U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1995
(Second Quarter Fiscal 1996)
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from -------- to --------
Commission File No. 1-4676
*
THE BETHLEHEM CORPORATION
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(Exact Name of Small Business Issuer as Specified in its Charter)
Pennsylvania 24-0525900
- ------------------------------- -------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
25th and Lennox Streets
P. O. Box 348
Easton, PA 18044-0348
---------------------------------------
(Address of Principal Executive Office)
(610) 258-7111
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
*
Check whether issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
------- -------
*
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of December 31, 1995, there were
1,938,520 shares of Common Stock, no par value, outstanding.
<PAGE>
FORM 10-QSB
INDEX
PART I. Financial Information: Page No.
Consolidated Balance Sheet
November 30, 1995 (unaudited)..................................3
Consolidated Statement of Operations Three
months ended November 30, 1995
and 1994 (unaudited)...........................................5
Consolidated Statement of Operations Six
months ended November 30, 1995
and 1994 (unaudited)...........................................6
Consolidated Statement of Cash Flow Six
months ended November 30, 1995
and 1994 (unaudited)...........................................7
Notes to Consolidated Interim
Financial Statements...........................................8
Management's Discussion and Analysis or
Plan of Operation..............................................9
PART II. Other Information:
Legal Proceedings..............................................12
Exhibits and Reports on Form 8-K...............................12
Signatures.....................................................13
2
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Part I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE BETHLEHEM CORPORATION--CONSOLIDATED BALANCE SHEET
November 30, 1995
(in thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..................................... $ 90
Accounts receivable (Net of allowance for doubtful
accounts of $29,000) ........................................ 3,235
Inventories* .................................................. 2,861
Prepaid expenses and other current assets ..................... 347
Total Current Assets ........................................ 6,533
PROPERTY, PLANT AND EQUIPMENT:
At cost ....................................................... 8,733
Less accumulated depreciation ................................. 6,809
Net Property, Plant and Equipment ........................... 1,924
OTHER ASSETS:
Intangible pension and deferred compensation
plan assets ................................................. 524
Intangibles ................................................... 523
Other ......................................................... 45
Total Other Assets .......................................... 1,092
TOTAL ASSETS .............................................. 9,549
*Inventories consist of the following:
Finished goods ............................................... 1,027
Raw materials & components ................................... 529
Work in process (net of $569,000 advanced from
customers) ................................................ 1,310
Less allowance for write down to estimated
net realizable value ...................................... (5)
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2,861
See accompanying notes to financial statements.
3
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THE BETHLEHEM CORPORATION--CONSOLIDATED BALANCE SHEET
November 30, 1995
(in thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ......................... $ 1,284
Accounts payable ............................................. 3,564
Accrued liabilities .......................................... 1,348
Advances on contracts in excess of costs ..................... 778
Total Current Liabilities .................................. 6,974
Other Liabilities:
Long-term debt - net of current maturities ..................... 3,131
Deferred compensation and other pension
liabilities .................................................. 1,257
STOCKHOLDERS' EQUITY:
Preferred stock - authorized, 1,000,000 shares
without par value; none issued or outstanding .............. 0
Common stock - authorized, 4,000,000 shares
without par value, stated value of $.50
per share; issued 1,938,520 shares ......................... 969
Additional paid-in capital ................................... 4,720
Accumulated deficit .......................................... (7,502)
Less treasury stock, at cost, 12 shares ...................... 0
TOTAL STOCKHOLDERS' EQUITY ..................................... (1,813)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................... 9,549
See accompanying notes to financial statements.
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THE BETHLEHEM CORPORATION--CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended November 30
(in thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------
1995 1994
---- ----
NET REVENUES ................................. $ 3,906 $ 4,231
Cost of Goods Sold ....................... 3,172 3,568
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Gross Profit ............................. 734 663
Selling and administrative expenses:
Selling .................................. 263 142
Administrative ........................... 408 355
----------- -----------
671 497
Operating profit ............................. 63 166
Other income/(Expenses):
Interest expense ......................... (60) (74)
Other Income ............................. 17 1
Interest Income .......................... 3 1
----------- -----------
(40) (72)
Income from operations before provision
for income taxes .......................... 23 94
(Provision) Benefit for income taxes ......... 0 0
----------- -----------
NET INCOME ................................... $ 23 $ 94
=========== ===========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary .................................. .007 .044
Assuming Full Dilution ................... .007 .044
WEIGHTED AVERAGE OF COMMON SHARES
OUTSTANDING
Primary .................................. 3,266,530 2,139,015
Fully Diluted ............................ 3,266,530 2,139,015
See accompanying notes to financial statements.
5
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THE BETHLEHEM CORPORATION--CONSOLIDATED STATEMENT OF OPERATIONS
Six months ended November 30
(in thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------
1995 1994
---- ----
NET REVENUES ................................. $ 6,872 $ 6,997
Cost of Goods Sold ....................... 5,293 5,736
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Gross Profit ............................. 1,579 1,261
Selling and administrative expenses:
Selling .................................. 498 288
Administrative ........................... 877 723
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1,375 1,011
Operating profit ............................. 204 250
Other income/(Expenses):
Interest expense ......................... (120) (132)
Other Income ............................. 2 1
Interest Income .......................... 3 1
----------- -----------
(115) (130)
Income from operations before provision
for income taxes .......................... 89 120
(Provision) Benefit for income taxes ......... 0 0
----------- -----------
NET INCOME ................................... $ 89 $ 120
=========== ===========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary .................................. .028 .055
Assuming Full Dilution ................... .028 .055
WEIGHTED AVERAGE OF COMMON SHARES
OUTSTANDING
Primary .................................. 3,206,642 2,181,871
Fully Diluted ............................ 3,226,754 2,181,871
See accompanying notes to financial statements.
6
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THE BETHLEHEM CORPORATION--CONSOLIDATED
STATEMENT OF CASH FLOWS Six months
ended November 30
(in thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------
1995 1994
---- ----
Cash flows provided by (used for)
operating activities ............................. $(1,982) $ 302
Cash flows used for investing activities: .......... (29) (67)
Cash flows provided by (used for)
financing activities: ............................ 1,935 (279)
------- -------
NET (DECREASE) IN CASH AND CASH
EQUIVALENTS ........................................ (76) (44)
Cash and cash equivalents,
beginning of period .............................. 151 60
Cash and cash equivalents,
at end of period ................................. 75 16
======= =======
See accompanying notes to financial statements.
7
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THE BETHLEHEM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FINANCIAL STATEMENT PRESENTATION:
1. The consolidated interim financial statements included herein
have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission with respect to Form 10-QSB. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes
that the disclosures made herein are adequate to make the
information not misleading. It is suggested that these interim
financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's
latest annual report on Form 10-KSB.
2. Interim statements are subject to possible adjustments in connection
with the annual audit of the Company's accounts for the full fiscal
year 1996. In the Company's opinion, all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of
the information shown have been included.
3. The results of operations for the interim periods presented are
not necessarily indicative of the results expected for the year
ending May 31, 1996.
4. Inventories, other than inventoried costs relating to long-term
contracts, are valued at the lower of first-in, first-out cost or
market. Inventoried costs relating to long-term contracts are stated at
the actual production cost, including factory overhead, incurred to
date reduced by amounts identified with revenue recognized on units
delivered or progress completed.
5. Net income/(loss) per share was determined on the basis of the weighted
average number of shares of common stock including, when applicable,
dilutive stock options using the treasury stock method.
6. On November 28, 1995 the Company completed its acquisition of
certain assets of the American Furnace division of Third
Millennium Products, Inc. pursuant to the terms of an Asset
Purchase Agreement by and among the Company, Bethlehem Advanced
Materials Corporation (a wholly owned subsidiary of the
Company), Third Millennium Products Inc. and North American
Advanced Materials Corporation. Pursuant to the agreement, the
Company purchased certain Accounts Receivable, Customer
Contracts, Machinery and Equipment and Goodwill. The purchase
8
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price was $420,000, which included the issuance of 50,000 shares of the
Company's common stock valued at approximately $3.00 per share.
The business combination is being accounted for utilizing the purchase
method of accounting. Goodwill will be amortized over twenty (20)
years. Results of operations of the acquired enterprise are included in
the accompanying statements of operations as of November 28, 1995.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
SECOND QUARTER COMPARISON
Net revenues for the second quarter fiscal 1996 were $3,906,000,
compared to net revenues of $4,231,000 for the same period last year. Gross
profit was $734,000 or 19% of net revenues compared to gross profit of $663,000
or 16% of net revenues for the same period in fiscal 1995. The increased gross
profit was attributable to higher profit margins recorded in the Company's
Industrial Sales Division. Modest growth was experienced in this division due to
increased sales from long term multiple item contracts.
The operating profit for the second quarter fiscal 1996 was $63,000
compared to $166,000 for the second quarter fiscal 1995. Selling and
administrative expenses increased from $497,000 in fiscal 1995 to $671,000 for
the same period in fiscal 1996. The primary factors for the increase in selling
and administrative expenses were: 1) increased advertising expenditures; 2)
increased travel costs for sales personnel; and 3) additional sales personnel
and administrative personnel. These resources were utilized to continue the
Company's entry into the international market as well as to pursue sales and
purchases of used process and environmental equipment.
Other expenses (consisting primarily of interest expense) equalled
$40,000 for the second quarter fiscal 1996 compared to other expenses of $72,000
for the same period in fiscal 1995. Net income for the second quarter of fiscal
1996 equalled $23,000 compared to net income of $94,000 for the same period in
fiscal 1995.
RESULTS OF OPERATIONS
YEAR TO DATE COMPARISON
Net revenues of $6,872,000 for the first six months of fiscal 1996
compared to net revenues of $6,997,000 for the same period in fiscal 1995. Gross
profit for the first six months of fiscal 1996 was $1,579,000 or 23% of net
revenues compared to gross profit of
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$1,261,000 or 18% of net revenues for the same period in fiscal 1995. The
Company's Industrial Sales division which provides specialty heavy machining and
fabrication services recorded higher gross profit margins than historically
experienced in this sales division. This factor combined with modest growth in
sales was the key reason for the increase.
The operating profit for the first six months of fiscal 1996 was
$204,000 compared to $250,000 for the same period in fiscal 1995. Selling and
administrative expenses increased for the first six months of fiscal 1996 to
$1,375,000 as compared to $1,011,000 for the first six months of fiscal 1995.
Increased personnel in the sales force combined with higher advertising
expenditures were the main factors for the increase in selling expenses. Both
factors continue to support the Company's expansion into international markets
and product sales. Administrative expenses increased from $723,000 for the first
six months of fiscal 1995 to $877,000 for the first six months of fiscal 1996,
an increase of $154,000. The increase was due to the addition of management
personnel and other key staff to support the Company's workload.
Other expenses (consisting primarily of interest expense) were $115,000
for the first six months of 1996 compared to $130,000 for the same period 1995.
Net income for the first six months of 1996 equalled $89,000 compared to net
income of $120,000 for the same period in fiscal 1995.
Backlog of $12,101,000 compared to backlog of $5,829,000 at November
30, 1994. Orders received for the second quarter of fiscal 1996 equalled
$11,535,000.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flow used for operating activities was $1,982,000 for the
first six months of fiscal 1996 compared to net cash flow provided by operating
activities for the first six months of fiscal 1995 of $302,000. The Company's
purchase of approximately $600,000 in used equipment inventory and the decreases
in accounts payable and accrued liabilities accounted for the cash used in
operating activities during the first six months of fiscal 1996.
Capital expenditures were $29,000 for the first six months of fiscal
1996 versus $67,000 for the first six months of fiscal 1995. The Company expects
to fund the majority of capital expenditures through cash flow generated through
operations and to utilize third party financing when cost effective or
appropriate.
Cash flows provided by financing activities equalled $1,935,000 for the
first six months of fiscal 1996 compared to cash flow used for financing
activities for the first six months of fiscal 1995 of $279,000. On July 14,
1995, the Company prepaid its note payable to G.E. Capital and paid relevant
closing costs with proceeds from
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advances against a $6.5 million total credit facility available from a group of
lenders. (Refer to 10-QSB for the quarterly period ended August 31, 1995 for
detailed information on this transaction.)
During the second quarter of fiscal 1996, the Company borrowed
approximately $600,000 to finance the acquisition of used equipment inventory.
Assuming continuing profitability, management believes that cash
generated from existing business, new orders and sales of used equipment will be
sufficient to meet the Company's cash requirements. Should the results of
operations of the Company generate cash that is insufficient to meet the
Company's requirements, outside sources of financing would be required.
Management believes that any inflationary increase arising from the Company's
raw material costs and certain overhead expenses have generally been reflected
in pricing to its customers.
11
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Part II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company settled a case it initiated in May of 1994 styled
The Bethlehem Corporation v. NJM Process Equipment Corp., Niel C.
Cavanaugh, John L. Boncher, Jr., Milton S. Mery, and Denver
Equipment Company, Inc., docketed to Civil Action No. 1994-CE-3643
in Northampton County Court of Common Pleas. The case was settled
pursuant to an agreement which protects the Company's trade secrets
and no other actions are pending or contemplated in this matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No. Description
3(ii) Bylaws of the Company
10(a) 1994 Stock Option Plan of the Company
10(b) Equity Incentive Plan for Directors of the Company
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
November 30, 1995.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE BETHLEHEM CORPORATION
/s/ Alan H. Silverstein
-----------------------
Alan H. Silverstein
President
/s/ Antoinette L. Martin
-----------------------
Antoinette L. Martin
Vice President, Finance
(Principal Financial and
Accounting Officer)
Date: January 15, 1996
13
Exhibit 3(ii)
BYLAWS
OF
THE BETHLEHEM CORPORATION
(As amended through December 12, 1995.)
<PAGE>
BYLAWS
OF
THE BETHLEHEM CORPORATION
Table of Contents
Page
Article 1 Corporation Office.................................. 1
Article 2 Shareholder Meetings................................ 1
Article 3 Quorum of Shareholders.............................. 3
Article 4 Voting Rights....................................... 5
Article 5 Proxies............................................. 7
Article 6 Record Date......................................... 8
Article 7 Shareholder List.................................... 9
Article 8 Judges of Election..................................10
Article 9 Consent of Shareholders in Lieu
of Meeting........................................11
Article 10 Directors...........................................12
Article 11 Removal of Directors................................13
Article 12 Vacancies on Board of Directors.....................14
Article 13 Powers of Board.....................................14
Article 14 Meetings of the Board of Directors..................16
Article 15 Action by Written Consent...........................17
Article 16 Compensation of Directors...........................17
Article 17 Liability of Directors..............................18
Article 18 Officers............................................20
Article 19 The Chairman of the Board...........................21
Article 20 The President.......................................21
Article 21 The Vice President..................................22
Article 22 The Secretary.......................................23
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Article 23 The Treasurer.......................................23
Article 24 Assistant Officers..................................24
Article 25 Indemnification of Officers, Directors,
Employees and Agents..............................25
Article 26 Shares; Share Certificates..........................30
Article 27 Transfer of Shares..................................31
Article 28 Lost Certificates...................................31
Article 29 Fiscal Year.........................................32
Article 30 Manner of giving Written Notice; Waivers
of Notice.........................................32
Article 31 Amendments..........................................34
Article 32 Non-Applicability of Subchapter E of
Chapter 25 of the BCL.............................34
Article 33 Non-Applicability of Subchapter G of
Chapter 25 of the BCL.............................35
Article 34 Non-Applicability of Subchapter H of
Chapter 25 of the BCL.............................35
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BYLAWS
OF
THE BETHLEHEM CORPORATION
Article 1
CORPORATION OFFICE
Section 1.1 The Corporation shall have and continuously
maintain in the Commonwealth of Pennsylvania a registered office at an address
to be designated from time to time by the Board of Directors, which may, but
need not, be the same as its place of business.
Section 1.2 The Corporation may also have offices at such
other places as the Board of Directors may from time to time designate or the
business of the Corporation may require.
Article 2
SHAREHOLDER MEETINGS
Section 2.1 All meetings of the shareholders shall be held at
such time and place, within or without the Commonwealth of Pennsylvania, as may
be determined from time to time by the Board of Directors and need not be held
at the registered office of the Corporation.
Section 2.2 An annual meeting of the shareholders for the
election of directors and the transaction of such other business as may properly
be brought before the meeting shall be held in each calendar year at such time
and place as may be determined by the Board of Directors.
Section 2.3 Special meetings of the shareholders may
be called at any time by the resolution of the Board of
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Directors, which may fix the date, time and place of the meeting. If the Board
of Directors does not fix the date, time or place of the meeting, it shall be
the duty of the Secretary to do so. A date fixed by the Secretary shall not be
more than 60 days after the date of the adoption of the resolution of the Board
of Directors calling the special meeting.
Section 2.4 Written notice of each meeting other than an
adjourned meeting of shareholders, stating the place and time, and, in the case
of a special meeting of shareholders, the general nature of the business to be
transacted, shall be provided to each shareholder of record entitled to vote at
the meeting at such address as appears on the books of the Corporation. Such
notice shall be given, in accordance with the provisions of Article 30 of these
Bylaws, at least (a) ten days prior to the day named for a meeting to consider a
fundamental change under Chapter 19 of the Pennsylvania Business Corporation Law
of 1988 (the "BCL") or (b) five days prior to the day named for the meeting in
any other case.
Section 2.5
(a) Whenever the Corporation has been unable to communicate
with a shareholder for more than 24 consecutive months because communications to
the shareholder are returned unclaimed or the shareholder has otherwise failed
to provide the Corporation with a current address, the giving of notice to such
shareholder pursuant to Section 2.4 of these Bylaws shall not be required. Any
action or meeting that is taken or held without
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notice or communication to that shareholder shall have the same validity as if
the notice or communication had been duly given. Whenever a shareholder provides
the Corporation with a current address this Section 2.5(a) shall cease to be
applicable to such shareholder until such later time, if any, as the terms of
this Section 2.5(a) shall again become applicable.
(b) The Corporation shall not be required to give notice to
any shareholder pursuant to Section 2.4 hereof if and for as long as
communication with such shareholder is unlawful.
Section 2.6 The Board of Directors may provide by resolution
with respect to a specific meeting or with respect to a class of meetings that
one or more shareholders may participate in such meeting or meetings of
shareholders by means of conference telephone or other communications equipment
by means of which all persons participating in the meeting can hear one another.
Participation in the meeting by such means shall constitute presence in person
at the meeting. Any notice otherwise required to be given in connection with any
meeting at which participation by conference telephone or other communications
equipment is permitted shall so specify.
Article 3
QUORUM OF SHAREHOLDERS
Section 3.1 A meeting of shareholders duly called shall not be
organized for the transaction of business unless a quorum is present.
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Section 3.2 The presence, in person or by proxy, of
shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast on a particular matter to be acted upon at the
meeting shall constitute a quorum for purposes of consideration and action on
such matter.
Section 3.3 The shareholders present at a duly organized
meeting may continue to do business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum .
Section 3.4 If a meeting of shareholders cannot be organized
because a quorum is not present, those present in person or by proxy, may,
except as otherwise provided by statute, adjourn the meeting to such time and
place as they may determine, without notice other than an announcement at the
meeting, until the requisite number of shareholders for a quorum shall be
present in person or by proxy.
Section 3.5 Notwithstanding the provisions of Sections 3.1,
3.2, 3.3 and 3.4 of these Bylaws:
(a) Any meeting of shareholders, including one at which
directors are to be elected, may be adjourned for such period as the
shareholders present and entitled to vote shall direct.
(b) Those shareholders entitled to vote who attend a meeting
called for election of directors that has been previously adjourned for lack of
a quorum, although less than a quorum as
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fixed in these Bylaws, shall nevertheless constitute a quorum for the purpose of
electing directors.
(c) Those shareholders entitled to vote who attend a meeting
that has been previously adjourned for one or more periods aggregating at least
15 days because of an absence of a quorum, although less than a quorum as fixed
in these Bylaws, shall nevertheless constitute a quorum for the purpose of
acting upon any matter set forth in the notice of the meeting if the notice
states that those shareholders who attend the adjourned meeting shall
nevertheless constitute a quorum for the purpose of acting upon the matter.
Article 4
VOTING RIGHTS
Section 4.1 Except as may be otherwise provided by the
Corporation's Articles of Incorporation, at every meeting of shareholders, every
shareholder entitled to vote thereat shall be entitled to one vote for every
share having voting power standing in his name on the books of the Corporation
on the record date fixed for the meeting. Except as otherwise provided in the
Corporation's Articles of Incorporation, in each election of directors every
shareholder entitled to vote shall have the right to multiply the number of
votes to which he may be entitled by the total number of directors to be elected
in the same election and he may cast the whole number of his votes for one
candidate or he may distribute them among any two or more candidates.
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Section 4.2 Except as otherwise provided by statute, at any
duly organized meeting of shareholders the vote of the holders of a majority of
the votes cast shall decide any question brought before such meeting.
Section 4.3 Unless demand is made before the voting begins by
a shareholder entitled to vote at any election for directors, the election of
such directors need not be by ballot.
Section 4.4 No shareholder shall be permitted to nominate a
candidate for election as a director unless such shareholder shall provide to
the Secretary of the Corporation (a) information about such candidate that is
equivalent to the information concerning the candidates nominated by the Board
of Directors that was contained in the Corporation's proxy statement for the
immediately preceding annual meeting of shareholders at which directors were
elected if the Corporation distributed a proxy statement to its shareholders in
connection with such election of directors or (b) if the Corporation did not
distribute such a proxy statement, the following information about such
candidate: name, age, any position or office held with the Corporation, a
description of any arrangement between the candidate and any other person(s)
(naming such person(s)) pursuant to which he was nominated as a director,
principal occupation for the five years prior to the election, the number of
shares of the Corporation's stock beneficially owned by the candidate and a
description of any material transaction or series of transactions to which the
Corporation or any of its affiliates
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is a party and in which the candidate or any of his affiliates has a direct or
indirect material interest, which description shall specify the candidate's
interest in the transaction, the amount of the transaction and, where
practicable, the amount of the candidate's interest in the transaction. Such
information shall be provided in writing not later than 120 days before the
first anniversary of the preceding annual meeting of shareholders.
Article 5
PROXIES
Section 5.1 Every shareholder entitled to vote at a meeting of
shareholders, or to express consent or dissent to corporate action in writing
without a meeting, may authorize another person or persons to act for him by
proxy. Every proxy shall be executed in writing by the shareholder or his duly
authorized attorney-in-fact and filed with the Secretary of the Corporation. A
proxy, unless coupled with an interest, shall be revocable at will,
notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of a proxy shall not be effective until written
notice thereof has been given to the Secretary of the Corporation. An unrevoked
proxy shall not be valid after three years from the date of its execution unless
a longer time is expressly provided therein. A proxy shall not be revoked by the
death or incapacity of the maker, unless before the vote is counted or the
authority is
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exercised, written notice of such death or incapacity is given to
the Secretary of the Corporation.
Section 5.2 Where two or more proxies of a shareholder are
present, the Corporation shall, unless otherwise expressly provided in the
proxy, accept as the vote of all shares represented thereby the vote cast by a
majority of them, and, if a majority of the proxies cannot agree whether the
shares represented shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among those persons.
Article 6
RECORD DATE
Section 6.1 The Board of Directors may fix a time prior to the
date of any meeting of shareholders as a record date for the determination of
the shareholders entitled to notice of, or to vote at, the meeting, which time,
except in the case of an adjourned meeting, shall not be more than 90 days prior
to the date of the meeting of shareholders. Only shareholders of record on the
date so fixed shall be entitled to notice of, or to vote at, such meeting,
notwithstanding any transfer of shares on the books of the Corporation after any
record date fixed as aforesaid. The Board of Directors may similarly fix a
record date for the determination of shareholders of record for any other
purpose, such as the payment of a distribution or a conversion or exchange of
shares.
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Section 6.2 The Board of Directors may by resolution adopt a
procedure whereby a shareholder of the Corporation may certify in writing to the
Corporation that all or a portion of the shares registered in such shareholder's
name are held for the account of a specified person or persons. Such resolution
may set forth: (a) the classification of shareholder who may certify; (b the
purpose or purposes for which the certification may be made; (c) the form of
certification and information to be contained therein; (d) if the certification
is with respect to a record date, the time after the record date within which
the certification must be received by the Corporation; and (e) such other
provisions with respect to the procedure as are deemed necessary or desirable.
Upon receipt by the Corporation of a certification complying with the procedure,
the persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
Article 7
SHAREHOLDER LIST
Section 7.1 The officer or agent having charge of the share
transfer books of the Corporation shall make a complete alphabetical list of the
shareholders entitled to vote at any meeting, showing their addresses and the
number of shares held by each. The list shall be produced and kept open at the
time and place of the meeting for inspection by any shareholder during the
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entire meeting except that if the Corporation has 5,000 or more shareholders, in
lieu of the making of the list, the Corporation may make the information
available at the meeting by other means.
Section 7.2 Failure to comply with the provisions of Section
7.1 of these Bylaws shall not affect the validity of any action taken at a
meeting prior to a demand at the meeting by any shareholder entitled to vote
thereat to examine the list.
Section 7.3 The original transfer books for shares of the
Corporation, or a duplicate thereof kept in the Commonwealth of Pennsylvania,
shall be prima facie evidence as to who are the shareholders entitled to examine
the list or transfer books for shares or to vote at any meeting.
Article 8
JUDGES OF ELECTION
Section 8.1 Prior to any meeting of shareholders, the Board of
Directors may appoint judges of election, who may but need not be shareholders,
to act at such meeting or any adjournment thereof. If judges of election are not
so appointed, the presiding officer of any such meeting may, and on the request
of any shareholder or his proxy shall, make such appointment at the meeting. The
number of judges shall be one or three. No person who is a candidate for an
office to be filled at the meeting shall act as a judge of election.
Section 8.2 In case any person appointed as a judge of
election fails to appear or fails or refuses to act, the vacancy so created may
be filled by appointment made by the Board of
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Directors in advance of the convening of the meeting or at the meeting by the
presiding officer thereof.
Section 8.3 The judges of election shall determine the number
of shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum and the authenticity, validity and effect
of proxies. The judges of election shall also receive votes or ballots, hear and
determine all challenges and questions in any way arising in connection with the
right to vote, count and tabulate all votes, determine the result and do such
other acts as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as practicable. If
there are three judges of election, the decision, act or certificate of a
majority shall be the decision, act or certificate of all.
Section 8.4 On request of the presiding officer of the meeting
or of any shareholder, the judges of election shall make a report in writing of
any challenge, question or matter determined by them and execute a certificate
of any fact found by them. Any report or certificate made by them shall be prima
facie evidence of the facts found by them.
Article 9
CONSENT OF SHAREHOLDERS IN LIEU OF MEETING
Section 9.1 Any action required or permitted to be
taken at a meeting of the shareholders may be taken without a
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meeting if, prior or subsequent to the action, a written consent or consents
thereto signed by all of the shareholders who would be entitled to vote at a
meeting for such purpose shall be filed with the Secretary of the Corporation.
Article 10
DIRECTORS
Section 10.1 The number of directors shall be determined by
the Board of Directors from time to time. Each director shall be a natural
person of full age and need not be a resident of the Commonwealth of
Pennsylvania or a shareholder of the Corporation.
Section 10.2 The Board of Directors may elect a Chairman of
the Board. The Chairman of the Board shall preside at all meetings of
shareholders and directors.
Section 10.3 Except as otherwise provided in Article 12 of
these Bylaws, directors shall be elected by the shareholders. The candidates
receiving the highest number of votes from the shareholders, or each class or
group of classes, if any, entitled to elect directors separately up to the
number of directors to be elected by the shareholders, or class or group of
classes, if any, shall be elected. The term of each director shall continue
until the Annual Meeting of Shareholders next following the director's election
and until such director's successor shall be duly elected and qualify, or until
his earlier death, resignation or removal. A decrease in the number of
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directors shall not have the effect of shortening an incumbent
director's term.
Article 11
REMOVAL OF DIRECTORS
Section 11.1 The entire Board of Directors, or a class of the
Board of Directors where the Board of Directors is classified with respect to
the power of shareholders to elect directors, or any individual director may be
removed from office without assigning any cause by the vote of the shareholders
or of the holders of a class or series of shares, entitled to elect directors or
the class of directors. Notwithstanding the foregoing, an individual director
shall not be removed (unless the entire Board of Directors or class of directors
is removed) from the Board of Directors if sufficient votes are cast against the
resolution for such director's removal which, if cumulatively voted at an annual
or other regular election of directors, would be sufficient to elect one or more
directors to the Board of Directors or a class thereof. If any directors are so
removed, new directors may be elected at the same meeting.
Section 11.2 The Board of Directors may declare vacant the
office of a director who has been judicially declared of unsound mind or who has
been convicted of an offense punishable by imprisonment for a term of more than
one year.
Section 11.3 The Board of Directors may be removed at any time
with or without cause by the unanimous vote or consent of shareholders entitled
to vote thereon.
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Article 12
VACANCIES ON BOARD OF DIRECTORS
Section 12.1 Vacancies on the Board of Directors, including
vacancies resulting from an increase in the number of directors, shall be filled
by a majority vote of the remaining members of the Board of Directors, though
less than a quorum, or by a sole remaining director, and each person so elected
shall be a director to serve for the balance of the unexpired term.
Section 12.2 When one or more directors resign from the Board
of Directors effective at a future date, the directors then in office, including
those who have so resigned, shall have the power by a majority vote to fill the
vacancies, the vote thereon to take effect when the resignations become
effective.
Article 13
POWERS OF BOARD
Section 13.1 The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors, which may exercise all
such powers of the Corporation and do all such lawful acts and things as are
directed or required to be exercised and done by statute, the Articles of
Incorporation or these Bylaws.
Section 13.2 The Board of Directors may, by resolution adopted
by a majority of the directors in office, establish one or more committees
consisting of one or more directors as may be deemed appropriate or desirable by
the Board of Directors to serve at the pleasure of the Board. Any committee, to
the extent
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provided in the resolution of the Board of Directors pursuant to which it was
created, shall have and may exercise all of the powers and authority of the
Board of Directors, except that no committee shall have any power or authority
as to the following:
(a) The submission to shareholders of any action
requiring approval of shareholders;
(b) The creation or filling of vacancies in the Board
of Directors;
(c) The adoption, amendment or repeal of these Bylaws;
(d) The amendment or repeal of any resolution of the
Board of Directors that by its terms is amendable or repealable
only by the Board of Directors; and
(e) Action on matters committed by these Bylaws or
resolution of the Board of Directors to another committee of the
Board of Directors.
Article 14
MEETINGS OF THE BOARD OF DIRECTORS
Section 14.1 A meeting of the Board of Directors may be held
immediately following the annual meeting of shareholders at which directors have
been elected without the necessity of notice to the directors.
Section 14.2 Meetings of the Board of Directors shall be held
at such times and places within or without the Commonwealth of Pennsylvania as
the Board of Directors may from time to time appoint or as may be designated in
the notice of the meeting. One or more directors may participate in any meeting
of
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the Board of Directors, or of any committee thereof, by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear one another. Participation in a meeting by
such means shall constitute presence in person at the meeting.
Section 14.3 Special meetings of the Board of Directors may be
called by the Chairman of the Board, if there shall be one, or the President of
the Corporation on one day's notice to each director, either by telephone, or if
in writing, in accordance with the provisions of Article 30 of these Bylaws.
Special meetings shall be called by the Chairman of the Board, the President or
Secretary in like manner and on like notice upon the written request of a
majority of the directors in office.
Section 14.4 At all meetings of the Board of Directors a
majority of the directors in office shall constitute a quorum for the
transaction of business, and the acts of a majority of the directors present and
voting at a meeting at which a quorum is present shall be the acts of the Board
of Directors, except as may be otherwise specifically provided by statute or by
the Articles of Incorporation or by these Bylaws.
Article 15
ACTION BY WRITTEN CONSENT
Section 15.1 Any action required or permitted to be taken at a
meeting of the Board of Directors may be taken without a meeting if, prior or
subsequent to the action, a consent or
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consents thereto signed by all of the directors is filed with the
Secretary of the Corporation.
Article 16
COMPENSATION OF DIRECTORS
Section 16.1 Directors, as such, may receive a stated salary
for their services or a fixed sum and expenses for attendance at regular and
special meetings or any combination of the foregoing as may be determined from
time to time by resolution of the Board of Directors, and nothing contained
herein shall be construed to preclude any director from receiving compensation
for services rendered to the Corporation in any other capacity.
Article 17
LIABILITY OF DIRECTORS
Section 17.1 A director of the Corporation shall stand in a
fiduciary relation to the Corporation and shall perform his duties as a
director, including his duties as a member of any committee of the Board of
Directors upon which he may serve, in good faith, in a manner he reasonably
believes to be in the best interests of the Corporation, and with such care,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. In performing his duties, a
director shall be entitled to rely in good faith on information, opinions,
reports or statements, including financial statements and other financial data,
in each case prepared or presented by any of the following: (a) one or more
officers or employees of the Corporation whom the director reasonably
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believes to be reliable and competent in the matters presented; (b) legal
counsel, public accountants or other persons as to matters which the director
reasonably believes to be within the professional or expert competence of such
persons; or (c) a committee of the Board of Directors upon which he does not
serve, duly designated in accordance with law, as to matters within its
designated authority, which committee the director reasonably believes to merit
confidence. A director shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause his reliance to
be unwarranted.
Section 17.2 In discharging the duties of their respective
positions, the Board of Directors, committees of the Board of Directors and
individual directors may, in considering the best interests of the Corporation,
consider the effects of any action upon employees, suppliers and customers of
the Corporation and communities in which offices or other establishments of the
Corporation are located, and all other pertinent factors. The consideration of
these factors shall not constitute a violation of Section 17.1 hereof.
Section 17.3 Absent breach of fiduciary duty, lack of good
faith or self-dealing, actions taken as a director or any failure to take any
action shall be presumed to be in the best interests of the Corporation.
Section 17.4 A director of the Corporation shall not
be personally liable, as such, for monetary damages for any
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action taken, or any failure to take any action, unless: (a) the director has
breached or failed to perform the duties of his office under Sections 17.1
through 17.3 hereof; and (b) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
Section 17.5 The provisions of Section 17.4 hereof shall not
apply to: (a) the responsibility or liability of a director pursuant to any
criminal statute; or (b) the liability of a director for the payment of taxes
pursuant to local, state or federal law.
Section 17.6 Notwithstanding any other provisions of these
Bylaws, the approval of shareholders shall be required to amend, repeal or adopt
any provision as part of these Bylaws that is inconsistent with the purpose or
intent of Sections 17.1, 17.2, 17.3, 17.4, 17.5 or 17.6 of this Article 17, and,
if any such action shall be taken, it shall become effective only on a
prospective basis from and after the date of such shareholder approval. The
provisions of this Article 17 were adopted by the shareholders of the
Corporation on May 29, 1987.
Article 18
OFFICERS
Section 18.1 The Corporation shall have a Chairman of the
Board, a President, a Secretary and a Treasurer, or persons who shall act as
such, regardless of the name or title by which they may be designated, elected
or appointed and may have such other officers and assistant officers as the
Board of Directors
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may authorize from time to time. The Chairman of the Board, President and
Secretary shall be natural persons of full age. The Treasurer may be a
corporation, but if a natural person shall be of full age. It shall not be
necessary for the officers to be directors. Any number of offices may be held by
the same person. Each officer shall hold office at the pleasure of the Board of
Directors and until his successor has been elected or until his earlier death,
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. The resignation shall be effective upon receipt thereof by
the Corporation or at such subsequent time as may be specified in the notice of
resignation. The Corporation may secure the fidelity of any or all of the
officers by bond or otherwise.
Section 18.2 Except as otherwise provided in the Articles of
Incorporation, an officer shall perform his duties as an officer in good faith,
in a manner he reasonably believes to be in the best interests of the
Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his duties shall not be liable by reason
of having been an officer of the Corporation.
Section 18.3 Any officer or agent of the Corporation
may be removed by the Board of Directors with or without cause.
The removal shall be without prejudice to the contract rights, if
any, of any person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights. If
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the office of any officer becomes vacant for any reason, the
vacancy may be filled by the Board of Directors.
Article 19
THE CHAIRMAN OF THE BOARD
Section 19.1 The Chairman of the Board shall be the chief
executive officer of the Corporation. He shall preside at all meetings of the
shareholders and directors.
Article 20
THE PRESIDENT
Section 20.1 In the absence of the Chairman of the Board of
Directors, the President shall preside at all meetings of shareholders and
directors. He shall be responsible for the general and active management of the
business of the Corporation; shall see that all orders and resolutions of the
Board of Directors and the Chairman of the Board are put into effect, subject,
however, to the right of the Board of Directors to delegate any specific powers,
except such as may be by statute exclusively conferred on the President, to any
other officer or officers of the Corporation; and shall have the authority to
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
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Article 21
THE VICE PRESIDENT
Section 21.1 The Vice President or, if more than one, the Vice
Presidents in the order, if any, established by the Board of Directors shall, in
the absence or incapacity of the President, have the authority to exercise all
the powers and perform the duties of the President. The Vice Presidents,
respectively, shall also have such other authority and perform such other duties
as may be provided in these Bylaws or as shall be determined by the Board of
Directors or the President. Any Vice President may, in the discretion of the
Board of Directors, be designated as executive, senior' or by departmental or
functional classification.
Article 22
THE SECRETARY
Section 22.1 The Secretary shall attend all meetings of the
Board of Directors and of the shareholders and keep accurate records thereof in
one or more minute books kept for that purpose and shall perform the duties
customarily performed by the secretary of a corporation and such other duties as
may be assigned to him by the Board of Directors or the President.
Article 23
THE TREASURER
Section 23.1 The Treasurer shall be responsible for the
custody of the corporate funds and securities; shall be responsible for full and
accurate accounts of receipts and
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disbursements in books belonging to the Corporation; and shall perform such
other duties as may be assigned to him by the Board of Directors or the
President. He shall give bond in such sum and with such surety as the Board of
Directors may from time to time direct.
Article 24
ASSISTANT OFFICERS
Section 24.1 Each assistant officer shall assist in the
performance of the duties of the officer to whom he is assistant and shall
perform such duties in the absence of the officer. He shall perform such
additional duties as the Board of Directors, the President or the officer to
whom he is assistant may from time to time assign him. Such officers may be
given such functional titles as the Board of Directors shall from time to time
determine.
Article 25
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Section 25.1 The Corporation shall indemnify any director or
officer, and may indemnify any other employee or agent, who was or is a party
to, or is threatened to be made a party to, or who is called as a witness in
connection with, any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Corporation, by reason of the fact that he
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the
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request of the Corporation as a director, officer, employee or agent of another
domestic or foreign corporation, for profit or not-for-profit, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding unless the
act or failure to act giving rise to the claim for indemnification is determined
by a court to have constituted willful misconduct or recklessness.
Section 25.2 The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article 25 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any Bylaw, agreement, contract,
vote of shareholders or directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. It is the policy of the Corporation that indemnification of, and
advancement of expenses to, directors and officers of the Corporation shall be
made to the fullest extent permitted by law. To this end, the provisions of this
Article 25 shall be deemed to have been amended for the benefit of directors and
officers of the Corporation effective immediately upon any modification of the
BCL or any modification, or adoption of any other law that expands or enlarges
the power or obligation of corporations organized under the BCL to indemnify, or
advance expenses to, directors and officers of corporations.
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Section 25.3 The Corporation shall pay expenses incurred by an
officer or director, and may pay expenses incurred by any other employee or
agent, in defending an action, or proceeding referred to in this Article 25 in
advance of the final disposition of such action 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 he is not entitled to be indemnified by the
Corporation.
Section 25.4 The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article 25 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 person.
Section 25.5 The Corporation shall have the authority to
create a fund of any nature, which may, but need not, be under the control of a
trustee, or otherwise secure or insure in any manner, its indemnification
obligations, whether arising under these Bylaws or otherwise. This authority
shall include, without limitation, the authority to: (a) deposit funds in trust
or in escrow; (b) establish any form of self-insurance; (c) secure its indemnity
obligation by grant of a security interest, mortgage or other lien on the assets
of the Corporation; or (d) establish a letter of credit, guaranty or surety
arrangement for the benefit of such persons in connection with the anticipated
indemnification or advancement of expenses contemplated by this
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Article 25. The provisions of this Article 25 shall not be deemed to preclude
the indemnification of, or advancement of expenses to, any person who is not
specified in Section 25.1 of this Article 25 but whom the Corporation has the
power or obligation to indemnify, or to advance expenses for, under the
provisions of the BCL or otherwise. The authority granted by this Section 25.5
shall be exercised by the Board of Directors of the Corporation.
Section 25.6 The Corporation shall have the authority to enter
into a separate indemnification agreement with any officer, director, employee
or agent of the Corporation or any subsidiary providing for such indemnification
of such person as the Board of Directors shall determine up to the fullest
extent permitted by law.
Section 25.7 As soon as practicable after receipt by any
person specified in Section 25.1 of this Article 25 of notice of the
commencement of any action, suit or proceeding specified in Section 25.1 of this
Article 25, such person shall, if a claim with respect thereto may be made
against the Corporation under Article 25 of these Bylaws, notify the Corporation
in writing of the commencement or threat thereof; however, the omission so to
notify the Corporation shall not relieve the Corporation from any liability
under Article 25 of these Bylaws unless the Corporation shall have been
prejudiced thereby or from any other liability which it may have to such person
other than under Article 25 of these Bylaws. With respect to any such action as
to which such
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person notifies the Corporation of the commencement or threat thereof, the
Corporation may participate therein at its own expense and, except as otherwise
provided herein, to the extent that it desires, the Corporation, jointly with
any other indemnifying party similarly notified, shall be entitled to assume the
defense thereof, with counsel selected by the Corporation to the reasonable
satisfaction of such person. After notice from the Corporation to such person of
its election to assume the defense thereof, the Corporation shall not be liable
to such person under Article 25 of these Bylaws for any legal or other expenses
subsequently incurred by such person in connection with the defense thereof
other than as otherwise provided herein. Such person shall have the right to
employ his own counsel in such action, but the fees and expenses of such counsel
incurred after notice from the Corporation of its assumption of the defense
thereof shall be at the expense of such person unless: (a) the employment of
counsel by such person shall have been authorized by the Corporation; (b) such
person shall have reasonably concluded that there may be a conflict of interest
between the Corporation and such person in the conduct of the defense of such
proceeding; or (c) the Corporation shall not in fact have employed counsel to
assume the defense of such action. The Corporation shall not be entitled to
assume the defense of any proceeding brought by or on behalf of the Corporation
or as to which such person shall have reasonably concluded that there may be a
conflict of interest. If indemnification under Article
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25 of these Bylaws or advancement of expenses are not paid or made by the
Corporation, or on its behalf, within 90 days after a written claim for
indemnification or a request for an advancement of expenses has been received by
the Corporation, such person may, at any time thereafter, bring suit against the
Corporation to recover the unpaid amount of the claim or the advancement of
expenses. The right to indemnification and advancements of expenses provided
hereunder shall be enforceable by such person in any court of competent
jurisdiction. The burden of proving that indemnification is not appropriate
shall be on the Corporation. Expenses reasonably incurred by such person in
connection with successfully establishing the right to indemnification or
advancement of expenses, in whole or in part, shall also be indemnified by the
Corporation.
Section 25.8 The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
domestic or foreign corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article 25.
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Section 25.9 Notwithstanding any other provisions of these
Bylaws, the approval of shareholders shall be required to amend, repeal or adopt
any provision as part of these Bylaws that is inconsistent with the purpose or
intent of this Article 25, and, if any such action shall be taken, it shall
become effective only on a prospective basis from and after the date of such
shareholder approval. The provisions of this Article 25 were adopted by the
shareholders of the Corporation on May 29, 1987.
Article 26
SHARES; SHARE CERTIFICATES
Section 26.1 All shares issued by the Corporation shall be
represented by certificates. The share certificates of the Corporation shall be
numbered and registered in a share register as they are issued; shall state that
the Corporation is incorporated under the laws of the Commonwealth of
Pennsylvania; shall bear the name of the registered holder, the number and class
of shares and the designation of the series, if any, represented thereby, the
par value, if any, of each share or a statement that the shares are without par
value, as the case may be; shall be signed by the Chairman of the Board, the
President or a Vice President, and the Secretary or the Treasurer or any other
person properly authorized by the Board of Directors, and shall bear the
corporate seal, which seal may be a facsimile engraved or printed. Where the
certificate is signed by a transfer agent or a registrar, the signature of any
corporate officer on such certificate may be a facsimile engraved or
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printed. In case any officer who has signed, or whose facsimile signature has
been placed upon, any share certificate shall have ceased to be such officer
because of death, resignation or otherwise before the certificate is issued,
such share certificate may be issued by the Corporation with the same effect as
if the officer had not ceased to be such at the date of its issue.
Article 27
TRANSFER OF SHARES
Section 27.1 Upon surrender to the Corporation of a share
certificate duly endorsed by the person named in the certificate or by attorney
duly appointed in writing and accompanied where necessary by proper evidence of
succession, assignment or authority to transfer, a new certificate shall be
issued to the person entitled thereto and the old certificate cancelled and the
transfer recorded on the share register of the Corporation. Except as otherwise
provided pursuant to Section 6.2 hereof, a transferee of shares of the
Corporation shall not be a record holder of such shares entitled to the rights
and benefits associated therewith unless and until the share transfer has been
recorded on the share transfer books of the Corporation. No transfer shall be
made if it would be inconsistent with the provisions of Article 8 of the
Pennsylvania Uniform Commercial Code.
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Article 28
LOST CERTIFICATES
Section 28.1 Where a shareholder of the Corporation alleges
the loss, theft or destruction of one or more certificates for shares of the
Corporation and requests the issuance of a substitute certificate therefor, the
Board of Directors may direct a new certificate of the same tenor and for the
same number of shares to be issued to such person upon such person's making of
an affidavit in form satisfactory to the Board of Directors setting forth the
facts in connection therewith, provided that prior to the receipt of such
request the Corporation shall not have either registered a transfer of such
certificate or received notice that such certificate has been acquired by a bona
fide purchaser. When authorizing such issue of a new certificate the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate, or his
heirs or legal representatives, as the case may be, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such form
and sum and with surety or sureties, with fixed or open penalty, as shall be
satisfactory to the Board of Directors, as indemnity for any liability or
expense which it may incur by reason of the original certificate remaining
outstanding.
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Article 29
FISCAL YEAR
Section 29.1 The fiscal year of the Corporation shall be as
determined by the Board of Directors.
Article 30
MANNER OF GIVING WRITTEN NOTICE; WAIVERS OF NOTICE
Section 30.1 Whenever written notice is required to be
given to any person under the provisions of these Bylaws, it may be given to the
person either personally or by sending a copy thereof by first class or express
mail, postage prepaid, or by telegram (with messenger service specified), telex
or TWX (with answerback received) or courier service, charges prepaid, or by
telecopier, to his address (or to his telex, TWX, telecopier or telephone
number) appearing on the books of the Corporation or, in the case of written
notice to directors, supplied by each director to the Corporation for the
purpose of the notice. If the notice is sent by mail, telegraph or courier
service, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX, when
dispatched.
Section 30.2 Any written notice required to be given to any
person under the provisions of statute, the Corporation's Articles of
Incorporation or these Bylaws may be waived in a writing signed by the person
entitled to such notice whether before or after the time stated therein. Except
as otherwise
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required by statute, and except in the case of a special meeting, neither the
business to be transacted at, nor the purpose of, a meeting need be specified in
the waiver of notice. In the case of a special meeting of shareholders, the
waiver of notice shall specify the general nature of the business to be
transacted. attendance of any person, whether in person or by proxy, at any
meeting shall constitute a waiver of notice of such meeting, except where a
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting was not
lawfully called or convened.
Article 31
AMENDMENTS
Section 31.1 Subject to the provisions of Sections 17.6 and
25.9 hereof, these Bylaws may be amended or repealed, and new Bylaws adopted, by
the affirmative vote of a majority of the votes cast by the shareholders at any
regular or special meeting duly convened after written notice to the
shareholders that the purpose, or one of the purposes, of the meeting is to
consider the amendment or repeal of these Bylaws and the adoption of new Bylaws.
There shall be included in, or enclosed with, the notice, a copy of the proposed
amendment or a summary of the changes to be effected thereby.
Section 31.2 Except as provided in Sections 17.6 and 25.9
hereof, and except as provided in Section 1504(b) of the BCL, these Bylaws may
be amended or repealed, and new Bylaws
84427.2
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<PAGE>
adopted, by the affirmative vote of a majority of the members of the Board of
Directors at any regular or special meeting duly convened, subject to the power
of the shareholders to change such action of the Board of Directors.
Article 32
NON-APPLICABILITY OF SUBCHAPTER E OF
CHAPTER 25 OF THE BCL
Section 32.1 Pursuant to Section 1541(a)(2)(ii) of the BCL,
Subchapter E of Chapter 25 of the BCL relating to control transactions shall not
be applicable to the Corporation by virtue of the adoption by the Board of
Directors on March 21, 1984 of the following provision of the Bylaws of the
Corporation as then in effect:
"Section 9.1. By reason of this Article IX, which was duly adopted by
the Board of Directors of the Corporation on March 21, 1984 pursuant to
Section 910(A)(1) of the [Business Corporation Law of 1933], Section
910 of the [Business Corporation Law of 1933] shall not be applicable
to the Corporation.
Article 33
NON-APPLICABILITY OF SUBCHAPTER G OF
CHAPTER 25 OF THE BCL
Section 33.1 By reason of this Article 33, which was duly
adopted by the Board of Directors of the Corporation on July 26, 1990 pursuant
to Section 2561(b)(2)(i) of the BCL, Subchapter G of Chapter 25 of the BCL shall
not be applicable to the Corporation.
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Article 34
NON-APPLICABILITY OF SUBCHAPTER H OF
CHAPTER 25 OF THE BCL
Section 34.1 By reason of this Article 34, which was duly
adopted by the Board of Directors of the Corporation on July 26, 1990 pursuant
to Section 2571(b)(2)(i) of the BCL, Subchapter H of Chapter 25 of the BCL shall
not be applicable to the Corporation.
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Exhibit 10(a)
THE BETHLEHEM CORPORATION
1994 STOCK OPTION PLAN
1. Purpose. The purpose of the Plan is to provide additional
incentive to those officers and key employees of the Company and its
Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts will
result in the long-term growth and profitability of the Company. An additional
purpose of the Plan is to build a proprietary interest among the Company's
Non-Employee Directors and thereby secure for the Company's stockholders the
benefits associated with common stock ownership by those who will oversee the
Company's future growth and success. To accomplish such purposes, the Plan
provides that the Company may grant Incentive Stock Options, Nonqualified Stock
Options, or Stock Appreciation Rights.
2. Definitions. For purposes of this Plan:
(a) "Agreement" means the written agreement
evidencing the grant of an Option and Stock Appreciation Rights, if applicable,
and setting forth the terms and conditions thereof.
(b) "Board" means the Board of Directors of the
Company.
(c) "Cause" means, unless otherwise defined in
the particular Agreement evidencing the grant of an Option (i) the willful
neglect or refusal to perform the Optionee's duties or responsibilities or the
willful taking of actions which materially impair the Optionee's ability to
perform the Optionee's duties or responsibilities which continues after being
brought to the attention of the Optionee (other than any such failure resulting
from the Optionee's incapacity due to physical or mental illness) or (ii) the
willful act or failure to act by the Optionee which is materially injurious to
the Company or a Subsidiary which is brought to the attention of the Optionee in
writing not more than thirty (30) days from the date of its discovery by the
Company, a Subsidiary or the Board.
(d) "Change in Capitalization" means any
increase, reduction, or change or exchange of Shares for a different number or
kind of shares or other securities of the Company by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
issuance of warrants or
<PAGE>
rights, stock dividend, stock split or reverse stock split, combination or
exchange of shares, repurchase of shares, change in corporate structure or
otherwise.
(e) "Change in Control" means one of the
following events:
(i) any "person" (as defined in Sections
13(d) and 14(d) of the Exchange Act other than any person who is a stockholder
of the Company on the effective date hereof), other than the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary, or any corporation owned, directly or indirectly,
by the stockholders of the Company, in substantially the same proportions as
their ownership of stock of the Company, acquires "beneficial ownership" of more
than fifteen percent (15%) of the issued and outstanding Shares of the Company;
or (ii) during any period of not more than two (2) consecutive years,
individuals who at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in subsections
2(e)(i), 2(e)(iii) or 2(e)(iv) hereof) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or (iii) the stockholders of the Company approve a merger other than (x) a
merger which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
Subsidiary, at least fifty percent (50%) of the combined voting power of all
classes of stock of the Company or such surviving entity outstanding immediately
after such merger or (y) a merger effected to implement a recapitalization of
the Company (or similar transaction) in which no person (other than any person
who is a stockholder of the Company on the effective date hereof) acquires more
than fifty percent (50%) of the combined voting power of the Company's then
outstanding securities; or (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or a sale of all or substantially all of
the assets of the Company.
(f) "Code" means the Internal Revenue Code of
1986, as amended.
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(g) "Committee" means a committee of two or more
Outside Directors appointed by the Board to administer the Plan and to perform
the functions set forth herein.
(h) "Company" means The Bethlehem Corporation, a
Pennsylvania corporation.
(i) "Disability" means the inability, due to
illness or injury, to engage in any gainful occupation for which the individual
is suited by education, training or experience, which condition continues for at
least twelve (12) months.
(j) "Eligible Employee" means any officer or
other key employee of the Company or a Subsidiary designated by the Committee as
eligible to receive Options or Stock Appreciation Rights subject to the
conditions set forth herein.
(k) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(l) "Fair Market Value" means the fair market
value of the Shares as determined by the Committee in its sole discretion;
provided, however, that (A) if the Shares are admitted to trading on a national
securities exchange, Fair Market Value on any date shall be the last sale price
reported for the Shares on such exchange on such date or on the last date
preceding such date on which a sale was reported, (B) if the Shares are admitted
to quotation on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or other comparable quotation system and have been
designated as a National Market System ("NMS") security, Fair Market Value on
any date shall be the last sale price reported for the Shares on such system on
such date or on the last day preceding such date on which a sale was reported,
or (C) if the Shares are admitted to quotation on NASDAQ and have not been
designated a NMS security, Fair Market Value on any date shall be the average of
the highest bid and lowest asked prices of the Shares on such system on such
date.
(m) "Incentive Stock Option" means an Option
within the meaning of Section 422 of the Code.
(n) "Non-Employee Director" means a member of
the Board who is not an employee of the Company or a Subsidiary.
(o) "Nonqualified Stock Option" means an Option
which is not an Incentive Stock Option.
(p) "Option" means an Incentive Stock Option, a
Nonqualified Stock Option, or either or both of them, as the context requires.
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(q) "Optionee" means a person to whom an Option
has been granted under the Plan.
(r) "Outside Director" means a member of the
Board satisfying the requirements of Section 162(m)(4)(C)(i) of the Code and the
regulations promulgated thereunder.
(s) "Parent" means any corporation in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock of one of the
other corporations in such chain.
(t) "Plan" means The Bethlehem Corporation 1994
Stock Option Plan, as amended from time to time.
(u) "Securities Act" means the Securities Act of
1933, as amended.
(v) "Shares" means shares of the Common Stock,
no par value per share, of the Company (including any new, additional or
different stock or securities resulting from a Change in Capitalization), as the
case may be.
(w) "Stock Appreciation Right" means a right to
receive all or some portion of the increase in the value of Shares as provided
in Section 7 hereof.
(x) "Subsidiary" means any corporation in an
unbroken chain of corporations, beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(y) "Ten-Percent Stockholder" means an Eligible
Employee, who, at the time an Incentive Stock Option is to be granted to such
Eligible Employee, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company, a Parent or a Subsidiary within the
meaning of Sections 424(e) and 424(f), respectively, of the Code.
3. Administration.
(a) The Plan shall be administered by the
Committee, which shall hold meetings at such times as may be necessary for the
proper administration of the Plan. The Committee shall keep minutes of its
meetings. A majority of the Committee shall constitute a quorum and a majority
of a quorum may authorize any action. Any decision reduced to writing and signed
by a majority of the members of the Committee shall be
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<PAGE>
fully effective as if it had been made at a meeting duly held. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, Options, or Stock
Appreciation Rights, and all members of the Committee shall be fully indemnified
by the Company with respect to any such action, determination or interpretation.
The Company shall pay all expenses incurred in the administration of the Plan.
(b) Subject to the express terms and conditions
set forth herein, the Committee shall have the power from time to
time:
(i) to determine those Eligible Employees to
whom Options shall be granted under the Plan and the
number of Nonqualified Stock Options, Stock
Appreciation Rights and/or Incentive Stock Options to
be granted to each Eligible Employee and to prescribe
the terms and conditions (which need not be
identical) of each Option and Stock Appreciation
Right, including the purchase price per share of each
Option;
(ii) to construe and interpret the Plan and
the Options and Stock Appreciation Rights granted
hereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan,
including, but not limited to, correcting any defect
or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the
manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all
decisions and determinations by the Committee in the
exercise of this power shall be final and binding
upon the Company or a Subsidiary, and the Optionees,
as the case may be;
(iii) to determine the duration and purposes
for leaves of absence which may be granted to an
Optionee without constituting a termination of
employment or service for purposes of the Plan;
and
(iv) generally, to exercise such powers and
to perform such acts as are deemed necessary or
advisable to promote the best interests of the
Company with respect to the Plan.
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<PAGE>
4. Stock Subject to Plan.
(a) The aggregate number of Shares that may be
issued or transferred pursuant to Options or Stock Appreciation Rights granted
under the Plan is 400,000 Shares, and the maximum number of Shares with respect
to which Options or Stock Appreciation Rights may be granted to any Eligible
Employee is 250,000 Shares. The Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, such number of Shares as shall be
determined by the Board.
(b) Whenever any outstanding Option or portion
thereof expires, is cancelled or is otherwise terminated (other than by exercise
of the Option or any related Stock Appreciation Right), the Shares allocable to
the unexercised portion of such Option may again be the subject of Options and
Stock Appreciation Rights hereunder; provided, however, that any such terminated
option shall count against the maximum numbers of Shares with respect to which
Options or Stock Appreciation Rights may be granted to any Eligible Employee.
(c) The aggregate fair market value of Shares
(determined on the date of grant) for which an Eligible Employee may be granted
Incentive Stock Options which are exercisable for the first time in any
particular calendar year (whether under the terms of the Plan or any other stock
option plan of the Company, a Parent or a Subsidiary) shall not exceed $100,000.
To the extent any Option which is intended to be an Incentive Stock Option is
granted to any Eligible Employee fails to satisfy the requirements of this
subsection, the Incentive Stock Option shall be treated as a Nonqualified Stock
Option. This Section 4 shall be applied by taking Options into account in the
order in which they are granted.
5. Eligibility. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select
those Eligible Employees who will receive Options and Stock
Appreciation Rights.
6. Options. The Committee may grant Options in
accordance with the Plan, the terms and conditions of which shall
be set forth in an Agreement. Each Option and Agreement shall be
subject to the following conditions:
(a) Purchase Price. The purchase price or the
manner in which the purchase price is to be determined for Shares under each
Option shall be set forth in the Agreement, provided that the purchase price per
Share under each Option shall not be less than the Fair Market Value of a Share
at the time the Option is granted (one hundred ten percent (110%) in the case of
an Incentive Stock Option granted to a Ten-Percent Stockholder).
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<PAGE>
(b) Duration. Options granted hereunder shall be
for such term as the Committee shall determine, provided that (i) no Incentive
Stock Option shall be exercisable after the expiration of ten (10) years from
the date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and (ii) no Nonqualified Stock Option
shall be exercisable after the expiration of ten (10) years and one (1) day from
the date it is granted. The Committee may, subsequent to the granting of any
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
(c) Non-transferability. No Option granted
hereunder shall be transferable by the Optionee to whom granted otherwise than
by will or the laws of descent and distribution, and an Option may be exercised
during the lifetime of such Optionee only by the Optionee or such Optionee's
guardian or legal representative. The terms of such Option shall be binding upon
the beneficiaries, executors, administrators, heirs and successors of the
Optionee.
(d) Vesting. Subject to subsection 6(e) below,
unless otherwise set forth in the Agreement, each Option shall become
exercisable as to 33-1/3 percent of the Shares covered by the Option on the
first anniversary of the date the Option was granted and as to an additional
33-1/3 percent of the Shares covered by the Option on each of the following two
(2) anniversaries of such date of grant. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Option expires.
The Committee may accelerate the exercisability of any Option or portion thereof
at any time.
(e) Accelerated Vesting. Notwithstanding the
provisions of subsection 6(d) above, each Option granted to an Optionee shall
become immediately exercisable in full upon a Change in Control.
(f) Termination of Employment. In the event that
an Optionee ceases to be employed by the Company or a Subsidiary, any
outstanding Options held by such Optionee shall, unless the Agreement evidencing
such Option provides otherwise, terminate as follows:
(i) If the Optionee's termination of
employment is due to his death or Disability, the
Option (to the extent exercisable at the time of the
Optionee's termination of employment) shall be
exercisable for a period of one (1) year following
such termination of employment, and shall thereafter
terminate;
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(ii) If the Optionee's termination of
employment is by the Company or a Subsidiary for
Cause, the Option shall terminate on the date of the
Optionee's termination of employment; and
(iii) If the Optionee's termination of
employment is for any other reason (including an
Optionee's ceasing to be employed by a Subsidiary as
a result of the sale of such Subsidiary or an
interest in such Subsidiary), the Option (to the
extent exercisable at the time of the Optionee's
termination of employment) shall be exercisable for a
period of three (3) months following such termination
of employment, and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide,
either at the time an Option is granted or thereafter, that the Option may be
exercised after the periods provided for in this subsection 6(f), but in no
event beyond the term of the Option.
(g) Method of Exercise. The exercise of an
Option shall be made only by a written notice delivered to the Secretary of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise in cash, by check, or, at the
discretion of the Committee and upon such terms and conditions as the Committee
shall approve, by transferring Shares to the Company or by a cashless exercise
procedure. Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the Committee,
the Optionee shall deliver the Agreement evidencing the Option and the Agreement
evidencing any related Stock Appreciation Right to the Secretary of the Company,
who shall endorse thereon a notation of such exercise and return such Agreement
to the Optionee. Not less than 100 Shares may be purchased at any time upon the
exercise of an Option unless the number of Shares so purchased constitutes the
total number of Shares then purchasable under the Option.
(h) Rights of Optionees. No Optionee shall be
deemed for any purpose to be the owner of any Shares subject to any Option
unless and until (i) the Option shall have been exercised pursuant to the terms
thereof, (ii) the Company shall have issued and delivered the Shares to the
Optionee, and (iii) the Optionee's name shall have been entered as a stockholder
of record on the books of the Company. Thereupon, the Optionee shall
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have full voting, dividend and other ownership rights with respect to such
Shares.
7. Stock Appreciation Rights. The Committee may, in its
discretion in connection with the grant of an Option, grant Stock Appreciation
Rights in accordance with the Plan, the terms and conditions of which shall be
set forth in an Agreement. A Stock Appreciation Right shall cover the same
shares covered by the Option (or such lesser number of shares as the Committee
may determine) and shall, except as provided in this Section 7, be subject to
the same terms and conditions as the related Option.
(a) Stock Appreciation Rights Related to an
Option.
(i) Time of Grant. A Stock Appreciation
Right may be granted only at the time of grant of
the related Option.
(ii) Payment. A Stock Appreciation Right
shall entitle the holder thereof, upon exercise of
the Stock Appreciation Right or any portion thereof,
to receive payment of an amount computed pursuant to
subsection 7(a)(iv) below.
(iii) Exercise. A Stock Appreciation Right
shall be exercisable at such time or times and only
to the extent that the related Option is exercisable,
and will not be transferable except to the extent the
related Option may be transferable. A Stock
Appreciation Right granted in connection with an
Incentive Stock Option shall be exercisable only if
the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the
related Incentive Stock Option.
(iv) Amount Payable. Upon the exercise of a
Stock Appreciation Right, the Optionee shall be
entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value
of a Share on the date of exercise of such Stock
Appreciation Right over the per Share purchase price
under the related Option, by (B) the number of Shares
as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable
with respect to any Stock Appreciation Right by
including such a limit at the time it is granted.
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(v) Treatment of Related Options and Stock
Appreciation Rights Upon Exercise. Upon the exercise
of a Stock Appreciation Right, the related Option
shall be cancelled to the extent of the number of
Shares as to which the Stock Appreciation Right is
exercised and upon the exercise of an Option granted
in connection with a Stock Appreciation Right, the
Stock Appreciation Right shall be cancelled to the
extent of the number of Shares as to which the Option
is exercised or surrendered.
(b) Method of Exercise. Stock Appreciation Rights
shall be exercised by an Optionee only by a written notice delivered in person
or by mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the Secretary
of the Company, who shall endorse thereon a notation of such exercise and return
such Agreements to the Grantee.
(c) Form of Payment. Payment of the amount
determined under subsection 7(a)(iv) above may be made solely in whole Shares in
a number determined based upon their Fair Market Value on the date of exercise
of the Stock Appreciation Right or, alternatively, at the sole discretion of the
Committee, solely in cash, or in a combination of cash and Shares as the
Committee deems advisable. In the event that a Stock Appreciation Right is
exercised within the sixty-day period following a Change in Control, any amount
payable shall be solely in cash. If the Committee decides to make full payment
in Shares, and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash. Notwithstanding the foregoing, to the
extent required by Rule 16b-3 of the Exchange Act, no payment in the form of
cash may be made upon the exercise of a Stock Appreciation Right pursuant to
subsection 7(a)(iv) above to an officer of the Company or a Subsidiary who is
subject to Section 16(b) of the Exchange Act, unless the exercise of such Stock
Appreciation Right is made during the period beginning on the third business day
and ending on the twelfth business day following the date of release for
publication of the Company's quarterly or annual statements of earnings.
8. Loans.
(a) The Company or any Subsidiary may make loans
to an Optionee in connection with the exercise of an Option, subject to the
following terms and conditions and such other terms and conditions not
inconsistent with the Plan, including
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the rate of interest, if any, as the Committee shall impose from
time to time.
(b) No loan made under the Plan shall exceed the
sum of (i) the aggregate purchase price payable pursuant to the Option with
respect to which the loan is made, plus (ii) the amount of the reasonably
estimated income and employment taxes payable by the Optionee with respect to
the exercise of the Option, reduced by (iii) the aggregate par value of the
Shares being acquired pursuant to exercise of the Option. In no event may any
such loan exceed the Fair Market Value, at the date of exercise, of the Shares
received pursuant to such exercise.
(c) No loan shall have an initial term exceeding
ten (10) years; provided, that loans under the Plan shall be renewable at the
discretion of the Committee; and provided further, that the indebtedness under
each loan shall become due and payable, as the case may be, on a date no later
than (i) one (1) year after termination of the Optionee's employment due to
death, Disability, or retirement or (ii) the date of termination of the
Optionee's employment for any reason other than death, Disability, or
retirement.
(d) Loans under the Plan may be satisfied by an
Optionee, as determined by the Committee, in cash or, with the consent of the
Committee, in whole or in part by the transfer to the Company of Shares whose
Fair Market Value on the date of such payment is equal to part or all of the
outstanding balance of such loan.
(e) A loan shall be secured by a pledge of Shares
with a Fair Market Value of not less than the principal amount of the loan.
After any repayment of a loan, pledged Shares no longer required as security may
be released to the Optionee.
(f) Every loan shall meet all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction.
9. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization,
the Committee shall conclusively determine the appropriate adjustments, if any,
to the maximum number and class of shares of stock with respect to which Options
and Stock Appreciation Rights may be granted under the Plan, the number and
class of shares of stock as to which Options and Stock Appreciation Rights have
been granted under the Plan, and the purchase price therefor, if applicable.
(b) Any such adjustment in the Shares or other
securities subject to outstanding Incentive Stock Options
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<PAGE>
(including any adjustments in the purchase price) shall be made in such manner
as not to constitute a modification as defined by Section 424(h)(3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the Code.
10. Non-Employee Director Options. Notwithstanding any of the
other provisions of the Plan to the contrary, the provisions of this Section 10
shall apply only to grants of Options to Non-Employee Directors. Except as set
forth in this Section 10, the other provisions of the Plan shall apply to grants
of Options to Non-Employee Directors to the extent not inconsistent with this
Section 10. For purposes of interpreting Section 6 of the Plan, a Non-Employee
Director's service as a member of the Board shall be deemed to be employment
with the Company or its Subsidiaries.
(a) General. Non-Employee Directors shall receive
Nonqualified Stock Options in accordance with this Section 10 and may not be
granted Stock Appreciation Rights or Incentive Stock Options under this Plan.
The purchase price per Share purchasable under Options granted to Non-Employee
Directors shall be the Fair Market Value of a Share on the date of grant. No
Agreement with any Non-Employee Director may alter the provisions of this
Section 10 and no Option granted to a Non-Employee Director may be subject to a
discretionary acceleration of exercisability.
(b) Grants to New Non-Employee Directors. Each
Non-Employee Director who, after December 1, 1994, is elected to the Board for
the first time by stockholders of the Company at any special or annual meeting
of stockholders and who does not receive a grant of an option as prescribed in
Section 4(a)(ii) of The Bethlehem Corporation Equity Incentive Plan For
Directors, will, at the time such director is elected and duly qualified, be
granted automatically, without action by the Committee, an Option to purchase
10,000 Shares.
(c) Grants to Continuing Directors. On the date
of each annual meeting of stockholders subsequent to January 1, 1995, each
continuing Non-Employee Director (i.e., a director not being elected by
stockholders for the first time) will be granted automatically, without action
by the Committee, an Option to purchase 500 Shares.
(d) Vesting. Subject to accelerated vesting
pursuant to subsection 6(e)(i) hereof, each Option shall be exercisable as to
33-1/3% of the Shares covered by the Option on the date the Option is granted
and as to an additional 33-1/3% of the Shares covered by the Option on each of
the following two anniversaries of such date of grant. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. Subsections 6(d), 6(e)(ii) and 6(f)
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hereof shall not apply to Options granted to Non-Employee
Directors.
(e) Duration. Subject to the immediately
following sentence, each Option granted to a Non-Employee Director shall be for
a term of ten (10) years and one (1) day. Upon the cessation of a Non-Employee
Director's membership on the Board for any reason, Options granted to such
Non-Employee Director shall expire upon the earlier of (i) three (3) years from
the date of such cessation of Board membership or (ii) expiration of the term of
the Option. The Committee may not provide for an extended exercise period beyond
the periods set forth in this subsection 10(e).
11. Release of Financial Information. A copy of the Company's
annual report to stockholders shall be delivered to each Optionee if and at the
time any such report is distributed to the Company's stockholders. Upon request
by any Optionee, the Company shall furnish to such Optionee a copy of its most
recent annual report and each quarterly report and current report filed under
the Exchange Act since the end of the Company's prior fiscal year.
12. Termination and Amendment of the Plan. The Plan shall
terminate on the day preceding the tenth anniversary of its effective date,
except with respect to Options and Stock Appreciation Rights outstanding on such
date, and no Options or Stock Appreciation Rights may be granted thereafter. The
Board may sooner terminate or amend the Plan at any time, and from time to time;
provided, however, that, except as provided in Section 9 hereof, no amendment
shall be effective unless approved by the stockholders of the Company where
stockholder approval of such amendment is required (a) to comply with Rule 16b-3
under the Exchange Act subsequent to the registration of a class of equity
securities of the Company under Section 12 of the Exchange Act or (b) to comply
with any other law, regulation or stock exchange rule. Notwithstanding anything
in this Section 12 to the contrary, subsequent to the registration of a class of
equity securities of the Company under Section 12 of the Exchange Act, Section
10 hereof shall not be amended more than once in any six-month period, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules or regulations thereunder.
Except as provided in Section 9 hereof, rights and obligations
under any Option granted before any amendment of the Plan shall not be adversely
altered or impaired by such amendment, except with the consent of the Optionee.
13. Non-Exclusivity of the Plan. The adoption of the
Plan by the Board shall not be construed as amending, modifying
or rescinding any previously approved incentive arrangement or as
-13-
<PAGE>
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
14. Limitation of Liability. As illustrative of the
limitations of liability of the Company, but not intended to be
exhaustive thereof, nothing in the Plan shall be construed to:
(a) give any person any right to be granted an
Option or Stock Appreciation Right other than at the sole
discretion of the Committee;
(b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or
its Subsidiaries to terminate the employment of any person at any
time; or
(d) be evidence of any agreement or
understanding, expressed or implied, that the Company or its Subsidiaries will
employ any person in any particular position, at any particular rate of
compensation or for any particular period of time.
15. Regulations and Other Approvals; Governing Law.
(a) This Plan and the rights of all persons
claiming hereunder shall be construed and determined in accordance with the laws
of the Commonwealth of Pennsylvania without giving effect to the choice of law
principles thereof.
(b) The obligation of the Company to sell or
deliver Shares with respect to Options granted under the Plan shall be subject
to all applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
(c) Any provisions of the Plan inconsistent with
Rule 16b-3 under the Exchange Act shall be inoperative and shall not affect the
validity of the Plan.
(d) Except as otherwise provided in Section 12
hereof, the Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority or to obtain
for Optionees granted Incentive Stock Options, the tax benefits under the
applicable provisions of the Code and regulations promulgated thereunder.
-14-
<PAGE>
(e) Each Option and Stock Appreciation Right is
subject to the requirement that, if at any time the Committee determines, in its
absolute discretion, that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option or Stock Appreciation Right or the issuance of
Shares, no Options or Stock Appreciation Rights shall be granted or payment made
or Shares issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions as acceptable to the Committee.
(f) In the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and the Committee may
require an Optionee receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares, to represent to the Company in writing that
the Shares acquired by such Optionee are acquired for investment only and not
with a view to distribution.
16. Miscellaneous.
(a) Multiple Agreements. The terms of each Option
or Stock Appreciation Right may differ from other Options or Stock Appreciation
Rights granted under the Plan at the same time, or at any other time. The
Committee may also grant more than one Option or Stock Appreciation Right to a
given Optionee during the term of the Plan, either in addition to, or in
substitution for, one or more Options or Stock Appreciation Rights previously
granted to that Optionee. The grant of multiple Options or Stock Appreciation
Rights may be evidenced by a single Agreement or multiple Agreements, as
determined by the Committee.
(b) Withholding of Taxes. The Company shall have
the right to deduct from any payment of cash to any Optionee an amount equal to
the federal, state and local income and employment taxes and other amounts
required by law to be withheld with respect to any Option or Stock Appreciation
Right. Notwithstanding anything to the contrary contained herein, if an Optionee
is entitled to receive Shares upon exercise of an Option or Stock Appreciation
Right, the Company shall have the right to require such Optionee, prior to the
delivery of such Shares, to pay to the Company the amount of any federal, state
or local income and employment taxes and other amounts which the Company is
required by law to withhold. The Agreement evidencing any Incentive Stock Option
granted under this Plan shall provide that
-15-
<PAGE>
if the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any Share or Shares issued to
such Optionee pursuant to such Optionee's exercise of the Incentive Stock
Option, and such disposition occurs within the two-year period commencing on the
day after the date of grant of such Option or within the one-year period
commencing on the day after the date of transfer of the Share or Shares to the
Optionee pursuant to the exercise of such Option, such Optionee shall, within
ten (10) days of such disposition, notify the Company thereof and thereafter
immediately deliver to the Company any amount of federal, state or local income
and employment taxes and other amounts which the Company informs the Optionee
the Company is required to withhold.
(c) Designation of Beneficiary. Each Optionee
may, with the consent of the Committee, designate a person or persons to receive
in the event of such Optionee's death, any Option or Stock Appreciation Right
and/or amounts payable pursuant thereto, to which such Optionee would then be
entitled. Such designation will be made upon forms supplied by and delivered to
the Company and may be revoked or changed in writing. In the event of the death
of an Optionee and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Optionee's death, the Company shall
deliver such Options, Stock Appreciation Rights and/or amounts payable to the
executor or administrator of the estate of the Optionee, or if no such executor
or administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such Options, Stock Appreciation Rights
and/or amounts payable to the spouse or to any one or more dependents or
relatives of the Optionee, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
17. Effective Date. The Plan shall become effective upon
adoption by the Board, subject, however, to its further approval by the
requisite vote of the shareholders of the Company within twelve (12) months
after the date the Plan is adopted by the Board, at a regular meeting of the
stockholders or at a special meeting of the stockholders called and held for
such purpose. Grants of Incentive Stock Options, Nonqualified Stock Options and
Stock Appreciation Rights may be made prior to such stockholder approval, but
all grants made prior to such stockholder approval shall be subject to the
obtaining of such approval and, if such approval is not obtained, such grants
shall not be effective for any purpose.
-16-
Exhibit 10(b)
THE BETHLEHEM CORPORATION
EQUITY INCENTIVE PLAN
FOR DIRECTORS
(As amended through December 12, 1995)
THE BETHLEHEM CORPORATION, a corporation organized under the laws of
the Commonwealth of Pennsylvania, hereby sets forth the Equity Incentive Plan
for Directors. The Plan provides for the grant of nonqualified stock options to
Directors and will be submitted for the approval of the Company's stockholders
within 12 months after the date of the Plan's initial adoption by the Board, and
the Plan will become effective upon such approval.
1. Definitions. whenever the following terms are used in
this Plan they shall have the meanings specified below unless the
context clearly indicates to the contrary.
"Company" shall mean The Bethlehem Corporation, a
Pennsylvania corporation.
"Affiliate" shall mean any corporation in which the Company
owns, directly or indirectly, 25% or more of the voting stock.
"Board" shall mean the Board of Directors of the
Company.
"Committee" shall mean the committee which has been appointed
to administer the Plan under the provisions of Section 2 of the Plan.
"Director" shall mean a member of the Board.
"Option" shall mean an option granted under the provisions of
Section 4 of the Plan to purchase common stock of the Company.
"Optionee" shall mean a Director to whom an Option is
granted.
"Fair Market Value" shall be the closing price of the
Company's common stock quoted on the American Stock Exchange Listings (the
"Listings") for the date in question, as published in the Wall Street Journal.
If no sale prices are quoted in the Listings for such date, the next preceding
date for which such sale prices are quoted shall be used.
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as it may
hereafter be amended. Reference to a specific section of the Code shall include
such section, any valid regulation promulgated thereunder and any comparable
provision of any future legislation amending, supplementing or superseding such
section.
"Total Disability" shall mean a permanent and total disability
as determined in accordance with Section 72(m)(7) of the Code.
"Secretary" shall mean the Secretary or an Assistant
Secretary of the Company.
"Plan" shall mean this Equity Incentive Plan for
Directors.
"Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
"Termination of Service" shall mean a cessation of a
Director's service as a member of the Board, whether as a result of resignation,
failure to be reelected or any other reason.
2. Administration.
(a) Appointment of Committee. The Committee shall
consist of at least two Directors, appointed by and holding
office at the pleasure of the Board.
(b) Duty and Power of Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan, the
Options and to adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. The Committee shall not have any discretion to determine
who will be granted Options or to determine the number of Options, the exercise
price of Options or the timing of the grant of Options to be granted to any
Director.
(c) Committee Actions. The Committee may act either
by vote of a majority of its members at a meeting or by a
memorandum or other written instrument signed by all members of
the Committee.
(d) Compensation; Professional Assistance; Good Faith
Actions. Members of the Committee shall not receive any
compensation for their services as members, but all expenses and
-2-
<PAGE>
liabilities they incur in connection with the administration of the Plan shall
be borne by the Company. The Committee may, with the approval of the Board,
employ attorneys, consultants, accountants, or other persons. The Committee, the
Company and its officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Optionees, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan, and
all members of the Committee shall be fully protected and indemnified by the
Company with respect to any such action, determination or interpretation.
3. Shares Subject to Plan.
(a) Limitations. The shares of stock issuable pursuant to
Options shall be shares of the Company's no par value common stock. The total
number of such shares available for Options granted under the Plan shall not
exceed 130,000 in the aggregate. The total number of such shares for which
Options may be granted under the Plan to any one Director shall not exceed
10,000 shares.
(b) Effect of Unexercised or Cancelled Options. If an Option
expires or is cancelled for any reasons without having been fully exercised or
vested, the number of shares subject to such Option that were not purchased or
did not vest prior to such expiration or cancellation may again be made subject
to an Option granted hereunder (to the same Optionee or to a different
Optionee).
(c) Changes in Company's Shares. In the event that the
outstanding shares of common stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, stock dividend (either in shares of the Company's common stock or of
another class of the Company's stock), spin-off or combination of shares,
appropriate adjustments shall be made by the Committee in the aggregate number
and kind of shares that may be issued on exercise of Options and, to the extent
appropriate, in the option price referred to in Section 4(b)(ii) hereof.
4. Stock Options.
(a) Granting of Options.
-3-
<PAGE>
(i) Eligibility. Each Director shall be eligible
to be granted Options.
(ii) Granting of Options. Each Director on March
21, 1991 shall be granted an Option for 10,000 shares on such date. Each
individual who becomes a Director of the Company after March 21, 1991 shall be
granted an Option for 10,000 shares under the Plan on the first business day
after he becomes a Director.
(b) Terms of Options.
(i) Option Agreement. Each Option shall be
evidenced by a written stock option agreement, which shall be executed by the
Optionee and the Company and which shall contain such terms and conditions as
the Committee determines are required by the Plan.
(ii) Option Price. The price of the shares
subject to each Option shall be equal to the greater of $3.15 per share or 100%
of the Fair Market Value for such shares on the date the Option is granted.
(iii) Date of Grant. The date on which an Option
shall be granted shall be the date determined under Section
4(a)(ii).
(iv) Commencement of Exercisability.
(A) No Option may be exercised in whole or
in part during the six months after such Option is granted.
Thereafter, the Option shall be exercisable in full.
(B) No portion of an Option that is
unexercisable at the time of the Optionee's Termination of
Service shall thereafter become exercisable.
(v) Expiration of Options. Each Option shall
terminate upon the expiration of six years from the date the Option was granted;
except that, a Director's Option shall terminate immediately if said Director is
removed from the Board (A) by action of the shareholders of the Company or the
Board in accordance with the Company's By-laws or applicable law, (B) by a court
of competent jurisdiction, or (C) by operation of law, in any such case where
"cause" is the express reason for such removal."
(vi) Adjustment in Outstanding Options. In the
event that the outstanding shares of the stock subject to Options are increased
or decreased or changed into or exchanged for a different number or kind of
shares of the Company, or other securities of the Company, or of another
corporation, by reason
-4-
<PAGE>
of reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend (either in shares of the Company's common stock
or of another class of the Company's stock), spin-off or combination of shares,
the Committee shall make an appropriate and equitable adjustment in the number
and kind of shares as to which all outstanding Options, or portions thereof then
unexercised, shall be exercisable, to the end that after such event the
Optionee's proportionate interest shall be maintained as before the occurrence
of such event. Such adjustment in an outstanding Option shall be made without
change in the total price applicable to the Option or the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any necessary corresponding
adjustment in Option price per share. Any such adjustment made by the Committee
shall be final and binding upon all Optionees, the Company and all other
interested persons.
(c) Exercise of Options.
(i) Person Eligible to Exercise. During the
lifetime of the Optionee, only he may exercise an Option granted to him or any
portion thereof. After the death of the Optionee, any exercisable portion of an
Option may be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution. The Company may require appropriate
proof from any such other person of his right or power to exercise the Option or
any portion thereof.
(ii) Fractional Shares. The Company shall not be
required to issue fractional shares on exercise of an Option.
(iii) Manner of Exercise. An exercisable Option,
or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following:
(A) Notice in writing signed by the Optionee
or other person then entitled to exercise such Option or portion thereof,
stating that such Option or portion is exercised, such notice complying with all
applicable rules established by the Committee;
(B) Full cash payment for the shares with
respect to which such Option or portion is thereby exercised and which are to be
delivered to him pursuant to such exercise;
(C) The payment to the Company of all income
tax withholding as the Committee determines to be advisable; and
(D) Such representations and documents as
the Committee, in its absolute discretion, deems necessary or
-5-
<PAGE>
advisable to effect compliance with all applicable provisions of the Securities
Act of 1933, as amended, and any other federal or state securities laws or
regulations. The Committee may, in its absolute discretion, also take whatever
additional actions it deems appropriate to effect such compliance including,
without limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars.
(iv) Conditions to Issuance of Stock Certificates.
The shares of common stock deliverable upon exercise of an Option, or any part
thereof, may be previously authorized but unissued shares and/or issued shares
that have then been reacquired by the Company. The Company shall not be required
to issue or deliver any certificate or certificates for shares of common stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(A) The admission of such shares to listing
on all stock exchanges on which such class of stock is then listed;
(B) The completion of any registration or
other qualification of such shares under any state or federal law or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body that the Company shall, in its absolute discretion,
deem necessary or advisable;
(C) The obtaining of any approval or other
clearance from any state or federal governmental agency which the Company shall,
in its absolute discretion, determine to be necessary or advisable;
(D) The satisfaction of any tax rules,
regulations or requirements that the Company shall, in its absolute discretion,
determine to be necessary or advisable; and
(E) The lapse of such reasonable period of
time following the exercise of the Option as the Company may determine, in its
absolute discretion, from time to time to be necessary or advisable for reasons
of administrative convenience.
(v) Rights of Stockholders. An Optionee shall
not be, nor have any of the rights of, a stockholder of the Company in respect
to any shares that may be purchased upon the exercise of any Option or portion
thereof unless and until certificates representing such shares have been issued
by the Company to such Optionee.
5. Miscellaneous Provisions.
-6-
<PAGE>
(a) Options Not Transferable. No Option or interest or right
therein or part thereof shall be subject to liability or availability for the
debts, contracts, or engagements of the Optionee or his successors in interest
or shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means, whether such disposition is
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment, or any other legal or equitable proceedings (including bankruptcy)
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 5(a) shall prevent transfers by
will or by the applicable laws of descent and distribution.
(b) Amendment, Suspension or Termination of the Plan. The Plan
may be wholly or partially amended or otherwise modified, suspended, or
terminated at any time or from time to time by the Board; provided, however,
that the provisions of Sections 3(a), 4(a)(ii) and 4(b)(ii) shall not be amended
more than once every six months other than to comport with changes in the Code
or the rules thereunder; and provided further that no amendment of the Plan
shall be effected without approval of the Company's stockholders if stockholder
approval is required under the Code or under applicable laws and regulations of
the Securities and Exchange Commission or any stock exchange. Neither the
amendment, suspension, nor termination of the Plan shall, without the consent of
the Optionee, alter or impair any rights or obligations under any Option
theretofore granted. No Option may be granted during any period of suspension
nor after termination of the Plan.
(c) Titles. Titles are provided herein for convenience
only and are not to serve as a basis for interpretation or construction of the
Plan.
(d) Compliance with Rule 16b-3. The provisions of the Plan are
intended to comply in all respects with the provisions of Rule 16b-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934 and
any amendments thereto, and, if the Plan shall not so comply, whether on the
date of adoption or by reason of any later amendment to or interpretation of
Rule 16b-3, the provisions of the Plan shall be deemed to be automatically
amended so as to bring them into full compliance with such rule.
-7-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed financial statements for the second quarter ended November 30, 1995
and is qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 90
<SECURITIES> 0
<RECEIVABLES> 3,264
<ALLOWANCES> 29
<INVENTORY> 2,861
<CURRENT-ASSETS> 6,533
<PP&E> 8,733
<DEPRECIATION> 6,809
<TOTAL-ASSETS> 9,549
<CURRENT-LIABILITIES> 6,974
<BONDS> 3,131
<COMMON> 969
0
0
<OTHER-SE> (2,782)
<TOTAL-LIABILITY-AND-EQUITY> 9,549
<SALES> 3,906
<TOTAL-REVENUES> 3,906
<CGS> 3,172
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (20)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60
<INCOME-PRETAX> 23
<INCOME-TAX> 0
<INCOME-CONTINUING> 23
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23
<EPS-PRIMARY> .007
<EPS-DILUTED> .007
</TABLE>
