The Class B Preferred Shares may be redeemed at $1.00 per share after July 31, 1992. During the period from July 31, 1990 to July 31, 1992 the Class B Preferred Shares are redeemable for a price of $1.00 per share if the closing price per Common Share on a recognized stock exchange throughout a 20-trading day period not more than 90 days preceding the day on which notice of redemption is given is not lower than $3.75 per share. Each Class B Preferred Share may, up to April 30, 1997, or earlier if the Company calls such shares for redemption, be converted at the option of the holder into one-half of a Common Share until April 30, 1992 or four-ninths of a Common Share thereafter. The Class B Preferred Shares are not retractable by the holder.

Dividends

The Company is restricted in paying cash dividends in respect to any shares of its capital stock as long as any Redeemable Preferred Shares of the subsidiary are outstanding. In the event that the Company is unable to pay a dividend in cash on these shares, the dividend is satisfied by the issuance of Common Shares. 145,833 shares were issued in January, 1988 to meet the semi-annual obligation of $350,000 due for the last half of 1987 and 145,833 shares were issued in July 1988 to meet the semi-annual obligation of $350,000 due for the first half of 1988. In January 1989, the dividend for the second half of 1988, which was accrued at the year end, was paid in cash with the permission of the Company’s bankers.

11. PRODUCT LIABILITY LAWSUITS

The Company continues to be named as a defendant in bodily injury and property damage asbestos-related product liability lawsuits in the United States.

(A) Bodily Injury Claims. Since 1974, the Company has been involved in approximately 3,950 bodily injury claims, but is currently defending only about 500 claims. In 1988, approximately 100 new claims were filed against the Company, and the Company agreed to settle or dispose of, or was dismissed from, approximately 160 claims. Virtually all the Company’s legal and settlement costs incurred in 1988 were paid for by insurers.

The number of new claims in 1988 was substantially below that in prior years, and it is expected that a significant percentage of those filed will involve little or no exposure to the Company. It is nevertheless impossible to predict the number of new claims that may be brought against the Company. The Company continued in 1988 to dispose of more claims than were filed against it in the year, and it is anticipated that even greater progress will be made in this respect in 1989 primarily as a result of the Manville reorganization that took effect late last year. Approximately one-half of the pending claims against the Company arise out of plants owned and principally supplied by Johns-Manville, which was in reorganization and thus exempt from litigating these claims from 1982 until late 1988. It is expected that a large percentage of these claims will be disposed of by the new Manville Trust in 1989, paving the way for reasonable settlements of these claims by the Company in the same year.

Future costs arising from the litigation to be borne by the Company and its insurers are difficult to predict, since the Company’s potential liability in each case depends upon a great many factors apart from purely legal defences, including the seriousness of the bodily injury, whether the alleged illness is related to exposure to asbestos supplied by the Company, and the amount of contribution required from and paid by the various co-defendants. In the past, many of the claims have been ultimately dismissed voluntarily, and the majority of