SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934. For the transition period
from: ________________ to ________________
Commission File Number 0-1125
MADISON GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin
(State or other jurisdiction of incorporation or organization)
39-0444025
(IRS Employer Identification No.)
133 South Blair Street, Madison, Wisconsin 53703
(Address of principal executive offices and ZIP code)
(608) 252-7000
(Registrant's telephone number including area code)
Common Stock Outstanding at November 12, 1998:
16,079,718 shares
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,
and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
==============================
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
1998 1997 1998 1997
------- ------- -------- --------
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME
- --------------------
Operating Revenues:
Electric $50,458 $45,502 $131,295 $123,585
Gas 7,321 7,655 56,161 67,736
------- ------- -------- --------
Total Operating Revenues 57,779 53,157 187,456 191,321
------- ------- -------- --------
Operating Expenses:
Fuel for electric
generation 10,219 8,341 24,890 23,833
Purchased power 2,950 3,060 8,292 11,695
Natural gas purchased 2,454 3,255 31,380 42,692
Other operations 16,372 15,041 48,598 46,497
Maintenance 3,475 2,786 10,529 9,409
Depreciation and
amortization 8,112 7,348 24,648 20,115
Other general taxes 2,309 2,112 7,000 6,559
Income tax items 3,367 3,385 8,803 8,600
------- ------- -------- --------
Total Operating Expenses 49,258 45,328 164,140 169,400
------- ------- -------- --------
Net Operating Income 8,521 7,829 23,316 21,921
AFUDC - equity funds 25 (12) 79 12
Other income, net 109 555 1,123 1,346
Non-utility operating
income/(loss), net (156) (114) 60 796
------- ------- -------- --------
Income before interest
expense 8,499 8,258 24,578 24,075
------- ------- -------- --------
Interest expense:
Interest on long-term
debt 2,508 2,392 7,356 7,212
Other interest 166 213 558 621
AFUDC - borrowed funds (13) 6 (42) (6)
------- ------- -------- --------
Net Interest Expense 2,661 2,611 7,872 7,827
------- ------- -------- --------
Net Income $ 5,838 $ 5,647 $ 16,706 $ 16,248
======= ======= ======== ========
Earnings per share of
common stock (basic
and diluted) (Note 3) $0.36 $0.35 $1.04 $1.01
======= ======= ======== ========
STATEMENTS OF RETAINED
INCOME
- ----------------------
Balance - beginning of
period $52,755 $50,761 $52,285 $50,451
Earnings on common stock 5,838 5,647 16,706 16,248
Cash dividends on common
stock (Note 3) (5,239) (5,200) (15,637) (15,491)
------- ------- ------- -------
Balance - end of period $53,354 $51,208 $53,354 $51,208
======= ======= ======= =======
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 5,838 $ 5,647 $16,706 $16,248
Items not affecting
working capital:
Depreciation and
amortization 8,112 7,348 24,648 20,115
Deferred income taxes (759) (388) (3,145) (1,098)
Amortization of nuclear
fuel 680 707 1,983 805
Amortization of
investment tax credits (187) (188) (560) (566)
AFUDC - equity funds (25) 12 (79) (12)
Other 921 68 1,503 542
------- ------- ------- -------
Net funds provided from
Operations 14,580 13,206 41,056 36,034
Changes in working
capital, excluding
cash, sinking funds,
maturities, and interim
loans:
(Increase)/decrease in
current assets (592) 5,524 14,790 28,251
Decrease in current
liabilities (1,144) (6,838) 1,906 (23,338)
Other noncurrent items,
net (829) (4,226) 6,668 1,079
------- ------- ------- -------
Cash provided by
Operating Activities 12,015 7,666 64,420 42,026
------- ------- ------- -------
FINANCING ACTIVITIES
- --------------------
Cash dividends on common
and preferred stock (5,239) (5,200) (15,637) (15,491)
Maturities/redemptions
of First Mortgage Bonds - - - (3,800)
Increase in long-term
debt 30,000 - 30,000 5,000
Other decrease in First
Mortgage Bonds 10 9 29 28
Increase/(decrease) in
interim loans (11,750) 4,500 (33,500) (11,750)
------- ------- ------- -------
Cash provided by/(used
for) Financing Activities 13,021 (691) (19,108) (26,013)
------- ------- ------- -------
INVESTING ACTIVITIES
- --------------------
Additions to utility
plant and nuclear fuel (8,764) (5,650) (23,124) (14,877)
AFUDC - borrowed funds (13) 6 (42) (6)
Increase in nuclear
decommissioning fund (2,234) (1,884) (7,210) (4,042)
------- ------- ------- -------
Cash used for Investing
Activities (11,011) (7,528) (30,376) (18,925)
------- ------- ------- -------
CHANGE IN CASH AND
EQUIVALENTS 14,025 (553) 14,936 (2,912)
Cash and equivalents at
beginning of period 3,019 2,929 2,108 5,288
------- ------- ------- -------
Cash and equivalents at
end of period $17,044 $ 2,376 $17,044 $ 2,376
======= ======= ======= =======
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Sept. 30, Dec. 31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost, in
service:
Electric $519,691 $510,405
Gas 185,157 181,861
-------- --------
Gross plant in service 704,848 692,266
Less accumulated provisions for
depreciation (432,275) (407,602)
-------- --------
Net plant in service 272,573 284,664
Construction work in progress 15,603 10,995
Nuclear decommissioning fund 69,046 59,179
Nuclear fuel, net 8,377 8,255
-------- --------
Total Utility Plant 365,599 363,093
-------- --------
Other property and investments 7,501 8,252
-------- --------
Current Assets:
Cash and cash equivalents 17,044 2,108
Accounts receivable, less reserves of
$1,116 and $1,235, respectively 21,298 28,395
Unbilled revenue 8,195 13,580
Material and supplies, at average cost 5,902 5,557
Fossil fuel, at average cost 3,142 3,605
Stored natural gas, at average cost 10,672 9,851
Prepaid taxes 4,819 7,190
Other prepayments 1,440 2,081
-------- --------
Total Current Assets 72,512 72,367
-------- --------
Deferred charges 23,707 28,078
-------- --------
Total Assets $469,319 $471,790
======== ========
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization (see statement) $341,944 $310,846
-------- --------
Current Liabilities:
Long-term debt sinking fund
requirements 200 200
Interim loans - commercial paper
outstanding - 33,500
Accounts payable 9,288 14,528
Accrued taxes 3,214 -
Accrued interest 3,628 2,206
Accrued nonregulated items 4,536 4,837
Other 8,137 5,326
-------- --------
Total Current Liabilities 29,003 60,597
-------- --------
Other Credits:
Deferred income taxes 42,427 45,572
Regulatory liability - SFAS 109 24,007 24,875
Investment tax credit - deferred 10,125 10,685
Other regulatory liabilities 21,813 19,215
-------- --------
Total Other Credits 98,372 100,347
-------- --------
Commitments - -
-------- --------
Total Capitalization and Liabilities $469,319 $471,790
======== ========
The accompanying notes are an integral part of the above balance
sheets.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Sept. 30, Dec. 31,
1998 1997
-------- --------
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY
- ---------------------------
Common stock - par value $1 per share:
Authorized 50,000,000 shares
Outstanding 16,079,718 shares $ 16,080 $ 16,080
Amount received in excess of par value 112,558 112,558
Retained income 53,354 52,285
-------- --------
Total Common Shareholders' Equity 181,992 180,923
-------- --------
FIRST MORTGAGE BONDS
- --------------------
6 1/2%, 2006 series:
Pollution Control Revenue Bonds 6,675 6,675
8.50%, 2022 series 40,000 40,000
6.75%, 2027A series:
Industrial Development Revenue Bonds 28,000 28,000
6.70%, 2027B series:
Industrial Development Revenue Bonds 19,300 19,300
7.70%, 2028 series 21,200 21,200
-------- --------
First Mortgage Bonds Outstanding 115,175 115,175
Unamortized discount and premium on
bonds, net (1,023) (1,052)
Long-term debt sinking fund
requirements (200) (200)
-------- --------
Total First Mortgage Bonds 113,952 113,923
OTHER LONG-TERM DEBT
- --------------------
6.01%, due 2000 11,000 11,000
6.91%, due 2004 5,000 5,000
6.02%, due 2008 30,000 -
-------- --------
Total Capitalization $341,944 $310,846
======== ========
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1998
================================================================
The consolidated financial statements included herein have been
prepared by the Company, without audit (except for balance sheet
information at December 31, 1997), pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC).
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures made are adequate to make the
information presented not misleading. In the opinion of Company
management, all adjustments (consisting of only normal recurring
adjustments) necessary to fairly present results have been made.
It is suggested that these consolidated financial statements be
read in conjunction with the financial statements and the notes
thereto set forth on pages 18 through 27 of the Company's 1997
Annual Report to Shareholders and in the Company's 1997 Annual
Report on Form 10-K.
1. Summary of Significant Accounting Policies
------------------------------------------
The accounting and financial policies relative to the
following items have been described in the "Notes to
Consolidated Financial Statements" in the Company's 1997
Annual Report to Shareholders and have been omitted herein
because they have not changed materially through the date of
this report.
a. General
b. Utility plant
c. Nuclear fuel
d. Joint plant ownership
e. Depreciation
f. Income taxes
g. Pension plans
h. Postretirement benefits other than pensions
i. Fair value of financial instruments
j. Capitalization matters: preferred stock; and notes payable
to banks, commercial paper, and lines of credit
k. Gas marketing subsidiaries
l. Commitments
m. Segments of business
n. Regulatory assets and liabilities
2. Nuclear Decommissioning
-----------------------
Nuclear decommissioning costs are being accrued to an
end-of-service life of 2002 for the Kewaunee Nuclear Power
Plant (Kewaunee). These costs are currently recovered from
customers in rates and are deposited in external trusts. The
Company is presently funding decommissioning costs in the
amount of $8.1 million annually. These trusts are shown on the
balance sheet in the utility plant section. As of
September 30, 1998, these trusts totaled $69.0 million (fair
market value).
Decommissioning costs are recovered through depreciation
expense, exclusive of earnings on the trusts. Net earnings on
the trusts are included in other income. The long-term,
after-tax earnings assumption on these trusts is 5.6 percent.
The Company's share of Kewaunee decommissioning costs is
estimated to be $82.1 million in current dollars based on a
site-specific study performed in 1992 using immediate
dismantlement as a method of decommissioning. Decommissioning
costs are assumed to inflate at an average rate of
6.0 percent. Physical decommissioning is expected to occur
during the period 2014 through 2021, with additional
expenditures being incurred during the period 2022 through
2039 related to the storage of spent nuclear fuel at the site.
The Company's obligations regarding decommissioning and spent
nuclear fuel have significantly changed with its agreement
with Wisconsin Public Service Corporation (WPSC) to sell the
Company's ownership in Kewaunee to WPSC (also discussed in
Item 2, Management's Discussion and Analysis).
3. Per-Share Amounts
-----------------
Earnings per share of common stock, basic and diluted, are
computed on the basis of the daily weighted average number of
shares outstanding. For the three and for the nine months
ended September 30, 1998 and 1997, there were 16,079,718
shares outstanding.
Dividends declared and paid per share of common stock for the
periods ended September 30, 1998 and 1997, were, respectively,
for the three months $0.326 and $0.323; for the nine months
$0.972 and $0.963.
4. Rate Matters
------------
The Company received approval from the Public Service
Commission of Wisconsin (PSCW) on March 19, 1998, to recover
approximately $1.8 million (excluding carrying costs) of
deferred expenses related to the 1997 repairs to the Kewaunee
steam generator tubes. The deferred expenses were recovered
through a four-month customer surcharge effective April
through July of 1998.
On April 15, 1998, the Company announced its intention to
increase electric rates for the test year beginning January 1,
1999, by $14.6 million, or 8.9 percent annually, and increase
natural gas rates by $4.6 million, or 4.5 percent annually,
for the same time period. The proposed changes are based on a
requested return on common stock equity of 12.5 percent and
would remain in effect through the year 2000. The rising cost
of fuel coupled with increased transmission and generation
costs to improve electric reliability are the primary reasons
for the requested increase in electric rates. Both rate
requests include costs to implement technology to ensure
computer system compatibility with the year 2000. Hearings
were held in September with a final rate order expected by
year end.
5. First Mortgage Bonds and Other Long-Term Debt
---------------------------------------------
On September 14, 1998, the Company issued on the open market
$30 million in Medium Term Notes, due 2008 at 6.02%. The
Company intends to use the proceeds to finance several major
capital projects in 1998 and 1999.
6. Supplemental Cash Flow Information
----------------------------------
For purposes of the Consolidated Statements of Cash Flows, the
Company considers cash equivalents to be those investments
that are highly liquid with maturity dates of less than three
months.
Cash payments for interest, net of amounts capitalized, and
income taxes were as follows:
(Thousands of dollars) Three Months Nine Months
Ended Ended
September 30, September 30,
--------------- ----------------
1998 1997 1998 1997
------ ------ ------- -------
Interest, net of
amounts capitalized $1,214 $1,244 $6,454 $6,521
Income taxes paid $4,204 $3,849 $10,412 $11,016
7. Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
-------------------------------------------------------------
On June 15, 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities
(FAS 133). FAS 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 1999 (January 1, 2000,
for the Company). FAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a
hedge transaction and, if it is, the type of hedge
transaction. Management of the Company anticipates that, due
to its limited use of derivative instruments, the adoption of
FAS 133 will not have a significant effect on the Company's
results of operations or its financial position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
==========================================================
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash provided by operating activities through September of this
year increased $22.4 million, compared to the same time period
last year. This was attributable primarily to a decrease in net
working capital. Cash provided by operating activities during the
third quarter of 1998 increased $4.3 million compared to last
year's third quarter, for the same reason stated above.
Cash provided by financing activities increased $13.7 million for
the three months ended September 30, 1998, over the same time
period last year, because of the $30 million debt issue in
September 1998.
The Company's internally generated funds were greater than the
funds used for construction and nuclear fuel expenditures for the
nine-month period ended September 30, 1998. Cash used in
investing activities increased by $11.5 million during the nine
months ended September 30, 1998, compared to 1997, primarily due
to increased additions to utility plant and nuclear fuel
expenditures during the first nine months of 1998 compared to
1997. It is anticipated that 1998 construction and nuclear fuel
expenditures will be approximately $46.4 million.
Bank lines of credit available to the Company as of September 30,
1998, were $45 million.
The Company's capitalization ratios were as follows:
Sept. 30, 1998 Dec. 31, 1997
-------------- -------------
Common shareholders' equity 53.2% 52.5%
Long-term debt* 46.8 37.8
Short-term debt - 9.7
*Includes current maturities and current sinking fund
requirements.
The Company's First Mortgage Bonds are currently rated Aa2 by
Moody's Investors Service, Inc., and AA by Standard & Poor's
Corporation. The Company's Medium Term Notes are currently rated
Aa3 by Moody's and AA- by Standard & Poor's. The Company's
dealer-issued commercial paper carries the highest ratings
assigned by Moody's and Standard & Poor's.
Business and Regulatory Environment
- -----------------------------------
In February 1996, the PSCW submitted a report to the State
Legislature on electric utility restructuring in Wisconsin.
Included in the report was a 32-step work plan and time line
summarizing expected restructuring activities. During the summer
of 1997, Wisconsin and Illinois experienced electric supply
shortages due to outages of a number of nuclear plants in
Illinois and Wisconsin, including Kewaunee. The electric
reliability crisis caused the PSCW to revise its previous plans
for restructuring the electric industry. In October 1997, the
PSCW revised the plan to seven steps and stated that retail
competition cannot occur until all the safeguards are in place to
protect consumers. Also, prior to any significant restructuring,
reliability concerns must be addressed. This conclusion was
consistent with plans proposed by the Company and a broad
coalition of customers.
The new plan focuses on the construction of a generation and
transmission infrastructure by all Wisconsin utilities to
increase the amount of power in the state and the state's ability
to obtain electricity from other regions. The PSCW plans to
remove any barriers to open access to the transmission system
that currently exist and to move forward in its efforts to
develop a strong state and regional Independent System Operator
(ISO). This would assure that the transmission system is operated
safely, reliably, and with open and nondiscriminatory access.
Also in its revised plan, the PSCW plans to explore new ways to
promote the development of renewable energy sources. The PSCW has
not set a date for retail competition and has concluded that any
decision to go to retail competition in the electric industry
remains to be made in the future. The Company cannot predict what
impact future PSCW actions may have on its future financial
condition, cash flows, or results of operations. However, the
Company believes it is well-positioned to compete in a
deregulated market.
The restructuring of the electric industry could affect the
eligibility of the Company to continue applying Statement of
Financial Accounting Standard (SFAS) No. 71, "Accounting for the
Effects of Certain Types of Regulation." Under this situation,
continued deferral of certain regulatory asset and liability
amounts on the Company's books may no longer be appropriate as
allowed under SFAS No. 71. The Company is unable to predict
whether any adjustments to regulatory assets and liabilities will
occur in the future. The PSCW's restructuring plan specifically
recognizes the need to allow recovery for commitments made under
prior regulatory regimes.
The Company's last rate order authorized a gas cost recovery
mechanism that allows recovery of pipeline capacity, Federal
Energy Regulatory Commission (FERC)-approved/mandated charges,
and supply demand costs. Under the new mechanism, gas commodity
costs will be compared to a monthly benchmark equal to the
first-of-the-month index plus adders reflecting the effects on
pricing for reliability, flexibility, weather, and variable
transportation costs. If actual costs are below the benchmark,
full recovery is allowed. Gas commodity costs above the benchmark
will be reviewed by the PSCW. A target will also be determined
for capacity release. Capacity release above the target will be
shared 60 percent with the ratepayers and 40 percent with the
shareholders. Any shortfalls in capacity release will be shared
40 percent with the ratepayers and 60 percent with the
shareholders.
Electric Reliability Act
- ------------------------
On April 28, 1998, Governor Tommy Thompson signed into law the
1997 Wisconsin Act 204 (the Act) - the Electric Reliability Plan.
The Act seeks to guarantee the reliable provision of electricity
in Wisconsin for future generations. It received widespread
support from consumer groups, legislators, and utilities
(including the Company).
Among the many provisions included in the Act are those
streamlining the regulatory process. For instance, the Act
requires the PSCW to prepare a strategic energy assessment, and
calls for expediting the PSCW and the Department of Natural
Resources (DNR) deadlines to grant certificates of public
convenience and necessity needed to construct electric generating
facilities and transmission lines. The Act also calls for
utilities to voluntarily transfer transmission operations to an
ISO approved by the FERC by June 30th of the year 2000.
The Act also includes the following:
- - Allows for the construction of "merchant" power plants that
would sell their power to utilities. A merchant plant is built
without prior commitments to buy the power it will produce.
- - Requires a total of 50 megawatts of new generation to come
from renewable power sources, such as wind or solar. The
Company is in the process of building a $14 million wind
generation project which will allow its customers to purchase
blocks of energy produced with renewable resources. Pursuant
to the Act, these costs will be recovered from the companies'
customers through rates.
- - Directs the PSCW to conduct a study of constraints in the
intrastate and interstate transmission system that hurt the
reliability of electric service in Wisconsin. The PSCW
reported the results to the state legislature on September 1,
1998.
In response to the Act, the Company issued Request for Proposals
and has entered into an agreement with WPSC to have an 83-MW gas
combustion turbine built. The capital cost of this turbine would
be approximately $30 million, and its targeted date of operation
is June 1, 2000. The agreement has been filed with the PSCW and
is awaiting approval.
Year 2000
- ---------
The "Year 2000" (Y2K) issue is the result of computer programs
that were written using two digits rather than four to define the
applicable year. If the Company's computer programs with
date-sensitive functions are not Y2K compliant, they may
recognize a date "00" as the year 1900 rather than the year 2000.
This could result in a system failure causing disruptions in
normal business operations.
In 1997, the Company established a Y2K project team to address
this concern. During 1997, the project team completed an
assessment of the Company's internal systems as well as the
Company's embedded systems that may be susceptible to system
failures or processing errors as a result of the Y2K issue. The
project team identified those systems that may require
remediation or replacement and established priorities for repair
or replacement. The business systems considered most critical to
continuing operations have been given the highest priority. The
Company's objective is to complete substantially all remediation
and replacement of critical internal systems by the first quarter
of 1999, and to complete final testing for Y2K by the end of July
1999.
As part of the Y2K project plan, critical service providers,
vendors, customers and business partners have been identified and
steps taken in an attempt to ascertain their stage of Y2K
readiness through questionnaires and interviews.
Concurrently with the Y2K readiness measures described above, the
Company is developing contingency plans intended to mitigate the
possible disruption in business operations that may result from
the Y2K issue. Contingency plans may include increasing fuel
inventories, securing alternate suppliers, and adjusting facility
shutdown and start-up schedules along with other appropriate
measures. Contingency planning is an ongoing process and will be
continually revised as additional information becomes available.
It is currently estimated that the cost of the Company's Y2K
efforts will be $4.3 million, of which $627,000 has been spent.
These costs are being expensed as incurred and are being funded
through operating cash flow. The costs associated with the
replacement of computerized systems and equipment are being
capitalized.
Environmental Matters
- ---------------------
The Company received a notice of violation from the DNR regarding
fugitive dust and coal emissions at its Blount Generating
Station. The Company and the DNR are working on a solution in
which the Company will make certain capital improvements over the
next two years. The cost of these improvements are included in
the Company's currently filed rate case. In the opinion of
management, the improvements will meet the Company's obligation
to fully comply with the notice.
Kewaunee Nuclear Power Plant
- ----------------------------
Kewaunee is operated by WPSC with a license that expires in 2013.
The Company has a 17.8 percent ownership interest in Kewaunee.
On April 7, 1998, the PSCW approved WPSC's application for
replacement of the two steam generators at Kewaunee. The total
cost of replacing the steam generators would be approximately
$90.7 million (the Company's share would be 17.8 percent or
$16.1 million). The replacement work is scheduled for the spring
of 2000 and will take approximately 60 days.
The Company finalized an agreement on September 29, 1998, with
WPSC to sell its ownership (17.8 percent) of Kewaunee to WPSC.
This agreement is contingent upon regulatory approval and steam
generator replacement. The closing of this agreement is scheduled
for the spring of 2000. The Company's decommissioning liability
has been limited to the current fund balances plus all
decommissioning contributions through 2002. The Company will have
an option to purchase capacity and energy up to approximately the
Company's current capacity in Kewaunee from WPSC for up to two
years following the closing of the transaction.
The Company believes it can secure capacity and energy more cost
effectively from other sources than from its Kewaunee investment.
The aforementioned agreement provides that the book value of the
Company's share of Kewaunee could be credited against the
purchase price of a planned 83-megawatt, natural gas-fired,
combustion turbine electric generating station to be built near
Marinette, Wisconsin. WPSC had previously agreed to build this
station for the Company. If, for some reason, the Marinette
station is not completed, the agreement calls for WPSC to pay for
the Company's share of Kewaunee with a combination of cash and
notes.
On October 17, 1998, Kewaunee was shut down for a planned
maintenance and refueling outage. Inspection of the plant's two
steam generators shows the repairs made in 1997 are holding up
well and few additional repairs are needed. In addition to the
inspection and repairs of the steam generators, a major overhaul
is being performed on the main turbine generator. The plant
should be back in operation during the first week of December
1998. On July 2, 1998, the Kewaunee co-owners received approval
from the PSCW to defer the costs associated with the repair of
the Kewaunee steam generator tubes. If the costs are significant,
recovery of the deferred costs will be requested in a future rate
proceeding. Minimal costs have been deferred to date.
Kewaunee has been in operation since 1974 and is jointly owned by
the Company, WPSC, and Wisconsin Power and Light Company.
Background information regarding Kewaunee steam generator repair
issues is set forth in the registrant's Annual Report on Form
10-K for the year ended December 31, 1997.
RESULTS OF OPERATIONS
- ---------------------
Electric Sales and Revenues
- ---------------------------
Electric retail sales increased 4 percent for the nine-month
period and 8 percent for the three-month period ended
September 30, 1998, over the comparable periods last year (see
table).
ELECTRIC SALES IN MEGAWATT-HOURS
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
----------------------- ---------------------------
1998 1997 %Change 1998 1997 %Change
------- ------- ------- --------- --------- -------
Residential 225,111 200,916 12.0% 576,949 544,340 6.0%
Large com-
mercial and
industrial 284,679 243,417 17.0 785,294 716,950 9.5
Small com-
mercial and
industrial 205,451 210,055 (2.2) 571,571 566,229 0.9
Other 88,369 88,916 (0.6) 238,036 253,116 (6.0)
------- ------- --------- ---------
Total
retail 803,610 743,304 8.1 2,171,850 2,080,635 4.4
Sales for
resale 14,908 24,857 (40.0) 63,710 44,709 42.5
------- ------- --------- ---------
Total sales 818,518 768,161 6.6 2,235,560 2,125,344 5.2
======= ======= ========= =========
Electric operating revenues increased $7.7 million, or 6 percent,
for the first nine months of 1998 compared to the same period in
1997.
Electric operating revenues for the three-month period ended
September 30, 1998, increased $5.0 million, or 11 percent,
compared to last year's third quarter. The warmer weather this
summer contributed to the increase in electric sales for the
three and nine months ended September 30, 1998, compared to the
same periods last year. Also contributing to the increase in
revenues was a customer surcharge relating to deferred expenses
on 1997 repairs to the Kewaunee steam generation tubes (see
Footnote No. 4 - Rate Matters).
Cooling degree days (measured by the number of degrees the mean
daily temperature is above 65 degrees Fahrenheit) for the third
quarter of 1998 increased approximately 77 percent from last
year's third quarter and were 4 percent above normal.
Gas Sales and Revenues
- ----------------------
For the nine months ended September 30, 1998, gas operating
revenues decreased $11.6 million, or 17 percent, compared to the
same period in 1997. This decrease is primarily due to the
decrease in gas deliveries caused by the above-normal
temperatures experienced in this year's first quarter.
For the three months ended September 30, 1998, gas revenues
decreased $0.3 million, or 4 percent, compared to the same period
last year. This also can be attributed to the decrease in retail
gas deliveries.
The following table illustrates gas deliveries as compared to the
previous year:
GAS DELIVERIES IN THOUSANDS OF THERMS
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
----------------------- ------------------------
1998 1997 %Change 1998 1997 %Change
------ ------ ------- ------- ------- -------
Residential 5,379 5,533 (2.8) 51,321 60,217 (14.8)
Commercial
& industrial 6,957 8,828 (21.2) 45,575 59,083 (22.9)
------ ------ ------- -------
Total
retail 12,336 14,361 (14.1) 96,896 119,300 (18.8)
Transport 10,327 10,340 (0.1) 29,094 29,434 (1.2)
------ ------ ------- -------
Total
deliveries 22,663 24,701 (8.3) 125,990 148,734 (15.3)
====== ====== ======= =======
Electric Fuel and Natural Gas Costs
- -----------------------------------
Fuel costs for electric generation and purchased power increased
$1.7 million, or 15 percent, for the third quarter of 1998
compared to last year's third quarter. This is mainly attributed
to the higher sales we experienced in this year's third quarter
compared to last year's third quarter.
Fuel costs for electric generation and purchased power decreased
$2.3 million, or 7 percent, for the nine months ended
September 30, 1998, compared to the same period last year.
Electric margin (revenues less fuel and purchased power costs)
increased $10.0 million, or 11 percent, for this same time
period. The primary factor for the increased electric margin is
lower purchased power costs. During the first half of 1997, the
Company had higher replacement power costs due to the extended
outage of the Kewaunee plant.
Natural gas costs for the nine months ended September 30, 1998,
decreased $11.3 million, or 27 percent, compared to the same
period a year ago. This is mainly due to above-normal
temperatures resulting in a decrease in retail gas deliveries of
19 percent. Natural gas costs for the third quarter of 1998
decreased $0.8 million, or 25 percent versus the comparative 1997
period, due to a decrease in retail gas deliveries of 14 percent.
Other Operating Expenses
- ------------------------
Operations and maintenance costs increased $2.0 million, or
11 percent, for the third quarter of 1998 and increased
$3.2 million, or 6 percent, for the first nine months of the year
compared to the same time periods a year ago. The primary reason
for the increase is the costs associated with maintenance on our
generating facilities to meet this summer's power demand.
Depreciation and amortization expense increased $4.5 million, or
23 percent, for the nine months ended September 30, 1998, and
$0.8 million, or 10 percent, for the third quarter of 1998 versus
the comparable periods a year ago. The increases are attributed
to the accelerated depreciation and decommission funding of the
Kewaunee plant. The PSCW approved the accelerated depreciation
and decommissioning funding for Kewaunee based on a service life
ending at the end of 2002. The acceleration went into effect in
August of 1997.
PART II. OTHER INFORMATION
===========================
ITEM 1 - LEGAL PROCEEDINGS
- --------------------------
The Company has filed a case with the Dane County Circuit Court,
"Madison Gas and Electric Co. vs Public Service Commission of
Wisconsin." The case involves the Company's appeal of the PSCW's
order granting Wisconsin Public Service Corporation authority to
replace the steam generators at Kewaunee. The owners of Kewaunee
have differing views on the desirability of proceeding with the
steam generator replacement project. The Company has not favored
replacement of the steam generators and believes the record does
not support replacement. The case is being held in abeyance
pending consummation of the agreement to transfer ownership of
Kewaunee.
ITEM 5 - OTHER INFORMATION
- --------------------------
Forward-Looking Statements
- --------------------------
This report contains, and certain of the Company's other public
documents contain, forward-looking statements that reflect
management's current assumptions and estimates of future
performance and economic conditions, especially as they relate to
future revenues, expenses, financial resources, and regulatory
matters. Such statements are forward-looking statements made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. The Company cautions investors
that forward-looking statements are subject to known and unknown
risks and uncertainties that may cause the Company's actual
results to differ materially from those projected, expressed or
implied, in such forward-looking statements. Some of those risks
and uncertainties include the economic and market conditions in
the Company's service territory; magnitude and timing of capital
expenditures; regulatory environment, including the restructuring
of the electric utility industry in Wisconsin; regulatory
approval of the sale of Kewaunee; availability and cost of power
supplies; and the Company's ability to become Year 2000 compliant
at a reasonable cost.
Kewaunee Nuclear Power Plant
- ----------------------------
Kewaunee was shut down for refueling on October 17, 1998. During
refueling, the steam generator tubes were checked for
corrosion-induced cracking. This inspection discovered that a
small number of steam generator tubes need to be repaired by
sleeving or removed from service. Kewaunee is expected to return
to service in the first week of December.
On September 29, 1998, the Company and WPSC finalized an
agreement for WPSC to buy MGE's entire 17.8 percent share of
Kewaunee. The closing is contingent upon regulatory approval and
steam generator replacement and is scheduled to occur in the
spring of 2000.
Background information regarding Kewaunee steam generator repair
issues and ownership issues is set forth in the registrant's
Annual Report on Form 10-K for the year ended December 31, 1997,
and on Form 8-K dated September 30, 1998.
1999 Annual Meeting of Shareholders
- -----------------------------------
The Company's 1999 Annual Meeting of Shareholders is expected to
be held on Tuesday, May 4, 1999. Pursuant to rules of the
Securities and Exchange Commission (SEC), in order to be
considered for inclusion as an agenda item in the Company's 1999
Proxy Statement, a shareholder proposal must be received by the
Company no later than November 23, 1998. In addition, regardless
of whether a proposal is included as an agenda item in the
Company's 1999 Proxy Statement, the Company's Bylaws establish an
advance notice procedure for shareholder proposals to be brought
before any meeting of shareholders, including proposed
nominations of persons for election to the Board of Directors.
Shareholders at the 1999 Annual Meeting may consider a proposal
or nomination brought by a shareholder of record on the record
date to be established for the 1999 Annual Meeting who has given
the Company timely written notice, in proper form, of the
shareholder's proposal or nomination. A shareholder proposal or
nomination intended to be brought before the 1999 Annual Meeting
must be received by the Company after the close of business on
January 25, 1999, and prior to the close of business on
February 19, 1999.
If a timely and proper shareholder proposal is received by the
Company, the proposal is not included as an agenda item in the
1999 Proxy Statement, and the proposal is properly presented at
the 1999 Annual Meeting, the Company may exercise discretionary
authority when voting on the proposal if in the 1999 Proxy
Statement the Company advises shareholders on the nature of the
proposal and how the Company intends to vote on the proposal,
unless the shareholder satisfies certain SEC requirements,
including mailing a separate proxy statement to the Company's
shareholders. All proposals and nominations should be directed to
the Company's principal executive offices at 133 South Blair
Street, Post Office Box 1231, Madison, Wisconsin 53701-1231,
Attention: Corporate Secretary.
ITEM 6(A) - EXHIBITS
- --------------------
Exh. No. 3. Bylaws as in effect at October 16, 1998.
Exh. No. 4. Indenture of Mortgage and Deed of Trust between the
Company and Firstar Trust Company, as Trustee (and supplements).
Incorporated by reference to Exhibit 4A of the Company's 1997
Annual Report on Form 10-K (Commission File No. 0-1125).
Exh. No. 12. Ratio of Earnings to Fixed Charges
Exh. No. 27. Appendix E to Item 601(c) of Regulation S-K: Public
Utility Companies Financial Data Schedule UT.
ITEM 6(B) - REPORTS ON FORM 8-K
- -------------------------------
The Company filed a current report on Form 8-K dated September 30,
1998, under Item 5, "Other Events," which contains, under
Exhibit 99, a press release announcing its agreement with WPSC to
sell its share of the Kewaunee plant (17.8 percent) to WPSC.
SIGNATURES
==========
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.
MADISON GAS AND ELECTRIC COMPANY
(Registrant)
Date: November 12, 1998 /s/ David C. Mebane
Chairman, President and
Chief Executive Officer
(Duly Authorized Officer)
Date: November 12, 1998 /s/ Terry A. Hanson
Vice President - Finance
(Chief Financial and
Accounting Officer)
RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12
(Thousands of dollars) Nine Months Ended
September 30, 1998
------------------
EARNINGS
Income before interest expense $24,578
Add:
Income tax items 8,803
Income tax on other income 1,243
Amortization of debt discount,
premium expense 216
Allowance for funds used during construction -
borrowed funds 42
Interest on rentals 678
-------
Total Earnings $35,560
=======
FIXED CHARGES
Interest on long-term debt $7,356
Other interest 558
Amortization of debt discount, premium expense 216
Interest on rentals 678
------
Total Fixed Charges $8,808
======
RATIO OF EARNINGS TO FIXED CHARGES 4.04x
=====
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q. Items 1 through 22 are as of September 30, 1998. Items 23
through 38 are for the nine months ended September 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 365,599
<OTHER-PROPERTY-AND-INVEST> 7,501
<TOTAL-CURRENT-ASSETS> 72,512
<TOTAL-DEFERRED-CHARGES> 23,707
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 469,319
<COMMON> 16,080
<CAPITAL-SURPLUS-PAID-IN> 112,558
<RETAINED-EARNINGS> 53,354
<TOTAL-COMMON-STOCKHOLDERS-EQ> 181,992
0
0
<LONG-TERM-DEBT-NET> 159,952
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 200
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 127,175
<TOT-CAPITALIZATION-AND-LIAB> 469,319
<GROSS-OPERATING-REVENUE> 187,456
<INCOME-TAX-EXPENSE> 8,803
<OTHER-OPERATING-EXPENSES> 155,337
<TOTAL-OPERATING-EXPENSES> 164,140
<OPERATING-INCOME-LOSS> 23,316
<OTHER-INCOME-NET> 1,262
<INCOME-BEFORE-INTEREST-EXPEN> 24,578
<TOTAL-INTEREST-EXPENSE> 7,872
<NET-INCOME> 16,706
0
<EARNINGS-AVAILABLE-FOR-COMM> 16,706
<COMMON-STOCK-DIVIDENDS> 15,637
<TOTAL-INTEREST-ON-BONDS> 11,462
<CASH-FLOW-OPERATIONS> 41,056
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
BYLAWS
OF
MADISON GAS AND ELECTRIC COMPANY
(a Wisconsin Corporation)
(Including all amendments through October 16, 1998)
TABLE OF CONTENTS
ARTICLE I. OFFICES
1.01 Principal and Business Offices. . . . . . . . . . . . . .1
1.02 Registered Office . . . . . . . . . . . . . . . . . . . .1
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting. . . . . . . . . . . . . . . . . . . . . .1
2.02 Special Meeting . . . . . . . . . . . . . . . . . . . . .1
2.03 Place of Meeting. . . . . . . . . . . . . . . . . . . . .1
2.04 Notice of Meeting . . . . . . . . . . . . . . . . . . . .1
2.05 Closing of Stock Transfer Records or Fixing of
Record Date . . . . . . . . . . . . . . . . . . . . . . .2
2.06 Voting Record . . . . . . . . . . . . . . . . . . . . . .2
2.07 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . .2
2.08 Conduct of Meetings . . . . . . . . . . . . . . . . . . .3
2.09 Proxies . . . . . . . . . . . . . . . . . . . . . . . . .3
2.10 Voting of Shares. . . . . . . . . . . . . . . . . . . . .4
2.11 Voting of Shares by Certain Holders . . . . . . . . . . .4
(a) Other Corporations . . . . . . . . . . . . . . . . .4
(b) Legal Representatives and Fiduciaries. . . . . . . .4
(c) Pledgees . . . . . . . . . . . . . . . . . . . . . .4
(d) Treasury Stock and Subsidiaries. . . . . . . . . . .4
(e) Minors . . . . . . . . . . . . . . . . . . . . . . .4
(f) Incompetents and Spendthrifts. . . . . . . . . . . .5
(g) Joint Tenants. . . . . . . . . . . . . . . . . . . .5
2.12 Waiver of Notice by Shareholders. . . . . . . . . . . . .5
2.13 Unanimous Consent Without Meeting . . . . . . . . . . . .5
2.14 Notice of Shareholder Business and Nominations. . . . . .5
(a) Annual Meeting of Shareholders . . . . . . . . . . .5
(b) Special Meeting of Shareholders. . . . . . . . . . .6
(c) Increase in Number of Directors. . . . . . . . . . .7
(d) General. . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number . . . . . . . . . . . . . . . .8
3.02 Tenure and Qualifications . . . . . . . . . . . . . . . .8
3.03 Nominations for Election to the Board of Directors. . . .8
3.04 Regular Meetings. . . . . . . . . . . . . . . . . . . . .8
3.05 Special Meetings. . . . . . . . . . . . . . . . . . . . .9
3.06 Notice; Waiver. . . . . . . . . . . . . . . . . . . . . .9
3.07 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.08 Manner of Acting. . . . . . . . . . . . . . . . . . . . 10
3.09 Conduct of Meetings . . . . . . . . . . . . . . . . . . 10
3.10 Vacancies . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Compensation. . . . . . . . . . . . . . . . . . . . . . 10
3.12 Presumption of Assent . . . . . . . . . . . . . . . . . 11
3.13 Committees. . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Unanimous Consent Without Meeting . . . . . . . . . . . 11
3.15 Meetings By Telephone Or By Other Communication
Technology. . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV. OFFICERS
4.01 Number. . . . . . . . . . . . . . . . . . . . . . . . . 12
4.02 Election and Term of Office . . . . . . . . . . . . . . 12
4.03 Removal . . . . . . . . . . . . . . . . . . . . . . . . 12
4.04 Vacancies . . . . . . . . . . . . . . . . . . . . . . . 12
4.05 Chairman of the Board . . . . . . . . . . . . . . . . . 12
4.06 The Chief Executive Officer . . . . . . . . . . . . . . 13
4.07 President . . . . . . . . . . . . . . . . . . . . . . . 13
4.08 The Executive Vice President. . . . . . . . . . . . . . 13
4.09 The Vice Presidents . . . . . . . . . . . . . . . . . . 13
4.10 The Secretary . . . . . . . . . . . . . . . . . . . . . 13
4.11 The Treasurer . . . . . . . . . . . . . . . . . . . . . 13
4.12 Assistant Secretaries and Assistant Treasurers. . . . . 14
4.13 Other Assistants and Acting Officers. . . . . . . . . . 14
4.14 Salaries. . . . . . . . . . . . . . . . . . . . . . . . 14
4.15 Bond. . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V. CONTRACTS, LOANS, CHECKS, AND DEPOSITS: SPECIAL
CORPORATE ACTS
5.01 Contracts . . . . . . . . . . . . . . . . . . . . . . . 14
5.02 Loans . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.03 Checks, Drafts, etc.. . . . . . . . . . . . . . . . . . 15
5.04 Deposits. . . . . . . . . . . . . . . . . . . . . . . . 15
5.05 Voting of Securities Owned by this Corporation. . . . . 15
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01 Certificates for Shares . . . . . . . . . . . . . . . . 15
6.02 Facsimile Signatures and Seal . . . . . . . . . . . . . 16
6.03 Signature by Former Officer . . . . . . . . . . . . . . 16
6.04 Transfer of Shares. . . . . . . . . . . . . . . . . . . 16
6.05 Restrictions on Transfer. . . . . . . . . . . . . . . . 16
6.06 Lost, Destroyed, or Stolen Certificates . . . . . . . . 16
6.07 Consideration for Shares. . . . . . . . . . . . . . . . 16
6.08 Uncertificated Shares . . . . . . . . . . . . . . . . . 17
6.09 Transfer Agent and Registrar. . . . . . . . . . . . . . 17
6.10 Stock Regulations . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII. WAIVER OF NOTICE
ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING
ARTICLE IX. INDEMNIFICATION
9.01 Indemnification for Successful Defense. . . . . . . . . 18
9.02 Other Indemnification . . . . . . . . . . . . . . . . . 18
9.03 Written Request . . . . . . . . . . . . . . . . . . . . 19
9.04 Nonduplication. . . . . . . . . . . . . . . . . . . . . 19
9.05 Determination of Right to Indemnification . . . . . . . 19
9.06 Advance Expenses. . . . . . . . . . . . . . . . . . . . 20
9.07 Nonexclusivity. . . . . . . . . . . . . . . . . . . . . 20
9.08 Court-Ordered Indemnification . . . . . . . . . . . . . 21
9.09 Insurance . . . . . . . . . . . . . . . . . . . . . . . 22
9.10 Securities Law Claims . . . . . . . . . . . . . . . . . 22
9.11 Liberal Construction. . . . . . . . . . . . . . . . . . 22
9.12 Definitions Applicable to This Article. . . . . . . . . 22
ARTICLE X. SEAL
ARTICLE XI. AMENDMENTS
11.01. By Shareholders. . . . . . . . . . . . . . . . . . 23
11.02. By Directors . . . . . . . . . . . . . . . . . . . 24
11.03. Implied Amendments . . . . . . . . . . . . . . . . 24
ARTICLE I. OFFICES
1.01 Principal and Business Offices. The Corporation may
have such principal and other business offices, either within
or without the State of Wisconsin, as the Board of Directors
may designate or as the business of the Corporation may require
from time to time.
1.02 Registered Office. The registered office of the
Corporation required by the Wisconsin Business Corporation Law
to be maintained in the State of Wisconsin may be, but need not
be, identical with the principal office in the State of
Wisconsin, and the address of the registered office may be
changed from time to time by the Board of Directors or by the
registered agent. The business office of the registered agent
of the Corporation shall be identical to such registered
office.
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting. The annual meeting of the
shareholders shall be held at 2:00 p.m. on the third Friday in
April of each year or at such other time and date within forty-
five (45) days before or after said date as may be fixed by or
under the authority of the Board of Directors, for the purpose
of electing Directors and for the transaction of such other
business as may come before the meeting. If such postponement
or advancement is directed after the giving of notice of the
meeting, at least five (5) days' notice of such postponement or
advancement shall be given in the same manner as provided for
giving of notice to shareholders by these bylaws. If the day
fixed for the annual meeting shall be a legal holiday in the
State of Wisconsin, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not
be held on the day designated herein, or fixed as herein
provided, for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as
soon thereafter as convenient.
2.02 Special Meeting. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by the Wisconsin Business Corporation Law, may be
called by the Chairman of the Board, the Chief Executive
Officer, the President, a majority of the Board of Directors,
or by the holders of at least 10 percent of all the votes
entitled to be cast on any issue proposed to be considered at
the proposed special meeting who sign, date, and deliver to the
Corporation one or more written demands for the meeting
describing one or more purposes for which it is to be held.
2.03 Place of Meeting. The Board of Directors may
designate any place, either within or without the State of
Wisconsin, as the place of meeting for any annual meeting or
for any special meeting. If no designation is made, the place
of meeting shall be the principal business office of the
Corporation in the State of Wisconsin, but any meeting may be
adjourned to reconvene at any place designated by vote of a
majority of the shares represented thereat.
2.04 Notice of Meeting. Notice may be communicated by
mail, private carrier, or such other means permissible under
Wisconsin law. Such notice stating the place, day, and hour of
the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be communicated
or sent not less than 10 days (unless a longer period is
required by the Wisconsin Business Corporation Law or the
articles of incorporation) nor more than sixty days before the
date of the meeting, by or at the direction of the Chairman of
the Board (if one be designated), or the President, or the
Secretary, or other Officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting.
Written notice by the Corporation to its shareholders is
effective when mailed and may be addressed to the shareholders'
addresses shown in the Corporation's current record of
shareholders.
2.05 Closing of Stock Transfer Records or Fixing of Record
Date. A "shareholder" of the Corporation shall mean the person
in whose name shares are registered in the stock transfer
records of the Corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on
file with the Corporation. Such nominee certificates, if any,
shall be reflected in the stock transfer records of the
Corporation. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer records shall be
closed for a stated period but not to exceed, in any case,
seventy days. If the stock transfer records shall be closed for
the purpose of determining shareholders entitled to notice of
or to vote at a meeting of shareholders, such records shall be
closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer records, the
Board of Directors may fix in advance a date as the record date
for any such determination of shareholders, such date in any
case to be not more than seventy days and, in case of a meeting
of shareholders, not less than ten days prior to the date on
which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer records are
not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
dividend, the close of business on the date on which notice of
the meeting is mailed or on the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such
determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination
shall be applied to any adjournment thereof except where the
determination has been made through the closing of the stock
transfer records and the stated period of closing has expired.
2.06 Voting Record. The Officer or agent having charge of
the stock transfer records for shares of the Corporation shall,
before each meeting of shareholders, make a complete list of
the shareholders entitled to vote at such meeting, or any
adjournment thereof, with the address of and the number of
shares held by each. Such record shall be produced and kept
open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of
the meeting for the purposes of the meeting. The original stock
transfer records shall be prima facie evidence as to who are
the shareholders entitled to examine such records or to vote at
any meeting of shareholders. Failure to comply with the
requirements of this section shall not affect the validity of
any action taken at such meeting.
2.07 Quorum. Shares entitled to vote as a separate voting
group may take action on a matter at a meeting only if a quorum
of those shares exists with respect to that matter. Unless the
articles of incorporation or the Wisconsin Business Corporation
Law provides otherwise, a majority of the votes entitled to be
cast on the matter by the voting group constitutes a quorum of
that voting group for action on that matter.
Once a share is represented for any purpose at a meeting,
other than for the purpose of objecting to holding the meeting
or transacting business at the meeting, it is considered
present for purposes of determining whether a quorum exists,
for the remainder of the meeting and for any adjournment of
that meeting unless a new record date is or must be set for
that adjourned meeting.
If a quorum exists, action on a matter by a voting group
is approved if the votes cast within the voting group favoring
the action exceed the votes cast opposing the action, unless
the articles of incorporation or the Wisconsin Business
Corporation Law requires a greater number of affirmative votes.
"Voting group" means any of the following:
(a) All shares of one or more classes or series
that under the articles of incorporation or the Wisconsin
Business Corporation Law are entitled to vote and be counted
together collectively on a matter at a meeting of shareholders.
(b) All shares that under the articles of
incorporation or the Wisconsin Business Corporation Law are
entitled to vote generally on a matter.
Though less than a quorum of the outstanding shares are
represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally
notified.
2.08 Conduct of Meetings. The Chairman of the Board or the
Board of Directors shall set and approve the agenda for
shareholder meetings. The Chairman of the Board, or in the
Chairman's absence, the Chief Executive Officer, or in the
Chief Executive Officer's absence, the President, or in the
President's absence, the most senior member of the Board of
Directors, in terms of length of time served as a Director, or
such other member of the Board of Directors then present as may
be designated by the most senior member, shall call the meeting
of the shareholders to order and shall act as chairman of the
meeting, and the Secretary of the Corporation shall act as
secretary of all meetings of the shareholders, but in the
absence of the Secretary, the presiding Officer may appoint any
other person to act as secretary of the meeting.
2.09 Proxies. At all meetings of shareholders, a
shareholder entitled to vote may vote in person or by proxy
appointed in writing by the shareholder or by his or her duly
authorized attorney-in-fact. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the
meeting. Unless otherwise provided in the proxy, a proxy may be
revoked at any time before it is voted, either by written
notice filed with the Secretary or the acting Secretary of the
meeting or by oral notice given by the shareholder to the
presiding officer during the meeting. The presence of a
shareholder who has filed his or her proxy shall not of itself
constitute a revocation. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise
provided in the proxy. The Board of Directors shall have the
power and authority to make rules establishing presumptions as
to the validity and sufficiency of proxies.
2.10 Voting of Shares. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting
rights of the shares of any voting group or groups are
enlarged, limited, or denied by the articles of incorporation.
2.11 Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the
name of another corporation may be voted either in person or by
proxy by the president of such corporation or any other officer
of such corporation appointed by such president. A proxy
executed by any principal officer of such other corporation or
assistant thereto shall be conclusive evidence of the signer's
authority to act, in the absence of express notice to this
Corporation, given in writing to the Secretary of this
Corporation, or the designation of some other person by the
Board of Directors or by the bylaws of such other corporation.
(b) Legal Representatives and Fiduciaries. Shares
held by an administrator, executor, guardian, conservator,
trustee in bankruptcy, receiver, or assignee for creditors may
be voted by him, either in person or by proxy, without a
transfer of such shares into his or her name, provided that
there is filed with the Secretary before or at the time of
meeting proper evidence of his or her incumbency and the number
of shares held by him or her. Shares standing in the name of a
fiduciary may be voted by him, either in person or by proxy. A
proxy executed by a fiduciary shall be conclusive evidence of
the signer's authority to act, in the absence of express notice
to this Corporation, given in writing to the Secretary of this
Corporation, that such manner of voting is expressly prohibited
or otherwise directed by the document creating the fiduciary
relationship.
(c) Pledgees. A shareholder whose shares are
pledged shall be entitled to vote such shares until the shares
have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so
transferred.
(d) Treasury Stock and Subsidiaries. Neither
treasury shares, nor shares held by another corporation if a
majority of the shares entitled to vote for the election of
Directors of such other corporation is held by this
Corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares entitled to
vote, but shares of its own issue held by this Corporation in a
fiduciary capacity, or held by such other corporation in a
fiduciary capacity, may be voted and shall be counted in
determining the total number of outstanding shares entitled to
vote.
(e) Minors. Shares held by a minor may be voted
by such minor in person or by proxy, and no such vote shall be
subject to disaffirmance or avoidance, unless prior to such
vote the Secretary of the Corporation has received written
notice or has actual knowledge that such shareholder is a
minor.
(f) Incompetents and Spendthrifts. Shares held by
an incompetent or spendthrift may be voted by such incompetent
or spendthrift in person or by proxy and no such vote shall be
subject to disaffirmance or avoidance, unless prior to such
vote the Secretary of the Corporation has actual knowledge that
such shareholder has been adjudicated an incompetent or
spendthrift or actual knowledge of filing of judicial
proceedings for appointment of a guardian.
(g) Joint Tenants. Shares registered in the names
of two or more individuals who are named in the registration as
joint tenants may be voted in person or by proxy signed by any
one or more of such individuals if either (i) no other such
individual or his or her legal representative is present and
claims the right to participate in the voting of such shares or
prior to the vote files with the Secretary of the Corporation a
contrary written voting authorization or direction or written
denial or authority of the individual present or signing the
proxy proposed to be voted or (ii) all such other individuals
are deceased and the Secretary of the Corporation has no actual
knowledge that the survivor has been adjudicated not to be the
successor to the interests of those deceased. If contradictory
instructions on the voting of shares are submitted by joint
tenants, the votes shall not be counted.
2.12 Waiver of Notice by Shareholders. Whenever any notice
whatever is required to be given to any shareholder of the
Corporation under the articles of incorporation or bylaws or
any provision of law, a waiver thereof in writing, signed at
any time, whether before or after the time of meeting, by the
shareholder entitled to such notice, shall be deemed equivalent
to the giving of such notice and the Corporation shall include
copies of such waivers in its corporate records; provided that
such waiver in respect to any matter of which notice is
required under any provision of the Wisconsin Business
Corporation Law shall contain the same information as would
have been required to be included in such notice, except the
time and place of meeting.
2.13 Unanimous Consent Without Meeting. Any action
required or permitted by the articles of incorporation or
bylaws or any provision of law to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof.
2.14 Notice of Shareholder Business and Nominations.
(a) Annual Meeting of Shareholders. (1)
Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders
(i) pursuant to the Corporation's notice of meeting delivered
pursuant to Section 2.04 of these bylaws; (ii) by or at the
direction of the Board of Directors; or (iii) by any
shareholder of the Corporation who is entitled to vote at the
meeting, who complied with the notice procedures set forth in
clause (2) of this subparagraph (a) of this bylaw (or, if
applicable, subparagraph (c) of this bylaw) and who is a
shareholder of record at the time such notice is delivered to
the Secretary of the Corporation.
(2) For nominations or other business to be
properly brought before an annual meeting by a shareholder
pursuant to clause (iii) of subparagraph (a)(1) of this bylaw,
the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for shareholder
action. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal office of the
Corporation not earlier than the close of business on the 100th
calendar day nor later than the close of business on the 75th
calendar day prior to the date of the first anniversary of the
preceding year's annual meeting; provided, however, that in the
event that the date of an annual meeting is more than 30
calendar days before or more than 30 calendar days after the
date of the first anniversary of the preceding year's annual
meeting, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 100th
calendar day prior to such annual meeting and not later than
the close of business on the later of (i) the 75th calendar day
prior to such annual meeting and (ii) the 10th calendar day
after the day on which public announcement of the date of such
annual meeting is first made by the Corporation. Such
shareholder's notice shall set forth (i) as to each person whom
the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the regulations
promulgated thereunder, including such person's written consent
to being named in the proxy statement as a nominee and to
serving as a director if elected; (ii) as to any other business
that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (iii) as to the shareholder giving
the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (A) the name and address of
such shareholder, as they appear on the Corporation's stock
transfer books, and of such beneficial owner, and (B) the class
and number of shares of the Corporation which are owned
beneficially and of record by such shareholder and such
beneficial owner.
(b) Special Meeting of Shareholders. (1) Subject
to the rights of the holders of any preferred stock, only such
business shall be conducted at a special meeting of
shareholders called in accordance with Section 2.02 of these
bylaws as shall have been brought before the meeting pursuant
to the notice of meeting of the Corporation or persons calling
the meeting pursuant to Section 2.04 of these bylaws. Subject
to the rights of the holders of any preferred stock,
nominations of persons for election to the Board of Directors
may be made at a special meeting called in accordance with
Section 2.02 of these bylaws at which directors are to be
elected, and the proposal of business to be considered by the
shareholders may be made at any special meeting called in
accordance with Section 2.02 of these bylaws (i) pursuant to
the notice of meeting of the Corporation or persons calling the
meeting, (ii) by or at the direction of the Board of Directors
or (iii) by any shareholder of the Corporation who is entitled
to vote at the meeting, who complied with the notice procedures
set forth in clause (2) of this subparagraph (b) of this bylaw
(or, if applicable, subparagraph (c) of this bylaw) and who is
a shareholder of record at the time such notice is delivered to
the Secretary of the Corporation.
(2) For nominations or other business to be
properly brought before a special meeting by a shareholder
pursuant to clause (iii) of subparagraph (b) (1) of this bylaw,
the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for shareholder
action. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal office of the
Corporation not earlier than the close of business on the 100th
calendar day prior to such special meeting and not later than
the close of business on the later of (i) the 75th calendar day
prior to such special meeting and (ii) the 10th calendar day
after the day on which public announcement is first made of the
date of such special meeting and of the nominees, if any, to be
elected at such special meeting who were proposed by the Board
of Directors or persons calling such special meeting. Such
shareholder's notice shall set forth (i) as to each person whom
the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act and the
regulations promulgated thereunder, including such person's
written consent to being named in the proxy statement as a
nominee and to serving as a director if elected; (ii) as to any
other business that the shareholder proposes to bring before
the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any,
on whose behalf the proposal is made; and (iii) as to the
shareholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (A) the name
and address of such shareholder, as they appear on the
Corporation's stock transfer books, and of such beneficial
owner, and (B) the class and number of shares of the
Corporation which are owned beneficially and of record by such
shareholder and such beneficial owner.
(c) Increase in Number of Directors.
Notwithstanding anything to the contrary in the second sentence
of subparagraph (a)(2) of this bylaw or the second sentence of
subparagraph (b)(2) of this bylaw, in the event that the number
of directors to be elected to the Board of Directors is
increased or proposed to be increased and there is no public
announcement by the Corporation naming all of the nominees for
director or specifying the size of the increase in the number
of directors at least 100 calendar days prior to the date of
the meeting, a shareholder's notice required by subparagraph
(a) (2) or subparagraph (b)(2) of this bylaw shall also be
considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be
delivered to the Secretary at the principal office of the
Corporation not later than the close of business on the 10th
calendar day after the day on which such public announcement is
first made by the Corporation.
(d) General. (1) Subject to the rights of the
holders of any preferred stock, only persons who are nominated
in accordance with the procedures set forth in this bylaw shall
be eligible to serve as directors and only such business shall
be conducted at a meeting of shareholders as shall have been
brought before the meeting in accordance with the procedures
set forth in this bylaw. Except as otherwise provided by law,
the Articles of Incorporation or these bylaws, the Chairman of
the meeting shall have the power and duty to determine whether
a nomination or any business proposed to be brought before the
meeting was made or proposed in accordance with the procedures
set forth in this bylaw and, if any proposed nomination or
business is not in compliance with this bylaw, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this bylaw, "public
announcement" shall mean disclosure in a press release reported
by the Business Wire, Reuters, the Dow Jones News Service,
Associated Press, or comparable national news service or in a
document publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Section 13, 14, or 15(d) of
the Exchange Act.
(3) Notwithstanding the foregoing provisions of
this bylaw, a shareholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this bylaw.
Nothing in this bylaw shall be deemed to affect any rights of
shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number. The business and affairs
of the Corporation shall be managed by its Board of Directors.
The number of Directors of the Corporation shall be eleven
except that by resolution of the Board of Directors, the
Directors may set the number of Directors at not less than
seven (7) nor more than thirteen (13).
The Board of Directors shall be divided into three (3)
classes, to be as nearly equal in number of Directors in each
class as possible. The three classes are to be designated Class
I, Class II, and Class III. The term of office of the Directors
in Class I shall expire at the first annual meeting after their
initial election and until their successors are elected and
qualified; the term of office of the Directors in Class II
shall expire at the second annual meeting after their initial
election and until their successors are elected and qualified;
and the term of office of the Directors in Class III shall
expire at the third annual meeting after the initial election
and until their successors are elected and qualified. At each
annual meeting after the initial classification of the Board of
Directors, the class of Directors whose term expires at the
time of such election shall be elected to hold office until the
third succeeding annual meeting and until their successors are
elected and qualified.
3.02 Tenure and Qualifications. Each Director shall hold
office until the end of his or her term and until his or her
successor shall have been elected, or until his or her prior
death, resignation, or removal for cause only. A Director may
be removed from office for cause only by affirmative vote of 80
percent of the outstanding shares entitled to vote for the
election of such Director, taken at an annual meeting or a
special meeting of shareholders called for that purpose, and
any vacancy so created may be filled by the affirmative vote of
80 percent of such shares. A Director may resign at any time by
filing his or her written resignation with the Secretary of the
Corporation. Directors must be shareholders of the Corporation.
3.03 Nominations for Election to the Board of Directors.
Nominations for election to the Board of Directors may be made
in accordance with Section 2.14.
3.04 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw
immediately after the annual meeting of shareholders and each
adjourned session thereof. The place of such regular meeting
shall be the same as the place of the meeting of shareholders
which precedes it or such other suitable place as may be
announced at such meeting of shareholders. The Chairman of the
Board may provide by written notice, or the Board of Directors
may provide by resolution, the time and place, either within or
without the State of Wisconsin, for the holding of additional
regular meetings without other notice than such written notice
or resolution.
3.05 Special Meetings. Special meetings of the Board of
Directors may be called by or at the written request of the
Chairman of the Board, Chief Executive Officer, President, or
any two Directors. The Chairman may fix any place, either
within or without the State of Wisconsin, as the place for
holding any special meeting of the Board of Directors, and if
no other place is fixed, the place of meeting shall be the
principal business office of the Corporation in the State of
Wisconsin.
3.06 Notice; Waiver. Notice may be communicated in person,
by telephone, telegraph, teletype, facsimile, or other form of
wire or wireless communication, or by mail or private carrier,
and, if these forms of personal notice are impracticable,
notice may be communicated by a newspaper of general
circulation in the area where published, or by radio,
television, or other form of public broadcast communication.
Notice of each meeting of the Board of Directors (unless
otherwise provided in or pursuant to Section 3.04) shall be
communicated to each Director at his or her business address or
telephone number or at such other address or telephone number
as such Director shall have designated in writing filed with
the Secretary, in each case not less than four hours prior
thereto. Written notice is effective at the earliest of the
following:
(i) When received;
(ii) Five days after its deposit in the U.S. Mail,
if mailed postpaid and correctly addressed;
(iii) On the date shown on the return receipt, if
sent by registered or certified mail, return
receipt requested, and the receipt is signed
by or on behalf of the addressee.
Oral notice is effective when communicated, and the Corporation
shall maintain a record setting forth the date, time, manner,
and recipient of the notice.
Whenever any notice whatever is required to be given to
any Director of the Corporation under the articles of
incorporation or bylaws or any provision of law, a waiver
thereof in writing, signed at any time, whether before or after
the time of meeting, by the Director entitled to such notice,
shall be deemed equivalent to the giving of such notice, and
the Corporation shall retain copies of such waivers in its
corporate records. The attendance of a Director at a meeting
shall constitute a waiver of notice of such meeting, except
where a Director attends a meeting and objects thereat to the
transaction of any business because the meeting was not
lawfully called or convened. Neither the business to be
transacted at nor the purpose of any regular or special meeting
of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
3.07 Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law or by the articles of incorporation or
these bylaws, a majority of the number of Directors shall
constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but a majority of the
Directors present (though less than such quorum) may adjourn
the meeting from time to time without further notice.
3.08 Manner of Acting. The act of the majority of the
Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless the act of a
greater number is required by law or by the articles of
incorporation or these bylaws.
3.09 Conduct of Meetings. The Chairman of the Board, or in
the Chairman's absence, the Chief Executive Officer, or in the
Chief Executive Officer's absence, the President, or in their
absence, the most senior member of the Board of Directors then
present in terms of length of time served as a Director, or
such other member of the Board of Directors then present as may
be designated by the most senior member, shall call meetings of
the Board of Directors to order and shall act as chairman of
the meeting. The Secretary of the Corporation shall act as
Secretary of all meetings of the Board of Directors, but in the
absence of the Secretary, the presiding Officer may appoint any
Assistant Secretary or any Director or other person present to
act as Secretary of the meeting.
3.10 Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the
number of Directors, may be filled for the unexpired term of
the directorship by the affirmative vote of a majority of the
Directors then in office, though less than a quorum of the
Board of Directors, or a sole remaining director, if only one
shall remain; provided that, in case of a vacancy created by
the removal of a Director for cause by vote of the
shareholders, the shareholders shall have the right to fill
such vacancy at the same meeting or any adjournment thereof by
the affirmative vote of 80 percent of the outstanding shares
entitled to vote for the election of such Directors.
In the event there shall be no remaining Directors, then
and in that case all the powers and duties vested in the Board
of Directors shall vest automatically in the Emergency
Management Committee, which shall consist of all officers
holding the following positions: Chairman of the Board,
President, Chief Executive Officer, Vice President(s)
(including any Executive Vice Presidents and Senior Vice
Presidents but excluding any Assistant Vice Presidents),
Treasurer, and Secretary. The Emergency Management Committee
shall issue a call for a special meeting of shareholders to be
held at the earliest practicable date for the election of
directors. All Emergency Management Committee action shall be
reported to the elected Board of Directors at their first
meeting following election, and shall be subject to
ratification, revision, or alteration by the Board of
Directors; provided, however, no rights or acts of third
parties shall be affected by any of such revisions or
alterations.
3.11 Compensation. The Board of Directors, by affirmative
vote of a majority of the Directors then in office, and
irrespective of any personal interest of any of its members,
may establish reasonable compensation of all Directors for
services to the Corporation as Directors, Officers, or
otherwise, or may delegate such authority to an appropriate
committee. The Board of Directors also shall have authority to
provide for or to delegate authority to an appropriate
committee to provide for reasonable pensions, disability, or
death benefits, and other benefits of payments, to Directors,
Officers, and employees and to their estates, families,
dependents, or beneficiaries on account of prior services
rendered by such Directors, Officers, and employees to the
Corporation.
3.12 Presumption of Assent. A Director of the Corporation
who is present at a meeting of the Board of Directors or a
committee thereof of which he or she is a member, at which
action on any corporate matter is taken, shall be presumed to
have assented to the action taken unless his or her dissent
shall be entered in the minutes of the meeting or unless he or
she shall file his or her written dissent to such action with
the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered
mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not
apply to a Director who voted in favor of such action.
3.13 Committees. The Board of Directors, by resolution
adopted by the affirmative vote of a majority of the number of
Directors as provided in Section 3.08, may designate one or
more committees, each committee to consist of two or more
Directors elected by the Board of Directors, which to the
extent provided in said resolution as initially adopted, and as
thereafter supplemented or amended by further resolution
adopted by a like vote, shall have and may exercise, when the
Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of
the Corporation, except action in respect to dividends to
shareholders, election of the principal officers, or the
filling of vacancies in the Board of Directors or committees
created pursuant to this section. The Board of Directors may
elect one or more of its members as alternate members of any
such committee who may take the place of any absent member or
members at any meeting of such committee, upon request by the
Chairman of the Board or the President, or upon request by the
chairman of such meeting. Each such committee shall fix its own
rules governing the conduct of its activities and shall make
such reports to the Board of Directors of its activities as the
Board of Directors may request.
3.14 Unanimous Consent Without Meeting. Any action
required or permitted by the articles of incorporation or
bylaws or any provision of law to be taken by the Board of
Directors at a meeting or by resolution may be taken without a
meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Directors then in office.
3.15 Meetings By Telephone Or By Other Communication
Technology. Meetings of the Board of Directors or committees
may be conducted by telephone or by other communication
technology in accordance with Section 180.0820 of the Wisconsin
Business Corporation Law. Before any vote at a meeting so
conducted (i) to consider a plan of merger or consolidation,
(ii) to sell, lease, exchange, or otherwise dispose of
substantial property or assets of the corporation, (iii) to
voluntarily dissolve or to revoke voluntary dissolution
proceedings, or (iv) to file for bankruptcy, each of the
Directors shall first verify their identity by stating their
name and social security number at the time their vote is cast
in the same manner as they cast their vote. The types of
transactions constituting a disposal of substantial property or
assets of the corporation for purposes of this Section shall be
those types of transactions described in Section 180.1201 and
Section 180.1202 of the Wisconsin Business Corporation Law.
ARTICLE IV. OFFICERS
4.01 Number. The Officers of the Corporation shall be a
Chairman of the Board, a Chief Executive Officer, a President,
the number of Vice Presidents as provided by the Board of
Directors, a Treasurer, an Assistant Treasurer, a Secretary,
and an Assistant Secretary, each of whom shall be elected
annually by the Board of Directors. Such other Officers and
Assistant Officers as may be deemed necessary may be elected or
appointed by the Board of Directors and shall have such powers
and perform such duties as may be assigned by the Board of
Directors or the Chairman of the Board. The Board of Directors
or the Chairman of the Board may assign to any Officer general
supervision and charge over any branch of the business and
affairs of the Corporation. Any two or more offices may be held
by the same person, provided that such person holding any two
or more offices may sign documents in either but not both
capacities as an officer of the Corporation. The title of the
Officers may be modified from time to time by the Board of
Directors to designate more clearly the function or status of
such officer, by including terms such as "Acting," "Junior,"
"Senior," "Executive," "Group," "Division," "Special," or
"Assistant."
4.02 Election and Term of Office. The Officers of the
Corporation to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting
of the Board of Directors held after each annual meeting of the
shareholders. If the election of Officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each Officer shall hold office until his
or her successor shall have been duly elected or until his or
her prior death, resignation, or removal.
4.03 Removal. Any Officer or agent may be removed by the
Board of Directors with or without cause whenever, in its
judgment, the best interests of the Corporation will be served
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or
appointment shall not of itself create contract rights.
4.04 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise shall be
filled by the Board of Directors for the unexpired portion of
the term. The Board of Directors may, from time to time, omit
to elect one or more Officers or may omit to fill a vacancy,
and in such case, the designated duties of such Officer, unless
otherwise provided in these bylaws, shall be discharged by the
Chairman of the Board or such other officers as he or she may
designate.
4.05 Chairman of the Board. The Chairman of the Board
shall have general charge of the affairs of the Corporation. He
shall consult with and advise the Board of Directors and the
Officers and management staff of the Corporation for the
purpose of determining corporate policies and assignment of
duties. The Chairman of the Board shall preside at all meetings
of the shareholders and Board of Directors and shall carry out
such other duties and have such responsibilities as may be
specified by the Board of Directors.
4.06 The Chief Executive Officer. The Chief Executive
Officer shall have general supervision of the affairs of the
Corporation and sign and acknowledge all deeds and instruments
for the transfer, conveyance, or assignment of corporate
property, and all other instruments, contracts, and papers
necessary or convenient in the transaction of the corporate
business. Except as otherwise provided by law, the Board of
Directors, or the Chairman of the Board, he or she may
authorize any Vice President or other Officer or agent of the
Corporation to sign, execute, and acknowledge such documents or
instruments in his or her place and stead. In the absence of or
disability of the Chief Executive Officer, the Chairman of the
Board or his designee shall perform all the duties and
functions and exercise all the powers of the Chief Executive
Officer. He or she shall perform such other duties as from time
to time may be assigned to him or her by the Board of Directors
or the Chairman of the Board.
4.07 President. The President shall be the Chief Operating
Officer of the Corporation and, subject to the control of the
Board of Directors and the Chairman of the Board, shall have
general supervision of the divisions of the Corporation as
assigned by the Chairman of the Board or the Board of
Directors. He or she shall have authority, subject to such
rules as may be prescribed by the Board of Directors or the
Chairman of the Board, to appoint such agents and employees of
the Corporation as he or she shall deem necessary, to prescribe
their powers, duties, and compensation, and to delegate
authority to them. Such agents and employees shall hold office
at the discretion of the President. In general, he or she shall
perform all duties incident to the office of Chief Operating
Officer and such other duties as may be prescribed by the Board
of Directors or the Chairman of the Board from time to time. In
the absence or disability of the President, the Chairman of the
Board or his designee shall perform all the duties and
functions and exercise all the powers of the President.
4.08 The Executive Vice President. The Executive Vice
President shall supervise such Vice Presidents and other
managerial personnel and perform such other duties as may be
designated by the Chairman of the Board, Chief Executive
Officer, or President.
4.09 The Vice Presidents. Any Vice President shall perform
such other duties and have such authority as from time to time
may be delegated or assigned to him or her by the President,
the Chief Executive Officer, the Chairman of the Board, or the
Board of Directors. The execution of any instrument of the
Corporation by any Vice President shall be conclusive evidence,
as to third parties, of his or her authority to act in the
stead of the Chairman of the Board, Chief Executive Officer, or
President.
4.10 The Secretary. The Secretary shall: (a) keep the
minutes of the meetings of the shareholders and of the Board of
Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and the seal of the
Corporation; and (d) in general, perform all duties incident to
the office of Secretary and have such other duties and exercise
such authority as from time to time may be delegated or
assigned to him or her by the President, the Chief Executive
Officer, the Chairman of the Board, or the Board of Directors.
4.11 The Treasurer. The Treasurer shall: (a) have charge
and custody of and be responsible for all funds and securities
of the Corporation; (b) receive and give receipts for moneys
due and payable to the Corporation from any source whatsoever,
and deposit all such moneys in the name of the Corporation in
such banks, trust companies, or other depositories as shall be
selected in accordance with the provisions of Section 5.04; and
(c) in general, perform all of the duties incident to the
office of Treasurer and have such other duties and exercise
such other authority as from time to time may be delegated or
assigned to him or her by the President, the Chief Executive
Officer, the Chairman, or the Board of Directors.
4.12 Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant
Treasurers as the Board of Directors may from time to time
authorize. The Assistant Secretaries and Assistant Treasurers,
in general, shall perform such duties and have such authority
as shall from time to time be delegated or assigned to them by
the Secretary or the Treasurer, respectively, or by the
President, the Chairman of the Board, or the Board of
Directors.
4.13 Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint any person to act as
assistant to any Officer, or as agent for the Corporation in
his or her stead, or to perform the duties of such officer
whenever for any reason it is impracticable for such Officer to
act personally and such assistant or acting officer or other
agent so appointed by the Board of Directors shall have the
power to perform all the duties of the office to which he or
she is so appointed to be assistant, or as to which he or she
is so appointed to act, except as such power may be otherwise
defined or restricted by the Board of Directors.
4.14 Salaries. The salaries of the principal Officers
shall be fixed from time to time by the Board of Directors or
by a duly authorized committee thereof, and no Officer shall be
prevented from receiving such salary by reason of the fact that
he or she is also a Director of the Corporation.
4.15 Bond. If required by the Board of Directors, any
Officer or employee shall give the Corporation a bond in such
sum and with such surety or sureties as shall be satisfactory
to the Board of Directors for the faithful performance of the
duties of his or her office and for the restoration to the
Corporation, in case of his or her death, resignation,
retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in his or
her possession or under his or her control and belonging to the
Corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS,
AND DEPOSITS: SPECIAL CORPORATE ACTS
5.01 Contracts. Unless otherwise provided in these bylaws,
the Chairman, Chief Executive Officer, President, and any other
person or persons duly authorized by the Chairman, Chief
Executive Officer, or President may enter into any contract or
execute or deliver any instrument in the name of and on behalf
of the Corporation. No contract or other transaction between
the Corporation and one or more of its Directors or any other
corporation, firm, association, or entity in which one or more
of its Directors or Officers are financially interested, shall
be either void or voidable because of such relationship or
interest or because such Director or Directors are present at
the meeting of the Board of Directors or a committee thereof
which authorizes, approves, or ratifies such contract or
transaction or because his, or her, or their votes are counted
for such purpose, if (a) the fact of such relationship or
interest is disclosed or known to the Board of Directors or
committee which authorizes, approves, or ratifies the contract
or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested
Directors; or (b) the fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and
they authorize, approve, or ratify such contract or transaction
by vote or written consent; or (c) the contract or transaction
is fair and reasonable to the Corporation. Common or interested
Directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves, or ratifies such contract
or transactions.
5.02 Loans. No indebtedness for borrowed money shall be
contracted on behalf of the Corporation, and no evidences of
such indebtedness shall be issued in its name unless authorized
by or under the authority of a resolution of the Board of
Directors. Such authorization may be general or confined to
specific instances.
5.03 Checks, Drafts, etc. All checks, drafts, or other
orders for the payment of money, notes, or other evidences of
indebtedness issued in the name of the Corporation shall be
signed by such Officer or Officers, agent, or agents of the
Corporation and in such manner as shall from time to time be
determined by or under the authority of a resolution of the
Board of Directors.
5.04 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of
the Corporation in such banks, trust companies, or other
depositories as may be selected by or under the authority of a
resolution of the Board of Directors.
5.05 Voting of Securities Owned by this Corporation.
Subject always to the specific directions of the Board of
Directors, (a) any shares or other securities issued by any
other corporation and owned or controlled by this Corporation
may be voted at any meeting of security holders of such other
corporation by the Chairman of the Board or the President of
this Corporation, or their designee, and (b) whenever, in the
judgment of the Chairman of the Board or the President, it is
desirable for this Corporation to execute a proxy or written
consent in respect to any shares or other securities issued by
any other corporation and owned by this Corporation, such proxy
or consent shall be executed in the name of this Corporation by
the Chairman of the Board or the President, or their designee,
without necessity of any authorization by the Board of
Directors, affixation of corporate seal, or countersignature or
attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies
of this Corporation shall have full right, power, and authority
to vote the shares or other securities issued by such other
corporation and owned by this Corporation the same as such
shares or other securities might be voted by this Corporation.
ARTICLE VI. CERTIFICATES FOR
SHARES AND THEIR TRANSFER
6.01 Certificates for Shares. Certificates representing
shares of the Corporation shall be in such form consistent with
law. Such Certificates shall be signed by the Chairman of the
Board, the President, or a Vice President, and by the Secretary
or Assistant Secretary and shall bear the seal of the
Corporation or a facsimile thereof. All certificates for shares
shall be consecutively numbered or otherwise identified. The
name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer records of the
Corporation. All certificates surrendered to the Corporation
for transfer shall be cancelled, and no new certificate shall
be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except as
provided in Section 6.06.
6.02 Facsimile Signatures and Seal. The seal of the
Corporation on any certificates for shares may be a facsimile.
The signature of any authorized Officer upon a certificate may
be a facsimile if the certificate is manually signed on behalf
of a transfer agent or a registrar, other than the Corporation
itself or an employee of the Corporation.
6.03 Signature by Former Officer. In case any Officer, who
has signed or whose facsimile signature has been placed upon
any certificate for shares, shall have ceased to be such
Officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if he or she were such
Officer at the date of its issue.
6.04 Transfer of Shares. A "shareholder" of the
Corporation shall mean the person in whose name shares are
registered in the stock transfer records of the Corporation or
the beneficial owner of shares to the extent of the rights
granted by a nominee certificate on file with the Corporation.
Such nominee certificates, if any, shall be reflected in the
stock transfer records of the Corporation. Prior to due
presentment of a certificate for shares for registration of
transfer, the Corporation may treat the registered owner of
such shares as the person exclusively entitled to vote, to
receive notifications, and otherwise to have and exercise all
the rights and powers of an owner. Where a certificate for
shares is presented to the Corporation with a request to
register for transfer, the Corporation shall not be liable to
the owner or any other person suffering loss as a result of
such registration of transfer if (a) there were on or with the
certificate the necessary endorsements, and (b) the Corporation
had no duty to inquire into adverse claims or has discharged
any such duty. The Corporation may require reasonable assurance
that said endorsements are genuine and effective and in
compliance with such other regulations as may be prescribed by
or under the authority of the Board of Directors.
6.05 Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous
notation of any restriction imposed by the Corporation upon the
transfer of such shares.
6.06 Lost, Destroyed, or Stolen Certificates. Where the
owner claims that his or her certificate for shares has been
lost, destroyed, or wrongfully taken, a new certificate shall
be issued in place thereof if the owner (a) so requests before
the Corporation has notice that such shares have been acquired
by a bona fide purchaser, and (b) files with the Corporation a
sufficient indemnity bond, and (c) satisfies such other
reasonable requirements as may be prescribed by or under the
authority of the Board of Directors.
6.07 Consideration for Shares. The shares of the
Corporation may be issued for such consideration as shall be
fixed from time to time by the Board of Directors, provided
that any shares having a par value shall not be issued for a
consideration less than the par value thereof. The
consideration to be received for shares may consist of any
tangible or intangible property or benefit to the Corporation,
including cash, promissory notes, services performed, contracts
for services to be performed, or other securities of the
Corporation. When the Corporation receives the consideration
for which the Board of Directors authorized the issuance of
shares, the shares issued for that consideration are fully paid
and nonassessable, except as provided by Section 180.0622 of
the Wisconsin Business Corporation Law which may require
further assessment for unpaid wages to employees under certain
circumstances. The Corporation may place in escrow shares
issued for a contract for future services or benefits or a
promissory note, or make other arrangements to restrict the
transfer of the shares, and may credit distributions in respect
of the shares against their purchase price until the services
are performed, the benefits are received, or the note is paid.
If the services are not performed, the benefits are not
received, or the note is not paid, the Corporation may cancel,
in whole or in part, the shares escrowed or restricted and the
distributions credited.
6.08 Uncertificated Shares. In accordance with
Section 180.0626 of the Wisconsin Business Corporation Law, the
Corporation may issue any shares of any of its classes or
series without certificates. The authorization does not affect
shares already represented by certificates until the
certificates are surrendered to the Corporation. Within a
reasonable time after the issuance or transfer of shares
without certificates, the Corporation shall send the
shareholder a written statement of the information required on
share certificates by Sections 180.0625 and 180.0627, if
applicable, of the Wisconsin Business Corporation Law, and by
the bylaws of the Corporation.
The Corporation shall maintain at its offices, or at the
office of its transfer agent, original or duplicate stock
transfer records containing the names and addresses of all
shareholders and the number of shares held by each shareholder.
If the shares are uncertificated, the Corporation shall be
entitled to recognize the exclusive right of a person
registered on its records as such, as the owner of shares for
all purposes, and shall not be bound to recognize any equitable
or other claim to or interest in such 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 the
State of Wisconsin.
6.09 Transfer Agent and Registrar. The Corporation may
maintain one or more transfer offices or agencies, each in
charge of a transfer agent designated by the Board of
Directors, where the shares of stock of the Corporation shall
be transferable. The Corporation may also maintain one or more
registry offices, each in charge of a registrar designated by
the Board of Directors, where such shares of stock shall be
registered. The same person or entity may be both a transfer
agent and registrar.
6.10 Stock Regulations. The Board of Directors shall have
the power and authority to make all such further rules and
regulations not inconsistent with the statutes of the State of
Wisconsin as it may deem expedient concerning the issue,
transfer, and registration of certificates representing shares
of the Corporation.
ARTICLE VII. WAIVER OF NOTICE
Whenever any notice whatever is required to be given under
the provisions of the Wisconsin Business Corporation Law or
under the provisions of the articles of incorporation or
bylaws, a waiver thereof in writing signed at any time, whether
before or after the time of the meeting, by the person or
persons entitled to such notice shall be deemed equivalent to
the giving of such notice. Such waiver by a shareholder in
respect of any matter of which notice is required under any
provision of the Wisconsin Business Corporation Law shall
contain the same information as would have been required to be
included in such notice under any applicable provisions of said
Law, except that the time and place of meeting need not be
stated.
ARTICLE VIII. UNANIMOUS CONSENT
WITHOUT A MEETING
Any action required by the articles of incorporation or
bylaws or any provision of the Wisconsin Business Corporation
Law to be taken at a meeting or any other action which may be
taken at a meeting may be taken without a meeting if a consent
in writing setting forth the action so taken shall be signed by
all of the shareholders, Directors, or members of a committee
thereof entitled to vote with respect to the subject matter
thereof, and such consent shall have the same force and effect
as a unanimous vote.
ARTICLE IX. INDEMNIFICATION
9.01 Indemnification for Successful Defense. Within
20 days after receipt of a written request pursuant to
Section 9.03, the Corporation shall indemnify a Director or
Officer, to the extent he or she has been successful on the
merits or otherwise in the defense of a proceeding, for all
reasonable expenses incurred in the proceeding if the Director
or Officer was a party because he or she is a Director or
Officer of the Corporation.
9.02 Other Indemnification.
(a) In cases not included under Section 9.01, the
Corporation shall indemnify a Director or Officer against all
liabilities and expenses incurred by the Director or Officer in
a proceeding to which the Director or Officer was a party
because he or she is a Director or Officer of the Corporation,
unless liability was incurred because the Director or Officer
breached or failed to perform a duty he or she owes to the
Corporation and the breach or failure to perform constitutes
any of the following:
(1)A willful failure to deal fairly with the
Corporation or its shareholders in connection with a
matter in which the Director or Officer has a material
conflict of interest.
(2)A violation of criminal law, unless the
Director or Officer had reasonable cause to believe his or
her conduct was lawful or no reasonable cause to believe
his or her conduct was unlawful.
(3)A transaction from which the Director or
Officer derived an improper personal profit.
(4)Willful misconduct.
(b) Determination of whether indemnification is
required under this Section shall be made pursuant to
Section 9.05.
(c) The termination of a proceeding by judgment,
order, settlement, or conviction, or upon a plea of no contest
or an equivalent plea, does not, by itself, create a
presumption that indemnification of the Director or Officer is
not required under this Section.
9.03 Written Request. A Director or Officer who seeks
indemnification under Sections 9.01 or 9.02 shall make a
written request to the Corporation.
9.04 Nonduplication. The Corporation shall not indemnify a
Director or Officer under Sections 9.01 or 9.02 if the Director
or Officer has previously received indemnification or allowance
of expenses from any person, including the Corporation, in
connection with the same proceeding. However, the Director or
Officer has no affirmative duty to look to any other person for
indemnification nor to first exhaust his remedies to seek
indemnification from such other person.
9.05 Determination of Right to Indemnification.
(a) Unless otherwise provided by the articles of
incorporation or by written agreement between the Director or
Officer and the Corporation, the Director or Officer seeking
indemnification under Section 9.02 shall select one of the
following means for determining his or her right to
indemnification:
(1)By a majority vote of a quorum of the Board of
Directors consisting of Directors not at the time parties
to the same or related proceedings. If a quorum of
disinterested Directors cannot be obtained, by majority
vote of a committee duly appointed by the Board of
Directors and consisting solely of two or more Directors
not at the time parties to the same or related
proceedings. Directors who are parties to the same or
related proceedings may participate in the designation of
members of the committee.
(2)By independent legal counsel selected by a
quorum of the Board of Directors or its committee in the
manner prescribed in sub. (1) or, if unable to obtain such
a quorum or committee, by a majority vote of the full
Board of Directors, including Directors who are parties to
the same or related proceedings.
(3)By a panel of three arbitrators consisting of
one arbitrator selected by those Directors entitled under
sub. (2) to select independent legal counsel, one
arbitrator selected by the Director or Officer seeking
indemnification, and one arbitrator selected by the two
arbitrators previously selected.
(4)By an affirmative vote of the majority of
shares represented at a meeting of shareholders at which a
quorum is present. Shares owned by or voted under the
control of persons who are at the time parties to the same
or related proceedings, whether as plaintiffs or
defendants or in any other capacity, may not be voted in
making the determination.
(5)By a court under Section 9.08.
(6)By any other method provided for in any
additional right to indemnification permitted under
Section 9.07.
(b) In any determination under (a), the burden of
proof is on the Corporation to prove by clear and convincing
evidence that indemnification under Section 9.02 should not be
allowed.
(c) A written determination as to a Director's or
Officer's indemnification under Section 9.02 shall be submitted
to both the Corporation and the Director or Officer within
60 days of the selection made under (a).
(d) If it is determined that indemnification is
required under Section 9.02, the Corporation shall pay all
liabilities and expenses not prohibited by Section 9.04 within
10 days after receipt of the written determination under (c).
The Corporation shall also pay all expenses incurred by the
Director or Officer in the determination process under (a).
9.06 Advance Expenses. Within 10 days after receipt of a
written request by a Director or Officer who is a party to a
proceeding, the Corporation shall pay or reimburse his or her
reasonable expenses as incurred if the Director or Officer
provides the Corporation with all of the following:
(1)A written affirmation of his or her good faith
belief that he or she has not breached or failed to
perform his or her duties to the Corporation.
(2)A written undertaking, executed personally or
on his or her behalf, to repay the allowance (together
with reasonable interest thereon) to the extent that it is
ultimately determined under Section 9.05 that
indemnification under Section 9.02 is not required and
that indemnification is not ordered by a court under
Section 9.08(b)(2). The undertaking under this subsection
shall be an unlimited general obligation of the Director
or Officer and may be accepted without reference to his or
her ability to repay the allowance. The undertaking may be
secured or unsecured.
9.07 Nonexclusivity.
(a) Except as provided in (b), Sections 9.01,
9.02, and 9.06 do not preclude any additional right to
indemnification or allowance of expenses that a Director or
Officer may have under any of the following:
(1)The articles of incorporation.
(2)A written agreement between the Director or
Officer and the Corporation.
(3)A resolution of the Board of Directors.
(4)A resolution, after notice, adopted by a
majority vote of all of the Corporation's voting shares
then issued and outstanding.
(5)The statutes or common law of the State of
Wisconsin.
(b) Regardless of the existence of an additional
right under (a), the Corporation shall not indemnify a Director
or Officer or permit a Director or Officer to retain any
allowance of expenses, unless it is determined by or on behalf
of the Corporation that the Director or Officer did not breach
or fail to perform a duty he or she owes to the Corporation
which constitutes conduct under Section 9.02(a)(1), (2), (3) or
(4). A Director or Officer who is a party to the same or
related proceeding for which indemnification or an allowance of
expenses is sought may not participate in a determination under
this subsection.
(c) Sections 9.01 to 9.12 do not affect the
Corporation's power to pay or reimburse expenses incurred by a
Director or Officer in any of the following circumstances:
(1)As a witness in a proceeding to which he or
she is not a party.
(2)As a plaintiff or petitioner in a proceeding
because he or she is or was a Director or Officer of the
Corporation.
9.08 Court-Ordered Indemnification.
(a) Except as provided otherwise by written
agreement between the Director or Officer and the Corporation,
a Director or Officer who is a party to a proceeding may apply
for indemnification to the court conducting the proceeding or
to another court of competent jurisdiction. Application may be
made for an initial determination by the court under
Section 9.05(a)(5) or for review by the court of an adverse
determination under Section 9.05(a)(1), (2), (3), (4) or (6).
After receipt of an application, the court shall give any
notice it considers necessary.
(b) The court shall order indemnification if it
determines any of the following:
(1)That the Director or Officer is entitled to
indemnification under Sections 9.01 or 9.02.
(2)That the Director or Officer is fairly and
reasonably entitled to indemnification in view of all the
relevant circumstances, regardless of whether
indemnification is required under Section 9.02.
(c) If the court determines under (b) that the
Director or Officer is entitled to indemnification, the
Corporation shall pay the Director's or Officer's expenses
incurred to obtain the court-ordered indemnification.
9.09 Insurance. The Corporation may purchase and maintain
insurance on behalf of an individual who is a Director or
Officer of the Corporation against liability asserted against
or incurred by the individual in his or her capacity as a
Director or Officer, regardless of whether the Corporation is
required or authorized to indemnify or allow expenses to the
individual against the same liability under Sections 9.01,
9.02, or 9.06.
9.10 Securities Law Claims.
(a) Pursuant to the public policy of the State of
Wisconsin, the Corporation shall provide indemnification,
allowance of expenses, and insurance for any liability incurred
in connection with a proceeding involving securities regulation
described under (b) to the extent required or permitted under
Sections 9.01 to 9.09.
(b) Sections 9.01 to 9.09 apply, to the extent
applicable to any other proceeding, to any proceeding involving
a federal or state statute, rule, or regulation regulating the
offer, sale, or purchase of securities, securities brokers or
dealers, or investment companies or investment advisers.
9.11 Liberal Construction. In order for the corporation to
obtain and retain qualified Directors and Officers, the
foregoing provisions shall be liberally administered in order
to afford maximum indemnification of Directors or Officers and,
accordingly, the indemnification above provided for shall be
granted in all cases unless to do so would clearly contravene
applicable law, controlling precedent, or public policy.
9.12 Definitions Applicable to This Article.
(a) "Affiliate" shall include, without
limitation, any corporation, partnership, joint venture,
employee benefit plan, trust, or other enterprise that directly
or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, the
Corporation.
(b) "Corporation" means this Corporation and any
domestic or foreign predecessor of this Corporation where the
predecessor corporation's existence ceased upon the
consummation of a merger or other transaction.
(c) "Director or Officer" means any of the
following:
(1)A natural person who is or was a Director or
Officer of this Corporation;
(2)A natural person who, while a Director or
Officer of this Corporation, is or was serving at the
Corporation's request as a director, officer, employee,
agent, partner, trustee, member of any governing or
decision-making committee, of another Corporation or
foreign corporation, partnership, joint venture, trust, or
other enterprise.
(3)A natural person who, while a Director or
Officer of this Corporation, is or was serving an employee
benefit plan because his or her duties to the Corporation
also impose duties on, or otherwise involve services by,
the person to the plan or to participants or beneficiaries
of the plan.
(4)Unless the context requires otherwise, the
estate or personal representative of a Director or
Officer.
For purposes of this Article, it shall be conclusively presumed
that any Director or Officer serving as a director, officer,
employee, agent, partner, trustee, member of any governing or
decision-making committee of an Affiliate shall be so serving
at the request of the Corporation.
(d) "Expenses" include fees, costs, charges,
disbursements, attorney fees, and other expenses incurred in
connection with a proceeding.
(e) "Liability" includes the obligation to pay a
judgment, settlement, penalty, assessment, forfeiture, or fine,
including an excise tax assessed with respect to an employee
benefit plan, and reasonable expenses.
(f) "Party" includes a natural person who was or
is, or who is threatened to be made, a named defendant or
respondent in a proceeding.
(g) "Proceeding" means any threatened, pending,
or completed civil, criminal, administrative, or investigative
action, suit, arbitration, or other proceeding, whether formal
or informal, which involves foreign, federal, state, or local
law and which is brought by or in the right of the Corporation
or by any other person.
ARTICLE X. SEAL
The seal of the Corporation shall be circular in form,
with the name of the Corporation engraved around the margin and
the figures "1896," the year of its incorporation, engraved in
the center, and may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Failure to use the corporate seal shall not invalidate any
otherwise validly executed document.
ARTICLE XI. AMENDMENTS
11.01. By Shareholders. These bylaws may be altered,
amended, or repealed and new bylaws may be adopted by the
shareholders by affirmative vote of not less than a majority of
the shares present or represented at an annual or special
meeting of the shareholders at which a quorum is in attendance.
11.02. By Directors. These bylaws may also be altered,
amended, or repealed and new bylaws may be adopted by the Board
of Directors by affirmative vote of a majority of the number of
Directors present at any meeting at which a quorum is in
attendance; but no bylaw adopted by the shareholders shall be
amended or repealed by the Board of Directors if the bylaw so
adopted so provides.
11.03. Implied Amendments. Any action taken or
authorized by the shareholders or by the Board of Directors,
which would be inconsistent with the bylaws then in effect but
is taken or authorized by affirmative vote of not less than the
number of shares or the number of Directors required to amend
the bylaws so that the bylaws would be consistent with such
action, shall be given the same effect as though the bylaws had
been temporarily amended or suspended so far, but only so far,
as is necessary to permit the specific action so taken or
authorized.
