<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[X] Preliminary proxy statement
[_] Definitive proxy materials
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Autoclave Engineers, Inc..
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
The Board of Directors of Registrant
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(3).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
_______________________________________________________________________
(1) Title of each class of securities to which transactions applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:/1/
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
_______________________________________________________________________
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
_______________________________________________________________________
(1) Amount previously paid: $125
_______________________________________________________________________
(2) Form, schedule or registration statement no.: Preliminary Schedule
14A
_______________________________________________________________________
(3) Filing party: Autoclave Engineers, Inc.
_______________________________________________________________________
(4) Date filed: September 19, 1995
_______________________________________________________________________
<PAGE>
PRELIMINARY COPIES FILED PURSUANT TO RULE 14A-6(A)
--------------------------------------------------
[LOGO]
AUTOCLAVE ENGINEERS, INC.
22600 Savi Ranch Parkway
Yorba Linda, CA 92687
_______________________________________________
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
_______________________________________________
October 3, 1995
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Autoclave Engineers, Inc. (the "Corporation") on November 10, 1995, at 10:00
a.m., at the offices of the Corporation's wholly-owned subsidiary, Unit
Instruments, Inc., 22600 Savi Ranch Parkway, Yorba Linda, California.
I hope you will be able to join us. However, whether or not you are planning
to attend the meeting, please complete, sign and return the enclosed proxy card
to make certain that your shares are represented at the meeting.
Sincerely,
James C. Levinson
Chairman of the Board
Enclosure
<PAGE>
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Autoclave Engineers, Inc., a
Pennsylvania corporation, will be held on November 10, 1995, at 10:00 a.m., at
the offices of the Corporation's wholly-owned subsidiary, Unit Instruments, Inc.
("Unit"), 22600 Savi Ranch Parkway, Yorba Linda, California., for the following
purposes:
1. To elect two members of the Corporation's five-member Board of Directors.
2. To consider and act upon a proposal to change the Corporation's state of
incorporation from Pennsylvania to California pursuant to a Plan of
Merger which provides that the Corporation will be merged into its
wholly-owned subsidiary, Unit Instruments, Inc.
3. To consider and act upon a proposal to ratify the selection of the firm
of Price Waterhouse LLP as auditors for the fiscal year ended May 31,
1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Shareholders have the right to dissent from the merger and obtain payment for
their shares by following the procedure described in Subchapter 15D of the
Pennsylvania Business Corporation Law and summarized in "Reincorporation
Merger-Appraisal Rights of Dissenting Shareholders" in the accompanying Proxy
Statement.
Shareholders entitled to notice of and to vote at the meeting shall be
determined as of September 22, 1995, the record date fixed by the Board of
Directors for such purpose.
By Order of the Board of Directors,
Gary N. Patten
Secretary
October 3, 1995
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Notice of Annual Meeting of Shareholders......................
Proxy Statement...............................................
Securities Ownership of Certain
Beneficial Owners and Management.............................
Election of Directors.........................................
Board Meetings and Committees.................................
Executive Compensation........................................
Compensation Committee Report on Executive
Compensation.................................................
Performance Graph.............................................
Reincorporation Merger........................................
Approval of Selection of Auditors.............................
Shareholder Proposals.........................................
Expenses and Solicitation.....................................
</TABLE>
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE
REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND PROMPTLY
RETURN IT BY MAIL IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE>
PROXY STATEMENT
October 3, 1995
Proxies in the form enclosed with this Proxy Statement are solicited by the
Board of Directors of Autoclave Engineers, Inc. for use at the Annual Meeting of
Shareholders to be held on November 10, 1995, at 10:00 a.m., at the offices of
the Corporation's wholly-owned subsidiary, Unit Instruments, Inc. ("Unit"),
22600 Savi Ranch Parkway, Yorba Linda, California.
Only shareholders of record as of September 22, 1995 will be entitled to
vote at the meeting and any adjournments thereof. As of that date, ____________
shares of Common Stock of the Corporation were issued and outstanding. The
shareholders are entitled to one vote per share on any proposal presented at the
meeting, except that they have cumulative voting rights with respect to the
election of directors. Hence, each shareholder is entitled to as many votes in
the election of directors as shall equal the number of his or her shares of
Common Stock multiplied by the number of directors, two, to be elected, and the
shareholder may cast all such votes for a single nominee or may distribute such
votes between two or more nominees, as the shareholder may see fit. Shareholders
are requested, by means of execution of the accompanying proxy, to grant the
proxy holders discretionary authority to cumulate votes. Shareholders may vote
in person or by proxy.
In addition to the election of directors, the shareholders will consider and
vote upon a Plan of Merger pursuant to which the Corporation will be merged into
Unit (the "Reincorporation Merger"), and a proposal to ratify the selection of
Price Waterhouse LLP as auditors, each as further described in this Proxy
Statement.
Execution of a proxy will not in any way affect a shareholder's right to
attend the meeting and vote in person. Any shareholder giving a proxy has the
right to revoke it by notice to the Secretary of the Corporation at any time
before it is exercised.
The persons named as attorneys in the proxies are directors and/or officers
of the Corporation. All properly executed proxies returned in time to be counted
at the meeting will be voted as specified in the proxy. If no specification is
made, the shares will be voted for the election of each of the Board's nominees
to the Board of Directors, for approval of the Reincorporation Merger and for
approval of the selection by the Board of Directors of Price Waterhouse LLP as
auditors of the Corporation for its current fiscal year.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the meeting is necessary
to establish a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker "non-votes" are counted as present or
represented for purposes of determining the presence or absence of a quorum.
Directors are elected by a plurality of the votes cast by shareholders entitled
to vote at
<PAGE>
the meeting. Shares represented by proxies which are marked "withhold authority"
will have no effect on the outcome of the vote for election of directors.
Approval of other matters requires the affirmative vote of the majority of
shares present in person or represented by proxy at the meeting. Only shares
that are voted in favor of a particular proposal will be counted toward
achievement of a majority. Abstentions and broker non-votes have the same effect
as votes against the proposal. A non-vote occurs when a broker holding shares
for a beneficial owner votes on one proposal, but does not vote on another
proposal because the broker does not have discretionary voting power and has not
received instructions from the beneficial owner.
The Board of Directors knows of no other matter to be presented at the
meeting. If any other matter should be presented at the meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as attorneys in the proxies.
An Annual Report to Shareholders, containing financial statements for the
fiscal year ended May 31, 1995, is being mailed contemporaneously with this
Proxy Statement to all shareholders entitled to vote. This Proxy Statement and
the form of proxy were first mailed to shareholders on or about the date hereof.
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of October 1, 1995, certain information
with respect to the beneficial ownership of the Corporation's Common Stock by
each person known to the Corporation to be the beneficial owner of more than 5%
of the outstanding shares of its Common Stock, by each director, by each
executive officer named below, and by all directors and executive officers as a
group:
<TABLE>
<CAPTION>
Number of Shares Percent of
Name Beneficially Owned (1) Corporation's Common Stock
---- ---------------------- --------------------------
<S> <C> <C>
J&L Levinson Partnership 505,907(2) 12.5%
700 Louisiana Street
Houston, TX 77002
The TCW Group, Inc. 358,500 8.9%
865 Figueroa Street
Los Angeles, CA 90017
The Pioneer Group 334,500 8.3%
60 State Street
Boston, MA 02109
U.S. Bancorp 261,340 6.5%
1118 West Fifth Avenue
Portland, OR 97202
Dimensional Fund Advisors, Inc. 228,726 5.7%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
PNC Bank, N.A. 202,475 5.0%
Ninth and State Streets
Erie, PA 16553
James C. Levinson 133,496(3) 3.3%
A. Wade Blackman, Jr. 63,383(4) 1.6%
Michael J. Doyle 121,789(5) 3.0%
Marilyn G. Levinson 409,683(6) 10.1%
George Boyadjieff 0 --
Edward Rogas, Jr. 0 --
John E. Lamirande 0(7) --
John W. Leggat 0(8) --
Gary N. Patten 0(9) --
Michael Saloka 2,854(10) *
Kathryn S. Tricoli 0(11) --
Nelson Urdaneta 12,666(12) *
All directors and officers as a group 334,188(13) 8.3%
(11 persons at October 1, 1995)
</TABLE>
__________________
* Less than 1%
(1) Unless otherwise indicated, each named person has sole voting and
investment power over the shares beneficially owned by such person.
(footnotes continued on following page)
<PAGE>
(2) J & Levinson Partnership is a general partnership of which James C.
Levinson and Marilyn G. Levinson are the sole general partners.
(3) Includes 34,007 shares which Mr. Levinson has the present right to acquire
by exercise of stock options, and 99,489 shares which Mr. Levinson may be
deemed to beneficially own through his partnership interest in the J & L
Levinson Partnership. Does not include 406,418 shares owned by Mr.
Levinson's wife, Marilyn G. Levinson, through her partnership interest in
the J & L Levinson Partnership, as to which Mr. Levinson disclaims
beneficial ownership.
(4) Includes 63,383 shares which Mr. Blackman has the right to acquire by the
exercise of stock options that are currently exercisable or will become
exercisable within 60 days of October 1, 1995.
(5) Includes 33,712 shares which Mr. Doyle has the right to acquire by the
exercise of stock options that are currently exercisable or will become
exercisable within 60 days of October 1, 1995. Does not include 150,000
shares which Mr. Doyle has the right to acquire by the exercise of stock
options that become exercisable more than 60 days after October 1, 1995.
(6) Includes 3,265 shares which Mrs. Levinson has the right to acquire by
the exercise of stock options that are currently exercisable or will
become exercisable within 60 days of October 1, 1995.
(7) Does not include 35,110 shares which Mr. Lamirande has the right to
acquire by the exercise of stock options that become exercisable more than
60 days after October 1, 1995.
(8) Does not include 35,110 shares which Mr. Leggat has the right to
acquire by the exercise of stock options that become exercisable more than
60 days after October 1, 1995.
(9) Does not include 42,220 shares which Mr. Patten has the right to
acquire by the exercise of stock options that become exercisable more than
60 days after October 1, 1995.
(10) Consists of 2,854 shares which Mr. Saloka has the right to acquire by
the exercise of stock options that are currently exercisable or will
become exercisable within 60 days of October 1, 1995. Does not include
42,220 shares which Mr. Saloka has the right to acquire by the exercise of
stock options that become exercisable more than 60 days after October 1,
1995.
(11) Does not include 21,665 shares which Ms. Tricoli has the right to
acquire by the exercise of stock options that become exercisable more than
60 days after October 1, 1995.
(12) Consists of 12,666 shares which Mr. Urdaneta has the right to acquire by
the exercise of stock options that are currently exercisable or will
become exercisable within 60 days of October 1, 1995. Does not include
50,664 shares which Mr. Urdaneta has the right to acquire by the exercise
of stock options that become exercisable more than 60 days after October
1, 1995.
(13) Includes 146,622 shares which the executive officers and directors of the
Corporation have the right to acquire by the exercise of stock options
that are currently exercisable or will become exercisable within 60 days
of October 1, 1995. Does not include shares beneficially owned by four
former executive officers of the Corporation, each of whom own less than
1% of the Corporation's outstanding Common Stock, as set forth below:
<TABLE>
<CAPTION>
Name Shares
---- ------
<S> <C>
William F. Schilling 38,050
John G. Sontag 27,691
Thomas C. Guelcher 15,650
Jean-Claude Pineau 5,565
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is currently divided into three classes. Directors
are generally elected for terms of three years and until their successors are
elected and have qualified. The terms of each class expire in successive years
at the Annual Meeting of Shareholders. Two directors are to be elected at the
1995 Annual Meeting of Shareholders for a term of three years. The nominees for
election are James C. Levinson and A. Wade Blackman, Jr., each of whom is
currently a director of the Corporation. If the Reincorporation Merger is
approved by the shareholders, the Board of Directors of Unit as the surviving
corporation will consist of Messrs. Levinson and Blackman, assuming they are
elected at the meeting, as well as the other current members of the Board of
Directors, namely Michael J. Doyle, George Boyadjieff and Edward Rogas, Jr. In
such event, the Board of Directors will no longer be classified, and each member
of the Board of Directors will stand for election annually beginning with the
1996 Annual Meeting of Shareholders.
Directors are elected by a plurality of all votes cast. Shares represented
by all proxies received by the Board of Directors and not so marked as to
withhold authority to vote for any individual nominee or for both nominees will
be voted (unless one or more nominees are unable or unwilling to serve) for the
election of the nominees named above. The Board of Directors knows of no reason
why either nominee should be unable or unwilling to serve, but if such should be
the case, proxies will be voted for the election of some other person or for a
lesser number of nominees.
The following table sets forth the names of all directors of the Corporation,
their ages, their positions with the Corporation and the respective years in
which their terms of office expire.
<TABLE>
<CAPTION>
POSITIONS WITH TERM
NAME AGE THE CORPORATION EXPIRES
- ---- --- --------------- -------
<S> <C> <C> <C>
James C. Levinson (1).......... 67 Chairman of the Board 1995
of Directors
A. Wade Blackman, Jr. (2)...... 67 Director 1995
Michael J. Doyle............... 42 Director 1996
George Boyadjieff (2).......... 55 Director 1997
Edward Rogas, Jr. (1) (2)..... 55 Director 1996
</TABLE>
_________________________
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
Mr. Levinson, currently Chairman and formerly President and Chief Executive
Officer of the Corporation, has served as a director of the Corporation since
1961.
<PAGE>
Mr. Blackman has served as a director of the Corporation since 1984. He is
President of Farmington Capital Management Corporation, a private investment
company, and a former Managing General Partner of American Research &
Development Inc., a venture capital firm.
Mr. Doyle became the President and Chief Executive Officer of the Corporation
in September 1995. He is also President and Chief Executive Officer of Unit,
the Corporation's wholly owned subsidiary which manufactures mass-flow
controllers for use in the semiconductor industry, since 1980. He has also
served as a director of the Corporation since 1984.
Mr Boyadjieff was appointed a director of the Corporation at the Board
meeting held on September 27, 1995. He is President and Chief Executive Officer
of Varco International, Inc. ("Varco"), a leading manufacturer of products used
in the international oil and gas well industry. Mr. Boyadjieff has been
associated with Varco for 25 years and has served in a variety of technical and
executive positions. He is also a Director of Varco.
Mr. Rogas was appointed a director of the Corporation at the Board meeting
held on September 27, 1995. He is Vice President, Semiconductor Test Group, of
Teradyne, Inc. ("Teradyne"), a leading manufacturer of semiconductor, circuit-
board and telecommunications test systems. Mr. Rogas has been associated with
Teradyne since 1976 in various management and executive positions.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held seven meetings in fiscal 1995. Each incumbent
director attended at least 75% of the meetings of the Board and Committees of
the Board on which he served during that period.
The Board of Directors has three Committees: the Executive Committee, the
Compensation Committee and the Audit Committee. The Corporation does not have a
nominating committee.
The Executive Committee, which did not meet in fiscal 1995, has the power to
exercise all of the powers of the Board of Directors in the management and
business affairs of the Corporation in the intervals between meetings of the
full Board of Directors. The Board of Directors, at its September 27, 1995
meeting, determined not to continue the Executive Committee. Unit, following
the Reincorporation Merger, will not have an Executive Committee.
The Compensation Committee, which held four meetings in fiscal 1995,
determines the compensation of the executive officers of the Corporation and
administers the Corporation's stock plans.
The Audit Committee, which held two meetings in fiscal 1995, reviews the
scope and results of the audit by the independent auditors and makes
recommendations to the Board of Directors as to the selection of independent
auditors for each fiscal year. It also reviews systems of internal control and
accounting policies and procedures and, should the need arise, would direct and
supervise investigations into matters within the scope of its duties.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities with the Corporation and its subsidiaries for the
fiscal years ended May 31, 1995, 1994 and 1993, of those persons who were at May
31, 1995 (i) the chief executive officer; (ii) the other four most highly
compensated executive officers; and (iii) any executive officers, up to a
maximum of two, who departed during the year but who would have been among the
four most highly compensated officers of the Corporation (collectively, the
"Named Officers"). Mr. Jean-Claude Pineau, who is listed in the table, served
as President of Burton-Corblin S. A. prior to divestiture of that corporation by
the Corporation in January 1995; compensation data for Mr. Pineau in the table
relates to the period of time during the fiscal year that Burton-Corblin S. A.
was owned by the Corporation. Messrs. Schilling, Guelcher and Sontag, each of
whom are included in the following tables, resigned as of September 27, 1995
upon consummation of the sale by the Corporation of the Autoclave Engineers
Group in September 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
----------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (3)
- --------------------------- ---- ------ ----------
<S> <C> <C> <C>
William F. Schilling 1995 $191,796 $145,725
Chief Executive Officer, 1994 $181,908 $ 55,500
President and Director 1993 $171,600 0
James C. Levinson 1995 $127,795 0
Chairman and Director 1994 $135,384 0
1993 $220,000 0
Michael J. Doyle 1995 $160,937 $ 97,125
President of Unit and Director 1994 $135,608 $ 62,613
1993 $131,886 0
Thomas C. Guelcher 1995 $131,000 $ 68,775
Vice President of Corporate 1994 $127,930 $ 27,510
Development and Chief 1993 $114,615 0
Financial Officer
John G. Sontag 1995 $110,532 $ 44,620
Corporate Treasurer, 1994 $107,692 $ 13,248
Secretary and Controller 1993 $102,307 0
Jean-Claude Pineau 1995 $134,295 $217,152
President of 1994 $149,365 $ 31,270
Burton Corblin, S.A. 1993 $139,136 0
</TABLE>
(footnotes on following page)
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION (2)
----------------
AWARDS PAYOUTS
------ -------
SECURITIES
UNDERLYING
OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SARS PAYOUT COMPENSATION
- --------------------------- ---- -------- ------ ------------
<S> <C> <C> <C> <C>
William F. Schilling 1995 0 0 $742,422(5)(6)
Chief Executive 1994 0 0 0
Officer, President 1993 0 0 0
and Director
James C. Levinson 1995 0 0 0
Chairman and Director 1994 0 0 0
1993 0 0 0
Michael J. Doyle 1995 0 0 $ 11,250(4)
President of Unit 1994 0 0 $ 8,820(4)
and Director 1993 0 0 $ 8,400(4)
Thomas C. Guelcher 1995 0 0 $403,776(5)
V. P. of Corporate 1994 0 0 0
Development and Chief 1993 0 0 0
Financial Officer
John G. Sontag 1995 0 0 $324,775(5)
Corporate Treasurer, 1994 0 0 0
Secretary and 1993 0 0 0
Controller
Jean-Claude Pineau 1995 0 0 0
President of 1994 0 0 0
Burton Corblin, S.A. 1993 0 0 0
</TABLE>
- --------------------
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights (SARs) during the fiscal years ended May 31, 1995, 1994
and 1993 .
(3) Includes bonus payments earned by the Named Officers in the year indicated,
for services rendered in such year, which were paid in the next subsequent
year.
(4) Consists of contribution of $11,250 in 1995, $8,820 in 1994 and $8,400 in
1993 by Unit for account of Mr. Doyle pursuant to Unit's 401(k) plan.
(5) Represents severance costs accrued in 1995 which will be payable in the
next fiscal year as part of the Corporation's restructuring and
transferring of all corporate activities from Erie, Pennsylvania to Yorba
Linda, California.
(6) Includes a $225,000 special incentive payment.
<PAGE>
COMPENSATION OF DIRECTORS
Directors of the Corporation, other than those who are employees of the
Corporation, currently receive $1,000 for each attended meeting of the Board.
Directors also receive $1,000 for each committee meeting attended unless such
meeting is held within one day of a meeting of the Board of Directors, in which
case compensation is at the rate of $500 for each committee meeting. Directors
are also reimbursed for out-of-pocket expenses incurred in connection with
attendance at meetings and other services as a director.
Beginning September 1, 1993, each director who is neither an employee nor an
officer of the Corporation or its subsidiaries is automatically granted as
additional compensation an option to purchase a number of shares of the
Corporation's Common Stock as further described herein under "1990 Non-Employee
Director Stock Option Plan."
STOCK OPTIONS
The 1987 Stock Plan (the "1987 Plan") was adopted by the Board of Directors
of the Corporation on June 18, 1987 and approved by the shareholders on
September 30, 1987. Prior to the 1990 Annual Meeting of Shareholders, a total
of 605,000 shares of the Corporation's Common Stock (subject to adjustment in
certain events) was authorized for issuance under the 1987 Plan (after giving
effect to two 10% stock dividends which occurred subsequent to adoption of the
1987 Plan). At the 1990 Annual Meeting of Shareholders, an amendment to the
1987 Plan was approved which increased the number of shares of Common Stock
authorized for issuance thereunder to 1,600,000 shares. Under the 1987 Plan,
employees may be awarded incentive stock options ("ISO" or "ISOs"), as defined
in Section 422(b) (formerly Section 422A(b)) of the Internal Revenue Code of
1986, as amended (the "Code"), and directors, officers, employees and
consultants of the Corporation may be granted (i) options which do not qualify
as ISOs ("Non-qualified Option" or "Nonqualified Options" and, together with ISO
or ISOs, are sometimes collectively referred to herein as "Options"), (ii)
awards of stock in the Corporation, and (iii) opportunities to make direct
purchases of stock in the Corporation. As of October 1, 1995, stock options had
been granted under the 1987 Plan to the following officers and in the following
aggregate amounts: Mr. Levinson, 34,007 shares; Dr. Schilling, 37,050 shares;
Mr. Doyle, 33,712 shares; Mr. Saloka, 2,854 shares; Mr. Guelcher, 12,550 shares;
Mr. Sontag, 22,691 shares; Mr. Pineau, 0 shares; and all executive officers as a
group, 142,854 shares. The exercise prices of such options range from $5.89 to
$9.09 per share. The foregoing amounts do not include the following stock
options granted in August 1995 at an exercise price of $12.625 to the following
officers of Unit: Mr. Doyle, 150,000 shares; Mr. Lamarande, 35,110 shares; Mr.
Leggat, 35,110 shares; Mr. Patten, 42,220 shares; Mr. Saloka, 42,220 shares; Ms.
Tricoli, 21,665 shares; Mr. Urdaneta, 63,330 shares; and an aggregate of
30,000 shares to other non-officer employees of Unit.
OPTION GRANTS IN THE LAST FISCAL YEAR
During the fiscal year ended May 31, 1995, there were no grants of stock
options pursuant to the 1987 Plan to the Named Officers as reflected in the
Summary Compensation Table above.
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Corporation's Common Stock granted under the 1987 Stock Option
Plan, including (i) the number of shares purchased upon exercise of options in
fiscal 1995, (ii) the net value realized upon such exercise, (iii) the number of
unexercised options outstanding at May 31, 1995 and (iv) the value of such
unexercised options at May 31, 1995:
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND MAY 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF VALUE OF IN-THE-MONEY
ACQUIRED ON UNEXERCISED OPTIONS OPTIONS AT 5/31/95
NAME EXERCISE VALUE REALIZED AT 5/31/95 (2) EXERCISABLE (1)(2)
- ---- -------- -------------- -------------- ---------------------
<S> <C> <C> <C> <C>
W. F. Schilling 0 0 37,050 $198,485
J. C. Levinson 0 0 34,007 $206,359
M. J. Doyle 0 0 33,712 $205,350
T. C. Guelcher 0 0 12,550 $ 56,475
J. G. Sontag 0 0 22,691 $142,656
J-C Pineau 4,355 $19,754 0 0
</TABLE>
- -------------------
(1) Value is based on the difference between option exercise price and the
fair market value at 1995 fiscal year-end ($12.50 per share as quoted on
the NASDAQ National Market System) multiplied by the number of shares
underlying the option.
(2) All options are exercisable at May 31, 1995.
Options under the 1987 Plan to purchase an aggregate of 37,000 shares of
Common Stock were granted by the Board of Directors to all employees as a group
during the three fiscal years ended May 31, 1995, at an average per share
exercise price of $6.66. Options to purchase 50,000 shares of Common Stock at a
per share exercise price of $11.25 were granted by the Board of Directors under
the 1987 Plan to one director, Mr. Blackman, for being Chairman of a Special
Study Committee of the Board of Directors which performed oversight of a
strategic planning advisory project during the fiscal year ended May 31, 1995.
At October 1, 1995, options to purchase 643,735 shares remained available for
grant under the 1987 Plan.
<PAGE>
1990 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
In August 1990, the Board of Directors adopted a stock option plan (the "1990
Director Plan") for directors authorizing the grant of options for up to 100,000
shares of Common Stock. The 1990 Director Plan was approved by the shareholders
of the Corporation in September 1990. Options are granted pursuant to the 1990
Director Plan only to members of the Board of Directors of the Corporation who
are not employees or officers of the Corporation or its subsidiaries ("outside
directors"). Each outside director is automatically granted on September 1 of
each year, without further action by the Board of Directors, an option to
purchase one thousand (1,000) shares of the Corporation's Common Stock, provided
that such director shall have served as a director since at least December 31 of
the preceding year. The exercise price per share of options granted under the
1990 Director Plan is 100% of the fair market value of the Corporation's Common
Stock on the date the option is granted. The 1990 Director Plan requires that
options granted thereunder will expire on the date which is ten (10) years from
the date of grant.
In September 1992, the shareholders approved two amendments to the 1990
Director Plan. The authorized number of options was increased to 250,000. The
second amendment provided for each outside director to be automatically granted,
on September 1 of each year beginning in 1993, an additional option to purchase
a number of shares of the Corporation's Common Stock equal to a fraction, the
numerator of which is $1,500 times the number of full fiscal quarters during
which such person served as a director during the preceding 12 months, and the
denominator of which is 25% of the fair market value of the Common Stock on the
date the option is granted.
As of October 1, 1995, 86,563 options had been granted to ten present or
former directors of the Corporation under the 1990 Director Plan at per-share
exercise prices that range from $7.00 to $15.375. Of the total, 23,643 options
were granted at the exercise price of $8.50 per share to seven directors during
the year ended May 31, 1995, and 17,920 options were granted at the exercise
price of $15.375 to seven directors on September 1, 1995. One former director
exercised 2,000 options in June 1995 at an exercise price of $7.25 per share.
The aggregate number of shares of Common Stock subject to options under the
1990 Director Plan, as of October 1, 1995, was 84,563 shares.
DEFERRED COMPENSATION AGREEMENTS
The Corporation has deferred compensation agreements with certain key
employees, including Messrs. Levinson, Schilling, Doyle and Guelcher. Under
the agreements, the Corporation will make fixed monthly post-retirement payments
to such employees until their death, in amounts based upon the employees' annual
salaries at the time of retirement. Pursuant to such agreements, the employees
have agreed to refrain from competing with the Corporation, to maintain the
confidentiality of the Corporation's trade secrets and to renounce all personal
<PAGE>
interest in patents, know-how and other intellectual property developed by them
during their employment by the Corporation.
INVOLUNTARY SEVERANCE AGREEMENTS
In May 1994, the Corporation entered into agreements with thirteen officers
of the Corporation and its subsidiaries, including the Chief Executive Officer
and each of the Named Officers (except for Messrs. Levinson and Pineau),
providing severance benefits in the event they are terminated within two years
following a change in control of the Corporation. Pursuant to such agreements,
a change in control occurs (i) when any person becomes the beneficial owner of
securities of the Corporation representing more than 20% of the combined voting
power of the Corporation's then outstanding securities; (ii) if, during any
period of two consecutive years, individuals who constitute the Board of
Directors cease to constitute a majority of the Board of Directors; (iii) if all
or substantially all of the Corporation's assets, or the assets of the operating
group in which the officer is employed, or more than 50% of the Corporation's
operating assets are sold or transferred to a third party; (iv) if the
Corporation consolidates or merges with another corporation and the Corporation
is not the survivor; or (v) if the Corporation no longer has a class of
securities registered pursuant to Section 12 of the Exchange Act. The
agreements provide that if the officer is terminated following a change in
control of the Corporation, the Corporation shall pay such officer a sum equal
to two times his or her annual salary and bonus paid during the twelve-month
period immediately preceding the termination, vest the officer in any unvested
benefits under any retirement or deferred compensation plan in which the officer
participates, and pay for a two year continuation of such officer's health,
life, disability and accident insurance. However, the agreements provide that
to the extent such benefits would constitute an "excess parachute payment" under
Section 28OG of the Internal Revenue Code of 1986, the severance payments
payable thereunder shall be reduced.
The divestiture by the Corporation of Burton-Corblin S. A., together with
the divestiture of the Autoclave Engineers Group, together constituted a change
in control of the Corporation within the meaning of the agreements. The
Corporation, therefore, has become obligated to pay the severance benefits
required by the agreements to Messrs. Schilling, Guelcher and Sontag. These
amounts are reflected in the compensation tables above.
In connection with the divestiture of the Autoclave Engineers Group, the
Corporation entered into involuntary severance agreements with Mr. Doyle and six
other employees of Unit. Mr. Doyle's agreement supersedes his existing
agreement described above. The new agreements have similar terms and conditions
to those described above, except that the change in control provisions do not
give effect to the divestitures described above.
PENSION PLAN
The Corporation maintains a defined benefit pension plan (the "Pension Plan")
covering all employees (other than employees of Unit) who meet general
eligibility requirements and who agree to contribute 3% of their salary to the
plan. To be eligible, an employee must be 21 years old and complete 1,000 hours
of service. The benefits are computed by a formula which takes
<PAGE>
into account an employee's years of service and a percentage of his or her
average monthly compensation. The average monthly compensation is determined by
averaging the compensation for the employee's highest five calendar years of
earnings. Compensation covered by the Pension Plan includes salaries and annual
bonuses.
An employee may retire after reaching the age of 55 and completing ten years
service; however, benefits are reduced if such retirement precedes age 65.
The following table sets forth the estimated annual benefits payable on
normal retirement at age 65 under the Pension Plan:
<TABLE>
<CAPTION>
ANNUAL AVERAGE OF
HIGHEST FIVE CALENDAR ANNUAL PENSION
YEARS OF COMPENSATION COVERED YEARS OF SERVICE AT AGE 65
- --------------------- ----------------------------------
15 20 25 30 (MAXIMUM)
-- -- -- ------------
<S> <C> <C> <C> <C>
$ 75,000 $15,187 $20,250 $25,312 $30,375
100,000 20,250 27,000 33,750 40,500
125,000 25,312 33,750 42,187 50,625
150,000 30,375 40,500 50,625 60,750
175,000 35,437 47,250 59,062 70,875
200,000 40,500 54,000 67,500 81,000
225,000 45,562 60,750 75,937 91,125
</TABLE>
Pensions shown in the table are straight-life annuity amounts notwithstanding
the availability of joint-and-survivorship pensions at a reduced rate.
As of May 31, 1995, Mr. Levinson had 27 credited years of service under the
Pension Plan, Dr. Schilling had five credited years of service, Mr. Guelcher had
six credited years of service and Mr. Sontag had 12 credited years of service.
The compensation covered by the Pension Plan for each of these persons in fiscal
1995 was approximately equal to the applicable amount set forth in the preceding
Summary Compensation Table.
In connection with the divestiture of the Autoclave Engineers Group, the
purchaser of the group assumed the obligations of the Corporation under the
Pension Plan.
BONUS PLAN
Management employees of the Corporation participate in the Corporation's
Annual Incentive Compensation Plan (the "Incentive Compensation Plan"). Under
the Incentive Compensation Plan, management employees are eligible to receive
cash payments according to a weighted average formula based upon corporate,
group and individual performance. Such amounts are generally to be paid within
two and one-half months after the end of the fiscal year in which they are
earned. Annual administration of the Incentive Compensation Plan, including
<PAGE>
establishment of corporate objectives, participants, awards and payments, is
based upon recommendations made by the Corporation's President for approval by
the Compensation Committee and the Board of Directors. The Summary Compensation
Table set forth above includes amounts earned under the Incentive Compensation
Plan for performance during fiscal 1995.
The Corporation has also from time to time paid discretionary bonuses as
deemed appropriate by the Board of Directors.
UNIT PROFIT SHARING PLAN
Unit has a qualified profit sharing 401(k) plan (the "Unit Profit Sharing
Plan") for substantially all of its employees who meet certain age and length of
service requirements. Contributions equal to 50% of the participants'
contributions are made by Unit to the plan. Such contributions by Unit are
limited to 3% of a participant's compensation. Additional contributions may be
made by Unit at the discretion of Unit's Board of Directors. Contributions to
the plan in fiscal 1995 were $564,000. The Summary Compensation Table set forth
above includes amounts accrued under the Unit Profit Sharing Plan during fiscal
1995.
INCENTIVE PLAN
Key management employees of the Corporation are eligible to participate in
the Corporation's Long-Term Incentive Plan (the "Plan") which is administered by
the Compensation Committee of the Board of Directors. Under the Plan,
management employees are eligible to receive awards in the form of cash and
restricted stock awarded pursuant to the 1987 Plan. Award levels are determined
by comparing actual economic value created (defined as cash flow return in
excess of cost of capital multiplied by investment) to goals approved by the
Compensation Committee. Participation of key management employees in the Plan
and the proportions of cash and restricted stock to be included in awards are
subject to the discretion of the Compensation Committee. The cash component of
any award under the Plan cannot exceed one-half of the award amount. Awards
under the Plan are generally to be paid within two and one-half months after the
end of the last fiscal year of the three-year performance period to which the
award related.
In January 1995, the Corporation entered into an incentive agreement with Mr.
Pineau providing for aggregate payments of $217,152 upon consummation of the
sale of Burton Corblin, S.A., provided he was an employee on the closing date.
A partial payment of that amount was made to Mr. Pineau in connection with the
closing of the sale transaction, with the balance due in February 1996.
<PAGE>
OTHER TRANSACTIONS
During fiscal 1995, the law firm of Eckert Seamans Cherin & Mellott, of which
Mr. Kerr, a former director, was a partner until December 31, 1994 and is
currently special counsel, rendered professional services to the
Corporation.
The Corporation has loan agreements with PNC Bank, N.A. Mr. Junker, a
former director of the Corporation, is Vice Chairman of PNC Bank. As of
May 31, 1995, the total amount outstanding on these loans was $903,144 with
maturities through 1998. At May 31, 1995, these loans bore interest from 7.25%
to 9.50% per annum. Payments are due in monthly installments of approximately
$40,000, including interest.
During fiscal 1995, Mr. Blackman, a director of the Corporation, received
50,000 stock options under the 1987 Stock Plan for acting as Chairman of a
Special Study Committee of the Board of Directors which performed oversight of a
strategic planning advisory project.
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors,
composed entirely of directors who have never served as employees or officers of
the Corporation, is responsible for establishing the compensation of the Chief
Executive Officer and setting policy for compensation for senior management of
the Corporation. The members of the Compensation Committee bring expertise in
matters relating to executive compensation to their service on the Compensation
Committee gained through their experience on other Boards of Directors of public
and private companies.
The Committee, pursuant to its charter and at the direction of the Board of
Directors, endeavors to ensure that the senior management compensation program
fairly compensates executives for their performance, provides incentives which
attract and retain key executives and instills a sense of teamwork and ownership
consistent with shareholder interests. The program is designed to provide
competitive compensation with strong emphasis on pay for performance.
The senior management compensation program consists of two elements: (1) an
annual component (i.e., base salary and bonus); and (2) a long-term component
consisting of stock options and awards of cash and restricted stock. The
structure emphasizes variable rather than fixed compensation opportunities, in
which performance achievements that contribute to growth in shareholder value
will provide extraordinary awards. The program endeavors to provide a total
compensation structure which compares favorably in form and substance to the
average compensation provided by the Corporation's principal competition.
BASE SALARY
The Committee uses an executive salary range structure to determine a base
salary range for each senior management position. This salary range structure
which was developed by an independent personnel consultant is updated
periodically by the same consultant. A variety of data sources are used to
estimate the competitive market practices relevant to the Corporation, including
published compensation surveys as well as proprietary surveys conducted by the
consultant on behalf of his clients. In comparing the market data, special
consideration is made to reflect the Corporation's internal organizational
structure and positional responsibilities with like positions in comparably
sized companies. An executive's base salary level within this salary range is
determined based on the individual's contribution to company performance, as
well as qualitative factors bearing on an individual's experience,
responsibilities, and management and leadership abilities. The officers' base
salary for fiscal 1995 is shown under the heading "Salary" in the Summary
Compensation Table.
ANNUAL BONUS
The annual bonus plan is designed to reward key executives and motivate them
to meet or exceed annual income targets established by the Committee and
approved by the Board of Directors. These annual targets are aggressive and
challenging and may be different from the
<PAGE>
annual budget. Specifically, a net income target is established for the
Corporation and operating profit targets are established for each of the
operating companies. Bonuses for corporate executives are based on the corporate
target. The bonus for operating company presidents is weighted 20% on corporate
performance and 80% on the performance for each president's operation. These
officers are active participants in the establishment of corporate goals and
objectives; hence, the Committee believes it is appropriate that a portion of
their bonus be based on corporate performance. Other operating company
executives participating in the plan earn bonuses based solely on the
performance of the operating company by which they are employed. Award
opportunities for participants are based on the individual participant's job
responsibility and range from 15% to 50% of base salary when annual targets are
achieved. Actual performance must attain a threshold percentage of target in
order to qualify for any bonus award. This threshold is generally established at
85%, although the Committee has the discretion to use a different target. In
like manner, the Committee has the discretion to exclude the financial impact of
certain extraordinary transactions in determining attainment of performance
objectives. When the threshold level is achieved, the bonus paid is normally 20%
of the target bonus. If actual performance exceeds targeted levels, award
opportunities can be increased as much as 50% with the actual increase dictated
by the extent to which the target is exceeded. Bonuses shown in the bonus column
of the Summary Compensation Table reflect amounts earned subject to the
foregoing provisions.
LONG-TERM INCENTIVE
The long-term compensation program consists of stock options and a
combination of cash and restricted stock. The cash and restricted stock may be
awarded under the Corporation's Long-Term Incentive Plan if economic value
creation goals are met. These goals are a by-product of the three-year plans of
the Corporation and the operating companies. Determination of economic value is
a two-step process. First, cash flow return on total capital is calculated and
compared to the cost of capital. If this return exceeds the cost of capital,
economic value has been created. Actual economic value then is computed by
multiplying total capital by the incremental return in excess of the cost of
capital. The plan is designed in this manner to assure alignment of the long-
term economic interests of management with those of shareholders. Awards
ranging from 20% to 75% of base salary, depending on a participant's job
responsibility, are made at the end of three-year performance periods if actual
economic value created meets targeted levels. As with the annual bonus plan,
awards less than or greater than the targeted level are possible, depending on
actual economic value added as a percentage of target. Threshold and maximum
award opportunities are the same as those provided under the annual bonus plan.
A maximum of one-half the award amount earned is payable in cash, with the
remainder being paid in restricted stock. Such stock awards must be held for a
period of one year, and the recipient must remain an employee of the Corporation
throughout the one-year period. There were no awards earned for the 1993-1995
plan cycle.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION EXPENSES
The Revenue Reconciliation Act of 1993 limits the Corporation's ability to
deduct for federal income tax purposes compensation in excess of $1,000,000 per
executive for the Chief
<PAGE>
Executive Officer and four additional executive officers who are highest paid
and employed at year end, except to the extent such excess constitutes
performance-based compensation. The policy of the Board of Directors and the
Compensation Committee is to qualify future compensation arrangements to ensure
deductibility, except in those limited cases where stockholder value is
maximized by an alternative approach.
SUBMITTED BY THE COMPENSATION COMMITTEE:
Edward P. Junker, III Carl J. Schlemmer George H. Schofield
As of September 27, 1995
* * * * * * * * *
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Corporation's Common Stock during the five
fiscal years ended May 31, 1995 with the cumulative total return on (i) the
NASDAQ U.S. Stock Index, a composite index of the NASDAQ Stock Market prepared
by Media General Financial Services; and (ii) a broad peer group index prepared
by Media General Financial Services consisting of companies classified under SIC
Codes 349, 356 and 382 with market capitalization of less than $300 million.
The peer group consists of Central Sprinkler Corporation, Duriron Inc., Flow
International Corporation, Moore Products Company and New Brunswick Scientific.
The comparison assumes an investment of $100 on May 31, 1989 in the
Corporation's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends, if any.
<TABLE>
<CAPTION>
FISCAL YEAR
Company 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Autoclave Engineers Inc 100 80.57 82.54 79.76 94.62 142.66
Peer Group 100 101.01 111.91 108.82 100.50 151.50
Broad Market 100 99.83 106.28 127.19 139.48 152.66
</TABLE>
<PAGE>
REINCORPORATION MERGER
GENERAL
The Board of Directors believes that the best interests of the Corporation
and its shareholders would be served by changing the state of incorporation of
the Corporation from Pennsylvania to California. This change would be
accomplished through a merger transaction (the "Reincorporation Merger")
pursuant to which the Corporation would be merged with and into Unit, as
provided in a Plan of Merger (the "Plan of Merger"), a copy of which is included
as Exhibit A hereto.
The following discussion is a summary of the material features of the
Reincorporation Merger and Plan of Merger and the general effect of the proposed
reincorporation in California. The summary is not intended to be complete, and
is qualified in its entirety by reference to the Restated Articles of
Incorporation and Bylaws of Unit as the surviving corporation of the
Reincorporation Merger, copies of which are included as Exhibits B and C hereto,
respectively, and the Plan of Merger. Copies of the Articles of Incorporation
and Bylaws of the Corporation as presently in effect are available for
inspection at the headquarters of the Corporation, and will be sent to
shareholders without cost upon request.
The proposed reincorporation transaction involves the merger of the
Corporation with and into Unit, which was incorporated in California in 1980.
Unit has been a wholly-owned subsidiary of the Corporation since 1984 and is
currently the Corporation's only operating entity. Unit will be the continuing
and surviving corporation following the Reincorporation Merger. Upon
consummation of the Reincorporation Merger, the Corporation will cease to exist
and the shareholders of the Corporation will become shareholders of Unit on a
share-for-share basis.
As a result of the Reincorporation Merger, Unit will succeed to all of the
properties and other assets of the Corporation and will assume and become
responsible for all of the Corporation's liabilities and obligations. The
Reincorporation Merger, and the reincorporation of the Corporation into
California effected thereby, will not result in any change in the business
operations, assets, liabilities, contractual relations or management of the
Corporation. The directors who are elected at this annual meeting and the
officers serving the Corporation on the effective date of the Reincorporation
Merger will hold the same positions with Unit.
CAPITALIZATION OF UNIT; STOCK CERTIFICATES
On the effective date of the Reincorporation Merger, each share of Common
Stock of the Corporation will be converted automatically into one fully paid and
nonassessable share of Common Stock of Unit (the "Unit Common Stock").
Following the Reincorporation Merger, holders of Unit Common Stock will be
entitled to the rights, powers, privileges and limitations pertaining to the
Unit Common Stock. See "Certain Significant Differences Between the California
and Pennsylvania Charter Documents" and "Certain Significant Differences Between
the Corporation Laws of California and Pennsylvania." The number of authorized
shares of
<PAGE>
Common Stock of Unit will be the same as is authorized for the Corporation.
Unlike the Corporation's charter, the Unit charter authorizes 2,000,000 shares
of Preferred Stock, $.01 par value per share. No shares of Preferred Stock will
be issued in connection with the Merger. See "Certain Significant Differences
Between the California and Pennsylvania Charter Documents.".
It is anticipated that the Unit Common Stock will continue to be listed on
the Nasdaq National Market. The Company has applied to change the symbol under
which its shares are traded and, effective as of the date of the Reincorporation
Merger, its shares of Common Stock will be traded under the symbol "UNII." In
addition, the delivery of existing stock certificates of the Corporation will
constitute "good delivery" of shares of Unit in transactions subsequent to the
Reincorporation Merger. Accordingly, SHAREHOLDERS OF THE CORPORATION NEED NOT
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF UNIT.
However, any shareholder desiring replacement stock certificates representing
shares of Unit may submit such holder's present stock certificates to the
Corporation's transfer agent, Continental Stock Transfer & Trust Company, in
order to obtain new certificates. The Reincorporation Merger will not affect
the individual beneficial interests of the Corporation's shareholders in the
Common Stock.
VOTE REQUIRED FOR REINCORPORATION AND BOARD OF DIRECTOR'S RECOMMENDATION
Approval of the Plan of Merger will require the affirmative vote of a
majority of the votes cast by all shareholders entitled to vote in person or by
proxy. The Board of Directors has unanimously adopted and approved the Plan of
Merger and recommends a vote FOR approval of the Plan of Merger.
EFFECTIVE DATE
In addition to receipt of the requisite shareholder approval of the Plan of
Merger, the effectiveness of the Reincorporation Merger is conditioned upon the
receipt of an opinion of tax counsel. See "Certain Federal Income Tax
Consequences" below. It is presently anticipated that the Reincorporation
Merger will be effected as soon after both of these conditions is satisfied as
is practicable. However, the Boards of Directors of the Corporation and Unit
may terminate the Plan of Merger for any reason prior to its effective date,
either before or after shareholder approval.
PRINCIPAL REASONS FOR REINCORPORATION UNDER CALIFORNIA LAW
The principal reason for reincorporating in California is that substantially
all of the Corporation's operations, as well as its principal executive offices,
are in California.
The Corporation was organized under the laws of the State of Pennsylvania in
1958. Since the sale of the Autoclave Engineers Group in September 1995, the
Corporation moved its principal executive offices to Unit's offices in Yorba
Linda, California. Unit is currently the Corporation's only operating entity.
While the decision to incorporate in a particular state does not depend solely
on the location of a Corporation's headquarters, the Corporation believes that
<PAGE>
being incorporated in the state where its management is headquartered puts it in
position to monitor and participate in legislative and executive branch actions
and other governmental decisions affecting corporations in that state. This can
be important as corporations are substantially affected by changes in the legal
and financial environment in which they operate, and by the variety of
legislative and other governmental actions which may be taken in response to
such changes.
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to the Plan of Merger and the Pennsylvania Business Corporation Law
("BCL"), holders of Common Stock will have dissenters rights in connection with
the Merger under BCL Subchapter 15D ("Subchapter 15D"), and may object to the
Plan of Merger and demand in writing that the Corporation pay them the fair
value of their Common Stock.
Failure by any dissenting shareholder to comply with any procedure required
by Subchapter 15D may cause a termination of such shareholder's dissenters
rights. The Corporation will not give any notice of the following requirements
other than as described in this Proxy Statement and as required by the BCL. The
right to exercise dissenter's rights under Subchapter 15D is the sole remedy of
a holder of Common Stock with respect to the Reincorporation Merger, absent a
showing of fraud or fundamental unfairness in connection with the
Reincorporation Merger. Upon a showing of fraud or fundamental unfairness in
connection with the Reincorporation Merger, a shareholder could seek an
injunction against the consummation of the Reincorporation Merger.
A holder of record of Common Stock may assert dissenters as to fewer than all
of the shares of Common Stock registered in such holder's name only if the
holder dissents with respect to all of the Common Stock beneficially owned by
any one person and discloses the name and address of the person or persons on
whose behalf the holder dissents. In that event, the holder's rights shall be
determined as if the shares as to which the holder has dissented and the other
shares were registered in the names of different holders. A beneficial owner of
shares of Common Stock who is not also the record holder of such shares may
assert dissenters rights with respect to shares held on such owner's behalf and
shall be treated as a dissenting shareholder under the terms of Subchapter 15D
if the beneficial owner submits to the Corporation, not later than the time of
filing the Notice of Intention to Dissent (as defined below), a written consent
of the record holder. Such beneficial owner may not dissent with respect to less
than all shares of Common Stock beneficially owned by such beneficial owner.
Holders of Common Stock (or beneficial owners thereof as provided above) who
follow the procedures of Subchapter 15D as outlined below will be entitled to
receive from the Corporation the fair value of their shares of Common Stock
immediately before the Effective Date, taking into account all relevant factors
but excluding any appreciation or depreciation in anticipation of the
effectuation of the Plan of Merger. Holders of Common Stock (or beneficial
owners thereof) who elect to exercise their dissenters rights must comply with
all of the following procedures to preserve those rights.
Holders of Common Stock (or beneficial owners thereof) who wish to exercise
dissenters rights must file a written notice of intention to demand the fair
value of their shares of Common Stock if the Reincorporation Merger is
effectuated (the "Notice of Intention to Dissent"). Such dissenters must file
the Notice of Intention to Dissent with the Secretary of the Corporation prior
to the vote by shareholders on the Plan of Merger; they must make no change in
their beneficial ownership of Common Stock from the date of filing until the
Effective Date; and they must refrain from voting their Common Stock for the
approval and adoption of the Plan of Merger. The Notice of Intention to Dissent
must be in addition to and separate from any proxy or vote against the Plan of
Merger.
If the Plan of Merger is approved and adopted by the required vote at the
Annual Meeting, the Corporation will mail a notice (the "Notice of Approval") to
all dissenters who filed a Notice of Intention to Dissent prior to the vote on
the Plan of Merger and who refrained from voting for the approval and adoption
of the Plan of Merger. The Corporation expects to mail the Notice of Approval
promptly after effectuation of the Reincorporation Merger. The Notice of
Approval will state where and when (the "Demand Deadline") a demand for payment
must be sent and certificates for shares of Common Stock must be deposited in
order to obtain payment; it will supply a form for demanding payment (the
"Demand Form") which includes a request for certification of the date on which
the holder, or the person on whose behalf the holder dissents, acquired
beneficial ownership of the shares of Common Stock; and it will be accompanied
by a copy of Subchapter 15D. Dissenters must ensure that the Demand Form and
their certificates for shares of Common Stock are received by the Corporation on
or before the Demand Deadline. All mailings to the Corporation are at the risk
of the dissenter. However, the Corporation recommends that the Notice of
Intention to Dissent, the Demand Form and the holder's share certificates be
sent by certified mail.
Any holder (or beneficial owner) of Common Stock who fails to file a Notice
of Intention to Dissent, fails to complete and return the Demand Form, or
fails to deposit share certificates with the Company, each within the time
periods provided above, will lose the holder's (or beneficial owner's)
dissenters rights under Subchapter 15D. A dissenter will retain all rights of a
shareholder, or beneficial owner, as the case may be, until those rights are
modified by effectuation of the Plan of Merger.
Upon timely receipt, of the completed Demand Form, the Corporation is
required by the BCL either to remit to dissenters who have returned the Notice
of Intention to Dissent and the completed Demand Form and have deposited their
certificates, the amount the Corporation estimates to be the fair value for
their shares or to give written notice that no such remittance will be made. The
Corporation does not intend to make payment of any part of the amounts payable
to dissenters until the fair value of the Common Stock affected by the
Reincorporation Merger has been finally determined. The remittance or notice
will be accompanied by:
(1) the closing balance sheet and statement of income of the Corporation for
the fiscal year ended May 31, 1995, together with the latest available interim
financial statement;
(2) a statement of the Corporation's estimate of the fair value of the Common
Stock (the "Corporation's Estimate"); and
(3) a notice of the right of the dissenter to demand payment or supplemental
payment, as the case may be, accompanied by a copy of Subchapter 15D.
If the Corporation does not remit the amount of its estimate of fair value of
the Common Stock, it will return any certificates that have been deposited, and
may make a notation on any such certificates that a demand for payment in
accordance with Subchapter 15D has been made. If shares carrying such notation
are thereafter transferred, each new certificate issued therefor may bear a
similar notation, together with the name of the original dissenting holder or
owner of such shares. A transferee of such shares will not acquire by such
transfer any rights in the Corporation other than those which the original
dissenter had after making demand for payment of their fair value.
After the Corporation gives notice of the Corporation's Estimate, without
remitting that amount, and if the dissenter believes that the Corporation's
Estimate is less than the fair value of the shares, the dissenter may send to
the Corporation the dissenter's own estimate (the "Holder's Estimate") of the
fair value of the shares as contemplated by BCL (S) 1578, which will be deemed a
demand for payment of the amount of the Holder's Estimate. If a dissenter does
not file a Holder's Estimate within 30 days after the mailing by the Corporation
of its remittance or notice, the dissenter will be entitled to more than the
Corporation's Estimate.
If, within 60 days after the Effective Date or after the timely receipt by
the Corporation of any Holder's Estimate, whichever is later, any demands for
payment remain unsettled, the Corporation may file in court an application
for relief requesting that the fair value of the Common Stock be determined by
the court. There is no assurance that the Corporation will file such an
application. All dissenters, wherever residing, whose demands have not been
settled will be made parties to any such appraisal proceeding. The court may
appoint an appraiser to receive evidence and recommend a decision on the issue
of fair value. Each dissenter who is made a party will be entitled to recover
the amount by which the fair value of the dissenter's Common Stock is found to
exceed the amount, if any, previously remitted, plus interest. Interest shall be
payable from the Effective Date until the date of payment at such rate as is
fair and equitable under all the circumstances, taking into account all relevant
factors, including the average rate currently paid by the Corporation on its
principal line of credit. If the Corporation fails to file an application for
relief, any dissenter who has made a demand and who has not already settled the
dissenter's claim against the Corporation may do so in the name of the
Corporation at any time within 30 days after the expiration of the 60-day
period. If a dissenter does not file an application within the 30-day period,
each dissenter entitled to file an application shall be paid the Corporation's
Estimate and no more, and may bring an action to recover any amount thereof not
previously remitted.
The costs and expenses of such court proceedings, including the reasonable
compensation and expenses of the appraiser appointed by the court, will be
determined by the court and assessed against the Corporation, except that any
part of the costs and expenses may be apportioned and assessed as the court
deems appropriate against all or some of the dissenters who are parties and
whose action is demanding supplemental payment the court finds to be dilatory or
in bad faith. Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the Corporation,
and in favor of any or all dissenters, if the Corporation fails to comply
substantially with the requirements of Subchapter 15D. Such fees and expenses
may be assessed against either the Corporation or a dissenter, if the court
finds that the party against whom the fees and expenses are assessed acted in
bad faith or in a dilatory manner. If the court finds that the services of
counsel for any dissenter were of substantial benefit to other dissenters
similarly situated and should not be assessed against the Corporation, it may
award such counsel reasonable fees to be paid out of the amounts awarded to the
dissenters who were benefitted.
Under the BCL, a shareholder of the Corporation has no right to obtain, in
the absence of fraud or fundamental unfairness, an injunction against the
Reincorporation Merger, nor any right to valuation and payment of the fair value
of the holder's shares because of the Reincorporation Merger, except to the
extent provided by the dissenters rights provisions of Subchapter 15D. The BCL
also provides the absent fraud or fundamental unfairness, the rights and
remedies provided by Subchapter 15D are exclusive.
The foregoing description of the rights of dissenters under Subchapter 15D is
qualified in its entirety by the provisions of Subchapter 15D.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Board of Directors of the Corporation and of Unit each have conditioned
the effectiveness of the Reincorporation Merger on the receipt of an opinion of
tax counsel satisfactory to the Corporation, to the effect that, on the basis of
facts and assumptions set forth in such opinion, for federal income tax
purposes:
1. No gain or loss will be recognized by the Corporation, Unit or
shareholders of the Corporation by reason of the effectiveness of the
Reincorporation Merger;
2. Each shareholder's tax basis in the Unit Common Stock into which such
holder's Common Stock is converted will be the same as the tax basis of the
Common Stock held by the shareholder immediately prior to the consummation of
the Reincorporation Merger; and
3. A shareholder who holds Common Stock as a capital asset will include in
such holder's holding period for the Unit Common Stock the period during which
the shareholder held the Common Stock converted into such Common Stock of Unit.
No information is provided herein as to the state, local or foreign tax
consequences of the Reincorporation Merger. The federal income tax discussion
set forth above is for general information only. Each shareholder is urged to
consult such holder's own tax advisor as to these and any other tax consequences
of the Reincorporation Merger.
CERTAIN SIGNIFICANT DIFFERENCES BETWEEN THE
CALIFORNIA AND PENNSYLVANIA CHARTER DOCUMENTS
The rights of the Corporation's shareholders after the Reincorporation Merger
will be governed by the terms and provisions of the Articles of Incorporation
and Bylaws of Unit (jointly sometimes referred to as the "California Charter
Documents") and by the California General Corporation Law, and related statutes
and regulations (collectively, "California Law"). The California Charter
Documents, considered together, are generally the equivalent of the current
Articles of Incorporation and Bylaws of the Corporation (jointly sometimes
referred to as the
<PAGE>
"Pennsylvania Charter Documents"), except as described herein. In addition, the
Pennsylvania Charter Documents and the California Documents differ to the extent
necessary to conform to their respective state corporate statutes.
A general summary of the more significant differences in the Charter
Documents is given in the next two subsections. Further discussion of various
provisions of the Articles of Incorporation and Bylaws is included as part of
the comparison of California Law and the Pennsylvania General Corporation Law,
and related statutes and regulations (collectively, "Pennsylvania Law"), under
"Certain Significant Differences in the Corporation Laws of California and
Pennsylvania" below, as is a discussion of the significant changes in the rights
of the shareholders occurring by virtue of the application of California Law.
Articles of Incorporation of Unit. The Articles of Incorporation filed by
Unit with the Secretary of State of California are largely the same as the
Corporation's Articles of Incorporation, except as described below.
Preferred Stock - The Corporation's Articles of Incorporation do not presently
include a class of Preferred Stock. Article Five of Unit's Articles of
Incorporation provides for the issuance of up to 2,000,000 shares of Preferred
Stock which may be issued upon authority of the Board of Directors.
Under Unit's Articles of Incorporation, the Board can authorize the issuance,
at any time or from time to time, of one or more series of Preferred Stock
without further stockholder approval. In addition, the Board will determine all
designations, preferences and limitations of such stock, including but not
limited to, the designation of series and numbers of shares; the dividend rights
if any; the redemption provisions, if any; the rights upon liquidation,
dissolution or winding up of the Corporation, if any; the conversion or exchange
rights, if any; the sinking fund provisions, if any; the voting rights, if any,
provided that the holders of shares of Preferred Stock will not be entitled to
more than one vote per share when voting as a class with the holders of shares
of Common Stock; and the other preferences, powers, qualifications, special or
relative rights and privileges and limitations or restrictions of such
preferences or rights, if any. No holders of shares of the capital stock of
Unit have any preemptive rights to acquire any securities of Unit.
The Board and management of the Corporation believe that the authorization to
issue Preferred Stock provides flexibility for potential future financing needs.
While the Board has not determined to proceed with any financing, the Board and
management believe the Corporation should have the flexibility to issue
preferred stock, along with its existing ability to issue debt and additional
shares of Common Stock.
The Corporation also could issue Preferred Stock for other corporate
purposes, such as to implement equity alliances or to make acquisitions,
although no issuances for such purposes are presently contemplated. If the
Reincorporation Merger is approved, the Board will be able to specify the
precise characteristics of the Preferred Stock to be issued, depending on then
current market conditions and the nature of specific transactions.
<PAGE>
Even though voting rights of Preferred Stock are limited as described above,
the issuance of Preferred Stock could be used to discourage attempts to acquire
control of the Corporation. Neither the Board nor management is considering the
use of Preferred Stock for such purposes and they are not aware of any present
effort to accumulate the Corporation's securities for the purpose of gaining
control of the Corporation. The Board and management represent that they will
not issue, without prior stockholder approval, Preferred Stock for an anti-
takeover purpose, including without limitation, to implement any stockholders'
rights plan or with features intended to make an attempted acquisition of the
Corporation more difficult or costly. No Preferred Stock will be issued to any
individual or group for the purpose of creating a block of voting power to
support management on a controversial issue. The Board and management believe
that the authorization of Preferred Stock is in the best interest of the
stockholders and the Corporation.
Cumulative Voting - The Articles of Incorporation of Unit expressly disallow
cumulative voting in the election of directors. The California Corporation Law
states that unless otherwise stated in the Articles of Incorporation cumulative
voting is mandatory. Currently, pursuant to the Corporation's Bylaws,
shareholders may cumulate their votes for director. See "Certain Significant
Differences Between the Corporation Laws of California and Pennsylvania-
Cumulative Voting" below.
Indemnification - The Articles of Incorporation of Unit expressly eliminates the
monetary liability of directors and authorizes Unit to indemnify directors and
officers of Unit to the fullest extent permissible under California law.
Directors and officers of the Corporation are entitled to indemnification to the
fullest extent permissible under Pennsylvania law pursuant to the Corporation's
Bylaws. See "Certain Significant Differences Between the Corporation Laws of
California and Pennsylvania-Provisions Concerning Director Liability Matters"
below. While the Corporation has provided for indemnification of its directors,
the Corporation has not eliminated the liability to shareholders of its
directors as provided in Unit's Articles of Incorporation.
Board of Directors - The size of the board of directors of Unit is set forth as
a range in Unit's Articles of Incorporation. In order to change this range a
shareholder vote is required. The Corporation's Articles are silent on this
matter, consequently the Corporation's board has full discretion as to the size
of the board of directors.
Action by Written Consent - Unit's Articles of Incorporation state that action
by written consent of shareholders must be unanimous. The California
Corporation Law allows shareholders to take action by less than unanimous
written consent, subject to certain limitations and requirements, unless stated
otherwise in the Articles of Incorporation. Unit has opted to continue
requiring a unanimous written vote in lieu of a meeting consistent with the
Pennsylvania Corporation Law.
<PAGE>
Bylaws of Unit. The Bylaws of Unit are the substantial equivalent of the
present Bylaws of the Corporation, although certain changes have been made to
conform to the provisions of California Law, certain of which are described
below.
Record Date - Unit's Bylaws authorize the setting of a record date not more than
60 or less than 10 days prior to the date of a shareholders' meeting or prior to
any other action. The notice of a shareholders' meeting must be given not more
than 60 or less than 10 days before the date of the meeting. The Bylaws of the
Corporation only require that a record date be not more than 50 days nor less
than 10 days prior to the date of the meeting or the taking of any other action.
Notice of a meeting of the shareholders of the Corporation must be given not
less than 10 days prior to the meeting date.
Special Meetings - The Bylaws of Unit also contain a provision authorizing a
special meeting of shareholders of Unit to be called by the holders of shares of
not less than 10% of the votes at such meeting. A similar provision contained
in the Bylaws of the Corporation requires a minimum of 20% of the shareholders
to call a special meeting.
Adjournment - The Bylaws of the Corporation provide that shareholders present at
a duly called meeting at which a quorum is present may continue to transact
business until adjournment notwithstanding the withdrawal of shareholders
sufficient to have a quorum. Where a quorum has been withdrawn, under Unit's
Bylaws an action can be taken provided the action is approved by a majority of
shares required to constitute a quorum.
CERTAIN SIGNIFICANT DIFFERENCES BETWEEN THE
CORPORATION LAWS OF CALIFORNIA AND PENNSYLVANIA
The California Law and the Pennsylvania Law differ in many respects, and
consequently it is not practical to summarize all such differences. The
following is a summary of certain significant differences which may affect the
rights and interests of shareholders. The summary is qualified in its entirety
by reference to the provisions of California Law and Pennsylvania Law. One of
the most significant differences is that the Pennsylvania Law authorizes a
corporation in its original articles, or in an amendment to the articles
approved by its shareholders, to override most provisions of the Pennsylvania
Law.
Unit expects that at the time of the Reincorporation Merger it will be a
"Listed Corporation" under the California Law and the following discussion
reflects that assumption. A corporation may qualify as a "Listed Corporation"
generally if it is listed on the New York or American Stock Exchange or has 800
beneficial holders.
Classified Board. A classified board is one for which a certain number, but
not all, of the directors are elected on a rotating basis each year. The
Corporation's Bylaws currently mandate a classified board. The California Laws
allow a corporation to have a classified board only if it is a Listed
Corporation. If Unit wished to retain a classified board consisting of three
classes California Law requires a minimum of nine directors. Unit does not
intend to retain a classified board following the Reincorporation Merger.
<PAGE>
Change in Number of Directors. Under the California Law, a change in the
number of directors must be approved by the shareholders, although the board of
directors may fix the exact number of directors within a range set forth in
either the corporation's articles of incorporation or bylaws, if the range has
been approved by the shareholders. The Corporation, under the Pennsylvania Law,
sets the number of directors in the manner provided in the bylaws, which
requires only an action by the Board of Directors.
Calling of Special Shareholder Meetings. The Bylaws of Unit provide, in
accordance with California Law, that a special meeting of the shareholders may
be called by (i) the Board of Directors, (ii) the Chairman of the Board, (iii)
the President, or (iv) the holders of such number of shares entitled to cast not
less than 10% of the votes of such meeting. Under Pennsylvania Law, a special
meeting of the shareholders may be called by (a) the Board, or (b) such officers
or other persons provided in the bylaws. The Bylaws of the Corporation provide,
however, that a special meeting of the shareholders may also be called by the
holders entitled to cast not less than 20% of the votes at any such meeting.
Accordingly, fewer of Unit's shareholders will need to take action to call
meetings following the Reincorporation Merger.
Cumulative Voting. Generally under California Law cumulative voting in the
election of directors is mandatory. If any shareholder has given timely notice
of his intention to cumulate votes for the election of directors, any other
shareholder of a corporation is also entitled to cumulate votes at such
election. However, a corporation which is a Listed Corporation may by provision
in its articles or bylaws eliminate cumulative voting. Unit does not intend to
retain cumulative voting. The Corporation has a provision in its Bylaws
providing for cumulative voting without further action by any shareholder.
Loans to Officers and Employees. Under California Law, any loan to or
guaranty for the benefit of a director or officer of a corporation requires
approval of holders of a majority of the outstanding shares of the corporation.
However, the board of any corporation with 100 or more shareholders of record
and a bylaw provision approved by the outstanding shares authorizing the board
of directors alone to approve loans to or guarantees to an officer, may approve
such a loan or guaranty by a vote sufficient without the vote of any interested
director, if it determines that any such loan or guaranty may reasonably be
expected to benefit the corporation. Unit's Bylaws do not authorize the Board to
permit such loans or guarantees. Pennsylvania Law expressly permits loans,
guarantees of obligations or similar undertakings by a corporation to its
directors, officers or employees without shareholder approval.
Vote Required for Fundamental Transactions. Both California Law and
Pennsylvania Law generally require a shareholder vote (except as indicated
below) of both the acquiring and acquired corporation to approve mergers and of
the selling corporation for the sale by a corporation of all or substantially
all of its assets. With certain exceptions, the California Law also requires
that a merger or reorganization and certain sales of assets or similar
transactions be approved by a majority vote of each class of shares outstanding
and entitled to vote. By contrast, Pennsylvania Law generally does not require
such class voting, except as
<PAGE>
described in "Amendments to Articles of Incorporation" below and in the next
succeeding paragraph.
Unless the articles of incorporation require a greater vote, Pennsylvania Law
requires approval by the holders of a majority of the votes cast by the holders
entitled to vote with respect to fundamental transactions. Shareholder approval
is not required under the Pennsylvania Law in the case of (i) "short-form"
mergers, which are mergers of an 80%-owned subsidiary and a parent corporation,
or (ii) a merger which does not alter the status of the corporation as a
domestic business corporation and the articles and outstanding shares of the
corporation are unaffected except for certain amendments to the articles that
the board is permitted to make. The Articles of Incorporation of the
Corporation contain no provisions altering Pennsylvania statutes with respect to
shareholder voting or merger transactions.
Under the Pennsylvania Law, an amendment to the articles or plan of
reclassification, merger, consolidation, exchange, asset transfer, division or
conversion that provides mandatory special treatment for the shares of a class
held by particular shareholders or groups of shareholders within a class of
securities must be approved by each group of the holders of any outstanding
shares of a class who are to receive the same special treatment under the
amendment or plan, voting as a special class in respect to the plan, regardless
of any limitations states in the articles or bylaws on the voting rights of any
class. At the option of the corporation's board of directors, the approval of
such special treatment by any such affected group may be omitted, but in such
event the holders of any outstanding shares of the special class so denied
voting rights are entitled to dissenters' rights.
Amendments to Articles of Incorporation. Generally under California Law and
Pennsylvania Law, amendments to the articles of a corporation must be approved
by the board of directors and by the holders of a majority of the outstanding
shares. Under California Law, a proposed amendment generally must be approved
by the outstanding shares of a class if the amendment would (i) increase or
decrease the aggregate number of authorized shares of such class, (ii) effect an
exchange, reclassification or cancellation of all or part of the shares of such
class, other than a stock split, (iii) effect an exchange of all or part of the
shares of another class into the shares of such class, (iv) change the rights,
preferences, privileges or restrictions of the shares of such class, (v) create
a new class of shares having rights, preferences or privileges prior to the
shares of such class, or increase the rights, preferences or privileges or the
number of authorized shares of any class having rights, preferences or
privileges prior to the shares of such class, or (vi) cancel or otherwise affect
dividends on the shares of such class which have accrued but have not been paid.
Pennsylvania Law requires approval of a class only if the amendment would (i)
authorize the board to fix the relative rights and preferences of any special
class, (ii) make any change in the preferences, limitations or special rights of
the shares of a class adverse to the class, (iii) authorize a new class having a
preference as to dividends or assets senior to the class, or (iv) increase the
number of authorized shares of any class or series having a preference as to
dividends or assets which is senior to the class.
<PAGE>
Amendments to Bylaws. Under California Law, bylaws may be amended either by
approval of a majority of the outstanding shares or by the approval of the
board, except with respect to amending a bylaw fixing the number of directors or
the maximum and minimum number of directors, which must be approved by a
majority of the outstanding shares. Pennsylvania Law provides that the bylaws of
a corporation may expressly vest in the directors the power to amend the bylaws,
subject to the power of the shareholders to change such action, except that
certain matters are committed expressly to the shareholders unless otherwise
provided for in the articles. The notice of any meeting of shareholders to
consider amending the bylaws must provide in the notice of such meeting that
purpose of such meeting is to consider such action. The Bylaws of Unit provide
that its Bylaws may be amended by vote of the shareholders or by approval of the
board, except with respect to the authorized number of directors which is
committed expressly to the shareholders. See "Certain Significant Differences
between the California Charter Documents and Pennsylvania Charter Documents-
Articles of Incorporation" above.
Inspection of Shareholder Lists. California Law provides for an absolute
right of inspection of the shareholders' list for any shareholder holding 5% or
more of a corporation's outstanding voting shares or any shareholder holding 1%
or more of a corporation's outstanding voting shares who is involved in an
election contest. California Law also provides any shareholder a right of
inspection of shareholder lists for any purpose reasonably related to such
holder's interest as a shareholder. Pennsylvania Law only provides a right of
inspection of the shareholder list when the holder has a purpose reasonably
related to such holder's interest as a shareholder.
Dissenters' Rights. Under California Law, a dissenting shareholder of a
corporation participating in certain transactions may, under varying
circumstances, receive cash in the amount of the fair value of such holder's
shares (as determined by a court), in lieu of the consideration the holder would
otherwise have received in any such transaction. Shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System generally do not have such dissenters' rights unless the
holders of at least five percent of the class of outstanding shares claim the
right or the corporation or any law restricts the transfer of such shares.
Dissenters' rights are unavailable, however, if the shareholders of a
corporation or the corporation itself, or both, immediately after the
transaction will own equity securities constituting more than five-sixths of the
voting power of the surviving or acquiring corporation or its parent entity.
California Law also affords dissenters' rights for certain sale of asset
transactions.
Pennsylvania Law generally provides that dissenters' rights entitling the
holder to obtain payment of the fair value of such holder's shares are available
to a holder of shares of a Pennsylvania corporation in certain transactions
except (i) if such shares are listed on a national securities exchange, (ii) if
such shares are held of record by more than 2,000 shareholders, and (iii) with
respect to the adoption of a plan of asset transfer.
Dividends. California Law provides that a corporation may not make any
distribution (including dividends, whether in cash or property, and repurchases
or redemption of its shares for
<PAGE>
cash or property) unless (i) the corporation's retained earnings immediately
prior to the proposed distribution equal or exceed the amount of the proposed
distribution, or (ii) immediately after giving effect to such distribution, the
corporation's assets (exclusive of goodwill, capitalized research and
development expenses and deferred charges) would be at least equal to 1 1/4
times its liabilities (not including deferred taxes, deferred income and other
deferred credits) and the corporation's current assets would be at least equal
to its current liabilities (or 1 1/4 times its current liabilities if the
average pre-tax and pre-interest earnings for the preceding two fiscal years
were less than the average interest expenses for such years). In addition,
California Law provides that a corporation may not make any such distribution if
as a result the excess of the corporation's assets over its liabilities would be
less than the liquidation preference of all shares having a preference or
liquidation over the class or series to which the distribution is made.
Pennsylvania Law generally provides that a Pennsylvania corporation may not
make distributions if, unless the articles provide otherwise, after giving
effects thereto, (i) the corporation would be unable to pay its debts as they
become due in the usual course of business or (ii) the total assets of the
corporation would be less than the sum of its total liabilities plus the amount
that would be needed, if the corporation were to be dissolved at the time as of
which the distribution is measured, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
Voting by Ballot. California Law grants to each shareholder the right to
require a vote by written ballot for the election of directors at a
shareholders' meeting. Under Pennsylvania Law, unless otherwise restricted in
the bylaws, elections of directors need not be by ballot unless required by vote
of the shareholders before the voting begins.
Provisions Concerning Director Liability Matters. Both California Law and
the Pennsylvania Law contain provisions relating to director liability matters,
which are reviewed below as they relate to standard of care, monetary liability
and indemnification.
The standard of care required of a director of a California corporation is
that such director must perform his or her duties in good faith, in a manner
such director believes to be in the best interests of the corporation and its
shareholders and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances. This
is substantially similar to the counterpart provision in the Pennsylvania Law
which requires that the director perform his or her duties in good faith, in a
manner reasonably believed to be in the best interests of the corporation, and
with such care, including inquiry, skills and diligence, as a person of ordinary
prudence would use in similar circumstances.
Both California Law and Pennsylvania Law explicitly permit a director to
rely, subject to applicable standards, on information, opinions, reports or
statements, including financial statements and other financial data, prepared or
presented by certain other persons. These persons include corporation officers
and employees, legal counsel, accountants and committees of the board.
<PAGE>
Directors of Pennsylvania corporations also are explicitly permitted by
Pennsylvania Law to consider the effects of corporate actions on certain
specified constituencies in determining what is in the best interests of the
corporation. These constituencies include employees, the communities in which
the corporation has offices, and suppliers and customers. There is no
counterpart provision in California Law.
Limitation of director monetary liability for breach of fiduciary duty is
permitted by California Law and Pennsylvania Law. Under California Law, to be
operative such provision must be in a corporation's articles. The provision
contained in Unit's Articles eliminates liability of directors for monetary
damages to the fullest extent permitted under the California Law. Under the
Pennsylvania Law, such a provision may be in the bylaws if approved by a vote
of the shareholders. The Corporation's Bylaws contain no such provision.
California Law contains more exceptions to the limitation on personal liability
for monetary damages than does Pennsylvania Law.
Concerning indemnification, California Law and Pennsylvania Law are generally
similar regarding the range of circumstances under which corporations are
permitted to indemnify directors, officers and others. A key provision in both
California Law and Pennsylvania Law allows a corporation to include in its
bylaws, and in agreements between the corporation and its directors and
officers, provisions expanding the scope of indemnification beyond that
otherwise provided by law.
Under Pennsylvania Law, however, indemnification may not be made where the
acts or omissions are determined by a court to have constituted willful
misconduct or recklessness. California Law generally precludes indemnification
in more circumstances than does Pennsylvania Law.
For the reasons set forth above, the Board of Directors has unanimously
adopted and approved the Plan of Merger and recommends a vote FOR approval of
the Plan of Merger.
<PAGE>
APPROVAL OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Price Waterhouse LLP,
independent certified public accountants, to serve as auditors of the
Corporation for the fiscal year ending May 31, 1996. It is expected that a
member of the firm will be present at the Annual Meeting with the opportunity to
make a statement if so desired and will be available to respond to appropriate
questions.
The Board of Directors recommends a vote FOR approval of this selection.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in the Proxy Statement to be
mailed to all shareholders entitled to vote at the next annual meeting of
shareholders of the Corporation must be received at the Corporation's principal
executive offices not later than April 30, 1996. In order to eliminate any
potential controversy as to the date on which a proposal was received by the
Corporation, it is suggested that proponents submit their proposals by Certified
Mail, Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation, and in
addition to soliciting shareholders by mail through its regular employees, the
Corporation may request banks and brokers to solicit their customers who have
stock of the Corporation registered in the name of a nominee and, if so, will
reimburse such banks and brokers for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Corporation may also be made of
some shareholders in person or by mail, telephone or facsimile, following the
original solicitation.
<PAGE>
PRELIMINARY COPIES FILED PURSUANT TO RULE 14A-6(A)
--------------------------------------------------
PROXY AUTOCLAVE ENGINEERS, INC.
22600 SAVI RANCH PARKWAY
YORBA LINDA, CA 92687
THIS PROXY IS SOLICITED ON BEHALF OF THE AUTOCLAVE ENGINEERS, INC. BOARD OF
DIRECTORS
The undersigned appoints Michael J. Doyle, James C. Levinson and
A. Wade Blackman, Jr., and each of them, as proxies of the undersigned, each
with the power to appoint his substitute, and hereby authorizes each of them,
separately, to represent and to vote, as designated below, all the shares of
Common Stock of Autoclave Engineers, Inc. held of record by the undersigned on
September 22, 1995 or with respect to which the undersigned is otherwise
entitled to vote or act, at the Annual Meeting of Shareholders to be held on
November 10, 1995 or any adjournment thereof, upon matters set forth in the
Notice of Annual Meeting dated October 3, 1995, a copy of which has been
received by the undersigned.
1. Election of Directors: For the election of James C. Levinson and A. Wade
Blackman, Jr.
[_]FOR ALL [_]WITHHOLD AUTHORITY FOR ALL [_]WITHHOLD AUTHORITY
AS MARKED BELOW
________________________________________________________________________________
(INSTRUCTION: To withhold authority to vote for any individual, write that
person's name on the space provided above)
2. To consider and act upon a proposal to change the Corporation's state of
incorporation from Pennsylvania to California pursuant to a Plan of Merger
which provides that the Corporation will be merged into its wholly-owned
subsidiary, Unit Instruments, Inc.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To consider and act upon a proposal to ratify the selection of the firm of
Price Waterhouse LLP as auditors of the Corporation for the fiscal year
ending May 31, 1996.
FOR [_] AGAINST [_] ABSTAIN [_]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
upon matters incident to the conduct of the meeting and upon the election of
substituted nominees for Director designated by the Board of Directors if one
or more of the persons named in Proposal 1 above is unable to serve as a
Director.
(to be signed and dated on other side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR THE PROPOSALS IN ITEMS 2 AND 3, AND
AUTHORITY WILL BE DEEMED GRANTED UNDER PROPOSAL 4.
Dated: ___________________________, 1995
___________________________
Signature
___________________________
Signature if held jointly
Please sign exactly as the name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
EXHIBIT A
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PLAN OF MERGER
MERGING
AUTOCLAVE ENGINEERS, INC.
(A PENNSYLVANIA CORPORATION)
WITH AND INTO
UNIT INSTRUMENTS INC.
(A CALIFORNIA CORPORATION)
RECITALS
A. AUTOCLAVE ENGINEERS, INC. ("Autoclave") is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania, which is authorized to issue 12,000,000 shares of Common Stock,
par value $.15 per share ("Autoclave Common Stock"), of which _________ are
issued and outstanding.
B. UNIT INSTRUMENTS INC. ("Unit") is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, which
is authorized to issue 12,000,000 shares of Common Stock, par value $.15 per
share ("Unit Common Stock"), of which ___ are issued and outstanding; and
2,000,000 shares of Preferred Stock, par value $.01 per share, none of which are
issued and outstanding. Pursuant to this Plan of Merger Unit shall be the
surviving corporation subsequent to such merger.
C. The Board of Directors of Autoclave has adopted and approved this Plan of
Merger in accordance with the Pennsylvania Business Corporation Law of 1988, as
amended (the "PBCL") and directed that it be submitted to the shareholders of
Autoclave for approval.
D. The Board of Directors of Unit, as well as Autoclave, the sole
shareholder of Unit, has adopted this Plan of Merger in accordance with the
California General Corporation Law (the "CGCL").
ARTICLE I
General
1.1 The Merger. Autoclave and Unit shall effect a merger (the "Merger") in
accordance with and subject to the terms and conditions of this Plan of Merger
(the "Plan"). At the Effective Time (as defined in Section 1.2 hereof),
Autoclave shall be merged with and into Unit, and the existence of Autoclave,
except insofar as it may be continued by law, shall cease. After the Effective
Time Unit shall assume all the liabilities of Autoclave.
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1.2 Effectiveness. Articles of Merger, the Plan of Merger, and such other
documents and instruments as are required by, and complying in all respects
with, the CGCL and the PBCL shall be delivered to the appropriate state
officials for filing upon satisfaction of the conditions contained in Section
3.3 hereof. The Merger shall become effective at the time of the filing of the
required documents under the CGCL and the PBCL (the "Effective Time").
1.3 Further Assurances. If at any time Unit, or its successors or assigns,
shall consider or be advised that any further assignments or assurances in law
or any other acts are necessary or desirable to (a) vest, perfect or confirm, of
record or otherwise, in Unit its rights, title or interest in, to or under any
of the rights, properties or assets of Autoclave acquired or to be acquired by
Unit as a result of, or in connection with, the Merger, or (b) otherwise carry
out the purposes of this Plan, Autoclave and its proper officers and directors
shall be deemed to have granted to Unit an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments and assurances in law and
to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in Unit and otherwise to carry
out the purposes of this Plan; and the proper officers and directors of Unit are
fully authorized in the name of Autoclave or otherwise to take any and all such
action.
1.4 Amendment. Notwithstanding shareholder approval of this Plan, this Plan
may be terminated at any time on or before the Effective Time by agreement of
the Boards of Directors of Autoclave and Unit.
ARTICLE II
Capital Stock
2.1 Autoclave Common Stock. At the Effective Time, each share of Autoclave
Common Stock issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one validly issued, fully paid and non-assessable
share of Unit Common Stock and each share of Autoclave Common Stock held in the
treasury of Autoclave shall be canceled.
2.2 Unit Common Stock and Preferred Stock. Each share of Unit Common Stock
issued and outstanding immediately prior to the Effective Time shall be canceled
and retired and resume the status of authorized and unissued shares of Common
Stock, and no shares of Unit Common Stock or other securities of Unit shall be
issued in respect thereof. There are currently no shares of Preferred Stock
outstanding.
2.3 Exchange of Certificates. No exchange of certificates representing
shares of Autoclave Common Stock converted pursuant to Section 2.1 shall be
required, and from and after the Effective Time and until certificates
representing such Autoclave Common Stock are presented for exchange or
registration of transfer, all such certificates shall be deemed for al purposes
to represent the same number of shares of the class of Unit Common Stock into
which they were so converted. After the Effective Time, whenever certificates
which formerly represented shares of Autoclave Common Stock are presented for
exchange or registration of
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A-3
transfer, Unit shall cause to be issued in respect thereof, certificates
representing an equal number of shares of the appropriate class of Unit Common
Stock.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Articles of Incorporation and By-laws. The Articles of Incorporation of
Unit shall be unaffected by the Merger. The By-laws of Unit shall be unaffected
by the Merger.
3.2 Directors and Officers. The officers of Unit shall be unaffected by the
Merger and each such officer shall hold office until the expiration of his or
her term of office or earlier death, resignation or removal in accordance with
the Articles of Incorporation and By-laws of Unit and applicable law. Upon
effectiveness of the Merger the Board of Directors of Autoclave shall, without
further action, become the Board of Directors of Unit and each such director
shall hold office until the expiration of his or her term of office or earlier
death, resignation or removal in accordance with the Articles of Incorporation
and By-laws of Unit and applicable law.
3.3 Conditions to Merger. The obligation of Autoclave and Unit to effect the
Merger is subject to satisfaction of the following conditions (any or all of
which may be waived by Autoclave and Unit in their sole discretion to the extent
permitted by law):
(a) the shareholders of Autoclave shall have approved this Plan of
Merger; and
(b) Autoclave shall have received an opinion of its tax counsel,
satisfactory to Autoclave and substantially to the effect that, for
federal income tax purposes (i) no gain or loss will be recognized by
Autoclave, Unit or the shareholders of Autoclave by reason of the
effectiveness of the Merger, (ii) each Autoclave shareholder's basis in
Unit Common Stock into which such holder's Autoclave Common Stock is
converted will be the same as the tax basis of the Autoclave Common Stock
held by such holder immediately prior to the effectiveness of the Merger,
and (iii) a Autoclave shareholder who holds Autoclave Common Stock as a
capital asset will include in such holder's holding period for Unit Common
Stock the period during which such holder held the Autoclave Common Stock
converted into such Unit Common Stock.
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EXHIBIT B
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RESTATED ARTICLES OF INCORPORATION
OF
UNIT INSTRUMENTS, INC.
ARTICLE ONE: NAME
The name of the Corporation is: Unit Instruments, Inc.
ARTICLE TWO: PURPOSE
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE THREE: LIMITATION OF DIRECTORS' LIABILITY
The liability of the directors of this Corporation for monetary damages shall
be eliminated to the fullest extent permissible under California law.
ARTICLE FOUR: INDEMNIFICATION
This Corporation is authorized to indemnify the directors and officers of
this Corporation to the fullest extent permissible under California law and in
excess of that otherwise permitted under Section 317 of the California
Corporations Code.
ARTICLE FIVE: AUTHORIZED SHARES
This Corporation is authorized to issue two classes of shares designated
"Common Stock" and "Preferred Stock," respectively. The number of shares of
Common Stock authorized to be issued is 12,000,000, par value $.15 per share,
and the number of shares of Preferred Stock authorized to be issued is
2,000,000, par value $.01 per share.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors of the Corporation is hereby authorized to determine the
number of series into which
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the shares of Preferred Stock may be divided, and (except to the extent such
matters are fixed by the Articles of Incorporation) to determine and alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock, to fix the designation and number of
shares constituting any series prior to the issue of shares of that series and
to increase or decrease, within the limits stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any series (but not below the number of shares of such series then
outstanding), the number of shares of any such series subsequent to the issue of
shares of that series.
ARTICLE SIX: DIRECTORS
The number of directors of the corporation may be fixed from time to time by
resolution of the board of directors but shall not be less than four nor more
than seven. Upon becoming a listed corporation within the meaning of Section
301.5 of the California Corporations Code cumulative voting shall be eliminated.
ARTICLE SEVEN: ACTION BY CONSENT OF SHAREHOLDERS
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action to be so taken, shall be signed by
the holders of all of the outstanding shares entitled to vote thereon.
ARTICLE EIGHT: AGENT FOR SERVICE
The name and address in the State of California of the Corporation's agent
for service of process is______________________________________________.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation on _______________, 1995.
_______________________________________
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EXHIBIT C
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BYLAWS FOR THE REGULATION, EXCEPT
AS OTHERWISE PROVIDED BY STATUTE OR ITS
ARTICLES OF INCORPORATION, OF
UNIT INSTRUMENTS, INC.
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
the corporation is hereby fixed and located at 22600 Savi Ranch Parkway, Yorba
Linda, California. The Board of Directors is hereby granted full power and
authority to change said principal executive office from one location to
another. Any such change shall be noted on the bylaws by the secretary,
opposite this section, or this section may be amended to state the new location.
SECTION 2. OTHER OFFICES. Other business offices may at any time be
established by the Board of Directors at any place or places where the
corporation is qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual or other meetings of shareholders
shall be held at the principal executive office of the corporation, or at any
other place within or without the State of California which may be designated
either by the Board of Directors or by the written consent of all persons
entitled to vote thereat and not present at the meeting, given either before or
after the meeting and filed with the secretary of the Corporation.
SECTION 2. ANNUAL MEETINGS. The annual meeting of shareholders shall be
held each year on such date and at such time as shall be set by the
Board of Directors. At such meetings, directors shall be elected, reports of the
affairs of the Corporation shall be considered, and any other business may be
transacted which is within the powers of the shareholders. Written notice of
each annual meeting shall be given to each shareholder entitled to vote, either
personally or by mail or other means of written communication, charges prepaid,
addressed to such shareholder at his address appearing on the books of the
Corporation or given by him to the Corporation for the purpose of notice. If any
notice or report addressed to the shareholder at the address of such shareholder
appearing on the books of the Corporation is returned to the Corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice or report to the shareholder at such
address, all future notices or reports shall be deemed to have been duly
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given without further mailing if the same shall be available for the shareholder
upon written demand of the shareholder at the principal executive office of the
Corporation for a period of one year from the date of the giving of the notice
or report to all other shareholders. If a shareholder gives no address, notice
shall be deemed to have been given him if sent by mail or other means of written
communication addressed to the place where the principal executive office of the
Corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said principal executive office is
located.
All such notices shall be given to each shareholder entitled thereto not
less than ten (10) days nor more than sixty (60) days before each annual
meeting. Any such notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any such notice in accordance with
the foregoing provisions, executed by the secretary, assistant secretary or any
transfer agent of the Corporation, shall be prima facie evidence of the giving
of the notice.
Such notices shall specify:
(a) the place, the date, and the hour of such meeting;
(b) those matters which the Board, at the time of the mailing of the
notice, intends to present for action by the shareholders;
(c) if directors are to be elected, the names of nominees intended
at the time of the notice to be presented by management for election;
(d) the general nature of a proposal, if any, to take action with
respect to approval of (i) a contract or other transaction with an interested
director, (ii) amendment of the Articles of Incorporation, (iii) a
reorganization of the Corporation as defined in Section 181 of the General
Corporation Law, (iv) voluntary dissolution of the Corporation, or (v) a
distribution in dissolution other than in accordance with the rights of
outstanding preferred shares, if any; and
(e) such other matters, if any, as may be expressly required by
statute.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders, for the
purpose of taking any action permitted by the shareholders under the General
Corporation Law and the Articles of Incorporation of this Corporation, may be
called at any time by the Chairman of the Board or the president, or by the
Board of Directors, or by one or more shareholders holding not less than ten
percent (10%) of the votes at the meeting. Upon request in writing that a
special meeting of shareholders be called for any proper purpose, directed to
the Chairman of the Board, president, vice president or secretary by any person
(other than the Board) entitled to call a special meeting of shareholders, the
officer forthwith shall cause notice to be given to shareholders entitled to
vote that a meeting will be held at a time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after receipt of the request. Except in special cases where other express
provision is made by statute, notice of such special meetings shall be given in
the same manner as for the annual meetings of
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shareholders. In addition to the matters required by items (a) and, if
applicable, (c) of the preceding Section, notice of any special meeting shall
specify the general nature of the business to be transacted, and no other
business may be transacted at such meeting.
SECTION 4. QUORUM. The presence in person or by proxy of the persons
entitled to vote a majority of the voting shares at any meeting shall constitute
a quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
SECTION 5. ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum no other business may be transacted at such meeting, except as
provided in Section 4 above.
When any shareholders' meeting, either annual or special, is adjourned for
forty-five days or more, or if after adjournment a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given as in the
case of an original meeting. Except as provided above, it shall not be
necessary to give any notice of the time and place of the adjourned meeting or
of the business to be transacted thereat, other than by announcement of the time
and place of the adjourned meeting or of the business to be transacted thereat,
other than by announcement of the time and place thereof at the meeting at which
such adjournment is taken.
SECTION 6. VOTING. Unless a record date for voting purposes be fixed as
provided in Section 1 of Article V of these bylaws, then, subject to the
provisions of Sections 702 and 704, inclusive, of the Corporations Code of
California (relating to voting of shares held by a fiduciary, in the name of a
Corporation, or in joint ownership), only persons in whose names shares entitled
to vote stand on the stock records of the Corporation at the close of business
on the business day next preceding the day on which notice of the meeting is
given or if such notice is waived, at the close of business on the business day
next preceding the day on which the meeting of shareholders is held, shall be
entitled to vote at such meeting, and such day shall be the record date for such
meeting. Such vote may be viva voce or by ballot; provided, however, that all
elections for directors must be by ballot upon demand made by a shareholder at
any election and before the voting begins. If a quorum is present, except with
respect to election of directors, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on any matter shall be
the act of the shareholders, unless the vote of a greater number or voting by
classes is required by the General Corporation Law or the Articles of
Incorporation. Subject to the requirements of the next sentence and the Articles
of Incorporation, every shareholder entitled to vote at any election for
directors shall have the right to cumulate his votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which his shares are entitled, or to distribute his votes on
the same principle among as many candidates as he shall think fit. No
shareholder shall be entitled to cumulative votes unless the name of the
candidate or candidates for whom such votes would be cast has been placed in
nomination prior
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to the voting, and any shareholder has given notice at the meeting prior to the
voting of such shareholder's intention to cumulate his votes. The candidates
receiving the highest number of votes of shares entitled to be voted for them,
up to the number of directors to be elected, shall be elected.
SECTION 7. VALIDATION OF DEFECTIVELY CALLED OR NOTICED MEETINGS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy, or who, though present, has, at the
beginning of the meeting, properly objected to the transaction of any business
because the meeting was not lawfully called or convened, or to particular
matters of business legally required to be included in the notice, but not so
included, signs a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
SECTION 8. ACTION WITHOUT MEETING. Directors may be elected without a
meeting by a consent in writing, setting forth the action so taken, signed by
all of the persons who would be entitled to vote for the election of directors,
provided that, without notice except as hereinafter set forth, a director may be
elected at any time to fill a vacancy not filled by the directors by the written
consent of persons holding a majority of the outstanding shares entitled to vote
for the election of directors.
Any other action which, under any provision of the California General
Corporation Law, may be taken at a meeting of the shareholders, may be taken
without a meeting, and without notice except as hereinafter set forth, if a
consent in writing, setting forth the action so taken, is signed by all of the
persons who would be entitled to vote on the action.
Unless, as provided in Section 1 of Article V of these bylaws, the
Board of Directors has fixed a record date for the determination of shareholders
entitled to notice of and to give such written consent, the record date for such
determination shall be the day on which the first written consent is given. All
such written consents shall be filed with the secretary of the Corporation.
Any shareholder giving a written consent, or the shareholder's proxyholders,
or a transferee of the shares or a personal representative of the shareholder or
their respective proxyholders, may revoke the consent by a writing received by
the Corporation prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the secretary of
the Corporation, but may not do so thereafter. Such revocation is effective
upon its receipt by the secretary of the Corporation.
SECTION 9. PROXIES. Every person entitled to vote or execute consents
shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the Corporation. Any proxy duly executed
is not revoked and continues in full force and effect until (i) an instrument
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revoking it or a duly executed proxy bearing a later date is filed with the
secretary of the Corporation prior to the vote pursuant thereto, (ii) the person
executing the proxy attends the meeting and votes in person, or (iii) written
notice of the death or incapacity of the maker of such proxy is received by the
Corporation before the vote pursuant thereto is counted; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the person executing it specifies therein the length of
time for which such proxy is to continue in force.
SECTION 10. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders, the Board of Directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment
thereof. If inspectors of election be not so appointed, the chairman of any
such meeting may, and on the request of any shareholder or his proxy shall, make
such appointment at the meeting. The number of inspectors shall be either one
or three. If appointed at a meeting on the request of one or more shareholders
or proxies, the majority of shares represented in person or by proxy shall
determine whether one or three inspectors are to be appointed. In case any
person appointed as inspector fails to appear or fails or refuses to act, the
vacancy may, and on the request of any shareholder or a shareholder's proxy
shall, be filled by appointment by the Board of Directors in advance of the
meeting, or at the meeting by the chairman of the meeting.
The duties of such inspectors shall be as prescribed by Section 707 of the
General Corporation Law and shall include determining the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the authenticity, validity and effect of proxies;
receiving votes, ballots or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to vote; counting and
tabulating all votes or consents; determining when the polls shall close;
determining the result; and such acts as may be proper to conduct the election
or vote with fairness to all shareholders. In the determination of the validity
and effect of proxies, the dates contained on the forms of proxy shall
presumptively determine the order of execution of the proxies, regardless of the
postmark dates on the envelopes in which they are mailed.
The inspectors 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 inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima
facie evidence by the facts stated therein.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. Subject to limitations of the Articles of Incorporation
and of the California General Corporation Law as to action to be authorized or
approved by the shareholders, and subject to the duties of directors as
prescribed by the bylaws, all corporate powers shall be exercised by or under
the authority of, and the business and affairs of the
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Corporation shall be controlled by, the Board of Directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to wit:
First-To select and remove all the officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the bylaws, fix
their compensation and require from them security for faithful service.
Second-To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not inconsistent
with law, or with the Articles of Incorporation or the bylaws, as they may deem
best.
Third-To change the principal executive office and principal office for the
transaction of the business of the Corporation from one location to another as
provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the Corporation within or without the State of
California, as provided in Article I, Section 2, hereof; to designate any place
within or without the State of California for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Fourth-To authorize the issue of shares of stock of the Corporation from
time to time, upon such terms as may be lawful.
Fifth-To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefor.
Sixth-By resolution adopted by a majority of the authorized number of
directors, to designate an executive and other committees, each consisting of
two or more directors, to serve at the pleasure of the Board, and to prescribe
the manner in which proceedings of such committee shall be conducted. Unless
the Board of Directors shall otherwise prescribe the manner of proceedings of
any such committee, meetings of such committee may be regularly scheduled in
advance and may be called at any time by any two members thereof; otherwise, the
provisions of the bylaws with respect to notice and conduct of meetings of the
Board shall govern. Any such committee, to the extent provided in a resolution
of the Board, shall have all of the authority of the Board, except with respect
to:
(i) the approval of any action for which the General
Corporation Law or the Articles of Incorporation also require shareholder
approval;
(ii) the filling of vacancies on the Board or in any
committee;
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(iii) the fixing of compensation of the directors for serving
on the Board or on any committee;
(iv) the adoption, amendment or repeal of the bylaws;
(v) the amendment or repeal of any resolution of the Board;
(vi) any distribution to the shareholders, except at a rate or
in a periodic amount or within a price range determined by the Board; and
(vii) the appointment of other committees of the Board or the
members thereof.
SECTION 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors shall be not less than four nor more than seven with the exact number
to be set by the Board of Directors until changed by amendment of the Articles
of Incorporation or by a bylaw amending this Section 2 duly adopted by the vote
or written consent of holders of a majority of the outstanding shares entitled
to vote; provided that a proposal to reduce the authorized number of directors
below five cannot be adopted if the votes cast against its adoption at a
meeting, or the shares not consenting in the case of action by written consent,
are equal to more than 16 2/3 percent of the outstanding shares entitled to
vote.
SECTION 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at
each annual meeting of shareholders but, if any such annual meeting is not held
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders held for that purpose. All directors shall hold
office until their respective successors are elected, subject to the General
Corporation Law and the provisions of these bylaws with respect to vacancies on
the Board.
SECTION 4. VACANCIES. A vacancy in the Board of Directors shall be deemed
to exist in case of the (i) death, (ii) resignation or removal of any director
with or without cause, (iv) pursuant to Section 303 of the California
Corporations Code if a director has been declared of unsound mind by order of
court or convicted of a felony, (v) if the authorized number of directors be
increased, or if the shareholders fail, at any annual or special meeting of
shareholders at which any director or directors are elected, to elect the full
authorized number of directors to be voted for at that meeting.
Vacancies in the Board of Directors, except for a vacancy created by the
removal of a director, may be filled by a majority of the remaining directors,
though less than a quorum, or by a sole remaining director, and each director so
elected shall hold office until his successor is elected at an annual or a
special meeting of the shareholders. A vacancy in the Board of Directors
created by the removal of a director may only be filled by the vote of a
majority of the shares entitled to vote represented at a duly held meeting at
which a quorum is present, or by the written consent of the holders of a
majority of the outstanding shares.
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The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. Any such election by written
consent shall require the consent of holders of a majority of the outstanding
shares entitled to vote.
Any director may resign effective upon giving written notice to the chairman
of the Board, the president, the secretary or the Board of Directors of the
Corporation, unless the notice specifies a later time for the effectiveness of
such resignation. If the Board of Directors accepts the resignation of a
director tendered to take effect at a future time, the Board or the shareholders
shall have power to elect a successor to take office when the resignation is to
become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
SECTION 5. PLACE OF MEETING. Regular meetings of the Board of Directors
shall be held at any place within or without the State which has been designated
from time to time by resolution of the Board or by written consent of all
members of the Board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the Corporation. Special
meetings of the Board may be held either at a place so designated or at the
principal executive office.
SECTION 6. ORGANIZATION MEETING. Immediately following each annual meeting
of shareholders, the Board of Directors shall hold a regular meeting at the
place of said annual meeting or at such other place as shall be fixed by the
Board of Directors, for the purpose of organization, election of officers, and
the transaction of other business. Call and notice of such meetings are hereby
dispensed with.
SECTION 7. OTHER REGULAR MEETINGS. Other regular meetings of the Board of
Directors shall be held without call as provided in a resolution adopted by the
Board of Directors from time to time; provided, however, should said day fall
upon a legal holiday, then said meeting shall be held at the same time on the
next day thereafter ensuing which is a full business day. Notice of all such
regular meetings of the Board of Directors is hereby dispensed with.
SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
for any purpose or purposes shall be called at any time by the chairman of the
Board, the president, any vice president, the secretary or by any two directors.
Written notice of the time and place of special meetings shall be delivered
personally to each director or communicated to each director by telephone or by
telegraph or mail, charges prepaid, addressed to him at his address as it is
shown upon the records of the Corporation or, if it is not so shown on such
records or is not readily ascertainable, at the place at which the meetings of
the directors are regularly held. In case such notice is mailed, it shall be
deposited m the United States mail in the place in which the principal executive
office of the Corporation is located at least four days prior to the time of
holding the meeting. In case such notice is delivered, personally or by
telephone or telegraph, as above provided, it shall be so delivered at
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least forty-eight hours prior to the time of the holding of the meeting. Such
mailing, telegraphing or delivery, personally or by telephone, as above
provided, shall be due, legal and personal notice to such director.
SECTION 9. ACTION WITHOUT MEETING. Any action by the Board of Directors
may be taken without a meeting if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board and
shall have the same force and effect as a unanimous vote of such directors.
SECTION 10. ACTION AT A MEETING: QUORUM AND REQUIRED VOTE. Presence of a
majority of the authorized number of directors at a meeting of the Board of
Directors constitutes a quorum for the transaction of business, except as
hereinafter provided. Members of the Board may participate in a meeting through
use of conference telephone or similar communications equipment, so long as all
members participating in such meeting can hear one another. Participation in a
meeting as permitted in the preceding sentence constitutes presence in person at
such meeting. Every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present shall be regarded as
the act of the Board of Directors, unless a greater number, or the same number
after disqualifying one or more directors from voting, is required by law, by
the Articles of Incorporation, or by these bylaws. A meeting at which a quorum
is initially present may continue to transact business notwithstanding the
withdrawal of directors, provided that any action taken is approved by at least
a majority of the required quorum for such meeting.
SECTION 11. VALIDATION OF DEFECTIVELY CALLED OR NOTICED MEETINGS. The
transactions of any meeting of the Board of Directors, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present and if, either before or
after the meeting, each of the directors not present or who, though present,
has, prior to the meeting or at its commencement, protested the lack of proper
notice to him, signs a written waiver of notice or a consent to holding such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
SECTION 12. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.
SECTION 13. NOTICE OF ADJOURNMENT. If the meeting is adjourned for more
than twenty-four hours, notice of any adjournment to another time or place shall
be given prior to the time of the adjourned meeting to the directors who were
not present at the time of adjournment. Otherwise notice of the time and place
of holding an adjourned meeting need not be given to absent directors if the
time and place be fixed at the meeting adjourned.
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SECTION 14. FEES AND COMPENSATION. Directors and members of committees may
receive such compensation, if any, for their services, and such reimbursement
for expenses, as may be fixed or determined by resolution of the Board.
SECTION 15. INDEMNIFICATION OF AGENTS OF THE CORPORATION; PURCHASE OF
LIABILITY INSURANCE.
(a) For the purposes of this Section, "agent" means any person who is or was
a director, officer, employee or other agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, or was a director, officer, employee or agent of a
foreign or domestic corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation; "executive officer" means any person who is or was a director or an
officer serving a chief policy making function, or is or was serving at the
request of the Corporation as a director or officer of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise, or
was a director or officer serving a chief policy making function of a foreign or
domestic corporation which was a predecessor corporation of the Corporation or
of another enterprise at the request of the corporation; "proceeding" means any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without limitation,
attorneys' fees and any expenses of establishing a right to indemnification
under subsection (d) or paragraph (3) of subsection (e) of this section.
(b) This Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any proceeding (other than an action by or in
the right of this Corporation) by reason of the fact that such person is or was
an executive officer of the Corporation, against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with such proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in the best interests of the Corporation and,
in the case of a criminal proceeding, had no reasonable cause to believe the
conduct of such person was unlawful. This Corporation may indemnify any person
who was or is a party, or is threatened to be made a party, to any proceeding
(other than an action by or in the right of this Corporation) by reason of the
fact that such person is or was an agent of the Corporation by a majority vote
of a quorum consisting of directors who are not a party to such proceeding,
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the Corporation and, in the case of a criminal proceeding, had no
reason to believe the conduct of such person was unlawful. The termination of
any proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably
believed to be in the best interests of this Corporation or that the person had
reasonable cause to believe that the person's conduct was unlawful.
(c) This Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of this
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Corporation to procure a judgment in its favor by reason of the fact that such
person is or was an executive officer of this Corporation, against expenses
actually and reasonably incurred by such person in connection with the defense
or settlement of such action if such person acted in good faith, in a manner
such person believed to be in the best interests of this Corporation and its
shareholders. No indemnification shall be made under subsection (b) and/or (c):
(1) in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to this Corporation in the performance of
such person's duty to this Corporation and its shareholders, unless and only to
the extent that the court in which such proceeding is or was pending shall
determine upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for expenses and then
only to the extent that the court shall determine;
(2) Of amounts paid in settling or otherwise disposing of a pending
action without court approval; or
(3) Of expenses incurred in defending a pending action which is
settled or otherwise disposed of without court approval.
(d) To the extent that an agent or executive officer of a Corporation has
been successful on the merits in defense of any proceeding referred to in
subsection (b) or (c) or in defense of any claim, issue or matter therein, the
agent or executive officer shall be indemnified against expenses actually and
reasonably incurred by the agent or executive officer in connection therewith.
(e) Except as provided in subsection (d), any indemnification under this
section shall be made by this Corporation only if authorized in the specific
case, upon a determination that indemnification of the agent or executive
officer is proper in the circumstances because the agent or executive officer
has met the applicable standard of conduct set forth in subsection (b) or (c),
by:
(1) A majority vote of a quorum consisting of directors who are not
a party to such proceeding;
(2) If such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion;
(3) Approval or ratification by the affirmative vote of a majority
of the shares of this Corporation entitled to vote represented at a duly held
meeting at which a quorum is present or by the written consent of holders of a
majority of the outstanding shares entitled to vote. For such purpose, the
shares owned by the person to be indemnified shall not be considered outstanding
or entitled to vote thereon; or
(4) The court in which such proceeding is or was pending upon
application made by this Corporation or the agent or the attorney or other
person rendering services in connection
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with the defense, whether or not such application by the agent, attorney or
other person is opposed by this Corporation.
(f) Expenses incurred in defending any proceeding may be advanced by the
Corporation prior to the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of the agent or executive officer to repay such
amount if it shall be determined ultimately that the agent or executive officer
is not entitled to be indemnified as authorized in this section.
(g) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent such
additional rights to indemnification are authorized in the articles of this
Corporation. The rights to indemnity hereunder shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors, and administrators of the person. Nothing
contained in this section shall affect any rights to indemnification to which
persons other than such directors and officers may be entitled by contract or
otherwise.
(h) No indemnification or advance shall be made under this section, except
as provided in subsection (d) or paragraph (3) of subsection (e), in any
circumstance where it appears:
(1) That it would be inconsistent with a provision of the articles,
bylaws, a resolution of the shareholders or an agreement in effect at the time
the accrual of the alleged cause of action asserted in the proceeding in which
the expenses were incurred or other amounts were paid, which prohibits or
otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
(i) This Corporation may purchase and maintain insurance on behalf of any
agent of this Corporation against any liability asserted against or incurred by
the agent in such capacity or arising out of the agent's status as such, whether
or not this Corporation would have the power to indemnify the agent against such
liability under the provisions of this section. The fact that this Corporation
owns all or a portion of the shares of the company issuing a policy of insurance
shall not render this subsection inapplicable if either of the following
conditions are satisfied:
(1) If authorized in the Articles of Incorporation of this
Corporation, any policy issued is limited to the extent provided by subdivision
(d) of Section 204 of the California Corporations Code; or
(2) (A) The company issuing the insurance policy is organized, licensed,
and operated in a manner that complies with the insurance laws and regulations
applicable to its jurisdiction of organization,
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(B) The company issuing the policy provides procedures for
processing claims that do not permit that company to be subject to the direct
control of the Corporation that purchased that policy, and
(C) The policy issued provides for some manner of risk sharing
between the issuer and purchaser of the policy, on one hand, and some
unaffiliated person or persons, on the other, such as by providing for more than
one unaffiliated owner of the company issuing the policy or by providing that a
portion of the coverage furnished will be obtained from some unaffiliated
insurer or re-insurer.
(j) This Section 15 does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in such
person's capacity as such, even though such person may also be an agent of the
Corporation as defined in subsection (a) of this Section. This Corporation
shall have power to indemnify such a trustee, investment manager or other
fiduciary to the extent permitted by subdivision (f) of Section 207 of the
California General Corporation Law.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a president,
a secretary and a chief financial officer. The corporation may also have, at
the discretion of the Board of Directors, a Chairman of the Board, one or more
vice presidents, one or more assistant secretaries, one or more assistant
treasurers and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article.
SECTION 2. ELECTION. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the Board of Directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
SECTION 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint,
and may empower the president to appoint, such other officers as the business of
the Corporation may require, each of whom shall hold office, for such period,
have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors may from time to time determine.
SECTION 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by the Board of Directors, at any regular or special
meeting thereof, or, except in case of an officer chosen by the Board of
Directors, by any officer upon whom such power of removal may be conferred by
the Board of Directors (subject, in each case, to the rights, if any, of an
officer under any contract of employment).
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Any officer may resign at any time by giving written notice to the Board of
Directors or to the president, or to the secretary of the corporation, without
prejudice, however, to the rights, if any, of the Corporation under any contract
to which such officer is a party. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the bylaws for regular appointments to such office.
SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board of Directors and exercise and perform such other powers and duties as may
be from time to time assigned to him by the Board of Directors or prescribed by
the bylaws.
SECTION 7. PRESIDENT. Subject to such supervisory powers, if any, as may
be given by the Board of Directors to the Chairman of the Board, if there be
such an officer, the president shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
Corporation. He shall preside at all meetings of the shareholders and, in the
absence of the Chairman of the Board, or if there be none, at all meetings of
the Board of Directors. He shall be ex officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a Corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the bylaws.
SECTION 8. VICE PRESIDENT. In the absence or disability of the president,
the vice presidents in order of their rank as fixed by the Board of Directors
or, if not ranked, the vice president designated by the Board of Directors,
shall perform all the duties of the president, and when so acting shall have
such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or the bylaws.
SECTION 9. SECRETARY. The secretary shall record or cause to be recorded,
and shall keep or cause to be kept, at the principal executive office and such
other place as the Board of Directors may order, a book of minutes of actions
taken at all meetings of directors and shareholders, with the time and place of
holding, whether regular or special, and, if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's transfer agent, a share register,
or a duplicate share register, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
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The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the Corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
SECTION 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer of the
Corporation shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, surplus and shares. Any surplus,
including earned surplus, paid in surplus and surplus arising from a reduction
of stated capital, shall be classified according to source and shown in a
separate account. The books of account shall at all reasonable times be open to
inspection by any director.
The Chief Financial Officer shall deposit all monies and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as Chief Financial Officer and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
ARTICLE V
MISCELLANEOUS
SECTION 1. RECORD DATE. The Board of Directors may fix a time in the
future as a record date for the determination of the shareholders entitled to
notice of and to vote at any meeting of shareholders or entitled to give consent
to corporate action in writing without a meeting, to receive any report, to
receive any dividend or distribution, or any allotment of rights, or to exercise
rights in respect to any change, conversion or exchange of shares. The record
date so fixed shall be not more than sixty (60) days nor less than ten (10) days
prior to the date of any meeting, nor more than sixty (60) days prior to any
other event for the purposes of which it is fixed. When a record date is so
fixed, only shareholders of record on that date are entitled to notice of and to
vote at any such meeting, to give consent without a meeting, to receive any
report, to receive a dividend, distribution or allotment of rights, or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date, except as
otherwise provided in the Articles of Incorporation or bylaws.
SECTION 2. INSPECTION OF CORPORATE RECORDS. The accounting books and
records, the record of shareholders, and minutes of proceedings of the
shareholders and the Board and committees of the Board of this Corporation and
any subsidiary of this Corporation shall be open to inspection upon the written
demand on the Corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours, for a purpose
reasonably related to such holder's interests as a shareholder or as the holder
of such voting trust certificate. Such inspection by a shareholder or holder of
a voting trust certificate may be made
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in person or by agent or attorney, and the right of inspection includes the
right to copy and make extracts.
A shareholder or shareholders holding at least 5 percent in the aggregate of
the outstanding voting shares of the Corporation or who hold at least 1 percent
of such voting shares and have filed a Schedule 14B with the United States
Securities and Exchange Commission relating to the election of directors of the
Corporation shall have (in person, or by agent or attorney) the right to inspect
and copy the record of shareholders' names and addresses and shareholdings
during usual business hours upon five business days' prior written demand upon
the Corporation and to obtain from the transfer agent for the Corporation, upon
written demand and upon the tender of its usual charges, a list of the
shareholders' names and addresses, who are entitled to vote for the election of
directors, and their shareholdings, as of the most recent record date for which
it has been compiled or as of a date specified by the shareholder subsequent to
the date of demand. The list shall be made available on or before the later of
five business days after the demand is received or the date specified therein as
the date as of which the list is to be compiled.
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind and to inspect
the physical properties of the Corporation. Such inspection by a director may
be made in person or by agent or attorney and the right of inspection includes
the right to copy and make extracts.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name,
of or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
SECTION 4. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 1501 of the California General Corporation
Law is expressly waived, but nothing herein shall be interpreted as prohibiting
the Board from issuing annual or other periodic reports to shareholders.
A shareholder or shareholders holding at least five percent of the
outstanding shares of any class of the Corporation may make a written request to
the Corporation for an income statement of the Corporation for the three-month,
six-month or nine-month period of the current fiscal year ended more than 30
days prior to the date of the request and a balance sheet of the Corporation as
of the end of such period and, in addition, if no annual report for the last
fiscal year has been sent to shareholders, the annual report for the last fiscal
year. The Corporation shall use its best efforts to deliver on the statement to
the person making the request within 30 days thereafter. A copy of any such
statements shall be kept on file in the principal executive office of the
Corporation for 12 months and they shall be exhibited at all reasonable times to
any shareholder demanding an examination of them or a copy shall be mailed to
such shareholder.
The Corporation shall, upon the written request of any shareholder, mail to
the shareholder a copy of the last annual, semiannual or quarterly income
statement which it has prepared and a balance sheet as of the end of the period.
The quarterly income statements and
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balance sheets referred to in this section shall be accompanied by the report
thereon, if any, of any independent accountants engaged by the Corporation or
the certificate of an authorized officer of the Corporation that such financial
statements were prepared without audit from the books and records of the
Corporation.
SECTION 5. CONTRACTS, ETC., HOW EXECUTED. The Board of Directors, except
as in the bylaws otherwise provided, may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Corporation, and such authority may be general or
confined to specific instances; and, unless so authorized by the Board of
Directors, no officer, agent or employee shall have any power or authority to
bind the Corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or to any amount.
SECTION 6. CERTIFICATE FOR SHARES. Every holder of shares in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the Chairman or vice chairman of the Board or the president or
vice president and by the chief financial officer or an assistant financial
officer or the secretary or any assistant secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any of the
signatures on the certificate may be facsimile, provided that in such event at
least one signature, including that of either officer or the Corporation's
registrar or transfer agent, if any, shall be manually signed. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
Any such certificate shall also contain such legend or other statement as
may be required by Section 418 of the General Corporation Law, the Corporate
Securities Law of 1968, the federal securities laws, and any agreement between
the Corporation and the issuee thereof.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board of Directors or the bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state on the face thereof the amount remaining unpaid and the
terms of payment thereof.
No new certificate for shares shall be issued in lieu of an old certificate
unless the latter is surrendered and cancelled at the same time; provided,
however, that a new certificate will be issued without the surrender and
cancellation of the old certificate if (1) the old certificate is lost,
apparently destroyed or wrongfully taken; (2) the request for the issuance of
the new certificate is made within a reasonable time after the owner of the old
certificate has notice of its loss, destruction or theft; (3) the request for
the issuance of a new certificate is made prior to the receipt of notice by the
Corporation that the old certificate has been acquired by a bona fide purchaser;
(4) the owner of the old certificate files a sufficient indemnity bond with or
provides other adequate security to the Corporation; and (5) the owner satisfies
any other reasonable requirements imposed by the Corporation. In the event of
the issuance of a new certificate, the rights and liabilities of the
Corporation, and of the holders of the old and new certificates, shall
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be governed by the provisions of Sections 8104 and 8405 of the California
Uniform Commercial Code.
SECTION 7. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The president
or any vice president and the secretary or any assistant secretary of this
Corporation are authorized to vote, represent and exercise on behalf of this
Corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this Corporation. The authority herein
granted to said officers to vote or represent on behalf of this Corporation any
and all shares held by this corporation in any other corporation or corporations
may be exercised either by such officers in person or by any other person
authorized so to do by proxy or power of attorney duly executed by said
officers.
SECTION 8. INSPECTION OF BYLAWS. The Corporation shall keep in its
principal executive office in California, or, if its principal executive office
is not in California, then at its principal business office in California (or
otherwise provide upon Written request of any shareholder) the original or a
copy of the bylaws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
SECTION 9. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the California General Corporation Law shall govern the
construction of these bylaws. Without limiting the generality of the foregoing,
the masculine gender includes the feminine and neuter, the singular number
includes the plural and the plural number includes the singular, and the term
"person" includes a corporation as well as a natural person.
ARTICLE VI
AMENDMENTS
SECTION 1. POWER OF SHAREHOLDERS. New bylaws may be adopted or these
bylaws may be amended or repealed by the affirmative vote of a majority of the
outstanding shares entitled to vote, or by the written assent of shareholders
entitled to vote such shares, except as otherwise provided by law or by the
Articles of Incorporation.
SECTION 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section I of this Article VI to adopt, amend or repeal bylaws,
bylaws, other than a bylaw or amendment thereof changing the authorized number
of directors, may be adopted, amended or repealed by the Board of Directors.
