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 SEPTEMBER 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 1-2199
ALLIS-CHALMERS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 39-0126090
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4180 Cherokee Drive
Brookfield, Wisconsin 53214-3151
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(Address of principal executive offices) (Zip code)
(414)475-2000
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Registrant's telephone number, including area code
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 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__
At October 15, 1999 there were 1,588,128 shares of Common Stock outstanding.
<PAGE>
2
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------------
STATEMENT OF OPERATIONS
- -----------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
(Thousands, except per share)
Sales $ 894 $ 943 $ 3,030 $ 3,695
Cost of sales 682 670 2,230 2,624
-------- -------- -------- --------
Gross Margin 212 273 800 1,071
Marketing and administrative expense 326 426 1,097 1,300
-------- -------- -------- --------
Loss from Operations (114) (153) (297) (229)
Other income (expense)
Interest income 2 7 5 19
Interest expense (10) (10) (25) (28)
Other 0 836 1 858
-------- -------- -------- --------
Net Income/(Loss) $ (122) $ 680 $ (316) $ 620
======== ======== ======== ========
Net Income/(Loss) per Common Share $ .08) $ .68 $ (.20) $ .62
======== ======== ======== ========
STATEMENT OF ACCUMULATED DEFICIT
Nine Months Ended September 30 1999 1998
------------------------------ -------- --------
(thousands)
Accumulated deficit - beginning of year $(75,673) $(76,291)
Net income/(loss) (316) 620
-------- --------
Accumulated deficit - September 30 $(75,989) $(75,671)
======== ========
This interim statement is unaudited.
The accompanying Notes are an integral part of the Financial Statements.
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3
ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------------
STATEMENT OF FINANCIAL CONDITION
- --------------------------------
September 30, December 31,
1999 1998
------------- ------------
(thousands)
Assets
- ------
Cash and short-term investments $ 58 $ 223
Trade receivables, net 662 796
Inventories, net 129 127
Other current assets 63 112
----------- -----------
Total Current Assets 912 1,258
Net property, plant and equipment 1,220 1,308
----------- -----------
Total Assets $ 2,132 $ 2,566
=========== ===========
Liabilities and Shareholders' Deficit
- -------------------------------------
Current maturities of long-term debt $ 56 $ 60
Trade accounts payable 240 291
Accrued employee benefits 140 155
Accrued pension liability 67,901 67,901
Other current liabilities 314 312
----------- -----------
Total Current Liabilities 68,651 68,719
Accrued postretirement benefit obligations 952 981
Long-term debt 211 232
Shareholders' deficit
Common stock, ($.15 par value, authorized
2,000,000 shares, outstanding 1,588,128
at September 30, 1999 and 1,000,028 at
December 31, 1998) 152 152
Capital in excess of par value 8,155 8,155
Accumulated deficit (accumulated deficit of
$424,208 eliminated on December 2, 1988) (75,989) (75,673)
----------- -----------
Total Shareholders' Deficit (67,682) (67,366)
Commitments and contingent liabilities ----------- -----------
Total Liabilities and Shareholders'
Deficit $ 2,132 $ 2,566
=========== ===========
This interim statement is unaudited.
The accompanying Notes are an integral part of the Financial Statements.
<PAGE>
4
ALLIS-CHALMERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------------
STATEMENT OF CASH FLOWS
- -----------------------
Nine Months Ended
September 30
-------------------
1999 1998
-------- --------
(thousands)
Cash flows from operating activities:
Net income/(loss) $ (316) $ 620
Adjustments to reconcile net income/loss to net cash
(used) provided by operating activities:
Depreciation and amortization 125 138
Gain on sale of fixed assets 0 (2)
Change in working capital:
Decrease in receivables, net 134 206
Decrease (increase) in inventories (2) 31
Decrease in trade accounts payable (51) (56)
Decrease in other current items 36 16
Decrease in accrued pension liability, net 0 (900)
Other (29) (40)
-------- --------
Net cash (used) provided by operating activities (103) 13
Cash flows from investing activities:
Capital expenditures (52) (313)
Proceeds from sale of equipment 15 0
-------- --------
Net cash used by investing activities (37) (313)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt 29 71
Payment of long-term debt (54) (44)
-------- --------
Net cash (used) provided by financing activities (25) 27
-------- --------
Net decrease in cash and short-term
investments (165) (273)
Cash and short-term investments at
beginning of period 223 699
-------- --------
Cash and short-term investments at
end of period $ 58 $ 426
======== ========
Supplemental information - interest paid $ 25 $ 28
======== ========
This interim statement is unaudited.
The accompanying Notes are an integral part of the Financial Statements.
<PAGE>
5
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
This interim financial data should be read in conjunction with the consolidated
financial statements and related notes, management's discussion and analysis and
other information included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
All adjustments considered necessary for a fair presentation of the results of
operations have been included in the unaudited financial statements. The results
of operations for any interim period are not necessarily indicative of
Allis-Chalmers operating results for a full year.
NOTE 2 - POSTRETIREMENT OBLIGATIONS--PENSION PLAN
In 1994, the Company's independent pension actuaries changed the assumptions for
mortality and administrative expenses used to determine the liabilities of the
Allis-Chalmers Consolidated Pension Plan (Consolidated Plan). Primarily as a
result of the changes in mortality assumptions to reflect decreased mortality
rates of the Company's retirees, the Consolidated Plan was underfunded on a
present value basis. In the first quarter of 1996, the Company made a required
cash contribution to the Consolidated Plan in the amount of $205,000. The
Company did not, however, have the financial resources to make the other
required payments during 1996 and 1997. Given the inability of the Company to
fund such obligations with its current financial resources, in February 1997,
Allis-Chalmers applied to the Pension Benefit Guaranty Corporation (PBGC) for a
"distress" termination of the Consolidated Plan under section 4041(c) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA). The PBGC
approved the distress termination application in September 1997 and agreed to a
plan termination date of April 14, 1997. The PBGC became trustee of the
terminated Consolidated Plan on September 30, 1997.
Upon termination of the Consolidated Plan, Allis-Chalmers and its subsidiaries
incurred a liability to the PBGC for an amount equal to the Consolidated Plan's
unfunded benefit liabilities. Allis-Chalmers and its subsidiaries also have
liability to the PBGC, as trustee of the terminated Consolidated Plan, for the
outstanding balance of the Consolidated Plan's accumulated funding deficiencies.
The PBGC has estimated that the unfunded benefit liabilities and the accumulated
funding deficiencies (together, the PBGC Liability) totaled approximately $67.9
million.
In September 1997, Allis-Chalmers and the PBGC entered into an agreement in
principle for the settlement of the PBGC Liability which required, among other
things, satisfactory resolution of the Company's tax obligations with respect to
the Consolidated Plan under Section 4971 of the Internal Revenue Code of 1986,
as amended (Code). Section 4971(a) of the Code imposes, for each taxable year, a
first-tier tax of 10% on the amount of the accumulated funding deficiency under
a plan like the Consolidated Plan. Section 4971(b) of the Code imposes an
additional, second-tier tax equal to 100% of such accumulated funding deficiency
if the deficiency is not "corrected" within a specified period. Liability for
the taxes imposed under section 4971 extends, jointly and severally, to the
Company and to its commonly-controlled subsidiary corporations.
Prior to its termination, the Consolidated Plan had an accumulated funding
deficiency in the taxable years 1995, 1996, and 1997. Those deficiencies
resulted in estimated first-tier taxes under Code Section 4971(a) of
approximately $900,000.
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6
On July 16, 1998, the Company and the Internal Revenue Service (IRS) reached an
agreement in principal to settle the Company's tax liability under Code Section
4971 for $75,000. Following final IRS approval, payment of this amount was made
on August 11, 1998.
In June 1999, but effective as of March 31, 1999, the Company and the PBGC
entered into an agreement for the settlement of the PBGC Liability (the PBGC
Agreement).
Pursuant to the terms of the PBGC Agreement, the Company issued 585,100 shares
of its common stock to the PBGC, or 35% of the total number of shares issued and
outstanding on a fully-diluted basis, and the Company has a right of first
refusal with respect to the sale of the shares of common stock owned by the
PBGC. In accordance with the terms of the PBGC Agreement, the Company is
required to (i) decrease the size of the Board of Directors of the Company (the
Board) to seven members; (ii) cause a sufficient number of current directors of
the Company to resign from the Board and all committess thereof; and (iii) cause
Thomas M. Barnhart, II, Alexander P. Sammarco and David A. Groshoff, designees
of the PBGC, to be elected to the Board. The PBGC has caused the Company to
amend its By-laws (By-laws) to conform to the terms of the PBGC Agreement.
Furthermore, the Company agreed to pay the PBGC's reasonable professional fees
on the 90th day after a Release Event (as hereinafter defined), which is
currently evidenced by a Company promissory note in favor of the PBGC in the
amount of $75,000. During the term of the PBGC Agreement, the Company has agreed
not to issue or agree to issue any common stock of the Company or any "common
stock equivalent" for less than fair value (as determined by a majority of the
Board). The Company also agreed not to merge or consolidate with any other
entity or sell, transfer or convey more than 50% of its property or assets
without majority Board approval and agreed not to amend its Amended and Restated
Certificate of Incorporation (Certificate) or By-laws.
In order to satisfy and discharge the PBGC Liability, the PBGC Agreement
provides that the Company must either: (i) receive, in a single transaction or
in a series of related transactions, debt financing which makes available to the
Company at least $10 million of borrowings or (ii) consummate an acquisition, in
a single transaction or in a series of related transactions, of assets and/or a
business where the purchase price (including funded debt assumed) is at least
$10 million (Release Event).
In connection with the PBGC Agreement, and as additional consideration for
settling the PBGC Liability, the following agreements, each dated as of March
31, 1999 were also entered into; (i) a Registration Rights Agreement between the
Company and PBGC (the Registration Rights Agreement); and (ii) a Lock-Up
Agreement by and among the Company, the PBGC, AL-CH Company, L.P., a Delaware
limited partnership (AL-CH), Wells Fargo Bank, as trustee under that certain
Amended and Restated Retiree Health Trust Agreement for UAW Retired Employees of
Allis-Chalmers Corporation (the UAW Trust), and Firstar Trust Company, as
trustee under that certain Amended and Restated Retiree Health Trust Agreement
for Non-UAW Retired Employees of Allis-Chalmers Corporation (the Non-UAW Trust)
(the Lock-Up Agreement).
<PAGE>
7
The Registration Rights Agreement grants each holder of Registrable Shares
(defined in the Registration Rights Agreement to basically mean the shares of
common stock issued to the PBGC under the PBGC Agreement) the right to have
their shares registered pursuant to the Securities Act of 1933, as amended, on
demand or incidental to a registration statement being filed by the Company. In
order to demand registration of Registrable Shares, a request for registration
by holders of not less than 20% of the Registrable Shares is necessary. The
Company may deny a request for registration of such shares if the Company
contemplated filing a registration statement within 90 days of receipt of notice
from the holders. The Registration Rights Agreement also contains provisions
that allow the Company to postpone the filing of any registration statement for
up to 180 days. The Registration Rights Agreement contains indemnification
language similar to that usually contained in agreements of this kind.
The Lock-Up Agreement governs the transfer and disposition of shares of the
Company's common stock and the voting of such shares, as well as grants the PBGC
a right of sale of its shares prior to AL-CH, the UAW Trust and the Non-UAW
Trust.
Pursuant to the Lock-Up Agreement, unless the Board has terminated the common
stock transfer restrictions set forth in Article XIII of the Company's
Certificate, AL-CH, the UAW Trust and the Non-UAW Trust each agreed that, during
the period commencing on March 31, 1999 and ending on the third anniversary of
the Release Event, it will not, directly or indirectly, sell, transfer, assign
or dispose of any shares of Company stock it beneficially owns. Commencing with
the third anniversary of the Release Event and continuing until the fifth
anniversary of the Release Event, each of AL-CH, the UAW Trust and the Non-UAW
Trust agreed not to sell, transfer or dispose of any shares of Company stock
without first giving the PBGC an opportunity to sell all or any portion of the
shares of Company stock the PBGC owns. The foregoing right of the PBGC applies
to the sale of Company stock in a public offering or otherwise.
The Lock-Up Agreement also contains a voting component. During the term of the
Lock-Up Agreement, each party to the agreement agreed to vote, at any meeting of
the Company stockholders and in any written consent, all shares of Company stock
owned by it in favor of the election as directors of the Company the persons
nominated by the Nominating Committee of the Board and to refrain from taking
any action contrary to or inconsistent with such obligation. During the term of
the Lock-Up Agreement, each party to the agreement further agreed not to vote
its shares of Company stock or take any other action to amend the Company's
Certificate or By-laws in a manner that is inconsistent with, or in breach of,
the PBGC Agreement. Each party further agreed that it will vote all of its
shares (i) in favor of certain specified amendments to the Company's
Certificate, (ii) for the election of the persons designated by the PBGC (each,
a PBGC Director) to serve on the Board and (iii) in favor of the election of
Company directors who are committed to cause, and who do cause, one PBGC
Director to be appointed to the Nominating Committee of the Board and one PBGC
Director to be appointed as the Chairman of the Compensation Committee of the
Board.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- ---------------------------------------------
Results of Operations
Operations of the Company consist of Houston Dynamic Service, Inc. (HDS), the
Company's machinery repair and service subsidiary.
<PAGE>
8
Sales in the third quarter of 1999 totaled $894,000 a decrease of 5% from
$943,000 in the third quarter of 1998. The decrease was due to continued soft
conditions as a backlash to the very low oil prices during the second half of
1998 which resulted in lower shipments in 1999 compared to the same period in
1998. HDS continues to be affected by volatile market conditions that prevail in
the oil related fields of refining, processing, chemicals and petrochemical
operations throughout the Gulf Coast.
Gross margin, as a percentage of sales, was 24% in the third quarter of 1999, a
decrease from 29% in 1998 due to competitive pricing.
Marketing and administrative expense was $326,000 in the third quarter of 1999
compared with $426,000 in the prior year. The decrease reflects the 1998
nonreoccurring costs that were associated with the Consolidated Plan and related
IRS issues. See Note 2 to the Financial Statements for further discussion. A
significant portion of the Company's administrative expenses relates to expenses
for Securities and Exchange Commission and other governmental reporting as well
as legal, accounting and audit, tax, insurance and other corporate requirements
of a publicly held company.
The Company incurred a net loss of $122,000, or $.08 per common share, in the
third quarter of 1999 compared with a profit of $680,000, or $.68 per common
share, in the same period of 1998. The 1998 profit included $825,000 from a
$900,000 tax liability associated with the underfunding in the Consolidated Plan
that was settled for $75,000.
In the first nine months of 1999, the Company incurred a net loss of $316,000 or
$.20 per common share compared with a profit of $620,000 or $.62 per common
share in the same period of 1998.
Financial Condition and Liquidity
Cash and short term investments totaled $58,000 at September 30, 1999, a
decrease from $223,000 at December 31, 1998.
Net trade receivables at September 30, 1999 were $662,000, reflecting a decrease
from the December 31, 1998 level of $796,000. This decrease was due to lower
sales in the first nine months of 1999.
Inventory at September 30, 1999 was $129,000, a slight increase from $127,000 at
year end 1998.
Net property, plant and equipment was $1,220,000 at September 30, 1999, a
decrease from $1,308,000 at year end 1998. For the nine months ending September
30, 1999, $52,000 of capital expenditures were made to insure cost
competitiveness and the ability to reach new markets.
The A-C Reorganization Trust, pursuant to the Plan of Reorganization, funds all
costs incurred by Allis-Chalmers which relate to implementation of the Plan of
Reorganization, thus avoiding additional demands on the liquidity of the
Company. Such costs include an allocated share of
<PAGE>
9
certain expenses for Company employees, professional fees and certain other
administrative expenses.
In 1994, the Company's independent pension actuaries changed the assumptions for
mortality and administrative expenses used to determine the liabilities of the
Consolidated Plan. Primarily as a result of the changes in mortality assumptions
to reflect decreased mortality rates of the Company's retirees, the Consolidated
Plan was underfunded on a present value basis. In the first quarter of 1996, the
Company made a required cash contribution to the Consolidated Plan in the amount
of $205,000. The Company did not, however, have the financial resources to make
the other required payments during 1996 and 1997. Given the inability of the
Company to fund such obligations with its current financial resources, in
February 1997, Allis-Chalmers applied to the PBGC for a "distress" termination
of the Consolidated Plan under section 4041(c) of ERISA. The PBGC approved the
distress termination application in September 1997 and agreed to a plan
termination date of April 14, 1997. The PBGC became trustee of the terminated
Consolidated Plan on September 30, 1997.
Upon termination of the Consolidated Plan, Allis-Chalmers and its subsidiaries
incurred a liability to the PBGC for an amount equal to the Consolidated Plan's
unfunded benefit liabilities. Allis-Chalmers and its subsidiaries also have
liability to the PBGC, as trustee of the terminated Consolidated Plan, for the
outstanding balance of the Consolidated Plan's accumulated funding deficiencies.
The PBGC has estimated that the PBGC Liability totaled approximately $67.9
million.
In September 1997, Allis-Chalmers and the PBGC entered into an agreement in
principle for the settlement of the PBGC Liability which required, among other
things, satisfactory resolution of the Company's tax obligations with respect to
the Consolidated Plan under Section 4971 of the Code. Section 4971(a) of the
Code imposes, for each taxable year, a first-tier tax of 10% on the amount of
the accumulated funding deficiency under a plan like the Consolidated Plan.
Section 4971(b) of the Code imposes an additional, second-tier tax equal to 100%
of such accumulated funding deficiency if the deficiency is not "corrected"
within a specified period. Liability for the taxes imposed under section 4971
extends, jointly and severally, to the Company and to its commonly-controlled
subsidiary corporations.
Prior to its termination, the Consolidated Plan had an accumulated funding
deficiency in the taxable years 1995, 1996, and 1997. Those deficiencies
resulted in estimated first-tier taxes under Code Section 4971(a) of
approximately $900,000.
On July 16, 1998, the Company and the IRS reached an agreement in principal to
settle the Company's tax liability under Code Section 4971 for $75,000.
Following final IRS approval, payment of this amount was made on August 11,
1998.
In June 1999, but effective as of March 31, 1999, the Company and the PBGC
entered into the PBGC Agreement.
Pursuant to the terms of the PBGC Agreement, the Company issued 585,100 shares
of its common stock to the PBGC, or 35% of the total number of shares issued and
outstanding on a fully-diluted basis, and the Company has a right of first
refusal with respect to the sale of the shares of common stock owned by the
PBGC. In accordance with the terms of the PBGC Agreement, the Company is
required to (i) decrease the size of the Board to seven members; (ii) cause a
sufficient number of current directors of the Company to resign from the Board
and all
<PAGE>
10
committees thereof; and (iii) cause Thomas M. Barnhart, II, Alexander P.
Sammarco and David A. Groshoff, designees of the PBGC, to be elected to the
Board. The PBGC has caused the Company to amend its By-laws to conform to the
terms of the PBGC Agreement. Furthermore, the Company agreed to pay the PBGC's
reasonable professional fees on the 90th day after a Release Event, which is
currently evidenced by a Company promissory note in favor of the PBGC in the
amount of $75,000. During the term of the PBGC Agreement, the Company has agreed
not to issue or agree to issue any common stock of the Company or any "common
stock equivalent" for less than fair value (as determined by a majority of the
Board). The Company also agreed not to merge or consolidate with any other
entity or sell, transfer or convey more than 50% of its property or assets
without majority Board approval and agreed not to amend its Certificate or
By-laws.
In order to satisfy and discharge the PBGC Liability, the PBGC Agreement
provides that the Company must either: (i) receive, in a single transaction or
in a series of related transactions, debt financing which makes available to the
Company at least $10 million of borrowings or (ii) consummate an acquisition, in
a single transaction or in a series of related transactions, of assets and/or a
business where the purchase price (including funded debt assumed) is at least
$10 million (Release Event).
In connection with the PBGC Agreement, and as additional consideration for
settling the PBGC Liability, the following agreements, each dated as of March
31, 1999, were also entered into: the Registration Rights Agreement and the
Lock-Up Agreement.
The Registration Rights Agreement grants each holder of Registrable Shares
(defined in the Registration Rights Agreement to basically mean the shares of
common stock issued to the PBGC under the PBGC Agreement) the right to have
their shares registered pursuant to the Securities Act of 1933, as amended, on
demand or incidental to a registration statement being filed by the Company. In
order to demand registration of Registrable Shares a request for registration by
holders of not less than 20% of the Registrable Shares is necessary. The Company
may deny a request for registration of such shares if the Company contemplated
filing a registration statement within 90 days of receipt of notice from the
holders. The Registration Rights Agreement also contains provisions that allow
the Company to postpone the filing of any registration statement for up to 180
days. The Registration Rights Agreement contains indemnification language
similar to that usually contained in agreements of this kind.
The Lock-Up Agreement governs the transfer and disposition of shares of the
Company's common stock, the voting of such shares as well as grants the PBGC a
right of sale of its shares prior to AL-CH, the UAW Trust and the Non-UAW Trust.
Pursuant to the Lock-Up Agreement, unless the Board has terminated the common
stock transfer restrictions set forth in Article XIII of the Company's
Certificate, AL-CH, the UAW Trust and the Non-UAW Trust each agreed that, during
the period commencing on March 31, 1999 and ending on the third anniversary of
the Release Event, it will not, directly or indirectly, sell, transfer, assign
or dispose of any shares of Company stock it beneficially owns. Commencing with
the third anniversary of the Release Event and continuing until the fifth
anniversary of the Release Event, each of AL-CH, the UAW Trust and the Non-UAW
Trust agreed not to sell, transfer or dispose of any shares of Company stock
without first giving the PBGC an opportunity to sell all or any portion of the
shares of Company stock the PBGC owns. The foregoing right of the PBGC applies
to the sale of Company stock in a public offering or otherwise.
<PAGE>
11
The Lock-Up Agreement also contains a voting component. During the term of the
Lock-Up Agreement, each party to the agreement agreed to vote, at any meeting of
the Company stockholders and in any written consent, all shares of Company stock
owned by it in favor of the election as directors of the Company the persons
nominated by the Nominating Committee of the Board and to refrain from taking
any action contrary to or inconsistent with such obligation. During the term of
the Lock-Up Agreement, each party to the agreement further agreed not to vote
its shares of Company stock or take any other action to amend the Company's
Certificate or By-laws in a manner that is inconsistent with, or in breach of,
the PBGC Agreement. Each party further agreed that it will vote all of its
shares (i) in favor of certain specified amendments to the Company's
Certificate, (ii) for the election of PBGC Directors and (iii) in favor of the
election of Company directors who are committed to cause, and who do cause, one
PBGC Director to be appointed to the Nominating Committee of the Board and one
PBGC Director to be appointed as the Chairman of the Compensation Committee of
the Board.
The foregoing are summaries of certain provisions of the PBGC Agreement, the
Registration Rights Agreement and the Lock-Up Agreement. The summaries are not
complete descriptions of the terms and conditions of those agreements and are
qualified in their entirety by reference to the full text of the PBGC Agreement,
the Registration Rights Agreement and the Lock-Up Agreement, which are
incorporated herein by reference and copies of which have been filed with the
Securities and Exchange Commission as exhibits to the Quarterly Report on Form
10-Q for the quarter ended June 30, 1998.
The Environmental Protection Agency (EPA) and certain state environmental
protection agencies have requested information in connection with eleven
potential hazardous waste disposal sites in which products manufactured by
Allis-Chalmers before consummation of the Plan of Reorganization were disposed.
The EPA has claimed that Allis-Chalmers is liable for cleanup costs associated
with several additional sites. The EPA's claims with respect to one other site
were withdrawn in 1994 based upon settlements reached with the EPA in the
bankruptcy proceeding. In addition, certain third parties have asserted that
Allis-Chalmers is liable for cleanup costs or associated EPA fines in connection
with additional sites. In one of these instances a former site operator has
joined Allis-Chalmers and 47 other potentially responsible parties as a
third-party defendant in a lawsuit involving cleanup of one of the sites. In
each instance the environmental claims asserted against the Company involve its
prebankruptcy operations. Accordingly, Allis-Chalmers has taken the position
that all cleanup costs or other liabilities related to these sites were
discharged in the bankruptcy. In one particular site, the EPA's Region III has
concurred with the Company's position that claims for environmental cleanup were
discharged pursuant to the bankruptcy. While each site is unique with different
circumstances, the Company has notified other Regional offices of the EPA of
this determination associated with the Region III site. The Company has not
received responses from the other Regional offices. No environmental claims have
been asserted against the Company involving its postbankruptcy operations.
The only function that is year 2000 sensitive is our accounting system. We have
received written assurances from our software provider that the system is year
2000 compliant.
The Company's principal sources of cash include earnings from the operations of
HDS. The cash requirements needed for the administrative expenses associated
with being a publicly held company are significant, and the Company will
continue to use cash generated by operations to fund such expenses.
<PAGE>
12
The necessity to assure liquidity emphasizes the need for the Company to
continue in a prudent manner its search for appropriate acquisition candidates
in order to increase the Company's operating base and generate positive cash
flow.
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
- -------------------------
See PART I. Item 2, "Management's Discussion and Analysis."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------
(a) Exhibits: The exhibits filed herewith are as specified in the attached
Exhibit Index.
(b) Reports on Form 8-K - No report on Form 8-K was filed during the third
quarter of 1999.
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.
Allis-Chalmers Corporation
--------------------------
(Registrant)
/s/ John T. Grigsby, Jr.
--------------------------------
John T. Grigsby, Jr.
Vice Chairman, Executive Vice
President and Chief Financial
Officer
November 3, 1999
<PAGE>
13
ALLIS-CHALMERS CORPORATION
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
(3.1) March 31, 1999 Amendment to the By-Laws of Allis-Chalmers
Corporation
(3.2) Amended and Restated By-Laws of Allis-Chalmers Corporation (as
amended through March 31, 1999)
(27) Financial Data Schedule
Exhibit 3.1 AMENDMENT TO BY-LAWS
--------------------
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. The Board of Directors shall have the general management of
the affairs, property and business of the Company, and may adopt such rules and
regulations for that purpose and for the conduct of meetings as the Board may
deem proper. The Board may exercise and shall be vested with the powers of the
Company not inconsistent with law, the Certificate of Incorporation or these
By-laws.
SECTION 2. The number of Directors constituting the Board of Directors
shall be fixed at seven (7). Directors need not be stockholders of the Company.
SECTION 3. Except as otherwise provided by law or by these By-laws,
the Directors of the Company shall hold office until the next annual meeting of
stockholders. Each Director shall be elected to serve until the next annual
meeting of stockholders and until a successor shall have been duly elected and
qualified or until such Director's earlier death, resignation or removal. Any
vacancies in the Board of Directors may be filled by a majority of the Directors
then in office, though less than a quorum; provided, however, that any third
party pursuant to an agreement with the Company shall have the right to fill a
vacancy created by the departure of a Director who was nominated by such third
party. A Director so chosen shall hold office for the unexpired term in respect
of which the vacancy occurred or was created and until his or her successor
shall be elected and qualified or until his or her earlier resignation or
removal.
SECTION 4. As of the date these By-laws are being amended, the Company
shall include in any slate of nominees for election to the Board of Directors
three (3) nominees (a "PBGC Director" and collectively, the "PBGC Directors")
designated by the Pension Benefit Guaranty Corporation ("PBGC") pursuant to that
certain Agreement, dated as of February 28, 1999 (the "Master Agreement"),
between the Company and the PBGC.
SECTION 5. The Directors may hold their meetings and may have an
office and keep the books of the Company (except as otherwise may be provided
for by law) in such place or places, within or without the State of Delaware, as
from time to time the Board of Directors or the Chairman of the Board may
determine.
SECTION 6. Regular meetings of the Board of Directors shall be held
pursuant to a schedule established by the Board at its first meeting following
the annual meeting of stockholders. Such meetings shall be held on the second
Wednesday of the month, or at such other time as may be determined by the Board
of Directors or the Chairman of the Board.
<PAGE>
SECTION 7. Special meetings of the Board of Directors shall be held
whenever called by the Chairman of the Board, or in his absence by any officer
who is a Director, the Executive Committee, or by one-third of the whole Board.
SECTION 8. Regular meetings of the Board of Directors may be held
without notice provided that the time and place of such meeting is designated at
the preceding regular meeting of the Board of Directors. Notice of each other
regular meeting and of each special meeting of the Board of Directors shall be
given to each Director by letter mailed at least three days before the meeting,
by telegraph sent at least two days before the meeting, or by such shorter
telephone or other notice as the person or persons calling the meeting may deem
appropriate in the circumstances.
SECTION 9. A majority of the Directors at the time in office but in no
event less than one-third of the whole Board shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors. If less than a
quorum be present at a meeting, the Directors present may adjourn the meeting
and the meeting may be held as adjourned with due notice of such adjourned
meeting. If a quorum be present at a meeting, and the meeting is adjourned to
reconvene at a later time and/or date, due notice of such adjourned meeting
shall be given. Except as otherwise provided by law, by the Certificate of
Incorporation, by these By-laws or in the immediately following sentence, when a
quorum is present at any meeting of the Board of Directors, a majority of the
Directors present at such meeting shall decide any question brought before such
meeting and the action of such majority shall be deemed to be the action of the
Board. Notwithstanding the foregoing, when a quorum is present at any meeting of
the Board of Directors, the affirmative vote of at least four Directors shall be
necessary to: (i) determine the fair value of the Company Common Stock, or any
security that is convertible, exercisable or exchangeable for or into Company
Common Stock, and authorize the issuance thereof at the determined fair value;
(ii) authorize a consolidation or merger of the Company with or into another
person; or (iii) authorize the sale, assignment, transfer, lease, conveyance or
other disposal of 50% or more of the property or assets of the Company in one or
more related transactions. The Directors present at any duly called and held
meeting at which a quorum is present or represented may continue to do business
until adjournment, notwithstanding the withdrawal of such Directors as to leave
less than a quorum.
SECTION 10. Any action required or permitted to be taken at any
meeting if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or such committee.
SECTION 11. Unless otherwise provided by the Certificate of
Incorporation or these By-laws, members of the Board of Directors or any
committee thereof may participate in a meeting of the Board or such committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
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<PAGE>
SECTION 12. Except as otherwise provided by these By-laws:
(a) the Board of Directors may, by resolution passed by a majority of
the whole Board, designate an Executive Committee and one or more committees,
each committee to consist of one or more Directors. Each such committee shall
determine its own rules of operation and procedure. The Board may designate one
or more Directors as alternative members of the committee, who may replace any
absent or disqualified members at any meeting of such committee. In the absence
or disqualification of a member of the committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent to disqualified
member.
(b) any committee, to the extent provided in the resolution of the
Board of Directors creating it, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Company and may authorize the seal of the Company to be affixed
to all papers which may require it. No committee shall have the power or
authority to (i) amend the Certificate of Incorporation; (ii) adopt an agreement
of merger or consolidation; (iii) recommend to the stockholders the sale, lease
or exchange of all or substantially all of the Company's property and assets;
(iv) recommend to the stockholders a dissolution of the Company or a revocation
of a dissolution; or (v) amend the By-Laws of the Company. Unless the resolution
creating a committee, or the Certificate of Incorporation expressly provide, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
SECTION 13. By resolution adopted by the Board of Directors, the Board
shall appoint a Nominating Committee consisting of three individuals. The
Nominating Committee shall include any Director required to be included on the
Nominating Committee pursuant to any agreement between the Company and a third
party. As of the date these By-Laws are being amended, the Company is required
to include one PBGC Director on the Nominating Committee pursuant to the Master
Agreement. The Nominating Committee shall have all the power and authority
granted to it by the Board of Directors, including, without limitation,
recommending criteria for the selection of candidates to serve on the Board of
Directors, evaluating all proposed candidates for nomination to serve on the
Board of Directors, recommending to the Board of Directors a slate of nominees
for election by the stockholders of the Company and recommending to the Board of
Directors one or more nominees to fill vacancies in the Board of Directors. The
Nominating Committee shall also consider proposals for nomination from
stockholders of the Company which are made in writing to the Secretary of the
Company. As long as required by the Master Agreement, the Nominating Committee
shall recommend to the Board of Directors for election by the stockholders each
of the PBGC's designated nominees for election to the Board of Directors at
annual meetings of the Company's stockholders (or any special meeting or consent
solicitation for the election of directors). The Nominating Committee shall keep
a record of its acts and proceedings and shall report the same from time to time
to the Board of Directors.
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<PAGE>
SECTION 14. By resolution adopted by the whole Board of Directors, the
Board shall appoint a Compensation Committee consisting of three individuals.
The Compensation Committee shall include any Director required to be included on
the Compensation Committee pursuant to any agreement between the Company and a
third party. As of the date these By-laws are being amended, the Company is
required to include one PBGC Director on the Compensation Committee pursuant to
the Master Agreement, and such PBGC Director shall be the Chairman of the
Compensation Committee. The Compensation Committee shall have all the power and
authority as granted to it by the Board of Directors, including, without
limitation, the power and authority to establish the compensation and benefits
for Directors, officers and, at the option of the Compensation Committee, other
managerial personnel of the Company and its subsidiaries, including, without
limitation, fixing the cash compensation of such persons, establishing and
administering compensation and benefit plans for such persons and determining
awards thereunder, and entering into (or amending existing) employment and
compensation agreements with any such persons. The Compensation Committee shall
perform such other duties as shall from time to time be delegated to the
Compensation Committee by the Board of Directors. The Compensation Committee
shall consist solely of Directors who are not officers of the Company.
-4-
Exhibit 3.2 AMENDED AND RESTATED BY-LAWS
----------------------------
AMENDED AND RESTATED
BY-LAWS
OF
ALLIS-CHALMERS CORPORATION
INCORPORATED UNDER THE LAWS OF DELAWARE
MARCH 15, 1913
-------------
ARTICLE I
STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of the Company shall
be held at a place designated by the Board of Directors within or without the
State of Delaware, on the second Wednesday after the first Tuesday in May in
each year, if not a legal holiday, and if a legal holiday, then on the next
succeeding Wednesday not a legal holiday, or on such other date in the month of
April, May or June in any particular year which the Board of Directors
designates for the purpose of electing Directors and for the transaction of such
other proper business as may be brought before the meeting.
SECTION 2. Special meetings of the stockholders may be held whenever
called in writing by the Chairman of the Board or by resolution of the Board of
Directors at which a quorum is present, or as provided in the Certificate of
Incorporation. Such special meetings shall be held within or without the State
of Delaware, as may be ordered by the Board of Directors, and in the same manner
as the annual meeting, but only such subjects shall be considered or action
taken as may have been provided for in the notice.
SECTION 3. Notice of each meeting of the stockholders shall be given
by the Secretary by mailing a copy of such notice to each stockholder of record,
of a class or series entitled to vote at such meeting, other than any such
stockholder with whom communication is unlawful, at the last address appearing
on the records of the Company, at least ten, but not more than sixty, days
before such meeting. Such notice shall state the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. All or any of the stockholders may waive notice of any
meeting.
SECTION 4. At all meetings of the stockholders, the holders of the
shares of the capital stock of the Company having a majority of the votes
entitled to be cast at the meeting, present in person or by proxy, shall
constitute a quorum of the stockholders for all
<PAGE>
purposes, except in cases where the representation of a larger number is
required by law or the Certificate of Incorporation. Unless otherwise required
by law or the Certificate of Incorporation, any question brought before any
meeting of stockholders shall be decided by a majority of the votes of the
shares represented and entitled to be voted at such meeting.
If a quorum of stockholders shall not be present at the meeting, the
holders of shares having a majority of the votes represented at the meeting,
present in person or by proxy, may adjourn the same from time to time until a
quorum shall be present, and at any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been acted
upon at the meeting as originally called. Notice need not be given of such
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken unless the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, in which event a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 5. Unless otherwise provided in the Certificate of
Incorporation or in any resolution or resolutions adopted by the Board of
Directors pursuant thereto providing for the issue of shares of particular
series of Preferred Stock, and subject to the provisions of Section 4 of Article
V of these By-Laws, each stockholder shall be entitled to one vote for each
share of capital stock held by such stockholder. Each stockholder entitled to
vote at a meeting of stockholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person or persons to
act for him by proxy, but no proxy shall be voted on after three years from its
date, unless the proxy provides for a longer period.
SECTION 6. At each meeting of the stockholders, except as otherwise
required by law, the proxies and ballots shall be received and taken in charge
by three inspectors, and all questions touching the qualification of voters, the
validity of proxies, and the acceptance and rejection of votes shall be decided
by the inspectors. Such inspectors shall be appointed by the Board of Directors
before or at the meeting or, if no such appointment shall have been made, then
by the presiding officer. If for any reason any of the inspectors previously
appointed shall fail to attend or refuse or be unable to serve, inspectors in
place thereof shall be appointed in like manner.
All proxies received and accepted by any one of such inspectors,
wherever located, shall be deemed received and accepted by all inspectors, and
may be voted at the meeting, notwithstanding that any of such proxies may be
located elsewhere than at the place where the meeting is held. The inspectors
present at the meeting shall maintain a list of all valid proxies received prior
to the closing of the polls.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. The Board of Directors shall have the general management of
the affairs, property and business of the Company, and may adopt such rules and
regulations for that purpose and for the conduct of meetings as the Board may
deem proper. The Board may
-2-
<PAGE>
exercise and shall be vested with the powers of the Company not inconsistent
with law, the Certificate of Incorporation or these By-laws.
SECTION 2. The number of Directors constituting the Board of Directors
shall be fixed at seven (7). Directors need not be stockholders of the Company.
SECTION 3. Except as otherwise provided by law or by these By-laws,
the Directors of the Company shall hold office until the next annual meeting of
stockholders. Each Director shall be elected to serve until the next annual
meeting of stockholders and until a successor shall have been duly elected and
qualified or until such Director's earlier death, resignation or removal. Any
vacancies in the Board of Directors may be filled by a majority of the Directors
then in office, though less than a quorum; provided, however, that any third
party pursuant to an agreement with the Company shall have the right to fill a
vacancy created by the departure of a Director who was nominated by such third
party. A Director so chosen shall hold office for the unexpired term in respect
of which the vacancy occurred or was created and until his or her successor
shall be elected and qualified or until his or her earlier resignation or
removal.
SECTION 4. As of the date these By-laws are being amended, the Company
shall include in any slate of nominees for election to the Board of Directors
three (3) nominees (a "PBGC Director" and collectively, the "PBGC Directors")
designated by the Pension Benefit Guaranty Corporation ("PBGC") pursuant to that
certain Agreement, dated as of February 28, 1999 (the "Master Agreement"),
between the Company and the PBGC.
SECTION 5. The Directors may hold their meetings and may have an
office and keep the books of the Company (except as otherwise may be provided
for by law) in such place or places, within or without the State of Delaware, as
from time to time the Board of Directors or the Chairman of the Board may
determine.
SECTION 6. Regular meetings of the Board of Directors shall be held
pursuant to a schedule established by the Board at its first meeting following
the annual meeting of stockholders. Such meetings shall be held on the second
Wednesday of the month, or at such other time as may be determined by the Board
of Directors or the Chairman of the Board.
SECTION 7. Special meetings of the Board of Directors shall be held
whenever called by the Chairman of the Board, or in his absence by any officer
who is a Director, the Executive Committee, or by one-third of the whole Board.
SECTION 8. Regular meetings of the Board of Directors may be held
without notice provided that the time and place of such meeting is designated at
the preceding regular meeting of the Board of Directors. Notice of each other
regular meeting and of each special meeting of the Board of Directors shall be
given to each Director by letter mailed at least three days before the meeting,
by telegraph sent at least two days before the meeting, or by such shorter
telephone or other notice as the person or persons calling the meeting may deem
appropriate in the circumstances.
-3-
<PAGE>
SECTION 9. A majority of the Directors at the time in office but in no
event less than one-third of the whole Board shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors. If less than a
quorum be present at a meeting, the Directors present may adjourn the meeting
and the meeting may be held as adjourned with due notice of such adjourned
meeting. If a quorum be present at a meeting, and the meeting is adjourned to
reconvene at a later time and/or date, due notice of such adjourned meeting
shall be given. Except as otherwise provided by law, by the Certificate of
Incorporation, by these By-laws or in the immediately following sentence, when a
quorum is present at any meeting of the Board of Directors, a majority of the
Directors present at such meeting shall decide any question brought before such
meeting and the action of such majority shall be deemed to be the action of the
Board. Notwithstanding the foregoing, when a quorum is present at any meeting of
the Board of Directors, the affirmative vote of at least four Directors shall be
necessary to: (i) determine the fair value of the Company Common Stock, or any
security that is convertible, exercisable or exchangeable for or into Company
Common Stock, and authorize the issuance thereof at the determined fair value;
(ii) authorize a consolidation or merger of the Company with or into another
person; or (iii) authorize the sale, assignment, transfer, lease, conveyance or
other disposal of 50% or more of the property or assets of the Company in one or
more related transactions. The Directors present at any duly called and held
meeting at which a quorum is present or represented may continue to do business
until adjournment, notwithstanding the withdrawal of such Directors as to leave
less than a quorum.
SECTION 10. Any action required or permitted to be taken at any
meeting if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or such committee.
SECTION 11. Unless otherwise provided by the Certificate of
Incorporation or these By-laws, members of the Board of Directors or any
committee thereof may participate in a meeting of the Board or such committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
SECTION 12. Except as otherwise provided by these By-laws:
(a) the Board of Directors may, by resolution passed by a majority of
the whole Board, designate an Executive Committee and one or more committees,
each committee to consist of one or more Directors. Each such committee shall
determine its own rules of operation and procedure. The Board may designate one
or more Directors as alternative members of the committee, who may replace any
absent or disqualified members at any meeting of such committee. In the absence
or disqualification of a member of the committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent to disqualified
member.
(b) any committee, to the extent provided in the resolution of the
Board of Directors creating it, shall have and may exercise all the powers and
authority of the Board of
-4-
<PAGE>
Directors in the management of the business and affairs of the Company and may
authorize the seal of the Company to be affixed to all papers which may require
it. No committee shall have the power or authority to (i) amend the Certificate
of Incorporation; (ii) adopt an agreement of merger or consolidation; (iii)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Company's property and assets; (iv) recommend to the
stockholders a dissolution of the Company or a revocation of a dissolution; or
(v) amend the By-Laws of the Company. Unless the resolution creating a
committee, or the Certificate of Incorporation expressly provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
SECTION 13. By resolution adopted by the Board of Directors, the Board
shall appoint a Nominating Committee consisting of three individuals. The
Nominating Committee shall include any Director required to be included on the
Nominating Committee pursuant to any agreement between the Company and a third
party. As of the date these By-Laws are being amended, the Company is required
to include one PBGC Director on the Nominating Committee pursuant to the Master
Agreement. The Nominating Committee shall have all the power and authority
granted to it by the Board of Directors, including, without limitation,
recommending criteria for the selection of candidates to serve on the Board of
Directors, evaluating all proposed candidates for nomination to serve on the
Board of Directors, recommending to the Board of Directors a slate of nominees
for election by the stockholders of the Company and recommending to the Board of
Directors one or more nominees to fill vacancies in the Board of Directors. The
Nominating Committee shall also consider proposals for nomination from
stockholders of the Company which are made in writing to the Secretary of the
Company. As long as required by the Master Agreement, the Nominating Committee
shall recommend to the Board of Directors for election by the stockholders each
of the PBGC's designated nominees for election to the Board of Directors at
annual meetings of the Company's stockholders (or any special meeting or consent
solicitation for the election of directors). The Nominating Committee shall keep
a record of its acts and proceedings and shall report the same from time to time
to the Board of Directors.
SECTION 14. By resolution adopted by the whole Board of Directors, the
Board shall appoint a Compensation Committee consisting of three individuals.
The Compensation Committee shall include any Director required to be included on
the Compensation Committee pursuant to any agreement between the Company and a
third party. As of the date these By-laws are being amended, the Company is
required to include one PBGC Director on the Compensation Committee pursuant to
the Master Agreement, and such PBGC Director shall be the Chairman of the
Compensation Committee. The Compensation Committee shall have all the power and
authority as granted to it by the Board of Directors, including, without
limitation, the power and authority to establish the compensation and benefits
for Directors, officers and, at the option of the Compensation Committee, other
managerial personnel of the Company and its subsidiaries, including, without
limitation, fixing the cash compensation of such persons, establishing and
administering compensation and benefit plans for such persons and determining
awards thereunder, and entering into (or amending existing) employment and
compensation agreements with any such persons. The Compensation Committee shall
perform such other duties as shall from time to time be
-5-
<PAGE>
delegated to the Compensation Committee by the Board of Directors. The
Compensation Committee shall consist solely of Directors who are not officers of
the Company.
ARTICLE III
OFFICERS
SECTION 1. The Executive Officers of the Company shall be chosen by
the Board of Directors. There shall be a Chairman of the Board, a President, a
Secretary and a Treasurer, and may also be one or more Vice Presidents and such
other officers, if any, as the Board may from time to time determine. Any number
of offices may be held by the same person unless otherwise prohibited by law,
the Certificate of Incorporation or these By-Laws.
Any vacancy occurring in any office of the Company shall be filled by
the Board of Directors by the vote of a majority of all the Directors present at
any meeting at which a quorum is present except that, in its discretion, the
Board of Directors may leave unfilled for any such period as it may fix by
resolution, any office except those of Chairman of the Board, Treasurer and
Secretary.
All executives and other officers, agents or employees may be removed
from office by the Board of Directors at any time with or without cause.
The Executive Committee shall have the power to remove all officers,
agents and employees of the Company, except officers elected or appointed by the
Board of Directors.
SECTION 2. The Chairman of the Board shall preside at all meetings of
the stockholders and of the Board of Directors. He may sign with the Secretary
or an Assistant Secretary certificates of stock of the Corporation, and he shall
perform such other duties as may be prescribed by a resolution or resolutions of
the Board of Directors.
In addition to presiding at meetings of the stockholders and the Board
of Directors, the Chairman of the Board shall fulfill other duties and
responsibilities as assigned to him by the Board of Directors or the Executive
Committee.
SECTION 3. The President shall be the Chief Executive Officer of the
Corporation. He shall, in the absence of the Chairman of the Board, preside at
all meetings of the stockholders and of the Board of Directors. Subject to the
authority of the Board of Directors, he shall have general charge and
supervision of the business and affairs of the Corporation. He may sign and
execute in the name of the Corporation all deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall have been expressly delegated by the President or the Board of Directors
to some other officer or agent of the Corporation. He may vote stock in other
corporations, and he shall perform such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 4. The Treasurer shall perform all acts incident to the
position of Treasurer, subject to the control and supervision of the Board of
Directors, the Executive
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<PAGE>
Committee and the Chairman of the Board. By way of illustration, but not
limitation, of such authority, the Treasurer shall have custody of all the funds
and securities of the Company; he may sign and execute all bonds, contracts of
purchase or sale to which the Company is a party, documents or other obligations
in the name of the Company; he shall attend to the collection of all accounts,
bills receivable and other demands owing to the Company; he may endorse on
behalf of the Company for collection, checks, notes and other obligations, and
may deposit the same with all other funds in his custody to the credit of the
Company in such banks, trust companies, or depositaries as the Board or
Executive Committee may designate; he may sign all receipts and vouchers for
payments made to the Company; he may sign all checks, drafts and orders for the
payment of money executed by the Company in the usual course of its business; he
may sign all bills of exchange and promissory notes of the Company; he shall
keep full and accurate records showing all the receipts and disbursements of the
Company, he shall, whenever requested, furnish to the Board of Directors,
Executive Committee, Chairman of the Board or President a detailed account of
the receipts and expenditures of the Company for any specified period, and his
books and papers shall at all times be open and subject to the examination of
the Board, Executive Committee, Chairman of the Board, President or their
appointees for that purpose; he shall render to the Board, Executive Committee,
Chairman of the Board or other officer selected by the Chairman, whenever
requested, a statement of his transactions as Treasurer and of the financial
condition of the Company.
The Treasurer shall furnish a bond for the faithful discharge of his
duties in such sum and in such form and containing such provisions as may be
required by the Board of Directors or Executive Committee. The premium of any
surety company for furnishing such bond shall be paid by the Company.
SECTION 5. The Secretary shall perform all of the duties generally
incident to the office of Secretary, subject to the control of the Board of
Directors, Executive Committee and the Chairman of the Board. By way of
illustration, but not limitation, of such authority, the Secretary shall record
all of the proceedings of the meetings of the stockholders of the Company, the
Board of Directors, and the Executive Committee in books to be kept for that
purpose; he shall attend to the giving and serving of all notices of the
Company; he may sign or attest with the Chairman of the Board, the President, or
other corporate officer in the name of the Company all contracts or documents to
which the Company is a party, authorized by the Board of Directors, the
Executive Committee, or a corporate officer and, when required, shall affix the
seal of the Company thereto; and he shall have charge of the stock certificate
books, transfer books, the stock ledgers, and such other books and papers as the
Board of Directors, Executive Committee, Chairman of the Board or President may
direct, all of which shall at all reasonable times be open to the examination of
any Director upon application at the office of the Company during business
hours.
SECTION 6. All other officers shall have the authority, perform the
duties and exercise such powers in the management of the Company as may be
assigned to them from time to time by the Board of Directors or the Executive
Committee or by the President.
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<PAGE>
ARTICLE IV
CONDUCT OF BUSINESS
SECTION 1. All checks, drafts or orders for the payment of money shall
be signed by such officers or employees of the Company as the Board of Directors
or the Executive Committee may designate, subject to such restrictions and
regulations as may be ordered from time to time by the Board of Directors or the
Executive Committee.
No check shall be drawn or funds used for any purposes other than the
corporate business of the Company.
SECTION 2. Unless otherwise ordered by the Board of Directors, the
Chairman of the Board or the President, or any other person specifically
authorized thereto by the Chairman of the Board, the President, the Executive
Committee or the Board of Directors, shall have full power and authority to
execute, in the name of and on behalf of the Company, powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Company, and to attend and to act and to vote at any
meeting of stockholders of any corporation in which the Company may hold stock,
and at any such meeting or otherwise shall possess and may exercise any and all
rights and powers incident to the ownership of such stock, and which, as the
owner thereof, the Company might have possessed and exercised.
ARTICLE V
CAPITAL STOCK
SECTION 1. The certificates for shares of the capital stock of the
Company shall be in such form not inconsistent with the Certificate of
Incorporation as shall be approved by the Board of Directors. The certificate
shall be signed by (a) the Chairman of the Board or the President or any other
officer legally empowered to sign on behalf of the Company and duly authorized
to do so by the Board of Directors or the Executive Committee and (b) the
Secretary or the Treasurer or, if so authorized by the Board of Directors or the
Executive Committee, by an assistant secretary or assistant treasurer,
certifying the number of shares owned in the Company, and shall not be valid
unless so signed; provided, however, that, if permitted by law, the signatures
of such officials may be facsimiles, engraved or printed, and provided, further,
that outstanding certificates issued in conformance with the law and the By-Laws
of the Company at the time of their issue shall continue to be valid although
not in conformance with this By-Law.
The Board of Directors may appoint one or more Transfer Agents and
Registrars. If a Transfer Agent and Registrar shall have been appointed for any
class or series of stock of the Company, all stock certificates of such class or
series shall bear the signature of such Transfer Agent and Registrar; provided
however, that any such signature may be a facsimile.
All certificates surrendered to the Company shall be cancelled, and no
new certificates shall be issued, until the former certificate for the same
number of shares of the
-8-
<PAGE>
same class shall have been surrendered and cancelled, except as provided in the
next paragraph.
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
Company alleged to have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates or his legal representative, to advertise
the same in such manner as it shall require and/or to give the Company a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Company with respect to the certificate alleged to have been lost,
stolen or destroyed.
SECTION 2. Shares of the capital stock of the Company shall be
transferred only upon the books of the Company and only at the proper written
instruction of the registered holder thereof, or his duly authorized attorney,
upon surrender and cancellation of certificates for a like number of shares,
except as provided in the last paragraph of Section 1 of this Article, and
payment of all applicable transfer taxes.
SECTION 3. The Board of Directors shall have power and authority to
make all such rules and regulations as they deem necessary or expedient
concerning the issue, transfer, and registration of certificates for shares of
the capital stock of the Company, subject, however, to applicable laws and to
the rules and regulations of any stock exchange or exchanges on which such
capital stock is listed.
SECTION 4. In order that the Company may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty days nor less than ten days before the
date of such meeting. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 5. The Company shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owners, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Laws of
Delaware.
-9-
<PAGE>
ARTICLE VI
INDEMNIFICATION
SECTION 1. Subject to Section 4 of this Article, the Company 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 Company) by reason of the fact that he is or was a Director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a Director, officer, employee, agent or trustee 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 Company
(or, if acting as a trustee for trust funds established by the Company for the
benefit of its employees, he did so in accordance with fiduciary standards set
forth in the relevant trust document(s)) 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 Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Subject to Section 4 of this Article, the Company 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
Company 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 Company, or is or was serving
at the request of the Company 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 Company; 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 Company unless and only to the extent that the
Court of Chancery 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 indemnify for such expenses which the Court of Chancery or such
other court shall deem proper.
SECTION 3. The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any By-Law, 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 of such a
person.
-10-
<PAGE>
SECTION 4. Any indemnification under this Article (unless ordered by a
court) shall be made by the Company 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 standards of
conduct set forth in Section 1 or Section 2 of this Article, as the case may be.
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 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. To the extent,
however, that a Director, officer, employee or agent of the Company has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
SECTION 5. Notwithstanding any contrary determination in the specific
case under Section 4 of this Article, and notwithstanding the absence of any
determination thereunder, any Director, officer, employee or agent may apply to
any court of competent jurisdiction in the State of Delaware for indemnification
to the extent otherwise permissible under Sections 1 and 2 of this Article. The
basis of such indemnification by a court shall be a determination by such court
that indemnification of the Director, officer, employee or agent is proper in
the circumstances because he has met the applicable standards of conduct set
forth in Section 1 or 2 of this Article, as the case may be. Any application for
indemnification made to any court pursuant to this Section 5 shall be made in
such manner and form as may be required by the applicable rules of such court
or, in the absence thereof, by direction of the court to which such application
is made. Notice of any application for indemnification pursuant to the Section 5
shall be given to the Company promptly upon the filing of such application.
SECTION 6. Expenses incurred in defending or investigating a
threatened or pending civil or criminal action, suit or proceeding may be paid
by the Company 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 unless it shall ultimately be determined that he is
entitled to be indemnified by the Company as authorized in this Article.
SECTION 7. For the purpose of this Article, references to "the
Company" include all constituent corporations absorbed in a consolidation or
merger as well as the resulting or surviving corporation 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 resulting or surviving
corporation.
-11-
<PAGE>
ARTICLE VII
GENERAL
SECTION 1. Fiscal Year. The fiscal year shall begin on the 1st day of
January and end on the following 31st day of December in each year.
SECTION 2. Dividends and Working Capital. The Board of Directors in
its discretion shall have full power to fix the amount to be reserved for
working capital and other corporate purposes, to modify or eliminate such
reserves and, subject to the General Corporation Law of the State of Delaware
and the Certificate of Incorporation, to declare dividends from the surplus or
net profits of the Company over and above the amount so reserved.
SECTION 3. Seal. The corporate seal shall have inscribed thereon the
name of the Company and the year and the name of the State of its incorporation.
Such seal shall be in the charge of the Secretary. If and when so directed by
the Board of Directors, or the Secretary, a duplicate of the seal may be kept
and used by the Treasurer or by any Assistant Secretary or Assistant Treasurer.
SECTION 4. Surety Bond. Any officer or employee of the Company having
authority to sign checks or orders for the payment of money shall furnish a bond
of a surety company for the faithful discharge of his duties in such sum and in
such form and containing such provisions as may be required by the Board of
Directors or the Executive Committee, and the premiums of the surety company for
furnishing such bond shall be paid by the Company.
SECTION 5. Waivers of Notice; Dispensing With Notice. Whenever any
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation of
the Corporation, or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, Directors or Committee of Directors need be specified in any
written waiver of notice.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Whenever any notice whatever is required to be given under the
provisions of the General Corporation Law of the State of Delaware, of the
Certificate of Incorporation, or of these By-Laws, to any person with whom
communication is unlawful the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person; and any
action or meeting which shall be taken or held without notice to any such person
shall
-12-
<PAGE>
have the same force and effect as if such notice had been duly given. In the
event that the action taken by the Company is such as to require the filing of a
certificate under any of the other sections of this title, the certificate shall
state, if such is the fact and if notice is required, that notice was given to
all persons entitled to receive notice except such persons with whom
communication is unlawful.
SECTION 6. Amendments. These By-Laws may be altered or repealed by the
stockholders at any annual or at any special meeting, provided notice of the
proposed alteration or repeal is included in the notice of such meeting, and,
except for By-Laws that have been adopted by the stockholders, may also be
amended or repealed by the Board of Directors at any regular or special meeting.
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ALLIS-CHALMERS CORPORATION AS OF AND
FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 58
<SECURITIES> 0
<RECEIVABLES> 683
<ALLOWANCES> 21
<INVENTORY> 129
<CURRENT-ASSETS> 912
<PP&E> 2,816
<DEPRECIATION> 1,596
<TOTAL-ASSETS> 2,132
<CURRENT-LIABILITIES> 68,651
<BONDS> 211
0
0
<COMMON> 8,307
<OTHER-SE> (75,989)
<TOTAL-LIABILITY-AND-EQUITY> (2,132)
<SALES> 0
<TOTAL-REVENUES> 3,030
<CGS> 0
<TOTAL-COSTS> 2,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> (316)
<INCOME-TAX> 0
<INCOME-CONTINUING> (316)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (316)
<EPS-BASIC> (.20)
<EPS-DILUTED> (.20)
</TABLE>
