<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(C)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-8567-2
MAXUS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-1891531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
717 NORTH HARWOOD STREET, DALLAS, TEXAS 75201-6594
(Address of principal executive offices) (Zip Code)
(214) 953-2000
(Registrant's telephone number, including area code)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQURIED TO BE FILED BY SECTION 13 OR 15(C) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO THE FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
Shares of Common Stock outstanding at August 7, 1995: 135,609,772
<PAGE>
PART I. FINANCIAL INFORMATION
In the opinion of the management of Maxus Energy Corporation, all adjustments
(consisting only of normal accruals) necessary for a fair presentation of the
consolidated results of operations, consolidated balance sheet and consolidated
cash flows at the date and for the periods indicated have been included in the
accompanying consolidated financial statements.
2
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have reviewed the accompanying consolidated balance sheet of Maxus Energy
Corporation (a Delaware corporation) as of June 30, 1995, and the related
consolidated statements of income and cash flows for the three-month period then
ended in accordance with standards established by the American Institute of
Certified Public Accountants.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to the financial data and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Dallas, Texas
July 25, 1995
3
<PAGE>
MAXUS ENERGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited) (in millions, except per share)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
1994 1995
------------------------ ---------------------------
Three Months Six Months Three Months | Three Months
Ended Ended Ended | Ended
June 30, June 30, March 31, | June 30,
------------ ---------- ------------ | ------------
<S> <C> <C> <C> | <C>
REVENUES |
Sales and operating revenues $167.5 $354.6 $142.5 | $150.7
Other revenues, net 7.3 13.1 9.6 | 6.2
-------------------- ----------|-----------
174.8 367.7 152.1 | 156.9
-------------------- ----------|-----------
COSTS AND EXPENSES |
Operating expenses 57.9 122.1 64.7 | 58.0
Gas purchase costs 32.4 75.9 12.7 | 13.2
Exploration, including exploratory dry holes 8.4 18.5 8.9 | 16.8
Depreciation, depletion and amortization 35.2 73.4 29.9 | 45.2
General and administrative expenses 6.6 12.6 4.2 | 4.4
Taxes other than income taxes 2.7 6.8 3.0 | 2.8
Interest and debt expenses 24.9 47.4 24.1 | 34.7
Pre-merger costs - - 42.4 | -
Environmental studies and remediation 11.5 11.5 - | -
Restructuring: |
Gain on sale of assets (201.9) (201.9) - | -
Restructuring costs 100.9 100.9 - | -
-------------------- ----------|-----------
78.6 267.2 189.9 | 175.1
-------------------- ----------|-----------
|
Income (Loss) Before Income Taxes 96.2 100.5 (37.8) | (18.2)
Income Taxes 66.1 81.6 19.1 | 4.8
-------------------- ----------|-----------
Net Income (Loss) 30.1 18.9 (56.9) | (23.0)
|
Dividend Requirement on Preferred Stock 12.1 24.4 9.6 | 9.6
-------------------- ----------|-----------
Income (Loss) Applicable To Common Shares $ 18.0 $ (5.5) $(66.5) | $(32.6)
==================== ==========|===========
Income (Loss) per Common Share $ 0.13 $(0.04) $(0.49) | $(0.24)
==================== ==========|===========
Average Common Shares Outstanding |
(in millions) 134.7 134.6 135.5 | 135.6
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
4
<PAGE>
MAXUS ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET
(in million, except shares)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
December 31, | April 1, June 30,
1994 | 1995 1995
-------------|-------------------------
| (Unaudited) (Unaudited)
<S> <C> | <C> <C>
ASSETS |
Current Assets |
Cash and cash equivalents $ 40.6 | $ 92.1 $ 33.6
Short-term investments 103.8 | 65.0 40.3
Receivables, less doubtful receivables 152.4 | 127.8 120.5
Taxes receivable 23.8 | 13.7 -
Inventories 27.9 | 28.6 33.2
Restricted cash 46.4 | 48.5 32.6
Deferred income taxes 0.3 | 7.6 7.6
Prepaid expenses and other current assets 18.4 | 18.9 21.1
--------------------------------------------------------------------------------------------------|-------------------------
Total Current Assets 413.6 | 402.2 288.9
|
Properties and equipment, less accumulated |
depreciation and depletion $1,611.0, $0.0, and $45.2 1,088.4 | 2,404.7 2,391.8
Investments and long-term receivables 40.2 | 36.7 7.1
Restricted cash 94.2 | 77.1 82.5
Intangible assets, less accumulated amortization of $14.2 35.8 | - -
Deferred income taxes 9.4 | - -
Deferred charges 25.1 | 15.5 17.4
--------------------------------------------------------------------------------------------------|-------------------------
Total Assets $ 1,706.7 | $2,936.2 $2,787.7
==================================================================================================|=========================
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
Current Liabilities |
Long-term debt $ 4.7 | $ 12.7 $ 4.2
Accounts payable 65.1 | 49.8 42.4
Accrued liabilities 101.2 | 263.2 175.0
Taxes payable - | - 10.7
--------------------------------------------------------------------------------------------------|-------------------------
Total Current Liabilities 171.0 | 325.7 232.3
|
Long-term debt 970.9 | 1,282.7 1,284.5
Advance from parent - | - 1.9
Deferred income taxes 199.3 | 593.5 578.3
Other liabilities and deferred credits 149.4 | 260.9 248.1
$9.75 Redeemable Preferred Stock, $1.00 par value |
Authorized and issued shares -1,250,000 125.0 | 125.0 125.0
Stockholders' Equity |
$2.50 Preferred Stock, $1.00 par value |
Authorized shares -5,000,000 |
Issued shares -3,500,000 3.5 | 73.1 70.9
$4.00 Preferred stock, $1.00 par value |
Authorized shares -5,915,017 |
Issued shares -4,358,658, 4,356,958, and 4,356,958 4.4 | 24.8 20.4
Common Stock, $1.00 par value |
Authorized shares -300,000,000 |
Issued shares -135,694,722, 135,897,899, and 135,609,772 135.7 | 135.9 135.6
Paid-in capital 988.1 | 118.2 111.9
Accumulated deficit (1,016.4) | - (23.0)
Minimum pension liability (18.3) | - -
Unrealized gain / (loss) on marketable securities (2.4) | - 1.8
Common Treasury Stock, at cost -295,995 and 310,535 shares (3.5) | (3.6) -
--------------------------------------------------------------------------------------------------|-------------------------
Total Stockholders' Equity 91.1 | 348.4 317.6
--------------------------------------------------------------------------------------------------|-------------------------
Total Liabilities and Stockholders' Equity $ 1,706.7 | $2,936.2 $2,787.7
==================================================================================================|=========================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited). The Company uses the
successful efforts method to account for its oil and gas producing activities.
5
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MAXUS ENERGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited) (in millions)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
1994 1995
----------------------------------------
Six Months Three Months | Three Months
Ended Ended | Ended
June 30, March 31, | June 30,
---------- ------------ | ------------
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES: |
Net income (loss) $ 18.9 $(56.9) | $ (23.0)
Adjustments to reconcile net income (loss) to net cash provided |
by (used in) operating activities: |
Depreciation, depletion and amortization 73.4 29.9 | 45.2
Dry hole costs 0.3 1.0 | 6.8
Deferred income taxes 26.8 0.4 | (15.2)
Gain on sale of assets (179.3) (1.7) | (0.3)
Restructuring costs 91.0 - | -
Postretirement benefits 3.4 1.4 | 1.0
Pre-merger costs - 42.4 | -
Accretion of discount - - | 1.7
Other 18.2 1.3 | -
Changes in components of working capital: |
Receivables 10.7 23.8 | 6.7
Inventories, prepaids and other current assets (2.8) (1.4) | (6.7)
Accounts payable (37.0) (15.1) | (7.4)
Accrued liabilities (6.3) 26.3 | (37.7)
Taxes payable / receivable 18.1 10.1 | 24.4
---------- ------------ | ------------
Net Cash Provided by (Used in) Operating Activities 35.4 61.5 | (4.5)
------------------------------------------------------------------------------------------------------------------|-------------
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
Expenditures for properties and equipment--including |
dry hole costs (98.3) (53.6) | (39.3)
Expenditures for investments (20.1) - | -
Proceeds from sale of assets 312.8 2.1 | 0.6
Proceeds from sale/maturity of short-term investments 4.2 63.4 | 55.9
Purchases of short-term investments (55.5) (24.6) | -
Restricted cash 13.2 12.2 | 10.6
Other (6.7) 9.8 | (10.8)
---------- ------------ | ------------
Net Cash Provided by Investing Activities 149.6 9.3 | 17.0
------------------------------------------------------------------------------------------------------------------|-------------
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
Interest rate swap (5.9) 3.4 | 4.5
Net borrowings from joint venture partners (4.4) - | -
Proceeds from issuance of short-term debt 30.0 - | 17.2
Repayment of short-term debt (59.3) - | (17.7)
Net proceeds from issuance of long-term debt 61.3 - | 833.9
Repayment of long-term debt (71.7) - | (425.1)
Acquisition of common stock, including merger costs - - | (726.1)
Capital contribution from parent - - | 250.5
Cash advance from parent - - | 1.9
Stock rights redemption - (13.6) | -
Redemption of preferred stock (125.0) - | -
Dividends paid on preferred stock (24.4) (9.6) | (9.6)
---------- ------------ | ------------
Net Cash Used in Financing Activities (199.4) (19.8) | (70.5)
------------------------------------------------------------------------------------------------------------------|-------------
Net Increase (Decrease) in Cash and Cash Equivalents (14.4) 51.0 | (58.0)
Cash and Cash Equivalents at Beginning of Period 128.7 40.6 | 91.6
------------------------------------------------------------------------------------------------------------------|-------------
Cash and Cash Equivalents at End of Period $ 114.3 $ 91.6 | $ 33.6
==================================================================================================================|=============
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
6
<PAGE>
1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared in conformity with
generally accepted accounting principles, the most significant of which are
described below.
A) CONSOLIDATION AND EQUITY ACCOUNTING
The Consolidated Financial Statements include the accounts of Maxus
Energy Corporation and all domestic and foreign subsidiaries (the
"Company" or "Maxus"). All significant intercompany accounts and
transactions have been eliminated.
B) STATEMENT OF CASH FLOWS
Investments with original maturities of three months or less at the time
of acquisition are considered cash equivalents for purposes of the
accompanying Consolidated Statement of Cash Flows. Short-term investments
include U. S. Treasury Notes and investments with maturities over three
months but less than one year.
C) INVENTORY VALUATION
Inventories are valued at the lower of cost or market, cost being
determined primarily by the weighted average cost method.
D) PROPERTIES AND EQUIPMENT
Properties and equipment are carried at cost. Major additions are
capitalized; expenditures for repairs and maintenance are charged against
earnings.
The Company uses the successful efforts method to account for costs
incurred in the acquisition, exploration, development and production of
oil and gas reserves. Under this method, all geological and geophysical
costs are expensed; all development costs, whether or not successful, are
capitalized as costs of proved properties; exploratory drilling costs are
initially capitalized, but if the effort is determined to be
unsuccessful, the costs are then charged against earnings; depletion is
computed based on an aggregation of properties with common geologic
structural features or stratigraphic conditions, such as reservoirs or
fields.
For U. S. unproved properties, a valuation allowance (included as an
element of depletion) is provided by a charge against earnings to reflect
the impairment of unproven acreage. International non-producing leasehold
costs are reviewed semi-annually by management to insure the carrying
value is recoverable based upon the geological and engineering estimates
of total possible and probable reserves expected to be added over the
remaining life of each concession. A pro rata portion of the costs will
be transferred to investment in proved properties semi-annually based
upon new reserve updates.
Effective April 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 121. ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of." SFAS 121 requires a review of long-lived assets for impairment
whenever events or changes in circumstance indicate that the carrying
amount of the asset may not be recoverable. If the expected future net
cash flows of the long-lived assets is less than the carrying amount of
the asset an impairment loss shall be recognized to value the asset at
its fair value. Upon merger with YPF, the Company reviewed the valuation
of its oil and gas properties to assure the carrying value did not exceed
fair market value.
Depreciation and depletion related to the costs of all development
drilling, successful exploratory drilling and related production
equipment is calculated using the unit of production method based upon
estimated proved recoverable reserves. Other properties and equipment are
depreciated generally on the straight-line method over their estimated
useful lives. Estimated future
7
<PAGE>
dismantlement, restoration and abandonment costs for major facilities,
net of salvage value, are taken into account in determining depreciation,
depletion and amortization.
The Company capitalizes the interest cost associated with major property
additions and mineral development projects while in progress, such
amounts being amortized over the useful lives, and applying the same
depreciation method, as that used for the related assets.
When complete units of depreciable property are retired or sold, the
asset cost and related accumulated depreciation are eliminated with any
gain or loss reflected in income. When less than complete units of
depreciable property are disposed of or retired, the difference between
asset cost and salvage value is charged or credited to accumulated
depreciation.
E) DEFERRED CHARGES
Deferred charges are primarily debt issuance costs and are amortized over
the terms of the related debt agreements.
F) REVENUE RECOGNITION
Oil and gas sales are recorded on the entitlements method. Differences
between the Company's actual production and its entitlements result in a
receivable when underproduction occurs and a payable when overproduction
occurs.
G) PENSIONS
The Company has a number of trusteed noncontributory pension plans
covering substantially all full-time employees. The Company's funding
policy is to contribute amounts to the plans sufficient to meet the
minimum funding requirements under governmental regulations, plus such
additional amounts as management may determine to be appropriate. The
benefits related to the plans are based on years of service and
compensation earned during years of employment. The Company also has a
noncontributory supplemental retirement plan for executive officers. The
Company has fully accrued its accumulated pension obligation.
H) OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company provides certain health care and life insurance benefits for
retired employees and certain insurance and other postemployment benefits
for individuals whose employment is terminated by the Company prior to
their normal retirement. The Company accrues the estimated cost of
retiree benefit payments, other than pensions, during employees' active
service period. Employees become eligible for these benefits if they meet
minimum age and service requirements. The Company accounts for benefits
provided after employment but before retirement by accruing the estimated
cost of postemployment benefits when the minimum service period is met,
payment of the benefit is probable and the amount of the benefit can be
reasonably estimated. The Company has fully accrued its accumulated
postretirement and postemployment benefits obligation.
I) ENVIRONMENTAL EXPENDITURES
Environmental liabilities are recorded when environmental assessments
and/or remediation are probable and material and such costs to the
Company can be reasonably estimated.
J) LITIGATION CONTINGENCIES
The Company records liabilities for litigation when such amounts are
probable and material and can be reasonably estimated.
8
<PAGE>
K) INCOME TAXES
The Company reports income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for
Income Taxes." SFAS 109 requires the use of an asset and liability
approach to measure deferred tax assets and liabilities resulting from
all expected future tax consequences of events that have been recognized
in the Company's financial statements or tax returns.
L) EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of
shares of common stock and common stock equivalents outstanding, unless
the inclusion of common stock equivalents has an antidilutive effect on
earnings per share. Fully diluted earnings per share are not presented
due to the antidilutive effect of including all potentially dilutive
common stock equivalents.
M) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND
CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash equivalents, short-term investments
and trade receivables.
The Company's cash equivalents and short-term investments and restricted
cash represent high-quality securities placed with various high
investment grade institutions. This investment practice limits the
Company's exposure to concentrations of credit risk.
The trade receivables are dispersed among a broad domestic and
international customer base; therefore, concentrations of credit risk are
limited. The Company carefully assesses the financial strength of its
customers. Letters of credit are the primary security obtained to support
lines of credit.
The Company has minimal exposure to credit losses in the event of
nonperformance by the counterparties to its interest rate swap agreement,
natural gas price swap agreements and nonderivative financial assets. The
Company does not obtain collateral or other security to support financial
instruments subject to credit risk but restricts such arrangements to
investment-grade counterparties.
N) INVESTMENTS IN MARKETABLE SECURITIES
All investments in debt securities and certain investments in equity
securities are reported at fair value except for those investments which
management has the intent and the ability to hold to maturity.
Investments which are held-for-sale are classified based on the stated
maturity and management's intent to sell the securities. Unrealized gains
and losses on investments in marketable securities are reported as a
separate component of stockholders' equity.
O) DERIVATIVES
The Company periodically hedges the effects of fluctuations in the price
of natural gas through price swap agreements and futures contracts. The
Company typically hedges no more than 50% of its U. S. gas production.
Gains and losses on these hedges are deferred until the related sales are
recognized and are recorded as a component of sales and operating
revenues. The Company periodically enters into interest rate swap
agreements to hedge interest on long-term debt. The gain or loss on
interest rate swaps is recognized monthly as an increase or decrease to
interest expense.
9
<PAGE>
P) TAKE-OR-PAY OBLIGATIONS
The Company records payments received for take-or-pay obligations for
unpurchased contract volumes as deferred revenue, which is included in
Other Liabilities in the consolidated balance sheet. The deferred revenue
is recognized in the income statement as quantities are purchased which
fulfill the take-or-pay obligation.
2. MERGER
On June 8, 1995, a special meeting of the stockholders of the Company was
held to approve the Agreement of Merger ("Merger Agreement") dated February
28, 1995, between the Company, YPF Acquisition Corp. (the "Purchaser") and
YPF Sociedad Anonima ("YPF"). The holders of the Company's common stock,
$1.00 par value per share (the "Shares"), and $4.00 Cumulative Convertible
Preferred Stock (the "$4.00 Preferred Stock" and together with the Shares,
the "Voting Shares") approved the Merger Agreement, and the Purchaser was
merged into the Company (the "Merger") on June 8, 1995 (the "Merger Date").
The Merger was the consummation of the transactions contemplated by a tender
offer (the "Offer") which was commenced on March 6, 1995 by the Purchaser
for all the outstanding Shares at $5.50 per Share. Pursuant to the Offer, in
April 1995 the Purchaser acquired 120,000,613 Shares representing
approximately 88.5% of the then-outstanding Shares of the Company. As a
result of the Merger, each outstanding Share (other than Shares held by the
Purchaser, YPF or any of their subsidiaries or in the treasury of the
Company, all of which were cancelled, and Shares of holders who perfected
their appraisal rights under Section 262 of the Delaware General Corporation
Law) was converted into the right to receive $5.50, and YPF became the sole
holder of the Shares. Under the terms of the Merger Agreement, all of the
Company's preferred stock, consisting of the $4.00 Preferred Stock, $2.50
Cumulative Preferred Stock and $9.75 Cumulative Convertible Preferred Stock,
remain outstanding. YPF currently owns approximately 96.9% of the
outstanding Voting Shares.
The total amount of funds required by the Purchaser to acquire the entire
common equity interest in the Company, including the purchase of Shares
pursuant to the Offer and the payment for Shares converted into the right to
receive cash pursuant to the Merger, was approximately $762 million. On
April 5, 1995, the Purchaser entered into a credit agreement (the "Credit
Agreement") with lenders for which The Chase Manhattan Bank (National
Association) ("Chase") acted as agent, pursuant to which the lenders
extended to the Purchaser a credit facility for up to $550 million (the
"Purchaser Facility"). On April 5, 1995, the Purchaser borrowed $442 million
under the Purchaser Facility and received a capital contribution of $250
million from YPF. The Purchaser used borrowings under the Purchaser Facility
and the funds contributed to it by YPF to purchase 120,000,613 Shares
pursuant to the Offer.
Pursuant to a commitment letter from Chase, Chase provided two additional
credit facilities aggregating $425 million: (i) a credit facility of $250
million extended to Midgard Energy Company ("Midgard"), a wholly owned
subsidiary of the Company, and (ii) a credit facility of $175 million
extended to Maxus Indonesia, Inc. ("Holdings"), a wholly owned subsidiary of
the Company. The proceeds of the loans made pursuant to these facilities
were used to repay, in part, the Purchaser Facility, which was assumed by
the Company. In addition, the Company applied $8 million of its available
cash to repayment of the Purchaser Facility and used approximately $86
million of its available cash to pay holders of Shares converted into the
right to receive cash in the Merger.
During the second quarter of 1995, the Company used the purchase method to
record the acquisition of the Company by YPF. In a purchase method
combination, the purchase price is allocated to the assets acquired and
liabilities assumed based on their fair values at the date of acquisition.
As a result, the assets and liabilities of the Company were revalued to
reflect the approximate $762 million purchase price paid by YPF to acquire
the Company. The Company's oil and gas properties were assigned carrying
amounts based on their relative fair market values. In connection with the
purchase price allocation, the Company adopted Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
10
<PAGE>
which requires a review of long-lived assets for impairment whenever events
or changes in circumstance indicate that the carrying amount of the asset
may not be recoverable. Under SFAS 121, if the expected future cash flows of
the long-lived assets is less than the carrying amount of the asset an
impairment loss shall be recognized to value the asset at its fair value.
Since Maxus revalued its assets and liabilities in the purchase price
allocation, there was no impact on the financial statements in 1995
resulting from the adoption of SFAS No. 121.
The financial statements reflect the effects of Merger-related transactions
in the second quarter of 1995. Periods presented prior to the second quarter
of 1995 are presented on a pre-Merger basis and, therefore, are not
comparative. In addition, financial statement results for the first two
quarters of 1995 are not additive.
A) MIDGARD FACILITY
Approximately $250 million of the loans under the Purchaser Facility were
repaid on June 8, 1995 with funds provided to the Company by Midgard.
Midgard provided these funds from the proceeds of a $250 million loan
(the "Midgard Loan") extended to it pursuant to a credit agreement (the
"Midgard Facility") entered into on such date. In addition, approximately
$8 million of the loans outstanding under the Purchaser Facility,
including accrued interest on the Purchaser Facility loans, were repaid
on June 8, 1995 from cash held by the Company.
The Midgard Loan, which was made in a single drawing, will mature on
December 31, 2003 and will be repaid in up to 28 consecutive equal
quarterly installments commencing on March 31, 1997, subject to semi-
annual borrowing base redeterminations. At Midgard's option, the interest
rate applicable to the Midgard Loan will be, until March 31, 1997, either
(i) the one-, two- or three-month London Interbank Offered Rate ("LIBOR")
plus a margin of 1 3/4% or (ii) the Base Rate (as defined in the Midgard
Facility) plus a margin of 3/4% and, thereafter, either (iii) the one-,
two- or three-month LIBOR plus a margin of 2 1/4% or (iv) the Base Rate
plus a margin of 1 1/4%. At June 30, 1995, the interest rate on the
Midgard facility based on the two-month LIBOR plus 1 3/4% was 7.8125%.
The Midgard Loan is not secured but is guaranteed by YPF and the Company.
The agreement evidencing the Midgard Loan contains, among other things, a
negative pledge on all assets of Midgard, subject to customary
exceptions. It is anticipated that the Midgard Loan will be repaid with
funds generated by Midgard's business operations.
B) SUBSIDIARIES FACILITY
Approximately $175 million of the Purchaser Facility was repaid with
funds provided on June 16, 1995 to the Company by Holdings. Holdings
provided these funds from the proceeds of a $175 million loan (the
"Subsidiaries Loan") extended to it pursuant to a credit agreement (the
"Subsidiaries Facility") entered into on such date.
The Subsidiaries Loan, which was made in a single drawing on June 16,
1995, will mature on December 31, 2002 and will be repaid in up to 24
consecutive equal quarterly installments commencing on March 31, 1997,
subject to semi-annual borrowing base redeterminations. At the option of
Holdings, the interest rates applicable to the Subsidiaries Loan will be,
until March 31, 1997, either (i) the one-, two- or three-month LIBOR plus
a margin of 2 1/4% or (ii) the Base Rate (as defined in the Subsidiaries
Facility) plus a margin of 1 1/4% and, thereafter, either (iii) the one-,
two- or three-month LIBOR plus a margin of 2 3/4% or (iv) the Base Rate
plus a margin of 1 3/4%. At June 30, 1995, the interest rate on the
subsidiaries facility based on the one-month LIBOR plus 2 1/4% was
8.3125%. The Subsidiaries Loan to Holdings is secured by the stock of
Maxus Northwest Java, Inc. ("Java") and Maxus Southeast Sumatra, Inc.
("Sumatra") (collectively, the "Holdings Subsidiaries") and by the
interest of Holdings, Java and Sumatra in certain accounts maintained at
Chase into which the proceeds of sales of hydrocarbons are to be
deposited, and is guaranteed by Java, Sumatra, YPF and the Company. The
agreement evidencing the Subsidiaries Loan contains a negative pledge on
all of the other assets of Holdings, subject to customary exceptions. It
is anticipated that the Subsidiaries Loan will be repaid with funds
generated by the Holdings Subsidiaries' business operations.
11
<PAGE>
3. ANALYSIS OF THE MAIN ACCOUNTS OF THE CONSOLIDATED FINANCIAL STATEMENTS
Details regarding the significant accounts included in the accompanying
financial statements are as follows:
Consolidated Balance Sheet Accounts June 30, 1995
-------------
ASSETS
A) SHORT-TERM INVESTMENTS:
U.S. treasury notes $ 31.3
Other investments 9.0
--------
$ 40.3
========
B) RECEIVABLES:
Trade accounts receivables $ 59.6
Joint interest billings 29.8
IVA receivable 5.9
Crude trading receivables 10.2
Insurance receivables 8.6
Other 7.4
Allowance for doubtful trade receivables (1.0)
--------
$ 120.5
========
C) INVENTORIES:
Crude oil $ 4.6
Warehouse/field yard inventory 27.9
Other .7
--------
$ 33.2
========
D) PROPERTIES AND EQUIPMENT:
Oil and gas:
Proved $1,508.8
Unproved 742.0
Other 126.7
--------
2,377.5
Corporate 14.3
--------
$2,391.8
========
E) DEFERRED CHARGES:
Unamortized debt issuance costs $ 16.4
Other 1.1
--------
$ 17.5
========
12
<PAGE>
LIABILITIES
F) ACCRUED LIABILITIES:
Environmental remediation $ 22.8
Accrued interest 24.5
Overlift liability 9.0
Merger accrual 54.5
Other 64.2
------
$175.0
======
G) LONG-TERM DEBT:
Interest
Rates Maturity Current Noncurrent
----- -------- ------- ----------
8.5% Debentures 8.50 1997-2008 $ 75.2
9.375% Notes 9.375 2003 224.2
9.5% Notes 9.50 2003 86.8
9.875% Notes 9.875 2002 219.9
11.25% Debentures 11.25 2013 14.4
11.5% Debentures 11.50 2001-2015 94.3
Medium-term notes 7.57-11.08 1995-2004 $4.1 144.7
Maxus Indonesia
credit agreement 8.3125 1997-2002 175.0
Maxus Midgard
credit agreement 7.8125 1997-2003 250.0
Advance from parent 1.9
Other 0.1
---- --------
$4.2 $1,286.4
==== ========
H) OTHER LIABILITIES AND DEFERRED CREDITS:
Environmental remediation $ 95.1
Long-term employee benefit costs 62.5
Litigation contingencies 10.0
Reserve for insurance losses 23.0
Other 57.5
------
$248.1
======
4. TAXES
The Company reports income taxes in accordance with SFAS 109. The Company's
provision for income taxes was comprised of the following:
Three Months Ended
June 30, 1995
------------------
Current
Federal...........................................
Foreign........................................... $ 19.8
State and local................................... .2
------
20.0
Deferred
Federal........................................... (6.5)
Foreign........................................... (8.7)
------
(15.2)
------
Provision for income taxes............................. $ 4.8
======
13
<PAGE>
5. RESTRICTED CASH
At June 30, 1995, the Company had $115.1 million in restricted cash of which
$59.1 million represented collateral for outstanding letters of credit and
$15.5 million represented six months of interest on outstanding borrowings
as required by the Midgard and Subsidiaries credit agreements. Assets held
in trust as required by certain insurance policies totaled $40.5 million.
Approximately $32.6 million of collateral for outstanding letters of credit
at June 30, 1995, which will be released within twelve months, was
classified as a current asset.
6. PREFERRED STOCK
The Company has the authority to issue 100,000,000 shares of Preferred
Stock, $1.00 par value. The rights and preferences of shares of authorized
but unissued Preferred Stock are established by the Company's Board of
Directors at the time of issuance.
A) $9.75 CUMULATIVE CONVERTIBLE PREFERRED STOCK
In 1987, the Company sold 3,000,000 shares of $9.75 Cumulative
Convertible Preferred Stock (the "$9.75 Preferred Stock"). Since such
time, the Company has entered into various agreements, most recently on
June 8, 1995, with the sole holder of the $9.75 Preferred Stock pursuant
to which, among other things, the Company has repurchased 500,000 shares
and the parties have waived or amended various covenants, agreements and
restrictions relating to such stock. Currently, 1,250,000 shares of $9.75
Preferred Stock are outstanding, each receiving an annual cash dividend
of $9.75. In addition, 375,000 of such shares (the "Conversion Waiver
Shares") each receive an additional quarterly cash payment of $.25 ($.50
in certain circumstances). For the 12-month period commencing February 1,
1995, each share of the $9.75 Preferred Stock has a liquidation value of
$101.0836 ($126.4 million in the aggregate) which reduces to $100 at
February 1, 1996, in each case plus accrued dividends. Since February 1,
1994, the stock has been subject to mandatory redemption at the rate of
625,000 shares per year. The $9.75 Preferred Stock currently is neither
convertible by the holder nor redeemable at the Company's option and has
no associated registration rights. The $9.75 Preferred Stock entitles the
holder to vote only on certain matters separately affecting such holder,
and the $9.75 Preferred Stock other than the Conversion Waiver Shares
entitles the holder to elect one individual to the Board of Directors of
the Company. In addition, pursuant to the June 8, 1995 agreement, the
holder of the $9.75 Preferred Stock waived previously granted rights to
approve certain "self-dealing" transactions and certain financial
covenants pertaining to the Company, and the Company waived its right of
first offer with respect to the transfer of the $9.75 Preferred Stock and
certain transfer restrictions on such stock.
B) $4.00 CUMULATIVE CONVERTIBLE PREFERRED STOCK
Each outstanding share of $4.00 Cumulative Convertible Preferred Stock
(the "$4.00 Preferred Stock") is entitled to one vote, is convertible at
any time into shares of the Company's Common Stock (2.29751 shares at
December 31, 1994), shall receive annual cash dividends of $4.00 per
share, is callable at and has a liquidation value of $50.00 per share
($217.9 million in the aggregate at June 30, 1995) plus accrued but
unpaid dividends, if any.
C) $2.50 CUMULATIVE PREFERRED STOCK
Each outstanding share of the $2.50 Preferred Stock shall receive annual
cash dividends of $2.50 per share, is callable after December 1, 1998 at
and has a liquidation value of $25.00 per share ($87.5 million in the
aggregate at June 30, 1994), plus accrued but unpaid dividends, if any.
The holders of the shares are entitled to limited voting rights under
certain conditions. In the event the Company is in arrears in the payment
of six quarterly dividends, the holders of the $2.50 Preferred Stock have
the right to elect two members to the Board of Directors until
14
<PAGE>
such time as the dividends in arrears are current and a provision is made
for the current dividends due.
7. COMMITMENT AND CONTINGENCIES
Like other energy companies, Maxus operations are subject to various laws
related to the handling and disposal of hazardous substances which require
the cleanup of deposits and spills. In addition, Maxus is implementing
certain environmental projects related to its former chemicals business
("Chemicals"), sold to Occidental Petroleum Corporation ("Occidental") in
1986 and certain other disposed of businesses.
Maxus has agreed to remediate the site of the former agricultural chemical
plant in Newark, New Jersey, as required by a consent decree entered into in
1990 by Occidental, the United States Environmental Protection Agency (the
"EPA") and the New Jersey Department of Environmental Protection and Energy
(the "DEP"). Pursuant to an agreement with the EPA, Maxus is conducting
further testing and studies to characterize contaminated sediment in a
portion of the Passaic River near the plant site. Maxus has been conducting
similar studies under its own auspices for several years.
Under an Administrative Consent Order issued by the DEP in 1990 covering
sites in Kearny and Secaucus, New Jersey, Maxus will continue to implement
interim remedial measures and to perform remedial investigations and
feasibility studies and, if necessary, will implement additional remedial
actions at various locations where chromite ore residue, allegedly from the
former Kearny plant, was utilized, as well as at the plant site.
Until 1976, Chemicals operated manufacturing facilities in Painesville,
Ohio. Maxus has heretofore conducted many remedial, maintenance and
monitoring activities at this site. The former Painesville plant area has
been proposed for listing on the national priority list of Superfund sites
as designated by the EPA. The scope and nature of further investigation or
remediation which may be required cannot be determined at this time.
Maxus also has responsibility for Chemicals' share of the remediation cost
for a number of other non-plant sites where wastes from plant operations by
Chemicals were allegedly disposed of or have come to be located, including
several commercial waste disposal sites.
At the time of the spin-off by Maxus of Diamond Shamrock, Inc. ("DSI") in
1987, the Company executed a cost-sharing agreement for the partial
reimbursement by DSI of environmental expenses related to the Company's
disposed of businesses, including Chemicals. DSI will reach its total
reimbursement obligation in 1995.
The Company's total expenditures for environmental compliance for disposed
of businesses, including Chemicals, were $8.6 million in the second quarter
of 1995, $2.9 million of which was recovered from DSI under the cost-sharing
agreement. Those expenditures are projected to be approximately $10.7
million in the second half of 1995 after recovery from DSI.
Reserves, net of cost-sharing by DSI, have been established for
environmental liabilities where they are material and probable and can be
reasonably estimated. At the date of acquisition, reserves for the above
environmental contingencies totaled $124.7 million. At June 30, 1995, the
reserve balance was $117.9 million.
The Company enters into various operating agreements and capital commitments
associated with the exploration and development of its oil and gas
properties. Such contractual financial and/or performance commitments are
not material.
The Company's foreign petroleum exploration, development and production
activities are subject to political and economic uncertainties,
expropriation of property and cancellation or modification of contract
rights, foreign exchange restrictions and other risks arising out of foreign
governmental
15
<PAGE>
sovereignty over the areas in which the Company's operations are conducted,
as well as risks of loss in some countries due to civil strife, acts of war,
guerrilla activities and insurrection. Areas in which the Company has
significant operations include the United States, Indonesia, Ecuador,
Bolivia and Venezuela.
16
<PAGE>
MAXUS ENERGY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SECOND QUARTER 1995
MERGER
On June 8, 1995, a special meeting of the stockholders of Maxus Energy
Corporation (the "Company" or "Maxus") was held to approve the Agreement of
Merger ("Merger Agreement") dated February 28, 1995, between the Company, YPF
Acquisition Corp. (the "Purchaser") and YPF Sociedad Anonima ("YPF"). The
holders of the Company's common stock, $1.00 par value per share (the "Shares"),
and $4.00 Cumulative Convertible Preferred Stock (the "$4.00 Preferred Stock"
and together with the Shares, the "Voting Shares") approved the Merger
Agreement, and the Purchaser was merged into the Company (the "Merger") on June
8, 1995 (the "Merger Date").
The Merger was the consummation of the transactions contemplated by a tender
offer (the "Offer") which was commenced on March 6, 1995 by the Purchaser for
all the outstanding Shares at $5.50 per Share. Pursuant to the Offer, in April
1995 the Purchaser acquired 120,000,613 Shares representing approximately 88.5%
of the then-outstanding Shares of the Company. As a result of the Merger, each
outstanding Share (other than Shares held by the Purchaser, YPF or any of their
subsidiaries or in the treasury of the Company, all of which were cancelled, and
Shares of holders who perfected their appraisal rights under Section 262 of the
Delaware General Corporation Law) was converted into the right to receive $5.50,
and YPF became the sole holder of the Shares. Under the terms of the Merger
Agreement, all of the Company's preferred stock, consisting of the $4.00
Preferred Stock, $2.50 Cumulative Preferred Stock and $9.75 Cumulative
Convertible Preferred Stock, remain outstanding. YPF currently owns
approximately 96.9% of the outstanding Voting Shares.
The total amount of funds required by the Purchaser to acquire the entire common
equity interest in the Company, including the purchase of Shares pursuant to the
Offer and the payment for Shares converted into the right to receive cash
pursuant to the Merger, was approximately $762 million. On April 5, 1995, the
Purchaser entered into a credit agreement (the "Credit Agreement") with lenders
for which The Chase Manhattan Bank (National Association) ("Chase") acted as
agent, pursuant to which the lenders extended to the Purchaser a credit facility
for up to $550 million (the "Purchaser Facility"). On April 5, 1995, the
Purchaser borrowed $442 million under the Purchaser Facility and received a
capital contribution of $250 million from YPF. The Purchaser used borrowings
under the Purchaser Facility and the funds contributed to it by YPF to purchase
120,000,613 Shares pursuant to the Offer.
Pursuant to a commitment letter from Chase, Chase provided two additional credit
facilities aggregating $425 million: (i) a credit facility of $250 million
extended to Midgard Energy Company ("Midgard"), a wholly owned subsidiary of the
Company, and (ii) a credit facility of $175 million extended to Maxus Indonesia,
Inc. ("Holdings"), a wholly owned subsidiary of the Company. The proceeds of the
loans made pursuant to these facilities were used to repay, in part, the
Purchaser Facility, which was assumed by the Company. In addition, the Company
applied $8 million of its available cash to repayment of the Purchaser Facility
and used approximately $86 million of its available cash to pay holders of
Shares converted into the right to receive cash in the Merger.
During the second quarter of 1995, the Company used the purchase method to
record the acquisition of the Company by YPF. In a purchase method combination,
the purchase price is allocated to the assets acquired and liabilities assumed
based on their fair values at the date of acquisition. As a result, the assets
and liabilities of the Company were revalued to reflect the approximate $762
million purchase price paid by YPF to acquire the Company. The Company's oil and
gas properties were assigned carrying amounts based on their relative fair
market values. In connection with the purchase price allocation, the Company
adopted Statement of Financial Accounting Standards No. 121 ("SFAS 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," which requires a review of long-lived assets for impairment
whenever events or changes in circumstance indicate that the carrying amount of
the asset may not be recoverable. Under SFAS 121, if the expected future cash
flows of the long-lived assets is less than the carrying amount of the asset an
impairment loss shall be recognized to value the asset at its fair value. Since
Maxus revalued its assets and liabilities in the purchase price allocation,
there was no impact on the financial statements in 1995 resulting from the
adoption of SFAS No. 121.
17
<PAGE>
The financial statements reflect the effects of Merger-related transactions in
the second quarter of 1995. Periods presented prior to the second quarter of
1995 are presented on a pre-Merger basis and, therefore, are not comparative.
In addition, financial statement results for the first two quarters of 1995 are
not additive.
RESULTS OF OPERATIONS
Maxus reported a net loss of $23 million for the second quarter of 1995 or,
after preferred dividends, a loss of 24 cents per Share.
Sales and operating revenues for the second quarter of 1995 were $151 million,
compared to $168 million for the same period a year ago. The loss of production
from properties divested in 1994, lower volumes of purchased gas, lower oil
volumes in Indonesia, and lower U.S. natural gas prices negatively impacted
revenues by $39 million. Partially offsetting these declines in the second
quarter 1995 were a favorable oil price variance of $11 million in Indonesia and
revenue of $10 million from new production in South America. Initial sales from
the Company's South American operations were recorded in the third quarter 1994.
Net worldwide crude oil production was 61 thousand barrels per day ("mbpd") in
the second quarter 1995, compared to 63 mbpd in the same quarter a year ago.
Domestic crude oil volumes declined one mbpd during the period due to the loss
of production from the divested properties. Declines in crude oil volumes in
Indonesia of eight mbpd in the second quarter of 1995 were offset by seven mbpd
of crude oil volumes in South America.
U.S. natural gas sales of 170 million cubic feet per day ("mmcfpd") in the
second quarter of 1995 were down 127 mmcfpd from the same period last year. The
decline was driven by the loss of production from divested properties and lower
volumes of gas purchased for resale. The average gas price received in the
United States was $1.43 per thousand cubic feet ("mcf") in the second quarter
1995 as compared to $2.01 per mcf a year ago.
Northwest Java gas volumes of 57 mmcfpd in the second quarter 1995 were five
mmcfpd higher than the second quarter 1994. Gas realizations improved to $2.59
per mcf during the second quarter 1995 from $2.08 per mcf during the same period
last year due to the change in contract terms which increased the price received
for "old" gas production from $0.20 per mcf to $2.65 per mcf on January 1, 1995.
Natural gas liquids sales in the United States of 16 mbpd in the second quarter
of 1995 were relatively flat compared to the same period last year. The average
sales price for U.S. natural gas liquids in the second quarter of 1995 was
$10.61 per barrel, an increase of $0.83 per barrel from 1994.
Second quarter 1995 depreciation, depletion and amortization ("DD&A") was $45
million, which included $14 million of additional DD&A reflecting the impact of
the purchase price allocation on the book value of properties and equipment. The
book value of net properties and equipment increased approximately $1.3 billion
as a result of the purchase price allocation.
Interest and debt expenses of $35 million in the second quarter of 1995 included
$9 million of interest expense associated with the Purchaser Facility. Second
quarter 1995 interest expense also included $2 million of interest expense
associated with the accretion of discount on the Company's existing long-term
debt which was revalued downward $115 million to reflect fair market value as a
component of the purchase price allocation.
The second quarter 1994 results reflected a $101 million pre-tax net benefit
from the Company's restructuring activities, which included the sale of the
Company's interest in Diamond Shamrock Offshore Partners Limited Partnership
("DSP") and certain domestic oil and gas properties, resulting in pre-tax gain
of $202 million. This gain was partially offset by restructuring costs, which
included a $70 million write-off associated with the Company's undeveloped
Alaska coal leases, costs associated with staff reductions and the write-off of
non-producing assets outside the Company's core areas.
Second quarter 1995 income tax expense of $5 million included a $15 million
deferred tax benefit due primarily to the higher DD&A associated with the write-
up of the properties and equipment to fair market
18
<PAGE>
value as a result of the Merger. In the short-term, the Company expects to
realize additional deferred tax benefits as a result of higher DD&A.
FINANCIAL CONDITION
The Company's net cash used by operating activities was $5 million in the second
quarter of 1995. The $16 million of net cash provided by operating activities
before working capital changes was more than offset by working capital
requirements of $21 million. Lower accrued liabilities of $38 million resulting
from the payment of Maxus incurred pre-Merger costs and accrued interest coupled
with lower accounts payable of $7 million were somewhat offset by a U.S. federal
income tax refund of $22 million.
The Company began the second quarter of 1995 with $92 million of cash and cash
equivalents. During the second quarter of 1995, $56 million of short-term
investments were liquidated and $11 million of restricted cash was released.
Additionally, the Company received $851 million from the issuance of debt under
the Purchaser Facility and the Midgard and Holdings credit facilities and a $250
million capital infusion from YPF to partially fund the Merger. The Company
spent $5 million to fund operating activities, $39 million for capital
expenditures and $10 million for dividends. In connection with the Merger, the
Company repaid the Purchaser Facility and paid $726 million to acquire the
Shares outstanding and pay Merger costs, leaving a cash and cash equivalents
balance of $34 million at June 30, 1995. Of the approximate $762 million
purchase price paid by YPF to acquire the Company, as of June 30, 1995 $36
million remains to be paid in respect of Shares and Merger costs. This liability
was recorded in accrued liabilities.
The Company's exposure to foreign currency fluctuations is minimal as
substantially all of the Company's foreign contracts are denominated in U.S.
dollars.
The Company's only derivative financial instruments are interest rate swap
agreements, natural gas price swap agreements and futures contracts, which are
not used for trading purposes. During the second quarter of 1995, the impact of
these derivative financial instruments on revenues and interest expense was
immaterial.
FUTURE OUTLOOK
The Company currently projects total program spending (capital expenditures plus
exploration expenses) for 1995 to be approximately $230 million, $109 million of
which was spent during the first half of 1995. Pursuant to the Merger Agreement,
in the event that the Company is unable to meet its obligations as they come
due, whether at maturity or otherwise, including, solely for the purposes of
this undertaking, dividend and redemption payments with respect to the Preferred
Stock, YPF has agreed to capitalize the Company in an amount necessary to permit
the Company to meet such obligations; provided that YPF's aggregate obligation
will be: (i) limited to the amount of debt service obligations under the Midgard
Facility and/or the Subsidiaries Facility and (ii) reduced by the amount, if
any, of capital contributions by YPF to the Company after the Merger Date and by
the amount of the net proceeds of any sale by the Company of common stock or
non-redeemable preferred stock after the Merger Date. The foregoing obligations
of YPF (the "Keepwell Covenant") will survive until the ninth anniversary of the
Merger Date. In addition, on March 7, 1995, YPF announced that its board of
directors authorized YPF to guarantee the Company's outstanding long-term debt
as of the Merger Date, the principal amount of which is approximately $977
million. The long-term debt covered by the YPF guarantee is the Company's
outstanding 11 1/4%, 11 1/2% and 8 1/2% Sinking Fund Debentures, its outstanding
9 7/8%, 9 1/2% and 9 3/8% Notes, and its outstanding medium-term notes. YPF has
also guaranteed the payment and performance of the Company s obligations to the
holders of its $9.75 Preferred Stock.
In addition to maintaining and developing its core areas (Mid-continent,
Indonesia and Ecuador) and emerging areas (Bolivia and Venezuela), it is
expected the Company will acquire or assume responsibility for YPF's exploration
interests in Bolivia, Ecuador, Chile, Peru, Algeria and the U.S. Gulf of Mexico.
The Company will continue to focus on maximizing the value of its core producing
assets and seek new investment opportunities in new associated ventures.
19
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
A. A special meeting of the Company's stockholders was held on June 8,
1995. The holders of Common Stock and $4.00 Cumulative Convertible Preferred
Stock (the "$4.00 Preferred Stock") voted as follows:
1. ADOPTION OF AGREEMENT OF MERGER
Common Stock
------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
123,039,246 604,467 176,297 0
$4.00 Preferred Stock
---------------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
2,331,461 62,662 39,876 0
2. AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
Common Stock
------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
123,112,223 496,673 211,114 0
$4.00 Preferred Stock
---------------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
2,319,740 64,209 50,050 0
3. AMENDMENTS TO THE BY-LAWS
Common Stock
------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
123,201,238 420,069 198,703 0
20
<PAGE>
$4.00 Preferred Stock
-----------------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
2,338,478 54,170 41,351 0
B. The annual meeting of the Company's stockholders was held on August 3,
1995. The holders of Common Stock and the $4.00 Preferred Stock voted as
follows:
1. ELECTION OF DIRECTORS
CHARLES L. BLACKBURN
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
3,925,550 125,203
CEDRIC BRIDGER
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
3,998,375 52,378
PETER GAFFNEY
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
21
<PAGE>
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
3,996,625 54,128
GEORGE L. JACKSON
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
3,928,250 122,503
NELLS LEON
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
3,995,900 54,853
J. R. LESCH
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
22
<PAGE>
3,996,850 53,903
P. DEXTER PEACOCK
Common Stock
------------
Votes For Votes Withheld
----------- --------------
135,609,772 0
$4.00 Preferred Stock
---------------------
Votes For Votes Withheld
----------- --------------
3,997,875 52,878
2. RATIFY APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Common Stock
------------
Votes For Votes Against Abstentions
----------- ------------- -----------
135,609,772 0 0
$4.00 Preferred Stock
---------------------
Votes For Votes Against Abstentions
----------- ------------- -----------
3,997,005 24,239 29,509
3. AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
Common Stock
------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
135,609,772 0 0 0
$4.00 Preferred Stock
---------------------
Votes For Votes Against Abstentions Broker Non-Votes
----------- ------------- ----------- ----------------
2,434,807 145,627 49,227 1,421,092
23
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3(i).1 -- Amendments to Restated Certificate of Incorporation
3(i).2 -- Restated Certificate of Incorporation, as amended
3(ii).1 -- Amendment to the By-Laws of the Company
3(ii).2 -- By-Laws of the Company, as amended
15.1 -- Letter of Arthur Andersen LLP regarding unaudited interim
financial statements
27.1 -- Financial Data Schedule
(b) Reports on Form 8-K During the Quarter.
April 5, 1995
April 21, 1995
June 8, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAXUS ENERGY CORPORATION
By: G. R. Brown
G. R. Brown, Vice President
and Controller, on behalf of
the registrant and as its
chief accounting officer
August 10, 1995
24
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Title Exhibit No.
------------- -----------
<S> <C>
Amendments to Restated Certificate of Incorporation 3(i).1
Restated Certificate of Incorporation, as amended 3(i).2
Amendment to the By-Laws of the Company 3(ii).1
By-Laws of the Company, as amended 3(ii).2
Letter of Arthur Andersen LLP regarding unaudited interim
financial Statements 15.1
Financial Data Schedule 27.1
</TABLE>
25
<PAGE>
Exhibit 3(i).1
ARTICLE FIFTH
ARTICLE FIFTH of the Company's Restated Certificate of Incorporation (the
"Certificate") was amended on June 8, 1995 to read as follows:
FIFTH. In furtherance of, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized and empowered:
(a) To make and alter the By-Laws of the Corporation; provided,
however, that the By-Laws made by the Board of Directors under the powers
hereby conferred may be altered, changed, amended or repealed by the Board
of Directors or by the affirmative vote of the holders of a majority of
shares having voting power with respect thereto; and
(b) From time to time to determine whether and to what extent, and
at what times and places, and under what conditions and regulations, the
accounts and books of the Corporation or any of them, shall be open to
inspection of stockholders; and no stockholder shall have any right to
inspect any account, book or document of the Corporation, except as
conferred by applicable law and subject to the rights, if any, of the
holders of any series of Preferred Stock.
The Corporation may in its By-Laws confer powers upon its Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable
law.
ARTICLE SEVENTH
ARTICLE SEVENTH of the Certificate was amended on August 10, 1995 to read
as follows:
SEVENTH. Subject to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional Directors under specific circumstances, special
meetings of stockholders of the Corporation may be called only by the Chairman
of the Board of Directors and shall be promptly called by the Chairman or the
Secretary at the written request of a majority of the Board of Directors, or the
holders of a majority of the outstanding Common Stock upon not fewer than ten
nor more than 60 days' written notice.
ARTICLE EIGHTH, SECTION 1
ARTICLE EIGHTH, SECTION 1 of the Certificate was amended on June 8, 1995 to
read as follows:
EIGHTH. SECTION 1. Number, Election and Terms of Directors. Subject to the
rights of he holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect additional
Directors under specific circumstances, the number of the Directors of the
Corporation shall be fixed from time to time by or pursuant to the By-Laws of
the Corporation, or until such director's earlier resignation or removal in
accordance with the General Corporation Law of the State of Delaware, this
Certificate of Incorporation and the By-Laws. Each director shall hold office
for one year after the time of such director's election or until such director's
successor is elected and qualified at the next succeeding annual meeting of
stockholders of the Corporation or until such director's earlier resignation or
removal in accordance with the General Corporation Law of the State of Delaware,
this Certificate of Incorporation and By-Laws.
ARTICLE EIGHTH, SECTIONS 4, 6 AND 7
ARTICLE EIGHTH, SECTIONS 4, 6 and 7 of the Certificate were amended on
August 10, 1995 to delete such SECTIONS in their entirety.
ARTICLE EIGHTH, SECTION 5
ARTICLE EIGHTH, SECTION 5 of the Certificate was redesignated as SECTION 4
and amended on August 10, 1995 to read as follows:
SECTION 5. Removal. Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect additional Directors under specified circumstances,
any Director may be removed from office only by the affirmative vote of the
holders of at least 50% of the combined voting power of the outstanding shares
of Voting Stock, voting together as a single class.
<PAGE>
EX - 3.(i).2
RESTATED
CERTIFICATE OF INCORPORATION
OF
MAXUS ENERGY CORPORATION
(ORIGINALLY INCORPORATED UNDER THE NAME OF
NEW DIAMOND CORPORATION ON JULY 19, 1983)
_______________
FIRST. The name of the Corporation (the "Corporation") is Maxus Energy
Corporation.
SECOND. The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The Corporation is authorized to issue two classes of capital
stock, designated Common Stock and Preferred Stock. The amount of total
authorized capital stock of the Corporation is 400,000,000 shares, divided into
300,000,000 shares of Common Stock, $1.00 par value, and 100,000,000 shares of
Preferred Stock, $1.00 par value.
The Preferred Stock may be issued in one or more series. The Board of
Directors is hereby authorized to issue the shares of Preferred Stock in such
series and to fix from time to time before issuance the number of shares to be
included in any series and the designation, relative powers, preferences and
rights and qualifications, limitations or restrictions of all shares of such
series. The authority of the Board of Directors with respect to each series
shall include, without limiting the generality of the foregoing, the
determination of any or all of the following:
(a) the number of shares of any series and the designation to
distinguish the shares of such series from the shares of all other
series;
(b) the voting powers, if any, and whether such voting powers are full
or limited, in such series;
(c) the redemption provisions, if any, applicable to such series,
including the redemption price or prices to be paid;
(d) whether dividends, if any, shall be cumulative or noncumulative,
the dividend rate of such series, and the dates and preferences of
dividends on such series;
(e) the rights of such series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the
Corporation;
<PAGE>
(f) the provisions, if any, pursuant to which the shares of such
series are convertible into, or exchangeable for, shares of any other
class or classes or of any other series of the same or any other class or
classes of stock, or any other security, of the Corporation or any other
corporation, and price or prices or the rates of exchange applicable
thereto;
(g) the right, if any, to subscribe for or to purchase any securities
of the Corporation or any other corporation;
(h) the provisions, if any, of a sinking fund applicable to such
series; and
(i) any other relative, participating, optional or other special
powers, preferences, rights, qualifications, limitations or restrictions
thereof;
all as shall be determined from time to time by the Board of Directors and shall
be stated in said resolution or resolutions providing for the issuance of such
Preferred Stock (a "Preferred Stock Designation").
$4.00 Cumulative Convertible Preferred Stock
The following is a statement of the powers, preferences, rights,
qualifications, limitations and restrictions of the Series, consisting of
5,915,017 shares, $1.00 par value, of the $4.00 Cumulative Convertible Preferred
Stock.
(A) Number of Shares. The number of shares which shall constitute this
Series shall be 5,915,017, which number may be increased or decreased (but not
below the number outstanding) from time to time by the Board of Directors of the
Corporation.
(B) Dividend Rate; Cumulative Date. The annual dividend rate payable on
this Series shall be $4.00 per share, cumulative to the extent not paid from
September 15, 1983, and in each case payable quarterly on March 15, June 15,
September 15 and December 15 in each year, commencing December 15, 1983.
(C) Redemption. The Corporation may, at the option of the Board of
Directors, redeem the whole or any part of the then-outstanding shares of this
Series, at any time or from time to time, upon notice duly given as hereinafter
specified, at the following prices per share if redeemed during the 12-month
period beginning December 15 of the year indicated:
<TABLE>
<S> <C>
1982............ $53.20
1983............ 52.80
1984............ 52.40
1985............ 52.00
1986............ 51.60
1987............ 51.20
1988............ 50.80
1989............ 50.40
</TABLE>
and thereafter at $50.00 per share, together in each case with a sum, for each
share so redeemed, computed at the rate of $4.00 per annum from and after the
last regular quarterly payment date applicable to $4.00 Series C Cumulative
Convertible Preferred Shares of Natomas Company,
-2-
<PAGE>
irrespective of whether such date precedes or follows the date of issuance of
this Series, on which the quarterly dividend was paid in full (the "Accrual
Date"), to and including such date fixed for redemption, less the aggregate of
the dividends theretofore and on such redemption date paid on such Series, but
computed without interest; provided that unless provision has been made for
payment in full of dividends on all shares of outstanding Preferred Stock of the
Corporation for all past dividend periods and the current period, no sum shall
be set aside for the redemption of any shares of this Series nor shall any
shares of this Series be purchased or otherwise acquired by the Corporation.
(D) Notice of Redemption. Notice of redemption of shares of this Series,
as described in division (C) hereof, shall be given as follows:
(1) Notice of every such redemption of shares of this Series shall be
given by publication at least once a week in each of two successive weeks
in a newspaper printed in the English language and customarily published on
each business day and of general circulation in the city in which the
Corporation maintains its principal executive offices and in the Borough of
Manhattan, The City of New York, commencing at least 20 but not more than
60 days prior to the date fixed for such redemption. Notice of every such
redemption shall also be mailed at least 20 but not more than 60 days prior
to the date fixed for such redemption to the holders of record of the
shares so to be redeemed at their respective addresses as the same shall
appear on the books of the Corporation, but no failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the validity
of the proceedings for the redemption of any shares so to be redeemed.
(2) In case of redemption of a part only of this Series at the time
outstanding, the redemption may be either pro rata or by lot. The Board of
Directors shall prescribe the manner in which the drawings by lot or the
pro rata redemption shall be conducted and, subject to the provisions
herein and in the Certificate of Incorporation contained, the terms and
conditions upon which the shares of this Series shall be redeemed from time
to time.
(3) If such notice of redemption shall have been duly given by
publication or if the Corporation shall have given to the bank or trust
company designated by the Corporation pursuant to this subdivision (3)
irrevocable authorization promptly to give or to complete such notice of
publication, and if on or before the redemption date specified therein the
funds necessary for such redemption shall have been deposited by the
Corporation, in trust for the pro rata benefit of the holders of the shares
so called for redemption, with a bank or trust company in good standing,
designated in such notice, organized under the laws of the United States of
America or of the State of New York, doing business in the Borough of
Manhattan, The City of New York, having a capital, surplus and undivided
profits aggregating at least $5,000,000 according to its last published
statement of condition, then, notwithstanding that any certificate for
shares so called for redemption shall not have been surrendered for
cancellation, from and after the time of such deposit, all shares so called
for redemption shall no longer be deemed to be outstanding and all rights
with respect to such shares shall forthwith cease and terminate, except
only the right of the holders thereof to receive from such deposit the
funds so deposited, without interest, and the right to exercise on or
before the close of business on the date fixed for redemption, privileges
of exchange or conversion, if any, not
-3-
<PAGE>
theretofore expiring. Any interest accrued on such funds shall be paid to
the Corporation from time to time.
(4) Any funds so set aside or deposited by the Corporation which shall
not be required for such redemption because of the exercise of any right
of conversion or exchange subsequent to the date of such deposit shall be
released or repaid to the Corporation. Any funds so set aside or
deposited, as the case may be, and unclaimed at the end of six years from
such redemption date shall be released or repaid to the Corporation, after
which the holders of the shares so called for redemption shall look only to
the Corporation for payment thereof.
(5) In connection with any redemption of shares of this Series, the
Corporation may arrange for the purchase and conversion of any shares of
this Series by an agreement with one or more investment banking firms or
other purchasers to purchase such shares by paying to or for the account of
the holders thereof on or before the close of business on the date fixed
for such redemption an amount not less than the redemption price (plus
accrued and unpaid dividends) payable by the Corporation on redemption of
such shares. Any shares of this Series tendered by the holders thereof for
redemption or not duly surrendered for conversion or deemed converted by
the holders thereof prior to the close of business on the date fixed for
redemption shall be deemed acquired by such purchasers from such holders
immediately prior to the close of business on the date fixed for such
redemption and surrendered by such purchasers for conversion pursuant to
such agreement, subject to payment of the amount indicated above. Such
amount shall be deposited, in trust for the pro rata benefit of the holders
of shares of this Series entitled thereto, with a bank or trust company
described in subdivision (3) of this division, and such deposit shall in
all respects be treated as though made by the Corporation pursuant thereto.
(6) If the Market Value of the Conversion Unit (as hereinafter defined)
on the date fixed for the redemption of shares of this Series is at least
equal to 120% of the amount payable in respect of each share of this Series
upon such redemption in accordance with division (C) hereof, then shares of
this Series not duly surrendered for conversion by the holders thereof
prior to the close of business on the date fixed for redemption shall
nevertheless be deemed to be converted by such holders into shares of
Common Stock pursuant to division (H) hereof immediately prior to such
time; provided, however, that no certificates for Common Stock issuable
upon such conversion shall be issued to any holder of shares of this Series
so converted or dividends paid or other distributions made on the Common
Stock so issued to such holder unless and until such holder shall surrender
to the Corporation the certificates for the shares of this Series so
converted. Upon such surrender, there shall be paid to the holder of such
certificates the aggregate amount of dividends and other distributions that
but for the provisions hereof would have been paid by the Corporation with
respect to the Common Stock issued on such conversion, but without interest
thereon. Until certificates representing shares of this Series have been
so surrendered such certificates shall be deemed for all corporate
purposes, other than the payment of dividends or distributions, to evidence
ownership of the Common Stock issued upon conversion of such shares. For
purposes of this subdivision (6), the "Conversion Unit" at any time shall
be deemed to be the number of shares of Common Stock into which each share
of this Series then may be converted, as provided in division (H)
-4-
<PAGE>
hereof, and the "Market Value of the Conversion Unit" on any date fixed for
the redemption of shares of this Series shall be deemed to be the amount
determined by multiplying (i) the Conversion Unit on such date by (ii) the
closing price per share of Common Stock on such date, determined as
provided in subdivision (3) of division (H) hereof.
(E) Liquidation. The amount which shall be paid to the holders of shares
of this Series in the event of any voluntary or involuntary total liquidation,
dissolution or winding up of the Corporation shall be $50.00 per share on each
outstanding share of this Series, plus in respect of each share of this Series a
sum computed at the rate of $4.00 per annum from and after the Accrual Date, to
and including the date fixed for such payment, less the aggregate of dividends
theretofore paid thereon, but computed without interest.
(F) Ratable Treatment. In the event that the amounts payable in
accordance with division (E) hereof are not paid in full, each share of this
Series shall, together with outstanding shares of all other series of Preferred
Stock of the Corporation, share ratably, without priority of one series over the
other, in the payment of dividends, including accumulations, if any, in the
proportion that the amount of dividends, including accumulations, if any, then
payable on each share bears to the aggregate of such amounts then payable on all
Preferred Stock of the Corporation and in any distribution of assets other than
by way of dividends in the proportion that the sum payable on each share bears
to the aggregate of the amounts so payable on all shares of Preferred Stock of
the Corporation.
(G) Limitation on Dividends. So long as any of the shares of this Series
shall remain outstanding, no dividend whatever shall be paid or declared, and no
distribution made, on any junior shares, other than a dividend payable solely in
junior shares, nor shall any junior shares be acquired for a consideration by
the Corporation or by any company a majority of the voting shares of which is
owned by the Corporation, unless all dividends on the shares of this Series
accrued for all past quarterly dividend periods shall have been paid and the
full dividends thereon for the then current quarterly dividend period shall have
been paid or declared and duly provided for.
(H) Conversion Rights. The terms upon which the holders of shares of this
Series may convert the same into shares of any other class or classes are as
follows:
(1) Subject to the provisions for adjustment hereinafter set forth and
to the provisions of the division (D) hereof, each of the shares of this
Series shall be convertible, at the option of the holder, upon surrender to
any Transfer Agent for such shares or to the Corporation if no such
Transfer Agent exists, of the certificate for the share to be converted,
into 1.2280 fully paid and non-assessable shares of Common Stock of the
Corporation. The right to convert shares of this Series called for
redemption shall terminate at the close of business on the date fixed for
redemption, unless the Corporation shall default in the payment of the
redemption price determined as provided in division (C) hereof; upon
conversion of any shares of this Series, no allowance or adjustment shall
be made for dividends on either class of shares, but nothing in this
subdivision shall relieve the Corporation from its obligation to pay any
dividends which shall have been declared and shall be payable to holders of
shares of this Series of record as of a date prior to such conversion even
though the payment date for such dividend is subsequent to the date of
conversion.
-5-
<PAGE>
(2) The number of shares of Common Stock into which each of the shares
of this Series is convertible shall be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall (a) pay a dividend on its Common
Stock in shares of the Corporation, (b) subdivide its outstanding
Common Stock, (c) combine its outstanding Common Stock into a smaller
number of shares, or (d) issue by reclassification of its Common Stock
(whether pursuant to a merger or consolidation or otherwise) any shares
of the Corporation, then each holder of a share of this Series shall be
entitled to receive upon the conversion of such share, the number of
shares of the Corporation which he would have owned or have been
entitled to receive after the happening of any of the events described
above had such share been converted immediately prior to the happening
of such event. Such adjustment shall be made whenever any of the events
listed above shall occur. An adjustment made pursuant to this
subdivision shall become effective retroactively with respect to
conversions made subsequent to the record date in the case of a stock
dividend, and shall become effective on the effective date in the case
of a subdivision, combination or reclassification.
(ii) In case the Corporation shall issue rights or warrants to the
holders of its Common Stock as such entitling them to subscribe for or
purchase Common Stock, at a price per share less than the current market
price per share of Common Stock (as defined in subdivision (3) below) on
the record date for determination of stockholders entitled to receive
such rights or warrants, then in each such case the number of shares of
Common Stock into which each share of this Series shall thereafter be
convertible shall be determined by multiplying the number of shares of
Common Stock into which such share of this Series was theretofore
convertible by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the denominator shall
be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would
purchase at such current market price. For the purposes of this
subdivision, the issuance of rights or warrants to subscribe for or
purchase shares or securities convertible into shares of Common Stock
shall be deemed to be the issuance of rights or warrants to purchase the
shares of Common Stock into which such shares or securities are
convertible at an aggregate offering price equal to the aggregate
offering price of such shares or securities plus the minimum aggregate
amount (if any) payable upon conversion of such shares or securities
into shares of Common Stock. Such adjustment shall be made whenever any
such rights or warrants are issued, and shall become effective
retroactively with respect to conversions made subsequent to the record
date for the determination of stockholders entitled to receive such
rights or warrants.
(iii) In case the Corporation shall distribute to holders of its
Common Stock (whether pursuant to a merger or consolidation or
otherwise) evidences of its indebtedness or assets (excluding cash
distributions after August 31, 1983 not exceeding the aggregate net
earnings of the Corporation and its subsidiaries on a consolidated basis
after such date
-6-
<PAGE>
less dividends paid after such date on shares other than shares of
Common Stock, all determined in accordance with generally accepted
accounting principles) or rights to subscribe (excluding those referred
to in paragraph (ii) above) then in each such case the number of shares
of Common Stock into which each share of this Series shall thereafter be
convertible shall be determined by multiplying the number of shares of
Common Stock into which such share of this Series was therefore
convertible by a fraction of which the numerator shall be the current
market price per share of the Common Stock (as defined in subdivision
(3) below) on the record date for determination of stockholders entitled
to receive such distribution, and of which the denominator shall be such
current market price per share of the Common Stock less the fair value
(as determined by the Board of Directors of the Corporation, whose
determination shall be conclusive, and described in a statement filed
with each Transfer Agent for the shares of this Series) of the portion
of the assets or evidences of indebtedness so distributed or of such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made, and
shall become effective retroactively with respect to conversions made
subsequent to the record date for the determination of stockholders
entitled to receive such distribution.
(3) For the purposes of any computation under subdivision (2) above, the
current market price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices for the 30 consecutive
full business days commencing 45 full business days before the day in
question. The closing price for each day shall be the last sales price
regular way or, in case no sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case (i) as officially
quoted by the New York Stock Exchange Composite Tape or (ii) if, in the
reasonable judgment of the Board of Directors of the Corporation, the New
York Stock Exchange, Inc. is no longer the principal United States market
for the Common Stock, then as quoted on the principal United States stock
exchange or market for the Common Stock as determined by the Board of
Directors of the Corporation, or (iii) if, in the reasonable judgment of
the Board of Directors of the Corporation there exists no principal United
States stock exchange or market for the Common Stock, then as reasonably
determined by the Board of Directors of the Corporation.
(4) No adjustment in the conversion rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this
subdivision (4)) would require an increase or decrease of at least 1% in
the number of shares of Common Stock into which each share of this Series
is then convertible; provided, however, that any adjustments which by
reason of this subdivision (4) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under division (H) shall be made to the nearest one-hundred
thousandth of a share.
(5) Whenever any adjustment is required in the shares into which shares
of this Series is convertible, the Corporation shall forthwith (i) file
with each Transfer Agent for this Series a statement describing in
reasonable detail the adjustment and the method of calculation used, and
(ii) cause a copy of such statement to be mailed to the holders of record
of the shares of this Series as of the effective date of such adjustment.
-7-
<PAGE>
(6) No fractional share or scrip representing fractional shares shall be
issued upon the conversion of shares of this Series. If any such
conversion would otherwise require the issuance of a fractional share, an
amount equal to such fraction multiplied by the closing price (determined
as provided in subdivision (3) above) of the shares of Common Stock on the
day of conversion shall be paid to the holder in cash by the Corporation.
(7) The certificate of any independent firm of public accountants of
recognized standing selected by the Board of Directors shall be evidence
of the correctness of any computation made under this division (H).
(8) All shares of this Series redeemed, purchased or otherwise acquired
by the Corporation or surrendered to it for conversion into Common Stock
as provided above shall be cancelled and thereupon restored to the status
of authorized but unissued Preferred Stock undesignated as to series.
(9) The Corporation shall be entitled to make such increases in the
conversion rate, in addition to those required by this division (H), as
shall be determined by the Board of Directors, as evidenced by a resolution
thereof, which are advisable in order to avoid taxation so far as
practicable of any dividend of shares or rights to shares, or any event
treated as such a dividend to the recipients for federal income tax
purposes.
(10) The shares of this Series shall be deemed to have been converted
and the person converting the same to have become the holder of record of
shares of Common Stock, for the purpose of receiving dividends and for all
other purposes whatever, as of the date when a certificate or certificates
for such shares of this Series are surrendered to the Corporation as
aforesaid. The Corporation shall not be required to make any such
conversion, and no surrender of the shares of this Series shall be
effective for such purpose, while the books for the transfer of either the
shares of Common Stock or of this Series are closed for any purpose, but
the surrender of such shares of this Series for conversion during any
period while such books are closed shall become effective for all purposes
of conversion immediately upon the reopening of such books, as if the
conversion had been made on the date such shares of this Series were
surrendered.
(11) The Corporation shall at all times reserve and keep available out
of its authorized Common Stock the full number of shares into which all
shares of this Series from time to time outstanding are convertible. If at
any time the number of authorized and unissued shares of Common Stock shall
not be sufficient to effect the conversion of all outstanding shares of
this Series at the conversion rate then in effect, the Corporation shall
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized and unissued Common Stock to such
number as shall be sufficient for such purpose.
(l) Voting Rights. Except as may otherwise be provided by law or in this
division (l), the holders of the shares of this Series shall be entitled to vote
at a rate of one vote per share as a class with the holders of all other shares
of capital stock of the Corporation then entitled to vote, and not as a separate
class, on a non-cumulative basis for election of directors and upon all other
matters
-8-
<PAGE>
which may be submitted to a vote of holders of the Corporation's Common Stock at
any annual or special meeting thereof.
In addition to the voting rights in respect of the election of directors
set forth in the preceding paragraph, the shares of this Series shall have the
voting rights set forth below:
(1) So long as any of the shares of this Series are outstanding, the
consent of the holders of at least a majority of the then-outstanding
shares of this Series, given in person or by proxy at any special or annual
meeting called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) Any increase in the authorized amount of Preferred Stock or the
authorization, or any increase in the authorized amount, of any class of
shares of the Corporation ranking on a parity with the Preferred Stock.
(ii) The sale, lease or conveyance (other than by mortgage) of all
or substantially all of the property or business of the Corporation or
the consolidation or merger of the Corporation into any other
corporation, unless the corporation resulting from such merger or
consolidation shall have thereafter no class of shares, either
authorized or outstanding, ranking prior to or on a parity with shares
corresponding to the shares of Preferred Stock, except the same number
of shares with no greater rights and preferences than the shares of
Preferred Stock authorized immediately preceding such consolidation or
merger and unless each holder of shares of Preferred Stock immediately
preceding such consolidation or merger shall receive the same number of
shares, with substantially the same rights and preferences, of the
resulting corporation; provided, however, that the resulting corporation
may have authorized and outstanding such additional shares having
preferences or priorities over or being on a parity with the shares of
Preferred Stock as the holders of Preferred Stock of the Corporation may
have previously authorized pursuant to the Certificate of Incorporation;
and provided, further, that this requirement of consent by the holders
of shares of Preferred Stock shall not be deemed to apply to or operate
to prevent either the purchase by the Corporation of the assets or
shares, in whole or in part, of any other corporation, or the sale by
the Corporation or any subsidiary of all or part of the capital shares
or assets of other corporations, including a subsidiary, or the sale of
a division or divisions of the Corporation or of any subsidiary, or any
other sale of property or assets which constitutes less than
substantially all of the property or assets of the Corporation.
(2) So long as any of the shares of this Series are outstanding, the
consent of the holders of at least 66 2/3% of the then-outstanding shares
of this Series given in person or by proxy, at any special or annual
meeting called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) The authorization, or any increase in the authorized amount, of
any class of shares of the Corporation ranking prior to the shares of
Preferred Stock.
-9-
<PAGE>
(ii) The amendment, alteration or repeal of any of the provisions of
the Certificate of Incorporation, or the amendment, alteration, repeal
or adoption of any resolution contained in a certificate of designation
filed pursuant to Section 151 of the General Corporation Law of the
State of Delaware in the office of the Secretary of State of the State
of Delaware, which would affect adversely any right, preference,
privilege or voting power of the shares of this Series or shares of any
other series of Preferred Stock or the holders thereof.
(3) Without limiting the rights, if any, of holders of any other series
of Preferred Stock, in case the Corporation shall be in arrears in the
payment of six quarterly dividends, whether or not successive, on the
outstanding shares of this Series or any other outstanding series of
Preferred Stock, the holders of shares of this Series voting separately as
a class and in addition to their other voting rights shall have the
exclusive right to elect two additional directors beyond the number to be
elected by all stockholders at the next annual meeting of stockholders
called for the election of directors, and at every subsequent such meeting
at which the terms of office of the directors so elected by the holders of
shares of this Series expire, provided such arrearage exists on the date of
such meeting or subsequent meetings, as the case may be. The right of the
holders of shares of this Series voting separately as a class to elect two
members of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on all shares of
Preferred Stock shall have been paid in full and provision has been made
for the payment in full of the dividends for the current quarter, at which
time the special right of the holders of shares of this Series so to vote
separately as a class for the election of Directors shall terminate,
subject to revesting at such time as the Corporation shall be in arrears in
the payment of six quarterly dividends, whether or not successive, on the
outstanding shares of this Series or any other outstanding series of
Preferred Stock. If the annual meeting of stockholders of the Corporation
is not, for any reason, held on the date fixed in the By-Laws at a time
when the holders of shares of this Series, voting separately and as a
class, shall be entitled to elect directors, or if vacancies shall exist in
both of the two offices of directors elected by the holders of shares of
this Series, the Chairman of the Board of the Corporation shall, upon the
written request of the holders of record of at least 10% of the shares of
this Series then outstanding addressed to the Secretary of the Corporation,
call a special meeting in lieu of the annual meeting of stockholders, or,
in the event of such vacancies, a special meeting of the holders of shares
of this Series, for the purpose of electing directors. Any such meeting
shall be held at the earliest practicable date at the place for the holding
of the annual meeting of stockholders or as otherwise determined pursuant
to the By-Laws. If such meeting shall not be called by the Chairman of the
Board of the Corporation within 20 days after personal service of said
written request upon the Secretary of the Corporation, or within 20 days
after mailing the same within the United States by certified mail,
addressed to the Secretary of the Corporation at its principal executive
offices, then the holder of record of at least 10% of the outstanding
shares of this Series may designate in writing one of their number to call
such meeting at the expense of the Corporation, and such meeting may be
called by the person so designated upon the notice required for the annual
meeting of stockholders of the Corporation and shall be held at the place
for holding the annual meetings of stockholders or as otherwise determined
pursuant to the By-Laws. Any holder
-10-
<PAGE>
of shares of this Series so designated shall have access to the lists of
stockholders to be called pursuant to the provisions hereof.
At any meeting held for the purpose of electing directors at which the
holders of shares of this Series shall have the right to elect directors
as aforesaid, the presence in person or by proxy of the holders of at least
33 1/3% of the outstanding shares of this Series shall be required to
constitute a quorum of such shares of this Series.
In the event any meeting of the holders of shares of this Series shall
be held for the purpose of electing directors pursuant to this subdivision
(3), nothing contained herein shall preclude the Corporation from
simultaneously calling and holding a meeting of any other class or series
of capital stock of the Corporation which may have voting rights to elect
directors.
Any vacancy occurring in the office of director elected by the holders
of shares of this Series may be filled by the remaining director elected by
the holders of the shares of such class, unless and until such vacancy
shall be filled by the holders of the shares of such class. Any director
to be elected by the holders of shares of this Series shall agree, prior to
his election to office, to resign upon any termination of the right of the
holders of shares of this Series to vote as a class for directors as herein
provided, and upon any such termination the directors then in office
elected by the holders of shares of this Series shall forthwith resign.
(J) Certain Taxes. The Corporation shall pay any and all taxes which may
be imposed upon it with respect to the issuance and delivery of shares of Common
Stock upon the conversion of the shares of this Series as herein provided. The
Corporation shall not be required in any event to pay any transfer or other
taxes by reason of the issuance of such shares of Common Stock in names other
than those in which the shares of this Series surrendered for conversion may
stand, and no such conversion or issuance of shares of Common Stock shall be
made unless and until the person requesting such issuance has paid to the
Corporation the amount of any such tax or has established to the satisfaction of
the Corporation and its transfer agent, if any, that such tax has been paid.
(K) No Sinking Fund. No sinking fund shall be provided for the purchase
or redemption of the shares of this Series.
(L) No Preemptive Rights. The holders of shares of this Series are not
entitled to any preemptive or other rights to subscribe for or to purchase any
shares or securities of any class which may at any time be issued, sold or
offered for sale by the Corporation.
(M) Rank. All shares of Preferred Stock, including this Series, shall be
of equal rank with each other regardless of series, and shall be identical with
each other except as provided in the Certificate of Incorporation or in a
certificate of designation filed pursuant to Section 151 of the General
Corporation Law of the State of Delaware with the Secretary of State of the
State of Delaware.
-11-
<PAGE>
Each holder of Common Stock of the Corporation entitled to vote shall have
one vote for each share thereof held except in the case of any election of
Directors as provided in Section 4 of Article Eighth.
Except as may be provided in this Certificate of Incorporation or by the
Board of Directors in a Preferred Stock Designation, the Common Stock shall have
the exclusive right to vote for the election of Directors and for all other
purposes, and holders of Preferred Stock shall not be entitled to receive notice
of any meeting of stockholders at which they are not entitled to vote or
consent.
The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the Corporation shall
have notice thereof, except as expressly provided by applicable laws.
$2.50 Cumulative Preferred Stock
The following is a statement of the powers, preferences, rights,
qualifications, limitations and restrictions of the Series, consisting of
5,000,000 shares, $1.00 par value, of the $2.50 Cumulative Preferred Stock.
SECTION 1. Designation and Amount. The shares of this Series shall be
designated as the "$2.50 Cumulative Preferred Stock" and the number of shares
constituting this Series shall be 5,000,000, which number, subject to the
provisions of the Certificate of Incorporation, may be increased or decreased by
the Board of Directors without a vote of stockholders; provided, however, that
such number may not be decreased below the number of the then currently
outstanding shares of this Series.
SECTION 2. Dividends. The holders of shares of this Series, in preference
to the holders of shares of the Common Stock of the Corporation and of any other
capital stock of the Corporation ranking junior to this Series as to payment of
dividends, shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, cumulative cash
dividends at the annual rate of $2.50 per share, and no more, in equal quarterly
payments on the fifteenth day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing March 15, 1994. Dividends shall begin to accrue and be
cumulative from the date of original issue of this Series. The amount of
dividends so payable shall be determined on the basis of twelve 30-day months
and a 360-day year. Accumulated but unpaid dividends shall not bear interest.
Dividends paid on the shares of this Series in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of this Series entitled to receive payment of a dividend
declared thereon, which record date shall be no more than sixty days prior to
the date fixed for the payment thereof.
SECTION 3. Redemption. The shares of this Series shall not be redeemable
prior to December 1, 1998. On or after that date, the Corporation shall have
the right, at its sole option and
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<PAGE>
election, to redeem the whole or any part of the then-outstanding shares of this
Series, at any time or from time to time, upon notice duly given as hereinafter
specified, at a price per share of $25.00, plus dividends accumulated but unpaid
to the redemption date; provided that unless provision has been made for payment
in full of dividends on all shares of outstanding Preferred Stock of the
Corporation for all past dividend periods and the current period, no sum shall
be set aside for the redemption of any shares of this Series nor shall any
shares of this Series be purchased or otherwise acquired by the Corporation.
Notice of every such redemption of shares of this Series shall be given by
publication at least once a week in each of two successive weeks in a newspaper
printed in the English language and customarily published on each business day
and of general circulation in the city in which the Corporation maintains its
principal executive offices and in the Borough of Manhattan, The City of New
York, commencing at least 30 but not more than 60 days prior to the date fixed
for such redemption. Notice of every such redemption shall also be mailed at
least 30 but not more than 60 days prior to the date fixed for such redemption
to the holders of record of the shares so to be redeemed at their respective
addresses as the same shall appear on the books of the Corporation, but no
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares so
to be redeemed. In case of redemption of a part only of this Series at the time
outstanding, the redemption may be either pro rata or by lot. The Board of
Directors shall prescribe the manner in which the drawings by lot or the pro
rata redemption shall be conducted and, subject to the provisions herein and in
the Certificate of Incorporation contained, the terms and conditions upon which
the shares of this Series shall be redeemed from time to time.
If such notice of redemption shall have been duly given by publication or
if the Corporation shall have given to the bank or trust company designated by
the Corporation as hereinafter specified irrevocable authorization promptly to
give or to complete such notice of publication, and if on or before the
redemption date specified therein the funds necessary for such redemption shall
have been deposited by the Corporation, in trust for the pro rata benefit of the
holders of the shares so called for redemption, with a bank or trust company in
good standing, designated in such notice, organized under the laws of the United
States of America or of the State of New York, doing business in the Borough of
Manhattan, The City of New York, having a capital, surplus and undivided profits
aggregating at least $5,000,000 according to its last published statement of
condition, then, notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from and after the
time of such deposit, all shares so called for redemption shall no longer be
deemed to be outstanding and all rights with respect to such shares shall
forthwith cease and terminate, except only the right of the holders thereof to
receive from such deposit the funds so deposited, without interest. Any
interest accrued on such funds shall be paid to the Corporation from time to
time. Any funds so set aside or deposited, as the case may be, and unclaimed at
the end of two years from such redemption date shall be released or repaid to
the Corporation, after which the holders of the shares so called for redemption
shall look only to the Corporation for payment thereof.
SECTION 4. Liquidation. The amount which shall be paid to the holders of
shares of this Series in the event of any voluntary or involuntary total
liquidation, dissolution or winding up of
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<PAGE>
the Corporation shall be $25.00 per share on each outstanding share of this
Series, plus an amount equal to all dividends accumulated but unpaid to the date
of such payment.
SECTION 5. Ratable Treatment. In the event that the amounts payable in
accordance with Section 4 hereof are not paid in full, each share of this Series
shall, together with outstanding shares of all other series of Preferred Stock
of the Corporation, share ratably, without priority of one series over the
other, in the payment of dividends, including accumulations, if any, in the
proportion that the amount of dividends, including accumulations, if any, then
payable on each share bears to the aggregate of such amounts then payable on all
Preferred Stock of the Corporation and in any distribution of assets other than
by way of dividends in the proportion that the sum payable on each share bears
to the aggregate of the amounts so payable on all shares of Preferred Stock of
the Corporation.
SECTION 6. Limitation on Dividends. So long as any of the shares of this
Series shall remain outstanding, no dividend whatever shall be paid or declared,
and no distribution made, on any junior shares, other than a dividend payable
solely in junior shares, nor shall any junior shares be acquired for a
consideration by the Corporation or by any company a majority of the voting
shares of which is owned by the Corporation, unless all dividends on the shares
of this Series accrued for all past quarterly dividend periods shall have been
paid and the full dividends thereon for the then current quarterly dividend
period shall have been paid or declared and duly provided for.
SECTION 7. Voting Rights. The holders of the shares of this Series shall
have no voting rights whatsoever, except for any voting rights to which they may
be entitled under the laws of the State of Delaware, and except as follows:
(a) So long as any of the shares of this Series are outstanding, the
consent of the holders of at least a majority of the then-outstanding
shares of this Series, given in person or by proxy at any special or annual
meeting called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) Any increase in the authorized amount of Preferred Stock or the
authorization, or any increase in the authorized amount, of any
class of shares of the Corporation ranking on a parity with the
Preferred Stock.
(ii) The sale, lease or conveyance (other than by mortgage) of all
or substantially all of the property or business of the Corporation
or the consolidation or merger of the Corporation into any other
corporation, unless the corporation resulting from such merger or
consolidation shall have thereafter no class of shares, either
authorized or outstanding, ranking prior to or on a parity with shares
corresponding to the shares of Preferred Stock, except the same number
of shares with no greater rights and preferences than the shares of
Preferred Stock authorized immediately preceding such consolidation or
merger and unless each holder of shares of Preferred Stock immediately
preceding such consolidation or merger shall receive the same number
of shares, with substantially the same rights and preferences, of the
resulting corporation; provided, however, that the resulting
corporation may have authorized and outstanding
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<PAGE>
such additional shares having preferences or priorities over or being
on a parity with the shares of Preferred Stock as the holders of
Preferred Stock of the Corporation may have previously authorized
pursuant to the Certificate of Incorporation; and provided, further,
that this requirement of consent by the holders of shares of Preferred
Stock shall not be deemed to apply to or operate to prevent either the
purchase by the Corporation of the assets or shares, in whole or in
part, of any other corporation, or the sale by the Corporation or any
subsidiary of all or part of the capital shares or assets of other
corporations, including a subsidiary, or the sale of a division or
divisions of the Corporation or of any subsidiary, or any other sale
of property or assets which constitutes less than substantially all of
the property or assets of the Corporation.
(b) So long as any of the shares of this Series are outstanding, the
consent of the holders of at least 66 2/3% of the then-outstanding shares
of this Series given in person or by proxy, at any special or annual
meeting called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) The authorization, or any increase in the authorized amount, of
any class of shares of the Corporation ranking prior to the shares of
Preferred Stock.
(ii) The amendment, alteration or repeal of any of the provisions of
the Certificate of Incorporation, or the amendment, alteration, repeal
or adoption of any resolution contained in a certificate of
designation filed pursuant to Section 151 of the General Corporation
Law of the State of Delaware in the office of the Secretary of State
of the State of Delaware, which would affect adversely any right,
preference, privilege or voting power of the shares of this Series or
shares of any other series of Preferred Stock or the holders thereof.
(c) Without limiting the rights, if any, of holders of any other series
of Preferred Stock, in case the Corporation shall be in arrears in the
payment of six quarterly dividends, whether or not successive, on the
outstanding shares of this Series or any other outstanding series of
Preferred Stock, the holders of shares of this Series voting separately as
a class and in addition to their other voting rights shall have the
exclusive right to elect two additional directors beyond the number to be
elected by all stockholders at the next annual meeting of stockholders
called for the election of directors, and at every subsequent such meeting
at which the terms of office of the directors so elected by the holders of
shares of this Series expire, provided such arrearage exists on the date of
such meeting or subsequent meetings, as the case may be. The right of the
holders of shares of this Series voting separately as a class to elect two
members of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on all shares of
Preferred Stock shall have been paid in full and provision has been made
for the payment in full of the dividends for the current quarter, at which
time the special right of the holders of shares of this Series so to vote
separately as a class for the election of Directors shall terminate,
subject to revesting at such time as the Corporation shall be in arrears in
the payment of six quarterly dividends, whether or not successive, on the
outstanding shares of this Series or any other outstanding series of
Preferred Stock. If the annual meeting of stockholders of the Corporation
is not, for any
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<PAGE>
reason, held on the date fixed in the By-Laws at a time when the holders of
shares of this Series, voting separately and as a class, shall be entitled
to elect directors, or if vacancies shall exist in both of the two offices
of directors elected by the holders of shares of this Series, the Chairman
of the Board of the Corporation shall, upon the written request of the
holders of record of at least 10% of the shares of this Series then
outstanding addressed to the Secretary of the Corporation, call a special
meeting in lieu of the annual meeting of stockholders, or, in the event of
such vacancies, a special meeting of the holders of shares of this Series,
for the purpose of electing directors. Any such meeting shall be held at
the earliest practicable date at the place for the holding of the annual
meeting of stockholders or as otherwise determined pursuant to the By-Laws.
If such meeting shall not be called by the Chairman of the Board of the
Corporation within 20 days after personal service of said written request
upon the Secretary of the Corporation, or within 20 days after mailing the
same within the United States by certified mail, addressed to the Secretary
of the Corporation at its principal executive offices, then the holder of
record of at least 10% of the outstanding shares of this Series may
designate in writing one of their number to call such meeting at the
expense of the Corporation, and such meeting may be called by the person so
designated upon the notice required for the annual meeting of stockholders
of the Corporation and shall be held at the place for holding the annual
meetings of stockholders or as otherwise determined pursuant to the By-
Laws. Any holder of shares of this Series so designated shall have access
to the lists of stockholders to be called pursuant to the provisions
hereof.
At any meeting held for the purpose of electing directors at which the
holders of shares of this Series shall have the right to elect directors
as aforesaid, the presence in person or by proxy of the holders of at least
33 1/3% of the outstanding shares of this Series shall be required to
constitute a quorum of such shares of this Series.
In the event any meeting of the holders of shares of this Series shall be
held for the purpose of electing directors pursuant to this subdivision
(c), nothing contained herein shall preclude the Corporation from
simultaneously calling and holding a meeting of any other class or series
of capital stock of the Corporation which may have voting rights to elect
directors.
Any vacancy occurring in the office of director elected by the holders of
shares of this Series may be filled by the remaining director elected by
the holders of the shares of such class, unless and until such vacancy
shall be filled by the holders of the shares of such class. Any director
to be elected by the holders of shares of this Series shall agree, prior to
his election to office, to resign upon any termination of the right of the
holders of shares of this Series to vote as a class for directors as herein
provided, and upon any such termination the directors then in office
elected by the holders of shares of this Series shall forthwith resign.
SECTION 8. No Sinking Fund. No sinking fund shall be provided for the
purchase or redemption of the shares of this Series.
SECTION 9. No Preemptive Rights. The holders of shares of this Series are
not entitled to any preemptive or other rights to subscribe for or to purchase
any shares or securities of any class which may at any time be issued, sold or
offered for sale by the Corporation.
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<PAGE>
SECTION 10. Rank. All shares of Preferred Stock, including this Series,
shall be of equal rank with each other regardless of series, and shall be
identical with each other except as provided in the Certificate of Incorporation
or in a certificate of designation filed pursuant to Section 151 of the General
Corporation Law of the State of Delaware with the Secretary of State of the
State of Delaware.
$9.75 Cumulative Convertible Preferred Stock
The following is a statement of the powers, preferences, rights,
qualifications, limitations and restrictions of the Series, consisting of
2,500,000 shares, $1.00 par value, of the $9.75 Cumulative Convertible Preferred
Stock.
SECTION 1. Designation and Amount. The shares of such series shall be
designated as the "$9.75 Cumulative Convertible Preferred Stock" (the "$9.75
Preferred Stock") and the number of shares constituting such series shall be
2,500,000 which number may be decreased (but not increased) by the Board of
Directors without a vote of stockholders; provided, however, that such number
may not be decreased below the number of then currently outstanding shares of
$9.75 Preferred Stock.
SECTION 2. Dividends and Distributions.
(a) The holders of shares of $9.75 Preferred Stock, in preference to the
holders of shares of the Common Stock, $1.00 par value (the "Common
Stock"), of the Corporation and of any other capital stock of the
Corporation ranking junior to the $9.75 Preferred Stock as to payment of
dividends, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
cumulative cash dividends at the annual rate of $9.75 per share, and no
more (except as otherwise provided in paragraph (b) of this Section 2), in
equal quarterly payments on the fifteenth day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date which is at least 10 days after the date of original
issue of the $9.75 Preferred Stock.
(b) If the ratio (expressed as a percentage) of Consolidated Funded Debt
(as defined in Section 10 hereof) to Gross Tangible Worth (as defined in
Section 10 hereof) of the Corporation and its Subsidiaries (as defined in
Section 10 hereof) or of any successor Person to the Corporation and its
Subsidiaries or of any Person of which the Corporation is a Subsidiary and
the Subsidiaries of such Person (the "Reporting Entity"), computed as if
all such Persons and the Corporation were consolidated pursuant to
generally accepted accounting principles, exceeds 60% as of the last day of
the calendar quarter for two or more consecutive calendar quarters, then
retroactively effective for the Quarterly Dividend Payment Date in the
first calendar quarter in which such ratio exceeds 60%, the holders of
shares of $9.75 Preferred Stock, in preference to the holders of shares of
Common Stock and of any other capital stock of the Corporation ranking
junior to the $9.75 Preferred Stock as to payment of dividends, shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, cumulative cash dividends at
the annual rate of $10.75 per share (rather than at the annual rate of
$9.75 per share as provided in paragraph
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<PAGE>
(a) of this Section 2), and no more, in equal quarterly payments on each
Quarterly Dividend Payment Date until such ratio is 60% or less as of the
last day of the calendar quarter for four consecutive calendar quarters.
After such period, the holders of shares of $9.75 Preferred Stock will be
entitled to receive dividends at the annual rate of $9.75 per share as
provided in paragraph (a) of this Section 2 until such ratio again exceeds
60% as of the last day of the calendar quarter for two or more consecutive
calendar quarters.
(c) Dividends payable pursuant to paragraph (a) or (b) of this Section 2
shall begin to accrue and be cumulative from the date of original issue of
the $9.75 Preferred Stock. The amount of dividends so payable shall be
determined on the basis of twelve 30-day months and a 360-day year. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares
of $9.75 Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of $9.75 Preferred Stock entitled to
receive payment of a dividend declared thereon, which record date shall be
no more than sixty days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of $9.75 Preferred Stock
shall have the following voting rights:
(a) So long as more than 750,000 shares of $9.75 Preferred Stock are
issued and outstanding, the holders of the outstanding shares of $9.75
Preferred Stock, voting separately as a single series, in person or by
proxy, shall be entitled to elect one or more directors of the Corporation,
in the number and manner specified in this paragraph (a) and, subject to
the provisions of the Restated Certificate of Incorporation of the
Corporation and of any other Certificate of Designations, Preferences and
Rights relating to any other class or series of capital stock of the
Corporation having a preference over the Common Stock as to dividends or
upon liquidation, the holders of shares of Common Stock and of any such
other class or series of capital stock of the Corporation, voting together
as a class, shall be entitled to elect the remaining directors of the
Corporation; provided, however, that until such time as any waiting period
with respect to any acquisition of shares of $9.75 Preferred Stock required
to expire under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, including any extensions thereof, shall have expired or been
terminated, the holders of shares of $9.75 Preferred Stock acquired in such
acquisition shall not have the right to vote for the election of directors.
So long as the number of shares of $9.75 Preferred Stock specified in this
sentence are issued and outstanding, the number of directors of the
Corporation which the holders of shares of $9.75 Preferred Stock, voting
separately as a single series, shall be entitled to elect shall be the
following:
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<PAGE>
<TABLE>
<CAPTION>
Number of
Number of Shares Directors
---------------- ---------
<S> <C>
2,250,000 or more............................ 3
1,500,000 or more but less than 2,250,000.... 2
750,001 or more but less than 1,500,000...... 1
</TABLE>
(b) So long as more than 300,000 shares of $9.75 Preferred Stock are
issued and outstanding, the affirmative vote of the holders of at least a
majority of the outstanding shares of $9.75 Preferred Stock, voting
separately as a single series, in person or by proxy, at a special or
annual meeting of stockholders called for the purpose, shall be necessary
to authorize any transaction defined as a "Self-Dealing Transaction" in
Section 3 of Article NINTH of the Restated Certificate of Incorporation of
the Corporation, as in effect on February 1, 1987.
(c) The affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of $9.75 Preferred Stock, voting separately as a
single series, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to (i) authorize,
or to increase the authorized number of shares of, or to issue, any class
or series of the Corporation's capital stock ranking prior (either as to
dividends or upon liquidation, dissolution or winding up) to the $9.75
Preferred Stock or (ii) amend, repeal or change any of the provisions of
the Restated Certificate of Incorporation of the Corporation or the
provisions of the Certificate of Designations, Preferences and Rights of
$9.75 Cumulative Convertible Preferred Stock which embodies this
resolution, in any manner which would alter or change the powers,
preferences or special rights of the shares of $9.75 Preferred Stock so as
to affect them adversely.
(d) The foregoing rights of holders of shares of $9.75 Preferred Stock
to take any actions as provided in this Section 3 may be exercised at any
annual meeting of stockholders or at a special meeting of stockholders held
for such purpose. At each meeting of stockholders at which the holders of
shares of $9.75 Preferred Stock shall have the right, voting separately as
a single series, to elect directors of the Corporation as provided in this
Section 3 or to take any other action, the presence in person or by proxy
of the holders of record of one-third of the total number of shares of
$9.75 Preferred Stock then outstanding and entitled to vote on the matter
shall be necessary and sufficient to constitute a quorum. At any such
meeting or at any adjournment thereof,
(i) the absence of a quorum of the holders of shares of $9.75
Preferred Stock shall not prevent the election of directors other than
those to be elected by the holders of shares of $9.75 Preferred Stock
and the absence of a quorum of the holders of shares of any other class
or series of capital stock shall not prevent the election of directors
to be elected by the holders of shares of $9.75 Preferred Stock or the
taking of any other action as provided in this Section 3; and
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<PAGE>
(ii) in the absence of a quorum of the holders of shares of $9.75
Preferred Stock, a majority of the holders of such shares present in
person or by proxy shall have the power to adjourn the meeting as to the
actions to be taken by the holders of shares of $9.75 Preferred Stock
from time to time and place to place without notice other than
announcement at the meeting until a quorum shall be present.
For the taking of any action as provided in this Section 3 by the
holders of shares of $9.75 Preferred Stock, each such holder shall have
one vote for each share of such stock standing in his name on the transfer
books of the Corporation as of any record date fixed for such purpose or,
if no such date be fixed, at the close of business on the Business Day (as
defined in Section 10 hereof) next preceding day on which notice is given,
or if notice is waived, at the close of business on the Business Day next
preceding the day on which the meeting is held.
Each director elected by the holders of shares of $9.75 Preferred Stock
as provided in paragraph (a) of this Section 3 shall, unless his term shall
expire earlier, hold office until the annual meeting of stockholders next
succeeding his election or until his successor, if any, is elected and
qualified.
In case any vacancy shall occur among the directors elected by the
holders of shares of $9.75 Preferred Stock as provided in paragraph (a) of
this Section 3, such vacancy may be filled for the unexpired portion of the
term by vote of the remaining directors or director theretofore elected by
such holders, or such directors' or director's successors in office. If
any such vacancy is not so filled within 20 days after the creation
thereof, the Chairman of the Board of the Corporation shall call a special
meeting of the holders of shares of $9.75 Preferred Stock to be held as
promptly as practicable and such vacancy or vacancies shall be filled at
such special meeting.
Any director elected by the holders of shares of $9.75 Preferred Stock
may be removed from office by vote of the holders of at least a majority
of the outstanding shares of $9.75 Preferred Stock. A special meeting of
the holders of shares of $9.75 Preferred Stock may be called by a majority
vote of the Board of Directors for the purpose of removing a director in
accordance with the provisions of this paragraph (d). The Chairman of the
Board of the Corporation shall, in any event, within 10 days after delivery
to the Corporation at its principal office of a request to call such a
special meeting signed by the holders of at least 20% of the outstanding
shares of $9.75 Preferred Stock, call a special meeting for such purpose to
be held as promptly as practicable after the delivery of such request.
If the Corporation shall not set a date for an annual meeting to elect
directors within thirteen months of the previous annual meeting, then
within 10 days after delivery to the Corporation at its principal office of
a request to call such an annual meeting signed by the holders of at least
20% of the outstanding shares of $9.75 Preferred Stock, the Chairman of the
Board of the Corporation shall call an annual meeting to be held as
promptly as practicable after the delivery of such request.
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(e) Except as provided herein or in the Restated Certificate of
Incorporation of the Corporation, or as required by law, the holders of
shares of $9.75 Preferred Stock shall have no voting rights and their
consent shall not be required for the taking of any corporate action.
SECTION 4. Certain Restrictions.
(a) Whenever quarterly dividends payable on shares of $9.75 Preferred
Stock as provided in Section 2 hereof are in arrears, thereafter and
until all accrued and unpaid dividends, whether or not declared, on the
outstanding shares of $9.75 Preferred Stock shall have been paid in full or
declared and set apart for payment, or whenever the Corporation shall not
have redeemed shares of $9.75 Preferred Stock at a time required by
paragraph (b) of Section 5 hereof, thereafter and until all mandatory
redemption obligations which have come due shall have been satisfied or all
necessary funds have been set apart for payment, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of capital stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the $9.75 Preferred Stock, other
than dividends or distributions payable in capital stock ranking junior (as
to dividends and upon liquidation, dissolution or winding up) to the $9.75
Preferred Stock; or (ii) declare or pay dividends, or make any other
distributions, on any shares of capital stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the
$9.75 Preferred Stock, other than dividends or distributions payable in
capital stock ranking junior (as to dividends and upon liquidation,
dissolution or winding up) to the $9.75 Preferred Stock, except dividends
paid ratably on the $9.75 Preferred Stock and all capital stock ranking on
a parity with the $9.75 Preferred Stock and on which dividends are payable
or in arrears, in proportion to the total amounts to which the holders of
all such shares are then entitled.
(b) Whenever quarterly dividends payable on shares of $9.75 Preferred
Stock as provided in Section 2 hereof are in arrears, thereafter and
until all accrued and unpaid dividends, whether or not declared, on the
outstanding shares of $9.75 Preferred Stock shall have been paid in full or
declared and set apart for payment, or whenever the Corporation shall not
have redeemed shares of $9.75 Preferred Stock at a time required by
paragraph (b) of Section 5 hereof, thereafter and until all mandatory
redemption obligations which have come due shall have been satisfied or all
necessary funds have been set apart for payment, the Corporation shall not:
(i) redeem or purchase or otherwise acquire for consideration any shares of
capital stock ranking (either as to dividends or upon liquidation,
dissolution or winding up) junior to, or on a parity with, the $9.75
Preferred Stock; or (ii) redeem or purchase or otherwise acquire for
consideration any shares of $9.75 Preferred Stock; provided, that the
Corporation may elect to redeem all outstanding shares of $9.75 Preferred
Stock pursuant to paragraph (a) of Section 5 hereof, or may redeem shares
of $9.75 Preferred Stock pro rata (or in full, if fewer than 750,000 shares
of $9.75 Preferred Stock are then outstanding) pursuant to paragraph (a) or
paragraph (b) of Section 5 hereof, or may otherwise redeem shares of $9.75
Preferred Stock pursuant to paragraph (c) of Section 5 hereof or clause
(iv) (B) of paragraph (b) of Section 8 hereof.
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(c) The Corporation shall not permit any Subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of capital
stock of the Corporation unless the Corporation could, pursuant to
paragraph (b) of this Section 4, purchase such shares at such time and in
such manner.
SECTION 5. Redemption.
(a) Except as otherwise provided in paragraph (c) of this Section 5 and
clause (iv) (B) of paragraph (b) of Section 8, the Corporation shall not
have any right to redeem shares of $9.75 Preferred Stock prior to August 1,
1995. On and after such date, subject to the restrictions contained in
Section 4 hereof, the Corporation shall have the right, at its sole option
and election, to redeem shares of $9.75 Preferred Stock, in whole or in
part, at any time and from time to time at the redemption prices per share
set forth below plus an amount per share equal to all unpaid dividends
thereon, including accrued dividends, whether or not declared, to the date
of redemption.
If redeemed during the period beginning August 1, 1995 and ending January
31, 1996, at a price of $101.0836, and thereafter, at a price of $100.00
(b) On each February 1 commencing on February 1, 1994 (so long as any
shares of $9.75 Preferred Stock remain outstanding), the Corporation shall
redeem 750,000 shares of $9.75 Preferred Stock (or, if fewer than 750,000
shares of $9.75 Preferred Stock are then outstanding, the number of shares
then outstanding), by paying therefor in cash $100.00 per share plus an
amount per share equal to all unpaid dividends thereon, including accrued
dividends, whether or not declared, to the date of redemption. The
Corporation may apply to its mandatory redemption obligations, on a pro
rata basis with respect to mandatory redemption payments to be made, any
shares of $9.75 Preferred Stock purchased, redeemed or otherwise acquired
(other than upon conversion) by it which have not been previously credited
against its mandatory redemption obligations.
(c) The Corporation shall have the right to redeem shares of $9.75
Preferred Stock in accordance with paragraph 7D of the Preferred Stock
Purchase Agreement dated February 1, 1987 between the Corporation and The
Prudential Insurance Company of America, as it may be amended from time to
time, and including any additional parties which become subject to said
paragraph 7D, in accordance with the procedures specified therein.
(d) If less than all shares of $9.75 Preferred Stock at the time
outstanding are to be redeemed, the shares to be redeemed shall be selected
pro rata, except in the event of a redemption made pursuant to paragraph
(c) of this Section 5.
(e) Except for a redemption made pursuant to paragraph (c) of this
Section 5 or clause (iv) (B) of paragraph (b) of Section 8, notice of any
redemption of shares of $9.75 Preferred Stock shall be mailed at least
thirty, but not more than sixty, days prior to the date fixed for
redemption to each holder of shares of $9.75 Preferred Stock to be
redeemed, at such holder's address as it appears on the transfer books of
the Corporation. In order to facilitate the
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redemption of shares of $9.75 Preferred Stock, the Board of Directors may
fix a record date for the determination of shares of $9.75 Preferred Stock
to be redeemed, or may cause the transfer books of the Corporation for the
$9.75 Preferred Stock to be closed, not more than sixty days or less than
thirty days prior to the date fixed for such redemption.
(f) On the date of any redemption being made pursuant to paragraph (a)
or (b) of this Section 5 which is specified in the notice given pursuant
to paragraph (e), the Corporation shall, and at any time after such notice
shall have been mailed and before such date of redemption the Corporation
may, deposit for the benefit of the holders of shares of $9.75 Preferred
Stock called for redemption the funds necessary for such redemption with a
bank or trust company in the Borough of Manhattan, the City of New York,
having a capital and surplus of at least $500,000,000. Any monies so
deposited by the Corporation and unclaimed at the end of two years from the
date designated for such redemption shall revert to the general funds of
the Corporation. After such reversion, any such bank or trust company
shall, upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof and any holder of shares of $9.75
Preferred Stock so called for redemption shall look only to the Corporation
for the payment of the redemption price. In the event that monies are
deposited pursuant to this paragraph (f) in respect of shares of $9.75
Preferred Stock that are converted in accordance with the provisions of
Section 8 hereof, such monies shall, upon such conversion, revert to the
general funds of the Corporation and, upon demand, such bank or trust
company shall pay over to the Corporation such monies and shall be relieved
of all responsibility to the holders of such converted shares in respect
thereof. Any interest accrued on funds deposited pursuant to this
paragraph (f) shall be paid from time to time to the Corporation for its
own account.
(g) Upon the deposit of funds pursuant to paragraph (f) in respect of
shares of $9.75 Preferred Stock called for redemption pursuant to paragraph
(a) or (b) of this Section 5, notwithstanding that any certificates for
such shares shall not have been surrendered for cancellation, the shares
represented thereby shall no longer be deemed outstanding, the rights to
receive dividends thereon shall cease to accrue from and after the date of
redemption designated in the notice of redemption and all rights of the
holders of shares of $9.75 Preferred Stock called for redemption shall
cease and terminate, excepting only the right to receive the redemption
price therefor and the right to convert such shares into shares of Common
Stock until the close of business on the second Business Day (as defined in
Section 10 hereof) preceding the date of redemption, in accordance with
Section 8 hereof.
SECTION 6. Reacquired Shares. Any shares of $9.75 Preferred Stock
converted, redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation, and upon the filing of
an appropriate certificate with the Secretary of State of the State of Delaware,
become authorized but unissued shares of Preferred Stock, $1.00 par value, of
the Corporation and may be reissued as part of another series of Preferred
Stock, $1.00 par value, of the Corporation subject to the conditions or
restrictions on issuance set forth herein.
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SECTION 7. Liquidation, Dissolution or Winding Up.
(a) Except as provided in paragraph (b) of this Section 7, upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (i) to the holders of shares of capital stock of the
Corporation ranking junior (upon liquidation, dissolution or winding up) to
the $9.75 Preferred Stock unless, prior thereto, the holders of shares of
$9.75 Preferred Stock shall, subject to Section 8 hereof, have received (A)
the liquidation value per share set forth below, plus an amount per share
equal to all unpaid dividends thereon, including accrued dividends, whether
or not declared, to the date of such payments or (B) if such payment occurs
prior to February 1, 1990 the greater of the amount determined pursuant to
clause (i) (A) and the Trading Value (as defined in Section 10 hereof) per
share of $9.75 Preferred Stock on the date of such payment; or (ii) to the
holders of shares of capital stock ranking on a parity (upon liquidation,
dissolution or winding up) with the $9.75 Preferred Stock, except
distributions made ratably on the $9.75 Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. For
purposes of clause (i) (A) above the liquidation value per share shall be
during each 12-month period beginning February 1:
<TABLE>
<S> <C>
1987.......................... $109.7500
1988.......................... $108.6667
1989.......................... $107.5834
1990.......................... $106.5001
1991.......................... $105.4168
1992.......................... $104.3335
1993.......................... $103.2502
1994.......................... $102.1669
1995.......................... $101.0836
1996 and thereafter........... $100.00.
</TABLE>
(b) If the Corporation shall commence a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or State
bankruptcy, insolvency or similar law, or consent to the entry of an order
for relief in an involuntary case under any such law or to the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of the Corporation or of any substantial part of
its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become
due, or if a decree or order for relief in respect of the Corporation shall
be entered by a court having jurisdiction in the premises in an involuntary
case under the Federal bankruptcy laws or any other applicable Federal or
State bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such decree
or order shall be unstayed and in effect for a period of 90 consecutive
days and on account of any such event the Corporation shall liquidate,
dissolve or wind up, no distribution shall be made (i) to the holders of
shares of capital stock of the Corporation ranking junior (upon
liquidation, dissolution or winding up) to the $9.75 Preferred Stock
unless, prior thereto, the holders of shares of $9.75 Preferred
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Stock shall have received $100.00 per share, plus an amount per share equal
to all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of such payment or (ii) to the holders of shares
of capital stock ranking on a parity (upon liquidation, dissolution or
winding up) with the $9.75 Preferred Stock, except distributions made
ratably on the $9.75 Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.
(c) Neither the consolidation, merger or other business combination of
the Corporation with or into any other Person or Persons nor the sale of
all or substantially all of the assets of the Corporation shall be deemed
to be a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 7.
SECTION 8. Conversion. Each share of $9.75 Preferred Stock may be
converted at any time on or after February 1, 1990, at the option of the holder
thereof, into shares of Common Stock, on the terms and conditions set forth in
this Section 8.
(a) Subject to the provisions for adjustment hereinafter set forth, each
share of $9.75 Preferred Stock shall be convertible in the manner
hereinafter set forth into 5.84 fully paid and nonassessable shares of
Common Stock.
(b) The number of shares of Common Stock into which each share of $9.75
Preferred Stock is convertible shall be subject to adjustment from time
to time as follows:
(i) In case the Corporation shall at any time or from time to time
declare a dividend, or make a distribution, on the outstanding shares of
Common Stock in shares of Common Stock or subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares or
combine or reclassify the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then, and in each such case,
the number of shares of Common Stock into which each share of $9.75
Preferred Stock is convertible shall be adjusted so that the holder of
each share thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock which the holder of a
share of $9.75 Preferred Stock would have been entitled to receive after
the happening of any of the events described above had such share been
converted immediately prior to the happening of such event or the record
date therefor, whichever is earlier. An adjustment made pursuant to
this clause (i) shall become effective (A) in the case of any such
dividend or distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (B) in the case of
any such subdivision, reclassification or combination, at the close of
business on the day upon which such corporate action becomes effective.
(ii) In case the Corporation shall at any time or from time to time
issue shares of Common Stock (or securities convertible into shares of
Common Stock) at a price per share (or having a conversion price per
share) less than $100.00 divided by the number
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of shares of Common Stock into which a share of $9.75 Preferred Stock is
then convertible (the "Conversion Price"), disregarding for the purposes
of this clause (ii) any limitations on conversion set forth in the first
sentence of this Section 8, as of the date of issuance of such shares or
of such convertible securities, then, and in each such case, the number
of shares of Common Stock into which each share of $9.75 Preferred Stock
is convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (A) the
number of shares of Common Stock into which such share was convertible
on the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding on such date and (2) the number of additional
shares of Common Stock issued (or into which the convertible securities
may convert), and the denominator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on such date and (2) the
number of shares of Common Stock which the aggregate consideration
receivable by the Corporation for the total number of shares of Common
Stock so issued (or into which the convertible securities may convert)
would purchase at such Conversion Price on such date. An adjustment
made pursuant to this clause (ii) shall be made on the next Business Day
following the date on which any such issuance is made and shall be
effective retroactively immediately after the close of business on such
date. For purposes of this clause (ii), the aggregate consideration
receivable by the Corporation in connection with the issuance of shares
of Common Stock or of securities convertible into shares of Common Stock
shall be deemed to be equal to the sum of the aggregate offering price
(before deduction of reasonable underwriting discounts or commissions
and expenses) of all such securities plus the minimum aggregate amount,
if any, payable upon conversion of any such convertible securities into
shares of Common Stock. The issuance of any shares of Common Stock
(whether treasury shares or newly issued shares) pursuant to a dividend
or distribution on, or subdivision, combination or reclassification of,
the outstanding shares of Common Stock requiring an adjustment in the
conversion ratio pursuant to clause (i) of this paragraph (b), or
pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation, and the investment of
additional optional amounts, in shares of Common Stock, in any such case
at a price per share of not less than 85% of the current market price
(determined as provided in such plans) per share of Common Stock, or
pursuant to any employee benefit plan or program of the Corporation at a
price per share of not less than the current market price (determined as
provided in such plans or programs), or pursuant to any option, warrant,
right, or convertible security outstanding as of the date hereof
(including, but not limited to, the Common Stock Purchase Rights issued
pursuant to the Rights Agreement between the Corporation and Ameritrust
Company National Association, dated as of October 29,1986, as amended as
of December 18, 1986, and supplemented and amended as of February 1,
1987, and as it may be further amended from time to time (the "Rights
Agreement"), and the $2.07 Cumulative Convertible Preferred Stock, $1.00
par value, and the $4.00 Cumulative Convertible Preferred Stock, $1.00
par value) shall not be deemed to constitute an issuance of Common Stock
or convertible securities by the Corporation to which this clause (ii)
applies.
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(iii) In case the Corporation shall at any time or from time to
time declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its Subsidiaries by way of dividend or
spin-off, except pursuant to the Rights Agreement) on its Common Stock,
other than (A) regular quarterly dividends payable in cash out of
surplus plus dividends payable in cash in an aggregate amount of up to
$200 million or (B) shares of Common Stock which are referred to in
clause (i) of this paragraph (b), then, and in each such case, the
number of shares of Common Stock into which each share of $9.75
Preferred Stock is convertible shall be adjusted so that the holder of
each share thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by multiplying
(1) the number of shares of Common Stock into which such share was
convertible on the day immediately prior to the record date fixed for
the determination of stockholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the
Current Market Price per share of Common Stock as of such record date,
and the denominator of which shall be such Current Market Price per
share of Common Stock less the Fair Market Value per share of Common
Stock (as determined in good faith by the Board of Directors of the
Corporation, a certified resolution with respect to which shall be
mailed to each holder of shares of $9.75 Preferred Stock) of such
dividend or distribution; provided, however, that in the event of a
distribution of shares of capital stock of a Subsidiary of the
Corporation (a "Spin-Off") made to holders of shares of Common Stock,
the numerator of such fraction shall be the sum of the Current Market
Price per share of Common Stock as of the 35th Trading Day after the
effective date of such Spin-Off and the Current Market Price of the
number of shares (or the fraction of a share) of capital stock of the
Subsidiary which is distributed in such Spin-Off in respect of one share
of Common Stock as of such 35th Trading Day and the denominator of which
shall be the Current Market Price per share of Common Stock as of such
35th Trading Day. An adjustment made pursuant to this clause (iii)
shall be made upon the opening of business on the next Business Day
following the date on which any such dividend or distribution is made
and shall be effective retroactively immediately after the close of
business on the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution; provided, however, if
the proviso to the preceding sentence applies, then such adjustment
shall be made and be effective as of such 35th Trading Day after the
effective date of such Spin-Off.
(iv) In case at any time the Corporation shall be a party to any
transaction (including, without limitation, a merger, consolidation,
sale of all or substantially all of the Corporation's assets,
liquidation or recapitalization of the Common Stock and excluding any
transaction to which clause (i), (ii) or (iii) of this paragraph (b)
applies) in which the previously outstanding Common Stock shall be
changed into or exchanged for different securities of the Corporation or
common stock or other securities of another corporation or interests in
a noncorporate entity or other property (including cash) or any
combination of any of the foregoing (each such transaction being herein
called the "Transaction," the date of consummation of the Transaction
being herein called the "Consummation Date," the Corporation (in the
case of a recapitalization of the Common
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Stock to which this clause (iv) applies or any other such transaction in
which the Corporation retains substantially all of its assets and
survives as a corporation) or such other corporation or entity (in each
other case) being herein called the "Acquiring Company," and the common
stock (or equivalent equity interests) of the Acquiring Company being
herein called the "Acquirer's Common Stock"), then, as a condition of
the consummation of the Transaction, lawful and adequate provisions
shall be made so that each holder of shares of $9.75 Preferred Stock
shall be entitled, at the election of the $9.75 Preferred Stock as
provided in the following sentence, to the treatment accorded pursuant
to sub-clause (A) (1) or (A) (2) and, to the extent applicable, (A) (3)
or, under the circumstances specified therein, sub-clause (B) or (C) of
this clause (iv). The selection by the holders of shares of $9.75
Preferred Stock of the treatment to be accorded such shares from among
the alternatives specified in the preceding sentence shall require the
affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of $9.75 Preferred Stock, voting in person or by proxy, at a
meeting of such stockholders, which vote shall be taken on or before the
later of (1) the 30th day following the Consummation Date, and (2) the
60th day following the date of delivery or mailing to such holder of the
last proxy statement relating to the vote on the Transaction by the
holders of the Common Stock, and which vote shall bind all holders of
shares of $9.75 Preferred Stock and their transferees; if the holders of
shares of $9.75 Preferred Stock are unable to or for any other reason do
not make a selection, then the Board of Directors of the Corporation
shall make such selection, in accordance with this clause (iv), from
among the alternatives specified in this clause (iv). Notwithstanding
the foregoing, any holder of $9.75 Preferred Stock shall in all events
be entitled to the treatment accorded pursuant to sub-clause (A) (3) in
the event the circumstances specified therein shall occur. Any
selection made by the holders of shares of $9.75 Preferred Stock in
accordance with the preceding sentence shall be communicated in writing
to the Corporation as promptly as practicable after the vote referred to
above shall have been taken.
(A) In case of any Transaction, each share of $9.75 Preferred
Stock shall continue to remain outstanding and shall be subject to
all the provisions of the Certificate of Designations, Preferences
and Rights of $9.75 Cumulative Convertible Preferred Stock which
embodies this resolution, as in effect prior to such Transaction
except that
(1) each share of $9.75 Preferred Stock shall thereafter be
convertible (subject to the limitations on conversion set forth
in the first sentence of this Section 8) into, in lieu of the
Common Stock issuable upon such conversion prior to the
Consummation Date, shares of the Acquirer's Common Stock, unless
the Acquiring Company fails to meet the requirements set forth
in (4), (5) and (6) below, in which case shares of the common
stock of the corporation (herein called a "Parent") which
directly or indirectly controls the Acquiring Company if it
meets the requirements set forth in (4), (5) and (6) below, at a
conversion price per share equal to the Conversion Price in
effect immediately prior to the Consummation Date multiplied by
a fraction the numerator of which is the market price per share
(determined in the same manner as
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provided in the definition of Current Market Price) of the
Acquirer's Common Stock or the Parent's common stock, as the
case may be, immediately prior to the Consummation Date and the
denominator of which is the Current Market Price per share of
Common Stock immediately prior to the Consummation Date (subject
in each case to adjustments from and after the Consummation Date
as nearly equivalent as possible to the adjustments provided for
in this paragraph (b) of this Section 8), or
(2) each share of $9.75 Preferred Stock shall thereafter be
convertible (subject to the limitations on conversion set forth
in the first sentence of this Section 8) into, in lieu of the
Common Stock issuable upon such conversion prior to the
Consummation Date, the amount of securities or other property to
which such holder would actually have been entitled as a holder
of shares of Common Stock upon the consummation of the
Transaction if such holder had converted such shares of $9.75
Preferred Stock immediately prior to such Transaction (subject
to adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustments provided for in this
paragraph (b) of this Section 8); provided that if in connection
with the Transaction a tender or exchange offer shall have been
made and there shall have been acquired pursuant thereto more
than 50% of the outstanding shares of Common Stock, and if the
holders of shares of $9.75 Preferred Stock so designate in the
notice given to the Corporation which specifies their selection
of this alternative (A) (2), each holder of such shares shall be
entitled to receive upon conversion thereof, the amount of
securities or other property to which such holder would actually
have been entitled as a holder of shares of Common Stock if such
holder had converted such shares of $9.75 Preferred Stock prior
to the expiration of such tender or exchange offer and accepted
such offer and had sold therein the percentage of all the shares
of Common Stock issuable upon conversion of its shares of $9.75
Preferred Stock equal to the percentage of shares of the then
outstanding Common Stock so purchased in the tender or exchange
offer, with the remaining portion of its shares of $9.75
Preferred Stock thereafter being convertible into the amount of
securities or other property to which such holder would actually
have been entitled upon the consummation of the Transaction as
a holder of shares of Common Stock if such holder had converted
such shares of $9.75 Preferred Stock immediately prior to such
Transaction (subject to adjustments from and after the
Consummation Date as nearly equivalent as possible to the
adjustments provided for in this paragraph (b) of this Section
8), or
(3) if neither the Acquiring Company nor the Parent meets
the requirements set forth in (4), (5) and (6) below, each share
of $9.75 Preferred Stock shall thereafter be convertible into,
in lieu of the Common Stock issuable upon such conversion prior
to the Consummation Date (and subject to the limitations on
conversion set forth in the first sentence of this Section 8),
an amount in cash equal to the Fair Market Value in cash, as of
the
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Consummation Date (computed without interest), of the shares of
capital stock or other securities or property (other than cash)
to which the holder of shares of $9.75 Preferred Stock would be
entitled, pursuant to (2) above (including the proviso thereof,
if applicable) upon conversion of each such share, as determined
by an independent investment banking firm (with an established
national reputation as a valuer of equity securities) selected
by the Corporation, plus the cash, if any, into which each such
share of $9.75 Preferred Stock would be convertible pursuant to
(2) above.
The Corporation agrees to obtain, and deliver to each holder of
shares of $9.75 Preferred Stock a copy of the determination of such
an independent investment banking firm within 15 days after the
Consummation Date of any Transaction to which (3) is applicable.
The requirements referred to above in the case of the Acquiring
Company or its Parent are that immediately after the Consummation
Date:
(4) it is a solvent corporation or other entity organized
under the laws of any State of the United States of America
having its common stock or, in the case of an entity other than
a corporation, equivalent equity securities, listed on the New
York Stock Exchange or the American Stock Exchange or quoted by
the NASDAQ National Market System or any successor thereto or
comparable system, and such common stock or equivalent equity
security continues to meet the requirements for such listing or
quotation,
(5) it is required to file, and in each of its three fiscal
years immediately preceding the Consummation Date (or since its
inception) has filed, reports with the Securities and Exchange
Commission (the "Commission") pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, and
(6) in the case of the Parent, such Parent is required to
include the Acquiring Company in the consolidated financial
statements contained in the Parent's Annual Report on Form 10-K
as filed with the Commission and is not itself included in the
consolidated financial statements of any other Person (other
than its consolidated subsidiaries).
Notwithstanding anything contained herein to the contrary, the
Corporation shall not effect any Transaction unless prior to the
consummation thereof each corporation or entity (other than the
Corporation) which may be required to deliver any securities or
other property upon the conversion of shares of $9.75 Preferred
Stock, or the satisfaction of conversion rights as provided herein
shall assume, by written instrument delivered to each holder of
shares of $9.75 Preferred Stock, the obligation to deliver to such
holder such securities or other property to which, in accordance
with the foregoing provisions, such holder may be entitled, and such
corporation or entity shall have similarly delivered to each holder
of shares of $9.75
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Preferred Stock an opinion of counsel for such corporation or
entity, which opinion shall state that the rights, powers and
privileges of the outstanding shares of $9.75 Preferred Stock,
including, without limitation, the conversion provisions applicable
thereto, if any, shall thereafter continue in full force and effect
and shall be enforceable against such corporation or entity in
accordance with the terms hereof and thereof.
(B) Notwithstanding the foregoing, if the Consummation Date of a
Transaction in which the Corporation is a party occurs prior to
February 1, 1990 and if during any period of 12 consecutive months
ending on or prior to February 1, 1990, the daily average of all the
closing sales prices for each month during such period shall have
been less than $14.75 (as such price shall be adjusted in accordance
with this sub-clause (B)), the shares of $9.75 Preferred Stock
shall, if the holders of shares of $9.75 Preferred Stock shall so
select, in the manner prescribed above in this clause (iv), be
redeemed by the Corporation for, or exchanged in a Transaction which
is a merger or consolidation for, a cash amount equal to $100.00 per
share plus an amount per share equal to all unpaid dividends
thereon, including accrued dividends, whether or not declared, to
the date such Transaction is consummated; provided, that if such
Transaction is a merger or consolidation, a definitive agreement for
any such merger or consolidation is entered into within 20 days
after the end of such 12-month period and is consummated within 75
days thereafter, and if such Transaction is other than a merger or
consolidation, it is consummated within 75 days after the end of
such 12-month period. The price set forth in the preceding sentence
shall from and after the record date for a dividend or distribution
requiring an adjustment in the conversion rate pursuant to clause
(iii) of this paragraph (b) be reduced by the Fair Market Value per
share of Common Stock of such dividend or distribution as determined
pursuant to clause (iii) and shall also be appropriately adjusted in
the event of an occurrence requiring an adjustment in the conversion
rate pursuant to clause (i) of this paragraph (b).
(C) In case of any Transaction, provision may be made, in lieu
of the adjustments hereinbefore provided for in this clause (iv),
for each share of $9.75 Preferred Stock to be exchanged for or to be
converted in such Transaction, in a manner and for consideration
other than as specified in any of sub-clauses (A) or (B); provided,
however, that any such treatment shall require both (1) the approval
of the Board of Directors of the Corporation, which approval
includes the affirmative vote of at least 80% of the directors then
in office other than those who have been elected pursuant to
paragraph (a) of Section 3 hereof and (2) the favorable opinion of
an independent investment banking firm (with an established national
reputation as a valuer of equity securities) selected by the Board
of Directors of the Corporation which is to the effect that the
Transaction is fair to the holders of shares of $9.75 Preferred
Stock, and to the holders of shares of Common Stock in view of the
treatment in such Transaction of the $9.75 Preferred Stock.
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All calculations under this paragraph (b) shall be made to the nearest one
one-hundredth of a share.
(c) If any adjustment in the number of shares of Common Stock into which
each share of $9.75 Preferred Stock may be converted required pursuant to
this Section 8 would result in an increase or decrease of less than 1% in
the number of shares of Common Stock into which each share of $9.75
Preferred Stock is then convertible, the amount of any such adjustment
shall be carried forward and adjustment with respect thereto shall be made
at the earlier of (i) the time of and together with any subsequent
adjustment, which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least 1% of the number of
shares of Common Stock into which each share of $9.75 Preferred Stock is
then convertible or (ii) three years after the date on which such
adjustment otherwise would have been made.
(d) The Board of Directors may increase the number of shares of Common
Stock into which each share of $9.75 Preferred Stock may be converted, in
addition to the adjustments required by this Section 8, as shall be
determined by it (as evidenced by a resolution of the Board of Directors)
to be advisable in order to avoid or diminish any income deemed to be
received by any holder for federal income tax purposes of shares of Common
Stock or $9.75 Preferred Stock resulting from any events or occurrences
giving rise to adjustments pursuant to this Section 8 or from any other
similar event.
(e) The holder of any shares of $9.75 Preferred Stock may exercise his
right to convert such shares into shares of Common Stock by surrendering
for such purpose to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose, a
certificate or certificates representing the shares of $9.75 Preferred
Stock to be converted accompanied by a written notice stating that such
holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this Section 8 and specifying the name or
names in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. In case such notice shall specify a
name or names other than that of such holder, such notice shall be
accompanied by payment of all transfer taxes payable upon the issuance of
shares of Common Stock in such name or names. Other than such taxes, the
Corporation will pay any and all issue and other taxes (other than taxes
based on income) that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of $9.75 Preferred Stock pursuant
hereto. As promptly as practicable, and in any event within five business
days after the surrender of such certificate or certificates and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Corporation
that such taxes have been paid), the Corporation shall deliver or cause to
be delivered (i) certificates representing the number of validly issued,
fully paid and nonassessable full shares of Common Stock to which the
holder of shares of $9.75 Preferred Stock so converted shall be entitled
and (ii) if less than the full number of shares of $9.75 Preferred Stock
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the number
of shares evidenced by such surrendered certificate or certificates less
the number of shares converted. Such conversion shall be deemed to have
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been made at the close of business on the date of giving of such notice and
of such surrender of the certificate or certificates representing the
shares of $9.75 Preferred Stock to be converted so that the rights of the
holder thereof as to the shares being converted shall cease except for the
right to receive shares of Common Stock in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be treated for
all purposes as having become the record holder of such shares of Common
Stock at such time. The Corporation shall not be required to convert, and
no surrender of shares of $9.75 Preferred Stock shall be effective for that
purpose, while the transfer books of the Corporation for the Common Stock
are closed for any purpose (but not for any period in excess of 15 days);
but the surrender of shares of $9.75 Preferred Stock for conversion during
any period while such books are so closed shall become effective for
conversion immediately upon the reopening of such books, as if the
conversion had been made on the date such shares of $9.75 Preferred Stock
were surrendered, and at the conversion rate in effect at the date of such
surrender.
(f) Subject to the limitations on conversion set forth in the first
sentence of Section 8 hereof, shares of $9.75 Preferred Stock may be
converted at any time up to the close of business on the second Business
Day preceding the date fixed for redemption of such shares pursuant to
Section 5 hereof.
(g) Upon conversion of any shares of $9.75 Preferred Stock, the holder
thereof shall not be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted; provided, that such holder
shall be entitled to receive any dividends on such shares of $9.75
Preferred Stock declared prior to such conversion if such holder held such
shares on the record date fixed for the determination of holders of shares
of $9.75 Preferred Stock entitled to receive payment of such dividend.
(h) In connection with the conversion of any shares of $9.75 Preferred
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the day
on which such shares of $9.75 Preferred Stock are deemed to have been
converted.
(i) The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the $9.75 Preferred Stock, such number of
shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all then outstanding shares of $9.75 Preferred Stock.
The Corporation shall from time to time, in accordance with the laws of
Delaware, increase the authorized amount of Common Stock if at any time the
number of authorized shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion at such time of all then outstanding
shares of $9.75 Preferred Stock.
SECTION 9. Reports as to Adjustments. Whenever the number of shares of
Common Stock into which each share of $9.75 Preferred Stock is convertible is
adjusted as provided in Section 8 hereof, the Corporation shall promptly mail to
the holders of record of the outstanding shares of $9.75 Preferred Stock at
their respective addresses as the same shall appear in the Corporation's stock
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records a notice stating that the number of shares of Common Stock into which
the shares of $9.75 Preferred Stock are convertible has been adjusted and
setting forth the new number of shares of Common Stock (or describing the new
stock, securities, cash or other property) into which each share of $9.75
Preferred Stock is convertible as a result of such adjustment, a brief statement
of the facts requiring such adjustment and the computation thereof, and when
such adjustment became effective.
SECTION 10. Definitions. For the purposes of the Certificate of
Designations, Preferences and Rights of $9.75 Cumulative Convertible Preferred
Stock which embodies this resolution:
"Business Day" means any day other than a Saturday, Sunday, or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"Consolidated Assets" at any time means the assets of the Corporation and
its Subsidiaries or of any successor Person to the Corporation and its
Subsidiaries or of any Reporting Entity and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles
as of February 1, 1987.
"Consolidated Funded Debt" at any time means the Funded Debt of the
Corporation and its Subsidiaries or of any successor Person to the Corporation
and its Subsidiaries or of any Reporting Entity and its Subsidiaries determined
on a consolidated basis in accordance with generally accepted accounting
principles as of February 1, 1987.
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of Common Stock
for the 30 consecutive Trading Days immediately prior to such date. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors. If the Common Stock is not publicly held or so listed or publicly
traded, "Current Market Price" shall mean the Fair Market Value per share as
determined in good faith by the Board of Directors of the Corporation.
"Fair Market Value" means the amount which a willing buyer would pay a
willing seller in an arm's-length transaction.
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"Funded Debt" of any Person means (i) all obligations for money borrowed,
(ii) all obligations evidenced by a note, bond, debenture or similar evidence of
indebtedness, (iii) all obligations representing the deferred and unpaid
purchase price for property or services, (iv) all capitalized lease and
production payment obligations and (v) all guarantees of obligations of others
of the types specified in clauses (i) through (iv) above, in each case where
such obligations mature, or which are extendible or renewable at the option of
the obligor on such obligations to a time, more than 12 months after the time of
the computation of the amount of Funded Debt in the respective amounts which
would be shown for such obligations, under generally accepted accounting
principles, on a balance sheet of such Person as a liability item other than a
current liability.
"Generally accepted accounting principles" means with respect to any
computation required or permitted hereunder such accounting principles which are
generally accepted as of February 1, 1987.
"Gross Tangible Worth" at any time means Consolidated Assets less the sum
of (i) all current liabilities (excluding any thereof which are by their terms
extendible or renewable at the option of the obligor thereon to a time more than
12 months after the time as of which the amount thereof is being computed), (ii)
total intangibles, (iii) deferred taxes, (iv) other liabilities (excluding
Funded Debt) and (v) minority interests in unconsolidated Subsidiaries of the
Corporation and its Subsidiaries or of any successor Person to the Corporation
and its Subsidiaries or of any Reporting Entity and its Subsidiaries determined
on a consolidated basis in accordance with generally accepted accounting
principles as of February 1, 1987.
"Person" shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Subsidiary" of any Person means any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Trading Value" per share of $9.75 Preferred Stock on any particular date
is the product of (i) the number of shares of Common Stock into which one share
of $9.75 Preferred Stock is convertible on such date (disregarding for the
purposes of this definition any limitations on conversion set forth in Section 8
hereof) and (ii) the then-Current Market Price per share of Common Stock.
"Voting Stock" means the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors.
SECTION 11. Rank. The $9.75 Preferred Stock shall rank on a parity as to
dividends and upon liquidation, dissolution or winding up with the outstanding
shares of the Corporation's $2.07
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Cumulative Convertible Preferred Stock, $1.00 par value, and $4.00 Cumulative
Convertible Preferred Stock, $1.00 par value.
Junior Preferred Stock, Series A
The following is a statement of the powers, preferences, rights,
qualifications, limitations and restrictions of the Series, consisting of
3,250,000 shares, $1.00 par value of the Junior Preferred Stock, Series A.
SECTION 1. Designation and Amount. The shares of such series shall be
designated as the "Junior Preferred Stock, Series A" (the "Junior Preferred
Stock") and the number of shares constituting such series shall be 3,250,000,
which number, subject to the provisions of the Certificate of Incorporation, may
be increased or decreased by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
number of the then currently outstanding shares of Junior Preferred Stock plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Junior Preferred Stock.
SECTION 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of the
Corporation's $4.00 Cumulative Convertible Preferred Stock, $9.75
Cumulative Convertible Preferred Stock and any other series of Preferred
Stock (or any similar stock) ranking senior to the Junior Preferred Stock
with respect to dividends, the holders of shares of Junior Preferred Stock,
in preference to the holders of Common Stock with a par value of $1.00 per
share (the "Common Stock") of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, cumulative
quarterly dividends payable in cash on the fifteenth day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Junior Preferred Stock, in an amount per share
(rounded to the nearest cent), subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Junior Preferred Stock. In the event the Corporation shall at any time
after September 12, 1988 (the "Rights Declaration Date") declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders
of shares of Junior Preferred Stock were entitled immediately prior to such
event under the preceding sentence shall be adjusted
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by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (a) of this Section
immediately before it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date, and the next subsequent Quarterly Dividend Payment Date, a dividend
of $0.01 per share on the Junior Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Junior Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not
more than 50 calendar days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of Junior Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
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(b) Except as otherwise provided herein or by law, the holders of
shares of Junior Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(c) Except as set forth in Section 11 hereof, or as required by law,
holders of Junior Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
SECTION 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the Junior Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a
parity with the Junior Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the
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Corporation could, under paragraph (a) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
SECTION 5. No Redemption. The shares of Junior Preferred Stock shall not
be redeemable.
SECTION 6. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
SECTION 7. Liquidation, Dissolution or Winding Up. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution or payment shall be made (a) to the holders of Common Stock or any
other shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock, plus an amount equal to all accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, or (b) to the holders of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after the Rights
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Junior Preferred Stock were entitled immediately prior to
such event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 8. Consolidation, Merger, Etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater
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or lesser number of shares of Common Stock, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change of
shares of Junior Preferred Stock shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock outstanding immediately prior to such event.
SECTION 9. Fractional Shares. The Corporation may issue fractions and
certificates representing fractions of a share of Junior Preferred Stock in
integral multiples of one one-hundredth of a share of Junior Preferred Stock, or
in lieu thereof, at the election of the Board of Directors of the Corporation at
the time of the first issue of any shares of Junior Preferred Stock, evidence
such fractions by depositary receipts, pursuant to an appropriate agreement
between the Corporation and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences of Junior Preferred Stock. In the
event that fractional shares of Junior Preferred Stock are issued, the holders
thereof shall have all the rights provided herein for holders of full shares of
Junior Preferred Stock in the proportion with such fraction bears to a full
share.
SECTION 10. Rank. The Junior Preferred Stock shall rank junior to all
other series of the Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets in liquidation, unless the terms of any such
series shall provide otherwise.
SECTION 11. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Junior Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least a majority of the outstanding shares of Junior Preferred Stock, voting
separately as a class.
FIFTH. In furtherance of, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized and empowered:
(a) To make and alter the By-Laws of the Corporation; provided, however,
that the By-Laws made by the Board of Directors under the powers hereby
conferred may be altered, changed, amended or repealed by the Board of
Directors or by the affirmative vote of the holders of a majority of shares
having voting power with respect hereto; and
(b) From time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the
accounts and books of the Corporation or any of them, shall be open to
inspection of stockholders; and no stockholder shall have any right to
inspect any account, book or document of the Corporation, except as
conferred by applicable law and subject to the rights, if any, of the
holders of any series of Preferred Stock.
The Corporation may in its By-Laws confer powers upon its Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable law.
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SIXTH. The stockholders and Board of Directors of the Corporation shall
have power to hold their meetings and to have one or more offices of the
Corporation within or without the State of Delaware, and to keep the books of
the Corporation outside of the State of Delaware at such place or places as may
from time to time be designated by the Board of Directors.
SEVENTH. Subject to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional Directors under specific circumstances, special
meetings of stockholders of the Corporation may be called only by the Chairman
of the Board of Directors and shall be promptly called by the Chairman or the
Secretary at the written request of a majority of the Board of Directors, or the
holders of a majority of the outstanding Common Stock upon not fewer than ten
nor more than 60 days' written notice.
Notwithstanding anything contained in this Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at least 80% of the
combined voting power of all shares of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to alter, change, amend, repeal, or adopt any provision inconsistent
with, this Article Seventh.
EIGHTH. SECTION 1. Number, Election and Terms of Directors. Subject to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect additional
Directors under specific circumstances, the number of the Directors of the
Corporation shall be fixed from time to time by or pursuant to the By-Laws of
the Corporation, or until such director's earlier resignation or removal in
accordance with the General Corporation Law of the State of Delaware, this
Certificate of Incorporation and the By-Laws. Each director shall hold office
for one year after the time of such director's election or until such director's
successor is elected and qualified at the next succeeding annual meeting of
stockholders of the Corporation or until such director's earlier resignation or
removal in accordance with the General Corporation Law of the State of Delaware,
this Certificate of Incorporation and By-Laws.
SECTION 2. Stockholder Nomination of Director Candidates and Introduction
of Business. Advance notice of stockholder nominations for the election of
Directors and advance notice of business to be brought by stockholders before an
annual meeting shall be given in the manner provided in the By-Laws of the
Corporation.
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SECTION 3. Newly Created Directorships and Vacancies. Except as otherwise
provided for or fixed pursuant to the provisions of Article Fourth of this
Certificate of Incorporation relating to the rights of the holders of any class
or series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect Directors under specified circumstances, newly created
directorships resulting from any increase in the number of Directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled only by the affirmative
vote of a majority of the remaining Directors then in office, even though less
than a quorum of the Board of Directors. Any Director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the class of Directors in which the new directorship was created or the vacancy
occurred and until such Director's successor shall have been elected and
qualified. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of an incumbent Director.
SECTION 4. Removal. Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect additional Directors under specified circumstances,
any Director may be removed from office only by the affirmative vote of the
holders of at least 50% of the combined voting power of the outstanding shares
of Voting Stock, voting together as a single class.
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NINTH. SECTION 1. Prevention of Greenmail. Any direct or indirect
purchase or other acquisition by the Corporation of any Voting Stock of any
class from any Interested Stockholder at a price in excess of the Market Price
shall, except as hereinafter provided, require the affirmative vote of the
holders of at least a majority of the combined voting power of the Voting Stock,
voting as a single class, excluding any votes cast with respect to shares of
Voting Stock beneficially owned by such Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law in or any
agreement with any national securities exchange, or otherwise, but no such
affirmative vote shall be required with respect to any purchase or other
acquisition of securities made as part of (a) a tender or exchange offer by the
Corporation to purchase securities of the same class made on the same terms to
all holders of such securities and complying with the applicable requirements of
the United States securities laws and the rules and regulations thereunder, (b)
the redemption of any shares of Preferred Stock pursuant to the provisions of
Article Fourth of this Certificate of Incorporation or any Preferred Stock
Designation, or (c) pursuant to an open-market purchase program conducted in
accordance with the requirements of Rule 10b-18 promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, or any
successor rule or regulation.
SECTION 2. Prevention of Self-Dealing. In addition to any action,
including any vote by stockholders required by law or this Certificate of
Incorporation, the approval or authorization of any Self-Dealing Transaction
shall require either (a) the approval of a majority of Disinterested Directors
or (b) the affirmative vote of the holders of at least a majority of the
combined voting power of the Voting Stock, voting together as a single class,
excluding any votes cast with respect to shares of Voting Stock beneficially
owned by an Interested Stockholder which is directly or indirectly a party, or
an Affiliate or Associate of which is directly or indirectly a party, to such
Self-Dealing Transaction.
SECTION 3. Certain Definitions. For the purpose of this Article Ninth:
(a) A "person" shall mean any individual, firm, corporation or other
entity.
(b) "Voting Stock" shall mean the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of Directors.
In any vote required by or provided for in this Article Ninth, each share
of Voting Stock shall have the number of votes granted to it generally in
the election of Directors.
(c) "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of more than 5%
of the outstanding Voting Stock; or
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(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of more than 5% of the
outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any Voting
Stock of the Corporation which at any time within the two-year period
immediately prior to the date in question was beneficially owned by any
Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of
1933.
(d) A person shall be a "beneficial owner" of any shares of Voting
Stock:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (b) the right to
vote pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates had any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any Voting Stock.
(e) In determining whether a person is an Interested Stockholder
pursuant to paragraph (c) of this Section 3, any class of Voting Stock
outstanding shall be deemed to include any Voting Stock deemed owned
through application of paragraph (d) of this Section 3 but shall not
include any other securities of such class which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(f) "Self-Dealing Transaction" means any of the following transactions:
(i) any merger or consolidation of the Corporation or any Subsidiary
with (a) any Interested Stockholder or (b) any other corporation
(whether or not itself an Interested Stockholder) which is, or after
such merger or consolidation would be, an Affiliate of an Interested
Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or
with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having an
aggregate fair market value of $25,000,000 or more or any loan, advance,
guarantee or other financial assistance, including any tax credit or
other tax advantages,
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<PAGE>
to or with any Interested Stockholder or any Affiliate of any Interested
Stockholder which involves a financial obligation or benefit of
$25,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an aggregate fair
market value of $25,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving an
Interested Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any
class of Voting Stock of the Corporation or any Subsidiary which is
directly or indirectly owned by any Interested Stockholder or any
Affiliate of any Interested Stockholder.
(g) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on January 1, 1985.
(h) "Subsidiary" means any corporation of which a majority of any class
of shares of such corporation entitled to vote generally in the election
of directors is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Stockholder set forth in paragraph (c) of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of the
combined voting power of all shares of such corporation entitled to vote
generally in the election of directors is owned, directly or indirectly, by
the Corporation.
(i) "Disinterested Director" means any member of the Board of Directors
of the Corporation who is unaffiliated with the Interested Stockholder and
was a member of the Board of Directors prior to the time that the
Interested Stockholder became an Interested Stockholder, and any successor
of a Disinterested Director who is unaffiliated with the Interested
Stockholder and is recommended to succeed a Disinterested Director by a
majority of Disinterested Directors then on the Board of Directors.
(j) "Market Price" means the average of the closing sales prices on the
20 regular trading days immediately preceding the date of any binding
agreement to purchase shares of Voting Stock of the class of Voting Stock
in question on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such class of Voting Stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such class of Voting Stock is
not listed on such
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<PAGE>
Exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such class of Voting
Stock is listed, or, if such class of Voting Stock is not listed on any
such exchange, the last closing bid quotations with respect to a share of
such class of Voting Stock immediately preceding the time in question on
the National Association of Securities Dealers, Inc., Automated Quotations
System or any system then in use (or any other system of reporting or
ascertaining quotations then available), or if such class of Voting Stock
is not so quoted, the fair market value at the time in question of such
stock as determined by the Board of Directors in good faith.
SECTION 4. Powers of the Board of Directors. A majority of the
Disinterested Directors, or, if there are no Disinterested Directors, a majority
of the members of the Board of Directors then in office, shall have the power to
determine, for the purposes of this Article Ninth, on the basis of information
known to them, (a) whether a person is an Interested Stockholder, (b) the number
of shares of Voting Stock beneficially owned by any person, (c) whether a person
is an Affiliate or Associate of another, and (d) whether the assets or financial
obligations or benefits which are the subject of any Self-Dealing Transaction
have, or the consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Self-Dealing Transaction
has, an aggregate fair market value of or involve $25,000,000 or more. A
majority of the Disinterested Directors, or, if there are no Disinterested
Directors, a majority of the members of the Board of Directors then in office,
shall have the further power to interpret all of the terms and provisions of
this Article Ninth.
SECTION 5. Amendment, Repeal, etc. Notwithstanding anything contained in
this Certificate of Incorporation or the By-Laws of the Corporation to the
contrary, the alteration, change, amendment, repeal or adoption of any
provisions inconsistent with this Article Ninth shall require the affirmative
vote of the holders of a majority of the combined voting power of the
outstanding Voting Stock, excluding any votes cast with respect to shares of
Voting Stock beneficially owned by any Interested Stockholder, voting together
as a single class, but in no event less than the affirmative vote of 80% of
combined voting power of the outstanding shares of Voting Stock, including
shares of Voting Stock beneficially owned by any Interested Stockholder, voting
together as a single class.
TENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, including
in a Preferred Stock Designation, in the manner now or hereafter prescribed by
applicable law and this Certificate of Incorporation, including any applicable
Preferred Stock Designation, and all rights conferred upon stockholders herein
are created subject to this reservation.
ELEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law
as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
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Exhibit 3(ii).1
BY-LAW 15, PARAGRAPH (A)
The Company's By-Law 15, Paragraph (a) was amended on June 8, 1995 to read
as follows:
15. Board of Directors.
(a) Number, election and terms. Except as otherwise fixed by, or pursuant
to the provisions of, Article Fourth of the Certificate of Incorporation
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional Directors under specified circumstances, the number of the Directors
of the Corporation shall be eight (8) unless otherwise fixed from time to time
by resolution of the Board of Directors but shall be fixed at no fewer than
three (3) nor more than fifteen (15).
<PAGE>
Exhibit 3(ii).2
MAXUS ENERGY
CORPORATION
BY-LAWS
AS AMENDED
APRIL 21, 1995
-------------------------------------------------
MAXUS ENERGY CORPORATION DALLAS, TEXAS 75201
<PAGE>
MAXUS ENERGY CORPORATION
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OFFICES
1. Delaware...................................................... 1
2. Dallas and Elsewhere.......................................... 1
STOCKHOLDERS' MEETINGS
3. Place......................................................... 1
4. Annual Meeting................................................ 1
5. Special Meetings.............................................. 1
6. Notice of Stockholder Business................................ 1
7. Inspectors.................................................... 2
8. Quorum........................................................ 2
9. Voting........................................................ 2
10. List of Stockholders.......................................... 3
11. Order of Business............................................. 3
NOMINATION OF DIRECTOR CANDIDATES
12. Notification of Nominees...................................... 3
13. Substitution of Nominees...................................... 4
14. Compliance with Procedures.................................... 4
DIRECTORS
15. Board of Directors............................................ 4
16. Responsibilities.............................................. 6
17. Powers........................................................ 6
18. Compensation.................................................. 7
19. Resignation................................................... 7
20. Meetings...................................................... 7
21. Notices....................................................... 7
22. Quorum........................................................ 7
23. Committees of the Board of Directors.......................... 7
OFFICERS
24. Executive Officers............................................ 8
25. Authority of the Board of Directors........................... 8
26. Term of Office................................................ 8
27. Compensation of Executive Officers............................ 8
28. Other Officers and Agents..................................... 8
</TABLE>
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<TABLE>
<S> <C>
29. Direction and Compensation of Other Officers.................. 8
30. Bond.......................................................... 8
31. President..................................................... 9
32. Vice Presidents............................................... 9
33. Secretary and Assistant Secretaries........................... 9
34. Treasurer and Assistant Treasurers............................ 9
35. Controller and Assistant Controllers.......................... 10
36. General Counsel and Deputy and Assistant
General Counsels.............................................. 10
INDEMNIFICATION
37. Damages and Expenses.......................................... 10
38. Insurance..................................................... 14
STOCK RECORDS
39. Form of Certificates.......................................... 14
40. Classes of Stock: Rights...................................... 14
41. Transfers..................................................... 15
42. Lost Certificates............................................. 15
43. Record Dates.................................................. 15
GENERAL
44. Contracts, Checks, Etc. ...................................... 15
45. Fiscal Year................................................... 15
46. Annual Statement.............................................. 15
47. Form of Notices............................................... 16
48. Seal.......................................................... 16
49. By-Law Amendment.............................................. 16
50. Certificate of Incorporation and Applicable Law............... 16
</TABLE>
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BY-LAWS
OFFICES
1. Delaware. The Corporation's registered office in the State of Delaware
shall be in the City of Wilmington, County of New Castle, State of Delaware, and
the name of the registered agent in charge thereof is The Corporation Trust
Company.
2. Dallas and Elsewhere. The Corporation shall also have an office at
such place in the City of Dallas, County of Dallas, State of Texas, and may
also have offices at such other places, as the Board of Directors may from time
to time appoint or the business of the Corporation may require.
STOCKHOLDERS' MEETINGS
3. Place. Meetings of the stockholders shall be held at such place as the
Board of Directors shall determine.
4. Annual Meeting. The annual meeting of the stockholders for the
election of Directors, the receiving of reports and the transaction of such
other business as may properly be brought before the meeting shall be held on
such date and at such time as the Board of Directors determines.
5. Special Meetings. Special meetings of the stockholders for any purpose
may be called by the President and shall be promptly called by the President or
by the Secretary at the written request of a majority of the Board of Directors
upon not fewer than 10 nor more than 60 days' written notice. The request shall
be sent to the President and the Secretary and shall state the purposes of the
proposed meeting. Special meetings of holders of the outstanding Preferred
Stock may be called in the manner and for the purposes provided in the
resolutions of the Board of Directors providing for the issue of such stock (a
"Preferred Stock Designation"). Business transacted at special meetings shall
be confined to the purposes stated in the notice.
6. Notice of Stockholder Business. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c)
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otherwise properly be requested to be brought before the meeting by a
stockholder. For business to be properly requested to be brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 80 days prior to
the meeting; provided, however, that in the event that the date of the meeting
is not publicly announced by the Corporation by mail, press release or otherwise
more than 90 days prior to the meeting, notice by the stockholder to be timely
must be delivered to the Secretary of the Corporation not later than the close
of business on the tenth day following the day on which such announcement of the
date of the meeting was communicated to stockholders. A stockholder's notice to
the Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (a) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, and (d) any material interest of the stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the procedures set
forth in this By-Law 6. The chairman of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the provisions of this By-Law
6, and if he should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
7. Inspectors. The Board of Directors shall appoint inspectors of
election to act as judges of the voting and to determine those entitled to vote
at any stockholders' meeting, or any adjournment thereof, in advance of such
meeting, but if the Board of Directors fails to make such appointments or if an
appointee fails to serve, the chairman of the stockholders' meeting may appoint
substitute inspectors.
8. Quorum. Except as otherwise provided in a Preferred Stock Designation,
the holders of stock having a majority of voting power entitled to vote at any
stockholders' meeting, present in person or represented by proxy, shall
constitute a quorum for the transaction of business thereat. If, however, such
majority shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time without notice,
other than announcement at the meeting of the time and place of the adjourned
meeting, until the requisite amount of voting stock shall be present or
represented or the meeting has been adjourned permanently. At such adjourned
meeting, at which the requisite amount of voting stock shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.
9. Voting. At each meeting of the stockholders, every stockholder having
the right to vote shall be entitled to vote in person or by proxy appointed by a
legally sufficient instrument. The vote for Directors, the vote upon any
questions set forth in the Proxy Statement for the meeting and the vote upon any
other action of business at the discretion of the chairman of the stockholders'
meeting shall be by written ballot. The vote upon any other question before the
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<PAGE>
meeting shall be by written ballot upon the demand of stockholders voting at
least 15% of the shares represented at the meeting. All questions, except
election or removal of Directors or as otherwise provided in these By-Laws, the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") or the Preferred Stock Designation for any series of Preferred
Stock, shall be decided by a majority vote of those shares present or
represented and voting, and, with respect to any election or question to be
decided by any class of stock voting as a class, by a majority vote of those
shares present or represented and voting of that class.
10. List of Stockholders. A complete list of the stockholders entitled to
vote at any meeting shall be available for examination by such persons for any
proper purpose, for such period of time and at such place as is required by law.
11. Order of Business. Unless otherwise determined by the Board of
Directors prior to the meeting, the chairman of the stockholders' meeting shall
determine the order of business and shall have the authority in his discretion
to regulate the conduct of any such meeting, including, without limitation, by
imposing restrictions on the persons (other than stockholders of the Corporation
or their duly appointed proxies) who may attend any such stockholders' meeting,
whether any stockholder or his proxy may be excluded from any stockholders'
meeting based upon any determination by the chairman, in his sole discretion,
that any such person has unduly disrupted or is likely to disrupt the
proceedings thereat, and the circumstances in which any person may make a
statement or ask questions at any stockholders' meeting.
NOMINATION OF DIRECTOR CANDIDATES
12. Notification of Nominees. Subject to the rights of holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, nominations for the election of Directors may be
made by the Board of Directors or a committee appointed by the Board of
Directors or by any stockholder entitled to vote in the election of Directors
generally. However, any stockholder entitled to vote in the election of
Directors generally may nominate one or more persons for election as Directors
at a meeting only if written notice of such stockholder's intent to make such
nomination or nominations has been received by the Secretary of the Corporation
not less than 80 days in advance of such meeting; provided, however, that in the
event that the date of the meeting was not publicly announced by the Corporation
by mail, press release or otherwise more than 90 days prior to the meeting,
notice by the stockholder to be timely must be delivered to the Secretary of the
Corporation not later than the close of business on the tenth day following the
day on which such announcement of the date of the meeting was communicated to
stockholders. Each such notice shall set forth: (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote for the election of Directors on the
date of such notice and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person
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or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or intended
to be nominated, by the Board of Directors; and (e) the consent of each nominee
to serve as a director of the Corporation if so elected.
13. Substitution of Nominees. In the event that a person is validly
designated as a nominee in accordance with By-Law 12 and shall thereafter become
unable or unwilling to stand for election to the Board of Directors, the Board
of Directors or the stockholder who proposed such nominee, as the case may be,
may designate a substitute nominee upon delivery, not fewer than five days prior
to the date of the meeting for the election of such nominee of a written notice
to the Secretary setting forth such information regarding such substitute
nominee as would have been required to be delivered to the Secretary pursuant to
By-Law 12 had such substitute nominee been initially proposed as a nominee.
Such notice shall include a signed consent to serve as a Director of the
Corporation, if elected, of each such substitute nominee.
14. Compliance with Procedures. If the chairman of the meeting for the
election of Directors determines that a nomination of any candidate for election
as a Director at such meeting was not made in accordance with the applicable
provisions of By-Laws 12 and 13, such nomination shall be void; provided,
however, that nothing in By-Laws 12 or 13 shall be deemed to limit any voting
rights upon the occurrence of dividend arrearages provided to holders of
Preferred Stock pursuant to the Preferred Stock Designation for any series of
Preferred Stock.
DIRECTORS
15. Board of Directors.
(a) Number, election and terms. Except as otherwise fixed by, or pursuant
to the provisions of, Article Fourth of the Certificate of Incorporation
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional Directors under specified circumstances, the number of the Directors
of the Corporation shall be eight (8) unless otherwise fixed from time to time
by resolution of the Board of Directors but shall be fixed at no fewer than
three (3) nor more than fifteen (15).
(b) Cumulative Voting In Certain Circumstances. In any election of
Directors of the Corporation on or after the date on which the Corporation
becomes aware that any 30% Stockholder (as defined below) has become a 30%
Stockholder, and until such time as no 30% Stockholder any longer exists, there
shall be cumulative voting for election of Directors so that any holder of
shares of the Corporation entitled to vote generally in the election of
Directors may cumulate the voting power represented by his shares and give one
candidate a number of votes equal to the number of Directors to be elected
multiplied by the number of votes to which such
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<PAGE>
shares are entitled, or distribute such votes on the same principle among as
many candidates for election as such holder of shares determines. For the
purposes of this Section (b) of By-Law 15, a 30% Stockholder shall mean any
person (other than the Corporation and any other corporation of which a majority
of the voting power of the capital stock entitled to vote generally in the
election of directors is owned, directly or indirectly, by the Corporation) who
or which is the beneficial owner, directly or indirectly of 30% or more of the
voting power of all shares of the Corporation entitled to vote generally in the
election of Directors.
For the purpose of this By-Law 15:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) A person shall be a "beneficial owner" of any shares of
stock of the Corporation:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates (as
defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 1, 1985) has
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding;
(iii) which is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
stock of the Corporation; provided, however, that no person shall be
deemed to be a "beneficial owner" of any shares of Voting Stock solely
by reason of such person's right to vote or to acquire such Voting
Stock pursuant to any agreement or instrument approved by a majority
of the Board of Directors.
(3) In determining whether a person is a holder of 30% or more of the
voting power of all shares of the Corporation entitled to vote
generally in the election of Directors pursuant to Section (b) of this
By-Law 15, any class of such shares outstanding shall be deemed to
include any such shares deemed owned through application of paragraph
(2) of this Section (b) but shall not include any other securities of
such class which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(c) Newly created directorships and vacancies. Except as otherwise
provided for or fixed by
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or pursuant to the provisions of Article Fourth of the Certificate of
Incorporation relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, newly created
directorships resulting from any increase in the number of Directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled only by the affirmative
vote of a majority of the remaining Directors then in office, even though less
than a quorum of the Board of Directors. Any Director elected in accordance
with the preceding sentence shall hold office for the remainder of the full term
of the class of Directors in which the new directorship was created or the
vacancy occurred and until such Director's successor shall have been elected and
qualified. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent Director.
(d) Removal. Subject to the rights of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation to elect
Directors under specified circumstances, any Director may be removed from office
only by the affirmative vote of the holders of at least 80% of the combined
voting power of the outstanding shares of stock entitled to vote generally in
the election of Directors, voting together as a single class; provided that
notwithstanding the foregoing provisions of this Section (d), if at any time
when cumulative voting is permitted pursuant to Section (b) of this By-Law 15
less than the entire Board of Directors is to be removed, no Director may be
removed from office if the votes cast against his removal would be sufficient to
elect him as a Director if then cumulatively voted at an election of the class
of Directors of which he is a part.
(e) Chairman of the Board. The Board may elect one of its members
Chairman of the Board, who shall preside at all meetings of the Board. The
Chairman of the Board shall also preside at all meetings of stockholders unless
the Board of Directors designates another person to preside.
16. Responsibilities. The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors.
17. Powers. In addition to the powers and authorities expressly conferred
by these By-Laws, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.
18. Compensation. The Board of Directors may establish such compensation
for, and reimbursement of the expenses of, Directors for attendance at meetings
of the Board of Directors or committees, or for other services by Directors to
the Corporation, as the Board of Directors may determine.
19. Resignation. Any Director may resign at any time by giving written
notice of his resignation to the President or the Secretary.
20. Meetings. Immediately after the adjournment of the annual meeting of
the stockholders
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each year, the Directors elected thereat shall, without notice, convene the
annual meeting of Directors for the organization of the Board of Directors, the
election of officers and members of committees and the transaction of any other
business which may properly come before the meeting. If a quorum of the Board
of Directors shall not be present, the President shall call a meeting for such
purposes as promptly as is practicable. Except as otherwise provided in this
By-Law 20, Directors may hold their regular and special meetings at such times
and places and have one or more offices and keep the books of the Corporation at
such places as the Board of Directors determines.
21. Notices. No notice of regular meetings of the Board of Directors need
be given. Special meetings of the Board of Directors may be called by the
President upon notice to each Director, given either in person or by mail,
telephone, telegram, telex or similar medium of communication; special meetings
shall be called by the President or the Secretary on like notice, on the written
request of three Directors. At least 24 hours' notice of special meetings shall
be given to each Director.
22. Quorum. Subject to the provisions of Section (c) of By-Law 15, at all
meetings of the Board of Directors, a majority of the total number of Directors
shall constitute a quorum for the transaction of business and, except for the
designation of committees (as provided in By-Law 23) and the removal of
executive officers (as provided in By-Law 25), the act of a majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum is not present, a majority of the Directors
present may adjourn the meeting without notice other than announcement until a
quorum is present.
23. Committees of the Board of Directors. The Board of Directors, by
resolution passed by a majority of the whole Board of Directors, may designate
one or more committees, each committee to consist of two or more Directors. A
committee shall have and exercise the powers of the Board of Directors in the
direction of the management of the business and affairs of the Corporation to
the extent provided in the resolution. Each committee shall have such name as
may be determined by the Board of Directors. Except as may be otherwise
provided in a resolution or resolutions duly adopted by the Board of Directors,
a majority of the members of a committee shall constitute a quorum and a
majority vote of the members at a meeting at which a quorum is present shall be
the act of the committee. A committee shall keep minutes of its proceedings, and
shall report its proceedings to the Board of Directors when required or when
requested by a Director to do so.
OFFICERS
24. Executive Officers. At the annual meeting of the Board of Directors
each year, or such other times as the Board of Directors may determine, the
Board of Directors may elect the following
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executive officers:
President
One or more Vice Presidents
General Counsel
Treasurer
Controller
25. Authority of the Board of Directors. The executive officers shall
have the duties, responsibilities and authorities as are reflected in these By-
Laws or in resolutions of the Board of Directors, but at all times the actions
of the executive officers shall be subject to the review, delegation,
redetermination, direction and control of the Board of Directors. Any number of
executive offices may be held by the same person. The President shall be a
member of the Board of Directors. At any meeting the Board of Directors may
elect additional executive officers, fill vacancies and, by vote of a majority
of the whole Board of Directors, remove any executive officer.
26. Term of Office. An executive officer shall hold office until he
retires, resigns or is removed by majority vote of the whole Board of Directors.
An officer may resign at any time by giving written notice of his resignation to
the President or the Secretary.
27. Compensation of Executive Officers. The executive officers shall
receive such compensation as shall be fixed by the Board of Directors.
28. Other Officers and Agents. The President may appoint the Secretary,
such Assistant Secretaries, Assistant Treasurers, Assistant Controllers, Deputy
General Counsels, Assistant General Counsels and other officers and agents as
the President shall deem necessary or proper in the conduct of the affairs of
the Corporation with such designations, titles, seniority, duties and
responsibilities as he shall deem advisable. The President shall report
appointments of other officers and agents to the Board of Directors.
29. Direction and Compensation of Other Officers. All officers and agents
appointed by the President shall perform their duties under the direction of the
President and shall receive compensation as from time to time shall be fixed by
the President and shall hold their offices at the pleasure of the President.
30. Bond. If required by the Board of Directors, any and every officer or
agent shall give the Corporation a bond in a sum and with one or more sureties
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
31. President. The President shall be the chief executive officer of the
Corporation. He shall have such duties and responsibilities as may be assigned
to him by the Board of Directors. He shall be the senior officer of the
Corporation and shall have overall responsibility for the
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management and direction of the business and affairs of the Corporation. In
addition, he shall perform such other duties and services and shall have such
other authority and responsibilities as shall be assigned to or required of him
from time to time by the Board of Directors or the Executive Committee of the
Board of Directors.
32. Vice Presidents. Each Vice President, however titled, shall perform
such duties and services and shall have such authority and responsibilities as
shall be assigned to or required of him from time to time by the Board of
Directors, the Executive Committee of the Board of Directors or the President.
33. Secretary and Assistant Secretaries.
(a) The Secretary shall attend all meetings of the stockholders and all
meetings of the Board of Directors and record all proceedings of the meetings of
the stockholders and of the Board of Directors, and he shall perform like duties
for the standing committees when requested by the Board of Directors or the
President. He shall give, or cause to be given, notice of all meetings of the
stockholders and meetings of the Board of Directors. He shall perform such
duties as may be prescribed to him by the President. He shall have charge of
the seal of the Corporation and authority to affix the seal to any instrument.
He or any Assistant Secretary may attest to the corporate seal by handwritten or
facsimile signature. The Secretary shall keep and account for all books,
documents, papers and records of the Corporation except those for which some
other officer or agent has been designated or is otherwise properly accountable.
He shall have authority to sign stock certificates.
(b) Assistant Secretaries, in the order of their seniority, shall assist
the Secretary and, if the Secretary is unavailable or fails to act, perform the
duties and exercise the authorities of the Secretary.
34. Treasurer and Assistant Treasurers.
(a) The Treasurer shall have the custody of the funds and securities
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Treasurer with the prior approval of the Chairman or
the President. He shall disburse the funds and pledge the credit of the
Corporation as may be directed by the Board of Directors and shall render to the
Board of Directors and the President, as and when required by them, or any of
them, an account of all his transactions as Treasurer.
(b) Assistant Treasurers, in the order of their seniority, shall assist the
Treasurer and, if the Treasurer is unable or fails to act, perform the duties
and exercise the powers of the Treasurer.
35. Controller and Assistant Controllers.
(a) The Controller shall be the chief accounting officer of the
Corporation. He shall keep full
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and accurate accounts of receipts and disbursements in books belonging to the
Corporation in accordance with accepted accounting methods and procedures. He
shall initiate periodic audits of the accounting records, methods and systems of
the Corporation. He shall render to the Board of Directors and the President, as
and when required by them, or any of them, a statement of the financial
condition of the Corporation.
(b) Assistant Controllers, in the order of their seniority, shall assist
the Controller and, if the Controller is unable or fails to act, perform the
duties and exercise the powers of the Controller.
36. General Counsel and Deputy and Assistant General Counsels.
(a) The General Counsel shall be the chief legal officer of the
Corporation. He shall provide legal counsel and advice to the Board of
Directors and to the officers with respect to compliance with applicable laws
and regulations. He shall also provide or obtain legal defense of the
Corporation. He shall render to the Board of Directors and the President, as
and when required by them, or any of them, a report on the status of claims
against, and pending litigation of, the Corporation.
(b) Deputy and Assistant General Counsels, in the order of their seniority,
shall assist the General Counsel and, if the General Counsel is unable or fails
to act, perform the duties and exercise the powers of the General Counsel.
INDEMNIFICATION
37. Damages and Expenses.
(a) Actions, Suits or Proceedings Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a Director,
officer, employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as a Director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges, expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not meet the standards of conduct set forth in
this Section (a).
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(b) Actions or Suits by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a Director, officer, employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges and expenses (including attorney's fees) actually and reasonably
incurred by him or on his behalf in connection with the defense or settlement of
such action or suit and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of such liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
(c) Indemnification for Costs, Charges and Expenses of Successful Party.
Notwithstanding the other provisions of this By-Law 37, to the extent that a
Director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Sections (a) and (b) of this By-Law 37, or in the defense of any claim,
issue or matter therein, he shall be indemnified against all costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith.
(d) Determination of Right to Indemnification. Any indemnification under
Sections (a) and (b) of this By-Law 37 (unless ordered by a court) shall be paid
by the Corporation unless a determination is made (1) by the Board of Directors
by a majority vote of a quorum consisting of Directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable, or
even if obtainable a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders, that
indemnification of the Director, officer, employee or agent is not proper in the
circumstances because he has not met the applicable standards of conduct set
forth in Sections (a) and (b) of this By-Law 37.
(e) Advance of Costs, Charges and Expenses. Costs, charges and expenses
(including attorneys' fees) incurred by a person referred to in Sections (a) and
(b) of this By-Law 37 in defending a civil or criminal action, suit or
proceeding (including investigations by any government agency and all costs,
charges and expenses incurred in preparing for any threatened action, suit or
proceeding) shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding; provided, however, that the payment of such
costs, charges and expenses incurred by a Director or officer in his capacity as
a Director or officer (and not in any other
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capacity in which service was or is rendered by such person while a Director or
officer) in advance of the final disposition of such action, suit or proceeding
shall be made only upon receipt of an undertaking by or on behalf of the
Director or officer to repay all amounts so advanced in the event that it shall
ultimately be determined that such Director or officer is not entitled to be
indemnified by the Corporation as authorized in this By-Law 37. No security
shall be required for such undertaking and such undertaking shall be accepted
without reference to the recipient's financial ability to make repayment. The
repayment of such charges and expenses incurred by other employees and agents of
the Corporation which are paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as permitted by this Section (e)
may be required upon such terms and conditions, if any, as the Board of
Directors deems appropriate. The Board of Directors may, in the manner set forth
above, and subject to the approval of such Director, officer, employee or agent
of the Corporation, authorize the Corporation's counsel to represent such
person, in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
(f) Procedure for Indemnification. Any indemnification under Sections (a),
(b), or (c) or advance of costs, charges and expenses under Section (e) of this
By-Law 37 shall be made promptly, and in any event within 60 days, upon the
written request of the Director, officer, employee or agent directed to the
Secretary of the Corporation. The right to indemnification or advances as
granted by this By-Law 37 shall be enforceable by the Director, officer,
employee or agent in any court of competent jurisdiction if the Corporation
denies such request, in whole or in part, or if no disposition thereof is made
within 60 days. Such person's costs and expenses incurred in connection with
successfully establishing his right to indemnification or advances, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of costs, charges and expenses under Section (e) of this
By-Law 37 where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set forth in
Sections (a) or (b) of this By-Law 37, but the burden of proving that such
standard of conduct has not been met shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Sections (a) and (b) of this By-Law 37, nor the fact that there has
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
(g) Other Rights; Continuation of Right to Indemnification. The
indemnification provided by this By-Law 37 shall not be deemed exclusive of any
other rights to which a person seeking indemnification may be entitled under any
law (common or statutory), agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office or while employed by or acting
as agent for the Corporation, and shall continue as to a person who has ceased
to be a Director, officer, employee or agent and shall inure to the benefit of
the estate, heirs, executors and administrators
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of such person. All rights to indemnification under this By-Law 37 shall be
deemed to be a contract between the Corporation and each Director, officer,
employee or agent of the Corporation who serves or served in such capacity at
any time while this By-Law 37 is in effect. No amendment or repeal of this By-
Law 37 or of any relevant provisions of the Delaware General Corporation Law or
any other applicable laws shall adversely affect or deny to any Director,
officer, employee or agent any rights to indemnification which such person may
have, or change or release any obligations of the Corporation, under this By-Law
37 with respect to any costs, charges, expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement which arise out of an action,
suit or proceeding based in whole or substantial part on any act or failure to
act, actual or alleged, which takes place before or while this By-Law 37, as
adopted by the Board of Directors of the Corporation on April 17, 1986, is in
effect. The provisions of this Section (g) shall apply to any such action, suit
or proceeding whenever commenced, including any such action, suit or proceeding
commenced after any amendment or repeal of this By-Law 37.
(h) For purposes of this By-Law:
(1) "the Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power
and authority to indemnify its Directors, officers, and employees or
agents, so that any person who is or was a Director, officer, employee or
agent of such constituent corporation, or is or was serving at the request
of such constituent corporation as a Director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
By-Law 37 with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued;
(2) "other enterprises" shall include employee benefit plans,
including but not limited to any employee benefit plan of the Corporation;
(3) "serving at the request of the Corporation" shall include any
service which imposes duties on, or involves services by, a Director,
officer, employee, or agent of the Corporation with respect to an employee
benefit plan, its participants, or beneficiaries, including acting as a
fiduciary thereof;
(4) "fines" shall include any penalties and any excise or similar
taxes assessed on a person with respect to an employee benefit plan;
(5) A person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in
Sections (a) and (b) of this By-Law 37;
(6) Service as a partner, trustee or member of management or similar
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committee of a partnership or joint venture, or as a Director, officer,
employee or agent of a corporation which is a partner, trustee or joint
venturer, shall be considered service as a Director, officer, employee or
agent of the partnership, joint venture, trust or other enterprise.
(i) Savings Clause. If this By-Law 37 or any portion hereof shall be
invalidated on any ground by a court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director, officer, employee and
agent of the Corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this By-Law 37 that shall not
have been invalidated and to the full extent permitted by applicable law.
38. Insurance. The Corporation shall purchase and maintain insurance on
behalf of any person who is or was or has agreed to become a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him or on his behalf in any such capacity,
or arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of By-Law
37, provided that such insurance is available on acceptable terms as determined
by a vote of a majority of the entire Board of Directors.
STOCK RECORDS
39. Form of Certificates. The certificates representing stock of the
Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be mechanically signed with a facsimile of the signature of
the President or a Vice President, and a facsimile of the signature of the
Secretary or an Assistant Secretary, and shall also be signed by, or bear the
facsimile signature of, a duly authorized officer or agent of any properly
designated transfer agent of the Corporation. Such certificates may be issued
and delivered notwithstanding that the person whose facsimile signature appears
thereon shall have ceased to be such officer at the time the certificates are
issued and delivered.
40. Classes of Stock: Rights. The designations, preferences and relative
participating, optional or other special rights of the various classes of stock
or series thereof, and the qualifications, limitations or restrictions thereof,
shall be set forth in full or summarized on the face or back of the certificates
which the Corporation issues to represent its stock, or in lieu thereof, such
certificates shall set forth the office of the Corporation from which the
holders of certificates may obtain a copy of such information.
41. Transfers. Subject to restrictions on the transfer of stock, the
Corporation shall make
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transfers of stock on its books upon surrender of the certificate for the shares
to the Corporation or its duly appointed transfer agent duly endorsed by the
stockholder named in the certificate or his duly authorized attorney.
42. Lost Certificates. An executive officer may direct a new certificate
to be issued in place of certificates theretofore issued by the Corporation and
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. As a condition precedent to the issuance thereof, the officer may
require the claimant to advertise the alleged loss, theft or destruction in such
manner as the officer may require and to give the Corporation a bond in such sum
as he may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed or the issuance of the new certificate.
43. Record Dates. The Board of Directors may fix in advance a date, not
more than 60 days nor fewer than 10 days prior to the date of any meeting of
stockholders, nor more than 60 prior to the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, as a record
date for the determination of the stockholders entitled to notice of, and to
vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting and any adjournment thereof, or to receive payment
of such dividend, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
GENERAL
44. Contracts, Checks, Etc. All contracts, agreements, checks, drafts,
notes, bonds, bills of exchange and orders for the payment of money shall be
signed or endorsed by the persons whom the Board of Directors prescribes
therefor.
45. Fiscal Year. The fiscal year of the Corporation shall be the calendar
year, except as otherwise determined from time to time by the Board of
Directors.
46. Annual Statement. The Board of Directors shall cause an independent
public accountant, selected from time to time by the Board of Directors, to
examine in accordance with generally accepted auditing standards, prior to the
annual meeting of the stockholders in each year, the books and records of the
Corporation and the financial statements for the preceding fiscal year, which
statements shall set forth the financial position as of the close of, and the
results of operations of the Corporation for, the preceding fiscal year, and the
Board of Directors shall cause such accountant or firm of accountants to render
to the Board of Directors its opinion with respect
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thereto. The Board of Directors shall cause copies of the financial statements
together with the opinion to be sent to all stockholders entitled to vote at the
annual meeting in the year succeeding the year to which the financial statements
apply and to be available to stockholders attending the annual meeting.
47. Form of Notices. Whenever notice is required to be given to any
Director or officer or stockholder, such notice may be given either in person or
by mail, telephone or telegram, telex or similar medium of communication, except
as provided in By-Law 6, By-Law 12 or By-Law 21. Except as provided in By-Law
6, By-Law 12 or By-Law 21, if mailed, the notice will be deemed given when
deposited in the United States mail, postage prepaid, addressed to the
stockholder, officer or Director at such address as appears on the books of the
Corporation, or, in default of other address, to such Director, officer or
stockholder at the General Post Office in the City of Dallas, Texas, or the City
of Cleveland, Ohio. If given in person or by telephone, notice will be deemed
given when communicated, and if given by telegram, telex or similar medium of
communication, notice will be deemed given when properly dispatched. Any
stockholder, Director or officer may waive any notice required to be given
under these By-Laws.
48. Seal. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
49. By-Law Amendment. Subject to the provisions of the Certificate of
Incorporation, these By-Laws may be altered, changed, amended or repealed at any
regular meeting of the stockholders (or at any special meeting thereof duly
called for that purpose) by a majority vote of the shares represented and
entitled to vote at such meeting; provided that in the notice of such special
meeting notice of such purpose shall be given. Subject to the laws of the State
of Delaware, the Certificate of Incorporation and these By-Laws, the Board of
Directors may by majority vote of those present at any meeting at which a
quorum is present amend these By-Laws, or enact such other By-Laws as in their
judgement may be advisable for the regulation of the conduct of the affairs of
the Corporation.
50. Certificate of Incorporation and Applicable Law. These By-Laws are
subject to the provisions of the Certificate of Incorporation and applicable
law.
16
<PAGE>
EXHIBIT 15.1
Maxus Energy Corporation:
We are aware that Maxus Energy Corporation has incorporated by reference in its
Registration Statements No. 33-61350 on Form S-3 and No. 33-6693, No. 33-28353,
No. 33-47538, No. 33-55857, No. 33-55938, No. 33-55918 and No. 2-85403 on Form
S-8 its Form 10-Q for the quarter ended June 30, 1995, which includes our report
dated July 25, 1995, covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of 1933, that
report is not considered a part of the registration statement prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Fort Worth, Texas
August 10, 1995
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