FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For Quarter Ended March 31, 1998
Commission File Number: 0-2085
BETZDEARBORN INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1503731
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4636 Somerton Road, Trevose, PA 19053
- ---------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 355-3300
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months [or for such shorter period that the
registrant was required to file such report(s)], and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
29,646,362 Common Shares outstanding as of May 8, 1998.
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
Three Months Ended
March 31,
1998 1997
---- ----
Net Sales $ 299.3 $ 306.4
Operating Costs and Expenses:
Cost of products sold 121.2 122.2
Selling, research and administrative 144.2 137.0
Integration/restructuring -- 6.6
------- --------
265.4 265.8
OPERATING EARNINGS 33.9 40.6
Other Income (Expense):
Interest (9.8) (11.4)
Investment and other (0.1) (0.4)
------- --------
(9.9) (11.8)
------- --------
EARNINGS BEFORE INCOME TAXES 24.0 28.8
Income Taxes 8.5 10.2
------- --------
NET EARNINGS $ 15.5 $ 18.6
======= ========
Net earnings per Common Share:
Basic $ 0.48 $ 0.61
======= ========
Diluted $ 0.46 $ 0.57
======= ========
Cash dividends declared per Common Share $ 0.38 $ 0.375
======= ========
Average number of Common Shares:
Basic 29.4 28.3
======= ========
Diluted 32.4 31.6
======= ========
See notes to consolidated financial statements.
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 39.4 $ 36.9
Trade accounts receivable, less allowances:
1998 -- $7.2; 1997 -- $7.2 265.5 293.0
Inventories:
Finished products and goods purchased for resale 49.1 49.2
Raw materials 46.4 45.1
---------- ----------
95.5 94.3
Income taxes 20.5 19.6
Prepaid expenses and other 37.2 36.2
---------- ----------
TOTAL CURRENT ASSETS 458.1 480.0
PROPERTY, PLANT AND EQUIPMENT -- at cost
Land 34.7 33.6
Buildings 209.8 214.3
Machinery and equipment 564.8 562.4
Construction in progress 28.6 15.8
---------- ----------
837.9 826.1
Less allowance for depreciation (437.9) (424.3)
---------- ----------
400.0 401.8
OTHER ASSETS
Investments and other 22.4 22.8
Goodwill -- net of accumulated amortization:
1998 -- $20.8; 1997 -- $17.8 440.6 447.7
Other intangibles -- net of accumulated amortization:
1998 -- $9.1; 1997 -- $8.8 78.7 81.3
---------- ----------
541.7 551.8
---------- ----------
TOTAL ASSETS $ 1,399.8 $ 1,433.6
========== ==========
</TABLE>
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED BALANCE SHEETS (Continued)
(In millions, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
---------- ----------
CURRENT LIABILITIES
<S> <C> <C>
Trade accounts payable $ 63.1 $ 77.7
Payroll and related taxes 38.5 47.7
Notes payable 24.0 26.6
Accrued restructuring costs 14.5 15.9
Other accrued liabilities 35.4 43.7
Income taxes 14.4 7.4
Dividends payable -- 11.2
Current portion of long-term debt 1.3 1.3
---------- ----------
TOTAL CURRENT LIABILITIES 191.2 231.5
LONG-TERM DEBT -- less portion classified as current 677.0 678.2
OTHER LONG-TERM LIABILITIES
Income taxes 18.3 14.3
Employee benefit plans 53.3 54.5
Other 2.2 2.7
---------- ----------
73.8 71.5
SHAREHOLDERS' EQUITY
Preferred shares, $.10 par value: authorized 1,000,000 shares;
issued 1998 -- 473,597 shares; 1997 -- 475,371 shares 94.7 95.0
Guarantee of related ESOP debt (88.3) (88.6)
Common shares, $.10 par value: authorized -- 90,000,000 shares;
issued 1998 -- 33,630,928 shares; 1997 -- 33,631,330 shares 3.4 3.4
Capital in excess of par value of shares 135.6 131.6
Retained earnings 514.1 501.1
Cost of common shares in treasury: 1998 -- 3,996,330 shares;
1997 -- 4,181,807 shares (149.8) (155.0)
Unearned compensation (5.0) (3.9)
Foreign currency translation adjustments (46.9) (31.2)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 457.8 452.4
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,399.8 $ 1,433.6
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
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OPERATING ACTIVITIES
<S> <C> <C>
Net earnings $ 15.5 $ 18.6
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 16.3 16.4
Amortization 3.8 3.8
Compensation and employee benefit plans 2.7 2.5
Changes in operating assets and liabilities, net of business
acquisitions:
Accounts receivable 24.5 (15.6)
Inventories (2.7) (3.0)
Prepaid expenses and other 0.5 (1.2)
Accounts payable and accrued expenses (21.7) (7.6)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 38.9 13.9
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (20.7) (13.0)
Proceeds from sales of long-term assets 1.4 6.0
Purchases of businesses and long-term investments -- (0.6)
Other, net -- 1.4
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NET CASH USED IN INVESTING ACTIVITIES (19.3) (6.2)
FINANCING ACTIVITIES
Repayments under credit facilities (4.3) (17.3)
Net short-term repayments (2.4) --
Dividends paid (13.1) (12.5)
Proceeds from issuance of common shares,
including treasury shares 5.0 22.4
------- -------
NET CASH USED IN FINANCING ACTIVITIES (14.8) (7.4)
Effect of exchange rate changes on cash (2.3) (1.7)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2.5 (1.4)
Cash and Cash Equivalents at Beginning of Year 36.9 38.2
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 39.4 $ 36.8
======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation of
consolidated financial position, consolidated results of operations and
consolidated cash flows in conformity with generally accepted accounting
principles. The foregoing consolidated financial statements include all
adjustments, consisting only of normal recurring accruals, which, in the opinion
of management, are necessary for a fair statement of the results of the interim
periods.
The Company is required starting in 1998 to report information about
comprehensive income in its annual and interim financial statements. Financial
Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income,"
requires companies to disclose in their annual reports the total, as well as the
components, of comprehensive income and in their interim reports the total
amount. The Company's components of comprehensive income are net income and
foreign currency translation adjustments which totaled to a loss of $0.2 million
and $6.0 million for the quarters ended March 31, 1998 and 1997, respectively.
In the fourth quarter of 1997, the Company changed its method of
accounting for business process reengineering costs incurred in connection with
its ongoing major project that combines business process reengineering and
information technology transformation. This accounting change was mandated by
the consensus position of the Financial Accounting Standards Board's Emerging
Issues Task Force (Issue No. 97-13). Effective October 1, 1997, the Company's
policy is that all such costs are expensed as incurred, whereas previously such
costs were capitalized and amortized subsequently. In the fourth quarter of
1997, business process reengineering costs capitalized through September 30,
1997 were written off as a cumulative effect type adjustment.
Note 2 - Common Shares Reserved for Stock Plans
At March 31, 1998, 4,994,071 and 428,119 Common Shares were reserved
for possible issuance pursuant to the exercise of stock options and grants under
the Company's Stock Option and Incentive Plans, respectively. An additional
352,785 Common Shares were available for purchase through payroll deductions
under the terms of the Employee Stock Purchase Plan. Further, 2,633,000 Common
Shares were reserved and kept available for possible conversion of the Series A
ESOP Convertible preferred stock.
Note 3 - Earnings per Share
In compliance with Financial Accounting Standards Board Statement No.
128, "Earnings per Share," the Company has changed its method of computing
earnings per share and has restated the prior year to conform to the new
requirements. Basic and diluted earnings per share as calculated under Statement
128 are as follows (in millions, except per share amounts):
<PAGE>
<TABLE>
<CAPTION>
Three months ended
March 31,
Basic Earnings per Share: 1998 1997
-------- --------
<S> <C> <C>
Net earnings $ 15.5 $ 18.6
Effect of preferred stock dividends, net of taxes (1.4) (1.4)
-------- --------
Net earnings available to common shareholders $ 14.1 $ 17.2
-------- --------
Average Common Shares outstanding - basic 29.4 28.3
======== ========
Basic Earnings per Common Share $ .48 $ .61
======== ========
Diluted Earnings per Share:
Net earnings $ 15.5 $ 18.6
Effect of ESOP charge to operations assuming conversion of
Series A ESOP Convertible Preferred Shares, net of taxes (0.6) (0.7)
-------- --------
Net earnings available to common shareholders $ 14.9 $ 17.9
-------- --------
Average Common Shares outstanding - basic 29.4 28.3
Effect of dilutive securities:
Contingently issuable shares 0.1 0.1
Employee stock options 0.3 0.5
Assumed conversion of Series A ESOP Convertible
Preferred Shares 2.6 2.7
-------- --------
Average Common Shares outstanding - diluted 32.4 31.6
-------- --------
Diluted Earnings per Common Share $ .46 $ .57
======== ========
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS
Results of Operations -- First Quarter
Net earnings for the quarter declined to $15.5 million from $18.6
million in 1997 and diluted earnings per share decreased 19% to $0.46 from
$0.57. Excluding integration expense in the first quarter of 1997, diluted
earnings per share decreased 34%. The 1998 first quarter results of operations
were unfavorably impacted by the relative strength of the U.S. dollar and by the
economic turmoil in the Asia-Pacific region.
First quarter net sales decreased 2% from $306.4 million in 1997 to
$299.3 million in 1998. Changes in average foreign exchange rates used to
translate local currency sales into U.S. dollars caused approximately a $12.5
million reduction in reported sales for the first quarter of 1998. U.S. sales
increased 1% over the prior year's first quarter level, while sales outside the
U.S. decreased 6% in U.S. dollars and
<PAGE>
increased 2% in local currencies. In local currencies, Canadian sales were down
4%, Latin American sales were up almost 3%, Asia-Pacific sales increased 1%, and
European sales increased 5%.
The first quarter results of operations in the Asia-Pacific region are
indicative of the economic conditions in this region. First quarter U.S. dollar
net sales in the region declined $4.5 million or 23% and the gross profit margin
as a percent of sales dropped approximately 5%, resulting in a $2.1 million
reduction in operating income compared to the first three months of 1997. The
Company is unable to estimate the timing or rate of improvement of business
conditions in this region, but will continue to monitor and report on this
situation.
Net sales reported by the Company's Canadian subsidiary for the first
quarter of 1998 declined by $2.2 million or 9% in U.S. dollars and 4% in
Canadian dollars. Weather conditions, including ice storms in Eastern Canada,
during the first quarter of 1998 negatively impacted revenues in this region.
Worldwide first quarter sales recorded by the Water Management Group
global business unit declined in the mid single-digit range in U.S. dollars and
in the low single-digit percentage range in local currencies. In the U.S., sales
have increased slightly over last year, while non-U.S. sales have decreased in
the low single-digit percentage range in local currencies.
The combined process chemical global business units increased net sales
by approximately 1% in U.S. dollars and in the mid-single digit range in local
currencies. The U.S. reported a percentage increase in the low single-digit
range, while units outside the U.S. reported local currency increases in the
upper single-digit range. The Paper Process Group, the largest of the three
process chemical groups, reported a local currency sales growth in the mid
single-digit range. The Hydrocarbon Process Group reported a local currency
sales percentage increase in the mid single-digit range.
The Company's gross profit margin decreased from 60.1% of net sales in the
first quarter of 1997 and 59.7% in the fourth quarter of 1997 to 59.5% in 1998.
The decline is partly due to lower margins in the Asia-Pacific region
principally from higher costs of raw material imported into the region.
Selling, research and administrative expenses, as a percent of net
sales, increased from 44.7% in 1997 to the current quarter's level of 48.2%.
This increase is primarily due to new hiring after the first quarter of 1997 and
expenses associated with the Company's ongoing information technology
transformation projects.
Integration expenses for the three months ended March 31, 1997 amounted
to $6.6 million and are associated with the activities of integration teams
responsible for the integration of the Dearborn business acquired on June 28,
1996. Such teams completed their activities in the first half of 1997.
Interest expense declined $1.6 million due to a $26.7 million decline
in total debt outstanding from the March 31, 1997 level. This decline is also
attributable to the lower interest costs on the Company's revolving credit
indebtedness as a result of the refinancing of this facility on October 20, 1997
as well as lower interest rates.
<PAGE>
In April 1998, the Company acquired for cash certain assets of Index
Industries, a privately held performance additives company. The acquired assets
and related results of operations will be included with the Company's
Hydrocarbon Process Group beginning April 1, 1998. This acquisition will be
accounted for using the purchase method of accounting and is not expected to
have a material impact on the Company's results of operations or its capital
resources and liquidity.
Capital Resources and Liquidity
Net cash provided by operating activities increased by $25 million
compared to the first quarter of 1997 mainly due to a $24.5 million decline in
accounts receivable since 1997 year-end. The decline in accounts receivable is
primarily attributable to the lower level of sales recorded in the 1998 first
quarter compared to the $334.2 million recorded in the fourth quarter of 1997
and to ongoing efforts to reduce accounts receivable. The Company plans to
continue reducing its overall level of accounts receivable and inventories.
Capital expenditures for the first three months increased by $7.7
million over the first quarter 1997 level principally due to increased
expenditures for the installation of SAP integrated systems. The Company
anticipates that 1998 capital expenditures will approximate $100 million to $110
million.
In April 1998 the Company began a commercial paper program to diversify
its borrowing sources and obtain access to potentially lower interest rates. The
proceeds from the issuance of $421 million of commercial paper on April 1, 1998
were used to repay U.S. borrowings outstanding under its Revolving Credit
Agreement. The Company is also considering the issuance of fixed rate term debt
to refinance a portion of its outstanding commercial paper. Upon the issuance of
fixed rate term debt, the Company may offset a proportionate amount of
outstanding interest rate swap agreements.
The Company anticipates that present cash and cash equivalents, cash
provided from operating activities and the $169 million of borrowings available
under the Credit Agreement will be sufficient to fund its 1998 operating,
capital expenditure, dividend and debt service cash requirements.
Impact of Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
which is required to be adopted for fiscal years beginning after December 15,
1997. Statement 131 will require the Company to disclose revenues and other
financial information pertaining to the business segments by which the Company
is managed, as well as the factors management used to determine these segments.
The Company is currently evaluating the requirements of Statement 131 to
determine how to present the required information in its financial statements
and expects to implement this statement in the fourth quarter of 1998.
Forward-Looking Information
Statements contained in this report, including statements relating to
the Company's expectations for anticipated growth in the future, are
"forward-looking statements," as such term is defined in the Private Securities
Litigation Act of 1995. Actual results could differ materially from the
Company's statements in
<PAGE>
this report regarding its anticipated performance due to various factors such as
foreign currency fluctuations and the impact on profitability from economic and
market conditions, especially as it exists in the Asia-Pacific region, interest
rate fluctuations that may impact the Company's financing plans, costs of
disruptions associated with the implementation of business process reengineering
and information technology transformation projects, and Year 2000 issues.
PART II OTHER INFORMATION
Item 1 - Legal Proceedings
A. Environmental
See the discussion under Item 3 - "Pending Legal Proceedings,"
Section A - Environmental, of the Registrant's Form 10-K for the fiscal year
ended December 31, 1997. There have been no material changes to that item with
the exception that proposed settlement of the litigation involving the Helen
Kramer Landfill has been finalized, and Consent Decrees with the United States
and State of New Jersey executed.
B. Product Liability
See the discussion under Item 3 - "Pending Legal Proceedings,"
Section B - Product Liability, of the Registrant's Form 10-K for the fiscal year
ended December 31, 1997. There have been no material changes to that item.
Item 2 - Changes in Securities
Change in Articles of Incorporation
1. Increase In Number of Authorized Shares of Common Stock
On April 9, 1998, the shareholders approved an amendment to Article 5
of the Company's Restated Articles of Incorporation to increase the number of
the Company's authorized shares of common stock from 90,000,000 to 250,000,000.
The additional shares of common stock have rights identical to those previously
authorized by the Company. Any future issuance of additional shares of common
stock may, among other things, have a dilutive effect on earnings per share of
common stock and on the equity and voting rights of those holding common stock
at the time such shares are issued.
The Company has a Shareholder Rights Plan to protect shareholder
interests in the event that the Company is confronted by hostile acquirers.
Under the terms of such Plan, each holder of shares of common stock owns
purchase rights equal to the number of shares held. Each purchase right entitles
the holder to purchase one additional share of the Company's common stock if
there are attempts to gain control of the Company without offering fair value to
the Company's shareholders.
<PAGE>
Changes in Company's Bylaws
The amendments updating the Bylaws of the Company were made to give
full effect to provisions of the Pennsylvania Business Corporation Law ("BCL").
The previous Bylaws of the Company were adopted by the Board of Directors in
1988, prior to the enactment of the BCL. The amendments conform the Company's
Bylaws more closely with the applicable provisions of the BCL.
2. Liability of Directors
On April 9, 1998, the shareholders approved an amendment to
Section 4.01(b) of the Bylaws of the Company relating to the personal liability
of the Company's Directors. The amendment is designed to protect Directors from
liability for monetary damages to either the Company or its shareholders for
mistakes or errors of judgment made in good faith and after reasonable inquiry
which, at some future date, might be considered to constitute a breach of their
duty of care. Directors who breach or fail to perform the duties of their office
as prescribed in the Bylaws and such breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness are not relieved from personal
liability to the Company or the shareholders by this amendment. Additionally,
those maintaining lawsuits against the Company's Directors would be able to
obtain equitable remedies, such as injunctive relief, in appropriate situations.
3. Indemnification of Directors, Officers and Other Authorized
Representatives
On April 9, 1998, the shareholders approved an amendment to
Article VII of the Bylaws of the Company relating to the indemnification of
Directors, officers and other authorized representatives of the Company. This
amendment provides for the mandatory indemnification of Directors, officers and
authorized representatives to the full extent permitted by the Pennsylvania
Business Corporation Law except where such indemnification is prohibited by law
or is finally determined to constitute willful misconduct or recklessness. The
amendment also provides for the mandatory advancement of expenses including
attorneys' fees and disbursements to Directors, officers and authorized
representatives which, under the current Bylaws, is permissive.
Item 4 - Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on April 9, 1998.
Proxies were solicited by the Board of Directors of the Company ("Board")
pursuant to Regulation 14 of the Securities Exchange Act of 1934. There was no
solicitation of proxies in opposition to the Board's nominee for Director. Such
nominee was elected. The amendment to the Restated Articles of Incorporation to
increase the number of authorized shares of common stock and the amendments to
Section 4.01(b) and Article VII of the Company's Bylaws were approved by the
shareholders. The firm of Ernst & Young LLP was elected as the Company's
independent auditors for the year 1998.
The number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes, were as follows:
<PAGE>
<TABLE>
<CAPTION>
Election of Directors
---------------------
Nominee For Against Abstained Not Voted
------- --- ------- --------- ---------
<S> <C> <C> <C> <C>
John G. Drosdick 25,923,544 611,633 -- 3,521,648
Approval of Amendment to Article 5 of the Company's Restated Articles of Incorporation
--------------------------------------------------------------------------------------
For Against Abstained Not Voted
--- ------- --------- ---------
19,105,877 7,303,351 125,746 3,521,851
Approval of Proposed Amendments to the Company's Bylaws
-------------------------------------------------------
For Against Abstained Not Voted
--- ------- --------- ---------
25,420,016 890,570 156,569 3,589,670
Election of Independent Auditors
--------------------------------
For Against Abstained Not Voted
--- ------- --------- ---------
Ernst & Young LLP 26,303,823 93,786 137,568 3,521,648
</TABLE>
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 1: Company's Restated Articles of Incorporation
Exhibit 2: Company's Bylaws
(b) A Form 8-K formally filed the Company's fourth quarter 1997
earnings release with the Commission on February 17, 1998.
A Form 8-K, reporting the Company's adoption of a new Shareholder
Rights Plan to become effective on September 19, 1998 at the expiration of the
Company's current Shareholder Rights Plan, was filed with the Commission on
March 9, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BETZDEARBORN INC.
-----------------
(Registrant)
Date: May 15, 1998 By: /s/ George L. James
-------------------------------
George L. James
Senior Vice President - Finance
Date: May 15, 1998 By: /s/ Linda R. Hansen
-------------------------------
Linda R. Hansen
Vice President,
Secretary and General Counsel
RESTATED ARTICLES OF INCORPORATION
OF
BETZDEARBORN INC.
1st. The name of the Corporation shall be BETZDEARBORN INC.
2nd. The location and post office address of its registered office in
this Commonwealth is 4636 Somerton Road, Trevose, Pennsylvania.
3rd. The purposes for which the Corporation is incorporated are: to
buy, sell, manufacture, compound, process, develop, handle and otherwise conduct
research, deal and trade in chemicals, chemical compounds and chemical products,
and equipment, materials and articles of all kinds and descriptions, including,
without limiting the generality of the foregoing, chemicals, chemical compounds
and chemical products, and equipment, materials and articles for use in the
treatment, improvement or control of water, waste, biological and
microbiological organisms or of other liquids, gases and solids; and the
Corporation shall have unlimited power to engage in and do any lawful act
concerning any or all lawful business for which corporations may be incorporated
under the Business Corporation Law of Pennsylvania.
The Corporation is organized under the Business Corporation Law of
Pennsylvania.
4th. The term for which the Corporation is to exist is perpetual.
5th. The aggregate number of shares which the Corporation has authority
to issue is 251,000,000 shares, divided into 1,000,000 Preferred Shares of the
par value of $.10 per share, and 250,000,000 Common Shares of the par value of
$.10 per share.
A description of the shares in each class and a statement of the
preferences, qualifications, limitations, restrictions, and the special or
relative rights granted to or imposed upon the shares of each class, except such
thereof as the Board of Directors is authorized to fix, as hereinafter provided,
are as follows:
I. Preferred Shares
1. The Preferred Shares may be divided into and issued in series, each
series to be so designated as to distinguish the shares thereof from the shares
of all other series and classes. The Board of Directors of the Corporation shall
have authority, by resolution, to
<PAGE>
establish from time to time new series of Preferred Shares by the allocation
thereto of Preferred Shares which are at the time undesignated as to series. In
establishing any such new series, the Board of Directors shall, by resolution,
fix and determine:
(a) A distinguishing designation for such series;
(b) The rate of dividends to be payable on the shares of such series, and
the date from which such dividends shall be cumulative upon shares
issued prior to the record date for the initial dividend thereon;
(c) Any redemption provisions with respect to the shares of such series,
including the terms and conditions upon which such shares may be
redeemed, and the price at which such shares may be redeemed (the
directors shall specify whether or not, and the extent to which, the
redemption price may be payable in property, which may include shares
or other securities owned by the Corporation, and, if payable in
property, the method of valuation to be used);
(d) The amounts payable upon the shares of such series in the event of
voluntary or involuntary liquidation;
(e) The terms and conditions of conversion, including specific rates of
conversion, if the Board of Directors determines that the shares of
such series shall be convertible into Common Shares or into any other
class of shares; and
(f) Sinking fund provisions, if any, in connection with a redemption or
repurchase of the shares of such series.
In the resolution establishing a new series of Preferred Shares, the
Board of Directors may provide for such additional rights, and with respect to
rights of redemption and convertibility, such relative preferences between
shares of different series, as are consistent with the rights of any outstanding
shares of a previously established series, and with all other provisions of this
Article 5th. Except as to the various rights and preferences fixed by the Board
of Directors in the resolution establishing a new series, all Preferred Shares
shall be identical. In case the stated dividends or the amounts payable on
liquidation, or both, are not paid in full, all Preferred Shares of all series
shall participate ratably in the payment of dividends, including accumulations,
if any, in accordance with the sums which would be payable thereon if all
dividends thereon were declared and paid in full, and, in any distribution of
assets other than by way of dividends, in accordance with the sums which would
be payable on such distribution if all sums payable thereon to holders of
Preferred Shares were discharged in full.
2. Dividends. The holders of the Preferred Shares shall be entitled to
receive, when and as declared by the Board of Directors, out of any funds of the
Corporation
2
<PAGE>
lawfully available for dividends under the laws of the Commonwealth of
Pennsylvania, cash dividends at such rate per share per annum for each
particular series as shall have been fixed by the Board of Directors, in the
resolution establishing such series, and no more, payable quarterly on such
dates as may have been fixed in the resolution establishing such series, or, if
no payment dates have been so specified by the Board of Directors, then on such
dates as may be determined by the Board of Directors from time to time.
Such dividends on the Preferred Shares shall be cumulative from the
dates as follows:
(a) In the case of shares issued prior to the record date for the initial
dividend on shares of the series of which such shares shall constitute
a part, then from the date fixed as aforesaid for such purpose by the
Board of Directors;
(b) If issued during the period commencing immediately after the record
date for a dividend on shares of such series and terminating at the
close of the payment date, then from such dividend payment date; and
(c) otherwise, from the dividend payment date next preceding the date of
issue of such shares.
Further restrictions with respect to dividends and distributions on,
and acquisitions for value of, Preferred Shares and Common Shares are set forth
in Section 6 of this Part I.
3. Redemption of Preferred Shares. Except as otherwise provided in
Section 6 of this Part I and except to the extent that the resolution of the
Board of Directors establishing a particular series shall provide that shares of
such series shall not be redeemable, and subject to the terms and conditions of
each outstanding series of Preferred Shares fixed as aforesaid, the Corporation
may, at the election of the Board of Directors, redeem all or any of the
outstanding Preferred Shares, or all or any shares of any series thereof, at any
time or from time to time, upon payment in respect of the shares so redeemed of
the redemption price fixed as aforesaid by the Board of Directors in respect of
the series of which such shares shall constitute a part, together in each case
with an amount equal to all accumulated and unpaid dividends thereon to the date
of redemption, whether or not such dividends shall have been earned or declared
(such price, including such amount equal to such accumulated and unpaid
dividends, and whether payable in cash or property or partly in cash and partly
in property, as herein provided, being hereinafter called the "redemption
price").
Any redemption shall be in such amount, at such place and in such
manner as the Board of Directors shall determine. In the case of a redemption of
less than all the outstanding Preferred Shares of any series, the particular
shares to be redeemed shall be selected by lot in such manner as the Board of
Directors shall determine. Notice of every
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redemption shall be mailed at least 30 days prior to the date fixed for such
redemption to the holders of record of the shares so to be redeemed at their
respective addresses as the same shall appear on the books of the Corporation.
From and after the date fixed in any such notice as the date of
redemption, unless default shall be made by the Corporation in providing the
redemption price at the time and place specified for the payment thereof
pursuant to said notice, all dividends on the Preferred Shares thereby called
for redemption shall cease to accrue, and all rights as shareholders in the
Corporation of the holders thereof, except the right to receive the redemption
price upon surrender of their share certificates, shall cease and terminate, and
such shares shall not be deemed outstanding for any purpose.
The Corporation may, however, give or irrevocably authorize the
Depositary hereinafter mentioned forthwith to give written notice (in the same
manner as the notice of redemption is required to be given as aforesaid) to the
holders of all the Preferred Shares selected for redemption that the redemption
price has been or will on a date specified be deposited with a designated bank,
bank and trust company, or private bank, which shall have an office in
Philadelphia, Pennsylvania, and shall have a capital and surplus of not less
than $25,000,000 (hereinafter called the "Depositary"), in trust for the account
of the holders of such Preferred Shares, and that such holders may receive the
redemption price of such Preferred Shares from such Depositary on or after the
date of such deposit upon the surrender of their share certificates without
awaiting the date fixed for redemption. In such event, if the redemption price
shall have been so deposited by the Corporation with such Depositary, all rights
as shareholders in the Corporation of the holders of the shares so called,
except the right to receive the redemption price from such Depositary, upon such
surrender, shall cease and terminate upon the date of such deposit or the date
of the giving of such notice or authority, whichever be later, and such
Preferred Shares shall thereafter not be deemed to be outstanding for any
purpose; provided, that if any shares so called for redemption shall at that
time be convertible, the conversion privilege may be exercised in accordance
with its terms, but not later than the close of business on the day prior to the
date fixed for redemption. Any portion of the redemption price so deposited
which represents the redemption price of convertible shares which are actually
converted shall promptly be repaid by the Depositary to the Corporation. Any
remaining portion of the redemption price so deposited which shall remain
unclaimed by the holders of such Preferred Shares at the end of two years after
the date so fixed for redemption shall be paid by such Depositary to the
Corporation, after which the holders of such Preferred Shares shall look only to
the Corporation for payment of the redemption price thereof.
The provisions of this Section 3 with respect to the rights of holders
of Preferred Shares to receive payment of the redemption price are subject in
all respects to the provisions of Section 2 of Part III hereof.
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Preferred Shares of any series redeemed, purchased or retired shall be
canceled and thereupon restored to the status of authorized but unissued
Preferred Shares undesignated as to series.
4. Liquidation or Dissolution. On any voluntary or involuntary
liquidation or dissolution of the Corporation, before any payment or
distribution shall be made to the holders of any Common Shares, the holders of
the Preferred Shares shall be entitled to be paid the amounts respectively fixed
therefor as aforesaid by the Board of Directors in respect of each outstanding
series of Preferred Shares, together in each case with an amount equal to all
accumulated and unpaid dividends thereon to the date of such payment, whether or
not such dividends shall have been earned or declared.
After such payment shall have been made in full to the holders of
Preferred Shares, they shall be entitled to no further payment or distribution,
and the holders of Common Shares shall be entitled to share ratably in all
remaining assets of the Corporation.
A consolidation with or merger with or into any other corporation or
corporations shall not be deemed a liquidation or dissolution of the Corporation
within the meaning of this Section 4.
5. Voting Rights. At each meeting of shareholders of the Corporation,
each holder of Preferred Shares shall be entitled to one vote for each such
share on each matter to come before the meeting, except as otherwise provided
herein or by law.
If, however, dividends upon any of the Preferred Shares shall be in
arrears in an amount equal to six or more quarterly dividends thereon, the
holders of the Preferred Shares, voting separately as a class, shall be entitled
to elect the number of directors determined as set forth below in this Section
5. The rights granted herein to the holders of Preferred Shares to elect
directors in the event of dividend arrearages are referred to herein as "Special
Voting Rights" and shall continue until all accumulated and unpaid dividends on
the Preferred Shares shall have been paid, whereupon the Special Voting Rights
shall cease and the voting rights otherwise provided shall resume, subject to
the Special Voting Rights being again revived from time to time upon the
reoccurrence of the conditions above described as giving rise thereto. The
directors to be elected by the exercise of Special Voting Rights of holders of
Preferred Shares are referred to herein as "Preferred Share Directors". The
other directors of the Corporation shall be elected by the holders of the Common
Shares, voting separately as a class, and are referred to herein as "Common
Share Directors".
At any time after the accrual of Special Voting Rights, a special
meeting of shareholders of the Corporation, for the purpose of the initial
exercise of such Special Voting Rights, shall be held, upon 30 days' notice,
upon call by the Secretary of the Corporation at the written request of any
holder of Preferred Shares at the time
5
<PAGE>
outstanding, or, if the Secretary shall fail or neglect to call such meeting
within 30 days after receipt of such request, then upon call by any such holder,
provided, however, that no such special meeting shall be called if the annual
meeting of shareholders is to be held within 90 days after the receipt of the
foregoing written request from any holder of the Preferred Shares. Upon the
mailing of the notice of any meeting of the shareholders of the Corporation at
which the Special Voting Rights are to be exercised, the number of directors of
the Corporation shall ipso facto be increased to the sum of (i) the number of
directors provided for in the Bylaws, plus (ii) that additional number of
directors necessary to provide sufficient vacancies to enable the holders of
Preferred Shares to elect the Preferred Share Directors. At such meeting of
shareholders the number of Common Share Directors shall be that number of
directors provided for in the Bylaws (the number of directors which the
Corporation would have were it not for the Special Voting Rights). The number of
Preferred Share Directors shall be the greater of (i) two or (ii) the number
determined by multiplying the number of Common Share Directors by the number of
Preferred Shares outstanding on the applicable record date, and dividing the
product so obtained by the total number of Common and Preferred Shares
outstanding on such record date, provided that if the number of Preferred Share
Directors includes a fraction,
(a) such fraction shall be disregarded if less than one-half, or
(b) the number of Preferred Share Directors shall be increased to the next
whole number if such fraction is one-half or more.
The number of directors of the Corporation indicated by the Bylaws may be
increased or decreased in such manner as may be permitted by the Bylaws, and
without the separate vote of the holders of Preferred Shares, provided that no
such action shall impair the right of the holders of Preferred Shares to elect
and be represented by the number of directors they are entitled to elect under
the Special Voting Rights so long as such Rights are in effect.
So long as Special Voting Rights are in effect, any vacancy in the
Board of Directors caused by the death or resignation of any Preferred Share
Director shall, until the next meeting of shareholders for the election of
directors, in each case be filled by vote of the remaining Preferred Share
Director or Directors, provided that if there shall be no such remaining
Director, such vacancy shall be filled for such period by vote of the Common
Share Directors. Upon termination of the Special Voting Rights, the term of all
Preferred Share Directors then in office shall expire, at which time the number
of directors of the Corporation shall revert to that number provided by the
Bylaws. For the purpose of this paragraph, a director elected in the manner
above provided to fill a vacancy in the number of Preferred Share Directors
shall also be deemed to be a Preferred Share Director.
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<PAGE>
Further provisions concerning voting rights of the holders of the
Preferred Shares are contained in Sections 7 and 8 of this Part I and in
Sections 1 and 3 of Part III, below.
6. Restrictions on Dividends and Purchase of Shares. So long as any
Preferred Shares shall be outstanding, no dividend (other than dividends payable
in Common Shares) shall be paid or distribution shall be made on the Common
Shares, nor shall any Common Shares be purchased, retired or otherwise acquired
by the Corporation (except out of the proceeds of the sale of Common Shares
received by the Corporation after January 1, 1970), nor shall any Preferred
Shares be redeemed, purchased or otherwise acquired (for sinking fund purposes
or otherwise) by the Corporation, except in accordance with a stock purchase
offer (which may vary as to terms offered with respect to shares of different
series but not with respect to shares of the same series) made to all holders of
record of Preferred Shares, unless in each such case,
(a) all dividends on all outstanding Preferred Shares for all past
quarterly dividend periods shall have been paid and full dividends
thereon for the then current quarterly dividend period declared and a
sum sufficient for the payment thereof set apart; and
(b) the Corporation shall not be in arrears in respect of any sinking fund
obligation or obligation of a similar nature in respect of any series
of Preferred Shares.
7. Certain matters requiring consent of holders of two-thirds of
Preferred Shares. So long as any Preferred Shares shall be outstanding, the
Corporation shall not, without the consent of the holders of at least two-thirds
of the Preferred Shares at the time outstanding, given in person or by proxy,
either in writing or at a meeting called for the purpose:
(a) adopt or effect any amendment to the Corporation's Articles of
Incorporation or Bylaws, other than an amendment of the nature
described under Section 8, below, which would adversely affect the
rights or preferences of the Preferred Shares; provided, however, that
if any such amendment shall adversely affect the rights or preferences
of one or more, but not all, of the several series of Preferred Shares
at the time outstanding, or shall unequally affect the rights or
preferences of two or more of such series, the consent of the holders
of at least two-thirds of the shares of each series adversely affected,
similarly given, shall be required in lieu of the consent of the
holders of two-thirds of the Preferred Shares; or
(b) authorize any new class of shares which are senior to the Preferred
Shares with respect to the payment of dividends or distributions on
liquidation or dissolution.
8. Certain matters requiring consent of holders of majority of all
outstanding shares. The Corporation may increase the authorized number of
Preferred Shares, or
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<PAGE>
authorize any new class of shares which are on a parity with the Preferred
Shares with respect to the payment of dividends or distributions on liquidation
or dissolution, by obtaining the affirmative vote, given in person or by proxy,
of the holders of at least a majority of the then outstanding Common Shares and
Preferred Shares, voting together and not by class.
II. Common Shares
1. Junior to Preferred Shares. The Common Shares shall rank junior to
the Preferred Shares with respect to payment of dividends and distributions on
liquidation or dissolution.
2. Voting Rights. At each meeting of shareholders of the Corporation,
each holder of Common Shares shall be entitled to one vote for each such share,
on each matter to come before the meeting, except as otherwise provided herein
or by law.
Further provisions concerning voting rights of the holders of Common
Shares are contained in Sections 5 and 8 of Part I, above, and in Sections 1 and
3 of Part III below.
3. Dividends. After all dividends upon all Preferred Shares for all
previous quarterly dividend periods shall have been paid and full dividends
thereon for the then current quarterly dividend period declared and a sum
sufficient for the payment thereof set apart therefor, and after or concurrently
with the setting aside of any and all amounts then or theretofore required to be
set aside for any sinking fund obligation or obligation of a similar nature in
respect of any series of Preferred Shares, then and not otherwise, and subject
to any other applicable provisions of Part I hereof, dividends may be declared
upon and paid to the holders of the Common Shares, to the exclusion of the
holders of the Preferred Shares.
4. Rights upon Liquidation. In the event of voluntary or involuntary
liquidation or dissolution of the Corporation, after payment in full of amounts
required to be paid to the holders of the Preferred Shares, the holders of the
Common Shares shall be entitled, to the exclusion of the holders of the
Preferred Shares, to share ratably in all remaining assets of the Corporation.
III. General
1. Except to the extent that a greater affirmative vote may be required
by law, the vote of the shareholders for approval of any plan of merger or
consolidation (excepting any plan of merger or consolidation for which no
shareholder approval is required under the provisions of Pennsylvania law in
effect at the time such action is taken); for authorization of any sale of all
or substantially all of the Corporation's assets; or for
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<PAGE>
adoption of any amendment of this Section 1 of Part III, must meet the following
requirements:
(a) There must be the affirmative vote (given in person or by proxy) of the
holders of at least a majority of the then outstanding Common Shares
and Preferred Shares, voting together and not by class; and
(b) Of the shares (regardless of class) actually represented in person or
by proxy at the particular meeting, there must be the affirmative vote
of at least two-thirds, voting together and not by class.
2. If a registered holder of shares of either class does not perfect
his right to receive
(a) any dividends payable upon his shares, or
(b) any redemption price due him for Preferred Shares called for
redemption by the Corporation,
within three years after the date for determination of those entitled to receive
such dividend or redemption price, then such holder shall have no further rights
with respect to such dividend or redemption price which shall thereupon become
the absolute property of the Corporation, its successors and assigns; provided,
however, that the above provisions of this Section may be disregarded by the
Board of Directors if and to the extent that counsel designated by the Board,
who may be counsel regularly retained by the Corporation, shall advise the Board
that such provisions may not be legally enforceable.
3. Shareholders of the Corporation shall not be entitled to cumulative
voting in the election of directors.
IV. Provisions Regarding Certain Business Combinations
1. General. In addition to any other requirements of these Restated
Articles of Incorporation and applicable law, every Business Combination
involving an Interested Shareholder must either be approved by a majority of the
Disinterested Directors or be fair (within the meaning of Section 2 of this Part
IV) to the holders of the Protected Shares of the Corporation.
2. Fairness Provisions. For purposes of Section 1 of Part IV, to be
fair to the holders of Protected Shares of the Corporation, a Business
Combination must meet all of the following conditions:
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(a) Minimum Value. The aggregate amount of the cash and the Fair
Market Value as of the Consummation Date of consideration other
than cash to be received per share by holders of shares of each
class or series of outstanding Protected Shares regardless of
whether the Interested Shareholder has previously acquired any
shares of a particular class or series of Protected Shares shall
be at least equal to the highest of the following:
(i) if applicable, the Highest Per Share Price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder or any of its
Affiliates or Associates for any shares of such class or
series of Protected Shares acquired by the Interested
Shareholder or any of its Affiliates or Associates (A) within
the two year period immediately prior to the Announcement Date
or (B) on the Determination Date, whichever is higher;
(ii) if applicable, the highest preferential amount per share to
which the holders of shares of such class or series of
Protected Shares are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; or
(iii) the Fair Market Value per share of such class or series of
Protected Shares on the Announcement Date or the Determination
Date, whichever is higher.
(b) Form of Consideration. The consideration to be received by holders of a
particular class or series of outstanding Protected Shares shall be in
cash or in the same form as the Interested Shareholder or any of its
Affiliates or Associates has paid for shares of such class or series of
Protected Shares prior to the Consummation Date. If the Interested
Shareholder or any of its Affiliates or Associates has paid for shares
of any class or series of Protected Shares with varying forms of
consideration, the form of consideration to be received for such class
or series of Protected Shares shall be either cash or the form used to
acquire the largest number of shares of such class or series of
Protected Shares previously acquired by it.
(c) Procedural Requirements.
(i) Maintain Dividends. After such Interested Shareholder has
become an Interested Shareholder and prior to the consummation
of such Business Combination, except as approved by a majority
of the Disinterested Directors, there shall have been (A) no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any
outstanding Preferred Shares of the Corporation, (B)
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<PAGE>
no reduction in the annual rate of dividends paid on the
Common Shares except as necessary to reflect any subdivision
of the Common Shares, and (C) such increase in the annual rate
of dividends paid on the Common Shares as was necessary to
reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar
transaction which had the effect of reducing the number of
outstanding Common Shares.
(ii) Acquisition of Additional Shares. After such Interested
Shareholder has become an Interested Shareholder and prior to
the Consummation Date, neither such Interested Shareholder nor
any of its Affiliates or Associates shall have become the
beneficial owner of any additional Voting Shares at a price
less than that provided for by paragraph (a) of Section 2 of
this Part IV except as part of the transaction which results
in such Interested Shareholder becoming an Interested
Shareholder.
(iii) No Disproportionate Benefits. After such Interested
Shareholder has become an Interested Shareholder, neither such
Interested Shareholder nor any of its Affiliates shall have
received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(iv) Furnish Information. A proxy or information statement
describing the proposed Business Combination and complying
with the requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be
mailed to all shareholders of the Corporation at least 30 days
prior to the Consummation Date (whether or not such proxy or
information statement is required pursuant to such Act or any
such subsequent provisions).
3. Powers of Board of Directors. A majority of the Disinterested
Directors of the Corporation shall have the power and duty to determine for the
purposes of this Part IV on the basis of the information known to them after
reasonable inquiry, (a) the number of Voting Shares beneficially owned by any
person, (b) whether a person is an Interested Shareholder or is an Affiliate or
Associate of another person, (c) whether a person has an agreement, arrangement
or understanding with another as to the matters referred to in paragraph (c) of
Section 6 of this Part IV, (d) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the issuance
or transfer of securities by the Corporation or any Subsidiary in any Business
Combination have, an aggregate Fair Market Value of $1,000,000 or more, and (e)
whether the
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requirements of paragraph (a) of Section 2 of this Part IV have been met with
respect to any Business Combination.
4. No Effect on Fiduciary Obligations of Interested Shareholders.
Nothing contained in this Part IV shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.
5. Amendment, Repeal, Etc. Notwithstanding any other provisions of
these Articles of Incorporation or the Bylaws of the Corporation, the
affirmative vote of the holders of not less than 80% of the outstanding Voting
Shares, voting together as a single class, shall be required to amend or repeal,
or adopt any provisions inconsistent with, this Part IV.
6. Definitions. For the purposes of this Part IV:
(a) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on March 7, 1985.
(b) "Announcement Date" means, with respect to any Business Combination,
the date of the first public announcement of such Business Combination.
(c) A person shall be a "beneficial owner" of any Voting Shares:
(i) which such person or any of its Affiliates or Associates owns,
directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote or direct the
vote pursuant to any agreement, arrangement or understanding;
or
(iii) which are owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of such
Voting Shares.
(d) "Board" means the Board of Directors of the Corporation.
(e) A "Business Combination" shall mean any one or more of the following:
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(i) any merger or consolidation of the Corporation or any
Subsidiary with or into (A) any Interested Shareholder or (B)
any other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation
would be, an Affiliate of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of
transactions) to or with any Interested Shareholder or any
Affiliate of any Interested Shareholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value of $1,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the Corporation or any Subsidiary to any
Interested Shareholder or any Affiliate of any Interested
Shareholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market
Value of $1,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or an Affiliate of any Interested
Shareholder; or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Shareholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity securities, or securities convertible into equity
securities, of the Corporation or any Subsidiary, including,
without limitation, any class or series of Protected Shares,
which is directly or indirectly owned by any Interested
Shareholder or any Affiliate of any Interested Shareholder.
(f) "Consummation Date" means, with respect to any Business Combination,
the date on which such Business Combination is effected.
(g) "Determination Date" means, with respect to any Interested Shareholder,
the date on which such Interested Shareholder first became an
Interested Shareholder.
(h) "Disinterested Director" means any member of the Board who is not an
Affiliate or Associate or nominee of the Interested Shareholder and was
a member of the Board prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of a Disinterested
Director who is a member of the
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<PAGE>
Board and who is not an Affiliate or Associate or a nominee of the
Interested Shareholder and was recommended to succeed a Disinterested
Director by a majority of Disinterested Directors on the Board at the
time of such recommendation.
(i) "Fair Market Value" means (A) in the case of stock, the highest closing
sale price during the thirty day period immediately preceding the date
in question of a share of such stock on the Composite Tape for New York
Stock Exchange, Inc. Listed Stocks, or, if such stock is not quoted on
such Composite Tape, on the New York Stock Exchange, Inc., or, if such
stock is not listed on the New York Stock Exchange, Inc., on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing sale
(or bid, as the case may be) quotation with respect to a share of such
stock during the thirty day period preceding the date in question as
reported by the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no such
quotations are available, the Fair Market Value on the date in question
of a share of such stock as determined by a majority of the
Disinterested Directors in good faith; and (B) in the case of property
other than cash or stock the Fair Market Value of such property on the
date in question as determined by a majority of the Disinterested
Directors in good faith.
(j) References to "Highest Per Share Price" shall in each case with respect
to any class of shares reflect an appropriate adjustment for any
dividend or distribution in such shares or any share split, pro rata
share distribution or reclassification of outstanding shares of such
class into a greater number of shares of such class or any combination
or reclassification of outstanding shares of such class into a smaller
number of shares of such class.
(k) "Interested Shareholder" shall mean, in respect of any Business
Combination, any person (other than the Corporation) who or which, as
of its Announcement Date, or on the day immediately prior to the
Consummation Date:
(i) is the beneficial owner, directly or indirectly, of ten
percent (10%) or more of the voting power of the outstanding
Voting Shares; or
(ii) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of ten percent (10%) or more of the voting power
of the then outstanding Voting Shares; or
(iii) is an assignee of or has otherwise succeeded to any shares
of Voting Shares of the Corporation which were at any time
within the two year
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period immediately prior to the date in question beneficially
owned by any Interested Shareholder if such assignment or
succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(l) For the purposes of determining whether a person is an Interested
Shareholder the number of Voting Shares deemed to be outstanding shall
include shares deemed beneficially owned by the Interested Shareholder
through application of paragraph (c) of Section 6 of this Part IV, but
shall not include any other Voting Shares which may be issuable
pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise.
(m) A "person" shall mean any individual, firm, partnership, joint venture,
corporation or other entity.
(n) "Protected Share" means Common Shares and all other classes of capital
stock of the Corporation having, or which may have upon the happening
of some contingency, the right to vote for the election of some or all
of the directors of the Corporation, regardless of whether at the time
in question such shares then have a present right to so vote.
(o) "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation.
(p) "Voting Shares" means, at any time, all shares of capital stock of the
Corporation entitled to vote generally in the election of directors.
(q) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration to be received" as used in
paragraph (b) of Section 2 of this Part IV shall include the Common
Shares and/or the shares of any other class of outstanding Protected
Shares retained by the holders of such shares.
15
B Y L A W S
OF
BETZDEARBORN INC.
(a Pennsylvania Registered Corporation)
(As adopted on April 9, 1998)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I - Offices and Fiscal Year................................................................................
Section 1.1 Registered Office............................................................................1
Section 1.2 Other Offices................................................................................1
Section 1.3 Fiscal Year..................................................................................1
Article II - Notice - Waivers - Meetings Generally.................................................................
Section 2.1 Manner of Giving Notice......................................................................1
(a) General Rule................................................................................1
(b) Bulk Mail...................................................................................2
(c) Adjourned Shareholder Meetings..............................................................2
Section 2.2 Notice of Meetings of Board of Directors.....................................................2
Section 2.3 Notice of Meetings of Shareholders...........................................................2
(a) General Rule................................................................................2
(b) Notice of Action by Shareholders on Bylaws..................................................3
(c) Notice of Action by Shareholders on Fundamental Change......................................3
(d) Notice of Action by Shareholders Giving Rise to Dissenters Rights...........................3
Section 2.4 Waiver of Notice.............................................................................3
(a) Written Waiver..............................................................................3
(b) Waiver by Attendance........................................................................4
Section 2.5 Modification of Proposal Contained in Notice.................................................4
Section 2.6 Exception to Requirement of Notice...........................................................4
(a) General Rule................................................................................4
(b) Shareholders Without Forwarding Addresses...................................................4
Section 2.7 Use of Conference Telephone and Similar Equipment............................................4
Section 2.8 Notice to Corporation of Shareholder Business and Nominations................................5
(a) Annual Meeting of Shareholders..............................................................5
(b) Special Meeting of Shareholders.............................................................6
(c) General.....................................................................................7
Article III - Shareholders
Section 3.1 Place of Meeting.............................................................................8
Section 3.2 Annual Meeting...............................................................................8
Section 3.3 Special Meetings.............................................................................8
Section 3.4 Quorum and Adjournment.......................................................................8
(a) General Rule................................................................................8
(b) Withdrawal of a Quorum......................................................................9
(c) Adjournments Generally......................................................................9
(d) Electing Directors at Adjourned Meeting.....................................................9
(e) Other Action in Absence of Quorum...........................................................9
Section 3.5 Action by Shareholders.......................................................................9
Section 3.6 Organization.................................................................................9
Section 3.7 Voting Rights of Shareholders...............................................................10
Section 3.8 Voting and Other Action by Proxy............................................................10
(a) General Rule...............................................................................10
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(b) Execution and Filing.......................................................................10
(c) Revocation.................................................................................11
(d) Expenses...................................................................................11
Section 3.9 Voting by Fiduciaries and Pledgees..........................................................11
Section 3.10 Voting by Joint Holders of Shares..........................................................11
(a) General Rule...............................................................................11
(b) Exception..................................................................................12
Section 3.11 Voting by Corporations.....................................................................12
(a) Voting by Corporate Shareholders...........................................................12
(b) Controlled Shares..........................................................................12
Section 3.12 Determination of Shareholders of Record....................................................12
(a) Fixing Record Date.........................................................................12
(b) Determination When a Record Date is Not Fixed..............................................13
(c) Certification by Nominee...................................................................13
Section 3.13 Voting Lists...............................................................................13
(a) General Rule...............................................................................13
(b) Effect of List.............................................................................13
Section 3.14 Judges of Election.........................................................................14
(a) Appointment................................................................................14
(b) Vacancies..................................................................................14
(c) Duties.....................................................................................14
(d) Report.....................................................................................14
Section 3.15 Minors as Security Holders.................................................................14
Section 3.16 Consent of Shareholders in Lieu of Meeting.................................................15
Article IV - Board of Directors....................................................................................
Section 4.1 Powers; Liability...........................................................................15
(a) General Rule...............................................................................15
(b) Liability of Directors.....................................................................15
(c) Notation of Dissent........................................................................16
Section 4.2 Qualifications and Selection of Directors...................................................16
(a) Qualifications.............................................................................16
(b) Election of Directors......................................................................16
Section 4.3 Number, Classification and Term of Office...................................................16
Section 4.4 Vacancies...................................................................................17
(a) General Rule...............................................................................17
(b) Resignation; Action by Resigned Directors..................................................17
Section 4.5 Removal of Directors........................................................................17
(a) Removal by the Shareholders................................................................17
(b) Removal by the Board.......................................................................17
Section 4.6 Place of Meetings...........................................................................18
Section 4.7 Organization of Meetings....................................................................18
Section 4.8 Regular Meetings............................................................................18
Section 4.9 Special Meetings............................................................................18
Section 4.10 Quorum of and Action by Directors..........................................................18
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(a) General Rule...............................................................................18
(b) Action by Written Consent..................................................................18
Section 4.11 Committees.................................................................................19
(a) Establishment and Powers...................................................................19
(b) Alternate Committee Members................................................................19
(c) Term.......................................................................................19
(d) Committee Procedures.......................................................................19
Section 4.12 Compensation...............................................................................20
Article V - Officers...............................................................................................
Section 5.1 Officers Generally..........................................................................20
(a) Number, Qualifications and Designation.....................................................20
(b) Bonding....................................................................................20
(c) Standard of Care...........................................................................20
Section 5.2 Election, Term of Office and Resignations...................................................21
(a) Election and Term of Office................................................................21
(b) Resignations...............................................................................21
Section 5.3 Subordinate Officers, Committees and Agents.................................................21
Section 5.4 Removal of Officers and Agents..............................................................21
Section 5.5 Vacancies...................................................................................21
Section 5.6 Authority...................................................................................22
(a) General Rule...............................................................................22
(b) Chief Executive Officer....................................................................22
Section 5.7 The Chairman of the Board...................................................................22
Section 5.8 The President...............................................................................22
Section 5.9 Executive Vice President....................................................................22
Section 5.10 Senior Vice President......................................................................23
Section 5.11 Vice President.............................................................................23
Section 5.12 Assistant Vice Presidents..................................................................23
Section 5.13 Secretary..................................................................................23
Section 5.14 Assistant Secretaries......................................................................23
Section 5.15 Treasurer..................................................................................24
Section 5.16 Assistant Treasurers.......................................................................24
Section 5.17 Subordinate Officers, Committees and Agents................................................24
Section 5.18 Salaries...................................................................................24
Article VI - Certificates of Stock, Transfer, Etc..................................................................
Section 6.1 Share Certificates..........................................................................25
(a) Form of Certificates.......................................................................25
(b) Share Register.............................................................................25
(c) Issuance...................................................................................25
Section 6.2 Transfer....................................................................................25
Section 6.3 Record Holder of Shares.....................................................................26
Section 6.4 Lost, Destroyed or Mutilated Certificates...................................................26
Article VII - Indemnification of Directors, Officers and Other
Representatives...........................................................................................
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Section 7.1 Scope of Indemnification....................................................................26
(a) General Rule...............................................................................26
(b) Partial Payment............................................................................27
(c) No Presumption.............................................................................27
(d) Definitions................................................................................27
Section 7.2 Proceedings Initiated by Indemnified Representatives........................................28
Section 7.3 Advancing Expenses..........................................................................28
Section 7.4 Securing of Indemnification Obligations.....................................................28
Section 7.5 Payment of Indemnification..................................................................28
Section 7.6 Arbitration.................................................................................29
(a) General Rule...............................................................................29
(b) Qualifications of Arbitrators..............................................................29
(c) Burden of Proof............................................................................29
(d) Expenses...................................................................................29
(e) Effect.....................................................................................29
Section 7.7 Contribution................................................................................30
Section 7.8 Mandatory Indemnification of Directors, Officers, etc.......................................30
Section 7.9 Contract Rights; Amendment or Repeal........................................................30
Section 7.10 Scope of Article...........................................................................30
Section 7.11 Reliance on Provisions.....................................................................31
Section 7.12 Interpretation.............................................................................31
Article VIII - Miscellaneous.......................................................................................
Section 8.1 Corporate Seal..............................................................................31
Section 8.2 Checks......................................................................................31
Section 8.3 Contracts...................................................................................31
Section 8.4 Interested Directors or Officers; Quorum....................................................31
(a) General Rule...............................................................................31
(b) Quorum.....................................................................................32
Section 8.5 Deposits....................................................................................32
Section 8.6 Corporate Records...........................................................................32
(a) Required Records...........................................................................32
(b) Right of Inspection........................................................................33
Section 8.7 Amendment of Bylaws.........................................................................33
</TABLE>
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B Y L A W S
OF
BETZDEARBORN INC.
(a Pennsylvania Registered Corporation)
Article I - Offices and Fiscal Year
Section 1.1 Registered Office
The registered office of the Corporation in the Commonwealth of
Pennsylvania shall be at 4636 Somerton Road, Trevose, Pennsylvania 19053-6783,
until otherwise established by an amendment of the articles of incorporation
(the "articles") or by the Board of Directors and a record of such change is
filed with the Pennsylvania Department of State in the manner provided by law.
Section 1.2 Other Offices
The Corporation may also have offices at such other places within or
without the Commonwealth of Pennsylvania as the Board of Directors may from time
to time appoint or the business of the Corporation may require.
Section 1.3 Fiscal Year
The fiscal year of the Corporation shall begin on the first day of
January in each year.
Article II - Notice - Waivers - Meetings Generally
Section 2.1 Manner of Giving Notice
(a) General Rule
Whenever written notice is required to be given to any person under the
provisions of the Pennsylvania Business Corporation Law of 1988 (the "Business
Corporation Law") or by the articles or 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 courier service, charges prepaid, or by facsimile
transmission to the address (or to the facsimile or telephone number) of the
person appearing on the books of the Corporation or, in the case of directors,
supplied by the director to the Corporation for the purpose of notice. If the
notice is sent by mail or courier service, it
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shall be deemed to have been given to the person entitled thereto when deposited
in the United States mail or with a courier service for delivery to that person
or, in the case of facsimile transmission, when received. A notice of meeting
shall specify the place, day and hour of the meeting and any other information
required by any other provision of the Business Corporation Law, the articles or
these bylaws.
(b) Bulk Mail
If the Corporation has more than 30 shareholders, notice of any regular
or special meeting of the shareholders, or any other notice required by the
Business Corporation Law or by the articles or these bylaws to be given to all
shareholders or to all holders of a class or series of shares, may be given by
any class of postpaid mail if the notice is deposited in the United States mail
at least 20 days prior to the day named for the meeting or any corporate or
shareholder action specified in the notice.
(c) Adjourned Shareholder Meetings
When a meeting of shareholders is adjourned, it shall not be necessary
to give any notice of the adjourned meeting or of the business to be transacted
at an adjourned meeting, other than by announcement at the meeting at which the
adjournment is taken, unless the Board fixes a new record date for the adjourned
meeting in which event notice shall be given in accordance with Section 2.3.
Section 2.2 Notice of Meetings of Board of Directors
Notice of a regular meeting of the Board of Directors need not be
given. Notice of every special meeting of the Board of Directors shall be given
to each director by telephone or in writing at least one hour (in the case of
notice by telephone), 24 hours (in the case of notice by facsimile transmission)
or 48 hours (in the case of notice by courier service or express mail) or five
days (in the case of notice by first class mail) before the time at which the
meeting is to be held. Every such notice shall state the time and place of the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board need be specified in a notice of the
meeting.
Section 2.3 Notice of Meetings of Shareholders
(a) General Rule
Except as otherwise provided in Section 2.1(b), written notice of every
meeting of the shareholders shall be given by, or at the direction of, the
Secretary or other authorized person to each shareholder of record entitled to
vote at the meeting at least (1) 10 days prior to the day named for a meeting
(and, in case of a meeting called to consider a merger, consolidation, asset
transfer, share exchange or division, to each shareholder of record not entitled
to vote at the meeting) called to consider a fundamental change under 15 Pa.C.S.
Chapter 19 or (2) five days prior to the day
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named for the meeting in any other case. If the Secretary neglects or refuses to
give notice of a meeting, the person or persons calling the meeting may do so.
In the case of a special meeting of shareholders, the notice shall specify the
general nature of the business to be transacted.
(b) Notice of Action by Shareholders on Bylaws
In the case of a meeting of shareholders that has as one of its
purposes action on the bylaws, written notice shall be given to each shareholder
that the purpose, or one of the purposes, of the meeting is to consider the
adoption, amendment or repeal of the 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.
(c) Notice of Action by Shareholders on Fundamental Change
In the case of a meeting of the shareholders that has as one of its
purposes action with respect to any fundamental change under 15 Pa.C.S. Chapter
19, each shareholder shall be given, together with written notice of the
meeting, a copy or summary of the amendment or plan to be considered at the
meeting in compliance with the provisions of Chapter 19.
(d) Notice of Action by Shareholders Giving Rise to Dissenters Rights
In the case of a meeting of the shareholders that has as one of its
purposes action that would give rise to dissenters rights under the provisions
of 15 Pa.C.S. Subchapter 15D, each shareholder shall be given, together with
written notice of the meeting:
(1) a statement that the shareholders have a right to dissent and obtain
payment of the fair value of their shares by complying with the
provisions of Subchapter 15D (relating to dissenters rights); and
(2) a copy of Subchapter 15D.
Section 2.4 Waiver of Notice
(a) Written Waiver
Whenever any written notice is required to be given under the
provisions of the Business Corporation Law, the articles or these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to the
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of the notice. Neither the business to be transacted
at, nor the purpose of, a meeting need be specified in the waiver of notice of
the meeting.
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(b) Waiver by Attendance
Attendance of a person at any meeting shall constitute a waiver of
notice of the 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.
Section 2.5 Modification of Proposal Contained in Notice
Whenever the language of a proposed resolution is included in a written
notice of a meeting required to be given under the provisions of the Business
Corporation Law or the articles or these bylaws, the meeting considering the
resolution may without further notice adopt it with such clarifying or other
amendments as do not enlarge its original purpose.
Section 2.6 Exception to Requirement of Notice
(a) General Rule
Whenever any notice or communication is required to be given to any
person under the provisions of the Business Corporation Law or by the articles
or these bylaws or by the terms of any agreement or other instrument or as a
condition precedent to taking any corporate action and communication with that
person is then unlawful, the giving of the notice or communication to that
person shall not be required.
(b) Shareholders Without Forwarding Addresses
Notice or other communications need not be sent to any shareholder with
whom the Corporation has been unable to communicate 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. Whenever the shareholder provides the Corporation with a current
address, the Corporation shall commence sending notices and other communications
to the shareholder in the same manner as to other shareholders.
Section 2.7 Use of Conference Telephone and Similar Equipment
Any director may participate in any meeting of the Board of Directors,
and 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 persons may
participate in a meeting of the shareholders of the Corporation, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this section shall constitute presence in person at the
meeting.
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Section 2.8 Notice to Corporation of Shareholder Business and Nominations
(a) Annual Meeting of Shareholders
(1) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be considered by
the shareholders may be made at an annual meeting of shareholders
(i) by or at the direction of the Chairman of the Board or the
Board of Directors or (ii) by any shareholder of the Corporation
who is entitled to vote at the meeting with respect to the
election of directors or the business to be proposed by such
shareholder, as the case may be, who complies with the notice
procedures set forth in clauses (2) and (3) of paragraph (a) of
this Section 2.8 and who is a shareholder of record at the time
such notice is delivered to the Secretary of the Corporation as
provided below.
(2) For nominations or other business to be properly brought before
an annual meeting by a shareholder pursuant to clause (ii) of
paragraph (a)(1) of this Section 2.8, the shareholder must have
given timely notice thereof in writing to the Secretary of the
Corporation and such business must be a proper subject for
shareholder action under the Business Corporation Law. To be
timely, a shareholder's notice shall be delivered to or mailed to
and received by the Secretary of the Corporation at the office
specified in Section 1.1 hereof not less than 120 days nor more
than 150 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that
the date of the annual meeting is advanced or delayed by more
than 30 days from such anniversary date, notice by the
shareholder to be timely must be so delivered or mailed and
received not later than the later of 120 days prior to such
annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such
shareholder's notice shall set forth (i) as to each person whom
the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that would
be required to be disclosed in a proxy statement filed pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") if proxies were solicited with
respect to such nominee by the Board of Directors and shall
include such person's written consent to serving as a director if
elected; (ii) as to any other business that the shareholder
proposes to bring before the meeting, a description of the
business desired to be brought before the meeting, the reasons
for conducting such business at the meeting and any material
interest in such business of such shareholder; and (iii) as to
the shareholder giving the notice
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(x) the name and address of such shareholder, as they appear on
the Corporation's books, (y) the class and number of shares of
the Corporation which are owned beneficially and of record by
such shareholder and (z) a description of all arrangements or
understandings among such shareholder and any other person or
persons, including any nominee (giving the name and address of
such person or persons), with respect to the matters set forth in
such shareholder's notice.
(3) Notwithstanding anything in the second sentence of paragraph
(a)(2) of this Section 2.8 to the contrary, in the event that
the number of directors to be elected to the Board of Directors
is increased from the number of directors then serving in the
class to be elected and there is no public announcement naming
all of the nominees for director or specifying the size of the
increased Board of Directors or class made by the Corporation at
least 130 days prior to the first anniversary of the preceding
year's annual meeting, a shareholder's notice required by
paragraph (a)(2) of this Section 2.8 shall also be considered
timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the
Secretary of the Corporation at the principal executive offices
of the Corporation not later than the close of business on the
tenth day following the day on which such public announcement is
first made by the Corporation.
(b) Special Meeting of Shareholders
At a special meeting of shareholders, only such business shall be
conducted as shall have been set forth in the notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of shareholders at which directors are to be elected (i) by or at the direction
of the Chairman of the Board or the Board of Directors pursuant to a resolution
or (ii) by any shareholder of the Corporation who is entitled to vote at the
meeting with respect to the election of directors, who complies with the notice
procedures set forth in this paragraph (b) and who is a shareholder of record at
the time such notice is delivered to the Secretary of the Corporation as
provided below. Nominations by shareholders of persons for election to the Board
of Directors may be made at a special meeting of shareholders if the
shareholder's notice as required by paragraph (a)(2) of this Section 2.8 shall
be delivered to the Secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the ninetieth day prior to such
special meeting and not later than the close of business on the later of the
sixtieth day prior to such special meeting or the tenth day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.
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(c) General
(1) Only persons who are nominated in accordance with the procedures
set forth in this Section 2.8 shall be eligible to serve as
directors and only such business shall be conducted at a meeting
of shareholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 2.8.
(2) Except as otherwise provided by law, the articles or this Section
2.8, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the
procedures set forth in this Section 2.8 and, if any proposed
nomination or business is not in compliance with this Section
2.8, to declare that such defective nomination or proposal shall
be disregarded.
(3) For purposes of this Section 2.8, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or
in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(4) Notwithstanding the foregoing provisions of this Section 2.8, a
shareholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 2.8. Nothing in
this Section 2.8 shall be deemed to enlarge or impair any rights
(i) of shareholders to request inclusion of proposals in the
Corporation's proxy materials with respect to a meeting of
shareholders pursuant to and upon meeting the requirements of
Rule 14a-8 under Exchange Act or (ii) of the holders of any class
or series of preferred stock or any other class or series of
stock as set forth in the articles to elect directors under
specified circumstances or to consent to specific actions taken
by the Corporation.
Article III - Shareholders
Section 3.1 Place of Meeting
Meetings of shareholders of the Corporation shall be held at such
place, within the Commonwealth of Pennsylvania or elsewhere, as may be fixed by
the Board of Directors. If the Board shall not fix a place for such meetings,
they shall be held at the office of the Corporation set forth in Section 1.1 of
these Bylaws.
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Section 3.2 Annual Meeting
The Board of Directors may fix and designate the date and time of the
annual meeting of the shareholders, but if no such date and time is fixed and
designated by the Board, the meeting for any calendar year shall be held on the
second Thursday in April in such year, if not a legal holiday under the laws of
Pennsylvania, and, if a legal holiday, then on the next succeeding business day,
not a Saturday, at 11:00 o'clock A.M., and at said meeting the shareholders then
entitled to vote shall elect directors and shall transact such other business as
may properly be brought before the meeting. If the annual meeting shall not have
been called and held within six months after the designated time, any
shareholder may call the meeting at any time thereafter.
Section 3.3 Special Meetings
Special meetings of the shareholders may be called at any time by the
Chairman of the Board or by resolution of the Board of Directors, who may fix
the date, time and place of the meeting. If the Board 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 calling the special meeting.
Section 3.4 Quorum and Adjournment
(a) General Rule
A meeting of shareholders of the Corporation duly called shall not be
organized for the transaction of business unless a quorum is present. The
presence 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 the purposes of consideration and
action on the matter. Shares of the Corporation owned, directly or indirectly,
by it and controlled, directly or indirectly, by the Board of Directors of the
Corporation, as such, shall not be counted in determining the total number of
outstanding shares for quorum purposes at any given time.
(b) Withdrawal of a Quorum
The shareholders present at a duly organized meeting can continue to do
business until adjournment notwithstanding the withdrawal of enough shareholders
to leave less than a quorum.
(c) Adjournments Generally
Any regular or special meeting of the shareholders, including one at
which directors are to be elected and one which cannot be organized because a
quorum has not attended, may be adjourned for such period and to such place as
the shareholders present and entitled to vote shall direct.
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(d) Electing Directors at Adjourned Meeting
Those shareholders entitled to vote who attend a meeting called for the
election of directors that has been previously adjourned for lack of a quorum,
although less than a quorum as fixed in this section, shall nevertheless
constitute a quorum for the purpose of electing directors.
(e) Other Action in Absence of Quorum
Those shareholders entitled to vote who attend a meeting of
shareholders 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 this section, 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.
Section 3.5 Action by Shareholders
Except as otherwise provided in the Business Corporation Law or the
articles or these bylaws, whenever any corporate action is to be taken by vote
of the shareholders of the Corporation, it shall be authorized upon receiving
the affirmative vote of a majority of the votes cast by all shareholders
entitled to vote thereon and, if any shareholders are entitled to vote thereon
as a class, upon receiving the affirmative vote of a majority of the votes cast
by the shareholders entitled to vote as a class.
Section 3.6 Organization
At every meeting of the shareholders, the Chairman of the Board, or, in
the case of vacancy in office or absence of the Chairman of the Board, one of
the following persons present in the order stated: the President, an Executive
Vice President, a Senior Vice President or a Vice President in their order of
rank or seniority in office, or a person chosen by vote of the shareholders
present, shall act as chairman of the meeting. The Secretary or, in the absence
of the Secretary, an assistant secretary, or, in the absence of both the
Secretary and assistant secretaries, a person appointed by the chairman of the
meeting, shall act as secretary of the meeting.
Section 3.7 Voting Rights of Shareholders
Unless otherwise provided in the articles, every shareholder of the
Corporation shall be entitled to one vote for every share standing in the name
of the shareholder on the books of the Corporation.
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Section 3.8 Voting and Other Action by Proxy
(a) General Rule
(1) Every shareholder entitled to vote at a meeting of shareholders
may authorize another person to act for the shareholder by proxy.
(2) The presence of, or vote or other action at a meeting of
shareholders by, a proxy of a shareholder shall constitute the
presence of, or vote or action by the shareholder.
(3) 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.
(b) Execution and Filing
Every proxy shall be executed in writing by the shareholder or by the
duly authorized attorney-in-fact of the shareholder and filed with the Secretary
of the Corporation. A telegram, telex, cablegram, datagram or similar
transmission from a shareholder or attorney-in-fact, or a photographic,
facsimile or similar reproduction of a writing executed by a shareholder or
attorney-in-fact:
(1) may be treated as properly executed for purposes of this
subsection; and
(2) shall be so treated if it sets forth a confidential and unique
identification number or other mark furnished by the Corporation
to the shareholder for the purposes of a particular meeting or
transaction.
(c) Revocation
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 exercised, written notice of the death or incapacity is given to
the Secretary of the Corporation.
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(d) Expenses
The Corporation shall pay the reasonable expenses of solicitation of
votes, proxies or consents of shareholders by or on behalf of the Board of
Directors or its nominees for election to the Board, including solicitation by
professional proxy solicitors and otherwise.
Section 3.9 Voting by Fiduciaries and Pledgees
Shares of the Corporation standing in the name of a trustee or other
fiduciary and shares held by an assignee for the benefit of creditors or by a
receiver may be voted by the trustee, fiduciary, assignee or receiver. A
shareholder whose shares are pledged shall be entitled to vote the shares until
the shares have been transferred into the name of the pledgee, or a nominee of
the pledgee, but nothing in this section shall affect the validity of a proxy
given to a pledgee or nominee.
Section 3.10 Voting by Joint Holders of Shares
(a) General Rule
Where shares of the Corporation are held jointly or as tenants in
common by two or more persons, as fiduciaries or otherwise:
(1) if only one or more of such persons is present in person or by
proxy, all of the shares standing in the names of such persons
shall be deemed to be represented for the purpose of determining
a quorum and the Corporation shall accept as the vote of all the
shares the vote cast by a joint owner or a majority of them; and
(2) if the persons are equally divided upon whether the shares held
by them shall be voted or upon the manner of voting the shares,
the voting of the shares shall be divided equally among the
persons without prejudice to the rights of the joint owners or
the beneficial owners thereof among themselves.
(b) Exception
If there has been filed with the Secretary of the Corporation a copy,
certified by an attorney at law to be correct, of the relevant portions of the
agreement under which the shares are held or the instrument by which the trust
or estate was created or the order of court appointing them or of an order of
court directing the voting of the shares, the persons specified as having such
voting power in the document latest in date of operative effect so filed, and
only those persons, shall be entitled to vote the shares but only in accordance
therewith.
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Section 3.11 Voting by Corporations
(a) Voting by Corporate Shareholders
Any Corporation that is a shareholder of this Corporation may vote at
meetings of shareholders of this Corporation by any of its officers or agents,
or by proxy appointed by any officer or agent, unless some other person, by
resolution of the Board of Directors of the other Corporation or a provision of
its articles or bylaws, a copy of which resolution or provision certified to be
correct by one of its officers has been filed with the Secretary of this
Corporation, is appointed its general or special proxy in which case that person
shall be entitled to vote the shares.
(b) Controlled Shares
Shares of this Corporation owned, directly or indirectly, by it and
controlled, directly or indirectly, by the Board of Directors of this
Corporation, as such, shall not be voted at any meeting and shall not be counted
in determining the total number of outstanding shares for voting purposes at any
given time.
Section 3.12 Determination of Shareholders of Record
(a) Fixing Record Date
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 be not more than 90 days prior to the date
of the meeting of shareholders. Only shareholders of record on the date fixed
shall be so entitled notwithstanding any transfer of shares on the books of the
Corporation after any record date fixed as provided in this subsection. The
Board of Directors may similarly fix a record date for the determination of
shareholders of record for any other purpose. When a determination of
shareholders of record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment thereof unless the
Board fixes a new record date for the adjourned meeting.
(b) Determination When a Record Date is Not Fixed
If a record date is not fixed:
(1) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close
of business on the day next preceding the day on which notice is
given.
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(2) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
(c) Certification by Nominee
The Board of Directors may 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 the name of the shareholder are held for the account
of a specified person or persons. 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.
Section 3.13 Voting Lists
(a) General Rule
The officer or agent having charge of the transfer books for shares of
the Corporation shall make a complete list of the shareholders entitled to vote
at any meeting of shareholders, arranged in alphabetical order, with the address
of and the number of shares held by each. The list shall be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any shareholder during the whole time of the meeting for the purposes thereof
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 therein available
at the meeting by any other means.
(b) Effect of List
Failure to comply with the requirements of this section 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. The
original share register or transfer book, 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 share register or transfer book or
to vote at any meeting of shareholders.
Section 3.14 Judges of Election
(a) Appointment
In advance of any meeting of shareholders of the Corporation, the Board
of Directors may appoint judges of election, who need not be shareholders, to
act at the meeting or any adjournment thereof. If judges of election are not so
appointed, the presiding officer of the meeting may, and on the request of any
shareholder shall, appoint judges of election at the meeting. The number of
judges shall be one or three.
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A person who is a candidate for an office to be filled at the meeting shall not
act as a judge.
(b) Vacancies
In case any person appointed as a judge fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the convening of the meeting or at the meeting by the
presiding officer thereof.
(c) Duties
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,
receive votes or ballots, hear and determine all challenges and questions in any
way arising in connection with nominations by shareholders or the right to vote,
count and tabulate all votes, determine the result and do such 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 is practical. If there are three
judges of election, the decision, act or certificate of a majority shall be
effective in all respects as the decision, act or certificate of all.
(d) Report
On request of the presiding officer of the meeting or of any
shareholder, the judges shall make a report in writing of any challenge or
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 stated therein.
Section 3.15 Minors as Security Holders
The Corporation may treat a minor who holds shares or obligations of
the Corporation as having capacity to receive and to empower others to receive
dividends, interest, principal and other payments or distributions, to vote or
express consent or dissent and to make elections and exercise rights relating to
such shares or obligations unless, in the case of payments or distributions on
shares, the corporate officer responsible for maintaining the list of
shareholders or the transfer agent of the Corporation or, in the case of
payments or distributions on obligations, the Treasurer or paying officer or
agent has received written notice that the holder is a minor.
Section 3.16 Consent of Shareholders in Lieu of Meeting
Any action which may be taken at a meeting of the shareholders or of a
class of shareholders of the Corporation may be taken without a meeting only if
a consent or consents in writing, setting forth the action so taken, shall be
signed by all the
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shareholders who would be entitled to vote at a meeting of the shareholders or
of a class of shareholders called for such purpose and shall be filed with the
Secretary of the Corporation.
Article IV - Board of Directors
Section 4.1 Powers; Liability
(a) General Rule
Unless otherwise provided by statute, all powers vested by law in the
Corporation shall be exercised by or under the authority of, and the business
and affairs of the Corporation shall be managed under the direction of, the
Board of Directors.
(b) Liability of Directors
(1) No director, including a director who is also an officer, of the
Corporation shall be personally liable for monetary damages as
such for any action taken, or any failure to take any action, in
his or her capacity as a director, including such director's
duties as a member of any committee of the Board of Directors on
which he or she may serve, unless:
(A) the director has breached or failed to perform the duties of
his or her office under Subchapter 17B of the Business
Corporation Law or any successor provision; and
(B) such breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any
criminal statute, or the liability of a director for the payment
of taxes pursuant to local, state or Federal law.
(Section 4.1(b) was approved by the shareholders of the Corporation on April 9,
1987 and amended by vote of the shareholders of the Corporation on April 9,
1998).
(c) Notation of Dissent
A director of the Corporation who is present at a meeting of the Board
of Directors, or of a committee of the Board, at which action on any corporate
matter is taken on which the director is generally competent to act, shall be
presumed to have assented to the action taken unless his or her dissent is
entered in the minutes of the meeting or unless the director files his or her
written dissent to the action with the secretary of the meeting before the
adjournment thereof or transmits the dissent in
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writing to the Secretary of the Corporation immediately after the adjournment of
the meeting. The right to dissent shall not apply to a director who voted in
favor of the action. Nothing in this section shall bar a director from asserting
that minutes of the meeting incorrectly omitted his or her dissent if, promptly
upon receipt of a copy of such minutes, the director notifies the Secretary of
the Corporation, in writing, of the asserted omission or inaccuracy.
Section 4.2 Qualifications and Selection of Directors
(a) Qualifications
Each director of the Corporation shall be a natural person of full age
who need not be a resident of the Commonwealth of Pennsylvania or a shareholder
of the Corporation.
(b) Election of Directors
In elections for directors, voting need not be by ballot, unless
required by vote of the shareholders before the voting for the election of
directors begins. The candidates receiving the highest number of votes from each
class or group of classes, if any, entitled to elect directors separately shall
be elected. If at any meeting of shareholders, directors of more than one class
are to be elected, each class of directors shall be elected in a separate
election.
Section 4.3 Number, Classification and Term of Office
The number of directors of the Corporation shall be not less than five,
nor more than thirteen, as determined from time to time by resolutions of the
Board of Directors. The directors shall be classified with respect to the time
for which they shall severally hold office. The Board of Directors shall divide
the number of directors as evenly as practicable into three classes.
At each annual election, the successors to the class of directors whose
terms shall expire in that year shall be elected to hold office for the term of
three years, so that the term of office of one class of directors shall expire
each year.
Each director shall hold office for the term for which he or she is
elected and until his or her successor shall have been elected and qualified.
(Section 4.3 was adopted by the shareholders of the Corporation on April 13,
1978 and amended by vote of the shareholders of the Corporation on April 9,
1981.)
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Section 4.4 Vacancies
(a) General Rule
Vacancies on the Board of Directors, including vacancies resulting from
an increase in the number of directors, may be filled by a majority vote of the
remaining members of the Board though less than a quorum, or by a sole remaining
director, and each person so selected shall be a director to serve until the
next selection of the class for which such director has been chosen, and until a
successor has been selected and qualified or until his or her earlier death,
resignation or removal.
(b) Resignation; Action by Resigned Directors
Any director may resign at any time by giving written notice to the
Chairman of the Board or the Secretary. Such resignation shall take effect upon
the receipt of such notice or at any later time specified therein. Unless
otherwise specified in the notice, acceptance of the resignation shall not be
necessary to make it effective. When one or more directors resign from the Board
effective at a future date, the directors then in office, including those who
have so resigned, shall have power by the applicable vote to fill the vacancies,
the vote thereon to take effect when the resignations become effective.
Section 4.5 Removal of Directors
(a) Removal by the Shareholders
The entire Board of Directors, or any class of the Board, or any
individual director may be removed from office by vote of the shareholders
entitled to vote thereon only for cause. In case the Board or a class of the
Board or any one or more directors are so removed, new directors may be elected
at the same meeting.
(b) Removal by the Board
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 or if,
within 60 days after notice of his or her selection, the director does not
accept the office either in writing or by attending a meeting of the Board of
Directors.
Section 4.6 Place of Meetings
Meetings of the Board of Directors may be held at such place 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.
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Section 4.7 Organization of Meetings
At every meeting of the Board of Directors, the Chairman of the Board
or, in the case of a vacancy in the office or absence of the Chairman of the
Board, one of the following directors present in the order stated: the Vice
Chairman of the Board, if there be one, the President or a person chosen by a
majority of the directors present shall act as chairman of the meeting. The
Secretary or, in the absence of the Secretary, an assistant secretary, or, in
the absence of the Secretary and the assistant secretaries, any person appointed
by the chairman of the meeting, shall act as secretary of the meeting.
Section 4.8 Regular Meetings
Regular meetings of the Board of Directors shall be held at such time
and place as shall be designated from time to time by resolution of the Board of
Directors.
Section 4.9 Special Meetings
Special meetings of the Board of Directors shall be held whenever
called by the Chairman of the Board or, in the case of a vacancy in the office
or absence of the Chairman of the Board, the President, or by two or more of the
directors.
Section 4.10 Quorum of and Action by Directors
(a) General Rule
A majority of the directors in office of the Corporation shall be
necessary to 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.
(b) Action by Written Consent
Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if, prior or subsequent to the action,
a consent or consents thereto by all of the directors in office is filed with
the Secretary of the Corporation.
Section 4.11 Committees
(a) Establishment and Powers
The Board of Directors may, by resolution adopted by a majority of the
directors in office, establish one or more committees to consist of one or more
directors of the Corporation. Any committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all of the
powers and authority of the Board of
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Directors except that a committee shall not have any power or authority as to
the following:
(1) The submission to shareholders of any action requiring approval
of shareholders under the Business Corporation Law.
(2) The creation or filling of vacancies in the Board of Directors.
(3) The adoption, amendment or repeal of these bylaws.
(4) The amendment or repeal of any resolution of the Board that by
its terms is amendable or repealable only by the Board.
(5) Action on matters committed by a resolution of the Board of
Directors to another committee of the Board.
(b) Alternate Committee Members
The Board may designate one or more directors as alternate members of
any committee who may replace any absent or disqualified member at any meeting
of the committee or for the purposes of any written action by the committee. In
the absence or disqualification of a member and alternate member or members of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another director to act at the meeting in the place of the absent or
disqualified member.
(c) Term
Each committee of the Board shall serve at the pleasure of the Board.
(d) Committee Procedures
The term "Board of Directors" or "Board," when used in any provision of
these bylaws relating to the organization or procedures of or the manner of
taking action by the Board of Directors, shall be construed to include and refer
to any committee of the Board.
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Section 4.12 Compensation
The Board of Directors shall have the authority to fix the compensation
of directors for their services as directors. A director may be a salaried
officer of the Corporation, but a director who is a salaried officer of the
Corporation shall not be entitled to receive any additional compensation for
service as a director.
Article V - Officers
Section 5.1 Officers Generally
(a) Number, Qualifications and Designation
The officers of the Corporation shall be a Chairman of the Board, a
President, a Secretary and a Treasurer. The Board of Directors may also choose
one or more Executive Vice Presidents, one or more Senior Vice Presidents, one
or more Vice Presidents, one or more Assistant Secretaries and Assistant
Treasurers and such other officers as may be elected in accordance with the
provisions of Section 5.3. Except as otherwise provided by any policy of the
Corporation adopted by the Board of Directors, officers may but need not be
directors or shareholders of the Corporation. The Chairman of the Board, the
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. Any number of
offices may be held by the same person.
(b) Bonding
The Corporation may secure the fidelity of any or all of its officers
by bond or otherwise.
(c) Standard of Care
In lieu of the standards of conduct otherwise provided by law, officers
of the Corporation shall be subject to the same standards of conduct, including
standards of care and loyalty and rights of justifiable reliance, as shall at
the time be applicable to directors of the Corporation. An officer of the
Corporation shall not be personally liable, as such, to the Corporation or its
shareholders for monetary damages for any action taken, or any failure to take
any action, unless the officer has breached or failed to perform the duties of
his or her office under the articles, these bylaws or the applicable provisions
of law and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness. The provisions of this subsection shall not apply to
the responsibility or liability of an officer pursuant to any criminal statute
or for the payment of taxes pursuant to local, state or federal law.
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Section 5.2 Election, Term of Office and Resignations
(a) Election and Term of Office
Officers of the Corporation, except those elected by delegated
authority pursuant to Section 5.3, shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after the annual
meeting of shareholders and at such other meetings as the Board of Directors may
determine. Each such officer shall hold office for a term of one year, or until
the next annual election, and until a successor has been selected and qualified
or until his or her earlier death, resignation or removal.
(b) Resignations
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. Acceptance of the resignation shall not be necessary to make it
effective, except as may be specified in such notice.
Section 5.3 Subordinate Officers, Committees and Agents
The Board of Directors may from time to time elect such other officers
and appoint such committees, employees or other agents as the business of the
Corporation may require, including one or more Assistant Secretaries, and one or
more Assistant Treasurers, each of whom shall hold office for such period, have
such authority, and perform such duties as are provided in these bylaws, or as
the Board of Directors may from time to time determine. The Board of Directors
may delegate to any officer or committee the power to elect subordinate officers
and to retain or appoint employees or other agents, or committees thereof, and
to prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
Section 5.4 Removal of Officers and Agents
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.
Section 5.5 Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause, may be filled by the Board of Directors or
by the officer or committee to which the power to fill such office has been
delegated pursuant to Section 5.3, as the case may be, and if the office is one
for which these bylaws prescribe a term, shall be filled for the unexpired
portion of the term.
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Section 5.6 Authority
(a) General Rule
All officers of the Corporation, as between themselves and the
Corporation, shall have such authority and perform such duties in the management
of the Corporation as may be provided by or pursuant to resolutions or orders of
the Board of Directors or, in the absence of controlling provisions in the
resolutions or orders of the Board of Directors, as may be determined by or
pursuant to these bylaws.
(b) Chief Executive Officer
The Chairman of the Board shall be the chief executive officer of the
Corporation.
Section 5.7 The Chairman of the Board
The Chairman of the Board shall preside at all meetings of the
shareholders and of the Board of Directors and shall perform such other duties
as may from time to time be requested by the Board of Directors. The Chairman of
the Board shall have authority to sign, execute and acknowledge, in the name of
the Corporation, deeds, mortgages, bonds, contracts and other instruments. The
Chairman of the Board shall be deemed to be and exercise the authority of the
office of president as to all matters as to which the Business Corporation Law,
reposes authority in the president of a corporation, and as to such matters the
President shall be deemed not to act as such.
Section 5.8 The President
The President shall be the chief operating officer of the Corporation
and shall have general supervision over the business and operations of the
Corporation, subject, however, to the direction and control of the Chairman of
the Board. He or she shall have the authority to sign, execute and acknowledge,
in the name of the Corporation, deeds, mortgages, bonds, contracts and other
instruments authorized by the Board, except in cases where the signing and
execution thereof shall be expressly delegated by the Board or the Chairman to
some other officer or agent of the Corporation; and, in general, he or she shall
perform all duties incident to the office of President and such other duties as
from time to time may be assigned by the Chairman.
Section 5.9 Executive Vice President
The Board may establish one or more Executive Vice Presidents. The
Executive Vice President, or if there shall be more than one, the Executive Vice
Presidents, shall direct and coordinate broad Corporation activities, including
departments in his or her charge, in accordance with policies established by the
Chairman and the Board of Directors. When so directed by the President, an
Executive Vice President may
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perform all of the duties of the President, and, when so acting, shall have all
of the powers of, and be subject to all of the restrictions upon the President.
Section 5.10 Senior Vice President
The Board may establish one or more Senior Vice Presidents. The Senior
Vice President, or if there shall be more than one, the Senior Vice Presidents,
shall have such responsibilities and shall perform such duties as may be
prescribed by the Chairman and/or the officer to whom they report.
Section 5.11 Vice President
The Board may establish one or more Vice Presidents. The Vice
President, or if there shall be more than one, the Vice Presidents, shall have
such responsibilities and shall perform such duties as may be prescribed by the
Chairman and/or the officer to whom they report.
Section 5.12 Assistant Vice Presidents
The Board may establish one or more Assistant Vice Presidents. The
Assistant Vice President, or if there shall be more than one, the Assistant Vice
Presidents, shall have such responsibilities and shall perform such duties as
may be prescribed by the Chairman and/or the officer to whom they report
Section 5.13 Secretary
The Secretary shall record all of the votes of the shareholders and of
the directors and the minutes of the meetings of the shareholders and of the
Board of Directors in a book or books to be kept for that purpose; he or she
shall see that notices of meetings of the Board and shareholders are given and
that all records and reports are properly kept and filed by the Corporation as
required by law; he or she shall be the custodian of the seal of the Corporation
and shall see that it is affixed to all documents to be executed on behalf of
the Corporation under its seal; and, in general, he or she shall perform all
duties incident to the office of Secretary, and such other duties as may, from
time to time, be assigned by the Board or the Chairman.
Section 5.14 Assistant Secretaries
In the absence or disability of the Secretary or when so directed by
the Secretary, any Assistant Secretary elected by the Board of Directors, or
temporarily appointed by the Chairman, may perform all the duties of the
Secretary, and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary. The Assistant Secretary shall perform
such other duties as from time to time may be assigned respectively by the Board
of Directors, the Chairman or the Secretary.
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Section 5.15 Treasurer
The Treasurer shall have charge of all receipts and disbursements of
the Corporation and shall have or provide for the custody of its funds and
securities; he or she shall have full authority to receive and give receipts for
all money due and payable to the Corporation, and to endorse checks, drafts, and
warrants in its name and on its behalf and to give full discharge for the same;
he or she shall deposit all funds of the Corporation except such as may be
required for current use, in such banks or other places of deposit as the Board
of Directors may from time to time designate; and, in general, he or she shall
perform all duties incident to the office of Treasurer and such other duties as
may, from time to time, be assigned by the Board or the Chairman.
Section 5.16 Assistant Treasurers
In the absence or disability of the Treasurer or when so directed by
the Treasurer, any Assistant Treasurer may perform all the duties of the
Treasurer, and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. The Assistant Treasurers shall perform
all such other duties as, from time to time, may be assigned respectively, by
the Board of Directors, the Chairman or the Treasurer.
Section 5.17 Subordinate Officers, Committees and Agents
The Board of Directors may, from time to time, elect such other
officers and appoint such committees, employees or other agents as the business
of the Corporation may require, each of which shall hold office for such period,
have such authority, and perform such duties as are provided in these bylaws, or
as the Board of Directors may, from time to time, determine. The Board of
Directors may delegate to any officer or committee the power to elect
subordinate officers and to retain or appoint employees or other agents, or
committees thereof, and to prescribe the authority and duties of such
subordinate officers, committees, employees or other agents.
Section 5.18 Salaries
The salaries of the officers elected by the Board of Directors shall be
fixed from time to time by the Board of Directors or by such officer as may be
designated by resolution of the Board. The salaries or other compensation of any
other officers, employees and other agents shall be fixed from time to time by
the officer or committee to which the power to elect such officers or to retain
or appoint such employees or other agents has been delegated pursuant to Section
5.3. No officer shall be prevented from receiving such salary or other
compensation by reason of the fact that the officer is also a director of the
Corporation.
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Article VI - Certificates of Stock, Transfer, Etc.
Section 6.1 Share Certificates
(a) Form of Certificates
Certificates for shares of the Corporation shall be in such form as
approved by the Board of Directors, and shall state that the Corporation is
incorporated under the laws of the Commonwealth of Pennsylvania, the name of the
person to whom issued, and the number and class of shares and the designation of
the series (if any) that the certificate represents. If the Corporation is
authorized to issue shares of more than one class or series, certificates for
shares of the Corporation shall set forth upon the face or back of the
certificate (or shall state on the face or back of the certificate that the
Corporation will furnish to any shareholder upon request and without charge), a
full or summary statement of the designations, voting rights, preferences,
limitations and special rights of the shares of each class or series authorized
to be issued so far as they have been fixed and determined and the authority of
the Board of Directors to fix and determine the designations, voting rights,
preferences, limitations and special rights of the classes and series of shares
of the Corporation.
(b) Share Register
The share register or transfer books and blank share certificates shall
be kept by the Secretary or by any transfer agent or registrar designated by the
Board of Directors for that purpose.
(c) Issuance
The share certificates of the Corporation shall be numbered and
registered in the share register or transfer books of the Corporation as they
are issued. They shall be executed in such manner as the Board of Directors
shall determine. In case any officer, transfer agent or registrar who has signed
or authenticated, or whose facsimile signature or authentication has been placed
upon, any share certificate shall have ceased to be such officer, transfer agent
or registrar because of death, resignation or otherwise, before the certificate
is issued, the certificate may be issued with the same effect as if the officer,
transfer agent or registrar had not ceased to be such at the date of its issue.
The provisions of this Section 6.2 shall be subject to any inconsistent or
contrary agreement in effect at the time between the Corporation and any
transfer agent or registrar.
Section 6.2 Transfer
Transfers of shares shall be made on the share register or transfer
books of the Corporation upon surrender of the certificate therefor, endorsed by
the person named in the certificate or by an attorney lawfully constituted in
writing. No transfer shall be
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made inconsistent with the provisions of the Uniform Commercial Code, 13 Pa.C.S.
(section)(section)8101 et seq., and its amendments and supplements.
Section 6.3 Record Holder of Shares
The Corporation shall be entitled to treat the person in whose name any
share or shares of the Corporation stand on the books of the Corporation as the
absolute owner thereof, and shall not be bound to recognize any equitable or
other claim to, or interest in, such share or shares on the part of any other
person.
Section 6.4 Lost, Destroyed or Mutilated Certificates
The holder of any shares of the Corporation shall immediately notify
the Corporation of any loss, destruction or mutilation of the certificate
therefor, and the Board of Directors may, in its discretion, cause a new
certificate or certificates to be issued to such holder, in case of mutilation
of the certificate, upon the surrender of the mutilated certificate or, in case
of loss or destruction of the certificate, upon satisfactory proof of such loss
or destruction and, if the Board of Directors shall so determine, the deposit of
a bond in such form and in such sum, and with such surety or sureties, as it may
direct.
Article VII - Indemnification of Directors, Officers and
Other Authorized Representatives
Section 7.1 Scope of Indemnification
(a) General Rule
The Corporation shall indemnify an indemnified representative
against any liability incurred in connection with any proceeding in which the
indemnified representative may be involved as a party or otherwise by reason of
the fact that such person is or was serving in an indemnified capacity,
including, without limitation, liabilities resulting from any actual or alleged
breach or neglect of duty, error, misstatement or misleading statement,
negligence, gross negligence or act giving rise to strict or products liability,
except:
(1) where such indemnification is expressly prohibited, or been
finally determined to be unlawful, under applicable law; or
(2) where the conduct of the indemnified representative has been
finally determined to constitute willful misconduct or
recklessness within the meaning of 15 Pa.C.S.(section)1746(b) or
any superseding provision of law sufficient in the circumstances
to bar indemnification against liabilities arising from the
conduct.
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<PAGE>
(b) Partial Payment
If an indemnified representative is entitled to indemnification in
respect of a portion, but not all, of any liabilities to which such person may
be subject, the Corporation shall indemnify such indemnified representative for
such portion of the liabilities.
(c) No Presumption
The termination of a proceeding by judgment, order, settlement or
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the indemnified representative is not entitled
to indemnification.
(d) Definitions
For purposes of this Article:
(1) "indemnified capacity" means any and all past, present and future
service by an indemnified representative in one or more
capacities as a director, officer, employee or agent of the
Corporation, or, at the request of the Corporation, as a
director, officer, employee, agent, fiduciary or trustee of
another Corporation, partnership, joint venture, trust, employee
benefit plan or other entity or enterprise;
(2) "indemnified representative" means any and all directors and
officers of the Corporation and any other person designated as an
indemnified representative by the Board of Directors of the
Corporation (which may, but need not, include any person serving
at the request of the Corporation, as a director, officer,
employee, agent, fiduciary or trustee of another Corporation,
partnership, joint venture, trust, employee benefit plan or other
entity or enterprise);
(3) "liability" means any damages, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed
with respect to an employee benefit plan or reasonable expense of
any nature (including, without limitation, attorneys' fees and
disbursements); and
(4) "proceeding" means any threatened, pending, or completed action,
suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative, or investigative, whether formal or
informal, and whether brought by or in the right of the
Corporation, a class of its security holders or otherwise.
27
<PAGE>
Section 7.2 Proceedings Initiated by Indemnified Representatives
Notwithstanding any other provision of this Article, the Corporation
shall not indemnify under this Article an indemnified representative for any
liability incurred in a proceeding initiated (which shall not be deemed to
include counterclaims or affirmative defenses) or participated in as an
intervenor or amicus curiae by the person seeking indemnification unless such
initiation of or participation in the proceeding is authorized, either before or
after its commencement, by the affirmative vote of a majority of the directors
in office. This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.3 Advancing Expenses
The Corporation shall pay the reasonable expenses (including attorneys'
fees and disbursements) incurred by an indemnified representative in advance of
the final disposition of a proceeding described in Section 7.1 or the initiation
of or participation in which is authorized pursuant to Section 7.2 upon receipt
of an undertaking by or on behalf of the indemnified representative to repay the
amount if it is ultimately determined pursuant to Section 7.6 that such person
is not entitled to be indemnified by the Corporation pursuant to this Article.
The financial ability of an indemnified representative to repay an advance shall
not be a prerequisite to the making of such advance.
Section 7.4 Securing of Indemnification Obligations
To further effect, satisfy or secure the indemnification obligations
provided herein or otherwise, the Corporation may maintain insurance, obtain a
letter of credit, act as self-insurer, create a reserve, trusts, escrow, cash
collateral or other fund or account, enter into indemnification agreements,
pledge or grant a security interest in any assets or properties of the
Corporation, or use any other mechanism or arrangement whatsoever in such
amounts, at such costs, and upon such other terms and conditions as the Board of
Directors shall deem appropriate. Absent fraud, the determination of the Board
of Directors with respect to such amounts, costs, terms and conditions shall be
conclusive against all security holders, officers and directors and shall not be
subject to voidability.
Section 7.5 Payment of Indemnification
An indemnified representative shall be entitled to indemnification
within 30 days after a written request for indemnification has been delivered to
the secretary of the Corporation.
28
<PAGE>
Section 7.6 Arbitration
(a) General Rule
Any dispute related to the right to indemnification, contribution or
advancement of expenses as provided under this Article, except with respect to
indemnification for liabilities arising under the Securities Act of 1933 that
the Corporation has undertaken to submit to a court for adjudication, shall be
decided only by arbitration in the metropolitan area in which the principal
executive offices of the Corporation are located at the time, in accordance with
the commercial arbitration rules then in effect of the American Arbitration
Association, before a panel of three arbitrators, one of whom shall be selected
by the Corporation, the second of whom shall be selected by the indemnified
representative and the third of whom shall be selected by the other two
arbitrators. In the absence of the American Arbitration Association, or if for
any reason arbitration under the arbitration rules of the American Arbitration
Association cannot be initiated, and if one of the parties fails or refuses to
select an arbitrator or the arbitrators selected by the Corporation and the
indemnified representative cannot agree on the selection of the third arbitrator
within 30 days after such time as the Corporation and the indemnified
representative have each been notified of the selection of the other's
arbitrator, the necessary arbitrator or arbitrators shall be selected by the
presiding judge of the court of general jurisdiction in such metropolitan area.
(b) Qualifications of Arbitrators
Each arbitrator selected as provided herein is required to be or have
been a director or executive officer of a Corporation whose shares of common
stock were listed during at least one year of such service on the New York Stock
Exchange or the American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System.
(c) Burden of Proof
The party or parties challenging the right of an indemnified
representative to the benefits of this Article shall have the burden of proof.
(d) Expenses
The Corporation shall reimburse an indemnified representative for the
expenses (including attorneys' fees and disbursements) incurred in successfully
prosecuting or defending such arbitration.
(e) Effect
Any award entered by the arbitrators shall be final, binding and
nonappealable and judgment may be entered thereon by any party in accordance
with
29
<PAGE>
applicable law in any court of competent jurisdiction, except that the
Corporation shall be entitled to interpose as a defense in any such judicial
enforcement proceeding any prior final judicial determination adverse to the
indemnified representative under Section 7.1(a)(2) in a proceeding not directly
involving indemnification under this Article. This arbitration provision shall
be specifically enforceable.
Section 7.7 Contribution
If the indemnification provided for in this Article or otherwise is
unavailable for any reason in respect of any liability or portion thereof, the
Corporation shall contribute to the liabilities to which the indemnified
representative may be subject in such proportion as is appropriate to reflect
the intent of this Article or otherwise.
Section 7.8 Mandatory Indemnification of Directors, Officers, etc.
To the extent that an authorized representative of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1741 or 1742 of the Business Corporation Law
or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees and disbursements)
actually and reasonably incurred by such person in connection therewith.
Section 7.9 Contract Rights; Amendment or Repeal
All rights under this Article shall be deemed a contract between the
Corporation and the indemnified representative pursuant to which the Corporation
intends to be legally bound. Any repeal, amendment or modification of this
Article by the Corporation that impairs the rights of any indemnified
representative or limits the obligations of the Corporation shall be prospective
only and shall not impair or affect any rights or obligations arising from
service as an indemnified representative prior to the effective date of such
repeal, amendment or modification.
Section 7.10 Scope of Article
The rights granted by this Article shall not be deemed exclusive of any
other rights to which those seeking indemnification, contribution or advancement
of expenses may be entitled under any statute, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in an indemnified
capacity and as to action in any other capacity. The indemnification,
contribution and advancement of expenses provided by or granted pursuant to this
Article shall continue as to a person who has ceased to be an indemnified
representative in respect of matters arising prior to such time, and shall inure
to the benefit of the heirs and personal representatives of such a person.
30
<PAGE>
Section 7.11 Reliance on Provisions
Each person who shall act as an indemnified representative of the
Corporation shall be deemed to be doing so in reliance upon the rights of
indemnification, contribution and advancement of expenses provided by this
Article.
Section 7.12 Interpretation
The provisions of this Article are intended to constitute bylaws
authorized by 15 Pa.C.S. (section)1746. (Article 7 was amended by vote of the
Shareholders of the Corporation on April 9, 1998.)
Article VIII - Miscellaneous
Section 8.1 Corporate Seal
The Corporation shall have a corporate seal in the form of a circle
containing the name of the Corporation, the year of incorporation and such other
details, if any, as may be approved by the Board of Directors. The affixation of
the corporate seal shall not be necessary to the valid execution, assignment or
endorsement by the Corporation of any instrument or other document.
Section 8.2 Checks
All checks, notes, bills of exchange or other similar orders in writing
shall be signed by such person or persons as the Board of Directors may from
time to time designate.
Section 8.3 Contracts
Except as otherwise provided in the Business Corporation Law in the
case of transactions that require action by the shareholders, the Board of
Directors may authorize any officer or agent to enter into any contract or to
execute or deliver any instrument on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 8.4 Interested Directors or Officers; Quorum
(a) General Rule
A contract or transaction between the Corporation and one or more of
its directors or officers or between the Corporation and another Corporation,
partnership, joint venture, trust or other enterprise in which one or more of
its directors or officers are directors or officers or have a financial or other
interest, shall not be void or voidable solely for that reason, or solely
because the director or officer is present at or participates in the meeting of
the Board of Directors that authorizes the contract or transaction, or solely
because his, her or their votes are counted for that purpose, if:
31
<PAGE>
(1) the material facts as to the relationship or interest and as to
the contract or transaction are disclosed or are known to the
Board of Directors and the Board authorizes the contract or
transaction by the affirmative votes of a majority of the
disinterested directors even though the disinterested directors
are less than a quorum;
(2) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to
the shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of
those shareholders; or
(3) the contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board of
Directors or the shareholders.
(b) Quorum
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board which authorizes a contract or
transaction specified in subsection (a).
Section 8.5 Deposits
All funds of the Corporation shall be deposited from time to time to
the credit of the Corporation in such banks, trust companies or other
depositaries as the Board of Directors may approve or designate, and all such
funds shall be withdrawn only upon checks signed by such one or more persons as
the Board of Directors shall from time to time designate.
Section 8.6 Corporate Records
(a) Required Records
The Corporation shall keep complete and accurate books and records of
account, minutes of the proceedings of the incorporators, shareholders and
directors and a share register giving the names and addresses of all
shareholders and the number and class of shares held by each. The share register
shall be kept at either the registered office of the Corporation in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated or at the office of its registrar or transfer agent. Any books, minutes
or other records may be in written form or any other form capable of being
converted into written form within a reasonable time.
32
<PAGE>
(b) Right of Inspection
Every shareholder shall, upon written verified demand stating the
purpose thereof, have a right to examine, in person or by agent or attorney,
during the usual hours for business for any proper purpose, the share register,
books and records of account, and records of the proceedings of the
incorporators, shareholders and directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the shareholder. The demand shall
be directed to the Corporation at its registered office in the Commonwealth of
Pennsylvania or at its principal place of business wherever situated.
Section 8.7 Amendment of Bylaws
These bylaws may be amended or repealed, or new bylaws may be adopted,
either (i) by vote of the shareholders at any duly organized annual or special
meeting of shareholders, or (ii) with respect to those matters that are not by
statute committed expressly to the shareholders and regardless of whether the
shareholders have previously adopted or approved the bylaw being amended or
repealed, by vote of a majority of the Board of Directors of the Corporation in
office at any regular or special meeting of directors; provided that any
proposal relating to Section 4.3 of these bylaws to change the number,
classification or term of office of directors must receive the affirmative vote
of at least seventy-five percent of all shares outstanding as of the record date
for any annual or special meeting of shareholders, and any proposal relating to
the seventy-five percent shareholder approval required by this Section must also
receive the affirmative vote of at least seventy-five percent of all shares
outstanding. Any change in these bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.3(b)
(relating to notice of action by shareholders on bylaws).
33
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