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PROPOSALS TWO THROUGH EIGHT
AMENDMENTS TO CERTIFICATE OF INCORPORATION
The Board of Directors has approved certain amendments to Article Ten of the Company's Amended and
Restated Certificate of Incorporation (the "Charter"). Article Ten was adopted in September 1991 at the
direction of the Company's then controlling stockholders, Citicorp Investments Inc. and The Prudential
Insurance Company of America, and was implemented prior to the Company's October 1991 initial public
offering. The controlling stockholders subsequently sold their investment in the Company in a secondary
offering in April 1992. The Board now believes that certain provisions of Article Ten should be amended as
discussed below.
The Board believes that certain provisions of Article Ten limit the Company's flexibility in taking advantage of
acquisition and financing opportunities. Furthermore, a number of the provisions currently contained in Article
Ten are not typical for similarly situated public companies. The Board believes, for the reasons set forth bel ow,
that the adoption of the proposed amendments by the stockholders are advisable and in the best interests of the
Company. An effect of Proposals Two through Seven may be to discourage an unsolicited attempt to assume
control of the Company by a holder of, or through the acquisition of, a large block of the Company's
outstanding shares, or to hinder an attempt to remove the incumbent management of the Company.
Management has no knowledge of any specific efforts to accumulate the Company's outstanding common stock,
to obtain control of the Company or to remove management.
Article Ten in its entirety as currently in effect is set forth in the left column of Annex A attached hereto. Art icle
Ten as proposed to be amended and as approved by the Board of Directors is set forth in the right column of
Annex A attached hereto. A description of each proposed amendment to Article Ten is set forth below.
PROPOSAL TWO
APPLICABILITY OF SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Article Ten, Section I of the Charter currently provides that the Company is not subject to the provisions of
Section 203 of the Delaware General Corporation Law (the "Delaware Law"). The Board is proposing that the
Charter be amended to provide that Section 203 apply to the Company.
Description of Delaware Law Section 203. Section 203 was enacted in Delaware in 1988. The purpose of the
law was to strike a balance between the benefits of an unfettered market for corporate shares and the well-
documented and judicially recognized need to limit abusive takeover tactics. As a Delaware corporation, the
Company may make an election as to whether it will be subject to Section 203.
Section 203 prevents a person who acquires 15% or more of the voting stock of a Delaware corporation (an
"interested stockholder") from effecting a merger or certain other business combinations with such corporation
for three years, unless the corporation's board of directors, prior to the date the acquiror becomes an interested
stockholder, approves either the business combination or the transaction that results in the acquiror's becoming
an interested stockholder. In the absence of such board approval, an acquiror may nonetheless merge or enter
into other business combinations with the corporation if it can satisfy either of two additional exceptions: (i) the
interested stockholder acquires at least 85% of the outstanding voting stock of the corporation (excluding shares
owned by director-officers and certain employee stock plans) in the same transaction in which it becomes an
interested stockholder; or (ii) the merger or other business combination is subsequently approved by the
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corporation's board of directors and holders of at least 66/3% of the outstanding voting stock that is not owned
by the interested stockholder.Section 203 provides that a Delaware corporation may "opt out" from the applicability of the statute if such
corporation's original certificate of incorporation contains a provision expressly electing not to be governed by
such law. In the case of the Company, certain formerly controlling stockholders determined that such an "opt
out" was appropriate and therefore such a provision was included in the Charter.
Reasons for Amendment. The Board believes that amending the Charter to cause the Company to be subject to
Section 203 of the Delaware Law would provide statutorily sanctioned protection for the Company's
stockholders in dealing with situations in which the Company is confronted with coercive and unfair takeover
tactics, and would place the Company's stockholders on an equal footing with stockholders of other Delaware
corporations that have "opted in" to Section 203 of the Delaware Law. The availability of Section 203
procedures would enable the Board to address unilateral actions by acquirors which could deprive the
Company's stockholders of their ability to determine the destiny of the Company or to receive a fair price for
their shares in a sale of the Company. These actions could include an offer that does not treat all stockholders
equally, a creeping acquisition of shares in the open market and other coercive takeover tactics. The applica tion
of Section 203 would not prevent the Board from considering an offer to acquire all or part of the Company or
from approving such offer if the Board believes the offer to be in the best interests of the Company's
stockholders. As described above, the Board may waive the applicability of Section 203 for particular
transactions when it determines that such actions would be in the best interests of the Company's stockholders.
Further, if the Company's stockholders subsequently desire that the Company "opt out" of the statute once
again, Section 203 provides an ability for the Company to effect such a change. The affirmative vote of a
majority of the stockholders entitled to vote would be required to adopt such an "opt out" provision. Under the
Delaware Law, however, such an amendment would not be effective until 12 months after its adoption and
would not apply to any business combination between the Company and any person who became an "interested
stockholder" on or prior to such adoption. Further, such an amendment would first have to be declared by the
Board to be advisable in order to be submitted to a stockholder vote.
For the text of Section I as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 1.
PROPOSAL THREE
POWER TO CALL SPECIAL MEETINGS OF STOCKHOLDERS
Article Ten, Section 2 of the Charter currently provides that special meetings of st ockholders of the Company
may be called by (a) the Board of Directors, (b) such persons as are authorized to call special meetings pursuant
to the Company's by-laws, or (c) the holders of 15% of the Company's outstanding shares. Under the Delawa re
Law, special meetings may be called by the Board of Directors or by such persons as ma y be authorized in a
corporation's charter or by-laws. The Board is proposing that the Charter be amended to increase the number of
stockholders necessary to call a special meeting from 15% to a majority of the Company's outstanding shares.
Reasons for Amendment. The Board believes that the current threshold affording holders of 15% of the
Company's outstanding shares the right to call special stockholder meetings establishes too low a threshold and
exposes the Company to the costs of preparing for a special stockholder meeting without a showing of
substantial support by the stockholders. The Board believes that the decision whether to hold such a meeting
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should properly rest with the holders of a majority of the Company's outstanding shares and with the Board of
Directors.For the text of Section 2 as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 2.
PROPOSAL FOUR
REQUIREMENT THAT STOCKHOLDER ACTION BE EFFECTED AT A MEETING
Currently, Article Ten, Section 3 of the Charter allows stockholder action to be taken without a meeting and
without a general vote if a consent or consents in writing are signed by the holders of the outstanding stock
having at least the minimum number of votes that would be necessary to take such action at a meeting a t which
all shares entitled to vote thereon were present. The Delaware Law allows a corporation to require in its cha rter
that stockholder actions must be effected at an annual or special meeting. The Board is proposing that Section 3
of the Charter be amended to require that stockholder action must be at a meeting of stockholders.
Reasons for Amendment. The Board believes that it is important for all of the Company's stockholders to have
the opportunity to participate in determining matters that may affect their rights. This should include t he
opportunity for all stockholders to consult with other stockholders or management regarding the proposed
actions, and the opportunity to vote for or against the proposed actions. Requiring a meeting would help to
ensure that all stockholders would be given the opportunity to consider the views of the Board and to meet and
exchange views with other stockholders regarding the proposal prior to its adoption. Giving all stockholders the
opportunity to exercise their right to vote for or against proposed actions would also help to avoid situations of
surprise and confusion, either to those stockholders whose written consents were not sought by those proposing
the actions or to the Company's Board of Directors. The Board believes that requiring that stockholders must act
at a meeting instead of through written consents is the more common approach for public companies.
For the text of Section 3 as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 3.
PROPOSAL FIVE
BOARD VACANCIES
Section 4(b) of Article Ten of the Charter currently prohibits the Board from filling vacancies and newly
created directorships until the stockholders have had a period of 90 days to fill the position following notice to
the stockholders which is required to be mailed upon the occurrence of such vacancy or newly created
directorship. Under the Delaware Law, unless a corporation's charter provides otherwise, vacancies and newly
created directorships resulting from any increase in the number of directors may be filled by the remaining
members of the board of directors. The Board is proposing that Section 4(b) be amended to enable the Board to
fill vacancies and newly created directorships.
Reasons For Amendment. The Board believes that the requirement to seek stockholder action on each occasion
in which a Board vacancy occurs, whether by resignation or by newly created directorship, may be
unnecessarily burdensome and costly and could delay the ability of the Company to benefit from the services of
new Directors. Since the stockholders of the Company have the power to elect the entire Board of Directors on
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an annual basis, the terms of directors appointed by the Board on an interim basis would in any event last only
until the next annual meeting. Stockholders are thus assured of having the opportunity within no more than one
year to vote for or against each Director, including the new member or members appointed by the Board on an
interim basis. Further, the proposal does not affect the right of stockholders granted under the Delaware Law to
remove a director, with or without cause.For the text of Section 4(b) as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 4(b).
PROPOSAL SIX
LIMITATIONS ON ISSUANCE OF EQUITY SECURITIES
Section 6 of Article Ten of the Charter currently provides that, with the exception of certain transactions such a s
stock splits, divisions or dividends, the Board may not issue or sell any equity security to any person who holds,
or after the issuance or sale would hold, shares representing more than five percent of the voting power of the
Company unless such issuance or sale is approved by a majority of the Company's outstanding shares
(excluding the shares of the person to whom the equity is being issued). The Board is proposing that Section 6
be amended to provide that stock issuances resulting in a person holding more than five percent of the voting
power of the Company may be made without such stockholder approval, but only if (a) the issuance or sale is to
a person not affiliated with the Company, and (b) the issuance or sale is approved by a majority of the non-
employee Directors.
Reasons for Amendment. The Board believes that current Section 6 limits the Company's flexibility to make
business acquisitions using Company stock. The effect of current Section 6 is that the Company cannot, without
first seeking and obtaining stockholder approval, undertake acquisitions involving a purchase price which
represents more than five percent of the outstanding stock of the Company. The Company has been engaged in
an acquisition strategy which has resulted in an expansion of its geographic markets and its product line. The
Company plans to continue this strategy; however, the Board believes that the successful implementation of this
strategy could be hampered by the current limitations on stock issuances set forth in Section 6. Current Section
6 also limits the Company's ability to raise capital through the issuance of stock to investors who may be willing
to make a significant investment in the Company.
The proposed amendment is designed to provide the Company added flexibility, while limiting the Board's
discretion in order to prevent issuances of stock that could involve a conflict of interest. Under the Charter as
amended, stockholder approval will continue to be a requirement for issuances of equity securities to any
"Affiliate" (i.e., a person in a control relationship with the Company) who would hold more than five percent of
the voting power of the Company. Furthermore, the rules of the New York Stock Exchange require stockholder
approval for share issuances by the Company which result in common stock being issued which will have
voting power equal to or in excess of 20% of the aggregate voting power outstanding prior to the issuance of the
stock or which will result in a change in control.
For the text of Section 6 as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 6.
PROPOSAL SEVEN
LIMITATIONS ON COMPENSATION RELATED TO CHANGE IN CONTROL
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Section 9 of Article Ten currently prohibits the Board from entering into severance arrangements which are
contingent upon a change in control, merger or acquisition of the Company unless such arrangements receive
the affirmative vote of a majority of the Company's outstanding shares (excluding shares owned by any person
who would be a party to such arrangements). The Board is proposing that Section 9 be amended with respect to
severance arrangements for directors, officers and employees whom the Board reasonably concludes make or
will make a significant contribution to the business of the Company. With respect to the granting of
arrangements to such key persons, the Board is proposing to substitute for the stockholder approval requirement
the following requirements: (a) that such arrangements be approved by a majority of non-employee directors,
and (b) that payments to any individual pursuant to such an arrangement be limited to the maximum amount
which does not result in "excess parachute payments" under Section 280G of the Internal Revenue Code of
1986, as the same may be amended from time to time (the "Code").
Section 280G of the Code generally defines "excess parachute payments" as amounts that exceed three times
the average annual taxable compensation of the individual. "Excess parachute payments" are not fully
deductible for income tax purposes by a corporation. The effect of this provision in the proposed amendment to
Section 9 would be to limit the Company's ability to enter into change in control arrangements without
stockholder approval that could result in payments that exceed the Internal Revenue Service's limitations on
severance arrangements.
Reasons for Amendment. The Board believes that the proposed amendment to Section 9 will give the Company
greater flexibility in offering compensation arrangements which will continue to attract, motivate and retain key
employees, yet will also provide important limitations on the Board's discretion in this area. The Board belie ves
that the stockholder approval requirement, which can be a lengthy and costly process, causes delays which
could result in the loss of key employees and potential key employees who could provide valuable services to
the Company. Further, the Board believes that the requirements of approval by non-employee directors and the
limitation on maximum payments should serve to restrict the granting of excessive "golden parachute"
arrangements.
For the text of Section 9 as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 9.
PROPOSAL EIGHT
AMENDMENTS CONCERNING POWER TO AMEND THE CHARTER.
Section 12 of Article Ten currently provides that the provisions contained in Article Ten shall not be amended
without the affirmative vote of the holders of at least 75% of the Company's outstanding shares, except that (i)
after the occurrence of a Change of Control, such amendments would require the affirmative vote of at least
50% of the Company's outstanding shares, and (ii) with respect to the provisions of Section 8 of Article Ten
(which relate to stockholder approval for the issuance of rights and options), after the transfer by certain
stockholders of their voting shares in the Company, amendments to such Section will require the affirmative
vote of at least 50% of the Company's outstanding shares. The Board is proposing that Section 12 be amended
to provide in all cases that amendments to the Charter may be made by the affirmative vote of holders of a
majority of the Company's outstanding shares.
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Approval of the proposed amendment to Section 12 will also constitute approval of a deletion of the related
definition of "Change in Control" which is contained in Section I I of Article Ten because that definition is not
used elsewhere in Article Ten.
Reasons for Amendment. The Delaware Law provides that in the absence of a provision to the contrary in the
charter or by-laws of a corporation, the affirmative vote of a majority of outstanding stock entitled to vote
thereon is required to amend a charter. The Board believes that it is appropriate for the Company to follow the
statutory rule in Delaware and that it is not in the best interests of the Company or its stockholders to allow a
26% minority to thwart the desires of a majority of the stockholders of the Company with respect to
amendments to the Charter.
For the text of Section 12 as currently in effect and as proposed to be amended, see Annex A, Article Ten,
Section 12.
The Board of Directors recommends a vote FOR each of the proposals to amend the Charter of
the Company as set forth above.
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ANNEX A
ARTICLE TEN (as currently in effect)
CERTAIN RIGHTS OF THE
CORPORATION'S STOCKHOLDERS
1. Section 203 Not Applicable. The Corporation shall not be governed by the provisions of Section 203 of the General Corporation Law of
the State of Delaware.
2. Special Meetings of Stockholders; Voting. Special meetings of the stockholders of the Corporation may be called by the Board of
Directors, such Person or Persons as may be authorized to call a special meeting by t he Corporation's by-laws, or by the holders of 15% of
the Corporation's Voting Shares. The holders of a majority of the Voting Shares shall constitut e a quorum at all meetings of stockholders.
When a quorum is present or represented by proxy at any meeting, the vote of the holders of a majority of the Voting Shares present in
person or represented by proxy and voting shall decide any question brought before the meeting, except as otherwise provided by law or the
provisions of ARTICLE FIVE, Section B, subsection 7 or this ARTICLE TEN. All Voting Shares sha ll be entitled to one vote per share on
any matter submitted to a vote of stockholders, except as otherwise provided by the provisions of this ARTICLE TEN. All proxies, ballots,
votes and tabulations that identify the particular vote of holders of Voting Shares shall be confidential and shall not be disclosed except (i) to
independent election inspectors appointed by the Corporation, who shall not be directors, offi cers, or employees of the Corporation, (ii) as
required by law, or (iii) when expressly requested by the voting stockholder.
ARTICLE TEN ( as proposed to be amended)
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CERTAIN RIGHTS OF THE
CORPORATION'S STOCKHOLDERS
1. Section 203 Applicable. The Corporation shall be governed by the provisions of Section 203 of the General Corporation Law of the State
of Delaware. 2. Special Meetings of Stockholders; Voting. Special meetings of the stockholders of the Corporation may be called by the Board of
Directors, such Person or Persons as may be authorized to call a special meeting by the Corporation's by-laws, or by the holders of a majority
of the Voting Shares. [No Change to Remainder of Section]
ARTICLE TEN (as currently in effect)
3. Action By Stockholders In Lieu of A Meeting. Any action required by the General Corporation Law of the State of Delaware to be ta ken
at any annual or special meeting of the stockholders of the Corporation, or any action whi ch may be taken at any annual or special meeting of
such stockholders, may be taken without a meeting, without prior notice and without a vote , if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voting and shall be deliv-
ered to the Corporation by delivery to its registered office in Delaware, the Corporation's principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of stockholders are recorde d. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested.
4. Election Of The Board Of Directors
(a) Annual Election. Directors of the Corporation shall not be divided into classes, and the term of each dire ctor shall expire at the annual
meeting of stockholders.,
(b) Vacancies. Vacancies on the Board of Directors and newly created directorships shall not be filled by the Board of Directors for a
period of 90 days commencing on the effective date of such vacancy or new directorship, and, during such 90-day period, the holders of
Voting Shares may fill such vacancy or newly created directorship. Upon the occurrence of a ny such vacancy or newly created directorship
(other than vacancies or new directorships created by action of the stockholders), the Corpora tion shall promptly, but in no event more than
five business days after such occurrence, cause notice of such occurrence and of the right of stoc kholders to act hereunder to be given to all
record holders of voting Shares.
ARTICLE TEN (as proposed to be amended)
3. Action By Stockholders Required At A Meeting. 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 stockholders and ma y not be effected by any consent in writing by such
stockholders.
4. Election Of The Board Of Directors
(a) Annual Election. [No Change]
(b) Vacancies. Vacancies on the Board of Directors and newly created directorships shall be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
ARTICLE TEN (as currently in effect)
5. Classes Of Stock. The designations and the powers, preferences and rights, and the qualifications, limitati ons and restrictions thereof in
respect of any class or classes of stock and any series of any class of stock of the Corpora tion shall be set forth in an amendment to this
Amended and Restated Certificate of Incorporation of the Corporation, and the Board of Dire ctors shall not have the authority to fix by
resolution or resolutions any of such designations, powers, preferences, rights, qualifications, limitations, and restrictions.
6. Issuances Of Equity Securities
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(a) Vote Required for Certain Sales of Equity Securities. Except as set forth in subsection (b) of this Section 10.6, in addition to any
affirmative vote of stockholders required by any provision of law, this Amended and Restated Certificate of Incorporation or the by-laws of
the Corporation, or any policy adopted by the Board of Directors, the Corporation shall not, and shall not permit any Subsidiary to, on or after
September 30, 1991, directly or indirectly, issue or sell any Equity Security of the Corporati on or any Subsidiary to any Person who would
be, after giving effect to such issuance or sale, an Interested Person, without the affirma tive vote of the holders of Voting Shares which
represent at least a majority of the aggregate voting power of all outstanding Voting Shares, voting together as a single class, excluding from
such vote and from Voting Shares deemed to be outstanding all Voting Shares Beneficially Owned by such Person. Such affirmative vote
shall be required notwithstanding the fact that no vote may be required, or that a lesse r percentage may be specified, by law or any agreement
with any national securities exchange or otherwise.
ARTICLE TEN (as proposed to be amended)
5. Classes Of Stock. [No Change]
6. Issuances Of Equity Securities
(a) Vote Required for Certain Sales of Equity
Securities. [No Change]
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ARTICLE TEN (as currently in effect)
(b) When a Vote is Not Required. The provisions of subsection (a) of this Section 10.6 shall not be applicable with respect t o any issuance
of shares of a class of Equity Securities (i) pursuant to any stock split-up or division effect ed by the Corporation on a pro rata basis to all
stockholders of such class, (ii) pursuant to any dividend that is paid by the Corporation i n shares of Equity Securities of the Corporation or
any Subsidiary on a pro rata basis to all stockholders of such class, (iii) pursuant to any divi dend reinvestment plan adopted by the
Corporation in which all stockholders of such class are eligible to participate, (i v) pursuant to any sale to underwriters in connection with a
bona fide underwritten public offering of Voting Shares, or (v) pursuant to warrants, options or similar ri ghts existing on or before September
1, 1991.
ARTICLE TEN (as proposed to be amended)
(b) When a Vote is Not Required. The provisions of subsection (a) of this Section 10.6 shall not be applicable with respect t o any issuance
of shares of a class of Equity Securities (x) where such issuance or sale is made to a Person who is not an Affiliate of the Corporation and
such issuance or sale has been approved by a majority of the members of the Board of Direc tors who are not employees of the Corporation;
or (y) pursuant to (i) any stock split-up or division effected by the Corporation on a pro rata basi s to all stockholders of such class, (ii) any
dividend that is paid by the Corporation in shares of Equity Securities of the Corporation or any Subsidiary on a pro rata basis to all
stockholders of such class, (iii) any dividend reinvestment plan adopted by the Corporation in whi ch all stockholders of such class are eligible
to participate, (iv) any sale to underwriters in connection with a bona fide underwritte n public offering of Voting Shares, or (v) warrants,
options or similar rights existing on or before September 1, 1991.
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ARTICLE TEN (as currently in effect)
7. Restriction Of Greenmail(a) Vote Required for Certain Acquisitions of Equity Securities. Except as set forth in subsection (b) of this Section 10.7, in addition to any
affirmative vote of stockholders required by any provision of law, this Amended and Restated Certificate of Incorporation or the by-laws of
the Corporation, or any policy adopted by the Board of Directors, the Corporation shall not, and shall not permit any Subsidiary to,
knowingly effect any direct or indirect purchase or other acquisition (including, without limi tation, redemptions and exchanges), from any
Person, of any Equity Security of a class of securities issued by the Corporation or any Subsidiary which is registered pursuant to Section 12
of the Exchange Act, at a price which is in excess of the Market Price of such Equi ty Security on the date that the understanding to effect
such transaction is entered into by the Corporation or any Subsidiary (whether or not such transact ion is concluded or a written agreement
relating to such transaction is executed on such date, such date to be conclusive ly established by determination of the Board of Directors),
without the affirmative vote of the holders of the Voting Shares which represent at lea st a majority of the aggregate voting power of all
outstanding Voting Shares, voting together as a single class, excluding from such vote and from Voting Shares deemed to be outstanding all
Voting Shares Beneficially Owned by such Person. Such affirmative vote shall be required notwith standing the fact that no vote may be
required, or that a lesser percentage may be specified, by law or any agreement with any Person.
(b) When a Vote is Not Required. The provisions of subsection (a) of this Section 10.7 shall not be applicable with respect to:
(i) any purchase, acquisition, redemption, or exchange of Preferred Stock, the purchase, acquisition, redemption or exchange of which is
provided for in any provisions of this Amended and Restated Certificate of Incorporation of the Corporation establishing the designations,
rights, and preferences of such Preferred Stock; or
ARTICLE TEN (as proposed to be amended) 7. Restriction Of Greenmail. [No Change]
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ARTICLE TEN (as currently in effect)(ii) any purchase or other acquisition of Equity Securities made as part of a tender or exchange offer by the Corporation made on
the same terms to all holders of such Equity Securities and complying with the appl icable requirements of the Exchange Act and the
rules and regulations thereunder (or any successor provisions to such Act, rules or regulations).
8. Rights And Options
(a) Vote Required for Rights and Options. Except as set forth in subsection (b) of this Section 10.8, the Corporation shall not, and
shall not permit any Subsidiary to, create or issue any rights or options entitling the holders thereof to purchase or otherwise obtain
any Equity Securities issued or to be issued by the Corporation or any such Subsidiary, without the affirmative vote of the holders of
Voting Shares which represent at least a majority of the aggregate voting power of all outstanding Voting Shares, voting together as a
single class.
(b) When a Vote is Not Required. The provisions of subsection (a) of this Section 10.8 shall not be applicable with respect to creation
or issuance of (i) any rights or options to employees of the Corporation or any~Subsidiary in connection with customary compensation
arrangements entered into by the Corporation or any Subsidiary in the ordinary course of business or (ii) options or rights to purchase
or obtain Equity Securities of any Subsidiary which constitutes less than 10% of the consoli dated assets of the Corporation as reflected
on the most recent audited financial statements of the Corporation available at the time of issuance issued to (x) employees of such
Subsidiary in connection with their employment by such Subsidiary or (y) any Person, other than an Interested Person, pursuant to a
bona fide business venture between the Corporation and/or such Subsidiary on one hand and such Person on the other hand.
ARTICLE TEN (as proposed to be amended)
8. Rights And Options. [No Change]
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ARTICLE TEN (as currently in effect)9. Golden Parachutes. The Corporation shall not enter into or extend any agreements or arrangements pursuant to whi ch
compensation would be paid to any director, officer, or employee of the Corporation which is contingent upon a change of control,
merger or acquisition of the Corporation, without the affirmative vote of the holders of Voting Shares which represent at least a
majority of the aggregate voting power of all outstanding Voting Shares, voting together as a single class, excluding from such vote
and from Voting Shares deemed to be outstanding all Voting Shares Beneficially Owned by a ny Person that is or would be a party to
such agreement or arrangement.
10. Reservation Of Shares. The Corporation will at all times reserve and keep available out of its authori zed but unissued shares of
Common Stock, the number of such shares which are sufficient for issuance upon exercise of any then outstanding warrant, option or
similar fight to receive or acquire any class of Common Stock.
11. Certain Definitions
For the purposes of this ARTICLE TEN:
ARTICLE TEN (as proposed to be amended)
Golden Parachutes.
(a) Employees. The Corporation shall not enter into or extend any agreements or arrangements pursuant to whic h compensation
would be paid to any employee of the Corporation which is contingent upon a Change in Control, merger or acquisition of the
Corporation without the affirmative vote of the holders of Voting Shares which represent at le ast a majority of the aggregate voting
power of all outstanding Voting Shares, voting together as a single class, excluding from suc h vote and from Voting Shares deemed to
be outstanding all Voting Shares Beneficially Owned by any Person that is or would be a party to such agreement or arrangeme nt.
(b) Directors, Officers and Key Personnel. Anything contained in Section 9(a) to the contrary notwithstanding, the Corporation
may enter into or extend any agreements or arrangements pursuant to which compensation would be paid to any director, officer or
other employee whom the Board of Directors has determined makes or is likely to make a significant contribution to the business of
the Corporation, which is contingent upon a change in control, merger or acquisition of the C orporation, provided that (i) such action
has received the affirmative vote of a majority of the members of the Board of Dire ctors who are not employees of the Corporation
and (ii) payments made to a person pursuant to any such agreement or arrangement shall be limited to the maximum amount which
does not result in "excess parachute payments" under Section 28OG of the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor legislation.
10. Reservation Of Shares. [No Change]
11. Certain Definitions
For the purposes of this ARTICLE TEN:
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ARTICLE TEN (as currently in effect)(i) "Affiliate" and "Associate" shall have the respective meanings ascribed to such t erms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on August 30, 1991.
(ii) "Beneficial Owner" when used with respect to any securities shall mean a Pe rson that, individually or with or through any of its
Affiliates or Associates,
(A) is the beneficial owner of such securities, within the meanings ascribed to the term beneficial owner in Rules 13d-3 and Rule 13d-5 of
the General Rules and Regulations under the Exchange Act as in effect on August 30, 1991;
(B) has (I) the right to acquire such securities (whether such right is exercisable i mmediately 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,
provided, however, that a Person shall not be deemed the Beneficial Owner of securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such tendered securitie s are accepted for purchase or exchange; or
(2) the right to vote such securities pursuant to any agreement, arrangement or understanding, provi ded, however, that a Person shall not be
deemed the Beneficial Owner of any securities because of such Person's right to vote such se curities if the agreement, arrangement or
understanding to vote such securities arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation
made to 10 or more persons; or
(C) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable
proxy or consent as described in item (2) of clause (B) of this definition), or disposing of such securities with any other Person that
Beneficially Owns, or whose Affiliates or Associates Beneficially Own, directly or indirectly, such securit ies.
ARTICLE TEN (as proposed to be amended)
(i) "Affiliate" and "Associate"-[ No Change]
(ii) "Beneficial Owner"-[No Change]
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ARTICLE TEN (as currently in effect)
Securities that are "Beneficially Owned" by any Person shall mean all such securities of which such Person is the Beneficial Owner. The
Corporation shall be permitted to conclusively rely upon its stock transfer ledger, public fi lings with regulatory agencies, such as Schedules
13D, or certificates of its stockholders in determining the Beneficial Ownership of any Person and its Affiliates of Vot ing Shares.
(iii) "Change in Control" shall mean either the acquisition by any Person and its Affil iates, other than Citicorp Investments, Inc. ("Cll"),
The Prudential Insurance Company of America ("Prudential"), World Equity Partners, L.P. ("WE"), exe cutive officers of the Corporation and
their Affiliates, of more than 40% of the Voting Shares.
(iv) "Equity Securities" shall have the meaning ascribed to such term in Rule 3a ll-I under the Exchange Act, as in effect on August 30,
1991.
(v) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(vi) "Interested Person" shall mean any Person (other than the Corporation or any Subsidiary) that is the 'direct or indirect Beneficial
Owner of more than 5% (five percent) of the aggregate voting power of the Voting Shares and any Affi liate or Associate of any such Person.
For the purpose of determining whether a Person is an Interested Person, Voting Shares that are de emed outstanding and are deemed
Beneficially Owned by such Person shall include unissued Voting Shares of the Corporation of whic h the Interested Person is the Beneficial
Owner but shall not include any other Voting Shares of the Corporation which may be issuable pursuant to any agreement, arrangement, or
understanding, upon exercise of conversion rights, warrants, or options, or otherwise to any Person who is not the Interested Person.
ARTICLE TEN (as proposed to be amended)
(iii) "Change in Control"-[ Deleted]
(iv) "Equity Securities"-[ No Change]
(v) "Exchange Act"-[No Change]
(vi) "Interested Person"-[No Change]
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ARTICLE TEN (as currently in effect)
(vii) "Market Price" of shares of a class of an Equity Security of the Corporation on any day shal l mean the highest sale price (regular
way) of shares of such class of such Equity Security on such day, or if that day is not a trading day, then on the trading day immediately
preceding such day, on the largest principal national securities exchange on which such c lass of Equity Security is then listed or admitted to
trading, or if such class of Equity Security is not listed or admitted to tra ding on any national securities exchange, then the highest reported
sale price for such shares in the over-the-counter market as reported on the NASDAQ National Ma rket System, or if such sale prices shall not
be reported thereon, then the highest bid price so reported, or if such price shall not be reported thereon, then as the same shall be reported by
the National Quotation Bureau Incorporated, or if the price is not determinable as se t forth above, then as determined in good faith by the
Board of Directors.
(viii) "Person" shall mean any individual, partnership, firm, corporation, association, trust, unincorporat ed organization or other entity, as
well as any syndicate or group deemed to be a person pursuant to Section 13(d)(5) of the Exchange Act, as In effect on August 30, 1991.
(ix) "Subsidiary" shall mean any company of which the Corporation is the Beneficial Owner, di rectly or indirectly, of (A) a majority of the
fair market value of the outstanding Equity Securities of such company, or (B) Equity Securiti es having a majority of the voting power
represented by all of the outstanding shares of capital stock of such company entitle d to vote generally in the election of directors. For the
purpose of determining whether a company is a Subsidiary, the outstanding Equity Securities there of shall include unissued Equity Securities
of which the Corporation is the Beneficial Owner but, except for the purpose of determining whe ther a company is a Subsidiary for the
purpose of subsection (v) hereof, shall not include any other Equity Securities which may be issuable pursuant to any agreement,
arrangement, or understanding, or upon the exercise of conversion rights, warrants, or options, or otherwise to any Person who is not the
Corporation.
ARTICLE TEN (as proposed to be amended)
(vii) "Market Price"-[No Change]
(viii) "Person"-[No Change]
(ix) "Subsidiary"-[ No Change]
- 17 -
ARTICLE TEN (as currently in effect)(x) "Voting Shares" shall mean the outstanding shares of capital stock of the Corporation enti tled to vote generafly in the election of
directors.
12. Amendment. The provisions of this ARTICLE TEN shall not be amended without the affirmative vot e of the holders of Voting Shares
which represent at least 75% of the aggregate voting power of all outstanding Voting Shares, vot ing together as a single class, except that (i)
after the occurrence of a Change of Control, the affirmative vote of the holders of Voting Shares which represent at least 50% of the aggregate
voting power of all outstanding Voting Shares, voting together as a single class, shall be required to amend the provisions of this Article TEN
and (ii) after the transfer by CII, Prudential and/or WE and their respective Affiliat es of Voting Shares, resulting in C11, Prudential, WE and
their Affiliates being collectively the Beneficial Owner of less than 10% of the Voting Shares and resulting in C11 and its Affiliates,
Prudential and its Affiliates and WE and its Affiliates each being the Bene ficial Owner of less than 5% of the Voting Shares, the affirmative
vote of the holders of Voting Shares which represent at least 50% of the aggregate voting power of a ll outstanding Voting Shares. voting
together as a single class, shall be required to amend the provisions of Section 8 of this Article TEN.
ARTICLE TEN (as proposed to be amended)
(x) "Voting Shares"-[No Change]
12. Amendment. The provisions of this ARTICLE TEN shall not be amended without the affirmative vot e of the holders of Voting Shares
which represent at least a majority of the aggregate voting power of all outstanding Voting Shares, voting together as a single class.
York International Corporation 3/25/94
