UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 0-27508
SUPERIOR SERVICES, INC.
(exact name of Registrant as specified in its charter)
Wisconsin 39-1733405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 South 84th Street, Suite 200, Milwaukee, Wisconsin 53214
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (414) 479-7800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes_X__ No___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
The number of shares of Common Stock of the registrant, par value $.01
per share, outstanding on August 9, 1999 was 32,461,756.
<PAGE>
SUPERIOR SERVICES, INC.
FORM 10-Q INDEX
For the Quarter Ended June 30, 1999
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets.........................3
Condensed Consolidated Income Statements......................4
Condensed Consolidated Statements of Shareholders'
Investment....................................................5
Condensed Consolidated Statements of Cash Flows...............6
Notes to Condensed Consolidated Financial Statements.......7-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................13-19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................20
Item 2. Changes in Securities and Use of Proceeds........................20
Item 4. Submission of Matters to a Vote of Securities Holders............20
Item 6. Exhibits and Reports on Form 8-K.................................21
SIGNATURES....................................................................22
EXHIBIT INDEX.................................................................23
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<PAGE>
<TABLE>
Superior Services, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
<CAPTION>
December 31, June 30,
1998 1999
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,715 $ 4,447
Trade accounts receivable 58,122 75,073
Prepaid expenses and other current assets 5,607 7,255
------------ -----------
Total current assets 73,444 86,775
Property and equipment, net 312,497 338,321
Restricted funds held in trust 1,149 1,317
Other assets 5,529 7,887
Intangible assets, net 134,223 185,189
------------ -----------
Total assets $ 526,842 $ 619,489
============ ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities:
Current maturities of long-term debt $ 5,194 $ 2,938
Trade accounts payable 18,069 19,522
Accrued payroll and related expenses 4,584 4,953
Other accrued expenses 31,838 37,074
------------ -----------
Total current liabilities 59,685 64,487
Long-term debt, net of current maturities 66,284 132,836
Disposal site closure and long-term care obligations 48,289 50,230
Deferred income taxes 23,865 24,008
Other liabilities 11,977 13,044
Commitments and contingencies
Shareholders' Investment:
Common stock 322 325
Additional paid-in capital 249,023 249,744
Retained earnings 67,397 84,815
------------ -----------
Total shareholders' investment 316,742 334,884
------------ -----------
Total liabilities and shareholders' investment $ 526,842 $ 619,489
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
Superior Services, Inc.
Condensed Consolidated Income Statements
(In Thousands, Except Share and Per Share amounts)
(Unaudited)
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1998 1999 1998 1999
---- ---- ---- ----
(Restated) (Restated)
<S> <C> <C> <C> <C>
Revenues $ 81,462 $ 98,995 $ 149,625 $ 179,003
Expenses:
Cost of operations 46,825 55,724 86,704 102,119
Selling, general and administrative costs 9,602 11,453 19,536 21,751
Merger costs 315 - 1,858 -
Depreciation and amortization expenses 9,955 12,814 19,271 23,780
---------- ---------- ---------- ----------
66,697 79,991 127,369 147,650
---------- ---------- ---------- ----------
Operating income 14,765 19,004 22,256 31,353
Other income (expense):
Interest expense (902) (1,479) (1,925) (2,429)
Other income 460 136 998 724
---------- ---------- ---------- ----------
Income before income taxes 14,323 17,661 21,329 29,648
Provision for income taxes 5,676 7,285 9,363 12,230
---------- ---------- ---------- ----------
Net income $ 8,647 $ 10,376 $ 11,966 $ 17,418
========== ========== ========== ==========
Earnings per share - basic $ 0.27 $ 0.32 $ 0.38 $ 0.54
========== ========== ========== ==========
Earnings per share - diluted $ 0.26 $ 0.32 $ 0.37 $ 0.53
========== ========== ========== ==========
Pro forma adjustments (note 3):
Net income, as reported $ 8,647 $ 10,376 $ 11,966 $ 17,418
Adjustment for income taxes (265) - (600) -
---------- ---------- ---------- ----------
Net income, as adjusted $ 8,382 $ 10,376 $ 11,366 $ 17,418
========== ========== ========== ==========
Earnings per share as adjusted - basic $ 0.26 $ 0.32 $ 0.36 $ 0.54
========== ========== ========== ==========
Earnings per share as adjusted -diluted $ 0.26 $ 0.32 $ 0.35 $ 0.53
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
Superior Services, Inc.
Condensed Consolidated Statements of Shareholders' Investment
(In Thousands, Except Share Amounts)
(Unaudited)
<CAPTION>
Common Additional
Stock Paid-In Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 32,202,297 $322 $249,023 $67,397 $316,742
Net income - - - 17,418 17,418
Issuance of common stock:
Exercise of stock options and
warrants 179,345 2 677 - 679
Other 77,727 1 44 - 45
---------- ---- -------- ------- --------
Balance at June 30, 1999 32,459,369 $325 $249,744 $84,815 $334,884
========== ==== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
Superior Services, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<CAPTION>
For the six months ended
June 30
-------
1998 1999
----- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $11,966 $17,418
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 19,271 23,780
Deferred income taxes 1,137 143
(Gain) loss on sale of assets (97) 598
Changes in operating assets and liabilities, net of effects of acquired
businesses:
Accounts receivable (9,019) (13,775)
Prepaid expenses and other current assets (404) (707)
Accounts payable and accrued expenses (2,696) (5,479)
Disposal site closure and long-term care
obligation 1,847 1,941
Other 916 (627)
------- -------
Net cash provided by operating activities 22,921 23,292
INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired (27,370) (61,174)
Purchases of property and equipment (20,352) (32,440)
Proceeds from sale of property and equipment 1,283 247
Increase in restricted funds held in trust (516) (168)
------- -------
Net cash used in investing activities (46,955) (93,535)
FINANCING ACTIVITIES
Net decrease in short-term borrowings (2,259) (2,256)
Proceeds from long-term debt 4,805 77,263
Payments of long-term debt (10,713) (10,712)
Issuance of common stock 1,533 680
Subchapter S distributions to former shareholders (1,411) -
------- -------
Net cash provided by (used in) financing activities (8,045) 64,975
------- -------
Net decrease in cash and cash equivalents (32,079) (5,268)
Cash and cash equivalents at beginning of period 44,955 9,715
------- -------
Cash and cash equivalents at end of period $12,876 $ 4,447
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
Superior Services, Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 1999
1. Organization and Basis of Presentation
Superior Services, Inc. ("Superior" or the "Company") is an integrated
solid waste services company providing a range of collection, transfer,
transportation, disposal and recycling services to generators of solid waste and
special waste. The condensed consolidated financial statements included herein
have been prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). As applicable
under such regulations, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes that
the presentations and disclosures in the financial statements included herein
are adequate to make the information not misleading. The financial statements
reflect all elimination entries and normal adjustments that are necessary for a
fair statement of the results for the interim periods presented.
During 1998, the Company acquired Alabama Waste Systems, Inc. and Acmar
Regional Landfill, Inc. (collectively "AWS"); Gopher Disposal, Inc., Eagle
Environmental, Inc., Materials Recovery, Ltd. and Watson's Rochester Disposal,
Inc. (collectively "Gopher"); PenPac, Inc., Heritage Recycling, Inc., Iorio
Carting, Inc., ACS Services, Inc., Recycling Techniques, Inc., Advanced Waste
Technologies, Inc., Baray, Inc., and Nicholas Enterprises, Inc. (collectively
"PenPac"); all accounted for using the pooling of interests method. Prior to
their merger, AWS, a substantial number of companies comprising Gopher and
PenPac had each selected S Corporation status for income tax purposes. As a
result of their merger, AWS, Gopher and PenPac terminated their S Corporation
elections. Pro forma provisions for income taxes are presented for the six
months ended June 30, 1998 and have been computed as if AWS, Gopher and PenPac
had been "C" Corporations during the period.
Operating results for interim periods are not necessarily indicative of
the results for full years or other interim periods. It is suggested that the
condensed consolidated financial statements included herein be read in
conjunction with the consolidated financial statements of Superior for the year
ended December 31, 1998 and the related notes thereto (the "Financial
Statements") included in the Company's Form 10-K for the year ended December 31,
1998.
The accompanying condensed consolidated financial statements include the
accounts of Superior and its subsidiaries. All significant intercompany
transactions and balances have been eliminated. Certain reclassifications have
been made to the 1998 financial statements to conform to the 1999 presentation.
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<PAGE>
2. Significant Accounting Policies and Use of Estimates
There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1998. For a description of these
policies, see Note 2 of Notes to Consolidated Financial Statements in the
Company's Form 10-K for the year ended December 31, 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. Acquisitions
In the first six months of 1999, the Company acquired 17 waste businesses
that were accounted for as purchases. Aggregate consideration for these
acquisitions was approximately $60.5 million in cash. The final determination of
cost, and allocations thereof, of certain of the Company's acquisitions is
subject to resolution of certain contingencies. Once such contingencies are
resolved, the purchase price is adjusted. Future payments are contingent based
on working capital adjustments, debt adjustments and contingent liabilities and
are recorded at the time of acquisition if the contingent payment can be
reasonably estimated. These acquisitions have been accounted for as purchases
and, accordingly, the results of their operations have been included in the
Company's financial statements from their respective dates of acquisition.
During the first six months of 1999, 77,727 shares were issued and $1.5
million of cash was paid in settlement of final valuation computations on
certain acquisitions that occurred in 1998.
The unaudited pro forma results of operations below assume that 1998 and
1999 acquisitions accounted for as purchases occurred at the beginning of 1998.
In addition to combining the historical results of all such acquired entities,
the pro forma calculations include adjustments for amortization of various
intangibles acquired in conjunction with the acquisitions. However, no
adjustments have been reflected for nonrecurring expenses as a result of the
acquisition of the entities.
<TABLE>
<CAPTION>
Six months ended June
30,
1998 1999
---- ----
(Unaudited and in thousands,
except per share amounts)
<S> <C> <C>
Total net revenue $187,895 $192,998
Net income $ 12,260 $ 17,571
Earnings per share - basic and diluted $ 0.38 $ 0.54
</TABLE>
The pro forma financial information does not purport to be indicative of
the result which would actually have been recognized had the purchase
transactions been completed on January 1, 1998 or which may be realized in the
future.
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<PAGE>
4. Shareholders' Investment
On January 18, 1999, February 10, 1999, February 23, 1999 and March 24,
1999 the Company granted employee incentive stock options exercisable for 8,000,
2,000, 470,531, and 30,000 shares of Common Stock at exercise prices of $17.50,
$16.8125, $19.6875, and $19.875 per share, respectively. The exercise prices
were all fair market value on the grant date. The options become exercisable 25%
after one year and an additional 6.25% for each quarter thereafter.
On May 11,1999, the Company granted non-qualified common stock options
for 10,000 shares at an exercise price of $23.625 per share to independent
directors serving the Company's Board of Directors. These options vest ratably
over an approximate three-year period.
Prior to its merger with the Company, GeoWaste Incorporated issued
warrants to an investment banker for investment advisory services rendered. The
warrants allowed the holders to acquire up to 192,800 shares of the Company's
common stock at $6.33 per share. On February 1, 1999, the holders of the
warrants converted the warrants into 119,417 shares of the Company's common
stock, following the cash-free exercise conversion rights contained in the
warrant agreement.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30,
-------- --------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator
Income from continuing operations used in
computing basic and diluted earnings per share $ 8,647 $ 10,376 $ 11,966 $ 17,418
========== ========== ======= =======
Denominator
Denominator for basic earnings per share -
weighted average common shares 32,003,714 32,448,196 31,863,541 32,401,017
Effect of dilutive securities - employee stock
options 705,111 317,319 471,978 247,800
---------- ---------- ---------- ----------
Denominator for diluted warnings per share -
adjusted weighted average common shares 32,708,825 32,765,515 32,335,519 32,648,817
========== ========== ========== ==========
</TABLE>
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<PAGE>
6. Landfill costs
Landfill costs include land held for development which is not being
amortized. In order to develop and operate a landfill, the Company typically
must go through several governmental review processes and obtain one or more
permits and often zoning or other land use approvals. Engineering and legal fees
paid to third parties incurred to obtain a disposal facility permit are
capitalized as landfill costs and amortized over the estimated related airspace
capacity. These costs are not amortized until the permit is obtained and
operations have commenced. If the Company determines that the facility cannot be
developed, these costs are charged to expense.
7. Commitments and Contingencies
In connection with the formation of the Company in 1993 through the
consolidation of three groups of independent waste services companies, certain
potential environmental liabilities associated with the previously filled
portion of the Superior Valley Meadows landfill were identified. The range of
possible loss has been estimated not to exceed $1.3 million. At the time of the
consolidation of these companies into the Company, a contingent liability escrow
was established to cover the highest estimated costs of redemption and
monitoring with respect to the contingent liabilities. To indemnify the Company
against these contingent liabilities, $1,308,000 is being held in an escrow
account. The Company believes that the entire amount of such environmental
liabilities will either be covered by the foregoing indemnification arrangement
or otherwise is not expected to have a material adverse effect on the Company's
results of operations or financial condition.
The Company or its subsidiaries have been notified that they are
potentially responsible parties ("PRPs") in connection with two sites listed on
the National Priorities List ("NPL"). When the Company concludes that it is
probable that a liability has been incurred with respect to a site, provision
will be made in the Company's financial statements reflecting its best estimate
of the liability based on management's judgment and experience, information
available from regulatory agencies and the number, financial resources and
relative degree of responsibility of other potentially responsible parties who
are jointly and severally liable for remediation of the site as well as the
typical allocation of costs among such parties. If a range of possible outcomes
is estimated and no amount within the range appears to be a better estimate than
any other, then the Company will provide for the minimum amount within the
range, in accordance with generally accepted accounting principles.
One NPL location is a landfill owned by the Company for which the range
of total costs for remaining remediation is estimated to be between $688,000 and
$2.3 million. The Company has an accrued liability of approximately $2.3 million
relating to this matter. As the timing of payments is uncertain, the accrual was
not measured on a discounted basis. The reasonably possible loss for this site
is not expected to exceed the amounts accrued by the Company for the selected
remedial action. The Company has entered into settlement agreements with certain
of the generator PRPs, in which the generator PRPs agree to contribute a total
of approximately 62% of future remediation costs and the annual operating,
maintenance, and monitoring costs. The former owner of the location agreed to
indemnify the Company up to $2.8 million for any site liabilities the Company
may incur as a PRP. The Company has been paid approximately $500,000 by the
former owner. The Company and the former owner are in dispute regarding the cost
of a likely remediation plan. An engineer selected by the former
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<PAGE>
owner has estimated the total remediation costs to be $688,000. This dispute is
now before an arbitrator. The Company has recorded as an asset approximately
$2.3 million that is deemed probable of recovery from the generator PRPs and
through indemnification from the former owner. The Company believes its existing
financial reserves, together with the amounts paid and remaining payable by the
former owner and the contribution obligations of the generator PRPs, are
adequate to cover the currently anticipated remediation costs.
The Company acquired Nicholas Enterprises, Inc. ("Nicholas") as part of
the PenPac acquisition on September 30, 1998. Prior to the Company's acquisition
of PenPac, Nicholas was named as a defendant in litigation pursuant to the New
Jersey Spill Compensation and Control Act at Sharkey's Landfill, a site in New
Jersey. During 1998, Nicholas was released from its liability pertaining to the
site in exchange for remitting $300,000 of insurance proceeds and other
additional assessments up to $50,000. Further, prior to the acquisition by the
Company, Nicholas was named as a PRP at the Cortese Landfill, a NPL site in New
York, pursuant to the Comprehensive Response, Compensation and Control Act.
During 1994, Nicholas agreed to pay approximately $200,000 to the State of New
York in final settlement of its share of past costs at the site. This amount has
been paid. Nicholas has requested, but not yet received, release of liability
for any subsequent costs related to this site. Although the Company has not been
informed of any additional liability related to these sites, under the terms of
the acquisition agreement for Nicholas, its former shareholders have agreed to
indemnify the Company, to the extent not covered by insurance, for all claims
arising from these sites.
As is the case with all sites, the performance of the elected remedies
will be subject to periodic review by regulatory agencies. In the event the
selected remedies do not perform adequately to meet applicable state and federal
standards, additional remedial measures beyond those currently anticipated could
be required by regulatory agencies. Implementation of any such additional
remedial measures may involve substantial additional costs beyond those
currently anticipated.
In the normal course of its business and as a result of the extensive
government regulation of the solid waste industry, the Company periodically may
become subject to various judicial and administrative proceedings and
investigations involving federal, state or local agencies. To date, the Company
has not been required to pay any material fine or judgment for violation of an
environmental law. The Company is involved in various environmental matters and
governmental proceedings, including original or renewal permit filings in
connection with the establishment, operation, expansion, closure and post
closure activities of certain landfills. There can be no assurance that such
permits shall be granted or such proceedings resolved in a manner favorable to
the Company. From time to time, the Company also may be subjected to actions
brought by citizen's groups in connection with the permitting of landfills or
transfer stations, or alleging violations of the permits pursuant to which the
Company operates. The Company is also subject from time to time to claims for
personal injury or property damage arising out of accidents involving its
vehicles. The Company believes that the ultimate resolution of these other
matters will not have a material adverse effect on the Company's financial
condition or results of operations.
The Company carries a range of insurance, including a commercial general
liability policy and a property damage policy. The Company maintains a limited
environmental impairment liability policy on its landfills and transfer stations
that provides coverage, on a "claims made" basis, against certain
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<PAGE>
third-party off-site environmental damage. There can be no assurance that the
limited environmental impairment policy will remain in place or provide
sufficient coverage for existing, but not yet known, third-party, off-site
environmental liabilities.
Subsequent Event - Pending Merger with Vivendi
OnJune 11, 1999 the Company and Vivendi, a societe anonyme organized
under the laws of France ("Parent"), entered into an Agreement and Plan of
Merger ("Merger Agreement") to acquire the Company in a two-step tender
offer/merger transaction.
The first step of the transaction was a cash tender offer by Onyx Solid
Waste Acquisition Corp., a Wisconsin corporation and wholly-owned subsidiary of
Parent ("Purchaser"), to acquire all of the Company's outstanding Common Stock,
including the associated Common Stock Purchase Rights issued pursuant to the
Rights Agreement, dated as of February 21, 1997, as amended, between the Company
and LaSalle Bank National Association (f/k/a LaSalle National Bank), as Rights
Agent (the "Rights" and, together with the Common Stock, the "Shares"), at
$27.00 per Share, net to the seller in cash (the "Offer"). The Offer was
completed on July 16, 1999 and Purchaser purchased approximately 30.3 million
Shares, or approximately 93% of the issued and outstanding Shares, pursuant to
the Offer.
The merger of Purchaser with and into the Company (the "Merger"), in
which the Company will be the surviving corporation, is the second and final
step in the acquisition of the Company by Parent and is conditioned, among other
things, principally upon the receipt of all necessary solid waste regulatory
approvals in the states in which the Company operates. As a result of the
Merger, the Company will become an indirect wholly-owned subsidiary of Parent.
In the Merger, each outstanding Share (other than Shares owned by Parent,
Purchaser or any other subsidiary of Parent, held in the treasury of the Company
or owned by any wholly-owned subsidiary of the Company, and other than Shares as
to which the holder has properly exercised dissenters' rights) will be converted
into the right to receive $27.00 in cash, without interest thereon.
The Merger Agreement provides that the Company will take, consistent with
applicable law and its Restated Articles of Incorporation and By-Laws, all
actions necessary to convene a meeting of holders of Shares as promptly as
practicable to consider and vote upon the approval of the Merger Agreement. At
such meeting of the Company's shareholders, all of the Shares then owned by
Parent, Purchaser and any other subsidiary of Parent will be voted in favor of
the Merger Agreement. As a result of the consummation of the Offer, Purchaser
owns approximately 93% of the outstanding Shares, or approximately 80% of the
aggregate voting power of the issued and outstanding Shares. Accordingly, the
approval of the Merger Agreement at such special meeting of the Company's
shareholders is assured without the affirmative vote of any other shareholder.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
The Company provides solid waste collection, transfer, transportation,
recycling and disposal services to over 800,000 residential, commercial and
industrial customers in Alabama, Florida, Georgia, Illinois, Michigan,
Minnesota, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia, and
Wisconsin. The Company also provides other integrated waste services, most of
which are project-based and many of that provide additional waste volumes to the
Company's landfills and recycling facilities. As of June 30, 1999, solid waste
operations consisted of 19 Company-owned solid waste landfills, four managed
third party landfills, 49 solid waste collection operations, 18 recycling
facilities and 22 solid waste transfer stations.
As described more fully below, revenues for the periods presented were
comprised of fees received for the following services:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1998 1999 1998 1999
----- ---- ---- ----
<S> <C> <C> <C> <C>
Collection 62% 61% 63% 62%
Third party disposal 19% 20% 18% 18%
Recycling 7% 6% 8% 6%
Other integrated waste services 12% 13% 11% 14%
--- --- --- ---
100% 100% 100% 100%
==== ==== ==== ====
</TABLE>
Results of Operations
Overview
The information presented below reflects the pro forma net income
exclusive of merger costs incurred in connection with acquisitions during 1998
which were accounted for as poolings of interest. Pro forma net income includes
federal and state income tax provisions for 1998 as if AWS, Gopher and PenPac
had been taxable entities, and excludes the cumulative deferred tax provision
for AWS which was a Subchapter S Corporation prior to its acquisition.
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<PAGE>
<TABLE>
<CAPTION>
Summary Financial Data
(in thousands, except per share data)
Three months ended June 30,
-----------------------------------------------------------------
Per Per
1998 Share 1999 Share
---- ----- ---- -----
(restated)
<S> <C> <C>
Revenue $81,462 - $98,995 -
Net income, as reported $8,647 $0.26 $10,376 $0.32
Pro forma adjustments:
Adjustment for income taxes (265) - - -
------- ----- ------- -----
Pro forma net income 8,382 0.26 10,376 0.32
Adjustments:
Merger costs, net of tax 170 - - -
------- ----- ------- -----
Adjusted net income, exclusive of merger costs
and cumulative deferred tax provisions $ 8,552 $0.26 $10,376 $0.32
======== ===== ======= =====
<CAPTION>
Summary Financial Data
(in thousands, except per share data)
Three months ended June 30,
-----------------------------------------------------------------
Per Per
1998 Share 1999 Share
---- ----- ---- -----
(restated)
<S> <C> <C> <C> <C>
Revenue $149,625 - $179,003 -
Net Income, as reported $ 11,966 $0.37 $ 17,418 $0.53
Pro forma adjustments:
Adjustment for income taxes 600 (0.02) - -
-------- ----- -------- -----
Pro forma net income 11,366 0.35 17,418 0.53
Adjustments:
Deferred income taxes 771 0.02 - -
Merger costs, net of tax 1,456 0.05 - -
-------- ----- -------- -----
Adjusted net income, exclusive of merger
costs and cumulative deferred tax provisions $ 13,593 $0.42 $ 17,418 $0.53
======== ===== ======== =====
</TABLE>
Revenues in the 1999 second quarter of $99.0 million increased 21.5% over
the comparable period in the prior year primarily due to businesses acquired
which were accounted for under the purchase method of accounting. Pro forma
earnings per share, exclusive of one-time merger costs, increased 23.1% to $0.32
per share from $0.26 per share for the second quarter of 1998, as restated. Net
income, exclusive of one-time merger costs, increased 21.3% to $10.4 million in
the 1999 second quarter, from $8.6 million in the same period of 1998. The
weighted average of common and common equivalent shares outstanding was 32.8
million for the second quarter of 1999 and 32.7 million for the second quarter
of 1998, as restated.
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<PAGE>
For the first six months of 1999, revenues increased 19.6% to $179.0
million compared to $149.6 million for the same period in the prior year,
primarily due to businesses acquired which were accounted for under the purchase
method of accounting. Net income, excluding one-time merger costs and the
cumulative deferred tax provision in 1998 for AWS which was a "S" Corporation
prior to its acquisition, increased 28.1% to $17.4 million in the first half of
1999, from $13.6 million in the first half of 1998. Pro forma earnings per
share, excluding one-time merger costs and the cumulative deferred tax provision
for AWS in 1998, increased 26.2% to $0.53 per share from $0.42 per share for the
second half of 1998, as restated. The weighted average of common and common
equivalent shares outstanding was 32.6 million for the first half of 1999 and
32.3 million for the first half of 1998, as restated.
The following table sets forth for the periods indicated the percentage
of revenues represented by the individual line items reflected in the Company's
condensed consolidated statements of operations:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1998 1999 1998 1999
---- ---- ---- ----
(restated) (restated)
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of Operations 57.5 56.3 57.9 57.0
Selling, general and administrative
expenses 11.8 11.6 13.1 12.2
Merger costs 0.4 - 1.2 -
Depreciation and amortization 12.2 12.9 12.9 13.3
----- ----- ----- -----
Operating income 18.1 19.2 14.9 17.5
Interest expense 1.1 1.5 1.3 1.4
Other (income) expense (0.6) (0.1) (0.7) (0.4)
----- ----- ----- -----
Income before income taxes 17.6 17.8 14.3 16.5
Income taxes 7.0 7.3 6.3 6.8
----- ----- ----- -----
Net income 10.6% 10.5% 8.0% 9.7%
===== ===== ====== =====
</TABLE>
Revenues
Revenues increased $17.5 million, or 21.5%, and 29.4 million, or 19.6%,
for the three-and six-month periods, respectively, ended June 30, 1999 compared
with the same periods in 1998. These increases for each 1999 period were
primarily due to the impact operations acquired which were accounted for under
the purchase method of accounting. Revenues for each 1999 period compared to the
same periods in 1998 increased $13.5 million and $23.3 million, respectively,
from the impact of operations acquired. The increase in revenue was also due, to
a much lesser extent, to increases in volumes of wastes collected and disposed
at the Company's landfills and to price increases enacted late in the first
quarter of 1999.
-15-
<PAGE>
Cost of Operations
Cost of operations increased $8.9 million, or 19.0%, and $15.4 million,
or 17.8%, for the three-and six-month periods ended June 30, 1999, respectively,
compared to the same periods in 1998. However, as a percentage of revenues, cost
of operations decreased from 57.5% in the second quarter of 1998 to 56.3% in the
second quarter of 1999, and from 57.9% in the first six months of 1998 to 57.0%
in the first six months of 1999. During the second quarter of 1999, the Company
internalized 63% of the waste it collected to its own disposal sites. The
increase in the dollar amount of cost of operations in both the three-and
six-months ended June 30, 1999 over the comparable periods in 1998 was primarily
attributable to the costs of collecting and disposing of the increased volumes
of wastes received from services provided to new customers, including the
operation of new businesses acquired.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $1.9 million, or 19.3%, and $2.2 million, or 11.3%, for
the three-and six-month periods ended June 30, 1999, respectively, compared to
the same periods in 1998. As a percentage of revenues, SG&A decreased to 11.6%
in the second quarter of 1999 compared to 11.8% in the second quarter of 1998,
and to 12.2% in the first six months of 1999 compared to 13.1% in the first six
months of 1998. SG&A decreased as a percentage of revenue due primarily to the
impact of spreading corporate SG&A costs over a larger revenue base as the
Company integrates acquisitions and continues to pursue its acquisition growth
strategy. The actual dollar amount of SG&A increased primarily due to increased
costs for personnel necessary to service new customers, including those
associated with the operations acquired.
Merger Costs
The Company incurred no nonrecurring merger costs during the first six
months of 1999 compared to $1.9 million in the first six months of 1998 because
there were no mergers completed during 1999 which were accounted for using the
pooling of interests method. The one-time merger costs in the first half of 1998
included severance and bonuses, professional fees, and other related merger
costs.
Depreciation and Amortization
Depreciation and amortization increased $2.9 million, or 28.7%, and $4.5
million, or 23.4%, for the three- and six-month periods ended June 30, 1999,
respectively, compared to the same periods in 1998 due to increased depreciation
costs for the additional assets and operations acquired. As a percentage of
revenues, depreciation and amortization increased to 12.9% in the second quarter
of 1999 compared to 12.2% in the second quarter of 1998, and to 13.3% in the
first six months of 1999 compared to 12.9% in the first six months of 1998.
Liquidity and Capital Resources
The Company's balance sheet at June 30, 1999 reflected approximately $4.4
million in cash and cash equivalents compared to $9.7 million at December 31,
1998. The decrease in cash and cash equivalents was primarily due to the use of
cash to acquire solid waste companies during the first six months of 1999.
-16-
<PAGE>
At June 30, 1999, the Company had $129.3 million of outstanding
borrowings, and approximately $3.9 million in letters of credit outstanding
under its revolving credit facility. Total long-term debt at June 30, 1999 was
$132.8 million. At June 30, 1999, the ratio of the Company's long-term debt to
total capitalization was 28.4% compared to 17.3% at December 31, 1998. This
increase was attributable to the increase in the use of debt during the first
half of 1999 to fund the Company's growth through acquisitions.
Capital expenditures for the six months ended June 30, 1999 were $32.4
million compared to $20.4 million for the six months ended June 30, 1998,
primarily due to increased spending for landfill expansions.
Net cash provided by operations for the six months ended June 30, 1999
increased to $23.3 million from $22.9 million in the six months ended June 30,
1998. The increase was primarily due to the increase in net income of $5.5
million and to an increase in depreciation and amortization, a non-cash expense,
of $4.5 million between the first six months of 1998 and the first six months of
1999. The increase in cash provided was mostly offset by the change in operating
assets and liabilities of $9.3 million between the first six months of 1998 and
the first six months of 1999.
Net cash used in investing activities for the six months ended June 30,
1999 increased to $93.5 million from $47.0 million in the six months ended June
30, 1998. The increase was primarily due to the Company's $62.2 million of net
cash payments for operations acquired in the six months ended June 30, 1999
compared to the $27.4 million of net cash payments in the six months ended June
30, 1998.
Net cash provided by financing activities in the six months ended June
30, 1999 totaled $65.0 million, compared to $8.0 million of cash used in the six
months ended June 30, 1998, reflecting the proceeds from long-term debt of $77.3
million during the first half of 1999 compared to only $4.8 million in the first
half of 1998.
As a result of the consummation of the Offer, on July 20, 1999 Parent
repaid in full all outstanding indebtedness to the Company's syndicate of banks.
Parent intends to directly or indirectly fund the Company's future borrowing
needs.
Seasonality
The Company's historical results of operations have tended to vary
seasonally, with the first quarter of the year typically generating the least
amount of revenues, and with revenues higher in the second and third quarters,
followed by a decline in the fourth quarter. This seasonality reflects the lower
volume of waste, as well as decreased revenues from project-based and other
integrated waste services during the fall and winter months, as well as the
operating difficulties experienced during the protracted periods of cold and
inclement weather typically experienced during the winter in the Upper Midwest.
Also, certain operating and other fixed costs remain relatively constant
throughout the calendar year, resulting in a similar seasonality of operating
income.
-17-
<PAGE>
Year 2000 Initiative
The Company is conducting a comprehensive review to ensure that all
internal computer systems and equipment are, or prior to the end of 1999 will
be, Year 2000 compliant. The Company's Year 2000 readiness plan includes the
following phases: (i) conducting an inventory of the Company's internal systems,
including information technology systems and non-information technology systems
(which include office and facilities' environment related systems) and the
systems acquired or to be acquired by the Company from third parties; (ii)
assessing and prioritizing any required remediation; (iii) remediating any
problems by repairing or, if appropriate, replacing the non-compliant systems;
(iv) testing of all remediated systems for Year 2000 compliance; and (v)
developing contingency plans that may be employed in the event that any system
used by the Company is unexpectedly affected by an unanticipated Year 2000
problem. The Company has completed its inventory phase of this plan and is
actively engaged in completing the remaining phases. The Company currently
expects to complete all phases of this plan and that all computer systems will
be Year 2000 compliant before October 31, 1999.
In addition to assessing its own systems, the Company has initiated
communication with all of its vendors, service providers and third party
business partners to assess their Year 2000 readiness. The Company plans to
continue assessment of its vendors, service suppliers and third party business
partners to ensure Year 2000 readiness. Despite the Company's diligence, there
can be no guarantee that the non-compliant systems of other entities which the
Company relies upon in its day to day operations will not have a material
adverse impact on the Company. The actual impact on the Company resulting from
non- compliance of these entities cannot be determined at this time.
The Company has limited the scope of its risk assessment to those factors
which it can reasonably be expected to influence. The Company has made the
assumption that government agencies, utility companies and national
telecommunication providers will continue to operate without interruption. The
lack of such services could have a material impact on the Company's ability to
operate, but the Company has little, if any, ability to influence such results,
or to make alternative arrangements in advance for such services if they are
unavailable. Additionally, the Company believes that disruptions in the economy
generally resulting from Year 2000 issues could have a material adverse impact
on the Company. The Company could be subject to litigation for computer system
failures such as equipment shutdown or failure to properly update business
records. Other potential consequences include the inability to accurately and
timely update customers' accounts, process financial transactions, bill
customers, report accurate data to management, shareholders, customers, and
others as well as business interruptions and financial losses. The amount of
potential liability or loss of revenue to the Company cannot be reasonably
estimated at this time.
The Company is currently developing contingency plans to address Year
2000 problems. The Company believes that this is an appropriate time frame for
developing these contingency plans.
While the Company believes its planning efforts should be adequate to
address its Year 2000 concerns, there can be no guarantee that the systems of
other companies on which the Company's systems and operations rely will be
converted on a timely basis and will not have a material effect on the Company.
The Company currently estimates that it will cost approximately $250,000 to
fully execute its Year 2000 initiative. Through June 30, 1999, the Company has
spent approximately
-18-
<PAGE>
$140,000 in connection with Year 2000 issues. All Year 2000 expenditures are
made from the information systems department budget and are expensed against
earnings. The percentage of the information systems department budget during
1999 expected to be used for Year 2000 remediation is less than 10%. No
information systems projects have been deferred due to Year 2000 efforts.
-19-
<PAGE>
PART II
Item 1. Legal Proceedings
See Note 7 to Condensed Consolidated Financial Statements included in
this Form 10-Q for information regarding certain legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
A modification has been made to the Rights Agreement, dated as of
February 21, 1998, as amended (the "Rights Agreement"), between LaSalle Bank
National Association (f/k/a LaSalle National Bank), as Rights agent, relating to
the common stock, $.01 par value per share, of the Company (the "Common Stock"),
including the associated Common Stock Purchase Rights (the "Rights") issued
pursuant to the Rights Agreement. On June 11, 1999, the Company entered into an
amendment to the Rights Agreement to make it inapplicable to (i) the Offer and
the Merger and (ii) the Merger Agreement, the Stock Option Agreement, dated as
of June 11, 1999, by and among Parent and the Company, and the transactions
contemplated thereby.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1999 annual meeting of shareholders was held on Tuesday,
May 11, 1999. At the meeting, the shareholders elected each of Joseph P. Tate
and Walter G. Winding to the Company's Board of Directors for three-year terms
expiring at the Company's 2002 annual meeting of shareholders and until their
successors are duly qualified and elected. The terms of all other then serving
directors continued after the meeting, including G. William Dietrich, Francis J.
Podvin, Warner C. Frazier and Donald Taylor. As of the April 1, 1999 record date
for the annual meeting, 32,356,812 shares of Common Stock were outstanding and
eligible to vote. Of the 28,375,138 shares of Common Stock voted at the meeting
in person or by proxy, the following votes were recorded for each nominee:
For Withheld
Name Votes Percentage Votes Percentage
---- ----- ---------- ----- ----------
Joseph P. Tate 26,691,241 94.1% 1,683,897 5.9%
Walter G. Winding 26,690,229 94.1% 1,684,909 5.9%
The tabulation of votes for the election of directors resulted in no
broker non-votes or abstentions.
Effective as of July 27, 1999, as a result of consummation of the Offer
and pursuant to the Merger Agreement, Messrs. Podvin, Frazier, Tate and Taylor
resigned from the Company's Board of Directors, the size of the Board was
reduced from seven to five members and the Board appointed the Parent's
designees, Henri Proglio, Denis Gasquet and Michel Gourvennec, as directors of
the Company.
-20-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The Exhibits filed or incorporated by reference herein are
as specified in the Exhibit Index.
(b) Reports on Form 8-K:
(i) On June 11, 1999, the Company filed a Current
Report on Form 8-K to reflect (under Item 5 of
Form 8-K) the execution of an Agreement and Plan
of Merger with Parent providing for Parent's
acquisition of all outstanding Shares.
(ii) On June 21, 1999, the Company filed an amendment
on Form 8-K/A to the Company's Current Report on
Form 8-K dated July 16, 1999. The report, as
amended, included (under Item 7 of Form 8-K) the
Shareholder Tender Agreement, dated as of June 11,
1999, by and among Parent, Purchaser and Joseph P.
Tate.
(iii) On July 16, 1999, the Company filed a Current
Report on Form 8-K to reflect (under Item 1 of
Form 8-K) the completion of the Offer to purchase
all outstanding Shares at $27.00 per Share by
Purchaser.
-21-
<PAGE>
SIGNATURE
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.
Superior Services, Inc.
(Registrant)
Date: August 16, 1999 /s/ George K. Farr
---------------- -----------------------------------
George K. Farr
Chief Financial Officer
-22-
<PAGE>
SUPERIOR SERVICES, INC.
EXHIBIT INDEX
Exhibit
Number Description
- - ------ -----------
(2.1) Agreement and Plan of Merger, dated as of June 11, 1999, by and
among Vivendi, Onyx Solid Waste Acquisition Corp. and Superior
Services, Inc. [Incorporated by reference to Exhibit 2.1 to
Superior Services Inc.'s Current Report on Form 8-K dated June 11,
1999 and filed June 14, 1999, as amended by a Form 8-K/A filed
June 21, 1999.]
(2.2) Stock Option Agreement, dated as of June 11, 1999, by and between
Superior Services, Inc. and Vivendi. [Incorporated by reference to
Exhibit 2.2 to Superior Services Inc.'s Current Report on Form 8-K
dated June 11, 1999 and filed June 14, 1999, as amended by a Form
8-K/A filed June 21, 1999.]
(3.1) Amendments to the Amended and Restated By-laws dated July 27,
1999.
(3.2) Amended and Restated By-laws, dated July 27, 1999, as amended.
(4) Amendment to Rights Agreement, dated as of June 11, 1999, by and
between Superior Services, Inc. and LaSalle Bank National
Association (f/k/a LaSalle National Bank). [Incorporated by
reference to Exhibit 4 to Superior Services, Inc.'s Current Report
on Form 8-K dated June 11, 1999 and filed June 14, 1999, as
amended by Form 8-K/A filed June 21, 1999.]
(10.1) Employment Agreement dated as of June 11, 1999 by and between
Superior Services, Inc. and G. William Dietrich. [Incorporated by
reference to Exhibit 99.2 to Superior Services, Inc.'s Current
Report on Form 8-K dated June 11, 1999 and filed June 14, 1999, as
amended by Form 8-K/A filed June 21, 1999.]
(10.2) Employment Agreement dated as of June 11, 1999 by and between
Superior Services, Inc. and George K. Farr. [Incorporated by
reference to Exhibit 99.3 to Superior Services, Inc.'s Current
Report on Form 8-K dated June 11, 1999 and filed June 14, 1999, as
amended by Form 8-K/A filed June 21, 1999.]
(10.3) Employment Agreement dated as of June 11, 1999 by and between
Superior Services, Inc. and Peter J. Ruud. [Incorporated by
reference to Exhibit 99.4 to Superior Services, Inc.'s Current
Report on Form 8-K dated June 11, 1999 and filed June 14, 1999, as
amended by Form 8-K/A filed June 21, 1999.]
(27) Financial data Schedule (EDGAR version only)
Exhibit 3.1
AMENDMENT TO THE AMENDED AND RESTATED BY-LAWS
OF
SUPERIOR SERVICES, INC.
Effective July 27, 1999, the Board of Directors of Superior Services,
Inc. has amended its By-laws (the "By-laws") adopted as of November 29, 1995 as
follows:
1. Section 3.01 of the By-laws is amended to read in its entirety as
follows:
ss. 3.01. General Powers; Number, Tenure and Qualifications.
All corporate powers shall be exercised by or under the
authority of, and the Corporation's business and affairs shall be
managed under the direction of, the Board of Directors.
The number of directors shall be fixed by a resolution
adopted by a majority of the directors then in office, or by
amendment of these By-laws, but in no event shall there be less
than five (5) directors, and a decrease in the number of directors
shall not shorten the term of office of an incumbent director.
Each director shall hold office until the next annual meeting of
shareholders and until his or her successor shall has been elected
and, if necessary, qualified, or until there is a decrease in the
number of directors which takes effect after the expiration of his
term, or until his or her prior death, resignation or removal.
2. Section 3.12 of the By-laws is amended to read in its entirety as
follows:
3.12. Vacancies.
Any vacancy occurring on the Board of Directors, including
a vacancy created by an increase in the number of directors, shall
be filled by the Board of Directors. If the directors remaining in
office constitute fewer than a quorum of the Board, then the
vacancy shall be filled by the affirmative vote of a majority of
all directors remaining in office. Any director elected to fill
such vacancy shall serve as a director until the next election of
directors, and until his or her successor shall be elected and
qualified.
-1-
Exhibit 3.2
AMENDED AND RESTATED BY-LAWS
OF
SUPERIOR SERVICES, INC.
(Adopted as of November 29, 1995
and amended as effective July 27, 1999)
ARTICLE I.
OFFICES
ss. 1.01. Business Office.
The Corporation's principal office shall be within the State of Wisconsin
and shall be located in Milwaukee County. The Corporation may have such other
offices, either within or without the State of Wisconsin, as the Board of
Directors may designate or as the Corporation's business may require from time
to time. The Corporation shall maintain at its principal office a copy of
certain records, as required by the Wisconsin Business Corporation Law (the
"Act").
ss. 1.02. Registered Office.
The Corporation's registered office required by the Act to be maintained
in the State of Wisconsin shall be the place designated by resolution of the
Corporation's Board of Directors and may be, but need not be, identical to the
principal office in the State of Wisconsin. The address of the registered office
may be changed from time to time.
ARTICLE II.
SHAREHOLDERS
ss. 2.01. Annual Shareholder Meeting.
The annual meeting of the shareholders shall be held on the second
Tuesday in May in each year at the hour of 10:00 a.m., or at such other time and
date as may be fixed by or under the authority of the Board of Directors, as
they deem appropriate in the good faith exercise of their business judgment, for
the purposes of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday in the State of Wisconsin, such meeting shall be held
at the same time on the next succeeding business day. If the election of
directors shall not be held on the day designated herein for the annual meeting
of the shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as conveniently may be held.
<PAGE>
ss. 2.02. Special Shareholder Meetings.
(a) Generally. Special meetings of the shareholders, for any purpose
or purposes, may be called by (1) the Chairperson of the Board, (2) the
President, (3) the Board of Directors or such officers as the Board of Directors
may authorize from time to time, or (4) the President or Secretary upon the
written request of the holders of record of at least one-tenth of all the
outstanding shares of the Corporation entitled to vote on any issue at the
meeting. The party calling the special meeting shall designate the date and hour
of the meeting, which date shall not be more than seventy (70) days after the
demand record date, as specified herein.
(b) Meetings Called by Shareholders. For purposes of determining the
number of shareholders necessary to demand a special meeting of the
shareholders, the record date (the "demand record date") shall be the sixtieth
(60th) day preceding the date of the special shareholder meeting. The requisite
number of shareholders demanding such a meeting (the "demanding shareholders")
shall deliver a written request to the President or Secretary, via hand delivery
or registered mail, within fifteen (15) days after the demand record date. The
costs of any special meeting, including, without limitation, the costs or
expenses of preparing and mailing the notice of meeting and any related proxy
materials shall be the responsibility of the demanding shareholders.
(c) Notice Requirements. Upon delivery to the President or Secretary
of a written request by the demanding shareholders, stating the purpose(s) of
the requested meeting, dated and signed by the person(s) entitled to request
such a meeting, it shall be the duty of the officer to whom the request is
delivered to give, within thirty (30) days of such delivery, notice of the
meeting to the shareholders. Notice of any special meeting shall be given in the
manner provided in ss. 2.04 of these By-laws. Only business within the
purpose(s) described in the special meeting notice shall be conducted at a
special shareholders meeting.
(d) Independent Verification. The Board may utilize independent
inspectors to verify that demand has properly been made by the requisite ten
percent (10%) of the outstanding shares of the Corporation, and that the
procedures required by this Section 2.02 have been followed.
ss. 2.03. Place of Shareholder Meeting.
The Board of Directors may design any place, either within or without the
State of Wisconsin, as the place of meeting for any annual or for any special
meeting called by the Board of Directors. A waiver of notice signed by all
persons entitled to vote at a meeting also may designate any place, either
within or without the State of Wisconsin, as the place for the holding of such
meeting. If no designation is made by the Board of Directors, or if a special
meeting be otherwise called, the place of the meeting shall be the Corporation's
principal business office in the State of Wisconsin, but any meeting may be
adjourned to reconvene at any place designated by vote of a majority of the
shares represented thereat.
2
<PAGE>
ss. 2.04. Notice of Shareholder Meeting.
(a) Required Notice. Unless otherwise required by the Act, written
notice stating the place, day and hour of any annual or special shareholder
meeting shall be delivered not less than ten (10) nor more than sixty (60) days
before the meeting date, either personally or by mail, by or at the direction of
the President, the Board of Directors, or other persons calling the meeting, to
each shareholder of record entitled to vote at such meeting and to any other
shareholder entitled by the Act or the Articles of Incorporation to receive
notice of the meeting. Notice shall be deemed to be effective at the earlier of:
(1) when deposited in the United States mail, addressed to the shareholder at
his or her address as it appears on the Corporation's stock transfer books, with
postage thereon prepaid; (2) on the date shown on the return receipt if sent by
registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee; (3) when received; or (4) 5 days after
deposit in the United States mail, if mailed postpaid and correctly addressed to
an address other than that shown in the Corporation's current record of
shareholders.
(b) Adjourned Meeting. If any shareholder meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
and place, if the new date, time, and place is announced at the meeting before
adjournment. But if a new record date for the adjourned meeting is or must be
fixed (see ss. 2.05 of this Article II), then notice must be given pursuant to
the requirements of paragraph (a) of this ss. 2.04, to those persons who are
shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive notice of meeting (or
any notice required by the Act, Articles of Incorporation, or By-laws), by a
writing signed by the shareholder entitled to the notice, which is delivered to
the Corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(i) waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting;
(ii) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
(d) Contents of Notice. The notice of each special shareholder
meeting shall include a description of the purpose or purposes for which the
meeting is called. If a purpose of any shareholder meeting is to consider
either: (1) a proposed amendment to the Articles of Incorporation (including any
restated articles requiring shareholder approval); (2) a plan of merger or share
exchange; (3) the sale, lease, exchange or other disposition of all, or
substantially all, of the Corporation's property; (4) the dissolution of the
Corporation; or (5) the removal of a director, the notice must so state and be
accompanied by, respectively, a copy
3
<PAGE>
or summary of the: (1) articles of amendment; (2) plan of merger or share
exchange; or (3) transaction for disposition of the Corporation's property. If
the proposed corporate action creates dissenters' rights, the notice must state
that shareholders are, or may be entitled to assert dissenters' rights, and must
be accompanied by a copy of Section 180.1301 of the Act. Except as provided in
this ss. 2.04(d), or as provided in the Corporation's Articles of Incorporation,
or otherwise in the Act, the notice of an annual shareholder meeting need not
include a description of the purpose or purposes for which the meeting is
called.
ss. 2.05. Notice of Shareholder Business and Nomination of Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be
considered by the shareholders may be made at an Annual Meeting (A)
pursuant to the Corporation's notice of meeting, (B) by or at the
direction of the Board of Directors or (C) by any shareholder of the
Corporation who is a shareholder of record at the time of giving of
notice provided for in this By-law and who is entitled to vote at the
meeting and complies with the notice procedures in this Section 2.05.
(ii) For nominations or other business to be properly
brought before an Annual Meeting by a shareholder pursuant to clause
(C) of Paragraph (a)(i) of this Section 2.05, the shareholder must
have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be received
by the Secretary of the corporation at the principal offices of the
Corporation not less than 45 days nor more than 75 days in advance of
the first annual anniversary (the "Anniversary Date") of the date set
forth in the Corporation's proxy statement for the prior year's
Annual Meeting as the date on which the Corporation first mailed
definitive proxy materials for the prior year's Annual Meeting;
provided, however, that in the event that the date of the Annual
Meeting is advanced by more than 30 days or delayed by more than 60
days from the second Tuesday in the month of May, notice by the
shareholder to be timely must also be so received not earlier than
the 90th day prior to the date of such Annual Meeting and not later
than the close of business on the later of (x) the 60th day prior to
such Annual Meeting and (y) the 10th day following the day on which
public announcement of the date of such meeting is first made. Such
shareholder's notice shall be signed by the shareholder of record who
intends to make the nomination or introduce the other business (or
his duly authorized proxy or other representative), shall bear the
date of signature of such shareholder (or proxy or other
representative) and shall set forth: (A) the name and address, as
they appear on this Corporation's books, of such shareholder and the
beneficial owner or owners, if any, on whose behalf the nomination or
proposal is made; (B) the class and number of shares of the
Corporation which are beneficially owned by such shareholder or
beneficial owner or owners; (C) a representation that such
shareholder is a holder of record of shares of the Corporation
entitled to vote at
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such meeting and intends to appear in person or by proxy at the
meeting to make the nomination or introduce the other business
specified in the notice; (D) in the case of any proposed nomination
for election or re-election as a director, (i) the name and residence
address of the person or persons to be nominated, (ii) a description
of all arrangements or understandings between such shareholder or
beneficial owner or owners and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination is to be made by such shareholder, (iii) such other
information regarding each nominee proposed by such shareholder as
would be required to be disclosed in solicitations of proxies for
elections of directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A under the
Securities and Exchange Act (the "Exchange Act"), including any
information that would be required to be included in a proxy
statement filed pursuant to Regulation 14A had a nominee been
nominated by the Board of Directors and (iv) the written consent of
each nominee to be named in a proxy statement and to serve as a
director of the Corporation if so elected; and (E) in the case of any
other business that such shareholder proposes to bring before the
meeting, (i) a brief description of the business desired to be
brought before the meeting and, if such business includes a proposal
to amend these By-laws, the language of the proposed amendment, (ii)
such shareholder's and beneficial owner's or owners' reasons for
conducting such business at the meeting, and (iii) any material
interest in such business of such shareholder and beneficial owner or
owners.
(b) Special Meetings. Only such business shall be conducted at a
Special Meeting as shall have been described in the notice of meeting sent to
shareholders pursuant to Section 2.04(d) of these By-laws. Nominations of
persons for election to the Board of Directors may be made at a Special Meeting
at which directors are to be elected pursuant to such notice of meeting (i) by
or at the direction of the Board of Directors or (ii) by any shareholder of the
Corporation who (A) is a shareholder of record at the time of giving of such
notice of meeting, (B) is entitled to vote at the meeting and (C) complies with
the notice procedures set forth in this Section 2.05. Any shareholder desiring
to nominate persons for election to the Board of Directors at such a Special
Meeting shall cause a written notice to be received by the Secretary of the
Corporation at the principal offices of the Corporation not earlier than 90 days
prior to such Special Meeting and not later than the close of business on the
later of (x) the 60th day prior to such Special Meeting and (y) the 10th day
following the day on which public announcement is first made of the date of such
Special Meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. Such written notice shall be signed by the shareholder
of record who intends to make the nomination (or his duly authorized proxy or
other representative), shall bear the date of signature of such shareholder (or
proxy or other representative) and shall set forth: (A) the name and address, as
they appear on the Corporation's books, of such shareholder and the beneficial
owner or owners, if any, on whose behalf the nomination is made; (B) the class
and number of shares of the Corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that such
shareholder is a holder of record of shares of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the
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meeting to make the nomination specified in the notice; (D) the name and
residence address of the person or persons to be nominated; (E) a description of
all arrangements or understandings between such shareholder or beneficial owner
or owners and each nominee and other person or persons (naming such person or
persons) pursuant to which the nomination is to be made by such shareholder; (F)
such other information regarding each nominee proposed by such shareholder as
would be required to be disclosed in solicitations of proxies for elections of
directors, or would be otherwise required to be disclosed, in each case pursuant
to Regulation 14A under the Exchange Act, including any information that would
be required to be included in a proxy statement filed pursuant to Regulation 14A
had the nominee been nominated by the Board of Directors; and (G) the written
consent of each nominee to be named in a proxy statement and to serve as a
director of the Corporation if so elected.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.05 shall be eligible to serve
as directors. Only such business shall be conducted at an Annual
Meeting or Special Meeting as shall have been brought before such
meeting in accordance with the procedures set forth in this Section
2.05. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set
forth in this Section 2.05 and, if any proposed nomination or
business is not in compliance with this Section 2.05 to declare that
such defective proposal shall be disregarded.
(ii) For purposes of this Section 2.05, "public
announcement" shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
Section 2.05, a shareholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section
2.05. Nothing in this Section 2.05 shall be deemed to limit the
Corporation's obligation to include shareholder proposals in its
proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
ss. 2.06. Fixing of Record Date.
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders, or any adjournment thereof, or shareholders
entitled to receive payment of any distribution or dividend, or in order to make
a determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date shall
be not more than seventy (70) days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If no such
record
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date is fixed, the record date for determination of such shareholders shall be
at the close of business on:
(a) With respect to an annual shareholder meeting or any special
shareholder meeting called by the Board of Directors or any person specifically
authorized by the Board or these By-laws to call a meeting, the day before the
first notice is delivered to shareholders;
(b) With respect to a special shareholder's meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date the
Board authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting
(pursuant to Article II, ss. 2.12), the date the first shareholder signs a
consent;
(e) With respect to a distribution to shareholders, (other than one
involving a repurchase or acquisition of shares), the date the Board authorizes
the distribution; and
(f) With respect to any other matter for which such a determination
is required, as provided by law.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date which it must do if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting.
ss. 2.07. Voting Lists.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make, before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The list must be arranged by voting group, if such exists,
and within each voting group by class or series of shares. The shareholder list
shall be subject to inspection at the Corporation's principal office by any
shareholder at any time during usual business hours for any proper purpose,
beginning two (2) business days after notice is given of the meeting for which
the list was prepared. Such list also shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the meeting for purposes related to the meeting. A
shareholder, or his or her agent or attorney, is entitled on written demand to
inspect and, subject to the requirements of the Act, to copy the list during
regular business hours and at the shareholder's expense, during the period it is
available for inspection. The Corporation shall maintain the shareholder list in
written form or in another form capable of conversion into written form within a
reasonable time. Notwithstanding the foregoing
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provision to the contrary, the Corporation's failure or refusal to prepare or
make available the shareholder list shall not affect the validity of any action
taken at such shareholder meeting.
ss. 2.08. Shareholder Quorum and Voting Requirements.
If the Articles of Incorporation or the Act provide for voting by a
single voting group on a matter, action on that matter is taken when voted upon
by the voting group.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles of Incorporation or the Act provide otherwise, a
majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
If the Articles of Incorporation or the Act provides for voting by two
(2) or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately. Action may be
taken by one voting group on a matter even though no action is taken by another
voting group entitled to vote on the matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting. However, a share represented at a meeting solely for the
purpose of objecting to the holding of the meeting or to the transaction of
business at the meeting shall not be deemed present at the meeting for quorum
purposes.
If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act require a greater number of affirmative
votes.
ss. 2.09. Proxies.
Except as otherwise provided by the Act, at all meetings of shareholders,
a shareholder may vote in person, or vote by proxy which is executed in writing
by the shareholder or which is executed by his duly authorized attorney-in-fact.
Such proxy shall be filed with the secretary of the Corporation or other person
authorized to tabulate votes before or at the time of the meeting. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. Unless otherwise provided in the appointment
form, a proxy appointment may be revoked at any time before it is voted, either
by written notice filed with the Secretary or other officer or agent of the
Corporation authorized to tabulate votes, or by oral notice given by the
shareholder during the meeting. The presence of a shareholder who has filed his
or her proxy appointment shall not of itself constitute a revocation.
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ss. 2.10. Voting of Shares.
Unless otherwise provided in the Articles of Incorporation or the Act,
each outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders.
Except as provided by specific court order, no shares held by another
corporation, if a majority of the shares entitled to vote for the election of
directors of such other corporation are held by the Corporation, shall be voted
at any meeting or counted in determining the total number of outstanding shares
at any given time for purposes of any meeting. Provided, however, the preceding
sentence shall not limit the Corporation's power to vote any shares, including
its own shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
ss. 2.11. Corporation's Acceptance of Votes.
(a) If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the Corporation, if acting
in good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of its shareholder, the Corporation,
if acting in good faith, is nevertheless entitled to accept the vote, consent,
waiver, or proxy appointment and give it effect as the act of the shareholder
if:
(i) the shareholder is an entity as defined in the Act and
the name signed purports to be that of an officer or agent of the
entity;
(ii) the name signed purports to be that of an
administrator, executor, guardian, or conservator representing the
shareholder and, if the Corporation requests, evidence of fiduciary
status acceptable to the Corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment;
(iii) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the Corporation
requests, evidence of this status acceptable to the Corporation has
been presented with respect to the vote, consent, waiver, and proxy
appointment;
(iv) the name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
Corporation requests, evidence acceptable to the Corporation of the
signatory's authority to sign for the
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shareholder has been presented with respect to the vote, consent,
waiver, or proxy appointment;
(v) two or more persons are the shareholder as covenants
or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be
acting on behalf of all the co-owners.
(c) The Corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(d) The Corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
ss. 2.12. Unanimous Consent Without Meeting.
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if one or more consents in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof and are delivered to
the Corporation for inclusion in the minute book. A consent signed under this
section has the effect of a meeting vote and may be described as such in any
document.
ss. 2.13. Dissenters' Rights.
Each shareholder shall have the right to dissent from action by the
Corporation and obtain payment for his or her shares when so authorized by the
Act, the Articles of Incorporation, these By-laws, or by resolution of the Board
of Directors.
ss. 2.14. Conduct of Meetings.
The Chairperson of the Board, if one has been elected, or if none has
been elected, the President, or in his or her absence the Vice-President, and in
his or her absence, any person chosen by the shareholders present, shall call
the meeting of the shareholders to order and shall act as Chairman of the
meeting, and the Secretary of the Corporation shall act as Secretary of all
meetings of the shareholders, except that the presiding officer may appoint any
Assistant Secretary or other person to act as Secretary of the meeting.
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ARTICLE III.
BOARD OF DIRECTORS
ss. 3.01. General Powers; Number, Tenure and Qualifications.
All corporate powers shall be exercised by or under the authority of, and
the Corporation's business and affairs shall be managed under the direction of,
the Board of Directors.
The number of directors shall be fixed by a resolution adopted by a
majority of the directors then in office, or by amendment of these By-laws, but
in no event shall there be less than five (5) directors, and a decrease in the
number of directors shall not shorten the term of office of an incumbent
director. Each director shall hold office until the next annual meeting of
shareholders and until his or her successor shall have been elected and, if
necessary, qualified, or until there is a decrease in the number of directors
which takes effect after the expiration of his term, or until his or her prior
death, resignation or removal.
ss. 3.02. Election.
Unless otherwise provided in the Articles of Incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
ss. 3.03. Regular Meetings.
A regular meeting of the Board of Directors shall be held without other
notice than this By-law immediately after, and at the same place as, the annual
meeting of shareholders, and each adjourned session thereof. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Wisconsin, for the holding of additional regular meetings
without other notice than such resolution. Any such regular meeting may be held
by any means of communication as permitted by ss. 3.08.
ss. 3.04. Special Meetings.
Special meetings of the Board of Directors may be called by or at the
request of the Chairperson of the Board, if one has been elected, the President
or any four (4) directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any time and any place, either within
or without the State of Wisconsin, as the time and place for holding any special
meeting of the Board of Directors called by them. If no place is fixed by the
person calling the meeting, the place of meeting shall be the Corporation's
principal office in the State of Wisconsin. Any such special meeting may be held
by any means of communication as permitted by ss. 3.08.
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ss. 3.05. Notice of Special Meetings; Waiver of Notice.
Notice stating the time and place of any special meeting of the Board of
Directors shall be given at least twenty-four (24) hours previously thereto by
written notice delivered personally or mailed to each director at his or her
business address, or such other address as designated in writing to the
Secretary, or by telephone or telegram. If mailed, such notice shall be deemed
to be effective with the earlier of: (1) when received, or (2) five days after
deposit in the United States Mail, addressed to the director's business office,
with postage thereon prepaid; or (3) the date shown on the return receipt if
sent by registered or certified mail, return receipt requested, and the receipt
is signed by or on behalf of the director. If notice be given by telephone or
telegram, such notice shall be deemed to be delivered when the notice is given
personally by telephone or when the telegram is delivered to the telegraph
company. Whenever any notice is required to be given to any director of the
Corporation under the provisions of these By-laws or under the provisions of the
Articles of Incorporation or under the provisions of any statute, a waiver
thereof in writing, signed at any time, whether before or after the time of the
meeting, by the director entitled to such notice, shall be deemed equivalent to
the giving of such notice. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting and objects thereat to the transaction of the business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
ss. 3.06. Director Quorum.
Except as otherwise specified by law or the Articles of Incorporation or
these By-laws, a majority of the number of directors fixed in the manner
provided by ss. 3.01 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
A majority of the number of directors appointed to serve on a committee
as authorized in ss. 3.15 of these By-laws shall constitute a quorum for the
transaction of business at any committee meeting. These provisions shall not,
however, apply to the determination of a quorum for actions taken under
emergency By-laws or any other provisions of these By-laws that fix different
quorum requirements.
ss. 3.07. Voting Requirement.
The affirmative vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors
or a committee of the Board of Directors. This provision shall not, however,
apply to any action taken by the Board of Directors pursuant to ss. 3.14 or
Article X of these By-laws, or in the event the affirmative vote of a greater
number of directors is required by the Act, the Articles of Incorporation, or
any other provision of these By-laws.
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ss. 3.08. Meetings by Telephonic Communication.
To the extent provided in these By-laws, the Board of Directors, or any
committee of the Board, may, in addition to conducting meetings in which each
director participates in person, and notwithstanding any place set forth in the
notice of the meeting or these By-laws, conduct any regular or special meeting
by the use of any electronic means of communication, such as by conference
telephone, provided all participating directors may simultaneously hear each
other during the meeting. Before the commencement of any business at a meeting
at which any directors do not participate in person, all participating directors
shall be informed that a meeting is taking place at which official business may
be transacted.
ss. 3.09. Director's Assent.
A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is deemed to
have assented to the action taken unless: (1) the director objects at the
beginning of the meeting (or promptly upon the director's arrival) to holding it
or transacting business at the meeting; or (2) the director dissents or abstains
from the action taken and minutes of the meeting are prepared that show the
director's dissent or abstention from the action; (3) the director dissents or
abstains from an action taken, minutes of the meeting are prepared that fail to
show the director's dissent or abstention from the action taken and the director
delivers to the Corporation a written notice of that failure that complies with
Section 180.0141 of the Act promptly after receiving the minutes; or (4) the
director delivers written notice of his or her dissent or abstention to the
presiding officer of the meeting before its adjournment or to the Corporation
immediately after adjournment of the meeting. The right of dissent or abstention
is not available to a director who votes in favor of the action taken.
ss. 3.10. Conduct of Meetings.
The Chairperson of the Board, if one has been elected, or if none has
been elected, the President, and in his absence the Vice-Presidents in the order
appointed under ss. 4.11 of Article IV, and in their absence, any director
chosen by the directors then present, shall call meetings of the Board of
Directors to order and shall act as Chairman of the meeting. The Secretary of
the Corporation shall act as secretary of all meetings of the Board of
Directors, but in the absence of the secretary, the presiding officer may
appoint any Assistant secretary or any director or other person present to act
as secretary of the meeting.
ss. 3.11. Removal; Resignation.
(a) Any director may be removed from office with or without cause,
but only by the affirmative vote of shareholders holding at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of the then outstanding shares
of all classes of capital stock of the Corporation generally possessing voting
rights in the election of directors, considered for this purpose as a single
class; provided, however, that if the Board of Directors by resolution adopted
by the Requisite Vote shall have recommended removal of a director, then the
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shareholders may remove such director from office with or without cause by a
majority of such outstanding shares.
(b) A director may resign at any time by filing a written resignation
with the Secretary of the Corporation.
ss. 3.12. Vacancies.
Any vacancy occurring on the Board of Directors, including a vacancy
created by an increase in the number of directors, shall be filled by the Board
of Directors. If the directors remaining in office constitute fewer than a
quorum of the Board, then the vacancy shall be filled by the affirmative vote of
a majority of all directors remaining in office. Any director elected to fill
such vacancy shall serve as a director until the next election of directors, and
until his or her successor shall be elected and qualified.
ss. 3.13. Compensation and Expenses.
The Board of Directors, irrespective of any personal interest of any of
its members, may (1) establish reasonable compensation of all directors for
services to the Corporation as directors or may delegate this authority to an
appropriate committee, (2) provide for, or delegate authority to an appropriate
committee to provide for, reasonable pensions, disability or death benefits, and
other benefits or payments to directors and to their estates, families,
dependents, or beneficiaries for prior services rendered to the Corporation by
the directors, and (3) provide for reimbursement of reasonable expenses incurred
in the performance of the directors' duties, including the expense of traveling
to and from Board meetings.
ss. 3.14. Unanimous Consent Without Meeting.
Any action required or permitted by the Articles of Incorporation or
By-laws or any provision of law to be taken by the Board of Directors at a
meeting or by resolution may be taken without a meeting if a consent in writing,
setting forth the action so taken shall be signed by all of the directors then
in office, and filed with the Corporation's records. Action taken by consent is
effective when the last director signs the consent, unless the consent specifies
a different effective date. A signed consent has the effect of a meeting and may
be described as such in any document.
ss. 3.15. Committees.
The Board of Directors by resolution adopted by the affirmative vote of a
majority of the number of directors may designate one or more committees, each
committee to consist of two (2) or more directors elected by the Board of
Directors, which to the extent provided in said resolution, as initially
adopted, and as thereafter supplemented or amended by further resolution adopted
by a like vote, shall have and may exercise, when the Board of Directors is not
in session, the powers of the Board of Directors in the management of the
Corporation's business and affairs, except action in respect to the (1)
authorization of distributions, (2) the approval or proposal to shareholders of
action for which the Act requires approval by
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shareholders, (3) filling vacancies on the Board of Directors or its committees,
(4) amending the Articles of Incorporation pursuant to Board authority, (5)
adopting, amending or repealing By-laws, (6) approving a plan of merger not
requiring shareholder approval, (7) the authorization or approval to reorganize
shares, except according to a formula or method prescribed by the Board of
Directors, (8) the authorization or approval of the issuance or sale or contract
for sale of shares, or (9) the determination of the designation and relative
rights, preferences and limitations of a class or series of shares. Sections
3.03, 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10 and 3.14 of this Article III,
which govern meetings, actions without meetings, notice and waiver of notice,
quorum and voting requirements of the Board of Directors, apply to committees
and their members.
ss. 3.16. Independent Director Stock Ownership Requirement
Each non-employee director of the Corporation is required to beneficially
own (as defined under Rule 13d-3 of the Securities Exchange Act of 1934) such
number of shares of the Corporation's common stock having a value at least equal
to three times the annual retainer fee paid from time to time by the Corporation
to such non-employee director. Each non-employee director shall have five years
to comply with this Section 3.16 from the later of (i) the date of such
director's first election or appointment to the Board of Directors or (ii) the
date of adoption of this Section 3.16 (February 16, 1999). The value of the
Corporation's common stock for purposes of this Section 3.16 shall be determined
by the Board of Directors in its discretion.
ARTICLE IV.
OFFICERS
ss. 4.01. Number.
The Corporation's principal officers shall be a Chairperson, Chief
Executive Officer, a Chief Financial Officer, a President, a Vice President, a
General Counsel, a Secretary, and a Treasurer, each of whom shall be appointed
by the Board of Directors. Additional officers and assistant officers, including
any Vice Presidents, may be appointed by the Board of Directors as the Board
deems appropriate. If there is more than one Vice President, the Board may
establish designations for the Vice Presidencies to identify their functions or
their order. There may, in addition, be a chairperson or co-chairperson of the
board, whenever the Board shall see fit to cause such office or offices to be
filled. Any two or more offices may be held simultaneously by the same person.
ss. 4.02. Appointment and Term of Office.
The Corporation's officers shall be appointed for a term as determined by
the Board of Directors. If no term is specified, they shall hold office until
their successor shall have been duly appointed and shall have qualified or until
the officer's death, resignation or removal from office in the manner
hereinafter provided.
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The designation of a specified term does not grant to the officer any
contract rights, and the Board can remove the officer at any time prior to the
termination of such term.
ss. 4.03. Removal.
Any officer or agent appointed by the Board of Directors may be removed
by the Board of Directors whenever in its judgment the Corporation's best
interests will be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Appointment of an officer
or agent shall not of itself create contract rights.
ss. 4.04. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification, or other reason shall be filled in the manner prescribed for
regular appointments to the office.
ss. 4.05. Powers, Authority and Duties.
The Corporation's officers shall have the powers and authority conferred
in the duties prescribed by the Board of Directors or the officer who appointed
them in addition to and to the extent not inconsistent with those specified in
other sections of this Article IV.
ss. 4.06. The Chairperson of the Board.
At the Board of Directors' option, it may elect a Chairperson of the
Board of Directors, who shall preside at all shareholders' and directors'
meetings at which he or she is present. If elected, the Chairperson of the Board
shall have and exercise general supervision over the conduct of the
Corporation's affairs and over its other officers, subject, however, to the
board's control. The Chairperson of the Board of Directors shall from time to
time report to the Board all matters within his or her knowledge that the
Corporation's interests may require to be brought to the Board's notice.
ss. 4.07. Chief Executive Officer.
The Chief Executive Officer shall be the senior officer of the
Corporation and in the recess of the Board of Directors shall have the general
control and management of all the business and affairs of the Corporation. He or
she shall also exercise such further powers and perform such other duties as may
from time to time be conferred upon or assigned by the By-laws or the Board of
Directors. He or she shall make annual reports and submit the same to the Board
of directors and also to the shareholders at their annual meeting, showing the
condition and the affairs of the Corporation. He or she shall from time to time
make such recommendations to the Board of Directors, as he or she thinks proper,
and shall bring before the Board of Directors such information as may be
required, relating to the business and property of the Corporation.
16
<PAGE>
ss. 4.08. Chief Financial Officer.
The Chief Financial Officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director.
The Chief Financial Officer shall deposit all money and other valuables
in the name and to the credit of the Corporation with such depositaries as may
be designated by the Board of Directors. He or she shall disburse the funds of
the Corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of all of his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or these By-laws.
ss. 4.09. General Counsel.
The General Counsel shall advise the Board of Directors and officers on
legal matters except those relating to taxes. The General Counsel shall perform
such additional duties as may be assigned to him by the Board of Directors, the
Chairperson of the Board, or the President.
ss. 4.10. The President.
The President shall be the Corporation's principal executive officer and,
subject to the control of the Board of Directors, shall in general supervise and
control all of the Corporation's business and affairs. If a Chairperson of the
Board has not been elected, or in the Chairperson's absence, the President
shall, when present, preside at all meetings of the shareholders and of the
Board of Directors. The President may sign, with the Secretary or any other
proper officer of the Corporation authorized by the Board of Directors,
certificates for shares of the Corporation and deeds, mortgages, bonds,
contracts, or other instruments in the ordinary course of business or that the
Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by the By-laws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incidental to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
ss. 4.11. The Vice President.
In the absence of the Chairperson of the Board and the President, or in
the event of the President's death or inability or refusal to act as directed by
the Board of Directors, the Vice President (or in the event there be more than
one Vice President, the Vice Presidents in the order designated at the time of
their appointment, or in the absence of any designation, then in order of their
appointment) shall perform the duties of the President, and when so acting shall
17
<PAGE>
have all the powers of and be subject to all the restrictions upon the
President. Any Vice President may sign, with the Secretary or an Assistant
Secretary certificates for shares of the Corporation; and shall perform such
other duties as from time to time may be assigned by the President or by the
Board of Directors.
ss. 4.12. The Secretary.
The Secretary shall: (a) keep the minutes of the meetings of the
shareholders and of the Board of Directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-laws or as required by law; (e) be custodian of the
corporate records and see that books, reports, statements, certificates and all
other documents and records required by law are properly kept and filed; (d)
keep a register of the post office address of each shareholder, which shall be
furnished to the Secretary by such shareholder; (e) sign with the President, or
a Vice President, certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the Corporation; and (g) in
general perform all duties in the name and to the credit of the Corporation with
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the President and directors, whenever they request
it, an account of all of his or her transactions as Chief Financial Officer and
of the financial condition of the Corporation, and shall have such other powers
and perform such other duties as may be prescribed bust companies, or other
depositories as shall be selected in accordance with the provisions of Article V
of these By-laws, and (c) in general perform all of the duties incidental to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors. If required by the Board
of Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
ss. 4.13. Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries, when authorized by the Board of Directors, may
sign with the President or a Vice President certificates for shares of the
Corporation and issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers if required by the Board of
Directors, shall give bonds for the faithful discharge of their duties in such
sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
ss. 4.14. Salaries.
Officers' salaries shall be fixed from time to time by the Board of
Directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the Corporation.
18
<PAGE>
ARTICLE V.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
ss. 5.01. Contracts.
The Board of Directors may authorize any individual officer or agent or
number of officers or agents to enter into any contract or to execute and
deliver any instrument in the Corporation's name and on its behalf, and such
authorization may be general or confined to specific instances.
ss. 5.02. Loans.
No loans shall be contracted on the Corporation's behalf and no
indebtedness shall be incurred in its name unless authorized by or under the
authority of a resolution of the Board of Directors. Such authorization may be
general or confined to specific instances.
ss. 5.03. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the Corporation's name, shall be
signed by such officer or officers, agents or agents of the Corporation and in
such manner as shall from time to time be determined by or under the authority
of a resolution of the Board of Directors.
ss. 5.04. Deposits.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the Corporation's credit in such banks, trust companies or
other depositories as may be selected by or under the authority of the Board of
Directors.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
ss. 6.01. Certificates for Shares.
(a) Content
Certificates representing shares of the Corporation shall at a
minimum state on their face the name of the issuing corporation and that it is
formed under the laws of Wisconsin; the name of the person to whom issued; and
the number and class of shares and the designation of the series, if any, the
certificate represents; and be in such form as determined by the Board of
Directors. Such certificates shall be signed (either manually or by facsimile)
by the President or a Vice President and by the Secretary or an Assistant
Secretary. Each certificate for shares shall be consecutively numbered or
otherwise identified.
(b) Legend as to Class or Series
19
<PAGE>
If the Corporation is authorized to issue different classes of shares
or different series within a class, the designations, relative rights,
preferences, and limitations applicable to each class and the variations in
rights, preferences, and limitations determined for each series (and the
authority of the Board of Directors to determine variations for future series)
must be summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the Corporation
will furnish the shareholders this information on request in writing and without
charge.
(c) Shareholder List
The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation.
(d) Transferred Shares
All certificates surrendered to the Corporation for transfer shall be
canceled and no new certificate shall be issued until the former certificate for
a like number of shares shall have been surrendered and canceled, except that in
case of a lost, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and indemnification of the Corporation as the Board of
Directors may prescribe.
ss. 6.02. Registration of the Transfer of Shares.
Registration of the transfer of shares of the Corporation shall be made
only on the Corporation's stock transfer books by the holder of record thereof
or by his or he legal representative, who shall furnish proper evidence of
authority to transfer, or by his or her attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary of the Corporation, and
on surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the Corporation's books shall be deemed by the
Corporation to be the owner thereof for all purposes.
ss. 6.03. Restrictions on Transfer.
The Board of Directors or shareholders may impose restrictions on the
transfer of shares. A restriction does not affect shares issued before the
restriction was adopted unless the holders of the shares are parties to the
restriction agreement or voted in favor of the restriction. The face or reverse
side of each certificate representing shares shall bear a conspicuous notation
of any restriction imposed by the Corporation upon the transfer of such shares.
ss. 6.04. Lost, Destroyed or Stolen Certificates.
Where the owner claims that his certificate of shares has been lost,
destroyed or wrongfully taken, a new certificate shall be issued in place
thereof if the owner (a) so requests before the Corporation has notice that such
shares have been acquired by a bona fide purchaser, and (b) satisfies such other
reasonable requirements as may be prescribed by or
20
<PAGE>
under the authority of the Board of Directors, including the furnishing of an
indemnity bond if so required.
ss. 6.05. Consideration for Shares.
The Corporation's shares may be issued for such consideration as shall be
fixed from time to time by the Board of Directors. The consideration to be paid
for shares may be paid in whole or in part, in money, promissory notes, in other
property, tangible or intangible, or in labor or services actually performed or
to be performed for the Corporation. When payment of the consideration for which
shares are to be issued shall have been received by the Corporation, such shares
shall be deemed to be fully paid and nonassessable by the Corporation. No
certificate shall be issued for any share until such share is fully paid.
If the consideration to be paid for share consists, in whole or part, of
a promissory note or a contract for services to be performed for the
Corporation, the Board of Directors may, in its discretion, elect to hold those
shares in escrow or otherwise restrict their transfer. In the event that shares
are so escrowed, and the shareholder defaults under his or her obligations under
the promissory note or the contract for services, as applicable, the Corporation
may, in addition to any other legal or equitable remedies, cancel all or part of
the escrowed shares.
ss. 6.06. Acquisition of Shares.
The Corporation may acquire its own shares and unless otherwise provided
in the Articles of Incorporation, the shares so acquired constitute authorized
but unissued shares.
ss. 6.07. Stock Regulations.
The Board of Directors shall have the power and authority to make all
such further rules and regulations not inconsistent with the statutes of the
State of Wisconsin as they may deem expedient concerning the issue, transfer and
registration of certificates representing shares of the Corporation.
ARTICLE VII.
CONFLICTS OF INTEREST POLICY
The Corporation and its subsidiaries (collectively referred to herein as
the "Corporation") shall not enter into any contract, loan or other transaction
in which a director, officer or employee of the Corporation has a direct or
indirect personal interest, other than a contract of employment between such
person and the Corporation, without such director, officer or employee first
fully disclosing to the Audit Committee of the Board of Directors all material
terms of such interest therein and allowing the Audit Committee of the Board of
Directors to specifically authorize and approve such contract, loan or
transaction. Ownership of less than 5% of the capital stock of a corporation
whose stock is publicly traded shall not, in and of itself, constitute a direct
or indirect interest in such corporation for purposes of this Article VII. This
Article VII may only be amended or deleted by a majority vote of directors
21
<PAGE>
not otherwise employed by the Corporation and who do not have a direct or
indirect personal interest in such amendment or deletion.
ARTICLE VIII.
FISCAL YEAR
The Board of Directors shall by resolution establish the Corporation's
fiscal year.
ARTICLE IX.
DISTRIBUTIONS
The Board of Directors may from time to time authorize, and the
Corporation may make distributions (including dividends on its outstanding
shares) in the manner and upon the terms and conditions provided by law, the
Articles of Incorporation and the resolutions of the Board of Directors.
ARTICLE X.
INDEMNIFICATION
ss. 10.01. Mandatory Indemnification.
The Corporation shall indemnify a director or officer as follows:
(a) To the extent he or she has been successful on the merits or
otherwise in the defense of a proceeding, for all reasonable expenses incurred
in the proceeding, if the director or officer was a party because he or she is
or was at the time of the events upon which the proceeding was based a director
or officer of the Corporation. A director or officer shall exercise his or her
right to indemnification under this ss. 10.01 of Article X by delivering a
written demand for indemnification to the Corporation's Treasurer, or the
President if the party seeking indemnification is the Treasurer.
(b) In all cases not included in ss. 10.01(a) of this Article X, the
Corporation shall indemnify a director or officer against liability incurred by
the director or officer in a proceeding to which the director or officer was a
party because he or she is or was at the time of the events upon which the
proceeding was based a director or officer of the Corporation, unless liability
was incurred because the director or officer breached or failed to perform a
duty he or she owes to the Corporation and the breach or the failure to perform
constitutes:
(i) A willful failure to deal fairly with the Corporation
or its shareholders in connection with a matter in which the director
or officer has a material conflict of interest;
22
<PAGE>
(ii) A violation of the criminal law, unless the director
or officer had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was
unlawful;
(iii) A transaction from which the director or officer
derived an improper personal benefit; or
(iv) Willful misconduct.
(c) Whether a director or officer of the Corporation shall be
entitled to indemnification under ss. 10.01(b) shall be determined in accordance
with the procedures established in ss.10.02 of this Article X.
(d) Within sixty (60) days of the completion of a successful
proceeding under ss. 10.01(a), or within sixty (60) days of the date of
determination under ss. 10.01(b) that an officer or director is entitled to
indemnification; the full amount for which such officer or director is entitled
to indemnification shall be paid to him or her, to the extent not previously
paid by the Corporation pursuant to Section 10.03 of these By-laws or otherwise.
(e) The termination of a proceeding by judgment, order, settlement or
conviction, or upon a plea of no contest or an equivalent plea, does not, by
itself, create a presumption that indemnification of the director or officer is
not required under this subsection.
ss. 10.02. Determination of Right to Indemnification.
A director or officer seeking indemnification under ss.10.01(b) of this
Article X shall first make a written request to the Corporation's Treasurer, or
the Corporation's President, if the person seeking indemnification is the
Treasurer, for such indemnification. Determination of whether indemnification is
required shall be made by one of the following means:
(a) By a majority vote of a quorum of the Board of Directors
consisting of directors who are not at the time parties to the same or related
proceedings. If such quorum of disinterested directors cannot be obtained, by a
majority vote of a committee duly appointed by the Board of Directors and
consisting solely of two (2) or more directors who are not at the time parties
to the same or related proceedings. Directors who are parties to the same or
related proceedings may participate in the designation of members of the
committee.
(b) By independent legal counsel selected by a majority vote of a
quorum of the Board of Directors or its committee consisting of directors who
are not at the time parties to the same or related proceedings or, if such a
quorum cannot be obtained, by a majority vote of the full Board of Directors,
including directors who are parties to the same or related proceedings.
(c) By the affirmative majority vote, or unanimous written consent,
of the Corporation's shareholders. However, shares owned by or voted under the
control of
23
<PAGE>
persons who at the time of the vote or consent are parties to the same or
related proceedings, whether as plaintiffs or defendants or in any other
capacity, may not be voted in making the determination.
(d) By a panel of three (3) arbitrators consisting of one (1)
arbitrator selected by those directors entitled under subsection (b) above to
select independent legal counsel, one (1) arbitrator selected by the director or
officer seeking indemnification and one (1) arbitrator selected by the other two
(2) arbitrators.
(e) By a court of competent jurisdiction upon application by the
director or officer for an initial determination of entitlement to
indemnification or for review by the court of an adverse determination.
Indemnification shall be ordered if the court determines that the director or
officer is entitled to indemnification under ss. 10.01 of this Article X or that
the director or officer is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances. If the director of officer is successful
in obtaining indemnification by order of the court, in addition to
indemnification against all other expenses and liability, the director or
officer shall be reimbursed for expenses reasonably incurred in pursuing his or
her request for indemnification.
The director or officer of the Corporation seeking indemnification shall
designate in his or her request for indemnification the method of making the
indemnification determination. In connection with such determination, the
director or officer shall be entitled to a rebuttable presumption that he or she
is entitled to indemnification, which presumption may only be overcome by the
party challenging such indemnification by clear and convincing evidence.
ss. 10.03. Advance of Expenses as Incurred.
The Corporation shall, upon written request by the director of officer,
pay for or reimburse the reasonable expenses incurred by a director or officer
who is a party to a proceeding, as those expenses are incurred, if the director
of officer furnishes the Corporation a written affirmation of his or her good
faith belief that he or she has not breached his or her duties to the
Corporation, and the director or officer furnishes the Corporation with a
written undertaking, executed personally or on his or her behalf, to repay the
allowance to the extent that it is ultimately determined that the
indemnification is not required. The Corporation may accept the undertaking
without reference to his or her ability to repay the allowance, and the
undertaking may be secured or unsecured.
ss. 10.04. Denial of Indemnification.
In the event that it is determined pursuant to the procedures of ss.
10.02 that an officer or director is not entitled to indemnification, the
officer or director who has been denied indemnification shall have the right to
choose the forum, from among the statutorily provided options, in which the
resolution of his or her right to indemnification is to be resolved.
24
<PAGE>
ss. 10.05. Insurance.
The Corporation may purchase and maintain insurance on behalf of its
directors and officers, or to reimburse itself, against liability asserted or
incurred and expenses incurred by the director or officer or corporation in
connection with a proceeding brought against the director or officer in his
capacity as a director or officer or arising from his status as a director or
officer, regardless of whether the Corporation is required or authorized to
indemnify the individual against the same liability pursuant to the provisions
hereof.
ss. 10.06. Definitions.
The following terms used in this Article X shall have the indicated
meanings:
(a) "Directors" or "officer" means an individual who (i) is or was a
director or officer of the Corporation; (ii) an individual who, while a director
or officer of the Corporation, is or was serving at the Corporation's request as
a director, officer partner, trustee, member of any governing or decision-making
committee, employee or agent of another corporation, partnership,k joint venture
or other enterprise; or (iii) while a director or officer of the Corporation,m
is or was serving an employee benefit plan because his or her duties to the
Corporation also impose duties on, or otherwise involve services by, the person
to the plan or to the participants in or beneficiaries of the plan. "Director"
or "officer" includes the estate or personal representatives of a director or
officer.
(b) "Expenses" include all fees, costs, charges, attorneys' counsel
fees and other expenses and disbursements incurred in connection with a
proceeding.
(c) "Liability" includes the obligation to pay a judgment,
settlement, penalty, fine, assessment or forfeiture, including an excise tax
assessed with respect to or on an employee benefit plan, and reasonable
expenses.
(d) "Party" includes an individual who was or is, or who is
threatened to be made, or is at risk of becoming, a named defendant or
respondent in a proceeding.
(e) "Proceeding" means any threatened, pending or completed action,
suit, claim, litigation, appeal, arbitration or other proceeding, whether civil,
criminal, administrative or investigative, formal or informal, predicated on
foreign, federal, state or local law, brought by or in the right of the
Corporation or by any other person or by an governmental or administrative body.
ss. 10.07. Savings Clause.
To the extent any court of competent jurisdiction shall determine that
the indemnification provided under this Article X shall be invalid as applied to
a particular claim, issue or matter, the provisions hereof shall be deemed
amended to allow and require indemnification to the maximum extent permitted by
law.
25
<PAGE>
ss. 10.08. Effective Date.
This Article X shall be deemed to be a contract between the Corporation
and each previous, current or future director or officer. The provisions of this
Article X shall apply to all proceedings commenced after the date hereof,
whether rising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article X shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
ARTICLE XI.
CORPORATE SEAL
The Corporation shall have no seal.
ARTICLE XII.
AMENDMENTS
ss. 12.01. Board of Directors.
Except as otherwise specified herein or in the Corporation's Amended and
Restated Articles of Incorporation, the Board of Directors, from time to time,
by vote of a majority of the directors then in office, may adopt, amend or
repeal any and all of the Corporation's By-laws, unless the Articles of
Incorporation or the Act reserve this power exclusively to the shareholders in
whole or in part; or the shareholders, in adopting, amending or repealing a
particular bylaw provide expressly that the Board of Directors may not amend or
repeal that bylaw.
ss. 12.02. Shareholders.
Except as otherwise specified herein or in the Corporation's Amended and
Restated Articles of Incorporation, the shareholders, from time to time, by vote
of a majority of the shares entitled to vote, may adopt, amend or repeal any and
all of the Corporation's By-laws.
ss. 12.03. Implied Amendments.
Any action taken or authorized by the shareholders or by the Board of
Directors, which would be inconsistent with the By-laws then in effect but which
is taken or authorized by the unanimous written consent of the shareholders or
Board of Directors or by the affirmative vote of not less than the number of
shares or the number of directors required to amend the By-laws so that the
By-laws would be consistent with such action, shall be given the same effect as
though the By-laws had been temporarily amended or suspended so far, but only so
far as it is necessary to permit the specific action so taken or authorized.
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC. AS OF AND FOR THE
SIX MONTHS ENDED JUNE 30, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 4,447
<SECURITIES> 0
<RECEIVABLES> 77,464
<ALLOWANCES> (2,391)
<INVENTORY> 2,723
<CURRENT-ASSETS> 86,775
<PP&E> 508,370
<DEPRECIATION> (170,049)
<TOTAL-ASSETS> 619,489
<CURRENT-LIABILITIES> 64,487
<BONDS> 132,836
0
0
<COMMON> 325
<OTHER-SE> 334,559
<TOTAL-LIABILITY-AND-EQUITY> 619,489
<SALES> 0
<TOTAL-REVENUES> 179,003
<CGS> 0
<TOTAL-COSTS> 125,899
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,040
<INTEREST-EXPENSE> 2,429
<INCOME-PRETAX> 29,748
<INCOME-TAX> 12,230
<INCOME-CONTINUING> 17,418
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 17,418
<EPS-BASIC> .54
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