FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from:________________ to ________________
Commission file number: 0-10957
NATIONAL PENN BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2215075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Philadelphia and Reading Avenues, Boyertown, PA 19512
(Address of principal executive offices) (Zip Code)
(610) 367-6001
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No___.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 10, 1996
Common Stock ($2.50 par value) (No.) 7,605,633 Shares
Page 1 of 15 pages
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information. Page
Item 1. Financial Statements .............................. 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ..... 7
Part II - Other Information.
Item 1. Legal Proceedings ................................. 13
Item 2. Changes in Securities ............................. 13
Item 3. Defaults Upon Senior Securities ................... 13
Item 4. Submission of Matters to a Vote of
Security Holders .................................. 13
Item 5. Other Information ................................. 13
Item 6. Exhibits and Reports on Form 8-K .................. 14
Signatures ............................................................ 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET March 31 Dec. 31
(Dollars in thousands, except per share data) 1996 1995
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and due from banks $28,479 $39,195
Interest bearing deposits in banks 1,194 2,014
Federal funds sold 30,000 ---
---------- ----------
Total cash and cash equivalents 59,673 41,209
Securities available for sale at market value 239,063 240,902
Loans, net of unearned discount 948,131 939,065
Less allowance for possible loan losses (20,723) (20,366)
---------- ----------
Net loans 927,408 918,699
Other assets 53,597 50,568
---------- ----------
Total Assets $1,279,741 $1,251,378
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $127,230 $134,968
Interest bearing deposits
(Includes certificates of deposit in excess of $100:
1996 - $93,494; 1995- $89,881) 810,579 779,922
---------- ----------
Total deposits 937,809 914,890
Securities sold under repurchase agreements
and federal funds purchased 154,142 138,550
Short-term borrowings 5,903 4,370
Long-term obligations 56,589 71,589
Accrued interest and other liabilities 18,487 15,364
---------- ----------
Total Liabilities 1,172,930 1,144,763
Commitments and contingent liabilities --- ---
Shareholders' equity
Preferred stock, no stated par value;
authorized 1,000,000 shares, none issued --- ---
Common stock, par value $2.50 per share;
20,000,000 shares authorized; 7,644,584
shares issued and 7,613,865 outstanding at
March 31, 1996; 7,642,413 shares issued and 7,594,474
shares outstanding at December 31, 1994 19,106 19,106
Additional paid-in-capital 57,488 57,501
Retained earnings 27,009 24,646
Valuation adjustment for securities available for sale, net of tax 3,999 6,579
Treasury stock (30,719 shares at cost at March 31, 1996 and
47,939 shares at cost at December 31, 1995) (791) (1,217)
---------- ----------
Total Shareholders' Equity 106,811 106,615
---------- ----------
Total Liabilities and Shareholders' Equity $1,279,741 $1,251,378
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Note: The Balance Sheet at Dec. 31, 1995 has been derived from the audited
financial statements at that date.
3
<PAGE>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
(Dollars in thousands, except per share data) March 31
1996 1995
<S> <C> <C>
INTEREST INCOME
Loans, including fees $21,892 $19,258
Deposits in banks 9 15
Federal funds sold 100 2
Investment securities 3,718 3,975
------ ------
Total interest income 25,719 23,250
------ ------
INTEREST EXPENSE
Deposits 8,198 7,403
Federal funds purchased, borrowed funds and
securities sold under repurchase agreements 3,071 2,387
------ ------
Total interest expense 11,269 9,790
------ ------
Net interest income 14,450 13,460
Provision for loan losses 975 750
------ ------
Net interest income after provision
for loan losses 13,475 12,710
------ ------
OTHER INCOME
Trust Services 631 424
Service charges on deposit accounts 783 640
Net gains (losses) on sale of securities and mortgages (103) 256
Other 634 748
------ ------
Total other income 1,945 2,068
------ ------
OTHER EXPENSES
Salaries, wages and employee benefits 5,024 4,981
Net premises and equipment 1,804 1,389
Other operating 2,621 2,837
------ ------
Total other expenses 9,449 9,207
------ ------
Income before income taxes 5,971 5,571
Applicable income tax expense 1,856 1,654
------ ------
Net income $4,115 $3,917
====== ======
PER SHARE OF COMMON STOCK
Net income 0.54 0.52
Dividends paid in cash 0.22 0.20
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
4
<PAGE>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
(Dollars in thousands)
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,115 $3,917
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Provision for loan losses 975 750
Depreciation and amortization 747 628
Net gains (losses) on sale of securities and mortgages (103) 256
Mortgage loans originated for resale (7,307) (1,279)
Sale of mortgage loans originated for resale 7,307 1,279
Other (1,135) 2,029
------- -------
Net cash provided by (used in) operating activities 4,599 7,580
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities - available for sale --- 2,525
Proceeds from maturities of investment securities - held to maturity --- 6,525
Proceeds from maturities of investment securities - available for sale 15,518 11
Purchase of investment securities - available for sale (14,852) (2,527)
Proceeds from sales of loans --- ---
Net increase in loans (9,684) (18,825)
Purchases of premises & equipment (822) (657)
------- -------
Net cash provided by (used in) investing activities (9,840) (12,948)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in:
Deposits 22,919 40,313
Repurchase agreements, fed funds & short-term borrowings 17,125 (32,124)
Long-term borrowings (15,000) ---
(Increase) decrease in treasury stock 426 186
Issuance of common stock under dividend reinvestment plan (13) ---
Cash dividends (1,752) (1,498)
------- -------
Net cash provided by (used in) financing activities 23,705 6,877
Net increase (decrease) in cash and cash equivalents 18,464 1,509
Cash and cash equivalents at January 1 41,209 34,159
------- -------
Cash and cash equivalents at March 31 $59,673 $35,668
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
5
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. The financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
2. The results of operations for the three month period ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
3. Per share data are based on the weighted average number of shares outstanding
of 7,611,681 and 7,547,382 for 1996 and 1995, respectively, and are computed
after giving retroactive effect to a 5% stock dividend paid October 31, 1995.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis is intended to assist in
understanding and evaluating the major changes in the financial condition and
earnings performance of the Company with a primary focus on an analysis of
operating results.
FINANCIAL CONDITION
Total assets increased to $1.280 billion, an increase of $28.4 million or
2.3% over the $1.251 billion at December 31, 1995. This increase is reflected
primarily in federal funds sold, the result of the investment of deposits, the
Company's primary source of funds.
Total cash and cash equivalents increased $18.5 million or 44.8% at March
31, 1996 when compared to December 31, 1995. As already noted, this increase was
primarily due to federal funds sold, partially offset by lower cash and due from
banks and lower interest bearing deposits in banks.
Loans increased to $927.4 million at March 31, 1996. The increase of $8.7
million or 1.0% compared to December 31, 1995 was primarily the result of the
investment of deposits and securities sold under agreements to repurchase. In
addition, loans originated for immediate resale during the first quarter
amounted to $7.3 million. The Company's credit quality is reflected by the
annualized ratio of net charge-offs to average total loans of 0.28% for the
first quarter and the level of non-accrual loans to total loans of 0.85% at
March 31, 1996. The Company has no significant exposure to energy and
agricultural-related loans. Non-accrual loans at December 31, 1995 were 0.77% of
total loans.
Investments, the Company's secondary use of funds, remained stable through
March 31, 1996.
As the primary source of funds, aggregate deposits of $937.8 million at
March 31, 1996 increased $22.9 million or 2.5% compared to December 31, 1995.
There was a shift in deposit mix during the first three months of 1996 as
interest bearing deposits increased $30.7 million and non-interest bearing
deposits decreased $7.7 million. Certificates of deposit in excess of $100,000
increased $3.6 million. In addition to deposits, earning assets are funded to
some extent through purchased funds and borrowings. These include securities
sold under repurchase agreements, federal funds purchased, short-term
borrowings, and long-term obligations. In aggregate, these funds totaled $216.6
million at March 31, 1996 and $214.5 million at December 31, 1995. The increase
of $2.1 million represents a shift from long-term obligations to short-term
7
<PAGE>
borrowings, primarily securities sold under repurchase agreements and federal
funds purchased.
Shareholders' equity increased slightly through March 31, 1996. This
increase was due to the retention of earnings and the change in valuation
adjustment for securities available for sale. Cash dividends paid during the
first three months of 1996 increased $173,000 or 11.5% compared to the cash
dividends paid during the first three months of 1995. Earnings retained during
the first three months of 1996 were 59.4% compared to 61.8% during the first
three months of 1995.
RESULTS OF OPERATIONS
Net income for the quarter ended March 31, 1996 was $4.1 million, 5.1% more
than the $3.9 million reported for the same period in 1995. The Company's
performance has been and will continue to be in part influenced by the strength
of the economy and conditions in the real estate market.
Net interest income is the difference between interest income on assets and
interest expense on liabilities. Net interest income increased $1.0 million or
7.4% to $14.5 million during the first quarter of 1996 from $13.5 million in the
first quarter 1995. The increase was due primarily to an increase in interest
income, as a result of growth in loan outstandings and higher rates on loans,
partially offset by growth in deposits and higher rates on deposits and
borrowings. Interest rate risk is a major concern in forecasting earnings
potential. The Company's prime rate from January 1, 1996 to January 31, 1996 was
8.5%. On February 1, 1996, the prime rate changed to 8.25%. Interest expense
during the first three months of 1996 increased $1.5 million or 15.1% compared
to the prior year three month period. Despite the current rate environment, the
cost of attracting and holding deposited funds is an ever-increasing expense in
the banking industry. These increases are the real costs of deposit accumulation
and retention, including FDIC insurance costs and branch overhead expenses. Such
costs are necessary for continued growth and to maintain and increase market
share of available deposits.
The provision for loan losses is determined by periodic reviews of loan
quality, current economic conditions, loss experience and loan growth. Based on
these factors, the provision for loan losses increased $225,000 for the first
three months of 1996 compared to the same period in 1995. The allowance for loan
losses of $20.7 million at March 31, 1996 and $20.3 million at December 31, 1995
as a percentage of gross loans was 2.2% at both dates. Net charge-offs of
$617,000 and $483,000 during the first three months of 1996 and 1995, continue
to be comparable to that of
8
<PAGE>
the Company's peers, as reported in the Bank Holding Company Performance Report.
"Total other income" decreased $123,000 or 5.9% during the first quarter of
1996 as the result of losses on the sale of securities and mortgages of
$359,000, and a decrease in other income of $114,000. "Total other expenses"
increased $242,000 or 2.6% during the quarter ended March 31, 1996. Of this
amount, premises and equipment increased $415,000 or 29.9% over the first
quarter of 1995. Salaries and benefits increased $43,000.
Income before income taxes increased by $400,000 or 7.2% compared to the
first quarter of 1995. Income taxes increased $202,000, or 12.2%, compared to
the first quarter of 1995.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The primary functions of asset/liability management are to assure adequate
liquidity and maintain an appropriate balance between interest-earning assets
and interest-bearing liabilities. Liquidity management involves the ability to
meet the cash flow requirements of customers who may be either depositors
wanting to withdraw funds or borrowers needing assurance that sufficient funds
will be available to meet their credit needs. Funding affecting short-term
liquidity, including deposits, repurchase agreements, federal funds purchased,
and short-term borrowings, increased in the aggregate $40.0 million from year
end 1995. Long-term borrowings decreased $15.0 million through the first quarter
of 1996.
The goal of interest rate sensitivity management is to avoid fluctuating
net interest margins, and to enhance consistent growth of net interest income
through periods of changing interest rates. Such sensitivity is measured as the
difference in the volume of assets and liabilities in the existing portfolio
that are subject to repricing in a future time period.
9
<PAGE>
The following table shows separately the interest rate sensitivity of each
category of interest-earning assets and interest-bearing liabilities at March
31, 1996:
<TABLE>
<CAPTION>
Repricing Periods (1)
One Year
Within Through Over
One Year Five Years Five Years
(In Thousands)
<S> <C> <C> <C>
Assets
Interest bearing deposits
at banks $ 1,194 $ -- $ --
Investment securities 41,567 79,159 118,337
Loans and leases 401,984 390,753 155,394
Other assets 30,000 -- 82,076
--------- --------- ---------
474,745 469,912 355,807
--------- --------- ---------
Liabilities and equity
Non-interest bearing deps. 127,230 -- --
Interest bearing deposits 389,215 188,996 232,368
Borrowed funds 190,157 3,610 22,867
Other liabilities -- -- 39,210
Hedging instruments 100,000 (90,000) (10,000)
Shareholders' equity -- -- 106,811
--------- --------- ---------
806,602 102,606 391,256
--------- --------- ---------
Interest sensitivity gap (331,857) 367,306 (35,449)
--------- --------- ---------
Cumulative interest rate
sensitivity gap ($331,857) $35,449 $ --
========= ========= =======
<FN>
(1) Savings and NOW deposits are scheduled for repricing based on
historical deposit decay rate analyses, as well as historical moving
averages of run-off for the Company's deposits in these categories.
</FN>
</TABLE>
Interest rate sensitivity is a function of the repricing characteristics of
the Company's assets and liabilities. These characteristics include the volume
of assets and liabilities repricing, the timing of the repricing, and the
relative levels of repricing. Attempting to minimize the interest rate
sensitivity gaps is a continual challenge in a changing rate environment. Based
on the Company's gap position as reflected in the above table, current accepted
theory would indicate that net interest income would increase in a falling
interest rate environment and would decrease in a rising rate environment. An
interest rate gap table does not, however, present a complete picture of the
impact of interest rate changes on net interest income. First, changes in the
general level of interest rates do not affect all categories of assets and
liabilities equally or simultaneously. Second, assets and liabilities which can
contractually reprice within the same period may not, in fact, reprice at the
same time or to the same
10
<PAGE>
extent. Third, the table represents a one-day position; variations occur daily
as the Company adjusts its interest sensitivity throughout the year. Fourth,
assumptions must be made to construct such a table. For example, non-interest
bearing deposits are assigned a repricing interval of within one year, although
history indicates a significant amount of these deposits will not move into
interest bearing categories regardless of the general level of interest rates.
Finally, the repricing distribution of interest sensitive assets may not be
indicative of the liquidity of those assets.
The Company anticipates volatile interest rate levels for the remainder
of 1996, with no clear indication of sustainable rising or falling rates. Given
this assumption, the Company's asset/liability strategy for 1996 is to move
toward a smaller negative gap (interest-bearing liabilities subject to repricing
greater than interest-earning assets subject to repricing) for periods up to a
year. The impact of a volatile interest rate environment on net interest income
is not expected to be significant to the Company's results of operations.
Effective monitoring of these interest sensitivity gaps is the priority of the
Company's asset/liability management committee.
CAPITAL ADEQUACY
The following table sets forth certain capital performance ratios.
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1996 1995
<S> <C> <C>
CAPITAL LEVELS
Tier 1 leverage ratio 7.67% 7.59%
Tier 1 risk-based ratio 11.09 10.97
Total risk-based ratio 12.35 12.23
CAPITAL PERFORMANCE
Return on average assets(annualized) 1.31 1.30
Return on average equity(annualized) 16.20 16.30
Earnings retained 59.40 59.30
Internal capital growth(annualized) 9.17 25.60
</TABLE>
The Company's capital ratios above compare favorably to the minimum
required amounts of Tier 1 and total capital to "risk- weighted" assets and the
minimum Tier 1 leverage ratio, as defined by banking regulators. At March 31,
1996, the Company was required to have minimum Tier 1 and total capital ratios
of 4.0% and 8.0%, respectively, and a minimum Tier 1 leverage ratio of 3.0%. In
order for the Company to be considered "well capitalized", as defined by banking
regulators, the Company must have Tier 1 and total capital ratios of 6.0% and
10.0%, respectively, and a minimum Tier 1 leverage ratio of 5.0%. The Company
currently meets the
11
<PAGE>
criteria for a well capitalized institution, and management believes that, under
current regulations, the Company will continue to meet its minimum capital
requirements in the foreseeable future. At present, the Company has no
commitments for significant capital expenditures.
The Company is not under any agreement with regulatory authorities nor is
the Company aware of any current recommendations by the regulatory authorities
which, if such recommendations were implemented, would have a material effect on
liquidity, capital resources or operations of the Company.
FUTURE OUTLOOK
The Company has just initiated its Private Banking division to serve the
financial and investment needs of the professional market, is introducing its
debit card, will open approximately six new supermarket branches in 1996, and
will install several new remote ATMs during the remainder of 1996. The Company
does not expect these new initiatives to start contributing to profits until
1997 or beyond; 1996 earnings may be somewhat negatively impacted by the initial
costs of these new operations.
On January 1, 1996 the FDIC reduced the insurance premiums that financial
institutions pay on commercial bank deposits to zero from the previous rate of
$.04 per hundred dollars of deposits in effect since May 1, 1995. The Company
must continue to pay $.23 per hundred dollars of deposits on approximately $225
million of deposits at branches acquired from Sellersville Savings and Loan
Association and Central Pennsylvania Savings Association. In order for the rate
on these deposits also to be lowered, there is a chance that in 1996 the Company
will have to pay a onetime assessment of between $1 million and $2 million to
help recapitalize the Savings Association Insurance Fund ("SAIF") segment of the
FDIC. On May 7, 1996, Senate Majority Leader Robert Dole rejected using the SAIF
recapitalization plan to offset the cost of repealing a federal gasoline tax.
The May 9, 1996 issue of American Banker reports that administration officials
have vowed to try again to pass a SAIF recapitalization plan, possibly by
attaching it to the 1997 budget bill now being negotiated by lawmakers.
The Company cannot predict if legislation will be enacted as previously
proposed, but expects that any legislation recapitalizing SAIF will likely
impose additional deposit insurance costs on the Company attributable to its
acquired SAIF-insured deposits. These costs may have a material adverse effect
on the Company's earnings when incurred.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
The registrant's banking subisidiary, National Penn Bank (the "Bank"),
opened new branches in King of Prussia and Malvern (Chester County), and the
Bank's 1st Main Line Bank Division opened a new branch in St. Davids (Delaware
County), during the first quarter 1996. On April 5, 1996, the Bank opened an ATM
in the Manayunk Farmers Market (Philadelphia County).
The Registrant anticipates that in the remainder of 1996 the Bank will open
a full-service branch in Lansdale (Montgomery County) and three more supermarket
branches, located in Trexlertown (Lehigh County), Exton (Chester County), and
Perkasie (Bucks County).
During first quarter 1996, the Bank created a Private Banking Division
headquartered in Wyomissing (Berks County). Timothy A. Day was named Senior Vice
President and head of Private Banking. Also during first quarter 1996, the Bank
introduced Asset-Based Lending as a new loan product.
On April 24, 1996, Russell J. Kunkel was named Vice Chairman of the Bank
with responsibility for Retail Lending, Technology, Operations and Private
Banking. During the first quarter, Ronald L. Bashore was named Senior Vice
President and Commercial Loan Group Head of commercial lending in Berks, Lehigh
and Lancaster Counties, and Robert H. Moses was appointed Administrative Vice
President and Manager of the Bank's Pottstown Commercial Lending Group.
On April 24, 1996, the Registrant's Bylaws were amended to provide for
"directors emeritus", and John A. Cenerazzo, a retiring Registrant and Bank
director, was elected as director emeritus of both the Registrant and the Bank.
Also on April 24, 1996, Mr. Anthony Armo was elected as new director of the
Bank.
In February 1994, the Registrant's Board of Directors approved the
repurchase of up to 200,000 shares of its common stock in open market or
negotiaited transactions. At March 31, 1996, a total of 186,340 shares have been
repurchased at an aggregate cost of $5,613,000.
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 3.2 - National Penn Bancshares, Inc. Bylaws, as amended.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. The Registrant did not file any Reports on
Form 8-K during the quarterly period ended March 31, 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NATIONAL PENN BANCSHARES, INC.
(Registrant)
Dated: May 15, 1996 By /s/ Lawrence T. Jilk, Jr.
--------------------------------
Lawrence T. Jilk, Jr., President
and Chief Executive Officer
Dated: May 15, 1996 By /s/ Gary L. Rhoads
--------------------------------
Gary L. Rhoads, Principal
Financial Officer
15
Exhibit 3.2
BYLAWS
NATIONAL PENN BANCSHARES, INC.
(A Pennsylvania Business Corporation)
ARTICLE I
Meetings of Shareholders
Section 1.01. Place of Meeting. Meetings of shareholders of the Corporation
shall be held at such place, within the Commonwealth of Pennsylvania or
elsewhere, as may be fixed by the Board of Directors. If no place is so fixed,
they shall be held at the office of the Corporation at Boyertown, Pennsylvania.
Section 1.02. Annual Meeting. The annual meeting of shareholders for the
election of directors whose terms are expiring and the transaction of any other
business which may be brought properly before the meeting shall be held on such
date and at such time as the Board of Directors shall determine from time to
time. If for any reason such meeting is not held at the time fixed therefor,
such election may be held at a subsequent meeting called for that purpose.
Section 1.03. Special Meetings. Special meetings of the shareholders may be
called at any time by the Board of Directors or the Chief Executive Officer or
by any other person or persons authorized by statute. Such meetings shall be
held on such date and time as may be fixed by the Board of Directors or the
Secretary or, in the absence of such designation, as fixed by the person or
persons calling the meeting.
Section 1.04. Notice of Meetings. Notice of all annual meetings of
shareholders shall be given by the Secretary. Written notice of the date, place,
and time of all meetings of shareholders, and of the general nature of the
business to be transacted at special meetings, shall be mailed by first class
mail to each shareholder of record entitled to vote at the meeting at
<PAGE>
least ten days prior to the day named for the meeting, unless a greater period
of notice is by law required in a particular case.
Section 1.05. Organization. At every meeting of the shareholders, the
Chairman of the Board or, if there is no such Chairman or if he is absent, the
senior present Vice Chairman of the Board or, if there is no such Vice Chairman
or if he is absent, the President or, in his absence, the senior present Vice
President or, in his absence, a chairman chosen by the shareholders, shall act
as chairman, and the Secretary or, in his absence, a person appointed by the
Chairman, shall act as secretary.
Section 1.06. Quorum; Action by Shareholders. The presence, in person or by
proxy, of the shareholders entitled to cast a majority of the votes which all
shareholders are entitled to cast on a particular matter shall constitute a
quorum for the purpose of considering such matter. Unless otherwise provided
herein, or in the Articles of Incorporation or by law, all matters shall be
decided by the action of the shareholders present, in person or by proxy,
entitled to cast at least a majority of the votes which all shareholders present
are entitled to cast, although such action would be by the holders of less than
a majority of the votes which all the shareholders entitled to vote thereon
would be entitled to cast.
Section 1.07. Procedure for Nomination of Candidates for Director.
Nominations for election to the Board of Directors may be made by the Board of
Directors and by any holder of any outstanding shares of the Corporation
entitled to vote for the election of directors. Nominations, other than those
made by the Board of Directors, shall be made in writing and shall be delivered
or mailed to the Corporation at its principal office not less than 14 days prior
to any meeting of shareholders called for the election of directors whose terms
expire at such meeting and shall contain the same information to the extent
known to the notifying shareholder as that required to be stated by the
Corporation in its
<PAGE>
proxy statement for the nominees of the Board of Directors; provided, however,
that if less than 21 days' notice of the meeting is given to shareholders, such
notice of nomination shall be mailed or delivered to the Corporation not later
than the close of business on the seventh day following the day on which the
notice of meeting was mailed. Nominations not made in accordance with this
section in his discretion, be disregarded by the chairman of the meeting, and
upon his instructions, the vote tellers may disregard all votes cast for each
such nominee.
Section 1.08. Financial Statements. Financial statements shall be sent to
shareholders annually as prescribed by law, but such statements need not be
examined by a certified public accountant or by a firm thereof.
ARTICLE II
Directors
Section 2.01. Number and Term of Office. There shall be such number of
directors who shall be divided into such classes and who shall be elected to
serve for such terms of office as is provided in the Articles of Incorporation.
Section 2.02. Vacancies. Vacancies on the Board of Directors, should they
occur for whatever reason, including vacancies resulting from death,
resignation, retirement, disqualification, or an increase in the number of
directors, shall be filled by a majority vote of the remaining directors though
less than a quorum. Each director elected by the Board of Directors pursuant to
this Section 2.02 shall hold such office for a term expiring at the annual
meeting of shareholders at which the term of the class to which he has been
elected expires and until his successor is elected and qualified.
Section 2.03. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, the
<PAGE>
President, or the Secretary. Any such resignation shall take effect at the time
of the receipt of such notice or at any later time specified therein. Unless
otherwise specified therein, the acceptance of a resignation shall not be
necessary to make it effective.
Section 2.04. Annual Meeting. Immediately after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
election of officers, and the transaction of other business at the place where
such election of directors was held. Notice of such meeting need not be given.
In the absence of a quorum at said meeting, the same may be held at any other
time and place which shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
Section 2.05. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and place as shall be designated from time to time by
resolution of the Board. Notice of such meetings need not be given.
Section 2.06. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board, if any, a Vice Chairman
of the Board, if any, the President or one-third or more of the directors in
office. Notice of the date, time, place, and general nature of the business to
be transacted at each special meeting shall be given by telephone, telegram,
letter or in person, unless such notice is waived, by or at the direction of the
person or persons authorized to call such meeting, to each director, at least
forty-eight hours in advance of the meeting.
Section 2.07. Organization. Every meeting of the Board of Directors shall
be presided over by the Chairman of the Board or, if there is no such Chairman
or if he is absent, the senior present Vice Chairman of the Board or, if there
is no such Vice Chairman or if he is absent, the President or, in his absence, a
chairman
<PAGE>
chosen by a majority of the directors present. The Secretary or, in his absence,
a person appointed by the Chairman, shall act as secretary.
Section 2.08. Quorum; Action by Board. Except to the extent that a greater
number is required by law, a majority of all of the directors in office shall
constitute a quorum for the transaction of business at any meeting, and the acts
of a majority of the directors present at a meeting at which a quorum is present
shall be the acts of the Board of Directors.
Section 2.09. Participation in Meetings. One or more directors may
participate in a meeting of the Board of Directors or a committee of the Board
of Directors by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other.
Section 2.10. Compensation. Fees and expenses payable for services as a
director or member of a committee of the Board of Directors shall be in such
amounts as shall be determined by the Board of Directors, except that no person
who receives a salary from the Corporation as an officer or employee thereof
shall receive any compensation as a director or a member of a committee of the
Board of Directors.
Section 2.11. Directors and Emergency Officers Succession. In the event of
an emergency resulting from warlike damage or an attack on the United States or
any nuclear disaster of sufficient severity to prevent the conduct and
management of the affairs and business of the Corporation under the direction of
its directors and officers as contemplated by these Bylaws, the officers and
employees of the Corporation shall continue to conduct the affairs of the
Corporation under such guidance from the directors as may be available, subject
to conformance with any governmental directives during the emergency.
<PAGE>
The officers shall have authority to execute and carry into effect any and
all of the actions, duties, and powers which may be authorized by governmental
directives for operations during emergencies, including the power to curtail,
limit, suspend, or resume any operation of the Corporation and change the
location of any office of the Corporation.
The officers at the time of such emergency shall have the broadest powers
to perform any and all acts which may be necessary for the purposes set forth in
the preceding paragraphs, including power to employ additional officers and
employees, to purchase and acquire or contract for the use of any services, real
estate, equipment, and other supplies, materials, and resources as they may deem
necessary or appropriate for the continued conduct of the operations of the
Corporation on such terms and conditions as to them shall seem desirable, and to
obligate the Corporation to pay the expenses thereof.
In order to provide for automatic succession of authority among the officer
personnel of the Corporation in such an emergency, the priorities of seniority
and succession of authority may be established and delegated to and among the
officers of the Corporation by resolution of the Board of Directors. The officer
in authority under the terms of the resolution shall have the power to assign
and reassign functions and duties among any of the other officers of the
Corporation.
Any authority granted to such officers herein shall be subject to the
authority otherwise vested in the Board of Directors, but shall not be deemed to
be restricted in any way by the inability on the part of the Board of Directors
to act.
Section 2.12. Age Qualification and Mandatory Retirement of Directors. No
person who has attained the age of sixty (60) years and is not then a director
shall be qualified for nomination or for election to the Board of Directors. No
person who has attained the
<PAGE>
age of seventy (70) years and was not a director on April 27, 1983, shall be
qualified for nomination or election to the Board of Directors. No person who
has attained the age of seventy-two (72) years shall be qualified for nomination
or for election to the Board of Directors.
No person who was a director on April 27, 1983, shall be qualified to serve
as a director from and after the date of the annual meeting of shareholders that
comes after his seventy-second birthday, and no person who was not a director on
April 27, 1983, shall be qualified to serve as a director from and after the
date of the annual meeting of shareholders that comes after his seventieth
birthday. Accordingly, a director, upon attaining such age, shall retire from
the Board of Directors effective on the date of the annual meeting of
shareholders that comes after the date upon which he attains such age. The
failure of any director to retire as provided in this section shall constitute
proper cause for the Board of Directors to declare vacant the office of such
director.
Section 2.13. Director Emeritus. A director who is ineligible for
reelection to the Board because of age shall be eligible to serve as Director
Emeritus. Such a Director may be named by the Board annually at its
reorganization meeting, but may not serve more than three consecutive terms. A
Director Emeritus shall have the privilege of attending all meetings of the
Board and shall have the opportunity of sharing his experience with the Board,
but shall have none of the responsibilities of a member of the Board, and shall
have no vote on matters put before the Board.
The terms "Director," "Board," or "Board of Directors" where used in these
Bylaws shall not be deemed to apply to or to include a Director Emeritus.
<PAGE>
ARTICLE III
Committees
Section 3.01. Executive Committee. There shall be an Executive Committee
consisting of such directors as shall from time to time be appointed by the
Board of Directors on the recommendation of the Chief Executive Officer. The
Board of Directors shall designate the Chairman of the Executive Committee. The
Executive Committee shall meet on call of the Chairman of the Executive
Committee, the Chairman of the Board, any Vice Chairman of the Board, or the
President. During the intervals between the meetings of the Board of Directors,
the Executive Committee shall possess and may exercise all the powers of the
Board of Directors in the management of the business and affairs of the
Corporation conferred by the Bylaws or otherwise, including, without limiting
the generality of the foregoing, the power to review and act upon Corporation
matters involving employee compensation, donations, insurance, pension and
profit sharing, and long-range planning. Except to the extent that a greater
number is required by law, a majority of all of the members of the Executive
Committee in office shall constitute a quorum for the transaction of business at
any meeting, and the acts of a majority of the members present at a meeting at
which a quorum is present shall be the acts of the Executive Committee. The
Executive Committee shall keep a record of its proceedings and report its
actions to the next following meeting of the Board of Directors.
Section 3.02. Audit Committee. There shall be an Audit Committee which
shall consist entirely of outside Directors to be appointed annually by the
Board of Directors on the recommendation of the Chief Executive Officer. The
object of the Audit Committee shall be to give additional assurance of the
integrity of the financial information used by the management of the Corporation
and by the Board in making decisions, and the integrity of the financial
information used by the management of the Corporation and by the Board in making
decisions, and the integrity of the
<PAGE>
financial information distributed to the shareholders and the public at large.
The Audit Committee shall review the internal audit controls of the Corporation
and shall have the authority to cause and supervise such examinations and audits
to be made by public accountants of the books and affairs of the Corporation and
subsidiary companies as it, in its discretion, deems advisable. The Audit
Committee also shall review audit policies, oversee internal audits, review
external audits, and review any examination reports. Members of management of
the Corporation, or any of its subsidiary companies, whether or not directors of
the Corporation, may be invited by the Audit Committee to attend meetings
thereof.
Section 3.02. Other Committees. The Board of Directors may, at any time and
from time to time, appoint such other standing or special committees to perform
such duties and make such investigations and reports as the Board of Directors
shall by resolution determine. Such committees shall determine their own
organization and times and places of meeting, unless otherwise directed by such
resolution.
ARTICLE IV
Officers
Section 4.01. Officers. The officers of the Corporation shall be a
President, a Secretary, a Treasurer, and may include a Chairman of the Board,
one or more Vice Chairmen of the Board, one or more Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
as the Board of Directors may from time to time determine.
Section 4.02. Qualifications. The officers shall be natural persons of full
age.
Section 4.03. Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors and shall serve at the pleasure of
the Board of Directors.
<PAGE>
Section 4.04. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the President, or the Secretary. Any
such resignation shall take effect at the time of the receipt of such notice or
at any later time specified therein. Unless otherwise specified therein, the
acceptance of a resignation shall not be necessary to make it effective.
Section 4.05. Chairman of the Board. The Board of Directors may elect one
of its members to be Chairman of the Board. He shall preside at all meetings of
the Board of Directors. He shall also have such other powers and duties as may
be conferred upon or assigned to him by the Board of Directors, as well as any
other powers specifically conferred upon him by these Bylaws.
Section 4.06. Vice Chairman of the Board. The Board of Directors may elect
one or more of its members to be a Vice Chairman of the Board. In the absence of
the Chairman, the senior present Vice Chairman shall preside at meetings of the
Board of Directors. Each Vice Chairman shall have such other powers and duties
as may be conferred upon or assigned to him by the Board of Directors.
Section 4.07. President. The President shall, in the absence of the
Chairman and the Vice Chairmen, or if no Chairman or Vice Chairmen have been
elected, preside at any meeting of the Board of Directors. The President shall
have and may exercise any and all other powers and duties pertaining by law,
regulation, or practice to the office of President, or imposed by these Bylaws.
He shall have such other powers and duties as may be conferred upon or assigned
to him by the Board of Directors.
Section 4.08. Chief Executive Officer. The Board of Directors may designate
the Chairman of the Board, and Vice Chairman of the Board or the President as
Chief Executive Officer. The Chief Executive Officer shall have general
supervision over the
<PAGE>
business and operations of the Corporation, subject, however, to the control of
the Board of Directors. He, or such persons as shall be designated by him, shall
sign, execute, acknowledge, verify, deliver, and accept, in the name of the
Corporation, deeds, mortgages, bonds, contracts, and other instruments
authorized by the Board of Directors, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation; and, in general, he shall have
general executive powers as well as such other powers and duties as may be
conferred upon or assigned to him by the Board of Directors.
Section 4.09. Vice Presidents. The Board of Directors may elect one or more
Executive Vice Presidents and may elect or appoint one or more Senior Vice
Presidents and Vice Presidents. Each such person shall have such powers and
duties as may be conferred upon or assigned to him by the Board of Directors or
the Chief Executive Officer.
Section 4.10. Secretary. The Secretary shall attend to the giving of all
notices required by these Bylaws to be given. He shall keep accurate minutes of
meetings of the Board of Directors and shall serve as Secretary to all
shareholder meetings. He shall be custodian of the corporate seal, records,
documents, and papers of the Corporation including election returns and
proceedings of shareholder meetings. He shall provide for the keeping of proper
records of all transactions of the Corporation assigned to him, from time to
time, by the Board of Directors or the Chief Executive Officer, and he shall
have all other powers and duties pertaining by law, regulation, or practice, to
the office of Secretary, or imposed by these Bylaws, or as may from time to time
be conferred upon or assigned to him by the Board of Directors or the Chief
Executive Officer.
Section 4.11. Assistant Secretaries. In the absence or disability of the
Secretary or when so directed by the Secretary,
<PAGE>
any Assistant Secretary may perform all the duties of the Secretary, and, when
so acting, shall have all the powers of, and be subject to all the restrictions
upon, the Secretary. The Assistant Secretaries shall perform such other duties
as from time to time may be conferred upon or assigned to them respectively by
the Board of Directors, the Chief Executive Officer, or the Secretary.
Section 4.12. The Treasurer. The Treasurer shall have charge of all
receipts and disbursements of the Corporation and shall have or provide for the
custody of its funds and securities; he shall have full authority to receive and
give receipts for all money due and payable to the Corporation, to endorse
checks, drafts, and warrants in its name and on its behalf, and to give full
discharge for the same; he shall deposit all funds of the Corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident to the office of Treasurer and
such other duties as may from time to time be conferred upon or assigned to him
by the Board of Directors or the Chief Executive Officer.
Section 4.13. Assistant Treasurers. In the absence or disability of the
Treasurer or when so directed by the Treasurer, any Assistant Treasurer may
perform all the duties of the Treasurer, and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
conferred upon or assigned to them respectively by the Board of Directors, the
Chief Executive Officer, or the Treasurer.
Section 4.14. Compensation of Officers and Others. The compensation of all
officers shall be fixed from time to time by the Board of Directors, or any
committee or officer authorized by the Board of Directors so to do.
<PAGE>
ARTICLE V
Limitation of Directors' Liability; Indemnification
Section 5.01. To the fullest extent permitted by the Directors' Liability
Act (42 Pa. C.S. Section 8361 et seq.) and the Business Corporation Law of the
Commonwealth of Pennsylvania, a director of the Corporation shall not be
personally liable to the Corporation, its shareholders, or others for monetary
damages for any action taken or any failure to take any action unless the
director has breached or failed to perform the duties of his or her office, as
set forth in the Directors' Liability Act, and such breach or failure
constitutes self-dealing, willful misconduct, or recklessness. The provisions of
this Article Fifth shall not apply with respect to the responsibility or
liability of a director under any criminal statute or the liability of a
director for the payment of taxes pursuant to local, state, or federal law.
Section 5.02. (a) The 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, suit, or proceeding, whether civil, criminal, administrative,
or investigative by reason of the fact that such person is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), amounts paid in settlement, judgments, and
fines actually and reasonably incurred by such person in connection with such
action, suit, or proceeding; provided, however, that no indemnification shall be
made in any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
(b) Expenses (including attorneys' fees) incurred in defending a civil or
criminal action, suit, or proceeding shall be paid by the Corporation in advance
of the final disposition of such
<PAGE>
action, suit, or proceeding, upon receipt of an undertaking by or on behalf of
the director, officer, employee, or agent to repay such amount if it shall be
ultimately determined that he or she is not entitled to be indemnified by the
Corporation as authorized in this Article Fifth.
(c) The indemnification and advancement of expenses provided by this
Article Fifth shall not be deemed exclusive of any other right to which persons
seeking indemnification and advancement of expenses may be entitled under any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to actions in such persons' official capacity and as to their actions in
another capacity while holding office, and 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 such person.
(d) The Corporation may purchase and maintain insurance on behalf of any
person, may enter into contracts of indemnification with any person, may create
a fund of any nature (which may, but need not be, under the control of a
trustee) for the benefit of any person, and may otherwise secure in any manner
its obligations with respect to indemnification and advancement of expenses,
whether arising under this Article Fifth or otherwise, to or for the benefit of
any person, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article Fifth.
Section 5.03. The limitation of liability provided in Section 5.01 of this
Article Fifth and the right to indemnification provided in Section 5.02 of this
Article Fifth shall apply to any action or any failure to take any action
occurring on or after January 27, 1987.
Section 5.04. Notwithstanding anything herein contained to the contrary,
this Article Fifth may not be amended or repealed and
<PAGE>
a provision inconsistent herewith may not be adopted, except by the affirmative
vote of 80% of the members of the entire Board of Directors or by the
affirmative vote of shareholders of the Corporation entitled to cast at least
80% of the votes which all shareholders of the Corporation are then entitled to
cast, except that if the Business Corporation Law or the Directors' Liability
Act is amended or any other statute is enacted so as to decrease the exposure of
directors to liability or to increase the indemnification rights available to
directors, officers, or others, then this Article Fifth and any other provision
of these Bylaws inconsistent with such decreased exposure or increased
indemnification rights shall be amended, automatically and without further
action on the part of shareholders or directors, to reflect such decreased
exposure or to include such increased indemnification rights, unless such
legislation expressly requires otherwise. Any repeal or modification of this
Article Fifth by the shareholders of the Corporation shall be prospective only,
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation or any right to indemnification from the Corporation
with respect to any action or any failure to take any action occurring prior to
the time of such repeal or modification.
Section 5.05. If, for any reason, any provision of this Article Fifth shall
be held invalid, such invalidity shall not affect any other provision not held
so invalid, and each such other provision shall, to the full extent consistent
with law, continue in full force and effect. If any provision of this Article
Fifth shall be held invalid in part, such invalidity shall in no way affect the
remainder of such provision, and the remainder of such provision, together with
all other provisions of this Article Fifth shall, to the full extent consistent
with law, continue in full force and effect.
Section 5.06. Article Fifth (as in effect on the day prior to the day on
which this new Article Fifth is approved by the
<PAGE>
shareholders of the Corporation), and all provisions of the Bylaws of the
Corporation insofar as they are inconsistent with this Article Fifth, are hereby
repealed, except that with respect to acts or omissions occurring prior to
January 27, 1987, such former Article Fifth and such other provisions of the
Bylaws of the Corporation shall remain in full force and effect.
ARTICLE VI
Share Certificates; Transfer
Section 6.01. Share Certificates. Share certificates shall be signed by the
manual, facsimile, printed, or engraved signatures of the Chairman of the Board
or a Vice Chairman of the Board or the President or a Vice President and the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer
of the Corporation, but one of such signatures shall be a manual signature
unless the certificates are signed by a transfer agent or a registrar, and shall
be sealed with the corporate seal, which may be a facsimile, engraved, or
printed seal. In case any officer who has signed, or whose facsimile signature
has been placed upon, any share certificate shall have ceased to be such officer
before the certificate is issued, it may be issued by the Corporation with the
same effect as if the officer had not ceased to be such at the date of its
issue.
Section 6.02. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the books of the Corporation by the owner thereof or by
his attorney thereunto authorized, upon surrender of the share certificates to
the Secretary or a transfer agent of the Corporation accompanied by a duly
executed power of attorney.
Section 6.03. Transfer Agent and Registrar; Regulations. The Corporation
may, if and whenever the Board of Directors so determines, maintain one or more
transfer offices or designate one
<PAGE>
or more transfer agents, where or by which the shares of the Corporation shall
be transferable, and also maintain one or more registry offices or designate one
or more registrars where or by which the shares shall be registered; and no
certificates for shares of the Corporation in respect of which a registrar shall
have been designated shall be valid unless countersigned and registered by such
registrar. The Board of Directors may also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer, and
registration of share certificates.
Section 6.04. Lost, Destroyed, and Mutilated Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of new share certificates in lieu of share
certificates lost, destroyed, or mutilated, upon such terms and conditions,
including the posting of an open-penalty bond, as the Board of Directors may
direct.
ARTICLE VII
Miscellaneous Provisions
Section 7.01. Notice of Meetings. Any notice required to be given by the
Corporation to any shareholder, director, or committee member may be (i)
delivered personally, (ii) mailed by first class United States mail, postage
prepaid, addressed to the shareholder's, director's, or committee member's
address appearing on the books of the Corporation, or supplied by him to the
Corporation for the purpose of notice, or (iii) telegraphed or transmitted by a
similar mode of communication to the address identified in clause (ii) above. If
notice is sent by mail less than ten days prior to any shareholders',
directors', or committee meeting, notice shall be deemed to have been given to
the person entitled thereto twenty-four hours after deposit in the United States
mail; otherwise, notice shall be deemed to have been given to the person
entitled thereto when deposited in the United States
<PAGE>
mail or when deposited with a telegraph or other transmitting office for
transmission to such person. Any shareholder, director, or committee member may
waive notice of any meeting before or after the meeting, and his attendance at a
meeting shall constitute a waiver of notice of such meeting, unless he announces
at the meeting that he is attending solely for the purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 7.02. Amendments. Bylaws may be adopted, amended, or repealed by
the Board of Directors in the manner provided in Section 2.08 or by the
shareholders in the manner provided in Section 1.06.
- ----------
Bylaws effective October 1, 1982
Amended April 11, 1984 - Sections 2.01; 2.02
Amended April 9, 1986 - Sections 2.02; 2.12; 3.01; 3.02
Amended April 21, 1987 - Article 5
Amended April 24, 1996 - Section 2.13
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