalized mortgage servicing rights be
assessed periodically for impairment based on the fair value of those
rights. Based on an evaluation performed as of June 30, 1996, no
impairment was recognized in the company's mortgage servicing rights
portfolio.
The company also adopted Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (FAS 123), on January 1,
1996. Under FAS 123, companies can elect, but are not required, to
recognize compensation expense for all stock-based awards, using a fair
value methodology. The company has adopted the disclosure only
provisions, as permitted by FAS 123. These disclosures will be
included in the company's 1996 annual report to stockholders.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 8
Pitney Bowes Inc.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Continuing Operations - second quarter of 1996 vs. second
quarter of 1995.
Revenue increased nine percent to $942.9 million in 1996 compared to
$862.6 million in the second quarter of 1995. Income from continuing
operations increased 21 percent to $118.5 million in 1996 from $98.3
million in the second quarter of 1995.
Sales revenue increased 11 percent in 1996, essentially all of which
was the result of volume growth. The facilities management business
recorded a 19 percent increase in sales as it continued to expand its
contract base, especially in the commercial market. In addition, sales
revenue was enhanced by strong sales of production mail systems as well
as significant growth in the international mailing business.
Rentals and financing revenue increased nine percent from the prior
year. Rental revenue growth reflected a greater number of higher
yielding Postage By Phone(R) meters on rental. Second quarter 1996 was
also favorably affected by the placement of a higher number of plain
paper facsimile systems in service and by price increases. The
increase in financing revenue was principally due to a higher base of
small-ticket equipment under lease, an increased contribution from non-
interest sensitive revenue sources, and the sale of the Custom
Vendor Finance (CVF) operations of Pitney Bowes Credit Corporation in
May 1996.
Support services revenue rose seven percent from the prior year. The
revenue growth was attributable to volume increases primarily at
production mail and the acquisition in 1995 of a former Japanese joint
venture.
The ratio of cost of sales to sales revenue decreased to 62.8 percent
in the second quarter of 1996 from 62.9 percent in the second quarter
of 1995. The improvement in this ratio reflects higher price
realization from domestic mailing equipment sales as well as lower
copier equipment costs related to a weaker yen. This improvement in
the ratio is partially offset by the growth of the company's facilities
management business, which includes most of its expenses in cost of
sales.
The ratio of cost of rentals and financing to rentals and financing
revenue decreased to 27.6 percent in 1996 from 27.9 percent in 1995,
primarily as a result of the CVF sale mentioned above.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 9
Selling, service and administrative expenses were 33.9 percent of
revenue in the second quarter of 1996 compared to 33.3 percent in the
second quarter of 1995. The increase in this ratio was due to higher
expenses related to direct marketing, the inclusion of a dividend
payment on preferred stock of a subsidiary company and strategic
expenditures which are expected to have a favorable impact on future
revenue and costs and expenses.
Research and development expenses decreased five percent to $20.6
million in the second quarter of 1996 from $21.6 million in the second
quarter of 1995. This decrease reflected higher 1995 expenditures for
new products approaching the end of their development cycle. In
addition, the company has maintained its cost containment programs
while continuing to significantly invest in cost effective, advanced
product development with emphasis on electronic and digital technology
and software development.
Net interest expense decreased to $47.4 million in the second quarter
of 1996 from $59.9 million in 1995. This decrease was due to lower
interest rates, lower average borrowing levels in 1996 reflecting the
impact of the cash generated by the sales of Dictaphone Corporation
(Dictaphone) and Monarch Marking Systems, Inc. (Monarch) in the latter
half of 1995 and the issuance of preferred stock in a subsidiary of the
company to outside institutional investors. The consolidated statement
of income reflects these preferred stock dividends as a minority
interest in "selling, service, and administrative" expense.
The second quarter effective tax rate was 34.9 percent in 1996 compared
to 36.0 percent in 1995. The improvement in the 1996 effective rate
was primarily due to tax benefits attributable to foreign operations.
Results of Continuing Operations - six months of 1996 vs. six months of
1995.
For the first six months of 1996 compared with the same period of 1995,
revenue increased nine percent while income from continuing operations
increased 16 percent to $225.0 million. The factors that affected
revenue and earnings performance included those cited for the second
quarter of 1996 versus 1995. In addition, first quarter 1995 revenue
included approximately $30 million in PROM (memory chip) sales
attributable to the January 1, 1995 United States postal rate change.
Nonrecurring Item
As of June 30, 1996, the company has made severance and benefit
payments of approximately $58.3 million to 1,500 employees
separated under the strategic focus initiatives commenced in 1994.
Approximately 400 employees with the requisite enhanced skills have
been hired to manufacture and service advanced product offerings. The
company has substantially completed its actions contemplated under the
strategic initiatives.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 10
Accounting Changes
The company adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of" on January 1, 1996. The company
periodically reviews the fair value of long-lived assets the results of
which have had no material affect on the company's reported results.
The company adopted Statement of Financial Accounting Standards
No. 122, "Accounting for Mortgage Servicing Rights" (FAS 122) on
January 1, 1996. FAS 122 requires that capitalized mortgage servicing
rights be assessed periodically for impairment based on the fair value
of those rights. Based on an evaluation performed as of June 30, 1996,
no impairment was recognized in the company's mortgage servicing rights
portfolio.
The company also adopted Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (FAS 123), on
January 1, 1996. Under FAS 123, companies can, but are not required
to, elect to recognize compensation expense for all stock-based awards,
using a fair value methodology. The company has adopted the
disclosure only provisions, as permitted by FAS 123. These
disclosures will be included in the company's 1996 annual report.
Liquidity and Capital Resources
The current ratio remained essentially unchanged at June 30, 1996 and
December 31, 1995 at .59 to 1 and .60 to 1, respectively. Working
capital has decreased since year-end 1995 primarily due to the
reclassification of $200 million of notes due in February 1997 to
current portion of long term debt.
As part of the company's non-financial services shelf registrations, a
medium-term note facility exists permitting issuance of up to $100
million in debt securities with maturities ranging from more than one
year up to 30 years of which $32 million remain available at June 30,
1996. The company also has an additional $300 million remaining on its
non-financial services shelf registrations filed with the Securities
and Exchange Commission (SEC). Amounts available under credit
agreements, shelf registrations and commercial paper and medium-term
note programs, in addition to cash generated internally and by the
sales of Monarch and Dictaphone, are expected to be sufficient to
provide for financing needs in the next several years.
In July 1996, Pitney Bowes Credit Corporation (PBCC) issued $200
million of medium-term notes due in July, 1999 and $100 million of
medium-term notes due in July, 2001 with coupon rates of 6.54 percent
and 6.78 percent, respectively.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 11
Subsequent to the July 1996 issuance, PBCC has $450 million of unissued
debt securities available from a shelf registration statement filed
with the SEC in September 1995. Up to $200 million of medium-term
notes may be offered under this registration statement. The $450
million available under this shelf registration statement should meet
PBCC's financing needs for the next two years. PBCC also had unused
lines of credit and revolving credit facilities totaling $1.7 billion
at June 30, 1996, largely supporting its commercial paper borrowings.
The ratio of total debt to total debt and stockholders' equity
including the preferred stockholders' equity in a subsidiary company in
total debt, was 61.4% at June 30, 1996 compared to 62.2% at December
31, 1995. This ratio was favorably affected by the proceeds from the
sales of Dictaphone and Monarch which were used primarily to repay
short-term debt, partially offset by the repurchase of approximately
1,556,000 shares of common stock for $75.3 million in the first half of
1996. Book value per common share increased to $14.32 at June 30, 1996
from $13.79 at year-end 1995 principally due to year-to-date income
offset by the repurchase of common shares as noted above.
The company enters into interest rate swap agreements principally
through its financial services businesses. It has been the practice
and objective of the company to use a balanced mix of debt maturities,
variable- and fixed-rate debt and interest rate swap agreements to
control the company's sensitivity to interest rate volatility. The
company utilizes interest rate swap agreements when it considers the
economic benefits to be favorable. Swap agreements, as noted above,
have been principally utilized to fix interest rates on commercial
paper and/or obtain a lower cost on debt than would otherwise be
available absent the swap.
Capital Investments
In the first half of 1996, net investments in fixed assets included
$40.8 million in net additions to property, plant and equipment and
$93.5 million in net additions to rental equipment and related
inventories compared with $61.4 million and $94.8 million during the
same period in 1995, respectively. The decrease in net additions to
property, plant and equipment was due to the completion of a new
facility in 1995. In the case of rental equipment, the additions
included the production of postage meters and purchase of facsimile and
copier equipment for both new placements and upgrade programs.
At June 30, 1996, commitments for the acquisition of property, plant
and equipment included plant and manufacturing equipment improvements,
as well as rental equipment for new and replacement programs.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 12
Legal and Regulatory Matters
The company has been advised by the Antitrust Division of the U.S.
Department of Justice that its civil investigation of Pitney Bowes'
postage equipment business has been closed. The investigation was
concluded without any findings that Pitney Bowes violated the surviving
provisions of the 1959 consent decree between the company and the U.S.
Department of Justice, and/or the antitrust laws.
In June, 1995, the United States Postal Service (U.S.P.S.) issued final
revised regulations addressing the manufacture, distribution and use of
postage meters. The regulations cover four general categories: meter
security, administrative controls, Computerized Meter Resetting Systems
(C.M.R.S.) and other issues. In general, the regulations impose
reporting and performance obligations on meter manufacturers, prescribe
potential administrative sanctions for failure to meet these
obligations and require a restructuring of the fund management system
of C.M.R.S., such as the company's Postage by Phone System, to give the
U.S.P.S. more direct control over meter licensee deposits. The company
is working with the U.S.P.S. to ensure that the implementation of these
regulations provides mailing customers and the U.S.P.S. with the
intended benefits, and that Pitney Bowes also benefits. The company
has undertaken a number of actions to implement these changes,
including modifying its Postage by Phone System. Customers now deposit
prepayments of postage into a U.S.P.S. account rather than a trust
account. The company's resetting of Postage by Phone meters still
requires the customer to request an authorization and reset code from
the company, a service for which the company charges a fee. The
company continues to believe that the financial impact to the company
resulting from implementation of these regulations will not be
material.
The company also continues to work with the U.S.P.S. to devise a multi-
year migration schedule to phase out mechanical meters in the United
States and replace them with electronic or digital meters in a manner
that is most beneficial and least disruptive to the operations of the
company's customers. This is consistent with the company's strategy of
introducing new technology into the marketplace to add value to
customers' operations and meet postal needs. This strategy and the
company's long-term focus has resulted in an increase in the percentage
of the electronic meters in the current U.S. base from six percent of
the overall base in 1986 to nearly 50 percent of the installed meter
base in 1995.
In May 1996, the U.S.P.S. issued a proposed schedule for the phase out
of mechanical meters in the United States marketplace. The schedule
proposes that (i) as of June 1, 1996, placements of mechanical meters
will be available only as replacements for existing licensed mechanical
meters; (ii) as of March 1, 1997, mechanical meters may not be used by
persons or firms who process mail for a fee; (iii) as of December 31,
1997, mechanical meters that interface with mail machines or processors
will no longer be approved; and (iv) as of March 1, 1999, all other
mechanical meters (stand alone meters) will no longer be approved. The
company has voluntarily ceased marketing and making new placements of
mechanical meters in the United States as of June 1, 1996. The company
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 13
intends to continue to work with the U.S.P.S. to devise a final
mechanical meter migration schedule that is most beneficial to our
customers and minimizes any negative impact to the company. Until such
time as a final mechanical meter migration plan is completed, the
financial impact, if any, on the company cannot be determined with any
certainty; but it is currently the belief of the company that such migration
plan will not cause a material adverse financial impact.
The May 1996 U.S.P.S. proposal also contemplates the evolution of
metering technology to include a digital information based indicia
standard which has not yet been developed. In July 1996, the U.S.P.S.
proposed initial specifications for a digital information based indicia
program. The U.S.P.S.
anticipates that digital metering would eventually replace electronic
metering in the United States at some undetermined date in the future.
The company's long-term strategy also envisions the use of digital
technology in new product offerings; the company anticipates working
with the U.S.P.S. in this effort to achieve a timely and effective
substitution plan. However, until final standards for a digital
information based indicia program are completed, and
transition to the new standard is clarified by the U.S.P.S., the impact
of this proposal, if any, on the company cannot be determined.
The company wishes to caution readers that any forward-looking
statements contained in this Form 10-Q or made by the management of the
company involve risks and uncertainties, and are subject to change
based on various important factors. The following factors, among
others, could affect the company's financial results and could cause
the company's financial performance to differ materially from the
expectations expressed in any forward-looking statement made by or on
behalf of the company -- the strength of worldwide economies; the
effects of and changes in trade, monetary and fiscal policies and laws,
and inflation and monetary fluctuations; the timely development of and
acceptance of new Pitney Bowes products and the perceived overall value
of these products by users including the features, pricing, and quality
compared to competitors' products; the willingness of users to
substitute competitors' products for Pitney Bowes products; the success
of the company in gaining approval of its products in new markets where
regulatory approval is required; the ability of the company to
successfully enter new markets, including the ability to efficiently
distribute and finance its products; the impact of changes in postal
regulations around the world that directly regulate the manufacture,
ownership and or distribution of postage meters, or that regulate
postal rates and discounts; the willingness of mailers to utilize
alternative means of communication; and the company's success at
managing customer credit risk.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 14
Part II - Other Information
Item 1: Legal Proceedings
The company is currently a defendant in a number of lawsuits arising in
the ordinary course of business, none of which should have, in the
opinion of management and legal counsel, a material adverse effect on
the company's financial position or results of operations.
The company has been advised by the Antitrust Division of the U.S.
Department of Justice that its civil investigation of Pitney Bowes'
postage equipment business has been closed. The investigation was
concluded without any findings that Pitney Bowes violated the surviving
provisions of the 1959 consent decree between the company and the U.S.
Department of Justice, and/or the antitrust laws.
Item 4: Submission of Matters to a Vote of Security Holders.
Below are the final results of the voting at the annual meeting of
shareholders held on May 13, 1996:
Proposal 1 - Election of Directors
Nominee For Withheld
Michael J. Critelli 115,246,883 11,800,384
George B. Harvey 115,203,912 11,843,355
Michael I. Roth 115,237,998 11,809,269
Phyllis S. Sewell 115,190,319 11,856,948
Proposal 2 - Appointment of Price Waterhouse LLP as Independent
Accountants
For Withheld Abstain
126,508,573 250,928 287,766
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 15
Proposal 3 - Proposal to Approve Adoption of the 1996 Pitney Bowes
Employee Stock Purchase Plan
For Withheld Abstain
120,823,328 5,561,570 662,369
Proposal 4 - Proposal to Approve Amendment to the Pitney Bowes
1991 Stock Plan
For Withheld Abstain
121,337,186 4,762,280 947,801
Proposal 5 - Proposal to Approve Amendment to the Pitney Bowes
Inc. Key Employees' Incentive Plan
For Withheld Abstain
117,174,545 8,930,669 942,053
There were no broker non-votes on any proposals.
The following other directors continued their term of office after the
annual meeting:
Linda G. Alvarado Charles E. Hugel
Marc C. Breslawsky David T. Kimball
William E. Butler Leroy D. Nunery
Colin G. Campbell Arthur R. Taylor
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 16
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Reg. S-K Status or Incorporation
Exhibits Description by Reference
(3)(a) Restated Certificate of See Exhibit (i)
Incorporation, as amended. on page 18.
(11) Computation of earnings See Exhibit (ii)
per share. on page 49.
(12) Computation of ratio of See Exhibit (iii)
earnings to fixed charges. on page 50.
(27) Financial Data Schedule See Exhibit (iv)
on page 51.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the three months ended June
30, 1996.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 17
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.
PITNEY BOWES INC.
August 14, 1996
/s/ C. F. Adimando
C. F. Adimando
Vice President - Finance and
Administration, and Treasurer
(Principal Financial Officer)
/s/ A. F. Henock
A. F. Henock
Vice President - Controller and
Chief Tax Counsel
(Principal Accounting Officer)
<TABLE>
Pitney Bowes Inc. - Form 10-Q Pitney Bowes Inc.
Six Months Ended June 30, 1996 Computation of Earnings per Share Exhibit (ii)
Page 49
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands, except per share data) 1996 1995 1996 1995
<CAPTION>
<S> <C> <C> <C> <C>
Primary
Income from continuing operations (1) $ 118,533 $ 98,348 $ 225,042 $ 194,337
Discontinued operations - 10,675 - 20,997
Net income applicable to common stock $ 118,533 $ 109,023 $ 225,042 $ 215,334
Weighted average number of common shares
outstanding 149,444,335 151,140,234 149,655,627 151,147,730
Preference stock, $2.12 cumulative convertible 731,416 789,002 738,887 800,486
Stock option and purchase plans 769,363 324,315 777,022 224,559
Total common and common equivalent shares
outstanding 150,945,114 152,253,551 151,171,536 152,172,775
Income per common and common equivalent share -
primary:
Continuing operations $ .79 $ .65 $ 1.49 $ 1.28
Discontinued operations - .07 - .14
Net income $ .79 $ .72 $ 1.49 $ 1.42
Fully Diluted
Income from continuing operations $ 118,533 $ 98,349 $ 225,042 $ 194,338
Discontinued operations - 10,675 - 20,997
Net income applicable to common stock $ 118,533 $ 109,024 $ 225,042 $ 215,335
Weighted average number of common shares
outstanding 149,444,335 151,140,234 149,655,627 151,147,730
Preference stock, $2.12 cumulative convertible 731,416 789,002 738,887 800,486
Stock option and purchase plans 803,981 356,987 846,838 259,794
Preferred stock, 4% cumulative convertible 11,490 11,490 11,490 11,526
Total common and common equivalent shares
outstanding 150,991,222 152,297,713 151,252,842 152,219,536
Income per common and common equivalent share -
fully diluted:
Continuing operations $ .79 $ .65 $ 1.49 $ 1.28
Discontinued operations - .07 - .14
Net income $ .79 $ .72 $ 1.49 $ 1.42
</TABLE>
[FN]
(1) Income from continuing operations was adjusted for preferred dividends.
<TABLE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1996
Page 50
Exhibit (iii)
Pitney Bowes Inc.
Computation of Ratio of Earnings to Fixed Charges (1)
(Dollars in thousands) Three Months Ended Six Months Ended
<CAPTION> June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income from continuing
operations before income
taxes $182,196 $153,615 $345,635 $303,601
Add:
Interest expense 48,971 61,593 98,883 121,704
Portion of rents
representative of the
interest factor 11,250 10,446 22,311 21,227
Amortization of capitalized
interest 229 229 457 457
Minority interest in the
income of subsidiary
with fixed charges 1,991 - 4,110 -
Income as adjusted $244,637 $225,883 $471,396 $446,989
Fixed charges:
Interest expense $ 48,971 $ 61,593 $ 98,883 $121,704
Capitalized interest 599 468 1,201 962
Portion of rents
representative of the
interest factor 11,250 10,446 22,311 21,227
Minority interest in the
income of subsidiary
with fixed charges 1,991 - 4,110 -
$ 62,811 $ 72,507 $126,505 $143,893
Ratio of earnings to fixed
charges 3.89 3.12 3.73 3.11
<FN>
(1) The computation of the ratio of earnings to fixed charges has been
computed by dividing income from continuing operations before income taxes and
fixed charges by fixed charges. Included in fixed charges is one-third of
rental expense as the representative portion of interest.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM PITNEY BOWES INC.
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME, CORRESPONDING
FOOTNOTE #3 FIXED ASSETS AND STATEMENT RE COMPUTATION OF PER SHARE EARNINGS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 92,787
<SECURITIES> 996
<RECEIVABLES> 370,630
<ALLOWANCES> 13,880
<INVENTORY> 289,310
<CURRENT-ASSETS> 2,190,927
<PP&E> 1,086,105
<DEPRECIATION> 591,887
<TOTAL-ASSETS> 7,888,458
<CURRENT-LIABILITIES> 3,694,080
<BONDS> 801,455
<COMMON> 323,338
200,000
2,504
<OTHER-SE> 1,812,670
<TOTAL-LIABILITY-AND-EQUITY> 7,888,458
<SALES> 794,653
<TOTAL-REVENUES> 1,849,202
<CGS> 496,803
<TOTAL-COSTS> 737,130
<OTHER-EXPENSES> 670,454
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,983
<INCOME-PRETAX> 345,635
<INCOME-TAX> 120,593
<INCOME-CONTINUING> 225,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 225,042
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
</TABLE>
RESTATED CERTIFICATE OF INCORPORATION
OF
Pitney Bowes Inc.
Pitney Bowes Inc., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as
follows:
1. The name of the corporation is Pitney Bowes Inc., and
the name under which the corporation was originally
incorporated is PITNEY-BOWES POSTAGE METER COMPANY. The date
of filing its original Certificate of Incorporation with
the Secretary of State was April 23, 1920.
2. This Restated Certificate of Incorporation only
restates and integrates and does not further amend the
provisions of the Certificate of Incorporation of this
corporation as heretofore amended or supplemented and there
is no discrepancy between those provisions and the
provisions of this Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended
or supplemented heretofore is hereby restated without
further amendment or changes to read as herein set forth in
full:
First:- That the name of the Corporation is Pitney Bowes
Inc.
Second:- The address of the Corporation's registered office
in Delaware is Corporation Trust Center, 1209 Orange Street,
City of Wilmington, New Castle County, Delaware, and the
name of its registered agent at such address is The
Corporation Trust Company.
Third:- The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
Fourth:- The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
245,600,000 shares, divided into 600,000 shares of
Cumulative Preferred Stock with the par value of $50 per
share (hereinafter called 'Preferred Stock'), 5,000,000
shares of Preference Stock without par value (hereinafter
called 'Preference Stock') and 240,000,000 shares of Common
Stock with the par value of $2 per share (hereinafter called
'Common Stock'). Subject to the provisions of law, the
Corporation may issue shares of its Preferred Stock,
Preference Stock and Common Stock, respectively, from time
to time and any securities convertible into, warrants,
options or rights to subscribe for, any such class or
classes (or any series of any thereof), for such
consideration as may be fixed from time to time by the Board
of Directors, which is hereby expressly authorized to fix
the same in its absolute and uncontrolled discretion subject
as aforesaid. Shares of Preference Stock without par value
for which consideration so fixed has been paid or delivered
to the Corporation shall be deemed fully paid stock and
shall not be liable to any further call or assessment
thereon and the holders of such shares shall not be liable
for any further demands in respect of such shares. The
Corporation may issue shares of its Preferred Stock,
Preference Stock and Common Stock and any securities
convertible into, or warrants options or rights to subscribe
for, such class or classes (or any series of any thereof)
without offering the same to the holders of its outstanding
capital stock. The minimum amount of capital with which the
Corporation shall commence business shall not be less than
$100,000.
<PAGE>
I. PROVISIONS RELATING TO PREFERRED STOCK
A. Issuance in Series.
(1) The Preferred Stock may be issued from time to time in
one or more series, each such series to have such
designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as are stated and
expressed herein and in any resolution or resolutions
providing for the issue of such series adopted by the Board
of Directors as hereinafter provided.
(2) Authority is hereby expressly vested in the Board of
Directors of the Corporation, subject to the provisions of
this Article Fourth, to authorize the issue of one or more
series of Preferred Stock and with respect to each series to
fix, by resolution or resolutions providing for the issue of
such series,
(a) the number of shares to constitute such series (which
number may be increased or decreased by action of the Board
of Directors of the Corporation as provided by law) and the
distinctive designation thereof;
(b) the dividend rate on the shares of such series, the
date or dates from which dividends shall accumulate and the
dividend payment dates;
(c) the premium, if any, over and above the par value
thereof and accrued dividends thereon, payable upon the
redemption of shares of such series otherwise than by or
through a retirement, purchase or sinking fund;
(d) whether or not the shares of such series shall be
subject to the operation of a retirement, purchase or
sinking fund, and, if so, the terms and provisions relative
to the operation thereof, including the premium, if any,
over and above the par value thereof and accrued dividends
thereon, payable on redemption by or through such fund;
(e) whether or not the shares of such series shall be made
convertible into or exchangeable for shares of any other
class or classes of stock of the Corporation or of any other
series of the same class of stock of the Corporation, or
shares of any other corporation, and, if made so convertible
or exchangeable, the conversion or exchange price or prices
or ratio or ratios or rate or rates at which such conversion
or exchange may be made, the method (if any) of adjusting
the same, and the other terms of such conversion or
exchange;
(f) the premium, if any, over and above the par value
thereof and accrued dividends thereon, which shares of such
series shall be entitled to receive upon the voluntary
liquidation, dissolution or winding up of the Corporation;
and
(g) any other preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, of such series not
inconsistent with the provisions of this Article Fourth.
(3) Each share of any one series of Preferred Stock shall be
identical with all other shares of such series in all
respects, except that shares of any one series issued at
different times may differ as to the dates from which
dividends thereon shall accumulate. All series of Preferred
Stock shall rank equally and be identical in all respects
except as permitted by the foregoing provisions of this
subheading A.
B. Dividend Rights and Restrictions.
(1) The holders of the Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out
of the assets of the Corporations legally available
therefor, cumulative dividends at the respective rates per
annum fixed by the Board of Directors for the shares of the
respective series, and no more, payable on such dates as
shall be fixed by the Board of Directors for the shares of
the respective series. Such dividends shall be cumulative as
to each share from the date fixed by the Board of Directors
pursuant to the provisions of paragraph (2) under subheading
A of this heading I.
<PAGE>
(2) No full dividend shall be declared or paid or set a part
for payment on the Preferred Stock of any series for any
dividend period unless full cumulative dividends, have been
or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such
payment on all the outstanding Preferred Stock of all series
for all dividend periods terminating on or prior to the date
of payment of such full dividend. When dividends are not
paid in full as aforesaid an all shares of all series of the
Preferred Stock at the time outstanding, any dividend
payments on the Preferred Stock, including accumulations, if
any, shall be paid to the holders of shares of all series of
the Preferred Stock ratably in proportion to the respective
sums which such holders would receive if all dividends
thereon accrued to the date of payment were declared and
paid in full. Accumulations of dividends shall not bear
interest.
(3) No dividend (other than a dividend in Common Stock or in
any other class of stock ranking junior to the Preferred
Stock as to assets and dividends) shall be declared or paid
or set aside for payment or other distribution declared or
made upon the Common Stock or upon any other class of stock
ranking junior to the Preferred Stock as to assets or
dividends, nor shall any Common Stock of the Corporation nor
any other class of stock of the Corporation ranking junior
to the Preferred Stock as to assets or dividends, be
redeemed, purchased or otherwise acquired for any
consideration by the Corporation (except by conversion into
or exchange for stock of the Corporation ranking junior to
the Preferred Stock as to assets and dividends) or any
Subsidiary thereof (as defined under subheading G of this
heading I), while any of the Preferred Stock is outstanding,
unless, in each case.
(a) the full cumulative dividends on all outstanding shares
of the Preferred Stock shall have been paid for all past
dividend periods and the full cumulative dividend on all
such shares of Preferred Stock for the current dividend
period or periods shall have been declared and paid or
declared and a sum sufficient for the payment thereof set
apart for such payment;
(b) the Corporation shall have made all payments, if any,
then or theretofore due under the requirements of all
retirement, purchase or sinking funds, if any, for the
Preferred Stock and all defaults in complying with any such
requirements shall have been made good.
C. Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of Preferred Stock of
each series shall be entitled to receive out of the assets
of the Corporation (whether capital or surplus) the
following amounts, before any payment or distribution shall
be made on the Common Stock or on any other class of stock
ranking junior to the Preferred Stock as to assets:
(a) in case of any involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the shares of
Preferred Stock of each series shall be entitled to receive
cash in an amount equal to the par value thereof together
with a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the
date of final distribution to the holders of the Preferred
Stock at the rate fixed by the Board of Directors for the
shares of such series; or
(b) in case of any voluntary dissolution, liquidation or
winding up of the Corporation, the holders of the shares of
Preferred Stock of each series shall be entitled to receive
cash in an amount equal to the par value thereof plus such
premium, if any, as shall have been fixed by the Board of
Directors for the shares of such series, together with a sum
equal to all dividends (whether or not earned or declared)
on such shares accrued and unpaid thereon to the date of the
final distribution to the holders of the Preferred Stock at
the rate fixed by the Board of Directors for the shares of
such series.
(2) The sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all
or substantially all of the property and assets of the
Corporation shall be deemed a voluntary dissolution,
liquidation or winding up of the Corporation for the
purposes of this subheading C, but the merger or
consolidation of the Corporation into or with any other
corporation or the merger or consolidation of any other
corporation into or with the Corporation, if consented to by
the holders of 66 2/3% of all the shares of Preferred Stock
at the time outstanding as provided in paragraph (3) under
subheading E of this heading I (or if, by reason of the the
provisions of sub paragraph (c) of such paragraph (3), not
requiring such consent), shall not be deemed to be a
dissolution, liquidation or winding up voluntary or
<PAGE>
involuntary, for the purposes of this subheading C or for
the purposes of subheading B or heading II of this Article
Fourth.
(3) After the payment to the holders of the Preferred Stock
of the full preferential amounts aforesaid, the holders of
the Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Corporation.
(4) If the assets distributable on such dissolution,
liquidation or winding up, whether voluntary or involuntary,
shall be insufficient to permit the payment to the holders
of the Preferred Stock of the full preferential amounts
aforesaid, then such assets or the proceeds thereof shall be
distributed among the holders of the Preferred Stock ratably
in proportion to the respective amounts the holders of such
shares of stock would be entitled to receive if they were
paid the full preferential amounts aforesaid.
D. Redemption.
(1) The Corporation shall have the right to redeem the
Preferred Stock of any series at any time, either in whole
or in such portions as from time to time the Board of
Directors may determine, a the par value thereof, plus an
amount equal to accrued and unpaid dividends, thereon to the
date fixed for redemption (hereinafter referred to as the
"Redemption Date") and in addition thereto the amount of
such premium, if any, payable upon such redemption as shall
be fixed for the shares of such series by the Board of
Directors (the total sum so payable upon any redemption
being hereinafter referred to as the "Redemption Price").
(2) At its election, the Corporation, on or prior to the
Redemption Date, may deposit the aggregate of the Redemption
Price of the shares to be redeemed with a bank or trust
company in the Borough of Manhattan, City and State of New
York having a capital and surplus (as shown by its latest
published statement) of at least $5,000,000 (hereinafter
referred to as the "Depositary") designated by the Board of
Directors, in trust for payment to the holders of the
Preferred Stock then to be redeemed.
(3) In the event that less than all of the outstanding
shares of Preferred Stock of any series are to be redeemed,
the number of shares to be redeemed shall be determined by
the Board of Directors and the shares to be redeemed shall
be determined by lot or pro rata as may be determined by the
Board of Directors or by such other method as may be
approved by the Board of Directors to conform to any rule or
regulation of the New York Stock Exchange or any other stock
exchange upon which the Preferred Stock may at the time be
listed.
(4) Notice of any redemption of Preferred Stock, specifying
the time and place of redemption, shall be mailed to each
holder of record of the shares of Preferred Stock to be
redeemed, at his address registered with the Corporation,
not more than 60 nor less than 30 days prior to the
Redemption Date; if less than all the shares owned by such
shareholder are then to be redeemed, the notice shall also
specify the number of shares thereof which are to be
redeemed. Also, notice of any such redemption, specifying
the number of shares of Preferred Stock to be redeemed and
the time and place of redemption, and, if less than all the
outstanding shares of any series are to be redeemed, the
certificate numbers of the series to be redeemed, shall be
published once, not more than 60 nor less than 30 days prior
to the Redemption Date, in a daily newspaper printed in the
English language and published and of general circulation in
the Borough of Manhattan, City and State of New York.
(5) Notice of redemption having been so mailed and
published, the shares of Preferred Stock therein designated
for redemption shall not be entitled to any dividends
accruing after the Redemption Date specified in such notice,
unless default be made in the payment of the Redemption
Price or in the deposit thereof as provided in paragraph (2)
under this subheading D, and on such Redemption Date, or if
the deposit provided for in paragraph (2) under this
subheading D shall have been made and the Corporation shall
have stated in such notice or redemption that the Redemption
Price of such shares will be payable before the Redemption
Date on an earlier date therein specified, then on such
earlier date, all rights of the respective holders of such
shares as shareholders of the Corporation by reason of the
ownership of such shares, shall cease, except any unexpired
conversion or exchange right and the right to receive the
Redemption Price of such shares upon presentation and
surrender of the respective certificates representing such
shares, and such shares shall not after such Redemption Date
or after such earlier date, as the case may be, be deemed to
be outstanding. In case less than all the shares represented
by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without
cost to the holder thereof.
<PAGE>
(6) Any funds deposited with the Depositary as provided in
paragraph (2) under this subheading D for the redemption of
Preferred Stock which shall not be required for such
redemption by reason of the exercise, subsequent to the date
of such deposit, of any right of conversion or exchange, or
otherwise, shall be returned to the Corporation forthwith.
Any funds deposited with the Depositary as aforesaid for the
redemption of shares of Preferred Stock remaining unclaimed
at the end of six years from and after the Redemption Date
in respect of which such funds were deposited shall be
returned to the Corporation forthwith and thereafter the
holders of such shares of Preferred Stock shall look only to
the Corporation for the payment of the Redemption Price
thereof. Any interest accrued on any funds deposited with
the Depositary shall belong to the Corporation and shall be
paid to it from time to time on demand.
(7) The provisions of the subheading D shall apply to
redemptions made for the purpose of complying with the
requirements of any retirements, purchase or sinking fund
with respect to shares of any series of the Preferred Stock,
provided, however, that the premium, if any, payable on any
redemption for such retirement, purchase or sinking fund
shall be as fixed for the shares of the particular series by
the Board of Directors.
(8) In order to facilitate the redemption of any shares of
Preferred Stock, the Board of Directors is authorized to
cause the transfer books of the Corporation to be closed as
to the shares of the particular series to be redeemed.
(9) Any shares of Preferred Stock which shall at any time
have been redeemed, or which shall at any time have been
surrendered for cancellation pursuant to any retirement,
purchase or sinking fund with respect to any series of the
Preferred Stock, or which shall have been converted or
exchanged for shares of any other class of stock of the
Corporation, shall, after such redemption, surrender,
conversion or exchange, have the status of authorized but
unissued shares of Preferred Stock, without designation as
to series until such shares are designated as part of a
particular series by the Board of Directors.
(10) Regardless of any other provision hereof, if at any
time the Corporation shall fail to pay dividends in full
upon all the then outstanding shares of the Preferred Stock,
thereafter and until dividends in full shall have been
declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment upon all such
shares, the Corporation shall not redeem for any purpose any
Preferred Stock unless all of the Preferred Stock at the
time outstanding is simultaneously redeemed, and neither the
Corporation nor any Subsidiary shall purchase any Preferred
Stock except in accordance with a purchase offer made to all
holders of the Preferred Stock at the time outstanding upon
the same terms (except that, if more than one series of
Preferred Stock is at the time outstanding, the terms may
include appropriate variations as between the respective
series by reason of the differing provisions thereof);
provided that the provisions of this paragraph (10) shall
not prevent shares of Preferred Stock of any series acquired
by the Corporation prior to any such failure to pay
dividends in full from being applied at any time by the
Corporation to the satisfaction of the requirements of any
retirement, purchase or sinking fund with respect to such
series of Preferred Stock.
E. Voting Rights.
(1) Except as otherwise expressly provided by law and by
paragraphs (2), (3) and (4) under this subheading E, the
holders of shares of Preferred Stock shall have no right to
vote for the election of directors or for any other purpose
or on any other subject or to be represented at or to
receive notice of any meeting of stockholders.
(2) In the event that at any time, or from time to time,
(a) six or more quarterly dividends, whether
consecutive or not, on any series of the Preferred Stock
shall be in arrears and unpaid, whether or not earned or
declared; or
(b) the Corporation shall have failed to set apart for
the retirement or purchase of the Preferred Stock any amount
then required by any retirement, purchase or sinking fund
with respect to any series of Preferred Stock to be set
apart; or
(c) after setting any such amount apart, the
Corporation shall be in default in applying the same in the
manner provided with respect to such fund;
<PAGE>
thereafter the holders of the Preferred Stock of all series
then outstanding shall be entitled to receive notice of all
meetings of stockholders for the election of directors, and
at each such meeting shall be entitled, voting separately as
a class, to elect one-third of the total number of directors
of the Corporation but not less than three directors. At any
time after the holders of the Preferred Stock shall have
become entitled as aforesaid to vote for the election of
directors, a meeting of the stockholders for the election of
new directors shall be called, upon the same notice as is
required for the annual meeting of stockholders, by the
Secretary of the Corporation upon the request of the holders
of record of at least 10% of the shares of Preferred Stock
at the time outstanding, or may be called, upon such notice,
by the holders of record of at least 10% of the shares of
Preferred Stock at the time outstanding. The term of office
of the directors of the Corporation shall terminate upon the
election of new directors at such meeting, and the new
directors elected at such meeting shall serve until the next
annual meeting of stockholders and until their successors
shall be elected, except as hereinafter provided in case the
voting rights of the holders of the Preferred Stock for the
election of directors shall cease. Such voting rights of the
holders of the Preferred Stock for the election of directors
shall continue until
(i) all dividends on the Preferred Stock in arrears shall
have been paid in full and dividends on the Preferred Stock
for the current dividend period or periods shall have been
declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment, and
(ii) all amounts for the retirement or purchase of the
Preferred Stock which the Corporation shall have failed to
set apart or apply shall have been set apart in full or
applied, as the case may be, in which event the voting
rights of the holders of the Preferred Stock for the
election of directors shall cease, subject to revival, as
aforesaid upon the occurrence of any of the events specified
in subdivisions (a), (b) or (c) of this paragraph (2). At
any time after the holders of the Preferred Stock shall
cease, as aforesaid, to be entitled to vote for the election
of directors, a meeting of the stockholders for the election
of new directors shall be called, upon the same notice as is
required for the annual meeting of stockholders, by the
Secretary of the Corporation upon the request of the holders
of record of at least 10% of the shares of Common Stock at
the time outstanding, or may be called, upon such notice, by
the holders of record of at least 10% of the shares of
Common Stock at the time outstanding. The term of office of
the directors of the Corporation shall terminate upon the
election of new directors at such meeting, and the new
directors elected at such meeting shall serve until the next
annual meeting of stockholders and until their successors
shall be elected, except as hereinabove provided in case the
holders of the Preferred Stock shall again become entitled
to vote for the election of directors.
(3) Unless the vote or consent of the holders of a greater
number of shares of Preferred Stock shall then be required
by law, the consent of the holders of at least 66 2/3% of
all of the shares of Preferred Stock at the time
outstanding, given in person or by proxy, either in writing
or by a vote at a meeting called for the purpose at which
the holders of the Preferred Stock of all series shall vote
separately as a class, shall be necessary for authorizing,
effecting or validating any one or more of the following
(subject to the provisions of paragraph (5) under this
subheading E applicable in case of the simultaneous
redemption of all of the Preferred Stock at the time
outstanding):
(a) the creation, authorization or issue of any shares of
any class of stock of the Corporation ranking prior to the
Preferred Stock as to dividends or assets or otherwise, or
the reclassification of any authorized stock of the
Corporation into any such prior shares, or the creation,
authorization or issue of any obligation or security
convertible into any such prior shares; or
(b) the amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation of the
Corporation, or of any certificate amendatory thereof or
supplemental thereto, so as to affect adversely the
preferences, rights, powers or privileges of the Preferred
Stock or the holders thereof, provided, however, that if
such amendment, alteration or repeal shall so affect less
than all the series of the Preferred Stock at the time
outstanding, then only the consent of the holders of 66 2/3%
of the outstanding shares of the series so affected shall be
necessary, unless at the time the laws of the State of
Delaware shall otherwise require; or
(c) the voluntary liquidation, dissolution or winding up of
the Corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the
Corporation or the parting with control thereof, or the
merger or consolidation of the Corporation into or with any
<PAGE>
other corporation or the merger or consolidation of any
other corporation into or with the Corporation; provided;
however, that such restriction shall not apply to nor shall
any consent of the holders of the Preferred Stock be
required for the merger or consolidation of the Corporation
into or with a Subsidiary or the merger or consolidation of
any Subsidiary into or with the Corporation if none of the
preferences, rights, powers or privileges of the Preferred
Stock or the holders thereof will be adversely affected
thereby, and if the corporation resulting from such merger
or consolidation will have authorized or outstanding after
such merger or consolidation no class of stock or other
securities (except such stock or securities of the
Corporation as may have been authorized or outstanding
immediately preceding such merger or consolidation) ranking
prior to or on a parity with the Preferred Stock as to
dividends or assets or otherwise.
(4) Unless the vote or consent of the holders of a greater
number of shares of Preferred Stock shall then be required
by law, the consent of the holders of at least a majority of
all of the shares of Preferred Stock at the time
outstanding, given in person or by proxy, either in writing
or by a vote at a meeting called for the purpose at which
the holders of the Preferred Stock of all series shall vote
separately as a class, shall be necessary for authorizing,
effecting or validating any one or more of the following
(subject to the provisions of paragraph (5) under this
subheading E applicable in case of the simultaneous
redemption of all of the Preferred Stock at the time
outstanding):
any increase of the authorized amount of the Preferred
Stock, or the creation, or authorization of any shares of
any other class of stock of the Corporation ranking on a
parity with the Preferred Stock as to dividends or assets or
otherwise, or the reclassification of any authorized stock
of the Corporation into any such parity shares, or the
creation or authorization of any obligation or security
convertible into any such parity shares.
(5) Notwithstanding the provisions of paragraphs (3) and (4)
under this subheading E, no vote or consent of the holders
of the Preferred Stock shall be required to create,
authorize or issue any shares of any class of stock of the
Corporation ranking prior to or on a parity with the
Preferred Stock as to dividends or assets or otherwise, if
it is provided that no such prior or parity shares may be
issued unless prior to or simultaneously with the issue
thereof.
(a) the Redemption Price of all the Preferred
Stock at the time outstanding shall be deposited with a
Depositary as provided in paragraph (2) under subheading
D hereof, and
(b) provision shall be made for the redemption of
all such Preferred Stock in accordance with the provisions
under such subheading D on a Redemption Date not more
than 35 days after such issue.
F. No Preemptive Rights.
None of the holders of shares of the Preferred Stock shall
be entitled as such, as a matter of right, to purchase,
subscribe for or otherwise acquire any new or additional
shares of stock of the Corporation of any class, or any
options or warrants to purchase, subscribe for or otherwise
acquire any such new or additional shares, or any shares,
notes, debentures, bonds or other securities convertible
into or carrying options or warrants to purchase, subscribe
for or otherwise acquire any such new or additional shares.
G. Definitions.
For the purposes of this heading I,
(a) the term "outstanding" used in reference to
Preferred Stock shall mean issued shares of Preferred Stock,
excluding shares held by the Corporation or a Subsidiary;
(b) the term "Subsidiary" shall mean any corporation,
association or business trust a majority of the shares of
stock of which at the time outstanding having voting power
for the election of directors or trustees either at all
times or only so long as no senior class of stock has voting
powers because of default in dividends or because of the
existence of some other default, is owned directly or
indirectly by the Corporation and/or by one or more of its
other Subsidiaries.
<PAGE>
II. PROVISIONS RELATING TO COMMON STOCK
A. Dividend Rights.
Subject to the prior rights of all classes of stock having
prior rights as to dividends at the time outstanding, the
holders of the Common Stock shall be entitled to receive,
when and as declared by the Board of Directors out of the
assets of the Corporation legally available therefor, such
dividends as may be declared from time to time by the Board
of Directors.
B. Liquidation Rights.
Upon the dissolution, liquidation or winding up of the
Corporation, after the payment in full of all preferential
amounts to which the holders of outstanding shares of all
classes of stock having prior rights thereto at the time
outstanding shall be entitled, the remainder of the assets
of the Corporation shall be distributed ratably among the
holders of the shares of Common Stock at the time
outstanding.
C. Voting Rights.
At all meetings of the stockholders, each holder of record
of Common Stock shall be entitled to vote and shall have one
vote for each share held by him of record.
III. TERMS OF 4% CONVERTIBLE CUMULATIVE PREFERRED STOCK
(as specified in resolution of the Board of
Directors adopted April 24, 1967)
RESOLVED, that 240,000 shares of the total authorized
amount of 600,000 shares of Cumulative Preferred Stock be
issued and constitute a single series designated "4%
Convertible Cumulative Preferred Stock" (hereinafter
called the "Series"), such Series to have the voting
powers, preferences and relative, participating, optional
or other special rights, and qualifications, limitations
or restrictions thereof, set forth in heading I of Article
Fourth of the Certificate of Incorporation, as heretofore
amended, and hereinafter set forth:
1. The dividend rate on the Series shall be 4% per annum,
and dividends thereon shall be payable quarterly on the
first days of February, May, August and November in each
year. Dividends on shares of the Series shall be
cumulative from and after the respective dates of issue
thereof.
2. The premium, over and above the par value thereof and
accrued dividends thereon, payable upon redemption of
shares of the Series pursuant to the provisions of
subheading D of heading I of Article Fourth of the
Certificate of Incorporation as amended, shall be the
following amounts per share:
$2.00 if the redemption date is prior to May 1, 1972;
$1.25 if the redemption date is on or after May 1, 1972
and prior to May 1, 1977;
$0.50 if the redemption date is on or after May 1, 1977
and prior to May 1, 1982;
$0.00 if the redemption date is on or after May 1, 1982.
3. The premium, over and above the par value thereof and
accrued dividends thereon, which shares of the Series
shall be entitled to receive upon the voluntary
liquidation, dissolution or winding up of the Company
pursuant to the provisions of subheading C of heading I of
Article Fourth of the Certificate of Incorporation as
amended, shall be the same premium, if any, as would be
payable pursuant to the provisions of the foregoing
paragraph (2) of this resolution if all such shares were
called for redemption on the date of the final
distribution to the holders of the Series.
4. The holders of shares of this Series shall have the
right, at their option, to convert such shares into shares
of Common Stock of the Company at any time on and subject
to the following terms and conditions:
(1) The shares of this Series shall be convertible at the
office of any Transfer Agent, and at such other office or
offices, if any, as the Board of Directors may designate,
into full paid and non-assessable shares (calculated as to
each conversion to the nearest 1/100th of a share) of
Common Stock of the Company, at the conversion price,
determined as hereinafter provided, in effect at the time
<PAGE>
of conversion, each shares of this Series being taken at
$50 for the purpose of such conversion. The price at which
shares of Common Stock shall be delivered upon conversion
(herein called the "conversion price") shall be initially
$70 per share of Common Stock. The conversion price shall
be reduced in certain instances as provided in paragraphs
(3), (9) and (10) below, and shall be increased in certain
instances as
provided in paragraph (10) below. No payment or adjustment
shall be made upon any conversion on account of any
dividends accrued on the shares of this Series surrendered
for conversion or on account of any dividends on the
Common Stock issued upon such conversion.
(2) In order to convert shares of this Series into Common
Stock the holder thereof shall surrender at any office
hereinabove mentioned the certificate or certificates
therefor, duly endorsed to the Company or in blank, and
give written notice to the Company at said office that he
elects to convert such shares. Shares of this Series shall
be deemed to have been converted immediately prior to the
close of business on the day of the surrender of such
shares for conversion as provided above, and the person or
persons entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the
conversion date, the Company shall issue and shall deliver
at said office a certificate or certificates for the
number of full shares of Common Stock issuable upon such
conversion, together with a scrip certificate for, or cash
in lieu of, any fraction of a share, as hereinafter
provided, to the person or persons entitled to receive the
same. In case shares of this Series are called for
redemption, the right to convert such shares shall cease
and terminate at the close of business on the Redemption
Date, unless default shall be made in payment of the
redemption price.
(3) In case the conversion price in effect immediately
prior to the close of business on any day shall exceed by
50 cents or more the amount determined at the close of
business on such day by dividing:
(i) a sum equal to (a) 4,565,687 multiplied by $70 (being
the initial conversion price), plus (b) the aggregate of
the amounts of all consideration received by the Company
upon the issuance of Additional Shares of Common Stock (as
hereinafter defined), minus (c) the aggregate of the
amounts of all dividends and other distributions which
have been paid or made after May 1, 1967 on Common Stock
of the Company, other than in cash out of its earned
surplus or in Common Stock of the Company, by
(ii) the sum of (a) 4,565,687 and (b) the number of
Additional Shares of Common Stock which shall have been
issued,
the conversion price shall be reduced, effective
immediately prior to the opening of business on the next
succeeding day, by an amount equal to the amount by which
such conversion price shall exceed the amount so
determined. The foregoing amount of 50 cents (or such
amount as theretofore adjusted) shall be subject to
adjustment as provided in paragraphs (9) and (10) below,
and such amount (or such amount as theretofore adjusted)
is referred to in such paragraphs as the "Differential
Amount."
(4) The term "Additional Shares of Common Stock" as used
herein shall mean all shares of Common Stock issued by the
Company after May 1, 1967 (including shares deemed to be
"Additional Shares of Common Stock" pursuant to paragraph
(10) below), whether or not subsequently reacquired or
retired by the Company, other than:
(i) shares issued upon conversion of shares of this
Series;
(ii) shares issued upon exercise of options granted or to
be granted pursuant to the Company's Stock Purchase Plans
as in effect on May 1, 1967, in an aggregate number of
shares not exceeding the number of shares issuable under
such Plans as in effect on such date (or such number of
shares is adjusted pursuant to anti-dilution provisions of
such Plans); and
(iii) shares issued by way of dividend or other
distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the
foregoing clauses (1) or (ii) or this clause (iii) or
shares of Common Stock resulting from any subdivision or
combination of shares of Common Stock so excluded.
<PAGE>
The sale or other disposition of any shares of Common
Stock or other securities held in the treasury of the
Company shall not be deemed an issuance thereof.
(5) In case of the issuance of Additional Shares of Common
Stock for a consideration part or all of which shall be
cash, the amount of the cash consideration therefor shall
be deemed to be the amount of cash received by the Company
for such shares (or, if such Additional Shares of Common
Stock are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of
Common Stock are sold to underwriters or dealers for
public offering without a subscription offering, the
initial public offering price), without deducting
therefrom any compensation or discount in the sale,
underwriting or purchase thereof by underwriters or
dealers or others performing similar services or for any
expenses incurred in connection therewith.
(6) In case of the issuance (otherwise than as a dividend
or other distribution on any stock of the Company or upon
conversion or exchange of other securities of the Company)
of Additional Shares of Common Stock for a consideration
part or all of which shall be other than cash, the amount
of the consideration therefor other than cash shall be
deemed to be the value of such consideration as determined
by the Board of Directors, irrespective of the accounting
treatment thereof. The reclassification of securities
other than Common Stock into securities including Common
Stock shall be deemed to involve the issuance for a
consideration other than cash of such Common Stock
immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to
receive such Common Stock.
(7) Additional Shares of Common Stock issuable by way of
dividend or other distribution on any class of capital
stock of the Company shall be deemed to have been issued
without consideration, and shall be deemed to have been
issued immediately prior to the close of business on the
date fixed for the determination of stockholders entitled
to receive such dividend or other distribution, except
that if the total number of shares constituting such
dividend or other distribution exceeds five percent of the
total number of shares of Common Stock outstanding at the
close of business on the date fixed for the determination
of stockholders entitled to receive such dividend or other
distribution such additional shares of Common Stock shall
be deemed to have been issued immediately after the
opening of business on the day following the date fixed
for the determination of
stockholders entitled to receive such dividend or other
distribution.
A dividend or other distribution in cash or in property
(including any dividend or other distribution in
securities other than Common Stock) shall be deemed to
have been paid or made immediately prior to the close of
business on the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution and the amount of such dividend or other
distribution in property shall be deemed to be the value
of such property as of the date of the adoption of the
resolution declaring such dividend or other distribution,
as determined by the Board of Directors at or as of that
date. In the case of any such dividend or other
distribution on Common Stock which consists of securities
which are convertible into or exchangeable for shares of
Common Stock, such securities shall be deemed to have been
issued for a consideration equal to the value thereof as
so determined.
If, upon the payment of any dividend or other distribution
in cash or in property (excluding Common Stock but
including all other securities), outstanding shares of
Common Stock are cancelled or required to be surrendered
for cancellation, on a pro rata basis, the excess of the
number of shares of Common Stock outstanding immediately
prior thereto over the number to be outstanding
immediately thereafter (less that portion of such excess
attributable to the cancellation of shares excluded from
the definition of Additional Shares of Common Stock by
clauses (i), (ii) or (iii) of paragraph (4) above), shall
be deducted from the sum computed pursuant to clause (ii)
of paragraph (3) above for the purposes of all
determinations under such paragraph (3) made immediately
prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such
dividend or other distribution and at any time thereafter.
The reclassification (including any reclassification upon
a consolidation or merger in which the Company is the
continuing corporation) of Common Stock into securities
including other than Common Stock shall be deemed to
involve (a) a distribution on Common Stock of such
securities other than Common Stock made immediately prior
to the close of business on the effective date of the
reclassification, and (b) a combination or subdivision, as
the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding
immediately thereafter.
<PAGE>
The issuance by the Company of rights or warrants to
subscribe for or purchase securities of the Company shall
not be deemed to be a dividend or distribution of any
kind.
(8) In case of the issuance of Additional Shares of Common
Stock upon conversion or exchange of other securities of
the Company, the amount of the consideration received by
the Company for such Additional Shares of Common Stock
shall be deemed to be the total of (a) the amount of the
consideration, if any, received by the Company upon the
issuance of such other securities, plus (b) the amount of
the consideration, if any, other than such other
securities, received by the Company (except in adjustment
of interest or dividends) upon such conversion or
exchange. In determining the amount of the consideration
received by the Company upon the issuance of such other
securities (i) the amount of the consideration in cash and
other than cash shall be
determined pursuant to paragraphs (5), (6) and (7) above,
and (ii) if securities of the same class or series of a
class as such other securities were issued for different
amounts of consideration, or if some were issued for no
consideration, then the amount of the consideration
received by the Company upon the issuance of each of the
securities of such class or series as the case may be,
shall be deemed to be the average amount of the
consideration received by the Company upon the issuance of
all the securities of such class or series, as the case
may be.
(9) In case Additional Shares of Common Stock are issued
as a dividend or other distribution on any class of
capital stock of the Company, and the total number of
shares constituting such dividend or other distribution
exceeds five percent of the total number of shares of
Common Stock outstanding at the close of business on the
date fixed for the determination of stockholders entitled
to receive such dividend or other distribution, the
conversion price and the Differential Amount in effect at
the opening of business on the day following the date
fixed for such determination shall be reduced by
multiplying each of them by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination and the denominator shall be the sum of
such number of shares and the total number of shares
constituting such dividend or other distribution, such
reductions to become effective immediately after the
opening of business on the day following the date fixed
for such determination. For the purposes of this paragraph
(9), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury
of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions
of shares of Common Stock (other than shares of Common
Stock which, upon issuance, would not constitute
Additional Shares of Common Stock). The Company will not
pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
(10) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common
Stock, the conversion price and the Differential Amount in
effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall
each be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the
conversion price and the Differential Amount in effect at
the opening of business on the day following the day upon
which such combination becomes effective shall each be
proportionately increased, such reductions or increases as
the case may be, to become effective immediately after the
opening of business on the day following the day upon
which such subdivision or combination becomes effective.
In the event of any such subdivision, the number of shares
of Common Stock outstanding immediately thereafter, to the
extent of the excess thereof over the number outstanding
immediately prior thereto (less that portion of such
excess attributable to the subdivision of shares excluded
from the definition of Additional Shares of Common Stock
by clauses (i), (ii) or (iii) of paragraph (4) above),
shall be deemed to be "Additional Shares of Common Stock"
and to have been issued immediately after the opening of
business on the day following the day upon which such
subdivision shall have become effective and without
consideration. In the event of
any such combination, the excess of the number of shares
of Common Stock outstanding immediately prior thereto over
the number outstanding immediately thereafter (less that
portion of such excess attributable to the combination of
shares excluded from the definition of Additional Shares
of Common Stock by clauses (i), (ii) or (iii) of paragraph
(4) above), shall be deducted from the sum computed
pursuant to clause (ii) of paragraph (3) above for the
purposes of all determinations under such paragraph (3)
made on any day after the day upon which such combination
becomes effective. Shares of Common Stock held in the
treasury of the Company and shares issuable in respect of
scrip certificates issued in lieu of fractions of shares
of Common Stock (other than shares of Common Stock which,
upon issuance, would not constitute Additional Shares of
Common Stock), shall be considered outstanding for the
purposes of this paragraph (10).
(11) Whenever the conversion price is adjusted as herein
provided:
<PAGE>
(a) the Company shall compute the adjusted conversion
price in accordance with this Section 4 and shall prepare
a certificate signed by the Treasurer of the Company
setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is
based, including a statement of the consideration received
or to be received by the Company for, and the amount of,
any Additional Shares of Common Stock issued since the
last such adjustment, and such certificate shall forthwith
be filed with the Transfer Agent or Agents for this
Series; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price
shall forthwith be required, and as soon as practicable
after it is required, such notice shall be published at
least once in a daily newspaper in the City of New York,
N.Y., and shall be mailed to the holders of record of the
outstanding shares of this Series; provided, however, that
if within ten days after the completion of mailing of such
a notice, an additional notice is required, such
additional notice shall be deemed to be required pursuant
to this clause (b) as of the opening of business on the
tenth day after such completion of mailing and shall set
forth the conversion price as adjusted at such opening of
business, and upon the publication and mailing of such
additional notice no other notice need be given of any
adjustment in the conversion price occurring at or prior
to such opening of business and after the time that the
next preceding notice given by publication and mail became
required.
(12) In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than
in cash out of its earned surplus; or
(b) the Company shall authorize the granting to the
holders of its Common Stock of rights to subscribe for or
purchase any shares of capital stock of any class or of
any other rights; or
(c) of any reclassification of the capital stock of the
Company (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any
consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company
is required, or
of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; then the Company
shall cause to be mailed to the Transfer Agent or Agents
for this Series and to the holders of record of the
outstanding shares of this Series, at least twenty days
(or ten days in any case specified in clause (a) or (b)
above) prior to the applicable record date hereinafter
specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or
rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to
became effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or
other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.
(13) The Company shall at all times reserve and keep
available, free from pre-emptive rights, out of its
authorized but unissued Common Stock, for the purpose of
effecting the conversion of the shares of this Series, the
full number of shares of Common Stock then deliverable
upon the conversion of all shares of this Series then
outstanding.
(14) No fractional shares of Common Stock shall be issued
upon conversion, but, instead of any fraction of a share
which would otherwise be issuable, the Company shall, at
its option, either
(a) issue non-dividend bearing and non-voting scrip
certificates for such fraction, such certificates to be in
such form and to contain such terms and conditions as the
Board of Directors shall at any time or from time to time
in its discretion fix and determine, provided that the
certificates shall be exchangeable, within such period
(which shall end not less than two years following the
date of issue thereof) as the Board of Directors shall
determine, together with other scrip certificates issued
upon conversion of shares of this Series, for stock
certificates representing a full share or shares, and upon
the expiration of such period shall be exchangeable for
cash, as provided in the scrip certificates, within such
further period (which shall end not less than six years
following the date of issue of such certificates) as the
Board of Directors shall determine; or
<PAGE>
(b) pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the market price
per share of Common Stock (as determined by the Board of
Directors) at the close of business on the day of
conversion.
(15) The Company will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of
Common Stock on conversion of shares of this Series
pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that in which the
shares of this Series
so converted were registered, and no such issue or
delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount
of any such tax, or has established, to the satisfaction
of the Company, that such tax has been paid.
(16) For the purpose of this Section 4, the term "Common
Stock" shall include any stock of any class of the Company
which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company, and which is not subject to redemption by the
Company. However, shares issuable on conversion of shares
of this Series shall include only shares of the class
designated as Common Stock of the Company as of May 1,
1967, or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which
have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and
which are not subject to redemption by the Company;
provided that if at any time there shall be more than one
such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from
all such reclassifications bears to the total number of
shares of all such classes resulting from all such
reclassifications.
5. So long as any shares of the Series are outstanding,
the Company shall not declare any cash dividend on its
Common Stock, nor shall be Company or any Subsidiary
purchase, redeem or otherwise acquire for a cash
consideration any shares of such Common Stock, if, after
giving effect to the proposed declaration or acquisition,
(i) the aggregate amount of all cash dividends on capital
stock of the Company of all classes paid or made after
December 31, 1966, plus (ii) the excess, if any, of the
aggregate amount of all cash payments made subsequent to
such date on account of the purchase, redemption or other
acquisition of shares of such Common Stock over the
aggregate amount of the net cash proceeds to the Company
from sales subsequent to such date of shares of such
Common Stock, would exceed $10,000,000 plus (or minus in
the case of a deficit) the consolidated net income of the
Company and its consolidated Subsidiaries for the period
from December 31, 1966 to the end of the last calendar
month preceding the date of such proposed declaration or
acquisition. For the purposes of this paragraph, Common
Stock issued upon conversion of other securities shall be
deemed issued for cash amounting, where such other
securities were evidences of indebtedness, to their
principal amount, and where preferred stock, to their
involuntary liquidation preference.
IV. PROVISIONS RELATING TO PREFERENCE STOCK
A. Issuance in Series.
The Preference Stock may be issued from time to time in
one or more series and in such amounts as may be
determined by the Board of Directors. The designations,
voting powers, preferences and relative, participating,
optional, conversion and other special rights, and the
qualifications, limitations and restrictions thereof, of
the Preference Stock of each series shall be such as are
fixed therein and, to the extent not fixed therein, shall
be such, not inconsistent with the provisions of this
Article Fourth, as
may be fixed by the Board of Directors, authority so to do
being hereby expressly granted, and stated in a resolution
or resolutions providing for the issue of such series of
Preference Stock (herein called 'Directors' Resolution').
The Preference Stock shall rank as to dividends and assets
junior to the Preferred Stock but prior to the Common
Stock and to any other capital stock of the Corporation
hereafter authorized, other than capital stock which shall
by its terms rank prior to or on a parity with the
Preference Stock and which shall be authorized pursuant to
paragraph (3) under subheading E of this heading IV of
this Article Fourth. Each share of Preference Stock shall
in all cases rank as to dividends and assets on a parity
with each other share of Preference Stock, irrespective of
series, except that shares of a series may rank as to
dividends or assets, or both, junior to shares of one or
more other series if by express terms of the Directors'
Resolution providing for the issuance of such junior
series the junior series is expressly made junior to the
senior series. No preferential dividend with respect to
any quarterly dividend period shall be declared or paid or
set apart for payment on any series of Preference Stock,
<PAGE>
or be paid or set apart for payment as part of the
redemption price of any series of Preference Stock, unless
at the same time a dividend in like proportion to the
respective preferential dividend rates for each other
series ranking equally or on a parity therewith and
entitled to receive dividends for such period shall
likewise be declared or paid or set apart for payment on
each such other series then outstanding, and no amounts
shall be paid or set apart for payment on any series of
Preference Stock in the event of liquidation, dissolution
or winding up of the Corporation unless at the same time
amounts in like proportion to the respective preferential
amounts to which the shares of each other series ranking
equally or on a parity therewith are entitled shall
likewise be paid or set apart for payment on each such
other series then outstanding.
B. Dividends.
The holders of Preference Stock of each series shall be
entitled to receive, when and as declared by the Board of
Directors, out of any funds legally available for that
purpose, cumulative preferential dividends in cash at the
rate fixed with respect to such series in the related
Directors' Resolution, and no more. Such dividends shall
accrue from the date or dates fixed with respect to such
series in the related Directors' Resolution, and shall be
cumulative, so that unless such dividends shall be
declared and paid or set apart for payment in full for all
previous quarterly dividend periods and for the current
quarterly dividend period, no dividends shall be declared
or paid upon, and no assets shall be distributed to or set
apart for, the shares of any class of stock ranking junior
to the Preference Stock as to dividends or assets. Accrued
and unpaid dividends on the Preference Stock shall not
bear interest. The term "accrued and unpaid dividends" as
used herein with respect to the Preference Stock shall
mean dividends on outstanding Preference Stock at the
rates fixed for the respective series thereof, from the
respective dates from which such dividends shall accrue to
the date as of which accrued and unpaid dividends are
being determined, less the aggregate of dividends
theretofore declared and paid or set apart for payment
upon such outstanding Preference Stock.
C. Liquidation Rights.
In the event of any voluntary liquidation, dissolution or
winding up of the Corporation, then, subject to the
provisions of paragraph (1) under subheading C of heading
I of this Article Fourth, the holders of Preference Stock
of each series shall be entitled to receive, from the
assets of the Corporation available for distribution to
stockholders, such preferential amount, in cash, as may be
specifically fixed with respect to such series in the
related Directors' Resolution, and in the event of any
involuntary liquidation, dissolution or winding up of the
Corporation, then, subject to the provisions of paragraph
(1) under subheading C of heading I of this Article
Fourth, the holders of Preference Stock of all series
shall be entitled to receive, from the assets of the
Corporation available for distribution to stockholders, a
preferential amount in cash as may be specifically fixed
with respect to such series in the related Directors'
Resolution, plus, in each case, whether voluntary or
involuntary, a further preferential amount equal to all
accrued and unpaid dividends thereon to the date payment
is made available to the holders of the Preference Stock;
subject as to all of the foregoing to the provisions of
any Directors' Resolution to the effect that any series of
Preference Stock shall be junior as to dividends or assets
to any one or more other series thereof, all of such
preferential amounts shall be paid or set apart for
payment before the payment or setting apart for payment of
any amount for, or the distribution of any assets of the
Corporation to, the holders of any class of stock ranking
junior to the Preference Stock as to dividends or assets.
D. Redemption.
If and to the extent so provided in the related Directors'
Resolution and subject to the provisions of paragraph (3)
under subheading B of heading I of this Article Fourth,
the whole or any part of the Preference Stock of any
series may be redeemed at the option of the Corporation at
any time or from time to time at such redemption price or
prices per share, plus an amount equal to accrued and
unpaid dividends thereon to the date designated for
redemption, as may be fixed with respect to such series in
the related Directors' Resolution, and upon such other
terms and conditions as may be fixed with respect to such
series in such Directors' Resolution. In the event that at
any time less than all the Preference Stock of any series
outstanding is to be redeemed, the shares to be redeemed
may be selected pro rata, or by lot, or by such other
equitable method as may be determined by the Board of
Directors. Notice of redemption shall be mailed or caused
to be mailed by the Corporation, addressed to each holder
of record of stock to be redeemed, at his last address as
the same appears on the books of the Corporation, at least
30 days prior to the date designated for redemption. If
such notice of redemption shall have been duly mailed, or
irrevocable instructions to effect such mailing shall have
<PAGE>
been given to the transfer agent or agents for such stock,
and if on or before the redemption date named in such
notice all funds necessary for such redemption shall have
been set aside by the Corporation in trust for the account
of the holders of the Preference Stock to be redeemed, so
as to be available therefor, then, from and after the
mailing of such notice or the giving of such irrevocable
instructions and the setting aside of such funds,
notwithstanding that any certificate for shares of
Preference Stock so called for redemption shall not have
been surrendered for cancellation, the shares represented
thereby shall no longer be deemed outstanding, and the
holder of such certificate or certificates shall have with
respect to such stock no rights in or with respect to the
Corporation except the right to receive the redemption
price thereof, without interest, upon the surrender of
such certificate or certificates, and the right, if and to
the extent granted by the related Directors' Resolution,
to convert such stock not later than the date designated
for redemption into other securities of the Corporation;
and after the date designated for redemption such stock
shall not be transferable on the books of the Corporation
except to the Corporation.
E. Voting Rights.
(l) Except as otherwise provided by law or by the
provisions of this heading IV or by a Directors'
Resolution, the Preference Stock shall not entitle the
holder thereof to vote upon or consent to any matter or
for any purpose, or to be represented at or to receive
notice of any meeting of stockholders.
(2) (a) If at any time dividends on any Preference Stock
shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when
all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly
dividend period on all shares of Preference Stock then
outstanding shall have been declared and paid or set apart
for payment. During each default period, the holders of
Preference Stock, voting as a class, irrespective of
series, shall have the right to elect two Directors.
(b) During any default period, such voting right of the
holders of Preference Stock may be exercised initially at
a special meeting called pursuant to subparagraph (c) of
this paragraph (2) or at any annual meeting of
stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor
the right of the holders of Preference Stock as
hereinafter provided to increase in certain cases the
authorized number of Directors shall be exercised unless
the holders of 25% in number of shares of Preference Stock
outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Preference Stock
of such voting right. At any meeting at which the holders
of Preference Stock shall exercise such voting right
initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to
fill such vacancies, if any, in the Board of Directors as
may then exist up to two Directors or, if such right is
exercised at an annual meeting, to elect two Directors. If
the number which may be so elected at any special meeting
does not amount to the required number, the holders of the
Preference Stock shall have the right to make such
increase in the number of Directors as shall be necessary
to permit the election by them of the required number.
After the holders of the Preference Stock shall have
exercised their right to elect Directors in any default
period and during the continuance of such period, the
number of Directors shall not be increased or decreased
except by vote of the holders of Preference Stock as
herein provided.
(c) Unless the holders of Preference Stock shall, during
an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may
order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares
of Preference Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the
holders of Preference Stock, which meeting shall thereupon
be called by the President, a Vice-President or the
Secretary of the Corporation. Notice of such meeting and
of any annual meeting at which holders of Preference Stock
are entitled to vote shall be given to each holder of
record of Preference Stock by mailing a copy of such
notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60
days after such order or request; or in default of the
calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by
any stockholder or stockholders owning in the aggregate
not less than 10% of the total number of shares of
Preference Stock outstanding. Notwithstanding the
provisions of this subparagraph (c), no such special
meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual
meeting of the stockholders.
<PAGE>
(d) In any default period the holders of Common Stock, and
other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of
Directors until the holders of Preference Stock shall have
exercised their right to elect Directors as a class, after
the exercise of which right (i) the Directors so elected
by the holders of Preference Stock shall continue in
office until their successors shall have been elected by
such holders or until the expiration of the default
period, and (ii) any vacancy in the Board of Directors may
(except as provided in subparagraph (b) of this paragraph
(2) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class
of stock which elected the Director whose office shall
have become vacant. References in this paragraph (2) to
Directors elected by the holders of a particular class of
stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (ii) of the foregoing
sentence.
(e) Immediately upon the expiration of a default period,
(i) the right of the holders of Preference Stock as a
class to elect Directors shall cease, (ii) the term of any
Directors elected by the holders of Preference Stock as a
class shall terminate, and (iii) the number of Directors
shall be such number as may be provided for in the by-laws
irrespective of any increase made pursuant to the
provisions of subparagraph (b) of this paragraph (2) (such
number being subject, however, to change thereafter in any
manner provided by law or in the by-laws). Any vacancies
in the Board of Directors effected by the provisions of
clauses (ii) and (iii) in the preceding sentence, may be
filled by a majority of the remaining Directors.
(3) As long as any Preference Stock is outstanding: (a)
the Corporation shall not, without the consent of the
holders of a majority of the outstanding shares of
Preference Stock, irrespective of series, either given by
vote in person or by proxy at a meeting of stockholders
called for that purpose, or given in writing, (i) increase
the authorized amount of the Preference Stock or (ii)
increase the authorized amount
of any previously authorized class of stock of the
Corporation ranking as to dividends or assets on an
equality with the Preference Stock or (iii) authorize or
create any class of stock of the Corporation ranking as to
dividends or assets on an equality with the Preference
Stock; and (b) the Corporation shall not, without the
consent of the holders of two-thirds of the outstanding
shares of Preference Stock, irrespective of series, either
given by vote in person or by proxy at a meeting of
stockholders called for that purpose, or given in writing,
create, authorize or increase the authorized amount of any
class of stock of the Corporation having preference or
priority as to dividends or assets over the Preference
Stock.
(4) Any action specified in paragraph (3) of this
subheading E as requiring the consent therein specified of
the holders of Preference Stock may be taken with such
consent and such additional vote or consent, if any, of
stockholders as may from time to time be required by this
Article Fourth or by law.
V. TERMS OF $2.12 CONVERTIBLE PREFERENCE STOCK
(as specified in resolutions of the Board of Directors
adopted May 11, 1979)
RESOLVED, that there is hereby established a series of
Preference Stock, designated $2.12 Convertible Preference
Stock. This series shall consist of 3,102,708 shares, and
to the extent that the designations, voting powers,
preferences, optional, conversion and other special
rights, and the qualifications, limitations and
restrictions thereof, are not fixed by the Certificate of
Incorporation, as amended, they are hereby fixed as
follows:
(a) The Preference Stock of this series shall be
designated "$2.12 Convertible Preference Stock".
(b) The preferential dividend rate shall be $2.12 per
share per annum; holders of record of shares of the $2.12
Convertible Preference Stock shall be entitled to receive
dividends, when and as declared by the Board of Directors
out of funds legally available therefor, in preference to
and in priority over shares of other series of Preference
Stock which are expressly made junior to the $2.12
Convertible Preference Stock as to dividends and, in the
absence of such express provisions, on a parity with
shares of such other series. Such dividends shall be
payable quarterly on the first days of January, April,
July and October of each year, commencing on the first
such date which is at least 10 days after the date of
original issue.
(c) Such dividends shall accrue from the date of original
issue, which, with respect to the shares of $2.12
Convertible Preference Stock to be issued pursuant to the
Agreement and Plan of Merger, dated as of December 20,
1978 between Dictaphone Corporation and PB Holding
Corporation ("PB"), shall be the Effective Date, as
defined therein.
<PAGE>
d) The shares of $2.12 Convertible
Preference Stock shall be fully paid and nonassessable.
(e) The $2.12 Convertible Preference Stock may be
redeemed, in whole or in part, at the option of the
Corporation by resolution of its Board of Directors, at
any time and from time to time on or after July 1, 1984 at
the following redemption prices, in each case plus accrued
and unpaid dividends to the date fixed for redemption:
If redeemed during the 12-month period beginning July
1,
1984 $29.00 per share
1985 $28.75 per share
1986 $28.50 per share
1987 $28.25 per share
1988 and thereafter $28.00 per share
(f) The preferential amount which holders of the $2.12
Convertible Preference Stock shall be entitled to receive
from the assets of the Corporation in the event of any
voluntary liquidation, dissolution or winding up of the
Corporation shall be the optional redemption price then in
effect, except that prior to July 1, 1984, such holders
shall be entitled to receive $29 per share, or, in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation, $28 per share, plus in each
case an amount equal to accrued and unpaid dividends
thereon (as defined in the Certificate of Incorporation) to
the date payment is made available to the holders of the
$2.12 Convertible Preference Stock. For purposes of
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the $2.12
Convertible Preference Stock shall rank in preference to
and priority over shares of other series of Preference
Stock which are expressly made junior to this series as to
assets and, in the absence of such express provisions, on a
parity with shares of such other series.
(g) In addition to voting rights provided under subheading
E of heading IV of Article Fourth of the Certificate of
Incorporation, shares of $2.12 Convertible Preference Stock
shall have voting rights as provided in this paragraph (g);
(1) At any annual or special meeting of stockholders at
which holders of Common Stock are entitled to vote, each
holder of shares of $2.12 Convertible Preference Stock
shall be entitled to cast a number of votes equal to the
number of whole and fractional shares of Common Stock into
which such holder's shares of $2.12 Convertible Preference
Stock are convertible on the record date for the meeting.
The same record date shall be used for all classes of stock
entitled to vote at any such meeting.
(2) Unless the vote or consent of the holders of a greater
number of shares shall then be required by law, the consent
of the holders of at least 66 2/3% of the shares of $2.12
Convertible Preference Stock at the time outstanding, given
in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of
shares of $2.12 Convertible Preference Stock shall vote
together as a separate class, shall be necessary for
authorizing, effecting or validating the amendment,
alteration or repeal of any of the provisions of this
resolution or of the Certificate of Incorporation of the
Corporation, as now or hereafter amended, or of any
certificate of designation relating to any other series of
Preference Stock, so as to affect adversely the powers,
preferences or rights of $2.12 Convertible Preference
Stock.
(h) The $2.12 Convertible Preference Stock shall be
convertible, at the option of the holders thereof, at any
time at the offices of the duly appointed transfer agent
for the $2.12 Convertible Preference Stock, if any, or at
such other office as the Board of Directors of the
Corporation
may determine, into fully paid and non-assessable shares
(calculated to the nearest 1/100 of a share) of Common
Stock of the Corporation at the rate of one share of Common
Stock for each share of $2.12 Convertible Preference Stock;
provided, however, that in case of the redemption of any
shares of $2.12 Convertible Preference Stock, such right of
conversion shall cease and terminate, as to the shares
called for redemption, at the close of business on the day
next prior to the date fixed for redemption, unless default
shall be made in the payment of the redemption price. The
rate at which shares of Common Stock shall be deliverable
in exchange for shares of $2.12 Convertible Preference
Stock upon conversion thereof is hereinafter referred to as
the 'conversion rate' for the $2.12 Convertible Preference
Stock. The conversion rate shall be subject to adjustment
from time to time in certain instances as hereinafter
provided, except that no adjustment shall be made unless by
reason of the happening of any one or more of the events
hereinafter specified, the conversion rate then in effect
shall be changed by 1% or more, but any adjustment of less
<PAGE>
than 1% that would otherwise be required then to be made
shall be carried forward and shall be made at the time of
and together with any subsequent adjustment which, together
with any adjustment or adjustments so carried forward,
amounts to 1% or more, provided that such adjustment shall
be made in all events (regardless of whether or not the
amount thereof or the cumulative amount thereof amounts to
1% or more upon the happening of one or more of the events
specified in either subparagraph (1) or subparagraph (4) of
this paragraph (h). Upon conversion the Corporation shall
make no payment or adjustment on account of dividends
accrued or in arrears on the $2.12 Convertible Preference
Stock surrendered for conversion.
Before any holder of $2.12 Convertible Preference Stock
shall be entitled to convert the same into Common Stock, he
shall surrender the certificate or certificates for such
$2.12 Convertible Preference Stock at the office appointed
as aforesaid, which certificate or certificates, if the
Corporation shall so request, shall be duly endorsed to the
Corporation or in blank, or accompanied by proper
instruments of transfer to the Corporation or in blank, and
shall give written notice to the Corporation that he elects
so to convert said $2.12 Convertible Preference Stock and
shall state in writing therein the name or names in which
he wishes the certificate or certificates for Common Stock
to be issued.
The Corporation will, as soon as practicable after such
surrender of certificates for $2.12 Convertible Preference
Stock accompanied by the written notice and the statement
above prescribed, issue and deliver at the office appointed
as aforesaid, to the person for whose account such $2.12
Convertible Preference Stock was so surrendered, or to his
nominee or nominees, certificates for the number of full
shares of Common Stock to which he shall be entitled as
aforesaid, together with a cash adjustment for any fraction
of a share as hereinafter stated, if not evenly
convertible. Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been
made as of the date of such surrender of the $2.12
Convertible Preference Stock to be converted, and the
person or persons entitled to receive the Common Stock
issuable upon conversion of such $2.12 Convertible
Preference Stock shall be treated for all purposes as the
record holder or holders of such Common Stock on such date.
The Corporation shall not be required to
convert, and no surrender of $2.12 Convertible Preference
Stock shall be effective for that purpose, while the stock
transfer books of the Corporation are closed for any
purpose; but the surrender of $2.12 Convertible Preference
Stock for conversion during any period while such books are
so closed shall become effective for conversion immediately
upon the reopening of such books, as if the conversion had
been made on the date such $2.12 Convertible Preference
Stock was surrendered, and at the conversion rate in effect
at the date of such surrender.
The conversion rate for the $2.12 Convertible Preference
Stock shall be subject to adjustment from time to time as
follows:
(1) If the Corporation shall at any time pay a dividend on
its Common Stock in Common Stock, subdivide its outstanding
shares of Common Stock into a larger number of shares or
combine its outstanding shares of Common Stock into a
smaller number of shares, the conversion rate in effect
immediately prior thereto shall be adjusted so that each
share of $2.12 Convertible Preference Stock shall
thereafter be convertible into the number of shares of
Common Stock which the holder of a share of $2.12
Convertible Preference Stock would have been entitled to
receive after the happening of any of the events described
above had such share been converted immediately prior to
the happening of such event. An adjustment made pursuant to
this subparagraph (1) shall become effective retroactively
to the record date in the case of a dividend and shall
become effective on the effective date in the case of a
subdivision or combination.
(2) If the Corporation shall issue rights or warrants to
all holders of shares of Common Stock for the purpose of
entitling them (for a period not exceeding 45 days from the
date of issuance) to subscribe for or purchase shares of
Common Stock at a price per share less than the average
market price per share (determined as provided below) of
the Common Stock on the record date for the determination
of the stockholders entitled to receive such rights or
warrants, then in each such case unless the holders of
shares of the $2.12 Convertible Preference Stock shall be
permitted to subscribe for or purchase shares of Common
Stock on the same basis as though such shares of $2.12
Convertible Preference Stock had been converted into shares
of Common Stock immediately prior to such record date, the
number of shares of Common Stock into which each share of
the $2.12 Convertible Preference Stock shall thereafter be
convertible shall be determined by multiplying the number
of shares of Common Stock into which each share of $2.12
Convertible Preference Stock was convertible on the day
immediately preceding such record date by a fraction the
numerator of which shall be the sum of the number of shares
<PAGE>
of Common Stock outstanding on such record date and the
number of additional shares of Common Stock so offered for
subscription or purchase, and the denominator of which
shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of shares of
Common Stock which the aggregate offering price of the
total number of shares so offered would purchase at such
average market price. Such adjustment shall become
effective retroactively immediately after such record date.
For the purpose of any computation under this paragraph
(h), the average market price per share of Common Stock on
any date shall be the average of the daily closing prices
for
the 30 consecutive trading days commencing 45 trading days
before the date in question. The closing price for each day
shall be the last sales price regular way or, in the case
no such sale takes place on such day, the average of the
closing bid and asked prices regular way in either case on
the Composite Tape.
(3) If the Corporation shall distribute to all holders of
shares of Common Stock any assets (other than any dividend
payable solely in cash), any rights to subscribe (other
than those referred to in subparagraph (2) above) or any
evidence of indebtedness or other securities of the
Corporation (other than Common Stock) then in each such
case the number of shares of Common Stock into which each
share of $2.12 Convertible Preference Stock shall
thereafter be convertible shall be determined by
multiplying the number of shares of Common Stock into which
each share of $2.12 Convertible Preference Stock was
theretofore convertible on the day immediately preceding
the record date for the determination of the stockholders
entitled to receive such distribution by a fraction the
numerator of which shall be the average market price per
share (determined as provided in subparagraph (2) above) of
the Common Stock on such record date and the denominator of
which shall be such average market price per share less the
then fair market value (as determined in a resolution
adopted by the Board of Directors of the Corporation, which
shall be conclusive evidence of such fair market value) of
the portion of the assets or evidence of indebtedness or
securities so distributed or of such subscription rights
applicable to one share of Common Stock. Such adjustment
shall become effective retroactively immediately after such
record date.
(4) In case of any capital reorganization or any
reclassification of the capital stock of the Corporation or
in case of the consolidation or merger of the Corporation
with another corporation or in the case of any sale or
conveyance of all or substantially all of the property of
the Corporation, each share of $2.12 Convertible Preference
Stock shall thereafter be convertible into the number of
shares of stock or other securities or property receivable
upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance,
as the case may be, by a holder of the number of shares of
Common Stock into which such share of $2.12 Convertible
Preference Stock was convertible immediately prior to such
capital reorganization, reclassification of capital stock,
consolidation, merger, sale or conveyance; and, in any
case, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the
provisions herein set forth with respect to rights and
interests thereafter of the holders of the $2.12
Convertible Preference Stock to the end that the provisions
set forth herein (including the specified changes in and
other adjustments of the conversion rate) shall thereafter
be applicable, as nearly as reasonably may be, in relation
to any shares of stock or other securities or other
property thereafter deliverable upon the conversion of the
$2.12 Convertible Preference Stock.
(5) The Corporation may make such increases in the
conversion rate, so as to increase the number of shares of
Common Stock into which the $2.12 Convertible Preference
Stock may be converted, in addition to those required by
paragraphs (1), (2), (3) and (4) above, as it considers to
be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights
shall not be taxable to the recipients.
(6) Whenever the conversion rate is adjusted as herein
provided, the Corporation shall forthwith file with any
transfer agent for the $2.12 Convertible Preference Stock
appointed as aforesaid a certificate, signed by the
President or one of the Vice Presidents of the Corporation
and by its Treasurer or an Assistant Treasurer, stating the
adjusted conversion rate determined as provided in this
paragraph (h). Such certificate shall show in detail the
facts requiring such adjustment. Whenever the conversion
rate is adjusted, the Corporation will forthwith cause a
notice stating the adjustment and the conversion rate as
adjusted to be mailed to the respective holders of $2.12
Convertible Preference Stock. Such transfer agent shall be
under no duty to make any inquiry or investigation as to
the statements contained in any such certificate or as to
the manner in which any computation was made, but may
accept such certificate as conclusive evidence of the
statements therein contained, and such transfer agent shall
be fully protected with respect to any and all acts done or
action taken or suffered by it in reliance thereon. No
transfer agent in its capacity as transfer agent shall be
<PAGE>
deemed to have any knowledge with respect to any change of
capital structure of the Corporation unless and until it
receives a notice thereof pursuant to the provisions of
this subparagraph (5) and in default of any such notice
such transfer agent may conclusively assume that there has
been no such change.
The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the
$2.12 Convertible Preference Stock, such number of shares
as shall from time to time be sufficient to effect the
conversion of all shares of $2.12 Convertible Preference
Stock from time to time outstanding. The Corporation shall
from time to time, in accordance with the laws of Delaware,
increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock remaining
unissued shall not be sufficient to permit the conversion
of all the then outstanding $2.12 Convertible Preference
Stock.
No fractions of shares of Common Stock are to be issued
upon conversion, but in lieu thereof the Corporation will
pay therefor in cash based on the closing price (determined
as provided in the last sentence of subparagraph (2) above)
of the Common Stock on the Composite Tape on the business
day next preceding the day of conversion.
The Corporation will pay any and all issue and other taxes
(other than taxes based on income) that may be payable in
respect of any issue or delivery of shares of Common Stock
on conversion of $2.12 Convertible Preference Stock
pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of Common
Stock in a name other than that in which the $2.12
Convertible Preference Stock so converted was registered,
and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established,
to the satisfaction of the Corporation, that such tax has
been paid.
(i) The stated value of the $2.12 Convertible Preference
Stock shall be $28 per share, and the entire consideration
received by the Corporation upon issuance of the $2.12
Convertible Preference Stock shall be capital.
VI. TERMS OF JUNIOR PREFERENCE STOCK
(as specified in resolutions of the Board of Directors
adopted December 11, 1995)
RESOLVED, that pursuant to the authority vested in the
Board of Directors of this Company in accordance with the
provisions of its Restated Certificate of Incorporation, a
series of Preference Stock of the Company be, and it hereby
is, created, and that the designation and amount thereof
and the voting powers, preferences and relative,
participating, optional and other special rights of the
shares of such series, and the qualifications, limitations,
or restrictions thereof are as set forth in exhibit A
attached hereto.
That set forth below is a true and complete copy of Exhibit
A described above.
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior
Participating Preference Stock" (the "Series A Preference
Stock") and the number of shares constituting the series A
Preference Stock shall be 1,700,000. Such number of shares
may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the
number of shares of Series A Preference Stock to a number
less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the
Corporation convertible into Series A Preference Stock.
Section 2. Dividends and Distributions. (A) Subject to the
rights of the holders of any shares of any shares of any
series of Preference Stock (or any similar stock) ranking
prior and superior to the Series A Preference Stock with
respect to dividends, the holders of shares of Series A
Preference Stock, in preference to the holders of Common
Stock, par value $2.00 per share (the "Common Stock"), of
the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first
day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Preference Stock, in an
amount per share (rounded to the nearest cent) equal to the
greater of (a) $1 or (b) subject to the provision for
<PAGE>
adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-
cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision
of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preference Stock.
In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of
Series A Preference Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preference Stock as provided
in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution
shall have been declared on the Common stock during the
period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend
of $1 per share on the Series A Preference Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preference Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preference
Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preference Stock
in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of
shares of Series A Preference Stock entitled to receive
payment of dividend or distribution declared thereon, which
record date shall be no more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preference shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preference Stock shall
entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of
Series A
Preference Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preference
Stock or any similar stock, or by law, the holders of
shares of Series A Preference Stock and the holders of
shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preference Stock shall have no
special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for
taking any corporation action.
<PAGE>
Section 4. Certain Restrictions. (A) Whenever quarterly
dividends or other dividends or distributions payable on
the Series A Preference Stock as provided in Section 2 are
in appears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on
shares of Series A Preference Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends, on any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preference
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the series A Preference Stock, except
dividends paid ratably on the Series A Preference Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such share are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding
up) to the Series A preference Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preference Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preference Stock, or
any shares of stock ranking on a parity with Series A
Preference Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in fair
and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preference Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preference Stock and may be reissued as
part of a new series of Preference Stock subject to the
conditions and restrictions on issuance set forth herein,
in the Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preference
Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation,
no distribution shall be made (1) to the holders of shares
of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preference Stock unless, prior thereto, the holders of
shares of of Series A Preference Stock shall have received
$100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the
holders of shares of Series A Preference Stock shall be
entitled to receive an aggregate amount per share, subject
to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed
per share to holders of shares of Common Stock, or (2) to
the holders of shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution,
dissolution or winding up) with the Series A Preference
Stock, except distributions made ratably on the Series A
Preference Stock and all such parity stock in proportion to
the total amounts to which the holders of all such share
are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in share of
Common Stock, (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount to which holders of
shares of Series A Preference Stock were entitled
immediately prior to such event under the proviso in clause
<PAGE>
(1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which
is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any
such case each share of Series A Preference Stock shall at
the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, than in each such case the
amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preference
stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
stock that were outstanding immediately prior to such
event.
Section 8. No redemption. The shares of Series A Preference
Stock shall not be redeemable.
Section 9. Rank. The Series A Preference Stock shall rank,
with respect to the Payment of dividends and the
distribution of assets, junior to all series of any other
class of the Corporation's Preference Stock.
Section 10. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which
would materially alter or change the powers, preferences or
special rights of the Series A Preference Stock so as to
affect them adversely without the affirmative vote of the
holders of a least two-thirds of the outstanding shares of
Series A Preference Stock, voting together as a single
class.
Fifth:- This Corporation shall have perpetual existence.
Sixth:- The private property of the stockholders shall not
be subject to the payment of corporate debts to any extent
whatsoever.
Seventh:-
PROVISIONS RELATING TO THE BOARD OF DIRECTORS
(a) Number, election and terms. Except as otherwise fixed
by or pursuant to the provisions of Article Fourth hereof
relating to the rights of the holders of any class or
series of stock having a preference over the Common Stock
as to dividends or upon liquidation to elect additional
directors under specified circumstances, the number of the
Directors of the Corporation shall be fixed from time to
time by or pursuant to the By-Laws of the Corporation. The
Directors, other than those who may be elected by the
holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation,
shall be classified, with respect to the time for which
they severally hold office, into three classes, as nearly
equal in number as possible, as shall be provided in the
manner specified in the By-Laws of the Corporation, one
class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1987, with
each class to hold office until its successor is elected
and qualified. At each annual meeting of the stockholders
of the Corporation, the successors of the class of
Directors whose term expires at
that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the
third year following the year of their election.
(b) Stockholder nomination of director candidates. Advance
notice of stockholder nominations for the election of
Directors shall be given in the manner provided in the By
Laws of the Corporation.
<PAGE>
(c) Newly created directorship and vacancies. Except as
otherwise provided for or fixed by or pursuant to the
provisions of Article Fourth hereof relating to the rights
of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified
circumstances, newly created directorships resulting from
any increase in the number of Directors and any vacancies
on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall
be filled by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a
quorum of the Board of Directors. Any Director elected in
accordance with the preceding sentence shall hold office
for the remainder of the full term of the class of
Directors in which the new directorship was created or the
vacancy occurred and until such Director's successor shall
have been elected and qualified. No decrease in the number
of Directors constituting the Board of Directors shall
shorten the term of any incumbent Director.
(d) Removal. Subject to the rights of any class of series
of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect Directors under
specified circumstances, any Director may be removed from
office, with or without cause and only by the affirmative
vote of the holders of 80% of the combined voting power of
the then outstanding shares of stock entitled to vote
generally in the election of Directors, voting together as
a single class.
(e) Amendment, repeal, etc. Notwithstanding anything
contained in this Restated Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at
least 80% of the voting power of all shares of the
Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be
required to alter, amend, adopt any provision inconsistent
with or repeal this Article SEVENTH.
Eighth:-
PROVISIONS RELATING TO STOCKHOLDER ACTION
Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly
called annual or special meeting of such holders and may
not be affected by any consent in writing by such holders.
Except as otherwise required by law and subject to the
rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends
or upon liquidation, special meetings of stockholders of
the Corporation may be called only by the Board of
Directors pursuant to a resolution approved by a majority
of the entire Board of Directors. Notwithstanding anything
contained in this Restated Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at
least 80% of the voting power of all shares of the
Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be
required to alter, amend, adopt any provision inconsistent
with or repeal this Article EIGHTH.
Ninth:-
PROVISIONS RELATING TO BY-LAWS
The Board of Directors shall have power to make, alter,
amend and repeal the By-Laws of the Corporation (except so
far as the By-Laws of the Corporation adopted by the
stockholders shall otherwise provide). Any By-Laws made by
the Directors under the powers conferred hereby may be
altered, amended or repealed by the Directors or by the
stockholders. Notwithstanding the foregoing and anything
contained in this Restated Certificate of Incorporation to
the contrary, Article I, Section 7 and Article II, Sections
2, 3, 4. 5, and 6 of the By-Laws shall not be altered,
amended or repealed and no provision inconsistent therewith
shall be adopted without the affirmative vote of the
holders of at least 80% of the voting power of all the
shares of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
Notwithstanding anything contained in this Restated
Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the
voting power of all shares of the Corporation entitled to
vote generally in the election of directors, voting
together as a single class, shall be required to alter,
amend, adopt any provision inconsistent with or repeal this
Article NINTH.
Tenth:-
<PAGE>
PROVISIONS RELATING TO CERTAIN BUSINESS COMBINATIONS
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
Restated Certificate of Incorporation, and except as
otherwise expressly provided in Section 2 of this Article
TENTH:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other
corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of
the Corporation or any Subsidiary having an aggregate Fair
Market Value 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 Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an
aggregate Fair Market Value of $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 an Interested Stockholder or any Affiliate
of any Interested Stockholder; 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 Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote 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 (it being
understood that for purposes of this Article TENTH, each
share of the Voting Stock shall have the number of votes
granted to it as determined pursuant to Article FOURTH of
this Restated Certificate of Incorporation). Such
affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage
may be specified, by law or in any agreement with any
national securities exchange or otherwise.
B. Definition of "Business Combination". The term "Business
Combination" as used in this Article TENTH shall mean any
transaction which is referred to in any one or more 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 TENTH 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 Restated Certificate of Incorporation, if
all of the conditions specified in either of the following
paragraphs A and B are met:
A. Approval by Disinterested Directors. The Business
Combination shall have been approved by a majority of the
Disinterested Directors (as hereinafter defined).
B. Price and Procedural Requirements. All of the following
conditions shall have been met:
<PAGE>
(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, appropriately
adjusted for any stock dividend, split-up or combination of
shares:
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for any
shares of Common Stock acquired by it (1) within the two
year period immediately prior to the first public
announcement of the proposal of the Business Combination
(the "Announcement Date") or (2) in the transaction in
which it became an Interested Stockholder, whichever is
higher; and
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (such latter
date is referred to in this Article TENTH 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
highest of the following, appropriately adjusted for any
stock dividend, split-up or combination of shares (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
Stockholder has previously acquired any shares of a
particular class of Voting Stock):
(a) (if applicable) the highest per share price (including
any brokerage commission, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for any
shares of such class of Voting Stock acquired by it (1)
within the two-year period immediately prior to the
Announcement Date of (2) in the transaction in which it
became an Interested Stockholder, 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 Stockholder has previously paid for shares of
such class of Voting Stock. If the Interested Stockholder
has paid for shares of any class of Voting Stock with
varying forms of consideration, the form of consideration
for such class of Voting Stock shall be either cash or the
form used to acquire the largest number of shares of such
class of Voting Stock previously acquired by it.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of
such Business Combination: (a) except as approved by a
majority of the Disinterested Directors, there shall have
been no failure to declare and pay at the regular date
therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Preferred or Preference
Stock; (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 a
majority of the Disinterested Directors, and (2) an
increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock
split) recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of
outstanding shares of the Common Stock, unless the failure
so to increase such annual rate is approved by a majority
of the Disinterested Directors; and (c) such Interested
Stockholder shall have not become the beneficial owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder
becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall
not have received the benefit, directly or indirectly
(except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection
with such Business Combination or otherwise.
<PAGE>
(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 stockholders of the Corporation at
least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or
subsequent provisions).
Section 3. Certain Definitions
For the purposes of this Article TENTH:
A. A "person" shall mean any individual, firm, corporation
or other entity.
B. "Interested Stockholder" shall mean any person (other
than the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of
more than 20% 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 Stockholder, if such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.
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 purposes of determining whether a person is an
Interested Stockholder 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 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 l2b-2 of the
General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on May 3, 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
Stockholder 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.
<PAGE>
G. "Disinterested Director" means any member of the Board
of Directors of the Corporation (the "Board") who is
unaffiliated with the Interested Stockholder and was a
member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder, and any
successor of a Disinterested Director who is unaffiliated
with the Interested Stockholder and is recommended to
succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board.
H. "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 Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if
such Stock is not listed on such Exchange, on the
principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any
such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period
preceding the date in question on the National Association
of Securities
Dealers, Inc. Automated Quotations System or any system
then in use, or if no such quotations are available, the
fair market value on the date in question of a share of
such stock as determined by the Board in good faith; and
(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 in good faith.
I. In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to
be received" as used in paragraphs B (i) and (ii) of
Section 2 of this Article TENTH 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.
Section 4. Powers of the Board of Directors.
A majority of the directors of the Corporation shall have
the power and duty to determine for the purposes of this
Article TENTH, on the basis of information known to them
after reasonable inquiry, (A) whether a person is an
Interested Stockholder, (B) the number of shares of Voting
Stock beneficially owned by any person, (C) whether a
person is an Affiliate or Associate of another, (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 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 Stockholders.
Nothing contained in this Article TENTH shall be construed
to relieve any Interested Stockholder from any fiduciary
obligation imposed by law.
Section 6. Amendment, Repeal, etc.
Notwithstanding any other provisions of this Restated
Certificate of Incorporation or the By-Laws of the
Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this Restated
Certificate of Incorporation or the By-Laws of the
Corporation), the affirmative vote 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
TENTH.
Eleventh:-
<PAGE>
Provisions Relating To Director's Liability and
Indemnification of Officers and Directors
Section 1. Elimination of Certain Liability of Directors
A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
Section 2. Indemnification and lnsurance
(a) Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is
or was a director or officer, of the Corporation or is or
was serving at the request of the Corporation as a
director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to
employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and
loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such
person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to
the benefit of his or her heirs, executors and
administrators; provided, however, that, except as
provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof)
was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include
the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the
Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or
her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such
person while a director or officer, including, without
limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be
made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced it shall ultimately be
determined that such director or officer is not entitled
to be indemnified under this Section or otherwise. The
corporation may, by action of its Board of Directors,
provide indemnification to employees and agents of the
Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under
paragraph (a) of this section is not paid in full by the
Corporation within thirty days after a written claim has
been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful
in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall
be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final
disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action
that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel, or of stockholders) that the claimant has
not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
<PAGE>
(c) Non-Exclusivity of Rights. The right to
indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may purchase and maintain
insurance at its expense to protect itself and on behalf
of any person who is or was or has agreed to become a
director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or
her and incurred by him or her or on his or her behalf in
any such capacity, or arising out of his or her status as
such, whether or not the Corporation would have the power
to indemnify him or her against such liability under the
provisions of this Article, provided that such insurance
is available on acceptable terms, which determination
shall be made by the Board of Directors.
(e) Additional Provisions. Nothing set forth in this
Article Eleventh Section 2 shall diminish the right of the
Board of Directors to adopt By-laws concerning the
indemnification of officers, directors, employees, and
agents of the Corporation, as authorized by law and not
inconsistent with the provisions of this Article.
Section 3. Amendment and Savings Clauses
(a) Amendment and Repeal. No amendment to or repeal of
this Article Eleventh shall apply to or have any effect on
the liability or alleged liability or the right to
indemnification of any director, officer, employee or
agent of the Corporation for or with respect to any acts
or omissions of such director, officer, employee or agent
occurring prior to such amendment or repeal.
(b) Savings Clause. If this Article or any portion hereof
shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee
and agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action,
suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or
in the right of the Corporation, to the full extent
permitted by any applicable portion of this article that
shall not have been invalidated and to the full extent
permitted by applicable law.
This Restated Certificate of Incorporation was duly
adopted by the Board of Directors in accordance with
Section 245 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Pitney Bowes Inc., has caused
this certificate to be signed by George B. Harvey,
its Chairman of the Board, and attested by Amy C. Corn,
its Corporate Secretary, this 29th day of
May, 1996.
Pitney Bowes Inc.
By s/George B. Harvey
Attest:
s/Amy C. Corn
______
Corporate Secretary
