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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to ______.
COMMISSION FILE NUMBER 1-10570
BJ SERVICES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 63-0084140
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
5500 NORTHWEST CENTRAL DRIVE, HOUSTON, TEXAS 77092
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 462-4239
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
There were 27,942,154 shares of the registrant's common stock, $.10 par value,
outstanding as of August 14, 1995.
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BJ SERVICES COMPANY
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Statement of Operations (Unaudited) - Three
and nine months ended June 30, 1995 and 1994 3
Consolidated Condensed Statement of Financial Position -
June 30, 1995 (Unaudited) and September 30, 1994 4
Consolidated Condensed Statement of Cash Flows (Unaudited) -
Nine months ended June 30, 1995 and 1994 5
Notes to Unaudited Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II - OTHER INFORMATION 15
</TABLE>
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue $ 199,542 $ 106,318 $ 425,625 $ 309,526
Operating expense:
Cost of sales and services 167,106 90,574 357,202 264,125
Research and engineering 3,822 2,166 8,100 6,678
Marketing 9,271 3,669 17,219 10,272
General and administrative 7,864 5,363 20,317 16,540
Goodwill amortization 1,236 289 1,814 896
Unusual charge 16,000 16,000
----------- ----------- ---------- ----------
Total operating expense 205,299 102,061 420,652 298,511
----------- ----------- ----------- ----------
Operating income (loss) (5,757) 4,257 4,973 11,015
Interest expense (4,884) (1,736) (9,502 ) (4,792)
Interest income 322 138 656 449
Other income (expense) - net 648 (227) 1,998 726
----------- ----------- ---------- ----------
Income (loss) before income taxes and
cumulative effect of accounting change (9,671) 2,432 (1,875 ) 7,398
Income taxes (3,823) 365 (2,149 ) 1,314
----------- ----------- ---------- ----------
Income (loss) before cumulative effect of
accounting change (5,848) 2,067 274 6,084
Cumulative effect of change in
accounting principle, net of tax (10,400)
----------- ----------- ----------- ----------
Net income (loss) $ (5,848) $ 2,067 $ 274 $ (4,316)
=========== =========== ========== ==========
Net income (loss) per share:
Income (loss) per share before cumulative
effect of accounting change $ (.23) $ .13 $ .01 $ .39
Cumulative effect of change in
accounting principle, net of tax (.66)
----------- ----------- ----------- ----------
Net income (loss) per share $ (.23) $ .13 $ .01 $ (.27)
=========== =========== ========== ==========
Average shares outstanding 26,115 15,667 19,170 15,663
=========== =========== ========== ==========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1995 1994
------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,383 $ 3,218
Receivables - net 167,186 103,754
Inventories:
Finished goods 51,251 30,970
Work in process 4,014 1,118
Raw materials 7,869 6,591
------------ ------------
Total inventories 63,134 38,679
Deferred income taxes 10,973 4,478
Other current assets 11,763 8,230
------------ ------------
Total current assets 254,439 158,359
Property - net 427,437 198,844
Deferred income taxes 96,324 16,365
Goodwill and other assets 200,073 36,498
------------ ------------
$ 978,273 $ 410,066
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 76,688 $ 54,609
Short-term borrowings and current
portion of long-term debt 28,942 33,450
Accrued employee compensation and benefits 20,787 10,521
Income and other taxes 11,170 10,678
Accrued insurance 13,355 2,637
Other accrued liabilities 41,181 9,162
------------ ------------
Total current liabilities 192,123 121,057
Long-term debt 274,666 74,700
Deferred income taxes 9,830 6,986
Accrued postretirement benefits and other 44,345 17,396
Stockholders' equity 457,309 189,927
------------ ------------
$ 978,273 $ 410,066
============ ============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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BJ SERVICES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 274 $ (4,316)
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Cumulative effect of accounting change 10,400
Unusual charge, non cash 3,646
Depreciation and amortization 25,178 19,080
Deferred income taxes (benefit) (8,637) (2,486)
Gain on disposal of property (740) (381)
Amortization of unearned compensation 660 117
Changes in assets and liabilities, net of effects from
acquisition of business:
Receivables 494 258
Inventories (4,361) (1,426)
Accounts payable (1,280) (2,115)
Other current assets and liabilities 8,131 (7,379)
Other, net 838 (1,240)
------------ ------------
Net cash provided by operating activities 24,203 10,512
Cash flows from investing activities:
Property additions (24,346) (32,149)
Proceeds from disposal of assets 5,121 1,164
Acquisition of business, net of cash acquired (202,858) (2,000)
------------ ------------
Net cash used for investing activities (222,083) (32,985)
Cash flows from financing activities:
Proceeds from borrowings, net 193,293 22,119
Proceeds from issuance of stock 2,752 780
------------ ------------
Net cash provided by financing activities 196,045 22,899
Increase (decrease) in cash and cash equivalents (1,835) 426
Cash and cash equivalents at beginning of period 3,218 1,620
------------ ------------
Cash and cash equivalents at end of period $ 1,383 $ 2,046
============ ============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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BJ SERVICES COMPANY
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 GENERAL
In the opinion of management, the unaudited consolidated condensed financial
statements for BJ Services Company (the "Company") include all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial position as of June 30, 1995, the results of
operations for each of the three and nine month periods ended June 30, 1995
and 1994 and the cash flows for each of the nine month periods then ended. The
consolidated condensed statement of financial position at September 30, 1994 is
derived from the September 30, 1994 audited consolidated financial statements.
Although management believes the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
and footnote disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission. The results of operations for the three and nine
month periods ended June 30, 1995 are not necessarily indicative of the results
to be expected for the full year.
Certain amounts for fiscal 1994 have been reclassified in the accompanying
consolidated condensed financial statements to conform to the current year
presentation.
NOTE 2 ACQUISITION
In April 1995, the Company acquired The Western Company of North America
("Western") for total consideration, including transaction costs, of $511.4
million in cash, Company common stock and warrants to purchase common stock.
The total transaction may be summarized as follows:
<TABLE>
(in thousands)
<S> <C> <C>
Cash $ 247,425
Stock issued (12,036,393 shares) 240,006
Warrants issued (4,800,037 warrants) 24,000
-----------
Total consideration 511,431
Net assets acquired 343,496(1)
-----------
Goodwill $ 167,935
===========
</TABLE>
----------------------
(1) Includes cash acquired of $44.5 million.
This acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of Western are included in the financial statements
beginning April 1, 1995. The assets and liabilities of Western have been
recorded on the Company's books at estimated fair market value on April 1, 1995
with the remaining purchase price reflected as goodwill, which will be
amortized on a straight line basis over 40 years. The allocation of the
purchase price is preliminary, as valuation and other studies have not been
finalized. It is not expected that the final allocation of purchase price will
produce materially different results from those presented herein. The
following unaudited pro forma summary presents the consolidated results of
operations of the Company as if the acquisition had occurred at the beginning
of fiscal year 1994.
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<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1995 1994
------------ ------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNT)
<S> <C> <C>
Revenue $ 599,547 $ 546,611
Net income (loss) from continuing operations
before cumulative effect of accounting change 4,325 (1,103)
Net income (loss) from continuing operations 4,325 (11,503)
Net income (loss) per share from continuing operations
before cumulative effect of accounting change .16 (.04)
Net income (loss) per share from continuing operations .16 (.41)
</TABLE>
NOTE 3 LONG TERM DEBT
Long term debt consisted of the following:
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1995 1994
------------- -----------------
(in thousands)
<S> <C> <C>
Notes payable, banks $ 275,000 $ 81,900
9.2% notes due August 1998 24,000 24,000
Other 2,166
------------- ------------
301,166 105,900
Less current maturities of long term debt 26,500 31,200
------------- ------------
Long term debt $ 274,666 $ 74,700
============= ============
</TABLE>
During the quarter ended June 30, 1995, the Company established a committed
unsecured credit facility with Bank of America as agent ("Bank Credit
Facility") and repaid and canceled its credit facility with the First National
Bank of Chicago. The Bank Credit Facility, which was executed on April 14,
1995 to accommodate the acquisition of Western, consists of a five-year $175.0
million revolver and a six-year $225.0 million term loan, providing an
aggregate of $400.0 million in available principal borrowings to the Company.
The Company is charged various fees in connection with this Bank Credit
Facility, including a commitment fee based on the average daily unused portion
of the commitment. Borrowings outstanding under the Bank Credit Facility at
June 30, 1995 amounted to $275.0 million, which is comprised of $225.0 million
under the term loan and $50.0 million under the revolver. The weighted average
interest rate for such outstanding borrowings was 6.74% at June 30, 1995.
The Bank Credit Facility incorporates a swingline facility allowing the Company
to borrow up to $20.0 million for up to seven days in minimum advances of $1.0
million. In addition, standby
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letters of credit are available in an amount not to exceed $20.0 million. No
such borrowings were outstanding at June 30, 1995.
The Company's debt agreements contain various customary covenants including
maintenance of certain profitability and solvency ratios and restrictions on
dividend payments, as defined in the Bank Credit Facility. The Company is also
required to make mandatory prepayments from free cash flow (as defined in the
Bank Credit Facility) subject to certain ratios as calculated at the end of
each fiscal year. Such prepayments shall be applied to reduce the term loan
installments on a pro rata basis.
At June 30, 1995, long term debt was due in aggregate annual installments of
$26,500,000, $35,500,000, $47,000,000, $53,900,000 and $99,200,000 in the
quarters ending June 30, 1996, 1997, 1998, 1999 and 2000, respectively, and an
aggregate of $39,066,000 thereafter.
Waivers have been obtained with respect to the Company's 9.2% Notes (the
"Notes") regarding covenant violations which would have occurred as a result of
the consummation of the Bank Credit Facility, in respect of certain restrictive
covenants included in the note agreements. Such waivers are effective until
September 12, 1995, subject to earlier termination upon occurrence of any event
of default under the Bank Credit Facility. The Company is currently involved
in negotiations to modify such restrictive covenants and other provisions of
the note agreement. If an amended note agreement is not consummated, the
Company intends to prepay the Notes using borrowings under the Bank Credit
Facility.
NOTE 4 UNUSUAL CHARGE
During the third quarter of 1995, the Company recorded an unusual charge of
$16.0 million ($.40 per share after-tax) in connection with a consolidation
program that is designed to improve efficiencies and reduce costs in connection
with the acquisition of Western.
The components of the unusual charge are as follows:
<TABLE>
<CAPTION>
1995 1995 BALANCE AT
PROVISION EXPENDITURES JUNE 30, 1995
----------------- --------------- -----------------
<S> <C> <C> <C>
Facility closings $ 5,643 $ (4,250)(1) $ 1,393
Change in control costs 5,381 (4,081) 1,300
Legal and other 3,342 (1,842) 1,500
Severance costs 1,634 (1,134) 500
------------- ------------- ------------
Total $ 16,000 $ (11,307) $ 4,693
============= ============= ============
</TABLE>
(1) Includes $3,646 non cash impairment of facilities.
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The Company and Western both operated facilities in many of the same locations.
Management has made the decision to close the duplicate facilities previously
operated by BJ Services and retain those operated by Western. A provision was
recorded to adjust the carrying value of these duplicate facilities to
estimated net realizable value and accruals were recorded for the estimated
costs associated with their closings, including maintenance of the facilities
until their ultimate sale and relocation of assets. Substantially all of the
duplicate facilities were closed as of June 30, 1995.
Upon consummation of the Western acquisition, the change in control provision
under the Company's executive officers' severance agreement was triggered. As
a result, approximately 168,000 performance units previously granted to the
Company's executive officers became fully vested and were subsequently issued.
The unusual charge includes an amount for the excess of the value of the
performance units on the date of issuance over the estimated amount which
otherwise was earned had the acquisition not occurred.
The unusual charge also includes an estimate of legal, severance and other
costs that would not have been incurred had the acquisition of Western not
occurred.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's operations are primarily driven by the number of oil and gas
wells being drilled, the depth and drilling conditions of such wells, the
number of well completions and the level of workover activity worldwide.
Drilling activity, in turn, is largely dependent on the price of oil and
natural gas. This is especially true in the United States, where the Company
generates approximately half of its revenues (approximately two-thirds after
giving effect to the acquisition of Western).
Due to weak energy prices and declining production, drilling activity in the
United States has declined more than 75% from its peak in 1981, and record low
drilling activity levels were experienced in 1986 and 1992. These events have
led to the withdrawal by the Company from several low activity areas in recent
years. In addition, pumping service companies have been unable to recapitalize
their aging United States fleets due to the inability, under current market
conditions, to generate adequate returns on new capital investments.
The U.S. averaged 677 and 737 active drilling rigs for the respective three and
nine month periods ended June 30, 1995. This represents a decline of 8% and
6%, respectively compared with the same periods in 1994. For the most recent
quarters, most of the activity decline occurred from reduced drilling for
natural gas. It is anticipated that natural gas drilling activity will continue
to show unfavorable comparisons over at least the next two quarters due to
currently weak natural gas prices.
While international (excluding Canada) drilling activity has historically been
less volatile than domestic activity, the international active rig count had
declined in each of the last four years prior to fiscal 1995 due to weaker oil
prices and economic and political instability in certain overseas countries.
The most significant declines in international drilling activity occurred in
the North Sea, Italy, Nigeria and Mexico. The activity decline has leveled off
somewhat with the active rig count for the first nine months of fiscal 1995
remaining flat with 1994.
In both the U.S. and internationally, there has been an increasing trend by oil
and gas companies toward "alliances" with the service companies. These
alliances take various forms including packaged or integrated services, single
source suppliers and turnkey agreements. For the first nine months of the
fiscal year, approximately $68 million of the Company's U.S. revenue and $9
million of its international revenue were generated under such alliances.
EXPANSIONS AND ACQUISITIONS
Despite the recent declines in international drilling activity, management
believes the primary opportunities for geographic and product expansion remain
in international markets. As a result,
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other than the acquisition of Western, the Company's capital spending and
expansion efforts have been primarily focused outside of the U.S. Most of the
Company's expansion efforts during the past year have been focused on expanding
the tubular services and commissioning and leak detection products, acquired in
1992, into geographic regions outside the North Sea.
On April 13, 1995 the Company completed its transaction to acquire Western for
$511.4 million ( including transaction costs of $7.2 million) in cash, shares
of Company common stock and warrants to purchase common stock. Both the
Company and Western are leading providers of oilfield services. The acquisition
gives the Company a greater "critical mass" with which to compete in U.S. and
international markets and the opportunity to realize significant consolidation
benefits. While merger and consolidation related costs will continue to depress
earnings for the next quarter, the acquisition is expected to add revenues of
up to 70 - 80% to the Company's previous revenue base and more than double the
Company's U.S. revenue base beginning in the June quarter. In addition, it is
estimated that at least $35 million of overhead and redundant operating costs
will be eliminated annually by combining the two companies. Approximately $3
to 4 million of consolidation benefits were realized during this most recent
quarter of combined operations and a total of approximately $7 to 8 million is
expected to be realized during the fourth fiscal quarter. The remainder of
the consolidation efforts and resulting benefits are expected to be in place
by the beginning of fiscal 1996. The realization of consolidation benefits
depends upon a number of factors, including factors relating to general
industry conditions and other factors outside the Company's control and the
amount and timing of consolidation costs and benefits that are ultimately
realized are subject to all such factors affecting the combined business.
RESULTS OF OPERATIONS
Revenue: Revenue for the quarter ended June 30, 1995 was $199.5 million,
compared with $106.3 million in the prior year's third quarter. Most of the
$93.2 million year over year increase was due to the current quarter results
including the operations of Western, which were acquired in April 1995, and from
increased activity in Latin America. For the nine months ended June 30, 1995,
revenue was $425.6 million, a $116.1 million increase over revenue for the
same period of the previous year.
U.S. revenues for the quarter ended June 30, 1995 were $121.5 million compared
to $51.1 million in the same period in 1994. For the nine month period, U.S.
revenues were $225.4 million, a $76.0 million increase over the prior year.
Such increases were due primarily to the acquisition of Western in April 1995.
On a combined basis, revenues in the U.S. declined 3% for the quarter while
overall drilling activity declined 8%. Natural gas drilling activity declined
by 14% compared with the previous year leading to revenue declines in the major
gas areas. Outside the major gas areas, the Company's U.S. operations showed
strong year to year gains due primarily to increased cement unit placements in
the Gulf of Mexico, the addition of a stimulation vessel introduced in mid 1994
and slightly improved pricing. Also contributing to the year over year increase
were alliances with major operators.
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International revenue for the three and nine month periods was $78.0 million
and $200.2 million, respectively. Such revenue represented increases of 41% and
25%, respectively, over the same periods of 1994. Much of the revenue growth
occurred in Latin America as a result of increased stimulation activity with
both private and governmental oil companies in Argentina, and the addition of a
stimulation vessel in 1994 and a coiled tubing barge in 1995 to service the
Lake Maracaibo, Venezuela market. Also contributing to the revenue increases
were revenues from the Company's operations in Egypt, which were accounted for
as an equity investment until the Company acquired the remaining ownership from
its joint venture partner in April 1994, and from the acquisition of Western in
April 1995. In addition, geographic expansion of the Company's tubular
services and casing and leak detection products generated increased revenues as
these products have now been expanded into a total of 13 countries, including
parts of the Middle East, Africa, South America, the Far East and Australia. A
recovery in drilling activity in the United Kingdom and Nigeria, the Company's
recent expansion into Viet Nam, and resumed stimulation activity in the North
Sea also contributed to the revenue growth for the most recent quarter. For the
nine month comparison, these gains were partially offset by declines in revenue
from the Company's North Sea operations as a result of a decline in stimulation
vessel activity and the loss of a major cementing contract in Norway.
Operating Income: For the quarter ended June 30, 1995, the Company recorded an
operating loss of $5.8 million, including a pre-tax $16.0 million ($.40 per
share after-tax) unusual charge. The unusual charge was taken in connection
with a consolidation program that is designed to improve efficiencies and
reduce costs resulting from the acquisition of Western. Included in the
unusual charge is an adjustment to the carrying value of duplicate operating
facilities, severance and related benefit costs, benefits due under agreements
covering the Company's executives which were triggered as a result of the
acquisition of Western, and legal and other costs that would not have been
incurred had the acquisition not occurred. Operating income for the nine
months ended June 30, 1995 was $5.0 million, including the $16.0 million
unusual charge, compared to $11.0 million for the year earlier period.
Exclusive of the unusual charge, this represents a $10.0 million improvement
over the same period of 1994, due primarily to revenue increases as a result
of the acquisition of Western and revenue growth internationally through
activity increases and expansions of products. For the quarter and nine month
periods, the cost of sales and services as a percentage of revenue was 1.5%
lower than that of the same periods of the previous year. The improvement in
the quarter was primarily as a result of cost reduction efforts implemented
after the acquisition of Western. Also contributing to the improvement for
the nine month period was approximately $1.5 million in nonrecurring expenses
which were incurred in the second quarter of fiscal 1994. Such expenses
included startup costs associated with the Company's new stimulation vessels
in the Gulf of Mexico and Venezuela, mobilization costs for geographic
expansions and offshore skid placements, and severance and other costs
associated with the downsizing of selected international locations. Other
operating expenses, excluding the unusual charge, increased by $10.7 million
and $13.1 million, respectively, for the three and nine month periods as
compared to the same periods of the prior year primarily as a result of the
acquisition of Western. Also contributing to the operating expense increase
were marketing expenses related to international expansions.
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Net interest expense increased by $3.0 million and $4.5 million, respectively,
over the same three and nine month periods of the previous year as a result of
borrowings to finance the acquisition of Western and increased interest rates
on the Company's floating rate debt obligations. The net other income of $2.0
million for the nine months ended June 30, 1995 resulted from royalty income
from certain of the Company's proprietary products, a nonrecurring gain on the
sale of a duplicate facility in Scotland during the first quarter and a gain
in the second quarter on the sale of certain nonrevenue generating assets in
the Far East region.
Exclusive of the unusual charge, the effective tax rate increased from 18% in
the prior year's first nine month period to 24% in the current year due to the
higher profitability being taxed at marginal rates of 30 to 35% during the
current year.
The prior year's results also reflect the cumulative effect of an accounting
change for retiree health benefits which resulted in a net loss for the nine
month period.
FINANCIAL CONDITION
Capital Resources and Liquidity: Net cash provided by operating activities
during the first nine months of 1995 was $24.2 million compared to $10.5
million in the same prior year period. The improvement was due to higher
profitability and a smaller increase in working capital compared with the year
earlier period.
Management strives to maintain low cash balances while utilizing available
credit facilities to meet the Company's capital needs. Any excess cash
generated is used to pay down outstanding borrowings.
On April 14, 1995 the Company canceled its committed unsecured credit facility
with the First National Bank of Chicago and the outstanding borrowings were
repaid with funds from the Company's committed unsecured credit facility with
Bank of America ("Bank Credit Facility"), executed to accommodate the
acquisition of Western. The Bank Credit Facility consists of a five-year
$175.0 million revolving credit facility and a six-year $225.0 million term
loan, providing an aggregate of $400.0 million in available principal
borrowings to the Company. Borrowings outstanding under the Bank Credit
Facility at June 30, 1995 amounted to $275.0 million which is comprised of
$225.0 million on the term loan and $50.0 million on the revolver.
The Company's interest bearing debt represented 39.9% of its total
capitalization at June 30, 1995, compared to 36.3% at the previous fiscal year
end. The increase reflects borrowings used to acquire Western.
Management believes that the credit facilities described above, combined with
other discretionary credit facilities and cash flows from operations, will
provide the Company with sufficient capital resources and liquidity to manage
its routine operations and fund projected capital expenditures.
The Company's debt agreements contain various customary covenants, including
the maintenance of certain profitability and solvency ratios. Waivers have been
obtained with respect to the
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Company's 9.2% Notes regarding the covenant violations which would have
occurred as a result of the consummation of the Bank Credit Facility, in
respect of certain restrictive covenants included in the note agreements. Such
waivers are effective until September 12, 1995, subject to earlier termination
upon the occurrence of any event of default under the Bank Credit Facility.
The Company is currently engaged in negotiations to modify such restrictive
covenants and other provisions of the note agreements. If an amended note
agreement is not consummated, the Company intends to prepay the 9.2% Notes with
funds available under its Bank Credit Facility.
At September 30, 1994, the Company had approximately $112 million of U.S. tax
net operating loss carryforwards expiring between 2004 and 2009. In connection
with the Western acquisition, the Company has acquired approximately $374
million of tax net operating loss carryforwards, subject to certain
limitations, expiring between 2001 and 2005. In the preliminary allocation of
purchase price, management has estimated that the Company will utilize
approximately $251 million of these carryforwards, the benefit of which has
been included in the $75 million net deferred tax asset recognized in the
acquisition. This estimate gives effect to the projected consolidation benefits
to be achieved by combining the two companies and eliminating certain redundant
overhead and operating costs.
Requirements for Capital: Capital expenditures for the nine months ended June
30, 1995 were $24.3 million, or $7.8 million below the spending in the same
period of the previous year. The current year's spending relates primarily to
offshore operations both in the U.S. and abroad. The prior year's spending
included approximately $12 million for the construction of two offshore
stimulation vessels completed during the Company's second fiscal quarter of
1994. Fiscal 1995 capital expenditures, which are expected to be approximately
$26 million (excluding the Western acquisition), will be focused primarily on
international growth opportunities, including product and geographic
expansions. The first nine months' investing activities included $5.1 million
of proceeds from the sale of a duplicate facility and other disposals of
assets. The cash generated from such sales is not of a recurring nature, and
the disposal of these assets will not have a material effect on future revenue
or operating profits.
The actual amount of 1995 capital expenditures will be primarily dependent upon
the availability of expansion opportunities and will be funded by cash flows
from operating activities and available credit facilities. Management believes
cash flows from operating activities and available lines of credit, if
necessary, will be sufficient to fund projected capital expenditures.
14
<PAGE> 15
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
Waivers have been obtained with respect to the Company's 9.2%
Notes (the "Notes"), regarding the covenant violations which
would have occurred as a result of the consummation of the
Company's credit agreement (the "Bank Credit Facility"), in
respect of certain restrictive covenants included in the note
agreements. Such waivers are effective until September 12,
1995, subject to earlier termination upon the occurrence of
any event of default under the Bank Credit Facility. The
Company is currently engaged in negotiations to modify such
restrictive covenants and other provisions of the note
agreement. If an amended note agreement is not consummated,
the Company intends to prepay the Notes with funds available
under its Bank Credit Facility.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Bylaws as amended effective April 13, 1995.
27.1 Financial Data Schedule
15
<PAGE> 16
(b) Reports on Form 8-K.
A current report on Form 8-K was filed by the Company
on April 14, 1995, attaching as an exhibit the press release
of BJ Services announcing the approval of the merger with
Western.
A current report on Form 8-K was filed by the Company on April
19, 1995, attaching as an exhibit the certificate of
incorporation of the Company, as amended (including the
certificate of merger with Western).
A current report on Form 8-K was filed by the Company on April
28, 1995, reporting under Item 2 the merger of Western with
and into the Company, and attaching as exhibits the press
releases regarding the redemption of the 7-1/4% Convertible
Subordinated Debentures due January 15, 2015, the Company's
second quarter earnings, and the determination of the merger
consideration.
A current report on Form 8-K/A was filed by the Company on May
31, 1995, including in Item 7 the financial statements of
Western and pro forma financial statements based upon the
historical financial information of the Company and Western,
and attaching as an exhibit the credit agreement of the
Company and certain of its subsidiaries with certain financial
institutions, including Bank of America National Trust and
Savings Association, as agent.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BJ Services Company
(Registrant)
Date: August 14, 1995 BY /s/ Michael McShane
-------------------------------------
Michael McShane
Vice President - Finance and
Chief Financial Officer
Date: August 14, 1995 BY /s/ Matthew D. Fitzgerald
-------------------------------------
Matthew D. Fitzgerald
Controller and Chief
Accounting Officer
17
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 Bylaws as amended effective April 13, 1995.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.1
BYLAWS
OF
BJ SERVICES COMPANY
AS ADOPTED
JULY 13, 1990
AND AMENDED BY THE
BOARD OF DIRECTORS
EFFECTIVE AS OF APRIL 13, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
ARTICLE I - OFFICES 1
SECTION 1. REGISTERED OFFICE 1
SECTION 2. OTHER OFFICES 1
ARTICLE II - MEETINGS OF STOCKHOLDERS 1
SECTION 1. PLACE OF MEETINGS 1
SECTION 2. ANNUAL MEETING OF STOCKHOLDERS 1
SECTION 3. QUORUM; ADJOURNED MEETINGS AND NOTICE THEREOF 1
SECTION 4. VOTING 2
SECTION 5. PROXIES 2
SECTION 6. SPECIAL MEETINGS 2
SECTION 7. NOTICE OF STOCKHOLDERS' MEETINGS 2
SECTION 8. WAIVER OF NOTICE 3
SECTION 9. MAINTENANCE AND INSPECTION OF STOCKHOLDER LIST 3
SECTION 10. STOCKHOLDER ACTION BY WRITTEN CONSENT
WITHOUT A MEETING 3
SECTION 11. INSPECTORS OF ELECTION 3
SECTION 12. PROCEDURE FOR STOCKHOLDERS' MEETINGS 4
SECTION 13. ORDER OF BUSINESS 4
SECTION 14. PROCEDURES FOR BRINGING BUSINESS BEFORE
AN ANNUAL MEETING 4
SECTION 15. PROCEDURES FOR NOMINATING DIRECTORS 5
ARTICLE III - DIRECTORS 6
SECTION 1. NUMBER AND QUALIFICATION OF DIRECTORS 6
SECTION 2. ELECTION AND TERM OF OFFICE 7
SECTION 3. RESIGNATION AND REMOVAL OF DIRECTORS 7
SECTION 4. VACANCIES 8
SECTION 5. POWERS 8
SECTION 6. PLACE OF DIRECTORS' MEETINGS 9
SECTION 7. REGULAR MEETINGS 9
SECTION 8. SPECIAL MEETINGS 9
SECTION 9. QUORUM 9
SECTION 10. ACTION WITHOUT MEETING 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 11. TELEPHONIC MEETINGS 9
SECTION 12. MEETINGS AND ACTION OF COMMITTEES 10
SECTION 13. SPECIAL MEETINGS OF COMMITTEES 10
SECTION 14. MINUTES OF COMMITTEE MEETINGS 10
SECTION 15. COMPENSATION OF DIRECTORS 11
SECTION 16. INDEMNIFICATION 11
ARTICLE IV - OFFICERS 12
SECTION 1. OFFICERS 12
SECTION 2. ELECTION OF OFFICERS 12
SECTION 3. SUBORDINATE OFFICERS 12
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS 13
SECTION 5. VACANCIES IN OFFICES 13
SECTION 6. CHAIRMAN OF THE BOARD 13
SECTION 7. VICE CHAIRMAN OF THE BOARD 13
SECTION 8. PRESIDENT 13
SECTION 9. VICE PRESIDENT 13
SECTION 10. SECRETARY 14
SECTION 11. CHIEF FINANCIAL OFFICER 14
SECTION 12. TREASURER AND CONTROLLER 14
ARTICLE V - CERTIFICATES OF STOCK 15
SECTION 1. CERTIFICATES 15
SECTION 2. SIGNATURES ON CERTIFICATES 15
SECTION 3. STATEMENT OF STOCK RIGHTS, PREFERENCES, PRIVILEGES 15
SECTION 4. LOST CERTIFICATES 15
SECTION 5. TRANSFERS OF STOCK 16
SECTION 6. FIXING RECORD DATE 16
SECTION 7. REGISTERED STOCKHOLDERS 16
ARTICLE VI - GENERAL PROVISIONS - DIVIDENDS 16
SECTION 1. DIVIDENDS 16
SECTION 2. PAYMENT OF DIVIDENDS; DIRECTORS' DUTIES 16
SECTION 3. CHECKS 17
SECTION 4. CORPORATE CONTRACTS AND INSTRUMENTS 17
(ii)
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
SECTION 5. FISCAL YEAR 17
SECTION 6. MANNER OF GIVING NOTICE 17
SECTION 7. WAIVER OF NOTICE 18
SECTION 8. ANNUAL STATEMENT 18
ARTICLE VII - AMENDMENTS 18
SECTION 1. AMENDMENT BY DIRECTORS 18
SECTION 2. AMENDMENT BY STOCKHOLDERS 18
</TABLE>
(iii)
<PAGE> 5
BYLAWS
OF
BJ SERVICES COMPANY
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at
such place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting.
Section 2. An annual meeting of stockholders shall be held on
the fourth Thursday in January in each year, if not a legal holiday, and if a
legal holiday, then on the next business day following, at 2:00 p.m. or at such
other date and time as may be determined from time to time by resolution
adopted by the Board of Directors, for the purpose of electing, subject to
Article III, Section 17 hereof, one class of the directors of the Corporation,
and transacting such other business as may properly be brought before the
meeting.
Section 3. A majority of the stock issued and outstanding and
entitled to vote at any meeting of stockholders, the holders of which are
present in person or represented by proxy, without regard to class or series,
shall constitute a quorum for the transaction of business except as otherwise
provided by law, by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), or by these Bylaws. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave
less than a quorum and the votes present may continue to transact business
until adjournment provided
<PAGE> 6
that any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum. If, however, such
quorum shall not be present or represented at any meeting of the stockholders,
a majority of the voting stock represented in person or by proxy may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote thereat.
Section 4. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy and entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of the statutes or the Certificate of Incorporation or these Bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 5. At each meeting of the stockholders, each
stockholder having the right to vote may vote in person or may authorize
another person or persons to act for him by proxy appointed by an instrument in
writing subscribed by such stockholder and bearing a date not more than three
years prior to said meeting, unless said instrument provides for a longer
period. All proxies must be filed with the Secretary of the Corporation at the
beginning of each meeting in order to be counted in any vote at the meeting. A
proxy shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney in fact. Except as otherwise set
forth in the Certificate of Incorporation, each stockholder shall have one vote
for each share of stock having voting power, registered in his name on the
books of the Corporation on the record date set by the Board of Directors as
provided in Article V, Section 6 hereof.
Section 6. Special meetings of the stockholders, for any
purpose, or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called at any time by the Board of
Directors or by a committee of the Board of Directors and whose powers and
authority, as provided in a resolution of the Board of Directors or in these
Bylaws, include the power to call such meetings. Special meetings of
stockholders of the corporation may not be called by any other person or
persons. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 7. Any notice requested to be given to stockholders by
statute, the Certificate of Incorporation or these Bylaws, including notice of
any meeting of stockholders, shall be given personally, by first-class mail or
by telegraphic communication, charges
-2-
<PAGE> 7
prepaid, addressed to the stockholder at the address of such stockholder
appearing on the books of the Corporation or given by the stockholder to the
Corporation for the purpose of notice. If no such address appears on the
Corporation's books or has been so given, notice shall be deemed to have been
given if sent by first-class mail or telegraphic communication to the
Corporation's principal executive office, or if published at least once in a
newspaper of general circulation in the county where such principal executive
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram.
If any notice addressed to a stockholder at the address of such
stockholder appearing on the books of a Corporation is returned to the
Corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the stockholder
at such address, all further notices shall be deemed to have been duly given
without further mailing if the same shall be available to the stockholder upon
written demand of the stockholder at the principal executive office of the
Corporation for a period of one year from the date of the giving of such
notice.
Section 8. Attendance of a person at a meeting shall constitute
a waiver of notice to such person of such meeting, except when the person
objects at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened, or objects to the
consideration of matters not included in the notice of the meeting.
Section 9. The officer or agent who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where their meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept open at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine such list or
to vote at any meetings of stockholders.
Section 10. No action shall be taken by stockholders except at
an annual or special meeting of stockholders, and stockholders may not act by
written consent.
Section 11. Before any meeting of stockholders, the Board of
Directors may
-3-
<PAGE> 8
appoint any persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of election are
so appointed, the chairman of the meeting may, and on the request of any
stockholder or a stockholder's proxy shall, appoint inspectors of election at
the meeting. The number of inspectors shall be either one or three. If
inspectors are appointed at a meeting on the request of one or more
stockholders or proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one or three inspectors are to
be appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
stockholder or a stockholder's proxy shall, appoint a person to fill such
vacancy.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies;
(b) Receive votes or ballots;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes;
(e) Determine when the polls shall close;
(f) Determine the results; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
Section 12. Meetings of the stockholders shall be presided over
by the Chairman of the Board of Directors, or in his absence, by the Vice
Chairman, the President or by any Vice President, or, in the absence of any of
such officers, by a chairman to be chosen by a majority of the stockholders
entitled to vote at the meeting who are present in person or by proxy. The
Secretary, or, in his absence, any person appointed by the Chairman, shall act
as secretary of all meetings of the stockholders.
Section 13. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting.
Section 14. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual meeting of the
stockholders except in accordance with the procedures hereinafter set forth in
this Section 14; provided, however, that nothing
-4-
<PAGE> 9
in this Section 14 shall be deemed to preclude discussion by any stockholder of
any business properly brought before the annual meeting in accordance with said
procedures.
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 (1) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board, (2) otherwise properly brought before the meeting by or at the
direction of the Board, or (3) otherwise properly brought before the meeting
by a stockholder. In addition to any other applicable requirements, for
business to be properly 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 30 days nor more than 60 days prior to the meeting as originally
scheduled; provided, however, that in the event that less than 40 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. Any adjournment(s) or postponement(s) of the original
meeting whereby the meeting will reconvene within 30 days from the original
date shall be deemed for purposes of notice to be a continuation of the
original meeting and no business may be brought before any such reconvened
meeting unless timely notice of such business was given to the Secretary of the
Corporation for the meeting as originally scheduled. A stockholder's notice to
the Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and their reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business.
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 in accordance with the provisions of this Section 14, 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.
Section 15. Notwithstanding anything in these Bylaws to the
contrary, only persons who are nominated in accordance with the procedures
hereinafter set forth in this Section 15 shall be eligible for election as
directors of the Corporation.
Nominations of persons for election to the Board of Directors of
the Corporation
-5-
<PAGE> 10
may be made at a meeting of stockholders only (1) by or at the direction of the
Board of Directors or (2) by any stockholder of the Corporation entitled to
vote for the election of directors at the meeting who complies with the notice
procedures set forth in this Section 15. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant
to timely notice in writing to the Secretary of the Corporation. To be timely,
a stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 30 days nor more
than 60 days prior to the meeting; provided, however, that in the event that
less than 40 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must
be so received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made. Any adjournment(s) or postponement(s) of the
original meeting whereby the meeting will reconvene within 30 days from the
original date shall be deemed for purposes of notice to be a continuation of
the original meeting and no nominations by a shareholder of persons to be
elected directors of the Corporation may be made at any such reconvened meeting
other than pursuant to a notice that was timely for the meeting on the date
originally scheduled. Such stockholder's notice shall set forth: (i) as to
each person whom the stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, or any successor regulation
thereto (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (ii) as to
the stockholder giving the notice (A) the name and address, as they appear on
the Corporation's books, of such stockholder, and (B) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 15, and if he should
so determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
ARTICLE III
DIRECTORS
Section 1. The Board of Directors shall consist of a minimum of
four (4) and a maximum of ten (10) directors. The number of directors shall be
fixed from time to time within the minimum and the maximum number established
by the then elected Board of Directors. The number of directors until changed
by resolution of the Board shall be seven
-6-
<PAGE> 11
(7). The maximum number of directors may not be increased by the Board of
Directors to exceed ten without the affirmative vote of 75% of the members of
the entire Board. The directors need not be stockholders. No officer of the
Corporation may serve on a board of directors of any company having a present
or retired employee on the Corporation's Board of Directors. No person may
stand for election as a director if within the previous one (1) year he has
resigned from the Board as a result of the tenure provisions of Article III,
Section 3 hereof regarding service for more than 10, 11 or 12 consecutive years
on the Board. No person associated with an organization whose services are
contracted by the Corporation shall serve on the Corporation's Board of
Directors, provided however that this prohibition may be waived by a majority
of the members of the whole Board if the Board in its judgment determines that
such waiver would be in the best interest of the Corporation.
Section 2. The Board of Directors shall be divided into three
classes, Class I, Class II and Class III. The number of directors in each
class shall be the whole number contained in the quotient arrived at by
dividing the authorized number of directors by three, and if a fraction is also
contained in such quotient then if such fraction is one-third (1/3), the extra
director shall be a member of Class III, and if the fraction is two-thirds
(2/3), one of the extra directors shall be a member of Class III and the other
a member of Class II. Each director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such director
was elected; provided, however, that the directors initially appointed to Class
I shall serve for a term ending on the date of the first annual meeting next
following September 30, 1990, the directors initially appointed to Class II
shall serve for a term ending on the date of the second annual meeting next
following September 30, 1990, and the directors initially appointed to Class
III shall serve for a term ending on the date of the third annual meeting next
following September 30, 1990. One class of the directors shall be elected at
each annual meeting of the stockholders. If any such annual meeting is not
held or the directors are not elected thereat, the directors may be elected at
any special meeting of stockholders held for that purpose. All directors shall
hold office until their respective successors are elected and qualified or
until their earlier death, resignation or removal.
Section 3. Directors who are employees of the Corporation must
resign from the Board of Directors at the time of any diminution in their
duties or responsibilities as an officer, at the time they leave the employ of
the Corporation for any reason or on their 70th birthday. A director's term of
office shall automatically terminate on the date of the annual meeting of
stockholders following: (i) his 70th birthday; (ii) the third anniversary of
his retirement from his principal occupation; (iii) unless he is an officer of
the Corporation, the date on which he has served on the Corporation's Board of
Directors for a consecutive period of (a) twelve (12) complete years or more
prior to the Corporation's 1991 annual meeting of stockholders, (b) eleven (11)
complete years or more prior to the Corporation's 1992 annual
-7-
<PAGE> 12
meeting of stockholders, or (c) commencing with the 1993 annual meeting of
stockholders, a total of ten (10) complete years or more thereafter; (iv) any
fiscal year in which he has failed to attend at least 66% of the meetings of
the Board of Directors and any committees of the Board of Directors on which
such director serves; or (v) the first anniversary of any change in his
employment (other that a promotion or lateral movement within the same
organization). The requirements of Section 3(v) of Article III may be waived
by a majority of the members of the whole Board (excluding the director whose
resignation would otherwise be required) if the Board in its judgment
determines that such waiver would be in the best interest of the Corporation.
Any director may be removed for cause by the holders of a majority of the
shares of the Corporation entitled to vote in the election of directors;
stockholders may not remove any director without cause. The Board of Directors
may not remove any director for or without cause, and no recommendation by the
Board of Directors that a director be removed for cause may be made to the
stockholders except by the affirmative vote of not less than 75% of the members
of the whole Board; provided that the Board may remove any director who fails
to resign as required by the provisions of these Bylaws.
Section 4. Except as otherwise provided by statute or the
Certificate of Incorporation, in the case of any increase in the number of
directors, such additional director or directors shall be proposed for election
to terms of office that will most nearly result in each Class of directors
containing one-third of the entire number of members of the whole Board, and,
unless such position is to be filled by a vote of the stockholders at an annual
or special meeting, shall be elected by a majority vote of the directors in
such Class or Classes, voting separately by Class. In the case of any vacancy
in the Board of Directors, however created, the vacancy or vacancies shall be
filled by a majority vote of the directors remaining in the Class in which the
vacancy occurs or, if only one such director remains, by such director. In the
event one or more directors shall resign, effective at a future date, such
vacancy or vacancies shall be filled as provided herein. Directors so chosen
or elected shall hold office for the remaining term of the directorship to
which appointed. Any director elected or chosen as provided herein shall serve
for the unexpired term of office or until his successor is elected and
qualified or until his earlier death, resignation or removal.
In the event of any decrease in the authorized number of
directors, (a) each director then serving as such shall nevertheless continue
as a director of the class of which he is a member until the expiration of this
current term, or his prior death, resignation or removal, and (b) the newly
eliminated directorships resulting from such decrease shall be apportioned by
the board of directors to such class or classes as shall, so far as possible,
bring the number of directors in the respective classes into conformity with
the formula in Section 2 hereof as applied to the new authorized number of
directors.
Section 5. The property and business of the Corporation shall
be managed by or under the direction of its Board of Directors. In addition to
the powers and authorities by these Bylaws expressly conferred upon them, the
Board may exercise all such powers of the
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<PAGE> 13
corporation and do all such lawful acts and things as are not by statute, by
the Certificate of Incorporation or by these Bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. The directors may hold their meetings and have one
or more office, and keep the books of the Corporation outside the state of
Delaware.
Section 7. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board. Except as otherwise provided by statute, any business
may be transacted at any regular meeting of the Board of Directors.
Section 8. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the Vice Chairman or the President on at
least forty-eight hours' notice to each director. Special meetings shall be
called by the President or the Secretary in like manner and on like notice on
the written request of any two directors unless the Board consists of only one
director, in which case special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of the sole
director.
Section 9. At all meetings of the Board of Directors a majority
of the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the vote of a majority
of the directors present at any meeting at which there is a quorum, shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute, by the Certificate of Incorporation or by these Bylaws.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
If only one director is authorized, such sole director shall constitute a
quorum. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action is
approved by at least a majority of the required quorum for such meeting.
Section 10. Unless otherwise restricted by statute, the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or
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<PAGE> 14
these Bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at such meeting.
COMMITTEES OF DIRECTORS
Section 12. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. If no alternate members have been appointed, the committee
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. The Board of Directors shall, by resolution
passed by a majority of the whole Board, designate one member of each committee
as chairman of such committee. Each such chairman shall hold such office for a
period not in excess of five years, and shall upon surrender of such
chairmanship resign from membership on such committee. Any such committee, to
the extent provided in the resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, but no such
committee shall have the power or authority to authorize an amendment to the
Certificate of Incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amend the Bylaws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
Section 13. Special meetings of committees may be called by the
Chairman of such committee, the Chairman of the Board or the President, on at
least 48 hours' notice to each member and alternate member. Alternate members
shall have the right to attend all meetings of the committee. The Board of
Directors may adopt rules for the government of any committee not inconsistent
with the provisions of these Bylaws. If a committee is comprised of an odd
number of members, a quorum shall consist of a majority of that number. If the
committee is comprised of an even number of members, a quorum shall consist of
one-half of that number. If a committee is comprised of two members, a quorum
shall consist of both members.
Section 14. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when requested.
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<PAGE> 15
COMPENSATION OF DIRECTORS
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
INDEMNIFICATION
Section 16. (a) The Corporation shall indemnify every person
who is or was a party or is or was threatened to be made a party to any action,
suit, or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation or any of its direct or indirect wholly-owned subsidiaries
or, while a director, officer, employee or agent of the Corporation or any of
its direct or indirect wholly-owned subsidiaries, is or was serving at the
request of the Corporation or any of its direct or indirect wholly-owned
subsidiaries, as a director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including counsel fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, to the full extent permitted
by applicable laws provided that the Corporation shall not be obligated to
indemnify any such person against any such action, suit or proceeding which is
brought by such person against the Corporation or any of its direct or indirect
wholly-owned subsidiaries or the directors of the Corporation or any of its
direct or indirect wholly-owned subsidiaries, other than an action brought by
such person to enforce his rights to indemnification hereunder, unless a
majority of the Board of Directors of the Corporation shall have previously
approved the bringing of such action, suit or proceeding. The Corporation
shall indemnify every person who is or was a party or is or was threatened to
be made a party to any action, suit, or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was
licensed to practice law and an employee (including an employee who is or was
an officer) of the Corporation or any of its direct or indirect wholly-owned
subsidiaries and, while acting in the course of such employment committed or is
alleged to have committed any negligent acts, errors or omissions in rendering
professional legal services at the request of the Corporation or pursuant to
his employment (including, without limitation, rendering written or oral legal
opinions to third parties) against expenses (including counsel fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or
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<PAGE> 16
proceeding, to the full extent permitted by applicable law; provided that the
Corporation shall not be obligated to indemnify any such person against any
action, suit or proceeding arising out of any adjudicated criminal, dishonest
or fraudulent acts, errors or omissions of such person or any adjudicated
willful, intentional or malicious acts, errors or omissions of such person.
(b) Expenses incurred by an officer or director of the
Corporation or any of its direct or indirect wholly-owned subsidiaries in
defending a civil or criminal action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized in this Section
16. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
(c) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 16 shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any provision of law, the Corporation's
Certificate of Incorporation, the Certificate of Incorporation or bylaws or
other governing documents of any direct or indirect wholly-owned subsidiary of
the Corporation, or any 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 any of the positions or having any of
the relationships referred to in this Section 16.
ARTICLE IV
OFFICERS
Section 1. The officers of the Corporation shall be a Chairman
of the Board, a President, a Chief Financial Officer, a Vice President, a
Secretary, a Treasurer and a Controller. The Corporation may also have, at the
discretion of the Board of Directors, a Vice Chairman of the Board, one or more
additional Vice Presidents, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article.
Section 2. The officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen by the Board of Directors, and each
shall serve at the pleasure of the Board, subject to the rights, if any, of any
officer under any contract of employment.
Section 3. The Board of Directors may appoint, and may empower
the President to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the Bylaws or as the
Board of Directors may from time to time determine.
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<PAGE> 17
Section 4. Any officer may be removed, either with or without
cause, by the Board of Directors, at any regular or special meeting thereof, or
except in case of an officer chosen by the Board of Directors, by any officer
upon whom such power of removal may be conferred by the Board of Directors,
provided that such removal shall not prejudice the remedy of such officer for
breach of any contract of employment.
Any officer may resign at any time by giving written notice to
the Corporation. Any such resignation shall take effect on receipt of such
notice or at any later time specified therein. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. Any such resignation is without prejudice to the rights, if any, of
the Corporation under any contract to which the officer is a party.
Section 5. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these Bylaws for regular appointments to such office.
Section 6. The Chairman of the Board shall, if present, preside
at all meetings of the Board of Directors and of the stockholders, and shall
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by the Bylaws.
Section 7. The Vice Chairman of the Board shall exercise and
perform such powers and duties as may be from time to time assigned to him by
the Board of Directors or prescribed in these Bylaws. In the absence of the
Chairman of the Board, the Vice Chairman of the Board shall preside at all
meetings of the stockholders and the Board of Directors.
Section 8. The President shall be the chief executive officer
of the Corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and the
officers of the Corporation. In the absence of the Chairman of the Board and
the Vice Chairman of the Board, the President shall preside at all meetings of
the stockholders and the Board of Directors. He shall have the general powers
and duties of management usually vested in the office of President of a
Corporation, and shall have such other powers and duties as may be prescribed
by the Board of Directors or the Bylaws.
Section 9. In the absence or disability of the President, the
Vice Presidents, if any, in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the President,
shall perform all the duties of the President, and when so acting shall have
all the powers of, and be subject to all the restrictions upon, the
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<PAGE> 18
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by
the Board of Directors, these Bylaws or the President.
Section 10. The Secretary shall keep or cause to be kept, at
the principal office or such other place as the Board of Directors may order, a
book of minutes of all meetings and actions of directors, committees of
directors and stockholders, with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof given, the
names of those present at directors' and committee meetings, the number of
shares present or represented at stockholders' meetings, and the proceedings
thereof.
The Secretary shall keep, or cause to be kept, at the principal
office or at the office of the Corporation's transfer agent or registrar, a
share register, or a duplicate share register, showing the names of all
stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required by these
Bylaws or by law to be given, and he shall keep the seal of the Corporation, if
one be adopted, in safe custody, and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or by the
Bylaws.
Section 11. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall be open at all times to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all of his transactions as Chief Financial Officer and of the financial
condition of the Corporation, and shall have other powers and perform such
other duties as may be prescribed by these Board of Directors or these Bylaws.
Section 12. The Treasurer and the Controller shall each have
such powers and perform such duties as from time to time may be prescribed for
him by the Board of Directors, the President or these Bylaws.
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<PAGE> 19
ARTICLE V
CERTIFICATE OF STOCK
Section 1. Every holder of stock of the Corporation shall be
entitled to have a certificate signed by, or in the name of the Corporation by,
the Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President, and by the Secretary or an Assistant Secretary, if one be
appointed, or the Treasurer or an Assistant Treasurer, if one be appointed, of
the Corporation, certifying the number of shares represented by the certificate
owned by such stockholder in the Corporation.
Section 2. Any or all of the signatures on the certificate may
be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. If the Corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series or stock, provided
that, except as otherwise provided by statute, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
LOST, STOLEN OR DESTROYED CERTIFICATES
Section 4. The Board of Directors, the Secretary and the
Treasurer each may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the owner of such certificate, or his legal representative.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to furnish the Corporation a bond in such form and
substance and with such surety as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate
alleged to have been
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<PAGE> 20
lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the Corporation, or the transfer
agent of the Corporation, of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 6. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than 60 nor less than 10 days before the
date of such meeting, nor more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
REGISTERED STOCKHOLDER
Section 7. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
laws of the State of Delaware.
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property or in shares of the
Corporation's capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. Before declaration of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors
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<PAGE> 21
from time to time, in their absolute discretion, thinks proper as a reserve
fund to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the Corporation,
and the Board of Directors may thereafter abolish any such reserve in its
absolute discretion.
CHECKS
Section 3. All checks, drafts or other orders for payment of
money, notes or other evidences of indebtedness, issued in the name of or
payable to the Corporation shall be signed by such officer or officers as the
Board of Directors or the President or any Vice President, acting jointly, may
from time to time designate.
Section 4. The President, any Vice President, the Secretary or
the Treasurer may enter into contracts and execute instruments on behalf of the
Corporation. The Board of Directors, the President or any Vice President may
authorize any officer or officers, and any employee or employees or agent or
agents of the Corporation or any of its subsidiaries, to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be October
1 through September 30, unless otherwise fixed by resolution of the Board of
Directors.
NOTICES
Section 6. Whenever, under the provisions of the statutes, the
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director, it shall not be construed to require personal notice, but such
notice may be given in writing, by mail, addressed to such director, at his
address as it appears on the records of the Corporation (unless prior to the
mailing of such notice he shall have filed with the Secretary a written request
that notices intended for him be mailed to some other address, in which case
such notice shall be mailed to the address designated in the request) with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail; provided,
however, that, in the case of notice of a special meeting of the Board of
Directors, if such meeting is to be held within seven calendar days after the
date of such notice, notice shall be deemed given as of the date such notice
shall be accepted for delivery by a courier service that provides "opening of
business next day" delivery, so long as at least one attempt shall have been
made, on or before the date such notice is accepted for
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<PAGE> 22
delivery by such courier service, to provide notice by telephone to each
director at his principal place of business and at his principal residence.
Notice to directors may also be given by telegram, by personal delivery or
telephone.
Section 7. Whenever any notice is required to be given under
the provisions of the statutes, the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing, or by telegraph, cable or other written
form of recorded communication, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ANNUAL STATEMENT
Section 8. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition
of the Corporation.
ARTICLE VII
AMENDMENTS
Section 1. Except any amendment to this Article VII and to
Article II, Section 6, Article II, Section 10, Article III, Section 1 (as it
relates to increases in the number of directors), Article III, Section 2, the
last sentence of Article III, Section 3 (as it relates to removal of
directors), Article III, Section 4, Article III, Section 16 and Article VI,
Section 6 of these Bylaws, or any of such provisions, which shall require
approval by the affirmative vote of directors representing at least 75% of the
number of directors provided for in accordance with Article III, Section 1, and
except as otherwise expressly provided in a bylaw adopted by the stockholders
as hereinafter provided, the directors, by the affirmative vote of a majority
of the whole Board and without the assent or vote of the stockholders, may at
any meeting, make, repeal, alter, amend or rescind any of these Bylaws,
provided the substance of the proposed amendment or other action shall have
been stated in a notice of the meeting.
Section 2. These Bylaws may not be altered, amended or
rescinded, and new Bylaws may not be adopted, by the stockholders of the
Corporation except by the vote of the holders of not less than 75% of the total
voting power of all shares of stock of the Corporation entitled to vote in the
election of directors, considered for such purpose as one class.
-18-
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