SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------------
FORM 10-Q
---------
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------------------------------------------------
For the Quarter ended: Commission file No.:
June 30, 2001 1-4601
- -------------------------- ----------------------------
SCHLUMBERGER N.V.
(SCHLUMBERGER LIMITED)
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NETHERLANDS ANTILLES 52-0684746
-------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
153 EAST 53 STREET, 57th Floor
NEW YORK, NEW YORK, U.S.A. 10022
42 RUE SAINT-DOMINIQUE
PARIS, FRANCE 75007
PARKSTRAAT 83
THE HAGUE,
THE NETHERLANDS 2514 JG
- ------------------------------------ --------------
(Addresses of principal executive (Zip Codes)
offices)
Registrant's telephone number: (212) 350-9400
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 2001
----------------------------- ----------------------------
COMMON STOCK, $0.01 PAR VALUE 573,882,168
PART I. FINANCIAL INFORMATION
-----------------------------
Item 1: Financial Statements
- ----------------------------
SCHLUMBERGER LIMITED
--------------------
(Schlumberger N.V., Incorporated in the Netherlands Antilles)
and Subsidiary Companies
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(Unaudited)
(Stated in thousands except per share amounts)
Periods Ended June 30,
-----------------------------------------------------------------------
Second Quarter Six Months
---------------------------------- -----------------------------------
2001 2000 (1) 2001 2000 (1)
---------------- ---------------- ----------------- -----------------
REVENUE:
Operating $3,634,599 $2,338,266 $6,544,033 $4,475,708
Interest & other income 59,388 83,541 149,417 159,651
---------------- ---------------- ----------------- -----------------
3,693,987 2,421,807 6,693,450 4,635,359
---------------- ---------------- ----------------- -----------------
EXPENSES:
Cost of goods sold & services 3,072,545 1,830,007 5,267,284 3,490,025
Research & engineering 173,209 130,740 343,805 261,782
Marketing 140,948 81,196 228,365 156,016
General 193,885 104,501 314,480 208,275
Interest 108,757 65,341 184,958 128,437
---------------- ---------------- ----------------- -----------------
3,689,344 2,211,785 6,338,892 4,244,535
---------------- ---------------- ----------------- -----------------
Income before taxes and
minority interest 4,643 210,022 354,558 390,824
Taxes on income 91,090 51,224 199,030 93,614
---------------- ---------------- ----------------- -----------------
Income (Loss) before minority
interest (86,447) 158,798 155,528 297,210
Minority interest (6,838) (2,875) (12,925) (5,129)
---------------- ---------------- ----------------- -----------------
Net Income (Loss) $ (93,285) $ 155,923 $ 142,603 $ 292,081
================ ================ ================= =================
Basic Earnings (Loss) Per Share $ (0.16) $ 0.27 $ 0.25 $ 0.51
================ ================ ================= =================
Diluted Earnings (Loss) Per Share $ (0.16) $ 0.27 $ 0.25 $ 0.51
================ ================ ================= =================
Average shares outstanding 573,451 569,293 573,255 568,090
================ ================ ================= =================
Average shares outstanding
assuming dilution 573,451 579,707 580,725 578,124
================ ================ ================= =================
Depreciation and amortization
included in expenses (2) $ 484,515 $ 311,550 $ 903,541 $ 623,893
================ ================ ================= =================
Dividends declared per share $ 0.1875 $ 0.1875 $ 0.3750 $ 0.3750
================ ================ ================= =================
(1) Reclassified, in part, for comparative purposes.
(2) Including multiclient seismic data costs.
See Notes to Consolidated Financial Statements
SCHLUMBERGER LIMITED
--------------------
(Schlumberger N.V., Incorporated in the Netherlands Antilles)
and Subsidiary Companies
CONSOLIDATED BALANCE SHEET
--------------------------
(Unaudited)
(Dollars in thousands)
Jun. 30, Dec. 31,
ASSETS 2001 2000 (1)
---------------- ---------------
CURRENT ASSETS:
Cash and short-term investments $1,505,515 $3,040,150
Receivables less allowance for doubtful accounts
(2001 - $143,348; 2000 - $106,503) 4,253,233 2,768,848
Inventories 1,407,986 1,111,585
Deferred taxes on income 349,053 259,184
Other current assets 476,165 313,444
---------------- ---------------
7,991,952 7,493,211
---------------- ---------------
LONG-TERM INVESTMENTS, HELD TO MATURITY 659,000 1,547,132
INVESTMENTS IN AFFILIATED COMPANIES 691,103 654,516
FIXED ASSETS:
Property, plant and equipment 11,640,753 10,821,509
Less accumulated depreciation (6,689,875) (6,426,995)
---------------- ---------------
4,950,878 4,394,514
---------------- ---------------
MULTICLIENT SEISMIC DATA 983,046 975,775
EXCESS OF INVESTMENT OVER NET ASSETS OF
COMPANIES PURCHASED less amortization,
AND INTANGIBLE ASSETS 6,997,281 1,716,427
DEFERRED TAXES ON INCOME 139,405 271,059
OTHER ASSETS 275,106 120,097
---------------- ---------------
$22,687,771 $17,172,731
================ ===============
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $4,535,773 $2,910,725
Estimated liability for taxes on income 487,139 379,916
Bank loans 1,124,074 556,020
Dividend payable 108,208 108,043
Long-term debt due within one year 97,254 36,201
---------------- ---------------
6,352,448 3,990,905
LONG-TERM DEBT 6,616,572 3,573,047
POSTRETIREMENT BENEFITS 511,655 476,380
MINORITY INTEREST 622,196 605,313
OTHER LIABILITIES 510,494 231,870
---------------- ---------------
14,613,365 8,877,515
---------------- ---------------
STOCKHOLDERS' EQUITY:
Common stock 1,974,194 1,963,905
Income retained for use in the business 8,151,074 8,223,476
Treasury stock at cost (1,737,435) (1,752,961)
Accumulated other comprehensive income (313,427) (139,204)
---------------- ---------------
8,074,406 8,295,216
---------------- ---------------
$22,687,771 $17,172,731
================ ===============
(1) Reclassified, in part, for comparative purposes.
See Notes to Consolidated Financial Statements
SCHLUMBERGER LIMITED
--------------------
(Schlumberger N.V., Incorporated in the Netherlands Antilles)
and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Unaudited)
(Dollars in thousands)
Six Months Ended
June 30,
Cash flows from operating activities: 2001 2000 (1)
--------------- ---------------
Net income $ 142,603 $ 292,081
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization (2) 903,541 623,893
Impairment charge for RMS businesses 280,000 -
Earnings of companies carried at equity, less
dividends received (2001 - $-; 2000 - $-) (29,205) (13,583)
Provision for losses on accounts receivable 6,149 15,316
Change in operating assets and liabilities:
Increase in receivables (628,017) (222,935)
Increase in inventories (286,855) (57,158)
Decrease (increase) in deferred taxes 23,937 (23,669)
(Increase) decrease in other current assets (71,281) 16,769
Increase in accounts payable and
accrued liabilities 136,868 39,914
Increase in estimated liability
for taxes on income 18,394 39,303
Other - net (283,975) (105,934)
--------------- ---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 212,159 603,997
--------------- ---------------
Cash flows from investing activities:
Purchase of fixed assets (990,404) (528,960)
Multiclient seismic data capitalized (221,219) (119,940)
Sales/retirements of fixed assets & other (17,971) 54,060
Decrease in investments 2,510,047 136,309
Businesses acquired, net of cash acquired (353,024) (261,446)
Acquisition of Sema plc, net of cash acquired (4,778,498) -
Decrease (increase) in other assets 10,108 (41,047)
--------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES (3,840,961) (761,024)
--------------- ---------------
Cash flows from financing activities:
Dividends paid (214,840) (212,368)
Proceeds from employee stock purchase plan 58,362 61,560
Proceeds from exercise of stock options 25,815 109,693
Proceeds from issuance of long-term debt 3,293,700 530,939
Payments of principal on long-term debt (25,581) (333,943)
Net increase in short-term debt 551,129 26,937
--------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,688,585 182,818
--------------- ---------------
Net increase in cash 59,783 25,791
Cash, beginning of period 160,718 132,589
--------------- ---------------
CASH, END OF PERIOD $ 220,501 $ 158,380
=============== ===============
(1) Restated, in part, for comparative purposes.
(2) Including multiclient seismic data costs.
See Notes to Consolidated Financial Statements
SCHLUMBERGER LIMITED
--------------------
(Schlumberger N.V., Incorporated in the Netherlands Antilles)
and Subsidiary Companies
STOCKHOLDERS' EQUITY
--------------------
(Unaudited)
(Dollars in thousands)
Accumulated Other
Comprehensive Income
-------------------------------- -----------------
Common Stock Retained Mark to Translation Comprehensive
---------------------------------
Issued In Treasury Income Market Adjustment Income
-------------- ----------------- --------------- ---------------- --------------- -----------------
Equity, January 1, 2001 $1,963,905 $ (1,752,961) $8,223,476 $ - $ (139,204) $ -
Net Income 142,603 142,603
Derivatives marked to market (26,958) (26,958)
Translation adjustment (226,265) (226,265)
RMS disposition 79,000 79,000
Dividends declared (215,005)
Shares sold to optionees (net
of fees) 10,289 15,526
Employee Stock Purchase Plan
-------------- ----------------- --------------- ---------------- --------------- -----------------
Equity, June 30, 2001 $1,974,194 $ (1,737,435) $8,151,074 $ (26,958) $ (286,469) $ (31,620)
============== ================= =============== ================ =============== =================
See Notes to Consolidated Financial Statements
SCHLUMBERGER LIMITED
--------------------
(Schlumberger N.V., Incorporated in the Netherlands Antilles)
and Subsidiary Companies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
In the opinion of management, all adjustments necessary to present fairly the
financial position and the results of operations have been made in the
accompanying interim financial statements. The Company's significant accounting
policies are summarized in its 2000 Annual Report. These policies have been
consistently applied during the interim period presented in this report. The
results of operations for the three and six month periods ended June 30, 2001
are not necessarily indicative of the results of operations that may be expected
for the entire year.
EARNINGS PER SHARE
- ------------------
The following is a reconciliation from basic earnings per share to diluted
earnings per share for the second quarter and the first six months of 2001:
(Stated in thousands except per share amounts)
Average Earnings
Net Shares (Loss)
Second Quarter Income (Loss) Outstanding per Share
- -------------- --------------- -------------- ------------
Basic $ (93,285) 573,451 ($0.16)
Effect of dilution:
Options (1) - -
--------------- -------------- ------------
$ (93,285) 573,451 ($0.16)
=============== ============== ============
Six Months
- ----------
Basic $ 142,603 573,255 $0.25
Effect of dilution:
Options 7,470 -
--------------- -------------- ------------
$ 142,603 580,725 $0.25
=============== ============== ============
(1) Due to the net loss, there is no dilutive effect in the second quarter.
CHARGES
- -------
The first quarter 2001 included a $25 million ($0.04 per share - diluted) in-
process research and development charge related to the acquisition of Bull CP8.
This charge is classified in Research & Engineering in the Consolidated
Statement of Income.
The second quarter 2001 included a $280 million ($0.48 per share - diluted)
estimated impairment charge from the expected disposition of certain Resource
Management Services businesses (Electricity and Water outside North America and
the worldwide Gas businesses). This charge, which included the write off of
goodwill ($139 million) and cumulative translation adjustment ($79 million), is
classified in Cost of goods sold and services in the Consolidated Statement of
Income.
CONTINGENCIES
- -------------
The Consolidated Balance Sheet includes accruals for the estimated future costs
associated with certain environmental remediation activities related to the past
use or disposal of hazardous materials. Substantially all such costs relate to
divested operations and to facilities or locations that are no longer in
operation. Due to a
number of uncertainties, including uncertainty of timing, the scope of
remediation, future technology, regulatory changes and other factors, it is
possible that the ultimate remediation costs may exceed the amounts estimated.
However, in the opinion of management, such additional costs are not expected to
be material relative to consolidated liquidity, financial position or future
results of operations.
In addition, Schlumberger and its subsidiaries are party to various other legal
proceedings. Although the ultimate disposition of these proceedings is not
presently determinable, in the opinion of Schlumberger any liability that might
ensue would not be material in relation to the consolidated liquidity, financial
position or future results of operations.
INVESTMENT IN SEMA PLC
- ----------------------
On February 12, 2001, Schlumberger announced that it had reached an agreement
with the board of directors of Sema plc on the terms of a recommended offer for
the entire issued and to be issued share capital of Sema plc.
On March 8, 2001, Schlumberger acquired, through market purchases, approximately
20% of the issued share capital of Sema at a cost of $1 billion.
On April 6, 2001, the offer for the shares of Sema plc was declared
unconditional in all respects. The aggregate consideration for the acquisition
of 100% of the issued Sema shares was $5.15 billion (including expenses of the
transaction) which is being financed from existing cash resources and borrowings
under a $3 billion credit facility.
The acquisition was accounted for using the purchase method of accounting and
the goodwill and identifiable intangibles aggregated $5.19 billion which are
being amortized on a straight line basis. The final allocation of the purchase
price and amortization periods had not yet been completed. For the third
quarter, goodwill and identifiable intangibles will be amortized on a straight
line basis over a composite life of 18 years.
The aggregate value of goodwill and identifiable intangibles comprised the
following:
(Dollars in billions)
Cost (including expenses) $ 5.15
Purchase accounting adjustments (1) 0.34
Net tangible assets acquired (0.30)
------------
$ 5.19
============
(1) Purchase accounting adjustments consisted primarily of severance costs ($84
million), facility reductions ($33 million), pension plan adjustments ($136
million) and tax restructuring costs ($50 million).
For financial reporting purposes, Schlumberger included the results of
operations of Sema in its consolidated accounts commencing April 1, 2001.
Sema is an IT services company (with approximately 22,000 employees) that
provides its customers with design, implementation, operations and management of
information systems and IT-related consulting services. Among the industry
sectors which Sema serves, Sema has increasingly focused on the
telecommunications and finance sectors, and provides a range of its own software
products specifically designed for these sectors in addition to its IT services.
Sema's customers include a wide variety of businesses and governmental
departments around the world. Sema's services and product offerings include
systems integration and consulting; software products for the
telecommunications, energy, transport and finance sectors; and outsourcing.
INVESTMENTS IN AFFILIATED COMPANIES
- -----------------------------------
Investments in affiliated companies include Schlumberger's 40% investment in the
MI Drilling Fluids Joint Venture (June 30, 2001 - $499 million; December 31,
2000 - $461 million). Equity in income of investments carried under the equity
method (2001 - $29 million; 2000 - $14 million) are included in Interest & other
income on the Consolidated Statement of Income.
NEW ACCOUNTING STANDARDS
- ------------------------
Commencing January 1, 2001, Schlumberger adopted SFAS 133, Accounting for
Derivative Instruments and Hedging Activities (See Item 2:Management's
Discussion and Analysis of Financial Condition and Results of Operations).
SFAS 141 (Business Combinations) has been adopted by Schlumberger for
acquisitions subsequent to June 30, 2001. SFAS 142 (Goodwill and Other
Intangible Assets) will be adopted by Schlumberger commencing January 1, 2002.
As required by SFAS 142, Schlumberger will undertake a review for impairment in
2002. In the second quarter 2001, Schlumberger incurred amortization of goodwill
and other intangibles amounting to $85 million (net of tax). With the adoption
of SFAS 142, the equivalent amount is estimated to be $12 million per quarter in
2002.
SEGMENT INFORMATION
- -------------------
Following the acquisition of Sema plc on April 6, 2001, Schlumberger created a
new business segment, SchlumbergerSema, which resulted from the merger of Sema
plc with certain businesses from Schlumberger's former segments, Test &
Transactions and Resource Management Services. Following this reorganization,
Schlumberger now operates two reportable segments, Oilfield Services and
SchlumbergerSema.
(Stated in millions)
---------------------------------------------------------------------------------------------------------
Elims/ Total Schlumberger Elims/
Six Months 2001 NAM LAM ECA MEA Other OFS Sema Other Other Consolidated
---------------------------------------------------------------------------------------------------------
Revenue $1,865 $ 720 $1,014 $ 976 $ 215 $4,790 $ 1,221 $ 572 $ (39) $ 6,544
=========================================================================================================
Segment Income $ 282 $ 65 $ 115 $ 168 $ (24) $ 606 $ 1 $ 14 $ (87) $ 534
Minority Interest - - - - 11 11 3 - (1) 13
Income Tax Expense 170 22 39 31 10 272 (16) (4) (53) 199
---------------------------------------------------------------------------------------------------------
Segment Income before tax $ 452 $ 87 $ 154 $ 199 $ (3) $ 889 $ (12) $ 10 $ (141) $ 746
===========================================================================================
Interest Income 96
Interest Expense (3) (182)
Charges (305)
--------------
Pretax Income $ 355
-------------------------------------------------------------------------------------------==============
---------------------------------------------------------------------------------------------------------
Elims/ Total Schlumberger Elims/
Six Months 2000 NAM LAM ECA MEA Other OFS Sema Other Other Consolidated
---------------------------------------------------------------------------------------------------------
Revenue $1,066 $ 511 $ 723 $ 804 $ 158 $3,262 $ 478 $ 770 $ (34) $ 4,476
=========================================================================================================
Segment Income $ 81 $ 13 $ 41 $ 132 $ 31 $ 298 $ 15 $ 23 $ (61) $ 275
Minority Interest - - - - - - 4 1 - 5
Income Tax Expense 48 10 24 21 21 124 (7) 9 (32) 94
---------------------------------------------------------------------------------------------------------
Segment Income before tax $ 129 $ 23 $ 65 $ 153 $ 52 $ 422 $ 12 $ 33 $ (93) $ 374
===========================================================================================
Interest Income 144
Interest Expense (1) (127)
--------------
Pretax Income $ 391
-------------------------------------------------------------------------------------------==============
BUSINESS REVIEW
- ---------------
(Stated in millions)
Oilfield
Services SchlumbergerSema Other (1)
-------------------------- -------------------------- ---------------------------
Second Quarter 2001 2000 % chg 2001 2000 % chg 2001 2000 % chg
- -------------- ---- ---- ----- ---- ---- ----- ---- ---- -----
Operating Revenue $ 2,467 $ 1,709 44% $ 901 $ 252 257% $ 287 $ 394 (27)%
Pretax Operating
Income (2) $ 471 $ 234 101% $ (15) $ 3 -% $ 7 $ 22 (66)%
Six Months
- ----------
Operating Revenue $ 4,790 $ 3,262 47% $ 1,221 $ 478 156% $ 572 $ 770 (26)%
Pretax Operating
Income (2) $ 889 $ 422 111% $ (12) $ 12 -% $ 10 $ 33 (69)%
(1) Includes those Resource Management Services businesses planned for
divestiture, Semiconductor Solutions and Global Tel*Link.
(2) Pretax operating income represents income before taxes and minority
interest, excluding interest expense, interest income, amortization of
goodwill and identifiable intangibles ($92 million and $125 million in the
second quarter of 2001 and six months 2001, respectively). All prior
periods have been restated for comparative purposes.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations.
- --------------
Second Quarter 2001 Compared to Second Quarter 2000
---------------------------------------------------
Net Loss for the second quarter was $93 million ($(0.16) per share - diluted)
after a $280 million ($0.48 per share - diluted) estimated impairment charge
from the expected disposition of certain Resource Management Services
businesses. Excluding this charge, net income for the quarter was $187 million
($0.32 per share - diluted) compared to $156 million ($0.27 per share - diluted)
last year.
Oilfield Services revenue, including WesternGeco, increased 44% versus the
second quarter of 2000 as the worldwide M-I rig count grew 27%. Compared with
the first quarter of 2001, revenue increased 6% as the worldwide M-I rig count
decreased 5%.
SchlumbergerSema revenue was $901 million for the quarter, a 7% sequential
increase on a proforma basis. This included revenue for the acquired businesses
of Sema ($560 million) and Bull CP8 ($35 million).
OILFIELD SERVICES
Oilfield Services operating revenue in the second quarter increased 44% year-on-
year with significant growth across all Areas and services driven by improved
pricing levels and the introduction of new technologies.
Sequentially, revenue increased 6% led by the Europe/CIS/West Africa Area and
activities within Well Completions & Productivity where there was a sharp
increase in product sales including Reda electrical submersible pumps. All
services grew sequentially except for WesternGeco.
The worldwide M-I rig count increased 27% year-on-year but decreased 5%
sequentially due mainly to the Canada spring break-up. Pretax operating income
in the second quarter grew 101% compared to the same period last year and 12%
sequentially.
The consolidation program for WesternGeco proceeded according to plan. The
seismic market has improved compared with last year; however, it remains soft,
predominantly due to spare capacity in the marine seismic market.
North America
- -------------
Revenue of $941 million increased 70% compared with the same quarter last year
and 2% sequentially. The M-I rig count increased 36% year-on-year and decreased
7% sequentially. Pretax operating income of $226 million was 237% higher than
the second quarter last year and remained flat sequentially. The large increase
in year-on-year revenue was partly attributable to the WesternGeco Joint
Venture.
Pricing improvements and an increase in non-rig related activity drove year-on-
year revenue growth. Year-on-year pretax operating income was led by strong
growth in Well Completions & Productivity, Well Services and Wireline
activities. The Alaska and US Land GeoMarkets recorded the strongest pretax
operating income growth year-on-year and sequentially, the latter being offset
by the Canada spring break-up.
Latin America
- -------------
Revenue of $355 million increased 36% year-on-year but decreased 3%
sequentially. This is in line with the M-I rig count, which increased 26%
compared with the same period last year and decreased 2% sequentially. Pretax
operating income of $44 million was 190% higher compared to last year and
increased 3% sequentially.
Year-on-year revenue growth was recorded across all services. In particular, the
activities associated with the IPM Burgos alliance project grew 52%. In
addition,
Schlumberger was awarded two deepwater completion contracts in Brazil,
confirming Schlumberger expertise in this area. The decrease in sequential
revenue growth, largely due to a slow down in marine seismic activity
particularly in the Mexico GeoMarket, was mitigated by continued revenue growth
from other services despite reduced rig activity.
Strong IPM activity contributed to the positive sequential pretax operating
income growth.
Europe/CIS/West Africa
- ----------------------
Revenue of $550 million increased 43% compared with the same quarter last year,
and 19% sequentially. The M-I rig count, excluding CIS, increased 17% year-on-
year and 1% sequentially. Pretax operating income of $96 million increased 134%
year-on-year and 69% sequentially.
Year-on-year and sequential revenue growth exceeded rig count growth due mainly
to increased non-rig related activity particularly in the North Sea and West
Africa. During the quarter, the first commercial survey utilizing the Q-Marine*
seismic system was successfully completed. Q*-Technology establishes a new level
of precision for seismic reservoir characterization and evaluation. The West
Africa and Nigeria GeoMarkets led the strongest year-on-year revenue growth with
increased testing activity, especially in West Africa where several PhaseTester*
Vx* multiphase well testing technology contracts were awarded in the last six
months. Vx-Technology determines a well's oil, gas and water flow rates without
the need for traditional test separators thus improving efficiency and
environmental performance.
Pretax operating income growth was led by WesternGeco, Well Completions &
Productivity and IPM activities.
Middle East & Asia
- ------------------
Second quarter revenue of $509 million increased 20% year-on-year and 9%
sequentially. The M-I rig count increased 6% year-on-year with a slight
sequential increase. Pretax operating income of $108 million increased 21% year-
on-year and 17% sequentially.
Year-on-year revenue growth was led by the Malaysia GeoMarket due to increased
activity across all services. Sequential revenue growth exceeded the rig count
growth due to improved pricing and increased non-rig related activity. This
included the award of a 4000 well petrophysical study to Data & Consulting
Services in the Middle East. Growth was also led by Well Completions &
Productivity, Testing and Wireline which was particularly active in the China
GeoMarket.
The GeoMarkets in this Area contributed to pretax operating income by raising
basic service prices while increasing market share.
SCHLUMBERGERSEMA
The SchlumbergerSema business segment reported operating revenue for the quarter
of $901 million, which included revenue from the recent acquisitions of Sema plc
($560 million) and Bull CP8 ($35 million).
The pretax operating loss for the quarter of $15 million was largely attributed
to losses in the utility sector, to lower profitability in telecom-related smart
cards and integration costs of about $5 million associated with the Sema
acquisition. The businesses acquired with Sema were break-even.
Revenue from the utility sector was up 11% sequentially on increased activity in
the utility business in North America. Service revenues from remotely readable
meter installations increased during the quarter. In addition, orders in
Utilities
increased by 9% in particular due to a new consulting contract with Louisiana
Gas & Electric.
Cards revenue of $176 million increased sequentially by 5% including the Bull
CP8 acquisition. Revenue was 20% lower than the previous quarter excluding the
Bull CP8 acquisition. Mobile communications cards (SIM) revenue was down 22%,
reflecting excess inventories carried by Asian mobile operators and reduced
demand for cellular handsets. Sequentially, orders for mobile prepaid cards were
8% higher and banking cards almost doubled, reflecting increased shipments of
cards to the UK and Proton e-purse cards to the Netherlands and to Belgium.
OTHER
The segment includes the portion of the Resource Management Services businesses,
Semiconductor Solutions and Global Tel*Link which are expected to be disposed of
in the near future. Revenue from the Resource Management Services businesses was
20% below last year; Semiconductor Solutions revenue was 50% below a year ago.
The operating loss at Semiconductor Solutions was more than offset by the profit
at Resource Management Services.
In the second quarter, the Company recorded an impairment charge of $280 million
($0.48 per share - diluted) related to the expected disposition of certain of
the Resource Management Services businesses (Electricity and Water outside North
America and the worldwide Gas businesses). The charge included the write off of
goodwill ($139 million) and cumulative translation adjustment ($79 million).
INCOME STATEMENT
Interest and other income decreased $24 million from the same period last year
as a $38 million decrease in interest income (2001 - $35 million; 2000 - $73
million) reflecting a decrease of $2.6 billion in average investment balances
which were used to finance the acquisition of Sema plc shares and a decrease in
average returns on investments from 6.1% to 5.6%, was partially offset by a $9
million gain from the sale of investments, also related to funding the Sema plc
share purchases, and a $5 million increase in equity income. Gross margin,
excluding the $280 million charge, of 23% was one and a half percentage points
above last year. Research and engineering expense as a percentage of revenue
decreased 0.8% and marketing expense increased 0.4%. General expense as a
percentage of revenue increased from 4.5% to 5.3%. Interest expense increased by
$43 million as average debt balances were up $2.8 billion due primarily to the
Sema acquisition and the average borrowing rates decreased from 6.6% to 6.4%.
The effective tax rate, excluding the $280 million charge, increased by 8
percentage points to 32% reflecting higher pretax income in the United States
and the effect of higher non-tax deductible goodwill amortization.
First Six Months 2001 Compared to First Six Months 2000
--------------------------------------------------------
Operating revenue for the first half of the year was $6.5 billion, a 46%
increase over the same period last year. Excluding charges, net income was $448
million and diluted earnings per share were $0.77, increases of 53% and 51%,
respectively, over the same period last year.
OILFIELD SERVICES
Operating revenue increased 47% due in large part to North America and
Europe/CIS/West Africa. Pretax operating income increased by 111% over last
year. The M-I rig count increased by 30%. Pricing improvements and the
WesternGeco Joint Venture influenced the growth in revenue.
North America
- -------------
Revenue increased 75% to $1.87 billion compared to the first six months of 2000,
pretax operating income of $452 million increased 252%. The M-I rig count
increased 30% over the same period last year. The increase in revenue reflected
the higher
non-rig related activities, price increase, new technologies and better
utilization of existing resources. Canada's revenue was negatively affected by
the early spring break-up.
Latin America
- -------------
Latin America revenue of $720 million increased by 41% compared to last year.
The pretax operating income increased by 272% and the M-I rig count increased by
30%. The decline in revenue from seismic activities in the GeoMarkets was offset
by strong Burgos Allianza ll activity. Venezuela and Trinidad and Tobago also
had to adjust Prisa contract bonus and inflation adjustment billings.
Europe/CIS/West Africa
- ----------------------
Revenue of $1.01 billion increased 40% over the same period last year. Pretax
operating income increased 136% and the M-I rig count (excluding CIS) increased
by 21%. IPM had a significant increase in revenue due mainly to the TFE Atora
EPF project in Gabon.
Middle East & Asia
- ------------------
Revenue increased 21% to $976 million. Compared to the same period last year,
pretax operating income was up 30% and the M-I rig count increased by 7%. The
GeoMarkets in this Area contributed to pretax operating income by raising basic
service prices while increasing market share.
SCHLUMBERGERSEMA
Revenue was $1.22 billion, 156% higher than last year and pretax operating
income was a loss of $12 million. Revenue for Utilities and Transactions Systems
both increased over last year.
OTHER
Revenue from the Resource Management Services businesses decreased 22% compared
to last year. Semiconductor Solutions revenue declined 42%. The profit at
Resource Management Services was partially offset by Semiconductor Solutions
losses.
INCOME STATEMENT
Interest and other income decreased $10 million from the same period last year
as a $44 million decrease in interest income (2001 - $102 million; 2000 - $146
million) reflecting a decrease in average investment balances which were used to
finance the acquisition of Sema plc shares, was partially offset by a $19
million gain from the sale of investments, also related to funding the Sema plc
share purchases, and a $16 million increase in equity income. Average returns on
investments increased from 6.0% to 6.2%. Gross margin, excluding the $280
million charge, of 24% was nearly two percentage points above last year.
Research and engineering, marketing and general expenses as a percentage of
revenue were flat. Interest expense increased $57 million as average borrowing
rates decreased from 6.6% to 6.5%. The increase in expenses was due mainly to
the acquisition of Sema plc. The effective tax rate, excluding the charges,
increased from 24% to 30% for the same period last year due to higher
profitability in the United States and the effect of higher non-tax deductible
goodwill amortization.
NEW ACCOUNTING STANDARDS
- ------------------------
Commencing January 1, 2001, Schlumberger adopted SFAS 133 (Accounting for
Derivative Instruments and Hedging Activities). Occasionally, Schlumberger uses
derivative instruments such as interest rate swaps, currency swaps, forward
currency contracts and foreign currency options. Forward currency contracts
provide a hedge against currency fluctuations on assets/liabilities denominated
in other than a functional
currency. Options are usually entered into as a hedge against currency
variations on firm commitments generally involving the construction of
long-lived assets.
Schlumberger maintains a foreign-currency risk management strategy that uses
derivative instruments to protect its interests from unanticipated fluctuations
in earnings and cash flows caused by volatility in currency exchange rates.
Movements in foreign currency exchange rates pose a risk to Schlumberger's
operations as exchange rate changes may affect profitability and cash flow.
Schlumberger uses foreign currency forward exchange contracts, swaps and
options. Schlumberger also maintains an interest rate risk management strategy
that uses derivatives to minimize significant, unanticipated earnings
fluctuations caused by interest rate volatility. Schlumberger's specific goals
are (1) to manage interest rate sensitivity by modifying the repricing or
maturity characteristics of certain of its debt and (2) to lower (where
possible) the cost of borrowed funds.
By using derivative financial instruments to hedge exposure to changes in
exchange rates and interest rates, Schlumberger exposes itself to credit risk
and market risk. Schlumberger minimizes the credit risk by entering into
transactions with high-quality counterparties, limiting the exposure to each
counterparty and monitoring the financial condition of its counterparties.
Market risk is managed through the setting and monitoring of parameters that
limit the types and degree of market risk which are acceptable.
At June 30, 2001, Schlumberger recognized a net $27 million charge in
Stockholders' Equity relating to SFAS 133. This charge was primarily due to the
change in the fair market value of Schlumberger's US interest rate swaps as a
result of declining interest rates. The effect on Stockholders' Equity at
December 31, 2000 was not significant.
In June 2001, SFAS 141 (Business Combinations) and SFAS 142 (Goodwill and Other
Intangible Assets) were issued. See "New Accounting Standards" in the "Notes to
the Consolidated Financial Statements".
ACQUISITIONS
- ------------
In April 2001, Schlumberger acquired Sema plc for an aggregate consideration of
$5.15 billion. See "Investment in Sema plc" in the "Notes to the Consolidated
Financial Statements".
In March 2001, Schlumberger acquired Bull CP8, a market leader in
microprocessor-based smart cards and associated systems applications for the
banking, mobile communications and network security industries. The acquisition
price was $313 million. Assets acquired included identifiable intangibles
(primarily patents) of $136 million and goodwill of $140 million. Additionally,
in-process research & development which aggregated $25 million was charged to
expense in the first quarter.
LIQUIDITY
- ---------
In April 2001, Schlumberger borrowed $3 billion to finance the acquisition of
Sema plc. See "Investment in Sema plc" in the "Notes to the Consolidated
Financial Statements".
FORWARD-LOOKING STATEMENTS
- --------------------------
Schlumberger cautions that, except for historical information, statements in
this 10-Q report, the second quarter 2001 earnings release and associated
conference call, and elsewhere may constitute forward-looking statements. These
include statements as to expectations, beliefs and future financial performance,
such as statements regarding business prospects in the key industries in which
Schlumberger operates and growth opportunities for Schlumberger in those
industries. These statements involve a number of risks, uncertainties,
assumptions and other factors that could cause actual results to differ
materially from those in the forward-looking statements. Such factors include:
continuing customer commitment to certain
key long-term contracts; changes in E&P spending by major oil and gas companies,
including renewed growth in gas drilling; economic, competitive and
technological factors affecting markets, services, and prices in Schlumberger
Sema businesses, including the extent and timing of a recovery in the
telecommunications industry segment and utilities investment in utility
management solutions; Schlumberger's ability to integrate newly acquired
businesses and to realize identified synergies and cost savings from those
acquisitions; timing and proceeds from anticipated divestitures; general
economic and business conditions in key regions of the world; and changes in
business strategy.
Item 3: Quantitative and Qualitative Disclosure about Market Risk.
- ------------------------------------------------------------------
Schlumberger does not believe it has a material exposure to financial market
risk. Schlumberger manages the exposure to interest rate changes by using a mix
of debt maturities and variable- and fixed-rate debt together with interest rate
swaps, where appropriate, to fix or lower borrowing costs. With regard to
foreign currency fluctuations, Schlumberger enters into various contracts, which
change in value as foreign exchange rates change, to protect the value of
external and intercompany transactions in foreign currencies. Schlumberger does
not enter into foreign currency or interest rate transactions for speculative
purposes.
* Mark of Schlumberger
PART II. OTHER INFORMATION
---------------------------
Item 6: Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
Exhibit 3(a) - Deed of Incorporation as amended May 4, 2001.
Exhibit 3(b) - By-Laws as amended April 19, 2001.
(b) Reports on Form 8-K:
1. Report on Form 8-K filed with the Commission on
April 20, 2001 to report that Schlumberger
Investments, a wholly owned subsidiary of
Schlumberger Limited, announced that its offer for
the ordinary Share Capital of Sema plc had been
declared unconditional in all respects.
2. Report on Form 8-K/A filed with the Commission on
June 15, 2001 to file the pro forma financial
information required by Form 8-K filed with the
Commission on April 20, 2001.
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 and in his capacity as chief accounting
officer.
Schlumberger Limited
(Registrant)
Date: August 8, 2001 .../s/Jean-Marc Perraud
-------------- -----------------------------
Jean-Marc Perraud
Controller and
Chief Accounting Officer
INDEX TO EXHIBITS
-----------------
Exhibit No: Description Appendix
- ----------- ----------- --------
Exhibit 3(a) Deed of Incorporation amended A
On May 4, 2001
Exhibit 3(b) By-Laws as amended on
April 19, 2001 B
Exhibit 3(a)
Appendix A
ARTICLES OF INCORPORATION OF THE
CORPORATION WITH LIMITED LIABILITY
SCHLUMBERGER N.V.
NAME AND DOMICILE
Article 1
1.1. The Company shall bear the name: SCHLUMBERGER N.V.
-----------------
1.2. Abroad and in transactions with foreign entities, persons or
organizations, the name SCHLUMBERGER LIMITED may be used.
1.3. The Company is established in Curacao.
1.4. The Company may change its place of domicile in accordance with the
Netherlands Antilles Ordinance on Transfer of Domicile to Third Countries
pursuant to a resolution of the Board of Directors.
OBJECTS
Article 2
2.1. The objects of the Company are:
(a) to design, develop, produce and supply technology, services, products and
systems and to, throughout the world, engage in any business or activity
related thereto;
(b) to enter into and carry on any mercantile business in any country and to
receive by assignment or purchase or to otherwise acquire any accounts
receivable, bank accounts, securities, bills of exchange, notes, bonds,
letters of credit, stocks or other instruments of value or documents of
title in any country and to collect and hold the proceeds thereof;
(c) to invest its assets in securities, including shares and other
certificates of participation and bonds, debentures or notes, as well as
other claims for interest bearing or non-interest baring debts, however
denominated, and in certificates, receipts, options, warrants or other
instruments representing rights to receive, purchase or subscribe for
securities or evidencing or representing any other rights or interest
therein in any and all forms, as well as derivatives and commodities;
(d) to borrow money and to issue evidences of indebtedness therefore, as well
as to lend money;
(e) to undertake, conduct, assist, promote or engage in any scientific,
technical or business research and development;
(f) to organize and to own, directly or indirectly, and to operate, under the
laws of any state or other government, domestic or foreign, corporations
and other organizations, companies, undertakings, entities, trusts, other
arrangements or persons; to subscribe for any such corporation,
organization, company, undertaking, entity, trust, other arrangement or
person; and to dissolve, liquidate, wind up, reorganize, merge or
consolidate any such corporation, organization, company, undertaking,
entity, trust, other arrangement or person;
(g) to obtain income from the disposition or grant of rights to use
copyrights, patents, designs, secret processes and formulae, trademarks
and other analogous property, from royalties (including rentals) for the
use of industrial, commercial or scientific equipment, and from
compensation or other consideration received for technical assistance or
services;
(h) to establish, participate in and manage limited liability and other
corporations, organizations, companies, undertakings, entities, trusts,
other arrangements or persons of every kind or nature whatsoever, and to
engage in industry and trade;
(i) to guarantee or otherwise secure, and to transfer ownership, to mortgage,
to pledge or otherwise to encumber assets as security for, and otherwise
take action to support, the obligations of the Company and the
obligations of other corporations, organizations, companies, undertakings
entities, trusts, other arrangements or persons, with or without
consideration;
(j) to place in trust all or any of its properties, including securities.
2.2. The Company is entitled to do all that in any way may be useful or
necessary for the attainment of the above objects or that is connected
therewith in the widest sense.
DURATION
Article 3
The Company shall have perpetual existence.
CAPITAL AND SHARES
Article 4
4.1. The authorized capital of the Company shall be SEVENTEEN MILLION UNITED
STATES DOLLARS (US$17,000,000.-), divided into (a) one billion five
hundred million (1,500,000,000) shares of common stock of the par value
of One United States Cent (US$0.01) per share and (b) two hundred million
(200,000,000) shares of preferred stock of the par value of One United
States Cent (US$0.01) per share, which may be issued in different series.
Shares of common stock may be referred to as "common shares" and shares
of preferred stock may be referred to as "preferred shares". The common
shares and the preferred shares, if any, may sometimes be referred to
herein as the "shares". Holders of common shares and preferred shares may
sometimes be referred to as the "shareholders".
4.2. Common shares representing more than twenty percent (20%) of the
authorized capital of the Company have been duly issued and fully paid.
4.3. Common shares, options to purchase or subscribe for common shares and
warrants or rights to subscribe for common shares, shall be issued at
such times, under such conditions and for such consideration, not less
than the par value per share in the case of the issuance of such share,
as may be determined from time to time by the Board of Directors.
4.4. With respect to the issuance of shares, options, warrants or rights to
purchase or subscribe for shares the Board of Directors may enter into
and conclude agreements without necessity of any action by the general
meeting of shareholders:
a. imposing special obligations upon the Company in connection with
the purchase of or subscription for shares;
b. concerning the issue of shares on a basis other than that on which
participation in the Company is open to the public; or
c. providing for the payment for shares by means other than by legal
tender of the Netherlands Antilles.
4.5. Subject to the provisions of this Article, preferred shares may be issued
from time to time in one or more series on such terms and conditions as
may be determined by the Board of Directors by the affirmative vote of at
least three- fourths of the members of the Board of Directors, after
considering the interests of the holders of common shares, for
consideration not less than the par value thereof and not less than fair
value taking into account the terms and conditions for the issuance
thereof and the relative voting, dividend and liquidation rights of such
preferred shares.
4.6. Prior to the issuance of any series of preferred shares, the Board of
Directors shall specify:
a. the distinctive designation of such series and the number of
preferred shares to constitute such series;
b. the annual dividend rate with respect to shares of such series,
which shall be based on the consideration paid on issuance of such
shares and which may be a fixed rate or a rate that fluctuates on
dividend adjustment dates set under a formula or procedure
determined by the Board of Directors prior to issuance, subject,
in all cases, to the following limitations:
(1) the annual dividend rate shall not exceed the greater of
(A) twenty percent (20%) or (B) one hundred and twenty
percent (120%) of the Standard & Poor's Weekly Preferred
Stock Yield Index or, in the event the Standard & Poor's
Weekly Preferred Stock Yield Index is no longer published,
any substantially equivalent preferred stock index, most
recently published before the date of issuance or the
relevant dividend adjustment date; and
(2) the annual dividend rate shall not be less than the smaller
of (A) six percent (6%) or (B) eighty percent (80%) of the
Standard & Poor's Weekly Preferred Stock Yield Index or, in
the event the Standard & Poor's Weekly Preferred Stock
Yield Index is no longer published, any substantially
equivalent preferred stock index, most recently published
before the date of issuance or the relevant dividend
adjustment date;
c. whether such dividends shall be payable annually or in
installments;
d. the rights, if any, of the holders of shares of such series to
convert shares of such series for shares of any other series of
preferred shares or for common shares, provided that shares of any
series shall not be convertible into shares of any series senior
thereto;
e. the rights, if any, of the Company to redeem shares of such series
(in which case the directors shall specify the date on or after
which the shares of such series may be called for redemption by
the
Company and the consideration to be paid therefore, or the manner
by which such consideration shall be calculated) and the rights,
if any, of holders of such shares to require the Company to
purchase such shares, and the provisions, if any, of any sinking
fund or other arrangement to be used in connection with such
redemption or purchase; and
f. any other terms and conditions of such series which are not
inconsistent with these articles of association or Netherlands
Antilles law.
4.7. Certificates for preferred shares may be issued bearing a legend
describing the terms and conditions thereof specified by the Board of
Directors.
4.8. Preferred shares of all series shall rank prior to the common shares with
respect to dividend and liquidation preferences as determined by the
Board of Directors at the time of issuance of any series of preferred
shares. Any series of preferred shares may be ranked by the Board of
Directors as to dividend and liquidation preferences, provided that no
series issued after any other series shall rank prior to such other
series as to such preferences. Any such series may be ranked pari passu
with any one or more other series as the Board of Directors may so
determine.
4.9. Upon liquidation of the Company, the holders of any series of preferred
shares shall be entitled to receive, before any distribution is made to
the holders of any other series of preferred shares ranking junior to
such series as to liquidation preference, and before any distribution to
the holders of common shares, the amount of the liquidation preference of
such shares which shall not exceed the sum of:
(1) the amount paid for such preferred shares on issuance, plus
(2) all accumulated and unpaid dividends on such preferred shares to
the date fixed for distribution.
Article 5
No holder of shares of the Company shall in that capacity have any preferential
or preemptive right to purchase or subscribe for any shares or any options,
warrants or rights to purchase shares or any securities convertible into or
exchangeable for shares which the Company may issue or sell, except those rights
of conversion, if any, of preferred shares specified in or determined in
accordance with Article 4.
Article 6
6.1. The Company may, for its own account and for valuable consideration, from
time to time acquire fully paid shares of its stock, on such terms and
conditions as the Board of Directors may determine, provided that at
least one- fifth part of its authorized capital remains outstanding with
others than the Company. The authority to make any such acquisition is
vested in the Board of Directors. Any shares so acquired may be canceled
by the Board of Directors without the prior approval of the general
meeting of shareholders.
6.2. The Company shall not acquire any voting rights by reason of ownership of
shares of its stock and, in connection with any general meeting of
shareholders, shares owned by the Company shall not be counted as
outstanding, or as present or represented, for the purpose of determining
a quorum or for any other purpose.
6.3. Shares of its stock owned by the Company may be sold at such times, under
such conditions and for such consideration as may be determined from time
to time by the Board of Directors.
Article 7
7.1. The shares shall be in registered form.
7.2. Share certificates for common shares may be issued at the request of the
shareholder.
7.3. The shares shall be entered into a register, which, provided a printed
record can be produced therefrom, may be in computerized form (the
"Register") which is kept by the Board of Directors or by a registrar
designated thereto by the Board of Directors (the "Registrar"). Each
entry shall mention the name of the shareholder, his residence or his
elected domicile, the quantity of his shares and the numbers of the share
certificates, if any, representing such shares. The Register shall not be
open for inspection by third parties or shareholders with respect to
shares other than those registered in their name, except with respect to
shares that have not been paid in full and except further, with respect
to the Registrar, if said Registrar has been requested, or if demand of
said Registrar has been made, to disclose any piece of information in the
Register and failure to disclose such information would lead to liability
of the Registrar.
7.4. Every transfer and devolution of a share shall be entered in the Register
and every such entry shall be signed or otherwise acknowledged by or on
behalf of the Board of Directors or by the Registrar.
7.5. The transfer of shares shall be effected either by serving a deed of
transfer upon the Company or by written acknowledgment of the transfer by
the Company, which acknowledgement can only take place by an annotation
on the share certificate, if share certificates have been issued.
7.6. The entry in the Register provided for in paragraphs 3 and 4 of this
Article shall have the effect of a written acknowledgment of the transfer
by the Company in the event no share certificate has been issued for the
shares concerned.
7.7. If any shareholder shall establish to the satisfaction of the Board of
Directors or the Registrar that his share certificate has been lost or
destroyed, then, at his request, a duplicate may be issued under such
conditions and guarantees (which, if required by the Registrar or the
Board of Directors, may include the provision of an indemnity bond issued
by an insurance company or other type of financial institution or entity)
as the Board of Directors or the Registrar shall determine. By the
issuance of the new share certificates on which shall be
recorded that it is a duplicate, the old certificate in place of which
the new one has been issued shall become null and void. The Board of
Directors or the Registrar may authorize the exchange of new share
certificates for mutilated share certificates. In such case the mutilated
share certificates shall be delivered to the Company and shall be
canceled immediately. The cost of a duplicate or new certificate and any
proper expenses incurred by the Company in connection with the issuance
thereof may, at the option of the Board of Directors or the Registrar, be
charged to the shareholder.
MANAGEMENT
Article 8
8.1. The management of all the affairs, property and business of the Company
shall be vested in a Board of Directors, who shall have and may exercise
all powers except such as are exclusively conferred upon the shareholders
by law or by these Articles of Association.
8.2. The directors shall be elected at a general meeting of shareholders by a
majority of votes cast, in person or by proxy, by the shareholders
entitled to vote. The number of persons constituting the whole Board of
Directors shall be not less than five nor more than twenty-four, as fixed
and elected by the general meeting of shareholders. The number of persons
constituting the whole Board of Directors shall, until changed at any
succeeding general meeting of shareholders, be the number so fixed and
elected. Directors may be suspended or dismissed at any general meeting
of shareholders. At any general meeting of shareholders at which action
is taken to increase the number of the whole Board of Directors or to
suspend or dismiss a director, or at any subsequent general meeting, the
shareholders may fill any vacancy or vacancies created by such action.
8.3. Each director shall be elected to serve until the next annual general
meeting of shareholders and until his successor shall be elected and
qualify, or until his death, resignation or removal.
8.4. Directors need not be Netherlands Antilles citizens or residents of the
Netherlands Antilles or shareholders of the Company.
8.5. In the event that one or more of the directors is prevented from or is
incapable of acting as a director, the remaining directors (or the
remaining director, if there should be only one) may appoint one or more
persons to fill the vacancy or vacancies thereby created on the Board of
Directors until the next general meeting of shareholders, provided that
if at any time the number of directors then in office shall be reduced to
less than a majority of the number constituting the whole Board of
Directors, the remaining directors or director shall forthwith call a
general meeting of shareholders for the purpose of filling the vacancies
on the Board of Directors, and provided further that in the event that
all of the directors are prevented from or are incapable of acting as
directors, the Company shall be temporarily managed by any person or
persons previously appointed by the Board of Directors so to act, who
shall forthwith call a general meeting of shareholders for the purpose of
electing a Board of Directors. Until such general meeting of shareholders
is held the person so designated shall only take such acts of management
that can not suffer any delay. If no such general meeting of shareholders
shall be called, and if no such person shall have been appointed, any
person or persons holding in the aggregate at least five percent of the
outstanding shares of stock of the Company may call a general meeting of
shareholders for the purpose of electing a Board of Directors.
8.6. A majority of the whole Board of Directors shall constitute a quorum for
the conduct of any business and the action of the majority of the
directors present in person or by proxy as hereinafter provided, at a
meeting at which a quorum is so present, shall constitute the action of
the Board of Directors.
8.7. Meetings of the Board of Directors may be held in or outside the
Netherlands Antilles.
8.8. Meetings may be held through telephone conference, video conference or
other real time communication allowing all persons participating in the
meeting to hear each other or through any other device permitted by then
applicable law, and participation in a meeting through any such lawful
device or arrangement shall constitute presence at such meeting.
8.9. Directors may in writing, by telegram, cable, telex, telefax, electronic
mail or other communication device appoint a proxy to act at any meeting
of the Board of Directors, such proxy to be restricted, however, to the
particular meeting specified therein. Such proxy must be another director
of the Company, provided, however, that at any meeting of the Board of
Directors a director may not act as proxy for more than one director.
8.10. When action by the Board of Directors is required or permitted to be
taken, action at a meeting may be dispensed with if all commercially
reasonable efforts have been taken to notify all the directors and if
three fourth of the directors shall consent in writing, by telegram,
cable, telex, telefax, electronic mail or other communication device to
such action taken or being taken, and provided further that all directors
are promptly notified of such action being taken or having been taken.
Article 9
9.1. The Board of Directors shall at least annually elect or appoint the
following officers: a Chairman, a Chief Executive Officer, a Secretary
and a Treasurer, each to serve until his successor is elected and
qualified. The Board of Directors from time to time also may elect or
appoint a Chief Financial Officer, a President, a Vice Chairman of the
Board of Directors, one or more executive Vice Presidents, one or more
Vice Presidents (who may have such additional descriptive designations as
the Board of Directors may determine), and any such other officers and
agents as it determines proper, all of whom shall hold office at
the pleasure of the Board of Directors. The same person may hold any two
or more of the aforesaid offices but no officer shall execute,
acknowledge or verify an instrument in more than one capacity if such
instrument is required by law or by these Articles of Association to be
executed, acknowledged or verified by two or more officers. The Chairman
and the Vice Chairman, if any, shall be chosen from among the Board of
Directors, but the other officers of the Company need not be members of
the Board of Directors.
9.2. The Company shall be represented at law and otherwise, and shall be bound
with respect to third parties, by the Board of Directors and by:
(a) those directors authorized by the Board of Directors to represent
the Company, who shall have the following titles and occupy the
following offices:
(i) Chairman; or
(ii) Vice-Chairman;
(b) persons, who may, but are not required to, be directors,
authorized by the Board of Directors to represent the Company, who
shall have the following titles and occupy the following offices:
(i) Chief Executive Officer;
(ii) President;
(iii) Chief Financial Officer;
(iv) one or more Executive Vice Presidents;
(v) one or more Vice Presidents;
(vi) Chief Operating Officer;
(vii) Controller;
(viii) Treasurer; or
(ix) Secretary.
9.3. The Board of Directors may also from time to time authorize other
persons, who may or may not be directors, to represent the Company, who
shall have such titles and occupy such additional offices as the Board of
Directors may determine.
9.4. The general meeting of shareholders may grant specific authority to the
Chief Executive Officer, the President or any member of the Board of
Directors to represent the Company with respect to any particular matter
as specified by such general meeting of shareholders.
9.5. The persons holding the above-mentioned offices or any other offices
which the Board of Directors may from time to time authorize as herein
provided shall, respectively, have such power and authority as the Board
of Directors may from time to time grant to the holders of the offices
held by them.
9.6. The Board of Directors may grant general or specific authority to
additional agents or to committees, giving such agents or committees such
general or limited powers or duties as it may deem appropriate.
9.7. In the event of a conflict of interest between the Company and one or
more directors, the Company shall be represented as determined from time
to time by the Board of Directors.
9.8. The Board of Directors may adopt and may amend and repeal such rules,
regulations and resolutions, including By-laws, as it may deem
appropriate for the conduct of the affairs and the management of the
Company, including rules, regulations and resolutions setting forth the
specific powers and duties of the holders of the above-mentioned offices
and other persons authorized by the Board of Directors to represent the
Company. Such rules and regulations and resolutions must be consistent
with these Articles of Association.
9.9. The directors, the holders of the above-mentioned offices and other
persons authorized by the Board of Directors to represent the Company
shall receive such compensation as the Board of Directors may from time
to time prescribe.
Article 10
10.1. The Company shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the Company) by reason of the fact that such person is or was a
director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise or entity, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such person's conduct was unlawful. The Company
shall indemnify any present or former officer or director of the Company
to the fullest extent allowed by the preceding provisions of this
paragraph 1 of this Article in the event of a "Change of Control".
"Change in Control" means a change in control of the Company which shall
be deemed to have occurred if at any time (i) any entity, person or
organization is or becomes the legal or
beneficial owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's
then outstanding shares without the prior approval of at least two-thirds
of the members of the Board of Directors in office immediately prior to
such entity, person or organization attaining such percentage interest;
(ii) the Company is a party to a merger, consolidation, share exchange,
sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a
majority of the Board of Directors thereafter; or (iii) during any
15-month period, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any new
director whose election or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period) cease for any reason to constitute at least a majority of
the Board of Directors.
10.2. The Company shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise or entity against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with the defense or settlement of
such action or suit if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best
interests of the Company and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall
have been finally adjudged to be liable to the Company for improper
conduct unless and only to the extent that the court in which such action
or suit was brought or any other court having appropriate jurisdiction
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses,
judgments, fines and amounts paid in settlement which the court in which
the action or suit was brought or such other court having appropriate
jurisdiction shall deem proper. The Company shall indemnify any present
or former officer or director of the Company to the fullest extent
allowed by the preceding provisions of this paragraph 2 of this Article
in the event of a Change in Control, as defined in paragraph 1 of this
Article.
10.3. To the extent that a present or former director or officer of the Company
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in paragraphs 1 and 2 of this Article, or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
10.4. Any indemnification under paragraphs 1 and 2 of this Article (unless
ordered by a court) shall be made by the Company only as authorized by
contract approved, or by-laws, resolution or other action adopted or
taken, by the Board of Directors or by the shareholders or as required by
the last sentences of paragraphs 1 and 2 of this Article.
10.5. Expenses (including attorneys' fees) incurred by a present or former
director or a present officer in defending any civil or criminal,
administrative or investigative action, suit or proceeding shall be paid
by the Company in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that
such person is not entitled to be indemnified by the Company as
authorized by this Article. Such expenses (including attorneys' fees)
incurred by former officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the Company deems appropriate.
10.6. The indemnification and advancement of expenses provided by or granted
pursuant to the other paragraphs of this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to
action in such person's official capacity and as to action in another
capacity while holding such office, and shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be
a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
10.7. The Company shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or
arising out of his status as such, whether or not the Company would have
the power to indemnify such person against such liability under the
provisions of this Article.
10.8. For purposes of this Article, reference to the Company shall include, in
addition to the resulting corporation, 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, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in
the same position under the provisions of this Article with respect to
the resulting or surviving corporation if its separate existence had
continued.
10.9. For purposes of this Article, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and
in a manner such person 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 Company" as referred to in this Article.
MEETINGS OF SHAREHOLDERS
Article 11
11.1. All general meetings of shareholders shall be held in the Netherlands
Antilles on Curacao, Bonaire, St. Eustatius, Saba or the Dutch part of
St. Maarten.
11.2. The annual general meeting of shareholders shall be held within nine
months after the end of the preceding fiscal year, on a date determined
from year to year by the Board of Directors, for the purpose of electing
directors, reporting on the course of business during the preceding
fiscal year, adopting of the balance sheet and the profit and loss
account for the preceding fiscal year and for any other purposes required
by law, and for such additional purposes as may be specified in the
notice of such meeting.
11.3. Special general meetings of shareholders may be called at any time upon
the direction of the Chairman, the Vice Chairman, the Chief Executive
Officer, the President or the Board of Directors or in the manner
provided for in Article 82 of the Code of Commerce of the Netherlands
Antilles, or by one or more holders of shares representing in the
aggregate a majority of the shares then outstanding, or as provided for
in Article 8.5.
11.4. Notice of meetings of shareholders, whether annual general meetings or
special general meetings, stating the time and place of the meeting,
shall be given to the shareholders not less than twenty (20) or more than
sixty (60) days prior to the date of the meeting in question by notice to
each shareholder at the address thereof appearing in the Register.
11.5. All notices of general meetings of shareholders shall state the matters
to be considered at the meeting.
11.6. Without limiting the manner by which notice otherwise may be given
effectively to shareholders or directors, any notice given by the Company
shall be effective if given by a form of electronic transmission
consented to by the person to whom the notice is given. Any such consent
shall be revocable by written notice received by the Company.
11.7. Notice given pursuant to paragraph 6 of this Article shall be deemed
given: (1) if by facsimile telecommunication, when directed to a number
at which the recipient has consented to receive notice; (2) if by
electronic mail, when directed to an electronic mail address at which the
recipient has consented to receive notice; (3) if by a posting on an
electronic network together with separate notice to the recipient of such
specific posting, upon the later of (A) such posting and (B) the giving
of such separate notice; and (4) if by any other form of electronic
transmission, when directed to the recipient. An affidavit that the
notice has been given by a form of electronic transmission shall, in the
absence of fraud or bad faith, be prima facie evidence of the facts
stated therein.
11.8. For purposes of these articles of association, "electronic transmission"
means any form of communication, not directly involving the physical
transmission of paper, that creates a record that may be retained,
retrieved, and reviewed by a recipient thereof.
Article 12
12.1. Every shareholder has the right to attend any general meeting in person
or by proxy, which proxy to the extent permitted by applicable law may be
given by electronic transmission, and to address the meeting.
12.2. Each holder of common shares and each holder of preferred shares shall be
entitled to one vote for each common share or preferred share held.
12.3. For the purpose of determining shareholders entitled to notice of and to
vote at any general meeting of shareholders, or entitled to receive
payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Company may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, sixty (60) days. If the
stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a general meeting of
shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to
be not more than sixty (60) days and, in case of a general meeting of
shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or to
vote at a general meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the
record date for
such determination of shareholders. When a determination of shareholders
has been made as herein provided, such determination shall apply to any
adjournment thereof except where the determination has been made through
the closing of stock transfer books and the stated period of closing has
expired.
Article 13
13.1. Except as otherwise provided herein, no action may be taken at any
general meeting of shareholders unless a quorum consisting of the holders
of at least one-half of the outstanding shares are present at such
meeting in person or by proxy.
13.2. If a quorum is not present in person or by proxy at any general meeting
of shareholders, a second general meeting shall be called in the same
manner as such original meeting of shareholders, to be held within two
months, at which second meeting, regardless of the number of shares
represented (but subject to the provisions of Articles 18, 19 and 21),
valid resolutions may be adopted with respect to any matter stated in the
notice of the original meeting and also in the notice of such second
meeting or which by law is required to be brought before the shareholders
despite the absence of a quorum.
13.3. Subject to the provisions of Articles 18, 19 and 21, the vote in favor by
a majority of the votes cast (excluding any abstentions) shall be
necessary to adopt any resolution at any general meeting of shareholders.
13.4. The Board of Directors from time to time shall appoint a person to
preside at general meetings of shareholders.
13.5. At any general meeting of shareholders, a shareholder may vote upon all
matters before the meeting, even if the decision to be taken would grant
him, in a capacity other than as a shareholder, any right against the
Company or would in such other capacity relieve him of any obligation to
the Company.
SEPARATE MEETINGS
Article 14
14.1. Separate meetings of holders of each series of preferred shares (each a
"Series Meeting") can be held and may be convened by any two or more
members of the Board of Directors.
14.2. Notice of Series Meeting shall be given not less than ten (10) days prior
to the date of the Series Meeting to the address of each holder of
preferred shares of the relevant series appearing in the Register.
14.3. The notice shall contain the agenda of the Series Meeting or shall
mention that it is deposited for inspection by the holder of the relevant
shares at the offices of the Company.
14.4. The Series Meetings do not have to be held in the Netherlands Antilles
but may be held in conjunction with any general meeting of shareholders.
14.5. To a Series Meeting all the provisions of these Articles of Association
and the laws of the Netherlands Antilles as to General Meetings of
Shareholders shall, mutatis mutandis, apply, if not otherwise provided in
this Article.
FISCAL YEAR
Article 15
The fiscal year of the Company shall be the calendar year.
BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
Article 16
16.1. Within eight months after the end of the fiscal year of the Company, the
Board of Directors shall prepare the balance sheet and profit and loss
account with respect to the preceding fiscal year. Subsequently, the
balance sheet and profit and loss account shall be submitted to the
shareholders for inspection and adoption at the annual general meeting of
shareholders in accordance with paragraph 2 of Article 11. From the date
at which the notice of the annual general meeting of shareholders is sent
until the close of the annual general meeting of shareholders, the
balance sheet and profit and loss account shall be available for
inspection by the shareholders at the office of the Company, and at any
additional place, if specified in the notice of such meeting.
16.2. The Board of Directors, with due observance of dividend entitlements of
the holders of preferred shares, is authorized to allocate such part of
the profits to the retained earning reserves as it deems fit.
DISTRIBUTION OF PROFITS
Article 17
17.1. Dividends on the shares of the Company may be declared either in cash,
property (including securities) or in shares of the Company, out of the
profits of the preceding fiscal year or years then available for
distribution. To the extent that profits of any fiscal year which are
available for distribution shall not be distributed, they shall be
carried forward and, unless extinguished as the result of subsequent
operations or otherwise applied by the Board of Directors, shall be
available for distribution in any subsequent year or years.
17.2. The Board of Directors has the authority to declare and make
distributions out of retained earnings reserves or out of the contributed
surplus capital reserves either in cash, property (including securities)
or in shares of the Company without the prior approval of the general
meeting of shareholders.
17.3. If, as appears from the adopted profit and loss statement, a loss has
been suffered which cannot be covered by a reserve or which cannot be
extinguished through the application of undistributed profits from
previous years or otherwise, no distribution of profits shall be effected
in subsequent years so long as such loss has not been made good.
17.4. If dividends are to be distributed, the holders of preferred shares shall
have preference as to such dividends in accordance with the preferences
of such shares as determined at the issuance thereof.
17.5. The Board of Directors may resolve at any time to distribute one or more
interim dividends as an advance payment of the dividend expected to be
determined by the shareholders at the annual general meeting.
DISPOSITION OF THE COMPANY'S ASSETS
Article 18
Notwithstanding any provision of Article 13, any sale or other disposition of
all or substantially all of the assets of the Company, whether for cash,
property, stock or other securities of another company, or for any other
consideration, shall be made only pursuant to a resolution duly adopted at a
general meeting of shareholders by the holder or holders of at least the
majority of the shares of the Company at the time outstanding and entitled to
vote, the notice of which meeting shall have specified the terms of such
proposed sale or other disposition; provided, however, the foregoing shall not
apply to any reorganization or rearrangement of the Company, or of any of its
subsidiaries or of any of its assets in any transaction whereby there shall be
no diminution of the beneficial interest of the shareholders of the Company in
such assets.
LIQUIDATION
Article 19
Notwithstanding any provision of Article 13, any resolution providing for the
dissolution, liquidation or winding up of the Company shall be valid only if
duly adopted at a general meeting of shareholders by the holder or holders of at
least a majority of the shares at the time outstanding and entitled to vote, the
notice of which meeting shall have specified the nature of any such resolution
to be voted upon at such meeting.
ACTION BY SHAREHOLDERS WITHOUT MEETING
Article 20
20.1. Notwithstanding any provision of Article 13, 18, 19 or 21, any action
which by law or by these Articles of Association is required or permitted
to be taken at a general meeting of shareholders may be taken without a
meeting if taken by the written consent of the holder or holders of at
least the majority of the shares of the Company outstanding and entitled
to vote. Each shareholder may evidence his consent by separate instrument
which may be executed by himself or on his behalf by a duly appointed
proxy. Notice of any action proposed to be taken under this Article 20
shall be communicated to each shareholder at his address appearing in the
share register, such notice to designate the date on or before which such
written consent must be received by the Secretary of the Company in order
to be counted. Any shareholder may revoke his consent by instrument
received by the Secretary of the Company on or before the date so
designated, or before written consents from the holders of the majority
of the shares outstanding and entitled to vote have been received by the
Secretary of the Company, whichever first occurs, and not thereafter.
20.2. For the purpose of determining shareholders entitled to notice of and or
to give written consent to any action proposed to be taken under this
Article 20, the Board of Directors of the Company may provide that the
stock transfer books shall be closed for a stated period not to exceed
sixty (60) days. Such books shall be closed for at least ten (10) days
immediately preceding the date on or before which written consents must
be received by the Secretary of the Company in order to be counted. In
lieu of closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of
shareholders, such date in any case to be not earlier than sixty (60)
days prior to the date on or before which written consents must be
received by the Secretary of the Company in order to be counted. If the
stock transfer books are not closed and no record date is fixed for the
determination of shareholders, the date on which notice of the action
proposed to be taken hereunder is mailed shall be the record date for
such determination of shareholders.
AMENDMENTS
Article 21
21.1. Notwithstanding any provision of Article 13, these Articles of
Association may be amended only pursuant to a resolution duly adopted at
a general meeting of shareholders by the holder or holders of at least
the majority of the shares of the Company at the time outstanding and
entitled to vote, the notice of which meeting shall have set forth the
exact text of the proposed amendment or amendments or shall have stated
that a copy of such text has been deposited at the office of the Company
in Curacao for inspection by the shareholders of the Company, and shall
remain available for inspection until the conclusion of said meeting.
21.2. Any amendment to these Articles of Association that would increase or
decrease the authorized number of preferred shares or par value thereof,
or the number of shares of any series thereof, or that would alter or
change the powers, preferences or any special rights of the preferred
shares, or of any series thereof, so as to affect them adversely, shall
require the approval of the holders of a majority of all preferred
shares, or of the preferred shares of the series adversely affected
(voting together as a single class), as the case may be.
Exhibit 3(b)
Appendix B
AMENDED AND RESTATED
BY-LAWS
of
SCHLUMBERGER LIMITED
(Schlumberger N.V.)
----------------------------------------
(Certain provisions of the By-Laws correspond to provisions contained in
the Deed of Incorporation as amended, and any amendment of such
provisions of the By-Laws is subject to an appropriate amendment of the
Deed of Incorporation.)
----------------------------------------
ARTICLE I
----------
SHAREHOLDERS
------------
SECTION 1.1 Place of Meetings: Chairmanship of Meetings
-------------------------------------------
All general meetings of shareholders shall be held in Curacao, Bonaire, St.
Eustatius, Saba or the Dutch part of St. Maarten. All such general meetings
shall be presided over by the Chairman or, in his absence or disability, by the
Vice Chairman. In the absence or disability of both the Chairman and the Vice
Chairman, such meetings shall be presided over by such other person as may be
designated by the Board of Directors.
SECTION 1.2 Annual Meeting
--------------
The annual general meeting of shareholders shall be held within the period
required by applicable law, on a date determined from year to year by the Board
of Directors, for the purpose of electing directors, reporting on the course of
business during the preceding fiscal year, adopting of the balance sheet and the
profit and loss accounts for the preceding fiscal year and for any other
purposes required by law, and for such additional purposes as may be specified
in the notice of such meeting.
SECTION 1.3 Special Meetings
----------------
Special general meetings of shareholders may be called at any time upon the
direction of the Chairman, the Vice Chairman, the Chief Executive Officer, the
President or the Board of Directors or in the manner provided in Article 82 of
the Code of Commerce of the Netherlands Antilles, or by one or more holders of
shares representing in the aggregate a majority of the shares of stock then
outstanding, or as provided for in Article 8.5 of the Deed of Incorporation.
SECTION 1.4 Notice of Meeting
-----------------
All notices of general meetings of shareholders shall state the matters to be
considered at the meeting. Notice of meetings of shareholders, whether annual
general meetings or special general meetings, stating the time and place of the
meeting, shall be given to the shareholders not less than 20 and no more than 60
days prior to the date of the meeting in question by notice to each shareholder
at the address thereof appearing in the share register.
SECTION 1.5 Closing of Transfer Books or Fixing of Record Date
--------------------------------------------------
For the purpose of determining shareholders entitled to notice of or to vote at
any general meeting of shareholders, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose (but excluding determinations made as provided in Section 1.7 of
these By-Laws with respect to action by shareholders without meeting), the Board
of Directors of the Company may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case, 60 days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a general meeting of shareholders, such
books shall be closed for at least 10 days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than 60 days and, in case of a general
meeting of shareholders, not less than 10 days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
general meeting of shareholders, or shareholders entitled to receive payment of
a dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
general meeting of shareholders has been made as herein provided, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of stock transfer books, and the
stated period of closing has expired.
SECTION 1.6 Quorum
------
Except as otherwise provided herein, no action may be taken at any general
meeting of shareholders unless a quorum consisting of the holders of at least
one-half of the outstanding shares is present at such meeting in person or by
proxy. If a quorum is not present in person or by proxy at any general meeting
of shareholders, a second general meeting shall be called in the same manner as
such original meeting of shareholders, to be held within two months, at which
second meeting, regardless of the number of shares represented (but subject to
the provisions of Articles 18, 19 and 21 of the Deed of Incorporation), valid
resolutions may be adopted with respect to any matter stated in the notice of
the original meeting and also in the notice of such second meeting or which, by
law, is required to be brought before the shareholders despite the absence of a
quorum. Subject to the provisions of Articles 18, 19 and 21 of the Deed of
Incorporation, a majority of the votes cast (excluding any abstentions) shall be
necessary to adopt any resolution at any general meeting of shareholders.
SECTION 1.7 Action by Shareholders Without Meeting
--------------------------------------
As provided in Article 20 of the Deed of Incorporation, any action which, by law
or by the Deed of Incorporation, is required or permitted to be taken at a
general meeting of shareholders may be taken without a meeting if taken by the
written consent of the holder or holders of at least the majority of the shares
of the Company outstanding and entitled to vote. Each shareholder may evidence
such consent by separate instrument which may be executed by the shareholder or
by a duly appointed proxy on behalf of the shareholder. Notice of any action
proposed to be taken under said Article 20 shall be given to each shareholder at
the address appearing in the share register, such notice to designate the date
on or before which such written consent must be received by the Secretary of the
Company in order to be counted. Any shareholder may revoke his or her consent by
instrument received by the Secretary of the Company on or before the date so
designated or before written consents from the holders of the absolute majority
of the shares outstanding and entitled to vote have been received by the
Secretary of the Company, whichever first occurs, and not thereafter. For the
purpose of determining shareholders entitled to notice of and or give written
consent to any action proposed to be taken under said Article 20, the Board of
Directors of the Company may provide that the stock transfer books shall be
closed for a stated period not to exceed 60 days.
Such books shall be closed for at least 10 days immediately preceding the date
on or before which written consents must be received by the Secretary of the
Company in order to be counted. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than 60 days prior to
the date on or before which written consents must be received by the Secretary
of the Company in order to be counted. If the stock transfer books are not
closed and no record date is fixed for the determination of shareholders, the
date on which notice of the action proposed to be taken hereunder is given,
shall be the record date for such determination of shareholders.
SECTION 1.8 Notices
-------
Without limiting the manner by which notice otherwise may be given effectively
to shareholders or directors, any notice given by the Company shall be effective
if given by a form of electronic transmission consented to by the person to whom
the notice is given. Any such consent shall be revocable by written notice
received by the Company. All notices shall be deemed given: (1) if by facsimile
telecommunication, when directed to a number at which the recipient has
consented to receive notice; (2) if by electronic mail, when directed to an
electronic mail address at which the recipient has consented to receive notice;
(3) if by a posting on an electronic network together with separate notice to
the recipient of such specific posting, upon the later of (A) such posting and
(B) the giving of such separate notice; and (4) if by any other form of
electronic transmission, when directed to the recipient. An affidavit that the
notice has been given by a form of electronic transmission shall, in the absence
of fraud or bad faith, be prima facie evidence of the facts stated therein. For
purposes of these By-Laws, "electronic transmission" means any form of
communication, not directly involving the physical transmission of paper, that
creates a record that may be retained, retrieved, and reviewed by a recipient
thereof.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 2.1 General Powers
--------------
The management of all the affairs, property and business of the Company shall be
vested in a Board of Directors who shall have and may exercise all powers except
such as are exclusively conferred upon shareholders by law or by the Deed of
Incorporation of the Company as from time to time amended. The Board of
Directors may delegate such of its powers as it deems appropriate to committees
consisting of one or more members of the Board and to the officers and other
agents of the Company.
SECTION 2.2 Number, Tenure and Qualifications
---------------------------------
The directors shall be elected at the annual general meeting of shareholders by
a majority of the votes cast by the shareholders entitled to vote. The number of
persons constituting the whole Board of Directors shall not be less
than five nor more than twenty-four as fixed and elected by the general meeting
of shareholders. The number of persons constituting the whole Board of Directors
shall, until changed at any succeeding general meeting of shareholders, be the
number so fixed and elected. Directors may be removed at any general meeting of
shareholders. At any general meeting of shareholders at which action is taken to
increase the number of the whole Board of Directors or to remove a director, or
at any subsequent general meeting, the shareholders may fill any vacancy or
vacancies created by such action. Each director shall be elected to serve until
the next annual general meeting of shareholders and until his or her successor
shall be elected and qualified or until his or her death, resignation or
removal. Directors need not be Netherlands citizens or residents of the
Netherlands Antilles or shareholders of the Company.
SECTION 2.3 Meetings of the Board
---------------------
The directors may hold their meetings in or outside the Netherlands Antilles.
Meetings may be held through telephone conference, video conference or other
real time communication allowing all persons participating in the meeting to
hear each other or through any other device permitted by then applicable law,
and participation in a meeting through any such lawful device or arrangement
shall constitute presence at such meetings. The Chairman or, in the absence or
disability of the Chairman, the Vice Chairman shall preside at their meetings.
In the absence or disability of both the Chairman and the Vice Chairman, such
meetings shall be presided over by such person as may be chosen by the Board of
Directors. Regular meetings of the Board of Directors shall be held at such
times as may from time to time be fixed by the Board. Notice need not be given
of regular meetings of the Board held at the time fixed by the Board. Special
meetings may be held at any time upon the call of the Chairman or the Vice
Chairman or of two directors by oral, electronic or written notice duly served
on, sent or mailed to each director not less than three days before such
meeting. The first meeting of the Board of Directors following the annual
general meeting of shareholders, whether a regular or special meeting of the
Board, shall be an organization meeting for the election of officers of the
Company and at which any other matters may also be acted upon by the Board.
Meetings may be held at any time without notice if all the directors are present
or if those not present and who are entitled to notice under the provisions of
this Section waive notice of the meeting in writing before or after the meeting.
Matters to be acted upon by the Board at any regular or special meeting need not
be specified in the notice thereof.
SECTION 2.4 Action by Directors Without Meeting
-----------------------------------
When action by the Board of Directors is required or permitted to be taken,
action at a meeting may be dispensed with if all commercially reasonable efforts
have been taken to notify all the directors and three fourths of the directors
shall consent in writing, by telegram, cable, telex, telefax, electronic mail or
other communication device to such action taken or being taken, and provided
that all directors are promptly notified of such action taken or
having been taken.
SECTION 2.5 Quorum
------
A majority of the whole Board of Directors shall constitute a quorum for the
conduct of any business, and the action of the majority of the directors present
in person or by proxy, as hereinafter provided, at a meeting at which a quorum
is so present shall constitute the action of the Board of Directors. Directors
may, by telegram, cable, telex, telefax, electronic mail or other communication
device, appoint a proxy to act at any meeting of the Board of Directors, such
proxy to be restricted, however, to the particular meeting specified therein.
Such proxy must be another director of the Company, provided, however, that at
any meeting of the Board of Directors a director may not act as proxy for more
than one director.
SECTION 2.6 Vacancies
---------
In the event that one or more of the directors is prevented from or is incapable
of acting as a director, the remaining directors (or the remaining director, if
there should be only one) may appoint one or more persons to fill the vacancy or
vacancies thereby created on the Board of Directors until the next general
meeting of shareholders, provided that, if at any time the number of directors
then in office shall be reduced to less than a majority of the number
constituting the whole Board of Directors, the remaining directors or director
shall forthwith call a general meeting of shareholders for the purpose of
filling the vacancies in the Board of Directors, and, provided further that in
the event that all of the directors are prevented from or are incapable of
acting as directors, the Company shall be temporarily managed by any person or
persons previously appointed by the Board of Directors so to act, who shall
forthwith call a general meeting of shareholders for the purpose of electing a
Board of Directors. If no such general meeting of shareholders shall be called
and if no such person shall have been appointed, any person or persons holding,
in the aggregate, at least five percent of the outstanding shares of stock of
the Company may call a general meeting of shareholders for the purpose of
electing a Board of Directors.
SECTION 2.7 Committees
----------
(a) Committees consisting of one or more members of the Board may be
established by the Board and shall have such general or limited powers or duties
as the Board shall deem appropriate. A majority of any such committee composed
of two or more members may determine its action at meetings and fix the time and
place of its meetings, unless the Board shall otherwise provide. Meetings may be
held through telephone conference, video conference or other real time
communication allowing all persons participating in the meeting to hear each
other or through any other device permitted by then applicable law, and
participation in a meeting through any such lawful device or arrangement shall
constitute presence at such meetings. When action by any committee is required
or permitted to be taken, action at a meeting may be dispensed with if all
members of the committee consent to such action. Members of a committee may, in
writing or by telegram, cable, telex, telefax, electronic mail or other
communication device, appoint a proxy to act at any meeting of the committee,
such proxy to be restricted, however, to the particular meeting specified
therein. Such proxy must be a director of the Company, provided, however, that
at any committee meeting a director may not act as proxy for more than one
committee member.
(b) The Board shall have power at any time to change the members of any
committee, to fill vacancies thereon, and to discharge any committee.
(c) The Board of Directors shall have a standing Audit Committee,
Compensation Committee, Finance Committee and Nominating Committee.
(d) The Board of Directors shall adopt a charter for each committee for
regulating the conduct of its affairs. Such charters must be consistent with
these By-Laws and the Deed of Incorporation.
ARTICLE Ill
OFFICERS
--------
SECTION 3.1 Election and Term of Office
---------------------------
The officers of the Company shall be elected by the Board of Directors and shall
be a Chairman, a Chief Executive Officer, a Secretary and a Treasurer. The Board
of Directors from time to time may also elect or appoint a Chief Financial
Officer, a President, a Vice Chairman of the Board of Directors, one or more
Executive Vice Presidents, one or more Vice Presidents and any such other
officers, including assistant officers and agents, as the Board may deem
advisable. Officers of the Company shall have such powers and duties as are
specified in these By-Laws and such further powers and duties as are determined
from time to time by the Board of Directors. Officers other than the Chairman
and the Vice Chairman may but need not be directors. The Board of Directors may
designate an officer or officers to be the Chief Financial Officer and the Chief
Accounting Officer of the Company. Two or more offices may be held by the same
person, provided, however, that no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such instrument is required
by law or by these By-Laws to be executed, acknowledged or verified by any two
or more officers. The Board of Directors may grant general or specific authority
to additional agents or to committees, giving such agents or committees such
general or limited powers or duties as it may deem appropriate. All officers and
agents shall serve at the pleasure of the Board and may be removed at any time
by the Board, which shall have power to fill any vacancy which shall occur in
any office by reason of death, resignation, removal or otherwise. Unless so
removed, the terms of office of all officers and of all members of any
committees of the Board shall continue until the election of their successors or
until the elimination of such offices or committees.
SECTION 3.2 Chairman
--------
The Chairman shall preside at all meetings of the Board, and shall exercise such
other powers and discharge such other responsibilities as may be assigned by the
Board of Directors. The Chairman shall have the power to sign certificates of
stock of the Company.
SECTION 3.3 Vice Chairman
-------------
The Board of Directors may, from time to time, designate a director of the
Company to be Vice Chairman. The Vice Chairman shall perform such duties as may
be assigned by the Chairman or by the Board of Directors, and shall, in the
absence or disability of the Chairman, act for the Chairman.
SECTION 3.4 Chief Executive Officer
-----------------------
The Board of Directors shall at least annually elect or appoint a Chief
Executive Officer of the Company. The Chief Executive Officer shall have general
executive powers and overall responsibility for the management of the business
of the Company.
SECTION 3.5 President
---------
The President shall exercise such powers and discharge such responsibilities as
may be assigned by the Board of Directors, and shall have the power to sign
certificates of stock of the Company.
SECTION 3.6 Chief Operating Officer
-----------------------
The Board of Directors may, from time to time, designate an officer of the
Company to be the Chief Operating Officer of the Company. The Chief Operating
Officer shall have general executive powers and responsibility for the
management of the operations of the Company.
SECTION 3.7 Vice Presidents
---------------
The several Vice Presidents shall do and perform all such duties and services as
shall be assigned to or required of them, from time to time, by the Board of
Directors, the Chairman, the Vice Chairman or the Chief Executive Officer.
SECTION 3.8 Secretary
---------
The Secretary shall attend to the giving of notice of all meetings of
shareholders and of the Board of Directors and shall keep and attest true
records of all proceedings thereat. The Secretary shall have charge of the
corporate seal and have authority to attest any and all instruments or writings
to which the same may be affixed. The Secretary shall have care and custody of
documents, papers and records of the Company, shall have the power to sign stock
certificates, and shall supervise the keeping of a record of the shareholders of
the Company. The Secretary shall generally perform all of the duties usually
appertaining to the office of the secretary of a company. In the absence of the
Secretary, or if the office is vacant, an Assistant Secretary shall perform the
duties of the Secretary, unless otherwise decided by the Board of Directors.
SECTION 3.9 Treasurer
---------
The Treasurer shall have the care and custody of all monies, funds and
securities of the Company and shall deposit or cause to be deposited all funds
of the Company in and with such depositories as the Board of Directors shall
designate from time to time. The Treasurer shall have the power to sign stock
certificates, to endorse for deposit or collection or otherwise all checks,
drafts, notes, bills of exchange or other commercial paper payable to the
Company and to give proper receipts or discharges therefore, and shall generally
perform all of the duties usually appertaining to the office of the treasurer of
a company. In the absence of the Treasurer, or if the office is vacant, an
Assistant Treasurer shall perform the duties of the Treasurer, unless otherwise
decided by the Board of Directors.
SECTION 3.10 Controller
----------
The Controller shall be in charge of the books of account and accounting records
of the Company and of its accounting procedures. The Controller shall render an
account of the funds of the Company whenever required so to do by the Board of
Directors, the Chairman, the Vice Chairman, or the President, and shall
generally perform all of the duties usually appertaining to the office of
controller of a company. In the absence of the Controller, or if the office is
vacant, an Assistant Controller shall perform the duties of the Controller,
unless otherwise decided by the Board of Directors.
SECTION 3.11 Salaries
--------
The salaries of the officers shall be fixed from time to time by the
Compensation Committee of the Board of Directors or, in absence thereof, by the
Board of Directors. No officer shall be prevented from receiving such salary by
reason of the fact that he or she is also a director of the Company.
SECTION 3.12 Checks. Notes. etc.
-------------------
All checks, drafts, notes, bills of exchange, acceptances and other instruments
for the payment of money shall be signed by such officer or officers, person or
persons, as may from time to time be thereunto authorized by the Board of
Directors.
ARTICLE IV
SHARES OF STOCK
SECTION 4.1 Registrar and Stock Certificates
------------------
Every shareholder shall be entitled to a certificate representing the
shareholder's shares. A Register shall be kept by the Board of Directors or by a
Registrar designated thereto by the Board of Directors. Each entry shall mention
the name and residence of the shareholder, and the quantity and numbers of the
share certificates. The Register shall not be open for inspection by third
parties or shareholders with respect to shares other than those registered in
their name, except with respect to shares that have not been paid in full and
except further, with respect to the Registrar, if said Registrar has been
requested, or if demand of said Registrar has been made, to disclose any piece
of information in the Register and failure to disclose such information would
lead to liability of the Registrar. Every transfer and devolution of a share
shall be entered in the Register and every such entry shall be signed or
otherwise acknowledged by or on behalf of the Board of Directors or by the
Registrar. Each certificate shall be signed by the Chairman or the Vice Chairman
or the President or any Vice President and by the Secretary or the Treasurer,
and bear the corporate seal or a facsimile thereof, certifying the number of
shares owned by the shareholder in the Company; provided that, where such
certificate is countersigned by a Registrar other than the Company, the
signatures of the officers of the Company and the Registrar on such certificate
may be a facsimile, engraved, stamped or printed. In case any officer or
officers or Registrar who shall have signed or whose facsimile signature or
signatures shall have been used on any such certificate or certificates shall
cease to be such officer or officers or Registrar, whether because of death,
resignation or otherwise before such certificate or certificates shall have been
delivered by the Company, such certificate or certificates may nevertheless be
issued and delivered as though the person or persons who signed such certificate
or certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be such officer or officers or Registrar.
SECTION 4.2 Lost Certificates
-----------------
In case any certificate of stock shall be lost, stolen or destroyed, the Board
of Directors, in its discretion, may authorize the issue of a substitute
certificate in place of the certificate of stock so lost, stolen or destroyed,
and may cause such substitute certificate to be countersigned and registered by
the appropriate Registrar; provided that, in each such case, the applicant for a
substitute certificate shall furnish to the Company and to such of its
Registrars as may require the same, evidence, satisfactory to them, of the loss,
theft or destruction of such certificate and of the ownership thereof and also
such security or indemnity as may by them be required.
ARTICLE V
---------
INDEMNIFICATION
---------------
SECTION 5.1 Indemnification in Actions by Third Party
-----------------------------------------
The Company shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that such person is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or entity, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe that
such person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that such person's conduct was unlawful. The Company shall
indemnify any present or former officer or director of the Company to the
fullest extent allowed by the preceding provisions of this Section 5.1 in the
event of a "Change of Control". "Change in Control" means a change in control of
the Company which shall be deemed to have occurred if at any time (i) any
entity, person or organization is or becomes the legal or beneficial owner,
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding shares without the
prior approval of at least two-thirds of the members of the Board of Directors
in office immediately prior to such entity, person or organization attaining
such percentage interest; (ii) the Company is a party to a merger,
consolidation, share exchange, sale of assets or other reorganization, or a
proxy contest, as a consequence of which members of the Board of Directors in
office immediately prior to such transaction or event constitute less than a
majority of the Board of Directors thereafter; or (iii) during any 15-month
period, individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
SECTION 5.2 Indemnification In Actions by or in the Right of the Company
------------------------------------------------------------
The Company shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Company to procure a judgment in its
favor by reason of the fact that such person is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or entity against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Company and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
finally adjudged to be liable to the Company for improper conduct unless and
only to the extent that the court in which such action or suit was brought or
any other court having appropriate jurisdiction shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses, judgments, fines and amounts paid in settlement which the court in
which the action or suit was brought or such other court having appropriate
jurisdiction shall deem proper. The Company shall indemnify any present or
former officer or director of the Company to the fullest extent allowed by the
preceding provisions of this Section 5.2 in the event of a Change in Control, as
defined in Section 5.1.
SECTION 5.3 Indemnification against Expenses
--------------------------------
To the extent that a present or former director or officer of the Company has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 5.1 and 5.2, or in defense of any claim,
issue or matter therein, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection therewith.
SECTION 5.4 Determination of Indemnification
--------------------------------
Any indemnification under Sections 5.1 and 5.2 (unless ordered by a court) shall
be made by the Company only as authorized by contract approved, or by-laws,
resolution or other action adopted or taken, by the Board of Directors or by the
shareholders or as required by the last sentences of Sections 5.1 and 5.2.
SECTION 5.5 Advance of Reimbursement of Expenses and Undertaking
----------------------------------------------------
Expenses (including attorneys' fees) incurred by a present or former director or
a present officer in defending any civil or criminal, administrative or
investigative action, suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified
by the Company as authorized by Article V of these By-Laws. Such expenses
(including attorneys' fees) incurred by former officers or other employees and
agents may be so paid upon such terms and conditions, if any, as the Company
deems appropriate.
SECTION 5.6 Non-Exclusivity of By-Laws
--------------------------
The indemnification and advancement of expenses provided by or granted pursuant
to the other Sections of this Article shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any law, by-law, agreement, vote of shareholders or disinterested
directors, or otherwise both as to action in such person's official capacity and
as to action in another capacity while holding such office, and shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 5.7 Insurance for Indemnification
-----------------------------
The Company shall have power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of his or her status as such,
whether or not the Company would have the power to indemnify such person against
such liability under the provisions of Article V of these By-Laws.
SECTION 5.8 Definition of the Company
-------------------------
For purposes of this Article V, reference to the Company shall include, in
addition to the resulting corporation, 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, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article V with respect to the resulting or surviving corporation if its
separate existence had continued.
SECTION 5.9 Other Definitions
-----------------
For purposes of this Article V, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to "serving at the request of the Company" shall include any service as a
director, officer, employee or agent of the Company which imposes duties on, or
involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or beneficiaries; and
a person who acted in good faith and in a manner such person 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 Company" as referred to in this Article V.
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 6.1 Fiscal Year
-----------
The fiscal year of the Company shall be the calendar year.
SECTION 6.2 Corporate Seal
--------------
The Company shall have a corporate seal which shall have inscribed thereon the
name of the Company, the words, "Netherlands Antilles", and the year of its
organization.
SECTION 6.3 Amendments
----------
These By-Laws may be altered, amended or repealed at any regular or special
meeting of the Board of Directors, except, however, that no provision of these
By-Laws which is included in, or the substance of which is expressed in, the
provisions of the Deed of Incorporation shall be so altered, amended or repealed
as to be inconsistent with the Deed of Incorporation. The amendment of these
By-Laws to eliminate any provisions hereof the substance of which is also
contained in the Deed of Incorporation shall not be deemed to render these By-
Laws inconsistent with the Deed of Incorporation or to affect in any way the
corresponding provisions of the Deed of Incorporation.
