<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996 Commission file number 1-5951
CMI CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 73-0519810
- ---------------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
I-40 & Morgan Road, P.O. Box 1985
Oklahoma City, Oklahoma 73101
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405) 787-6020
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Voting Class A Common Stock Par Value $.10 and
Voting Common Stock Par Value $.10 20,468,004
- ---------------------------------------------- ------------------------------
(Title of each class) (Outstanding at July 31, 1996)
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<PAGE>
CMI CORPORATION
Index
Page
----
PART I. Financial Information
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 and
June 30, 1995 3
Condensed Consolidated Statements of Operations -
Three Months and Six Months Ended June 30, 1996
and 1995 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of 11
Security Holders
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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<PAGE>
PART I - FINANCIAL INFORMATION
CMI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30 December 31 June 30
1996 1995 1995
----------- ----------- -----------
(Unaudited) * (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash & cash equivalents $ 1,626 2,062 1,509
Cash equivalents - restricted 150 150 825
Receivables, net of valuation allowance 13,222 11,731 17,154
Inventories
Finished equipment 29,807 31,717 22,842
Work-in-process 8,434 7,629 7,957
Raw materials & parts 23,783 23,753 22,988
------- ------- -------
62,024 63,099 53,787
Other current assets 391 389 352
Deferred tax asset 6,480 9,000 9,000
------- ------- -------
Total current assets 83,893 86,431 82,627
Property, plant & equipment 46,828 45,904 45,523
Less accumulated depreciation 35,623 34,671 34,091
------- ------- -------
Net property, plant & equipment 11,205 11,233 11,432
Long-term receivables 629 1,135 643
Deferred tax asset 9,800 9,800 9,800
Other assets 547 620 672
------- ------- -------
$106,074 109,219 105,174
======= ======= =======
Current liabilities:
Current portion of long-term debt $ 3,168 2,340 5,311
Accounts payable 10,783 11,417 12,209
Accrued liabilities 6,843 8,435 6,548
------- ------- -------
Total current liabilities 20,794 22,192 24,068
Long-term debt 17,466 23,091 17,040
Redeemable preferred stock 4,537 4,537 4,903
Common shares & other capital:
Voting Class A common stock & common
stock 2,047 2,038 2,036
Other capital 61,230 57,361 57,127
------- ------- -------
Total common shares & other capital 63,277 59,399 59,163
------- ------- -------
$106,074 109,219 105,174
======= ======= =======
</TABLE>
* Condensed from audited financial statements.
See notes to condensed consolidated financial statements.
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<PAGE>
CMI CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $38,758 43,604 75,251 76,275
------- ------- ------- -------
Costs and expenses:
Cost of revenues 27,821 30,439 53,023 53,238
Marketing and
administrative 6,157 4,818 11,834 10,107
Engineering and
product development 1,431 1,592 3,061 3,032
Interest expense 593 715 1,392 1,461
Interest income (97) (120) (251) (182)
Other expense (income), net (3) (110) 11 (114)
------- ------- ------- -------
35,902 37,334 69,070 67,542
------- ------- ------- -------
Earnings before income taxes 2,856 6,270 6,181 8,733
Income tax expense (benefit) (Note 6) 1,072 (8,534) 2,302 (8,443)
------- ------- ------- -------
Net earnings $ 1,784 14,804 3,879 17,176
======= ======= ======= =======
Net earnings per common share and
common share equivalent (Note 3) $ .09 .71 .18 .81
======= ======= ======= =======
Average outstanding shares and common
share equivalents 20,812 20,928 20,793 20,919
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
-4 of 12-
<PAGE>
CMI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 3,879 17,176
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 1,068 891
Amortization 20 35
Decrease (increase) in deferred tax expense (benefit) 2,520 (8,800)
Loss (gain) on sale of assets 11 (114)
Change in assets and liabilities:
Decrease (increase) in accounts receivable (1,491) 72
Decrease (increase) in inventory 1,075 (6,223)
Increase in other current assets (2) (153)
Increase (decrease) in accounts payable (634) 4,077
Decrease in accrued liabilities (1,592) (1,110)
Decrease in long-term receivables 506 8
Decrease (increase) in other, non-current assets 54 (4)
------- -------
Net cash provided by operating activities 5,414 5,855
------- -------
INVESTING ACTIVITIES
Proceeds from sale of assets 9 184
Capital expenditures (1,061) (1,240)
------- -------
Net cash used in investing activities (1,052) (1,056)
------- -------
FINANCING ACTIVITIES
Payments on long-term debt (790) (373)
Net payments on revolving credit note (5,746) (4,751)
Net borrowings on fleet financing agreement 1,739 1,562
Dividends on preferred stock (121) (417)
Redemption of preferred stock 0 (750)
Stock options exercised 120 16
------- -------
Net cash used in financing activities (4,798) (4,713)
------- -------
Increase (decrease) in cash and cash equivalents (436) 86
Cash and cash equivalents at beginning of year 2,062 1,423
------- -------
Cash and cash equivalents at end of period $ 1,626 1,509
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
-5 of 12-
<PAGE>
CMI CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) The interim condensed consolidated financial information has been
prepared in conformity with generally accepted accounting
principles applied, in all material respects, on a basis consistent
with the consolidated financial statements included in the annual
report filed with the Securities and Exchange Commission for the
preceding fiscal year. The financial information as of June 30,
1996 and 1995 and for the interim periods ended June 30, 1996 and
1995 included herein is unaudited; however, such information
reflects all adjustments consisting of only normal recurring
adjustments, which are, in the opinion of management, necessary to
a fair presentation of financial position and the operating results
for the interim periods.
(2) The results of operations for the six months ended June 30, 1996
are not necessarily indicative of the results to be expected for
the full year. The Company is in a very seasonal business, whereas
normally at least 60 percent of the Company's revenues occur in the
first six months of each calendar year.
(3) Earnings per share amounts are computed by dividing the net
earnings less redeemable preferred stock dividends and accretion of
the difference between the ultimate redemption value and the
initial carrying value of redeemable preferred stock for the
period, by the weighted average outstanding common shares and
common share equivalents for the period. Common share equivalents
are not considered in the computation of per share amounts if their
effect is anti-dilutive.
(4) Certain reclassifications have been made to the prior interim
periods to conform to the 1996 presentations.
(5) There have been no material changes in related party transactions
since the annual report filed for the preceding fiscal year.
(6) Under the provisions of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (Statement 109), the benefit
of tax deductions and credits not utilized by the Company in the
past is reflected as an asset to the extent the Company assesses
that future operations will "more likely than not" be sufficient to
realize such benefits.
The Company has assessed its past earnings history and trends,
sales backlog, budgeted sales, and expiration dates of
carryforwards of future tax benefits and has determined that it is
"more likely than not" that the $16,280,000 of deferred tax assets
will be utilized. The remaining valuation allowance of
approximately $700,000 is maintained against deferred tax assets
which the Company has not determined to be "more likely than not"
realizable at this time. The Company will continue to review the
valuation allowance on a quarterly basis and make adjustments as
appropriate. The ultimate realization of the deferred tax asset
will require aggregate taxable income of approximately $42 million
to $45 million in future years.
-6 of 12-
<PAGE>
At June 30, 1996, the temporary differences that give rise to
significant portions of the deferred tax assets are as follows (in
thousands):
<TABLE>
<CAPTION>
Current Non-Current
------- -----------
<S> <C> <C>
Tax operating loss & other carryforwards $2,406 12,006
Other temporary differences 4,074 (1,538)
----- -------
Deferred tax assets 6,480 10,468
Less valuation allowance - 668
----- -------
Net deferred tax asset $6,480 9,800
===== =======
</TABLE>
(7) Commitments and Contingencies
-----------------------------
The Company and its subsidiaries are parties to various leases
relating to plants, warehouses, office facilities, transportation
vehicles, and certain other equipment. Real estate taxes,
insurance, and maintenance expenses are normally obligations of the
Company. It is expected that in the normal course of business, the
majority of the leases will be renewed or replaced by other leases.
Leases do not provide for dividend restrictions, debt, or future
leasing arrangements. All leasing arrangements contain normal
leasing terms without unusual purchase options or escalation
clauses.
At June 30, 1996, the Company was contingently liable as guarantor
for certain accounts receivable sold with recourse of approximately
$2,933,000 through May 2006.
(8) Litigation
----------
On November 22, 1995, certain attorneys, previously engaged by the
Company in connection with prior patent litigation, filed suit
against the Company in the Circuit Court of Cook County, Illinois,
seeking to recover approximately $1.4 million of legal fees and
costs alleged to be owing by the Company, together with prejudgment
and postjudgment interest and other costs. The Company has filed
counterclaims against the law firm for negligence and legal
malpractice. The Company seeks an unspecified amount of monetary
damages, disgorgement of all legal fees collected, punitive
damages, prejudgment interest and other costs, and is seeking
removal of the case to the United States District Court for the
Northern District of Illinois, Eastern Division.
There are numerous other claims and pending legal proceedings that
generally involve product liability and employment issues. These
cases are, in the opinion of management, ordinary routine matters
incidental to the normal business conducted by the Company. In the
opinion of the Company's management after consultation with outside
legal counsel, the ultimate disposition of such proceedings,
including the case above, will not have a materially adverse effect
on the Company's consolidated financial position or future results
of operations.
-7 of 12-
<PAGE>
CMI CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The Company earned $1,784,000, or nine cents per share, for the three
months ended June 30, 1996, compared to $14,804,000, or 71 cents per
share, for the comparable three months ended June 30, 1995. Net
earnings for the three months ended June 30, 1995 benefited from a
lower effective tax rate and included $8,800,000, or 42 cents per
share, for previously unrecognized tax benefits related to Statement
109. Had the 1995 quarter been fully taxed, the comparison would be
nine cents per share for 1996 compared to 18 cents per share for 1995.
Revenues for the three months ended June 30, 1996 totaled $38,758,000,
down from $43,604,000 for the comparable three months ended June 30,
1995.
For the first six months of 1996, revenues totaled $75,251,000
compared to $76,275,000 in 1995. Net earnings were $3,879,000, or 18
cents per share, compared with $17,176,000, or 81 cents per share in
1995. Net earnings for the six months ended June 30, 1995 benefited
from a lower effective tax rate and included $8,800,000, or 42 cents
per share, for previously unrecognized tax benefits related to
Statement 109. Had the first six months of 1995 been fully taxed, the
comparison would be 18 cents per share for 1996 compared to 25 cents
per share for 1995.
The Company experienced an unprecedented level of shipping delays to
both domestic and foreign customers during the three months ended June
30, 1996. Although these delays reduced revenues and earnings for the
second quarter, unshipped orders for the Company's road machinery are
approximately $16,000,000 greater than unshipped orders as of June 30,
1995. For the six months ended June 30, 1996, the Company's domestic
revenues decreased five percent while international revenues increased
47 percent over the same period in 1995. Although the Company's
international activity continues to be behind pace with comparable
1994 levels, which included significant sales into Mexico, current
marketing activity indicates continued improvement. For the six
months ended June 30, 1996, shipments of road reclaimer/stabilizers,
pavement profiling equipment and hot-mix asphalt production plants
continued to be the leading sources of revenue.
Gross margin, as a percentage of net revenues, decreased to 28.3
percent for the three months ended June 30, 1996 from 30.2 percent for
the same period in 1995, and decreased to 29.6 percent from 30.2
percent for the six months period ended June 30, 1996 and 1995,
respectively. Gross margins decreased primarily due to pricing
competitiveness which the Company believed was key to maintaining
market share.
-8 of 12-
<PAGE>
Marketing and administrative expenses increased $1,339,000 for the
three months ended June 30, 1996, compared to the same period in 1995,
and increased $1,727,000 for the six months ended June 30, 1996,
compared to the same period in 1995.
As a percentage of net revenues, marketing and administrative expenses
were 15.9 percent and 11.0 percent for the three months ended June 30,
1996 and 1995, respectively. For the six months ended June 30,
marketing and administrative expenses, as a percentage of net
revenues, increased to 15.7 percent in 1996 from 13.3 percent in 1995.
The increases are due to the Company's continued aggressive marketing
strategy which include customer demonstrations for new and existing
products, continued participation in industry trade shows, and an
increased sales force for both domestic and international locations.
As previously disclosed, in March 1996 the Company participated in
CONEXPO-Con/Agg, a major industry equipment show held every three
years in Las Vegas, Nevada. The Company had the largest booth at the
show exhibiting 31 machines in a 31,000 square-foot display.
Engineering and product development expenses decreased $161,000 for
the three months ended June 30, 1996 and increased $29,000 for the six
months ended June 30, 1996, compared to the same periods in 1995.
Engineering and product development expenses, as a percent of net
revenues, remained consistent at 3.7 percent for the three months
ended June 30, 1996 and 1995. As a percentage of net revenues,
engineering and product development expenses were 4.1 percent and 4.0
percent for the six months ended June 30, 1996 and 1995, respectively.
As previously disclosed, the Company introduced many new products
during the CONEXPO-Con/Agg trade show which included a new line of
metric hot mix asphalt production plants, three new pavement profiling
machines, and several lines of concrete slipform paving machines.
Interest expense decreased to $593,000 from $715,000 for the three
months ended June 30, 1996 and 1995, respectively, and decreased to
$1,392,000 from $1,461,000 for the six months ended June 30, 1996 and
1995, respectively, due primarily to lower debt levels during the
period.
Liquidity and Capital Resources
- -------------------------------
The Company's working capital at June 30, 1996 was $63,301,000,
compared to $58,559,000 at June 30, 1995. The current ratio at June
30, 1996 was 4.04-to-1 compared to 3.43-to-1 at the same time last
year.
Cash provided by operating activities of $5,414,000 for the six months
ended June 30, 1996 decreased $441,000 when compared to the same
period in 1995. The change in cash provided by operating activities is
primarily the result of a decrease in inventories and accounts payable
for the six months ended June 30, 1996.
-9 of 12-
<PAGE>
Capital expenditures are budgeted at $3.5 million for 1996 and will be
financed using internally generated funds and leasing programs. These
capital expenditures are used to continue improving the Company's
manufacturing and product support efficiencies. Capital expenditures
totaled $1,061,000 for the six-month period ended June 30, 1996, a
decrease of $179,000 from the prior year.
The Company's revolving credit loan agreement has been in place since
1991. Terms of the credit loan agreement provide for a maximum credit
line of $30,000,000. The amount outstanding at June 30, 1996 was
$8,780,000 with $804,000 reflected in current portion of long-term
debt with the remainder reflected in long-term debt. Other term debts
have maturity dates ranging from August 1997 to September 2010 and are
expected to be paid or refinanced when due.
Income Taxes
- ------------
Under the provisions of Statement 109, the benefits of future tax
deductions and credits not utilized by the Company in the past are
reflected as an asset to the extent that the Company assesses that
future operations will "more likely than not" be sufficient to realize
such benefits. For the period ending June 30, 1996, the Company has
assessed its past earnings history and trends, sales backlog, budgeted
sales, and expiration dates of future tax deductions and credits. As
a result, the Company has determined it is "more likely than not"
that the $16,280,000 of deferred tax assets will be realized.
Realization of the deferred tax assets will require aggregate taxable
income of approximately $42 million to $45 million in future years.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
-10 of 12-
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
On May 3, 1996, the annual meeting of shareholders of the Company was
held at the Company's corporate offices in Oklahoma City, Oklahoma.
The items of business considered at the annual meeting were as
follows:
1. The election of Bill Swisher and David I. Anderson to serve as
directors of the Company each for a term of three years.
At the annual meeting, 18,214,679 votes were cast by the shareholders
FOR the election of Bill Swisher and 1,111,130 votes were WITHHELD;
18,221,368 votes were cast by the shareholders FOR the election of
David I. Anderson and 1,104,441 votes were WITHHELD.
2. Amend the Company's Bylaws by amending the text of Section 1 of
Article Fourth thereof. The primary purpose of the changes to
Section 1 was to clarify that (i) the exact number of directors
constituting the entire board is to be fixed from time to time by
the then existing directors, and (ii) the classes of directors do
not have to be of identical size.
At the annual meeting, 18,192,825 votes were cast by the shareholders
FOR the proposed amendment to the text of Section 1 of Article Fourth,
995,051 votes were cast AGAINST and 93,108 votes were WITHHELD.
3. Amend the Company's Bylaws by amending the text of Section 3 of
Article Fourth thereof. The primary purpose of the changes to
Section 3 was to clarify that as contemplated by the Act newly
created directorships and vacancies in the Board resulting for any
reason may be filled by a majority vote of the remaining directors
even though the remaining directors do not constitute a quorum.
At the annual meeting, 18,192,825 votes were cast by the shareholders
FOR the proposed amendment to the text of Section 1 of Article Fourth,
995,051 votes were cast AGAINST and 93,108 votes were WITHHELD.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K are as follows:
Exhibit No.
-----------
3(ii) Company's Bylaws as amended
11 Statements re Computation Per Share Earnings
27 Financial Data Schedule
(b) The Company did not file any report on a Form 8-K during the
fiscal quarter ended June 30, 1996.
-11 of 12-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: August 2, 1996 /s/Jim D. Holland
--------------------- ---------------------------------
Jim D. Holland
Sr. Vice President, Treasurer and
Chief Financial Officer
-12 of 12-
<PAGE>
EXHIBIT (11)
CMI CORPORATION
STATEMENTS RE COMPUTATION PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income per statement of operations $ 1,784 14,804 3,879 17,176
Deduct dividends on preferred stock $ 0 24 121 181
Deduct accretion of preferred stock discount $ 0 3 0 5
------ ------ ------ ------
Net Income Available to Common Stock $ 1,784 14,777 3,758 16,990
====== ====== ====== ======
Weighted average common shares outstanding 20,387 20,357 20,384 20,355
Add dilutive effect of outstanding stock
options (as determined using the treasury
stock method) 425 571 409 564
------ ------ ------ ------
Weighted average common shares outstanding,
as adjusted 20,812 20,928 20,793 20,919
====== ====== ====== ======
Primary earnings per share $ .09 .71 .18 .81
====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE
Net income applicable to common stock as
shown in primary computation above $ 1,784 14,777 3,758 16,990
------ ------ ------ ------
Weighted average common shares outstanding 20,387 20,357 20,384 20,355
Add fully dilutive effect of outstanding
stock options (as determined using the
treasury stock method) 425 571 409 564
------ ------ ------ ------
Weighted average common shares outstanding,
as adjusted 20,812 20,928 20,793 20,919
====== ====== ====== ======
Fully diluted earnings per share $ .09 .71 .18 .81
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,776
<SECURITIES> 0
<RECEIVABLES> 13,222
<ALLOWANCES> 0
<INVENTORY> 62,024
<CURRENT-ASSETS> 83,893
<PP&E> 46,828
<DEPRECIATION> 35,623
<TOTAL-ASSETS> 106,074
<CURRENT-LIABILITIES> 20,794
<BONDS> 17,466
4,537
0
<COMMON> 2,047
<OTHER-SE> 61,230
<TOTAL-LIABILITY-AND-EQUITY> 106,074
<SALES> 75,251
<TOTAL-REVENUES> 75,251
<CGS> 53,023
<TOTAL-COSTS> 67,918
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,392
<INCOME-PRETAX> 6,181
<INCOME-TAX> 2,302
<INCOME-CONTINUING> 3,879
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,879
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
<PAGE>
EXHIBIT 3(ii)
BYLAWS OF CMI CORPORATION
(as amended)
<PAGE>
Offices
-------
Section 1. The principal office shall be in Oklahoma City,
County of Oklahoma, State of Oklahoma, and the Corporation may also
have offices at such other places as the Board of Directors may from
time to time appoint.
Seal
----
Section 1. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the
words "Corporate Seal, Oklahoma 1968." Said seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or
reproduced or otherwise.
Shareholders
------------
Section 1. All meetings of the Shareholders shall be held in
Oklahoma City, Oklahoma, or at such other place as the director may
designate.
Section 2. Annual meetings of shareholders shall be held on a
date and at a time selected by the Board of Directors which is
mutually acceptable to all Directors, when they shall transact such
business as may properly be brought before the meeting.
Section 3. The holders of one-third of the stock issued and
outstanding, and entitled to vote thereat, present in person, or
represented by proxy, shall be requisite and shall constitute a quorum
at all meetings of the shareholders for the transaction of business,
except as otherwise provided by law, by the Certificate of
Incorporation, or by these Bylaws. If, however, the holders of such
part of the issued and outstanding stock shall not be present or
represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person, or by proxy, shall have
the power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until the requisite amount of
voting stock shall be present. At such adjourned meeting at which the
requisite amount of voting stock shall be represented, any business
may be transacted which might have been transacted at the meeting as
originally notified.
Section 4. At any meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote in
person, or by proxy appointed by an instrument in writing subscribed
by such shareholder and bearing a date not more than one hundred
twenty (120) days prior to said meeting; unless said instrument
provides for a longer period. Each shareholder shall have one vote
for each share of stock having voting power, registered in his name on
the books of the Corporation, and except where the transfer books of
the Corporation shall have been closed or a date shall have been fixed
as a record date for the determination of its shareholders entitled to
vote, no share of stock shall be voted on at any election for
directors which shall have been transferred on the books of the
Corporation within twenty days next preceding such election of
directors. Cumulative voting shall not be required or permitted.
1
<PAGE>
Section 5. Written notice of the annual meeting shall be
mailed to each shareholder entitled to vote thereat at such address as
appears on the stock books of the Corporation, at least ten (10) days
prior to the meeting, unless otherwise provided herein.
Section 6. A complete list of the shareholders entitled to
vote at the ensuing election, arranged in alphabetical order, with the
residence of each, and the number of voting shares held by each, shall
be prepared by the Secretary and filed in the office where the
election is to be held, at least ten (10) days before every election,
and shall, at all times during ordinary business hours for a period of
ten days prior to the meeting and during the whole time of said
election, be open to the examination of any shareholder.
Section 7. Special meetings of the shareholders, for any
purpose, or purposes, unless otherwise prescribed by statute, may be
called by the Chairman of the Board, and shall be called by the
Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of shareholders owning a
majority in amount of the entire capital stock of the Corporation
issued and outstanding, and entitled to vote. Such request shall
state the purpose or purposes of the proposed meetings.
Section 8. Business transacted at all special meetings shall
be confined to the objects stated in the call.
Section 9. Written notice of special meetings of the
shareholders, stating the time and place and object thereof, shall be
mailed, postage prepaid, at least ten days before such meeting, to
each shareholder entitled to vote thereat at such address as appears
on the books of the Corporation.
Section 10. Shareholder Action Taken at Meeting and Not by
Written Consent. No action required to be taken or which may be taken
at any annual meeting or special meeting of shareholders may be taken
without a meeting, and the power of shareholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
Directors
---------
Section 1. The business and affairs of this Corporation shall
be managed by or under the direction of its Board of Directors. The
exact number of directors shall be fixed from time to time by the
Board of Directors pursuant to a resolution adopted by a majority of
the entire Board of Directors; provided, however, that the number of
directors which shall constitute the entire Board shall not be less
than three nor more than nine. The directors shall be divided into
three classes, as nearly equal in number as possible, with the term of
office of one class expiring each year. At each annual meeting of
shareholders, the successors to the class of directors whose terms
expire at that time shall be elected to hold office for a term of
three years.
Section 2. The directors may hold their meetings and have one
or more offices, and keep the books of the Corporation at the offices
of the Corporation in Oklahoma City, Oklahoma, or at such other places
as they may from time to time determine.
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Section 3. Newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or any other cause may be filled
by a majority vote of the remaining directors, though less than a
quorum. Any director or directors so chosen shall hold office until
the next election of the class for which such director or directors
shall have been chosen, and until his or their successors shall have
been duly elected.
Section 4. In addition to the powers and authorities by these
Bylaws expressly conferred upon it, the Board of Directors may
exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of
Incorporation, as from time to time amended, or by these Bylaws, as
from time to time amended, directed or required to be exercised or
done by the shareholders.
Section 5. Any director or the entire Board of Directors may
be removed; however, such removal must be for cause and must be
approved as set forth in this Section. Except as may otherwise be
provided by law, cause for removal shall be construed to exist only
if: (1) the director whose removal is proposed has been convicted, or
where a director was granted immunity to testify where another has
been convicted, of a felony by a court of competent jurisdiction and
such conviction is no longer subject to direct appeal; (2) such
director has been adjudicated by a court of competent jurisdiction to
be liable for negligence, or misconduct, in the performance of his
duty to the Corporation in a matter of substantial importance to the
Corporation and such adjudication is no longer subject to director
appeal; (3) such director has become mentally incompetent, whether or
not so adjudicated, which mental incompetency directly affects his
ability as a director of the Corporation; or (4) such director's
actions or failure to act are deemed by the Board of Directors to be
in derogation of the director's duties.
Removal for cause, as cause is defined in (1), (2) and (4) above,
must be approved by at least two-thirds of the total number of
directors and by at least a 75% vote of the shares of the Corporation
then entitled to be voted at an election for that director, and the
action for removal must be brought within one year of such conviction
or adjudication. Removal for cause, as cause is defined in (3) above,
must be approved by at least two-thirds of the total number of
directors. For purposes of this paragraph, the total number of
directors will not include the director who is the subject of the
removal determination, nor will such director be entitled to vote
thereon.
Section 6. Notwithstanding any other provision of the
Certificate of Incorporation or the Bylaws of the Corporation (and not
withstanding the fact that a lesser percentage may be specified by
law, the Certificate of Incorporation or the Bylaws), this Article IV
shall not be altered, amended or repealed except by at least a 75%
affirmative vote of the shares of the Corporation entitled to vote
thereon.
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Committees
----------
Section 1. The Board of Directors may, by resolution passed
by two-thirds of all the members of the Board of Directors, designate
an executive committee to consist of three or more members of the
Board, one of whom shall be the Chairman of the Board of the
Corporation and who shall also serve as Chairman of the Executive
Committee. At all times that Recovery Equity Investors, L.P., a
Delaware limited partnership ("REI"), shall be entitled to designate
individuals for election to the Board of Directors pursuant to Section
4.1 of that certain Investment Agreement, dated as of August 19, 1991,
between the Corporation and REI, the Executive Committee, if any,
shall include such number of directors designated by REI such that the
percentage of directors designated by REI shall be no less than the
percentage of individuals which REI shall be entitled to designate for
election to the Board of Directors.
Section 2. The Executive Committee shall have and exercise
all of the authority of the Board in the management of the Corporation
in the interval between meetings of the Board.
Section 3. Notwithstanding any other provision of the
Certificate of Incorporation or the Bylaws of the Corporation (and not
withstanding the fact that a lesser percentage may be specified by
law, the Certificate of Incorporation or the Bylaws), the affirmative
vote of two-thirds or more of all the members of the Board of
Directors shall be required to amend or repeal or adopt any provisions
inconsistent with this Article V.
Compensation of Directors
-------------------------
Section 1. Directors and advisory directors, as such, by
resolution of the Board, may receive a stated salary for serving as a
member of the Board of Directors; provided that nothing herein
contained shall be construed to preclude any director or advisory
director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 2. Members of the special or standing committee may
be allowed like compensation and reimbursement of expenses of
attendance for attending committee meetings.
Meetings of the Board
---------------------
Section 1. The newly elected Board may meet at such place and
time either within or without the State of Oklahoma, as shall be fixed
by the vote of the shareholders at the annual meeting, for the purpose
of organization or otherwise, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to
constitute the meeting; provided a majority of the whole board shall
be present; or they may meet at such place and time as shall be fixed
by the consent in writing of all the directors even though contrary to
the place and time fixed by the shareholders.
Section 2. Regular meetings of the Board may be held without
notice at such time and place either within or without the State of
Oklahoma as shall from time to time be determined by the Board.
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<PAGE>
Section 3. Special meetings of the Board may be called by
either the Chairman or President on two days notice to each director,
either personally or by mail or by telegram; special meetings shall be
called by the Secretary in like manner and on like notice on the
written request of a majority of the directors.
Section 4. At all meetings of the Board, a majority of the
directors shall be necessary and sufficient to constitute a quorum for
the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be
the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of
Incorporation, as from time to time amended, or by these Bylaws, as
from time to time amended.
Section 5. Any action that may be taken at a meeting of the
directors or of a committee, may be taken without a meeting if a
consent in writing, setting forth the action so to be taken, shall be
signed by all of the directors or all of the members at the committee
as the case may be and the writing or writings are filed with the
minutes of proceedings thereof.
Officers
--------
Section 1. The officers of the Corporation shall be chosen by
the directors, and shall be a Chairman of the Board, a President, such
Vice-Presidents as the directors may deem advisable, a Secretary, a
Treasurer, and such Assistant Secretaries and Assistant Treasurers as
the directors may deem advisable. The Secretary and Treasurer may be
the same person, and any of the Vice Presidents may hold at the same
time the office of Secretary or Treasurer.
Section 2. The Board of Directors, at its first meeting and
after each annual meeting of shareholders, shall choose a Chairman of
the Board and President from their own number, the Vice-Presidents and
a Secretary and a Treasurer who need not be members of the Board.
Section 3. The Board may appoint such other officers and
agents as it shall deem necessary, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify in their stead. Any
officer elected or appointed by the Board of Directors may be removed
at any time, with or without cause, by the affirmative vote of a
majority of the whole Board of Directors. If the office of any
officer becomes vacant for any reason, the vacancy shall be filled by
the affirmative vote of a majority of the whole Board of Directors.
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<PAGE>
ARTICLE VIII-A
--------------
Chairman of the Board
---------------------
Section 1. The Chairman of the Board shall be the Chief
Executive Officer of the Company. He shall preside at all meetings of
the shareholders and directors. He shall make such reports to the
directors and shareholders as may be required from time to time.
Section 2. The Chairman of the Board shall have general and
active executive management of the Corporation, and shall perform all
such other duties as are incident to the position of Chief Executive
Officer and such other duties as are properly assigned to him by the
Board of Directors.
Section 3. The Chairman of the Board shall be an ex-officio
member of all committees of the Board of Directors.
President
---------
Section 1. The President shall be the Chief Operating Officer
of the Company. He shall make such reports to the directors and
shareholders as may be required from time to time. He shall preside
at all meetings of the shareholders and directors in the absence of
the Chairman of the Board.
Section 2. The President shall have general and active
executive management of the operations of the Corporation. He shall
perform all such other duties as are incident to the position of Chief
Operating Officer, or as properly assigned to him by the Board of
Directors. He shall have general authority in the affairs of the
Corporation, subject only to the Chairman of the Board and the Board
of Directors.
Vice Presidents
---------------
Section 1. Any of the Vice Presidents of the Corporation,
may, in the absence of or disability of the President, perform the
duties and exercise the powers of the President, and shall perform
such other duties as the Board of Directors shall prescribe.
Secretary
---------
Section 1. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the shareholders and record all
votes and the minutes of all proceedings in a book to be kept for that
purpose, and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of
Directors or the President. He shall keep in safe custody the seal of
the corporation, and when authorized by the Board, affix the same to
any instrument requiring it, and when so affixed it shall be attested
by his signature or by the signature of the Treasurer.
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<PAGE>
Treasurer
---------
Section 1. The Treasurer shall be the chief financial officer
of the Corporation. He shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in the name and to the
credit of the Corporation, in such depositories as may be designated
by the Board of Directors.
Section 2. He shall disburse the funds of the Corporation in
the usual course of its business or as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, at the regular meetings of the Board
of Directors, or whenever they require it, an account of all his
transactions as Treasurer and of the financial condition of the
Corporation.
Section 3. He shall give the Corporation a bond if required
by the Board of Directors in a sum, and with one or more sureties
satisfactory to the Board of Directors, for the faithful performance
of the duties of his office, and for the restoration to the
Corporation in case of his death, resignation, retirement, or removal
from office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging to
the Corporation.
Duties of Officers May be Delegated
-----------------------------------
Section 1. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may
deem sufficient, the Board of Directors may delegate, for the time
being, the powers or duties, or any of them, of such officer to any
other officers, or to any director, provided a majority of the entire
Board of Directors concurs therein.
Certificates of Stock
---------------------
Section 1. The certificates of stock of the Corporation shall
be numbered and shall be entered in the books of the Corporation as
they are issued. They shall exhibit the holder's name and number of
shares and shall be signed by the Chairman of the Board, President or
a Vice President and the Secretary. If the Corporation has a transfer
agent other than an employee of the Corporation, or a registrar and a
transfer clerk acting on its behalf, the signature of the officers may
be facsimiles engraved or printed.
Transfers of Stock
------------------
Section 1. Transfers of stock shall be made on the books of
the Corporation only by the person named in the certificate or by
attorney, lawfully constituted in writing, and upon surrender of the
certificate therefor.
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<PAGE>
Section 2. The Board of Directors may appoint a transfer
Agent and a Registrar for the Common Stock and Preferred Stock of the
Corporation. The Transfer Agent shall be in charge of the issue,
transfer, and cancellation of shares of stock and shall maintain stock
transfer books, which shall include a record of shareholders, giving
the names and addresses of all shareholders, and the number and class
of shares held by each; shall prepare voting lists for meetings of
shareholders; shall produce and keep open these lists at the meetings;
and shall perform such other duties as may be delegated by the Board
of Directors. Shareholders shall give notice of changes of their
addresses to the Transfer Agent. The Registrar shall be in charge of
preventing the over-issue of shares, shall register all stock
certificates, and perform such other duties as may be delegated by the
Board of Directors.
Closing of Transfer Books
-------------------------
Section 1. The Board of Directors shall have power to close
the stock transfer books of the corporation for a period not exceeding
forty days preceding the date of any meeting of shareholders or the
date for payment of any dividend or the date for the allotment of
rights or the date when any change or conversion or exchange of
capital stock shall go into effect, provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of Directors
may fix in advance a date, not exceeding forty days preceding the date
of any meeting of shareholders or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when
any change or conversion or exchange of capital stock shall go into
effect, as a record date for the determination of the shareholders
entitled to notice of, and to vote at, any such meeting, or entitled
to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, and in such case such
shareholders and only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to such notice, of, and
to vote at, such meeting, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as
aforesaid.
Registered Stockholders
-----------------------
Section 1. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable
or other claim or interest in such share on the part of any person
whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Oklahoma.
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<PAGE>
Lost Certificate
----------------
Section 1. Any person claiming a certificate of stock to be
lost or destroyed, shall make an affidavit or affirmation of that fact
and advertise the same in such manner as the Board of Directors may
require, and the Board of Directors may, in its discretion, require
the owner of the lost or destroyed certificate or his legal
representative, to give the Corporation a bond, in such sum as it may
direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account
of the alleged loss of any such certificate.
Checks
------
Section 1. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
Fiscal Year
-----------
Section 1. The fiscal year shall begin the first day of
January in each year.
Dividends
---------
Section 1. Dividends upon the capital stock of the
Corporation subject to the provisions of the Certificate of
Incorporation as from time to time amended, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the
capital stock of the Corporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for such other purpose as the directors shall
think may be for the best interests of the Corporation, and the
directors may abolish any such reserve in the manner in which it was
created, but not contrary to law, the provisions of its Certificate of
Incorporation, or the provisions of these Bylaws.
Directors Annual Statement
--------------------------
Section 1. The Board of Directors shall present at each
annual meeting, and when called for by vote of the shareholders at any
special meeting of the shareholders, a full and clear statement of the
business and financial condition of the Corporation. The directors
may, at their discretion, designate such report to be in lieu of
causing an annual report to be sent to the shareholders.
9
<PAGE>
Notices
-------
Section 1. Whenever under the provisions of these Bylaws
notice is required to be given to any director, officer, or
shareholder, it shall not be construed to mean personal notice but
such notice may be given in writing, by mail, by depositing the same
in the post office or letter box, in a postpaid, sealed, wrapper,
addressed to such shareholder, officer or director at such address as
appears on the books of the Corporation, or, in default of other
address, to such director, officer or shareholder at the General Post
Office in Oklahoma City, Oklahoma, and such notice shall be deemed to
be given at the time when the same shall be thus mailed.
Section 2. Any shareholder, director, or officer may waive
notice required to be given under these Bylaws.
Section 1. These Bylaws may be altered or amended or repealed
by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, at the regular or special
meeting of the shareholders if notice of the proposed alternation or
amendment or repeal be contained in the notice of the meeting,
provided, however, that no change of the time or place for the
election of directors shall be made within thirty days next before the
day on which such election is to be held, and that in case of any
change of such time or place, notice thereof shall be given to each
shareholder in person or by letter mailed to his last known post
office address, at least ten days before the election is held.
Section 2. These Bylaws may be altered, amended or repealed
by an affirmative vote of a majority of the Board of Directors,
subject to the conditions set forth in this article.
Indemnification
---------------
Section 1. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or
in the right of the Corporation) by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
10
<PAGE>
Section 2. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the District Court of
the State of Oklahoma or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case such person is fairly and reasonably entitled to indemnity for
such expenses which the District Court of the State of Oklahoma or
such other court shall deem proper.
Section 3. To the extent that a director, officer, employee,
or agent of the Corporation, or a person serving in any other
enterprise at the request of the Corporation, has been successful on
the merits or otherwise in defense of any action, suit or proceeding
referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, the Corporation shall indemnify him
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this
Article (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in Sections 1 and 2 of this Article. Such
determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties
to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (3)
by the stockholders.
Section 5. Expenses by a director, officer, employee or agent
in defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in
the specific case upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount less it
shall ultimately be determined that he is entitled to be indemnified
by the Corporation as authorize in this Article.
11
<PAGE>
Section 6. The indemnification provided by this Article shall
not limit the Corporation from providing any other indemnification
permitted by law nor shall it be deemed exclusive of any other rights
to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators or such a person.
Section 7. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such whether
or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
Section 8. For the purpose of this Article, references to
"the Corporation" include all constituent corporations the Corporation
has absorbed in a consolidation or merger so that any person who is or
was a director, officer, employee or agent of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this Article
with respect to the Corporation as he would if he had served the
Corporation in the same capacity.
Section 9. The invalidity or unenforceability of any
provisions of this Article shall not affect the validity or
enforceability of the remaining provisions of this Article.
Inapplicability of Control Shares Acquisition Act
-------------------------------------------------
Section 1. Sections 1145 through 1155 of Title 18 of the
Oklahoma Statutes, as amended from time to time, shall not apply to
the voting rights of the existing or future holders of shares of the
capital stock of the Corporation.
Amendment of Rights Agreement
-----------------------------
Section 1. For so long as Recovery Equity Investors, L.P., a
Delaware limited partnership, and its affiliates and associates
beneficially own an aggregate of at least 1,700,000 shares of Common
Stock, par value $0.10 per share, of the Corporation, the Corporation
shall not, without the prior written consent of REI, authorize,
approve, recommend or adopt any change to that certain Rights
Agreement dated February 3, 1987 between the Corporation and The
Liberty National Bank & Trust Company of Oklahoma City, as Rights
Agent, or take any other action or make any declaration with respect
thereto (or authorize, approve, recommend or adopt any other rights
agreement or similar arrangement).
Section 2. The number and type of securities set forth in
Section 1 of this Article XXVII shall be appropriately adjusted to
reflect any stock split, reverse stock split, stock dividend,
recapitalization or similar action.
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