<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
-----------------
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 0-14129
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INDEPENDENCE BANCORP,INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2483513
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Lake Street Ramsey, NJ 07446
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(Address of principal executive offices)
(201) 825-1000
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(Registrant's telephone number, including area code)
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
----- -----
Number of shares outstanding of each of the issuers classes of common stock
on July 31, 1995 1,310,308
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<PAGE>
INDEPENDENCE BANCORP, INC. AND SUBSIDIARY
-----------------------------------------
INDEX
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PAGE
NUMBER
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets (unaudited)
June 30, 1995 and December 31, 1994 3
Consolidated Statements of Income (unaudited)
Three Months Ended June 30, 1995 and 1994 and
Six Months Ended June 30, 1995 and 1994 4
Consolidated Statements of Cash
Flows(unaudited) Six Months Ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements
(unaudited) 6-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 10-16
PART II - OTHER INFORMATION 17
SIGNATURES 18
<PAGE>
INDEPENDENCE BANCORP,INC. and SUBSIDIARY
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Consolidated Balance Sheets (unaudited)
<TABLE>
<CAPTION>
June 30 December 31
(In thousands, except share data) 1995 1994
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<S> <C> <C>
Assets
Cash and due from banks $17,658 $17,326
Interest bearing deposits in other banks 3,778 4,860
Federal funds sold 17,050 8,550
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Cash and cash equivalents 38,486 30,736
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Securities
Available for sale, at market 7,301 3,451
Held to maturity, at cost (market value $116,615 and $104,364) 117,854 112,418
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Total securities 125,155 115,869
Loans
Commercial 28,811 27,109
Real estate-construction 4,259 2,750
Real estate-commercial 41,595 39,803
Real estate-residential 28,832 28,084
Installment 33,575 32,712
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Total loans 137,072 130,458
Less:
Allowance for possible loan losses 2,880 2,630
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Loans, net 134,192 127,828
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Premises and equipment,net 5,451 5,257
Accrued interest receivable 2,268 1,890
Other real estate, net 658 1,148
Other assets 592 479
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Total assets $306,802 $283,207
============================================================================================================================
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits
Demand (non-interest bearing) 69,654 63,662
Money market, NOW, and super NOW 93,028 81,928
Savings 66,057 66,397
Time certificates of $100,000 or more 7,754 6,047
Other time certificates 51,267 47,398
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Total deposits 287,760 265,432
Other liabilities 1,330 1,098
Employee Stock Ownership Plan (ESOP) debt 1,251 1,307
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Total liabilities 290,341 267,837
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Commitments and Contingencies
Stockholders' equity
Preferred stock, no par value,1,000,000 shares authorized - -
Cumulative convertible preferred stock, 9% Series A, $1 par value, 776,875 777 777
issued and outstanding (liquidation value -$6,215)
Common stock, par value $1.667 per share, 5,000,000 authorized;
1,309,808 and 1,305,668, respectively, issued and outstanding 2,184 2,182
Capital in excess of par value 12,814 12,802
Retained earnings 1,975 1,042
Net unrealized holding loss on securities available for sale, net of income tax benefit (38) (126)
Preferred stock acquired by ESOP (1,251) (1,307)
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Total stockholders' equity 16,461 15,370
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Total liabilities and stockholders' equity $306,802 $283,207
============================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
INDEPENDENCE BANCORP,INC.and SUBSIDIARY
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Consolidated Statements of Income (unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- ----------------------
(In thousands, except per share data) 1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Interest income:
Loans $3,128 $2,591 $6,095 $5,027
Securities 1,784 1,399 3,469 2,772
Federal funds sold 225 100 385 169
Deposits with banks 61 77 140 126
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Total interest income 5,198 4,167 10,089 8,094
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Interest expense:
Interest on deposits 1,511 1,075 2,884 2,101
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Total interest expense 1,511 1,075 2,884 2,101
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Net interest income 3,687 3,092 7,205 5,993
Provision for possible loan losses 160 250 340 500
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Net interest income after provision
for possible loan losses 3,527 2,842 6,865 5,493
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Non-interest income:
Service charges on deposit accounts 341 272 646 586
Other income 190 204 383 442
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531 476 1,029 1,028
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Non-interest expense:
Salaries and employee benefits 1,265 1,174 2,570 2,290
Occupancy and equipment 637 554 1,272 1,106
Insurance premiums on deposits 162 166 324 332
Other expenses 947 782 1,863 1,554
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3,011 2,676 6,029 5,282
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Income before income taxes 1,047 642 1,865 1,239
Income tax provision 347 211 619 407
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Net income 700 431 1,246 832
Dividends on preferred stock 140 140 280 280
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Net income applicable to common stock $560 $291 $966 $552
======================================================================================== ======================
Net income per common share
Primary $.42 $.22 $.73 $.42
Fully Diluted .33 .20 .58 .40
======================================================================================== ======================
Weighted average shares outstanding
Primary 1,325,317 1,308,340 1,325,185 1,308,477
Fully Diluted 2,133,423 2,100,851 2,133,291 2,100,988
======================================================================================== ======================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
INDEPENDENCE BANCORP, INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
(In thousands) June 30
--------------------------
Cash Flows From Operating Activities: 1995 1994
--------------------------
<S> <C> <C>
Net Income $1,246 $832
- -------------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Provision for possible loan losses 340 500
Depreciation of bank premises and equipment 374 274
Net amortization and accretion on securities 52 213
Provision for possible losses on other real estate 230 117
Loss (gain) on sale of other real estate 3 (58)
Gain on sale of residential mortgage loans and related servicing rights (12) (26)
Increase in accrued interest receivable (378) (153)
Decrease (increase) in other assets 113 (430)
Increase (decrease) in other liabilities 232 318
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Total Adjustments 954 755
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Net cash provided by (used in) operating activities 2,200 1,587
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Cash Flows From Investing Activities:
Proceeds from maturities of securities:
Available for sale 193 1,718
Held for maturity 6,374 9,330
Purchase of securities:
Available for sale (3,842) -
Held for maturity (12,007) (36,980)
Net increase in loans (6,945) (2,029)
Decrease in other real estate 260 800
Capital expenditures (568) (294)
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Net cash used in investing activities (16,535) (27,455)
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Cash Flows From Financing Activities:
Net increase in deposit accounts 22,328 11,698
Principal payments on ESOP debt 56 51
Proceeds from the issuance of common stock 14 13
Dividends paid (313) (280)
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Net cash provided by financing activities 22,085 11,482
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Net decrease (increase) in cash and cash equivalents 7,750 (14,386)
Cash and cash equivalents, beginning of year 30,736 39,431
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Cash and cash equivalents, end of year $38,486 $25,045
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Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $2,884 $2,101
Income taxes 350 220
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</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
INDEPENDENCE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for interim financial information. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. Therefore, it is
suggested that the accompanying unaudited consolidated financial statements be
read in conjunction with the financial statements and notes thereto included in
Independence Bancorp, Inc.'s (the Company) December 31, 1994 Annual Report to
Shareholders. In the opinion of management,the accompanying unaudited
consolidated financial statements include all adjustments of a normal recurring
nature necessary to present fairly the Company's financial position as of June
30, 1995, the results of its operations for the three and six months then ended,
and cash flows for the six months then ended. The results of operations for
such interim periods are not necessarily indicative of the results to be
expected for the full year.
Note 2. Summary of Significant Accounting Policies:
Principles of consolidation
The consolidated financial statements of Independence Bancorp,Inc. include the
accounts of the Company and its wholly-owned subsidiary, Independence Bank of
New Jersey (the Bank). All significant intercompany accounts and transactions
have been eliminated.
Securities
The Company prospectively adopted Statement of Financial Accounting
Standards 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115), effective January 1, 1994. SFAS 115 requires the Company
to classify its investment securities as: (1) held to maturity, (2) available
for sale or (3) trading.
Securities which the Company has the ability and intent to hold until
maturity are classified as held to maturity. These securities are carried at
cost, adjusted for amortization of premiums and accretion of discounts.
Securities which are held for indefinite periods of time which management
intends to use as part of its asset/liability strategy, or that may be sold in
response to changes in interest rates, changes in prepayment risk, increased
capital requirements or other similar factors, are classified as available for
sale and are carried at market value. Differences between the security's
amortized cost and
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
market value is charged/credited directly to stockholders' equity, net of income
taxes.
The Company has not classified any of its securities as trading.
Loans
Substantially all loans classified as commercial loans are at least
partially secured by real estate. Loans are stated at their principal amount
outstanding, net of any unearned income and net of loan origination fees and
costs. Nonrefundable loan origination fees and certain direct loan origination
costs are deferred and recognized over the life of the loan as an adjustment to
the loans' yield. The Bank does not accrue interest on any loan when factors
indicate collectability is doubtful. In general, the accrual of interest is
discontinued when a loan becomes 90 days past due as to principal or interest.
When interest accruals are discontinued, interest credited to income in the
current year is reversed, and interest accrued in the prior year is charged to
the allowance for possible loan losses. Management may elect to continue the
accrual of interest when the estimated net realizable value of collateral is
sufficient to cover the principal balance and accrued interest. Nonaccrual
loans are returned to accrual status when interest is received on a current
basis and other factors indicating doubtful collection cease.
Allowance for possible loan losses
The allowance for possible loan losses is maintained at a level considered
adequate by management to absorb potential loan losses. It is the result of an
in-depth and on-going analysis which relates outstanding balances to expected
allowance levels required to absorb future credit losses. Current economic
problems are addressed through management's assessment of anticipated changes in
the regional economic climate, changes in composition and volume of the loan
portfolio and variances in levels of classified, non-performing and past due
loans. Allowance adequacy calculations are completed by applying risk
assessments to determine specific and general allowance requirements for problem
and non-problem loans.
The allowance is increased as deemed necessary through provisions charged
against current earnings and additionally by crediting amounts of recoveries
received, if any, on previously charged-off loans. The allowance is reduced by
charge-offs of loans which are determined to be uncollectible, in accordance
with established policies.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
Impaired Loans
The Bank adopted SFAS 114 "Accounting by Creditors for Impairment of a
Loan", and SFAS 118 "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures" as of January 1, 1995. SFAS 114 requires that
certain impaired loans be measured based on the present value of expected future
cash flows discounted at the loan's original effective interest rate. As a
practical expedient, impairment may be measured based on the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. When the measure of the impaired loan is less than the recorded
investment in the loan, the impairment is recorded through a valuation
allowance.
The Bank had previously measured the allowance for possible loan losses
using methods similar to those prescribed in SFAS 114. As a result of adopting
these statements, no additional allowance for loan losses was required as of
January 1, 1995.
As of June 30, 1995, the Bank's recorded investment in impaired loans and
the related valuation allowance calculated under SFAS 114 is as follows:
<TABLE>
<CAPTION>
Recorded Valuation
Investment Allowance
-----------------------
<S> <C> <C>
Impaired Loans-
Valuation allowance required $ 504 $90
No valuation allowance required 2,155 0
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Total Impaired Loans $2,659 $90
====== ===
</TABLE>
This valuation allowance is included in the allowance for possible loan losses
on the balance sheet.
The average recorded investment in impaired loans for the six months ended
June 30, 1995 was $3.2 million.
Interest payments received on impaired loans are recorded as interest
income unless collection of the remaining recorded investment is doubtful at
which time payments received are recorded as reductions of principal. The Bank
recognized no interest income on impaired loans for the six months ended June
30, 1995.
In accordance with SFAS 114, a loan is classified as foreclosed property
when the Bank has taken possession of the
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued
collateral, regardless of whether the formal proceedings take place. This is a
change from previous accounting for in-substance foreclosed property under
provisions of SFAS 15. SFAS 114 requires classification as foreclosed property
based on actual possession, whereas previous practice classified certain loans
as in-substance foreclosures prior to possession based on characteristics of the
borrower and underlying collateral. As a result of adopting SFAS 114, loans of
approximately $501 thousand no longer qualify as in-substance foreclosures based
on the possession criterion, and therefore have been reclassified from other
assets to loans as of January 1, 1995. Prior periods have been restated to
reflect the pronouncement.
Other Real Estate
Other real estate is comprised of foreclosed properties where the Company has
actually received title. Other real estate is carried at the lower of fair
value, as determined by current appraisals, less estimated costs to sell, or the
recorded investment in the loan on the property. Write-downs on these properties
which occur after the initial transfer from the loan portfolio are recorded as
operating expenses. Costs of holding such property are charged to expense as
incurred. Gains, to the extent allowable, and losses on the disposition of these
properties are reflected in current operations.
Note 3. Commitments and Contingent Liabilities
In the normal course of business, there are outstanding various legal
proceedings, commitments and contingent liabilities, such as guarantees and
commitments to extend credit which are not reflected in the accompanying
financial statements. At June 30, 1995 standby letters of credit were
approximately $2,207,000. In addition, the Company has committed $25,907,000
for home equity loans; $14,733,000 for commercial and residential real estate
loans; $7,840,000 for commercial lines of credit and $6,135,000 for all other
commitments. In the judgement of management, the financial position or results
of operations of the Company will not be materially adversely affected by
the outcome of any present legal proceedings or other commitments and contingent
liabilities.
<PAGE>
Item 2- Management's Discussion and Analysis of Financial
- ----------------------------------------------------------
Condition and Results of Operations
-----------------------------------
Reference should be made to Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Independence Bancorp, Inc.
Annual Report and Form 10K for the year ended December 31, 1994.
Overview
- --------
The Company recorded net income applicable to common stock for the three
months ended June 30, 1995 of $560 thousand, or $.42 and $.33 primary and fully
diluted per common share, respectively. This compares to net income applicable
to common stock for the three months ended June 30, 1994 of $291 thousand, or
$.22 and $.20 primary and fully diluted per common share. The Company's second
quarter 1995 net income benefited from a 19.2% increase in net interest income
before the provision for possible loan losses as compared to the same period in
1994. Net income after preferred dividends for the six months ended June 30,
1995 was $966 thousand, or $.73 per common share on a primary basis and $.58 per
common share on a fully diluted basis, as compared to $552 thousand or $.42 per
common share on a primary basis and $.40 per common share on a fully diluted
basis for the comparable period in 1994.
As of June 30, 1995, the Company's Capital ratios were: 5.44% for Tier I
leverage capital; 10.46% for Tier I capital to risk-adjusted assets; and 11.75%
for total Tier capital to risk-adjusted assets. The Bank's ratios as of June
30, 1995 were 5.77% for Tier I leverage capital; 11.31% for Tier I capital to
risk-adjusted assets; and 12.56% for total Tier capital to risk-adjusted assets.
All ratios remain above regulatory mandated levels.
Delinquent loans (90 days or more, and still accruing) decreased $632
thousand or 97.1%, and non-accrual loans and total non-performing assets
declined 43.6%, and 40.0%, respectively, from June 30, 1994 to June 30, 1995.
As compared to December 31, 1994, total non-performing assets at June 30, 1995
declined 22.9%.
Net Interest Income
- -------------------
Net interest income, stated on a fully tax equivalent (FTE) basis,
increased $595 thousand, or 19.2% for the second quarter of 1995 as compared to
the second quarter of 1994. Net interest income on a fully tax equivalent basis
increased $1.2 million to $7.2 million in the first six months of 1995 when
compared to the same period of last year. Net interest margins are as follows:
5.32% for the three months ended June 30, 1995, as compared to 5.08% for the
same period in 1994, and 5.35% and 5.18% for the six months ended June 30, 1995
and 1994, respectively.
<PAGE>
Interest income (FTE) totalled $10.1 million for the first six months of
1995, an increase of 24.6%, or $2.0 million, as compared to the same period in
1994, while interest expense increased 37.3%, or $783 thousand during this
period. During the second quarter of 1995, interest income increased by 24.7%,
or $1.0 million, which was offset by the increase in interest expense of 40.6%,
or $436 thousand, as compared to the respective period in 1994. Growth in
average securities, loans and federal funds substantially accounted for the
increase in net interest income for both periods presented. Similarly, the
increase in average time deposits primarily accounted for the increase in
interest expense.
Average interest earning assets for the first six months of 1995 increased
$38.3 million, or 16.3%, over the comparable period in 1994 and the overall rate
on earning assets increased by 50 basis points. Securities and real estate loans
are primarily responsible for this growth with increases of $23.0 million and
$12.4 million,respectively, as compared with the same period of 1994.
The Company's average rate paid on interest-bearing liabilities increased
57 basis points for the three month period ended June 30, 1995, and 47 basis
points for the first half of 1995, as compared to the comparable periods of
1994. This increase is attributable to the rising rate environment during the
first half of 1995. As a result, the cost of these interest-bearing liabilities
increased to 2.17% for the second quarter of 1995 compared to 1.76% for the
second quarter of 1994. The cost of interest-bearing liabilities for the six
months ended June 30, 1995 increased to 2.13% compared to 1.81% for the
comparable period in 1994. Average demand deposits for the second quarter of
1995 increased $12.5 million, or 22.9% compared to the second quarter or 1994.
Average time deposits and other interest bearing liabilities increased $14.1
million, or 31.5% and $8.5 million, or 5.7%, for the second quarter of 1995
compared to the same period in 1994.
Included in interest-earning assets are loans on which the accrual of
interest has been discontinued. Such non-accrual loans amounted to $2.3 million
at June 30, 1995. Had these loans been current in accordance with their terms,
interest income on loans would have been $110 thousand higher.
Allowance and Provision for Possible Loan Losses
- ------------------------------------------------
The allowance for possible loan losses is maintained at a level considered
adequate by management to absorb potential loan losses. It is the result of an
in-depth and ongoing analysis which relates outstanding balances to expected
allowance levels required to absorb future credit losses. Current economic
problems are addressed through management's assessment of anticipated changes in
the regional economic climate, changes in composition and volume of the loan
portfolio and variances in levels of classified, non-performing and
<PAGE>
past due loans. Allowance adequacy calculations are completed by applying risk
assessments to determine specific and general allowance requirements for problem
and non-problem loans.
The Company prospectively adopted Statement of Financial Accounting
Standards 114, "Accounting by Creditors for Impairment of a Loan" (SFAS 114),
effective January 1, 1995. This Statement requires that impaired loans, within
the scope of the statement, be measured on the present value of expected future
cash flows discounted at the loan's effective interest rate or market price or
the fair value of the collateral if the loan is collateral dependent.
Appropriate periodic provisions are charged to operations as determined by the
foregoing methodology.
The following table lists selected data relating to the loan portfolio and
certain of the factors which were considered by management in determining the
amount of the allowance for possible loan losses for the period ended June 30,
1995. The table reflects the adoption of SFAS 114 and all prior year information
has been reclassified to conform with the current year presentation.
As of, or For the Period Ended
------------------------------
(dollar amounts in thousands)
06/30/94 09/30/94 12/31/94 03/31/95 06/30/95
-------- -------- --------- -------- --------
Non-Accrual Loans $ 3,084 $ 2,903 $ 2,622 $ 2,491 $ 2,283
Other Impaired Loans 1,850 1,767 792 628 501
Other Real Estate 1,017 693 1,222 915 789
------- ------- ------- ------- -------
Non-Performing Assets $ 5,951 $ 5,363 $ 4,636 $ 4,034 $ 3,573
======= ======= ======= ======= =======
Past Due Loans * $ 651 $ 44 $ 189 $ 143 $ 19
======= ======== ======= ======= =======
Net Charge-offs (recoveries) $ 500 $ 734 $ 876 $ (12) $ 90
======== ======== ======== ======= =======
Allowance for Possible
Loan Losses $ 2,492 $ 2,508 $ 2,630 $ 2,822 $ 2,880
======= ======= ======= ======= =======
Allowance as Percentage
of Loans Outstanding 2.02% 1.99% 2.03% 2.09% 2.10%
======= ======= ======= ======= =======
Allowance as Percentage
of Non-Performing
Loans 50.51% 53.70% 77.04% 90.48% 103.45%
======= ======= ====== ======= =======
Net Charge-offs (recoveries)
(annualized)to Average Loans
Outstanding 0.84% 0.80% 0.70% (0.04%) 0.13%
======= ======= ====== ======= =======
* Loans over 90 days past due on which interest continues to be
accrued.
For the six months ended June 30, 1995, net loan charge-offs were $90
thousand as compared with net loan charge-offs of $500 thousand for the same
period of 1994. There were $352 thousand in charge-offs, of which $274 thousand
or 77.8% of the loans charged off were commercial loans, which include lease
financing loans, and the
<PAGE>
remaining 22.2% were installment loans. Recoveries during the first six months
of 1995 were for commercial and installment loans previously charged off and
totalled $211 thousand and $51 thousand, repectively.
At June 30, 1995, the Company's non-accrual loans, impaired loans, and
other real estate (in total, non-performing assets) totalled $3.6 million as
compared to $6.0 million at June 30, 1994.
At June 30, 1995, the Company's allowance for possible loan losses was $2.9
million. This represented 2.1% of total loans and 103.5% of total non-
performing loans. This compares to the Company's allowance for possible loan
losses at June 30, 1994 of $2.5 million, or 2.0% of total loans and 50.5% of
total non-performing loans. The Company's allowance for possible loan losses at
December 31, 1994 was $2.6 million, or 2.0% of loans and 77.0% of total non-
performing loans.
Non-Interest Income
- -------------------
Total non-interest income for the second quarter of 1995 totaled $531
thousand, an increase of $55 thousand or 11.6% as compared to the same period of
1994. Service charges on deposit accounts increased 25.4% for the second quarter
of 1995 over the same period in 1994, primarily due to increased income from
account related charges. Other non-interest income for the first three months of
1995 decreased $14 thousand compared to the comparable period in 1994 as a
result of reduced fee income on loans. Total non-interest income for the first
half of 1995 remained even with the same period of 1994.
Non-Interest Expense
- --------------------
Annualized, total non-interest expense as a percentage of total average
assets for the second quarter of 1995 and 1994 was 3.99% and 4.04%,
respectively. Non-interest expense for the three month period ending June 30,
1995 totalled $3.0 million, an increase of $335 thousand as compared to the same
period of 1994. Salaries and employee benefits increased $91 thousand, or 7.8%
over the same period in 1994 due to additions made to staff and merit increases.
Occupancy and equipment costs for the second quarter of 1995 increased 15.0%, or
$83 thousand over the same period of 1994 as a result of increased data
processing and depreciation expenses relating to the Company's computer
conversion completed during the third quarter of 1994. Insurance premium on
deposit account expense for the second quarter of 1995 was even with the second
quarter of 1994. Other non-interest expenses for the three months ended June 30,
1995 increased $165 thousand, or 21.1% over the comparable period of 1994 due to
increased charges to the valuation reserve for other real estate owned, higher
advertising and marketing expenses, and increased stationery costs.
Total non-interest expense annualized, as a percentage of total average
assets for the first half of 1995 and 1994 was 4.08% and
<PAGE>
4.16%, respectively. Non-interest expense for the six months ended June 30, 1995
totalled $6.0 million, an increase of $747 thousand, or 14.1% as compared to the
same period in 1994. Salaries and employee benefits increased $280 thousand, or
12.2% for the first half of 1995 over the same period in 1994, primarily due to
increases in staff. Other operating expenses for the the first six months of
1995, excluding salaries and employee benefits, increased 15.6% as compared to
the same period in 1994. This increase was attributable to higher data
processing and equipment expense, costs associated with other real estate owned,
advertising and marketing expenses, and higher stationery and postage costs.
Interest Rate Sensitivity and Liquidity
- ---------------------------------------
Management has identified numerous strategies, including a redeployment of
asset maturities and cash flows to insulate net interest income from the effects
of changes in interest rates. Sensitivity to interest rate fluctuations is
measured in a number of time frames. Gap positions are monitored as part of the
committee process. This activity includes periodic forecasts of future business
activity which are applied to various interest rate environments in a simulation
process. The use of these financial modeling techniques assists management in
its continuing efforts to achieve stable earnings growth in an everchanging
interest rate environment. While gap analysis is a general indicator of the
potential effect that changing interest rates may have on net interest income,
the gap itself does not present a complete picture of interest rate sensitivity.
For this reason, the Company primarily uses simulation techniques to project
future net interest income streams, incorporating the current "gap" position,
the forecasted balance sheet mix and the anticipated spread relationships
between market rates and bank products under a variety of interest rate
scenerios.
Liquidity measures the ability to satisfy current and future cash flow
needs as they become due. The Company's primary sources of liquidity are
deposits, loan repayments and investment securities. During the first six months
of 1995 and 1994, average balances in marketable securities and other short-term
investments comprised 47.0% and 45.3% of average total assets, respectively.
During the first six months of 1995, average deposit balances (after interest
credited) increased 10.3% to $276.8 million from December 31, 1994.
Securities, which consist of obligations of the U.S. Treasury and U.S.
Government Agencies and issues of state and political subdivisions totaled
$125.2 million at June 30, 1995, an increase of 8.0% or $9.3 million over
December 31, 1994. At June 30, 1995, the Company's securities classified as held
to maturity reflected gross unrealized gains of $306 thousand and gross
unrealized losses of $1.5 million. Securities available for sale at June 30,
1995 totaled $7.3 million, an increase of $3.9 million or 111.6% as compared to
December 31, 1994.
<PAGE>
In accordance with SFAS 115, at June 30, 1995, the Company had an
unrealized loss balance of $38 thousand (net of tax effects) against retained
earnings for net declines in the fair market values of its investment securities
classified as available for sale. The Company had no investment securities
classified as trading securities as of June 30, 1995.
The Company remains a deposit-driven financial institution with emphasis
on core deposit accumulation and retention as a basis for sound growth and
profitability. The Company believes that its record of sustaining core deposit
growth is reflective of the Company's retail approach to banking which
emphasizes a combination of free checking accounts, convenient branch locations,
extended hours of service, quality service and active marketing. Historically,
the overall liquidity of the Company has been enhanced by the significant amount
of core deposits.
Capital Resources
- -----------------
At June 30, 1995, stockholders' equity totaled $16.5 million or 5.4% of
total assets, as compared with $15.4 million, or 5.4%, at December 31, 1994.
The Federal Reserve Board standards applicable to bank holding companies
and similar standards of the Federal Deposit Insurance Corporation applicable to
banks classify capital into two tiers, referred to as Tier I and Tier II. Tier
I capital consists of common stockholders' equity and qualifying perpetual
preferred stock, less goodwill. Tier II capital consists of the allowance for
possible loan and lease losses up to 1.25% of risk-weighted assets.
The Federal Reserve Board requires each bank holding company to maintain a
minimum leverage ratio of 3.0% (Tier I capital to quarterly average total
assets). The minimum 3.0% leverage requirement applies only to top-rated banking
organizations without any operating, financial or supervisory deficiencies.
Other organizations are expected to hold an additional capital cushion of at
least 100 to 200 basis points of Tier I capital, and, in all cases, banking
organizations should hold capital commensurate with the level and nature of all
the risks to which they are exposed. The Company's leverage capital ratio at
June 30, 1995 was 5.44%. On June 30, 1995, the Bank's leverage capital ratio was
5.77%.
Based on the continuing improvement in the Bank's condition, with the FDIC
and Department's permission, the Board of Directors rescinded its December 23,
1993 resolution that required, among other things, the Bank to maintain its Tier
I leverage capital ratio at not less than 5.50%.
<PAGE>
The following table reflects the Company's and Bank's capital ratios as of
June 30, 1995:
<TABLE>
Company Bank
- --------------------------------------------------------------
<S> <C> <C>
Tier I Capital:
Actual.............................. 10.46% 11.31%
Regulatory Minimum Requirement...... 4.00% 4.00%
Combined Tier I and Tier II Capital:
Actual.............................. 11.75% 12.56%
Regulatory Minimum Requirement...... 8.00% 8.00%
Leverage Ratio:
Actual.............................. 5.44% 5.77%
Regulatory Minimum Requirement...... 4.00%
to
5.00% 5.50%
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1 - LEGAL PROCEEDINGS
---------------------------
None
ITEM 2 - CHANGES IN SECURITIES
-------------------------------
None
ITEM 3 - DEFAULT UPON SENIOR SECURITIES
----------------------------------------
None
ITEM 4 - SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------
The annual meeting of shareholders was held on April 27, 1995. The
following directors were elected to serve until the next annual
meeting. The number of votes cast for or withheld from each
director is indicated opposite each director's name:
<TABLE>
<CAPTION>
Director Votes For Votes Withheld
-------- --------- --------------
<S> <C> <C>
A. Roger Bosma 966,407.4702 5,049.7116
Esko J. Koskinen 955,884.4702 15,572.7116
Robert O. Hagman 966,407.4702 5,049.7116
James R. Napolitano 966,407.4702 5,049.7116
William F. Dator 966,407.4702 5,049.7116
Joseph A. Haynes 966,407.4702 5,049.7116
Joseph LoScalzo 966,110.7946 5,346.3872
Julius J. Franchini 966,407.4702 5,049.7116
Robert F. Frasco 966,407.4702 5,049.7116
</TABLE>
ITEM 5 - OTHER INFORMATION
---------------------------
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
(a) The following exhibits are being filed with this report:
3.2 By-Laws of the Company.
27 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the
quarter for which this report is filed.
<PAGE>
SIGNATURES
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INDEPENDENCE BANCORP, INC.
--------------------------
August 7, 1995 BY: \s\ Kevin J. Killian
---------------------------- ----------------------------
DATE KEVIN J. KILLIAN
SENIOR VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
August 7, 1995 BY: \s\ Karen J. Hall
---------------------------- ----------------------------
DATE KAREN J. HALL
CHIEF ACCOUNTING OFFICER
<PAGE>
INDEPENDENCE BANCORP, INC.
--------------------------
BYLAWS
------
ARTICLE I. NAME AND SEAL.
- --------- -------------
Section 101. Name. The name of the Corporation is INDEPENDENCE BANCORP,
----------- ----
INC.
Section 102. State of Incorporation. The Corporation has been
----------- ----------------------
incorporated under the laws of the State of New Jersey.
Section 103. Seal. The corporate seal of the Corporation shall have
----------- ----
inscribed thereon the name of the Corporation, the year of its organization, the
words "Corporate Seal", and the name of the State of Incorporation. The seal may
be used by any person authorized by the Board of Directors of the Corporation or
by these Bylaws by causing the seal or a facsimile thereof to be impressed or
affixed, or in any manner reproduced.
ARTICLE II. REGISTERED AND PRINCIPAL OFFICES.
- ---------- --------------------------------
Section 201. Registered Office. The registered office of the Corporation
----------- -----------------
in the State of Incorporation shall be at 1100 Lake Street, Ramsey, New Jersey
07446.
Section 202. Offices. The principal office of the Corporation and any
----------- -------
other offices of the Corporation shall be located at such places, within and
without the State of Incorporation, as the Board of Directors may from time to
time determine or as the business of the Corporation may require, and as may be
permitted by law.
ARTICLE III. MEETING OF SHAREHOLDERS.
- ----------- -----------------------
Section 301. Place of Meetings. All meetings of the shareholders shall be
----------- -----------------
held at such place or places, within or without the State of Incorporation, as
shall be determined by the Board of Directors from time to time.
Section 302. Annual Meetings. The regular annual meeting of the
----------- ---------------
shareholders shall be held at such time as shall be determined by the Board of
Directors at which time shareholders shall elect directors and transact such
other business as may properly be brought before the meeting. Any business which
is a proper subject for shareholder action whether the notice of said meeting
contains any reference thereto, except as otherwise provided by applicable
statute or regulation.
Section 303. Special Meetings. Special meetings of the shareholders may
----------- ----------------
be called at any time by the President, or the Board of Directors or by the
shareholders entitled to cast at least one-tenth of the votes which all
shareholders are entitled to cast at the particular meeting. At any time, upon
such written request for a special meeting, it shall be the duty of the
Secretary to fix a date for
<PAGE>
the meeting, to be held not more than sixty (60) days after receipt of the
request, and to give due notice thereof. If the Secretary shall neglect or
refuse to fix the date and give notice, the person or persons making the request
may do so.
Section 304. Notice of Meetings. Written notice of every annual and
----------- ------------------
special meeting of shareholders, stating the time, place and purpose thereof,
shall be given as herein provided (by, or at the direction of, the person
authorized to call the meeting) to each shareholder of record entitled to vote
at the meeting, at least ten (10) days prior to the day named for the meeting,
unless a greater period of notice is required by statute in a particular case.
When a meeting is adjourned, it shall not be necessary to give any notice of the
adjourned meeting or of the business to be transacted at any adjourned meeting,
other than by announcement at the meeting at which such adjournment is taken.
Section 305. Quorum. A majority of the outstanding shares, represented in
----------- ------
person or by proxy, at a shareholders' meeting duly called shall constitute a
quorum for the transaction of business except as otherwise provided by law. If
however, such quorum shall not be present, those present there at may adjourn
the meeting to such time and place as they may determine, but in the case of any
meeting called for the election of Directors, those who attend the second of
such adjourned meetings, although less than a quorum, shall nevertheless
constitute a quorum for the purpose of electing Directors.
Section 306. Voting. Each shareholder shall be entitled to one (1) vote,
----------- ------
in person or by proxy, for each full share having voting power standing
registered in his name on the tenth (10th) day preceding the meeting of
shareholders exclusive of the day of such meeting, or on such other record date
(not more than sixty (60) days preceding the date of such meeting) as the Board
of Directors shall fix prior to such record date.
Section 307. Vote by Ballot. Upon the demand of any shareholder made
----------- --------------
before the voting begins, the vote for Directors and the vote upon any other
question or matter before a meeting, shall be by ballot.
Section 308. Proxy Voting. At each meeting of the shareholders, every
----------- ------------
shareholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such shareholder and
delivered to the Secretary at the meeting. No unrevoked proxy shall be valid
after eleven (11) months from the date of its execution, unless a longer time is
expressly provided therein, but in no event more than three years.
Section 309. Unpaid Shares. No share upon which any installment is due
----------- -------------
the Corporation and unpaid shall be voted at any meeting.
Section 310. Voting List. The officer or agent having charge of the stock
----------- -----------
transfer books shall make and certify a complete list of the shareholders
entitled to vote at the meeting of shareholders, arranged in alphabetical order,
within each class and series, with the address of and the number of shares held
by each, which list shall be produced and kept open at the time and place of the
meeting, and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original share ledger or transfer book, or a
duplicate thereof (kept at the registered office of the Corporation) shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or share ledger or transfer books, or to vote in person or by proxy, at any
meeting of shareholders.
<PAGE>
Section 311. Informal Action by Unanimous Consent. Unless the Board of
----------- ------------------------------------
Directors shall otherwise expressly direct, any action which may be taken at a
meeting of the shareholders may be taken without a meeting and without notice or
a waiver of notice, if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders who would be entitled to vote at a
meeting for such purpose and shall be filed with the Secretary of the
Corporation.
Section 312. Informal Action by Less Than Unanimous Consent. Unless the
----------- ----------------------------------------------
Board of Directors shall otherwise expressly direct, any action which may be
taken at a meeting of the shareholders or of a class of shareholders, other than
the annual election of directors, may be taken without a meeting, if a consent
or consents in writing to such action, setting forth the action so taken, shall
be (1) signed by shareholders entitled to cast such a percentage of the number
of votes which all such shareholders are entitled to cast thereon as is required
by law for the taking of action at a meeting of the shareholders or of a class
of shareholders and (2) filed with the secretary of the corporation. In no
case, however, shall such percentage be less than the larger of (1) two-thirds
of the total number of votes which all shareholders of the Corporation or of a
class of shareholders are entitled by the Articles to cast upon such action, or
(2) the minimum percentage of the vote required by law, if any, for the proposed
corporate action. Such action shall not become effective until after at least
ten days written notice of such action shall have been given to each shareholder
of record entitled to vote thereon. This section shall not be applicable to any
action with respect to any plan of merger or plan of consolidation to which
Section 14A:10-3 of the New Jersey Business Corporation Act is applicable.
ARTICLE IV. DIRECTORS AND BOARD MEETINGS.
- ---------- ----------------------------
Section 401. Management by Board of Directors. The business, property and
----------- --------------------------------
affairs of the Corporation shall be managed by its Board of Directors. The
Board of Directors may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.
Section 402. Nomination for Directors. Nominations for directors to be
----------- ------------------------
elected at an annual meeting of shareholders may be made only by the Nominating
Committee in accordance with Section 421 of the Bylaws and by Shareholders of
the Corporation entitled to vote for the election of directors at that meeting
who comply with the procedures set forth in this Section 402. Nominations made
by Shareholders shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than sixty (60) days nor more than ninety (90) days prior
to the date of each annual meeting. Such shareholder's notice shall set forth
(a) as to each person whom the shareholder proposes to nominate for election or
re-election as a director (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of Corporation stock which are
beneficially owned by such person on the date of such shareholder notice, and
(iv) any other information relating to such person that is required to be
disclosed in solicitations of proxies with respect to nominees for election as
directors, pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended; and (b) as to the shareholder giving the notice (i) the name and
address, as they appear on the
<PAGE>
Corporation's books, of such shareholder and any other shareholders known by
such shareholder to be supporting such nominees; and (ii) the class and number
of shares of Corporation stock which are beneficially owned by such shareholder
on the date of such shareholder notice and by any other shareholders known by
such shareholder to be supporting such nominees on the date of such shareholder
notice.
The Board of Directors may reject any nomination by a shareholder not made
in accordance with the terms of this Section 402. Alternatively, if the Board of
Directors fails to consider the validity of any nominations by a shareholder,
the presiding officer of the annual meeting shall, if the facts warrant,
determine and declare at the annual meeting that a nomination was not made in
accordance with the terms of this Section 402, and, if he should so determine,
he shall so declare at the annual meeting and the defective nomination shall be
disregarded.
If the Nominating Committee makes nominations for directors in accordance
with Section 421 of the Bylaws, no nominations for directors except those made
by the Nominating Committee shall be voted upon at the annual meeting unless
other nominations by shareholders are made in accordance with the provisions of
this Section 402.
If the Nominating Committee shall fail or refuse to nominate directors for
election at least thirty (30) days prior to the date of the annual meeting,
except in the case of a management nominee substituted as a result of the death,
incapacity, disqualification or other inability to serve of a management
nominee, nominations for directors may be made at the annual meeting by any
shareholder entitled to vote and shall be voted upon.
No person shall be elected as a director of the Corporation unless
nominated in accordance with the procedures set forth in these Bylaws.
Section 403. Number of Directors. The Board of Directors shall consist of
----------- -------------------
not less than five (5) nor more than twenty-five (25) directors. Within these
limits the number of directors shall be as established by resolution of a
majority of the full Board of Directors, provided, however, that no reduction in
the number of directors shall in any way affect the terms of directors then in
office.
Section 404. Qualifications of Directors. The directors need not be
----------- ---------------------------
residents of the State in which this Corporation is incorporated or shareholders
in the Corporation.
Section 405. Election of Directors. The directors shall be elected by the
----------- ---------------------
shareholders at the annual meeting of shareholders of the Corporation. Each
director shall be elected for the term of one year, and until his successor
shall be elected for the term of one year, and until his successor shall be
elected and shall qualify.
Section 406. Vacancies. If the office of any director shall become vacant
----------- ---------
by reason of death, resignation, disqualification or other cause, such vacancy
or vacancies, including vacancies resulting from an increase in the number of
directors, shall be filled by a majority of the remaining members of the Board,
though less than a quorum. Each person so elected by the Board of Directors to
fill a vacancy shall be a director until his or her successor is elected by the
shareholders who may make such election at the next annual meeting of
shareholders, or at any earlier special meeting of the shareholders duly called
for that purpose, and until such successor shall qualify.
<PAGE>
Section 407. Removal of Directors. The entire Board of Directors, or any
----------- --------------------
individual director may be removed from office without assigning any cause by
the vote of shareholders entitled to cast at least a majority of the votes which
all shareholders would be entitled to cast at any annual election of such
directors. In case the Board or any one or more directors be so removed, new
directors may be elected at the same meeting. The Board of Directors, by
unanimous consent, may remove or suspend a director, pending a final
determination, for any proper cause.
Section 408. Resignations. Any director may resign at any time. Such
----------- ------------
resignation shall be in writing, but the acceptance thereof shall not be
necessary to make it effective.
Section 409. Compensation of Directors. The compensation, if any, of
----------- -------------------------
directors shall be as determined by the Board of Directors. In addition to
compensation, if any, for services as a director, a director may serve the
Corporation in other capacities and receive separate compensation therefore.
Section 410. Place of Board Meetings. Regular meetings of the Board of
----------- -----------------------
Directors shall be at 1100 Lake Street, Ramsey, New Jersey 07446.
Section 411. Regular Meetings. Regular meetings of the Board of Directors
----------- ----------------
shall be held in each year at such times as the Board of Directors may provide
from time to time, by resolution with appropriate notice to the members of the
Board of Directors.
Section 412. Special Meetings. Unless the Board of Directors shall
----------- ----------------
otherwise direct, special meetings of the Board of Directors may be called by or
at the request of the Chairman of the Board or the President of the Corporation
on appropriate verbal or written notice to each Director, which notice shall, in
any event, be given at least twenty-four (24) hours before time for which
the meeting is scheduled. Special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of a majority
of the Board of Directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or outside
the State of Incorporation, as the place for holding any special meeting of the
Board of Directors called by them. Any business may be transacted at a special
meeting.
Section 413. Notice of Meetings. Unless otherwise required by law or
----------- ------------------
these Bylaws, neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need to be specified in the notice or waiver
of notice of such meeting. Notwithstanding anything herein to the contrary, no
action of the Board of Directors or corporate action taken pursuant thereto
shall be deemed unauthorized solely because the provisions of this Article
concerning notice of directors' meetings have not been complied with, provided
that said Board action is taken in a meeting at which a quorum of directors is
present, and such action is approved or subsequently ratified by a majority of
directors then in office.
Section 414. Quorum. A majority of the directors in office shall be
----------- ------
necessary to constitute a quorum for the transaction of business, except when
otherwise provided by law; but a lesser number may adjourn any meeting, from
time to time, and the meeting may be held, as adjourned, without further notice.
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.
<PAGE>
Section 415. Informal Action by Board of Directors Without Meeting. Any
----------- -----------------------------------------------------
action which may be taken at a meeting of the Board of Directors may be taken
without a meeting and without notice or a waiver of notice, if a consent in
writing, setting forth the action so taken or the action to be taken by the
Corporation, shall be signed by all the directors and shall be filed with the
Secretary of the Corporation.
Section 416. Presence at Meetings. Any one or more directors may
----------- --------------------
participate in a meeting of the Board or a committee of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and any person so
participating shall be deemed present at the meeting for all purposes.
Section 417. Reports and Records. The reports of officers and committees
----------- -------------------
and the records of the proceedings of all committees shall be filed with the
Secretary of the Board and presented to the Board of Directors at its next
regular meeting. The Board of Directors shall keep complete records of its
proceedings in a minute book kept for that purpose. When a director shall
request it, the vote of each director upon a particular question shall be
recorded in the minutes.
Section 418. Committees. The following committees shall be established in
----------- ----------
addition to any other committee the Board may in its discretion establish:
1. Executive Committee
2. Audit Committee
3. Nominating Committee
Section 419. Executive Committee. The Executive Committee shall consist
----------- -------------------
of at least five members of which the majority must be directors. A majority of
the members of the Executive Committee shall constitute a quorum. Meetings of
the Committee may be called at any time by the Chairman or Secretary of the
Committee, and shall be called whenever two or more members of the Committee so
request in writing. The Executive Committee shall have and exercise the
authority of the Board of Directors in the management of the business of the
corporation between the dates of regular meetings of the Board.
Section 420. Audit Committee. The Audit Committee shall consist of at
----------- ---------------
least three directors. Meetings of the Committee may be called at any time by
the Chairman of the Committee, and shall be called whenever two or more members
of the Committee so request in writing. A majority of the members of the
Committee shall constitute a quorum. The Committee shall supervise the audit of
the books and affairs of the Corporation.
Section 421. Nominating Committee. The Nominating Committee shall consist
----------- --------------------
of at least three directors. The Nominating Committee shall make nominations
for directors to be elected by the shareholders of the corporation. Except in
the case of a nominee substituted as a result of the death or other incapacity
of a management nominee, the nominating committee shall deliver to the Board of
Directors a written nomination for each directorship to be filled at each annual
meeting of the Shareholders at least 30 days in advance of the date of that
meeting. No nomination made by the Nominating Committee shall be effective
unless ratified by the Board of Directors. Upon such ratification, the written
nomination shall be deemed the nomination of the Nominating Committee and shall
be delivered to the Secretary of the Corporation.
<PAGE>
Section 422. Appointment of Committee Members. At the first meeting of
----------- --------------------------------
the Board of Directors after the annual meeting of shareholders, the Board of
Directors shall appoint, the members of the Executive Committee, Audit
Committee, and Nominating Committee and any other Committees, to serve until the
next annual meeting of shareholders.
Section 423. Organization and Proceedings. Each committee shall effect
----------- ----------------------------
its own organization by the appointment of a Chairman and such other officers as
it may deem necessary. A record of the proceedings of all committees shall be
kept and filed and presented as provided in Section 417 of these Bylaws.
ARTICLE V. OFFICERS, AGENTS AND EMPLOYEES.
- --------- ------------------------------
Section 501. Executive Officers. The executive officers of the
----------- ------------------
Corporation shall be elected annually by the Board of Directors and shall be a
Chairman of the Board of Directors, a President, a Secretary and a Treasurer.
One or more Vice Presidents, and such other officers and assistant officers also
may be elected or appointed as the Board of Directors may authorize from time to
time. Any two offices, except those of President and Vice President or
President and Secretary, may be filled by the same person. In addition to the
powers and duties prescribed by these Bylaws, the officers and assistant
officers shall have such authority and shall perform such duties as from time to
time shall be prescribed by the Board. The officers and assistant officers of
the corporation shall hold office until their successors are chosen and have
qualified, unless they are sooner removed from office as provided by these
Bylaws. The Board of Directors may add to the title of any officer or assistant
officer a word or words descriptive of his powers or the general character of
his duties. If the office of any officer or assistant officer becomes vacant
for any reason, the vacancy shall be filled by the Board of Directors.
Section 502. Agents or Employees. The Board of Directors may by
----------- -------------------
resolution designate the officer or officers who shall have authority to appoint
such agents or employees as the needs of the corporation may require. In the
absence of such designation this function may be performed by the President and
may be delegated by him to others in whole or in part.
Section 503. Salaries. The salaries of all officers of the corporation
----------- --------
shall be fixed by the Board of Directors or by authority conferred by resolution
of the Board. The Board also may fix the salaries and other compensation of
assistant officers, agents and employees of the corporation, but in the absence
of such action this function shall be performed by the President or by others
under his supervision.
Section 504. Removal of Officers, Agents or Employees. Any officer,
----------- ----------------------------------------
assistant officer, agent or employee of the corporation may be removed or his
authority revoked by resolution of the Board of Directors with or without cause,
but such removal or revocation shall be without prejudice to the rights, if any,
of the person so removed, to receive compensation or other benefits in
accordance with the terms of existing contracts. Any agent or employee of the
corporation likewise may be removed by the President or, subject to his
supervision, by the person having authority with respect to the appointment of
such agent or employee.
<PAGE>
Section 505. Chairman of the Board. The Chairman of the Board shall
----------- ---------------------
prescribe the duties of the other officers and employees and see to the proper
performance thereof. He or she shall preside at all meetings of the Board. The
Chairman of the Board shall be responsible for having all orders and resolutions
of the Board of Directors carried into effect. As authorized by the Board of
Directors, he or she shall execute on behalf of the Corporation and may affix or
cause to be affixed a seal to all instruments requiring such execution, except
to the extent that signing and execution thereof shall have been delegated to
some other officer or agent of the Corporation by the Board of Directors or by
the Chairman of the Board. In the absence of the Chairman of the Board, the
President shall preside at meetings of the Board. In general, the Chairman of
the Board shall perform all the acts and exercise all the authorities and duties
incident to his office or as prescribed by the Board of Directors.
Section 506. President. The President shall perform such duties as are
----------- ---------
incident to this office or prescribed by the Board of Directors or by the
Chairman of the Board. As authorized by the Board of Directors, he or she shall
execute on behalf of the Corporation and may affix or cause to be affixed a seal
to all instruments requiring such execution, except to the extent that signing
and execution thereof shall have been expressly delegated to some other officer
or agent of the Corporation. The President may be a member of the Board of
Directors.
Section 507. Vice President. The Vice Presidents shall perform such
----------- --------------
duties and do such acts as may be prescribed by the Board of Directors, the
Chairman of the Board, or the President. Subject to the provisions of this
Section, the Vice Presidents in order of their seniority, shall perform the
duties and have the powers of the President in the event of his absence or
disability or his refusal to act.
Section 508. Secretary. The Secretary shall act under the direction of
----------- ---------
the President. Unless a designation to the contrary is made at a meeting, the
Secretary shall attend all meetings of the Board of Directors and all meetings
of the shareholders and record all of the proceedings of such meetings in a book
to be kept for that purpose, and shall perform like duties for the standing
committees when required by these Bylaws or otherwise. The Secretary shall give,
or cause to be given, notice of all meetings of the shareholders and of the
Board of Directors, and shall perform such other duties as may be prescribed by
the President or the Board of Directors. The Secretary shall keep in safe
custody the seal of the Corporation, and, when authorized by the Board of
Directors, the Chairman of the Board or the President, cause it to be affixed to
any instruments requiring it.
Section 509. Treasurer; Powers and Duties. The Treasurer shall be the
----------- ----------------------------
chief financial officer and shall cause full and accurate accounts of receipts
and disbursements to be kept in books belonging to the Corporation. He shall
see to the deposit of all moneys and other valuable effects in the name and to
the credit of the corporation in such depository or depositories as may be
designated by the Board of Directors, subject to disbursement or disposition
upon orders signed in such manner as the Board of Directors shall prescribe. He
shall render to the President and to the directors, at the regular meetings of
the Board or whenever the President or the Board may require it, an account of
all his transactions as Treasurer and of the results of operations and financial
condition of the Corporation. If required by the Board, the Treasurer shall
give the corporation a bond in such sum, and with such surety or sureties as may
be satisfactory to the Board for the faithful discharge of the duties of his
office, and for the restoration to the Corporation, in case of his death,
resignation,
<PAGE>
retirement or removal from office, of all books, records, money and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
Section 510. Assistant Officers. Unless otherwise provided by the Board
----------- ------------------
of Directors, each assistant officer shall perform such duties as shall be
prescribed by the Board of Directors, the Chairman of the Board, the President
or the officer to whom he is an assistant. In the event of the absence or
disability of an officer or his refusal to act, his assistant officers shall, in
the order of their seniority, have the powers and authority of such officer.
Section 511. Delegation of Officers' Duties. Any officer may delegate
----------- ------------------------------
duties to his assistant (if any) appointed by the Board; and in case of the
absence of any officer or assistant officer of the Corporation, or for any other
reason that the Board of Directors may deem sufficient, the Board may delegate
or authorize the delegation of his powers or duties, for the time being, to any
person.
ARTICLE VI. INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS.
- ---------- --------------------------------------------------------
Section 601. The Company shall, to the fullest extent now or hereafter
-----------
permitted by Section 14A:3-5 of the New Jersey Business Corporation Act, as
amended from time to time, indemnify any director or officer of the Company.
The Board of Directors, by resolution adopted in each specific instance,
may similarly indemnify any person other than a director or officer of the
Company for liabilities incurred by him in connection with services rendered by
him at the request of the Company or any of its subsidiaries.
The provisions of this section shall be applicable to all actions, suits or
proceedings commenced after its adoption, whether such arise out of acts or
omissions which occurred prior to or subsequent to such adoption and shall
continue as to a person who has ceased to be a director or officer or to render
services at the request of the company and shall inure to the benefit of the
heirs, executors and administrators of such a person. The rights of
indemnification provided for herein shall not be deemed the exclusive rights to
which any director, officer, employee or agent of the company may be entitled.
Section 602. The Corporation may indemnify any person who was or is a
-----------
party, or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgement in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
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) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty to the Corporation unless and only to the extent that the court of
the county in which the registered office of the Corporation is located or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to be indemnified for
such expenses which the court shall deem proper.
<PAGE>
Section 603. The indemnification provided for in the preceding sections
-----------
shall be paid by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or other
agent is proper under the circumstances because he has met the applicable
standard of conduct set forth in each section, this determination to be made by
the Board of Directors by majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or in any other manner
authorized by law which the Board of Directors shall direct; provided, however,
that to the extent that a director, officer, employee or agent has been
successful on the merits or otherwise in defense of any such suit, action or
proceeding, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 604. Expenses incurred in defending a civil or criminal action,
-----------
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 603 of this Article upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall be ultimately determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
Section 605. The indemnification provided by this Article 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 his official capacity and as to
action in another capacity while holding such 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 a
person.
Section 606. The Corporation shall have power to purchase and maintain
-----------
insurance on behalf of any person who is or was a director, officer, employee or
agent of the 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 any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section.
ARTICLE VII. FINANCIAL REPORTS TO SHAREHOLDERS.
- ----------- ---------------------------------
Section 701. No Annual Report Required. Unless required by law, it is
----------- -------------------------
hereby expressly provided that the directors of this Corporation shall not be
required (pursuant to any statutory provision or requirement of law applicable
in the absence of this express provision), to send or cause to be sent to the
shareholders of this Corporation any annual financial report.
Section 702. Option Financial Reports. Nothing in these Bylaws shall be
----------- ------------------------
construed to prohibit the Board of Directors, the President, or other duly
authorized officers from sending financial or other reports to the shareholders
on an annual basis or from time to time, in such form as they may
<PAGE>
deem necessary or advisable in their discretion. Unless required by law, it is
hereby expressly provided that such reports need not be prepared by an
independent public or certified accountant.
ARTICLE VIII. RELATION OF DIRECTORS AND OFFICERS TO CORPORATION.
- ------------ -------------------------------------------------
Section 801. Fiduciary Relationship. Officers and directors of the
----------- ----------------------
Corporation shall stand in and have a fiduciary relation to the Corporation, and
shall discharge the duties of their respective positions in good faith and with
that diligence, care and skill which ordinarily prudent men and women would
exercise under similar circumstances.
ARTICLE IX. CORPORATION RECORDS.
- ---------- -------------------
Section 901. Proceedings of Shareholders and Directors. There shall be
----------- -----------------------------------------
kept at the registered office of the Corporation an original or duplicate record
of the proceedings of the shareholders and of the directors, and the original or
a copy of its Bylaws, including all amendments or alterations thereof to date,
together with other necessary and appropriate corporate records.
Section 902. Shareholders Right to Examine Corporate Records. Every
----------- -----------------------------------------------
shareholder shall, upon written demand in accordance with Section 14A:5-28 of
the New Jersey Business Corporation Act, have a right to examine, in person or
by agent or attorney, during the usual business hours for any proper purpose
reasonably related to such person's interests as a shareholder, the share
register, books or records of account, and records of the proceedings of the
shareholders and Board of Directors, and make copies of extracts therefrom
provided, however, that the Board of Directors shall be entitled to exercise
such specific rights as the Corporation may have under the law to keep
confidential such records which contain business secrets, the disclosure of
which would be injurious to the best interests of the Corporation and its
shareholders. If any attorney or other agent shall be the person who seeks the
right to inspection, the demand shall be accompanied by a power of attorney or
such other writing which authorizes the attorney or other agent to so act on
behalf of the shareholder. The demand shall be directed to the Corporation at
its registered office in the State of New Jersey or at its principal place of
business.
ARTICLE X. SHARES OF CAPITAL STOCK.
- --------- -----------------------
Section 1001. Share Certificates. Every shareholder in the Corporation
------------ ------------------
shall be entitled to receive a certificate representing the shares owned by him.
Said share certificates shall be numbered and registered in the books of the
Corporation, as they are issued.
Section 1002. Contents of Share Certificates. Said share certificates
------------ ------------------------------
shall state: (1) the name of the State of Incorporation; (2) the name of the
registered holder of the shares represented thereby; (3) the number and class
of shares and the designation of the series, if any which the certificate
represents; and (4) the par value of each share represented, or a statement
that the shares are without par value. If the Corporation is authorized to
issue more than one (1) class of stock, then upon the face or back of the
certificate there shall be set forth (or a statement shall appear that the
Corporation will furnish to any shareholder, upon request and without charge) a
full summary statement of the designations, preferences, limitations and
relative rights of the shares of each class authorized to be
<PAGE>
issued and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and
determined, and the authority of the Board of Directors to fix and determine the
relative rights and preferences of subsequent series.
Section 1003. Signatures on Share Certificates. Each such certificate
------------ --------------------------------
shall be signed by the President or Vice President, and by the Secretary or
Treasurer (or Assistant Secretary or Assistant Treasurer), or by such other
officers as may be designated by the Board of Directors, and sealed with the
corporate seal of the Corporation. If a certificate is signed (1) by a transfer
agent or an assistant transfer agent or (2) by a transfer clerk acting on behalf
of the Corporation and a registrar, the signature of any such authorized officer
may be facsimile. In case any officer who has signed, or whose facsimile
signature has been used on, any certificate or certificates shall cease to be
such officer of the Corporation, before such 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 1004. Lost or Destroyed Certificates. Any person claiming a share
------------ ------------------------------
certificate to be lost or destroyed shall make an affidavit or affirmation of
that fact and, in the manner and to the extent required by the Board of
Directors, shall advertise the same, give the Corporation a bond of indemnity
with sufficient surety to protect the Corporation or any person injured by the
issue of a new certificate from any liability or expense which it or they may
incur by reason of the fact that the original certificate remains outstanding,
whereupon a new certificate may be issued of the same tenor and for the same
number of shares as the one alleged to be lost or destroyed, but always to the
approval of the Board of Directors.
Section 1005. Transfer of Shares. All transfers of shares of the
------------ ------------------
Corporation shall be made upon the books of the Corporation upon surrender to
the Corporation or the transfer agent of the Corporation of a certificate or
certificates for shares, duly endorsed by the person named in the certificates
for shares, duly endorsed by the person named in the certificate or by attorney,
lawfully constituted in writing, or accompanied by proper evidence of
succession, assignment or authority to transfer. Thereupon, it shall be the duty
of the Corporation to issue a new certificate to the person entitled thereto,
cancel the old certificates and record the transaction upon its books.
Section 1006. Agreements Restricting Transfer of Shares. The Board of
------------ -----------------------------------------
Directors may authorize the Corporation to become party to agreements with
shareholders and other relating to transfer, repurchase, and issuance, of shares
of stock of the Corporation; provided, however, that such agreement must be
filed with the Corporation and all share certificates affected thereby shall
have clearly imprinted thereon a legend containing such agreement referring
thereto.
Section 1007. Registered Shareholders. The Corporation may treat the
------------ -----------------------
person registered on its books as the holder of any shares as the absolute owner
thereof, and as the one entitled to vote such shares and receive dividends
thereon.
Section 1008. Determination of Shareholders of Record. The Board of
------------ ---------------------------------------
Directors may fix a time not more than sixty (60) days prior to the date of any
meeting of shareholders, or the date fixed for the payment of any dividend or
distribution, or the date for the allotment of rights, or the date
<PAGE>
when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the determination of the shareholders entitled to
notice of, or to vote at, any such meeting, or entitled to receive payment of
any such dividend or distribution, or to receive any such allotment of rights,
or to exercise the rights in respect to any such change, conversion, or exchange
of shares. In such case only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to notice of, or to vote at, such
meeting, or to receive payment of such dividends, or to receive such allotment
or rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of such
period, and in such case written or printed notice thereof shall be mailed at
least ten (10) days before the closing thereof to each shareholder of record at
the address appearing on the records of the Corporation or supplied by him to
the Corporation for the purpose of notice. While the stock transfer books of the
Corporation are closed, no transfer of shares shall be made thereon. Unless a
record date is fixed for the determination of shareholders entitled to receive
notice of, or vote at, a shareholders; meeting, transferees of shares which are
transferred on the books of the Corporation within ten (10) days next preceding
the date of such meeting shall not be entitled to notice of or vote at such
meeting.
Section 1009. Voting Trusts. Unless the laws of the State of
------------ -------------
Incorporation or the Articles of Incorporation of this Corporation shall
otherwise provide, two (2) or more shareholders of this Corporation may, by
agreement in writing, transfer their shares to any corporation or person for the
purpose of vesting in the transferee or transferee all voting or other rights
pertaining to such shares for a period not exceeding ten (10) years, and upon
the terms and conditions stated in the agreement.
Section 1010. Consideration For Capital Stock. The Board of Directors of
------------ -------------------------------
the Corporation shall issue from time to time, the authorized shares of capital
stock of the Corporation for cash, real property, tangible or intangible
personal property, including stock of another corporation or for such property
as in the discretion of the Board of Directors may seem for the best interests
of the Corporation consistent with the Business Corporation Act of New Jersey.
ARTICLE XI. DIVIDENDS AND OTHER DISTRIBUTIONS TO SHAREHOLDERS.
- ---------- -------------------------------------------------
Section 1101. Dividends. Subject to applicable law of the State of
------------ ---------
Incorporation, and in accordance with the provisions thereof at the pertinent
applicable time, the Board of Directors of the Corporation may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
cash or property other than its own shares, except when the Corporation is
insolvent, or when the payment thereof would render the Corporation insolvent,
or when the declaration or payment thereof would be contrary to any restriction
contained in the Articles of Incorporation, but
(1) Dividends may be declared and paid in cash or property
only out of surplus of the Corporation, except as
otherwise provided by law; and
<PAGE>
(2) No dividends shall be paid which would reduce the remaining net assets
of the Corporation below the aggregate preferential amount payable in
the event of voluntary liquidation to the holders of shares having
preferential rights to the assets of the Corporation in the event of
liquidation.
Section 1102. Distribution of Shares of the Corporation. The Board of
------------ -----------------------------------------
Directors of the Corporation may, from time to time, distribute pro rata to
holders of any class or classes of its issued shares, treasury shares and
authorized but unissued shares, but
(1) If distribution is made, in the Corporation's authorized but unissued
shares having a par value, there shall be transferred to stated
capital at the time of such distribution an amount of surplus at
least equal to the aggregate par value of the shares so issued;
(2) If distribution is made, in the Corporation's authorized
but unissued shares without par value, the amount of stated
capital to be represented by each share shall be fixed by
resolution of the Board of Directors adopted at the time such
dividend is delivered;
(3) The amount per share so transferred to stated capital, or
the fact that there was no such transfer, shall be disclosed to the
shareholders receiving such distribution concurrently with the
distribution thereof.
(4) No distribution of shares of any class shall be made to
holders of shares of any other class unless the Articles so provide
or such distribution is authorized by the affirmative vote or
written consent of the holders of a majority of the outstanding
shares of the class in which the distribution is to be made.
In lieu of issuing fractional shares in any such distribution, the
Corporation may pay in cash the fair value thereof, as determined by the Board
of Directors, to shareholders entitled thereto.
Section 1103. Reserves. There may be set aside out of any funds of the
------------ --------
Corporation available for dividends such sum or sums as the directors, from time
to time, in their absolute discretion determine as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for the purchase of additional property, or for
such other purpose as the Board of Directors shall think conducive to the
interests of the Corporation. The Board of Directors may abolish or modify any
such reserve.
Section 1104. Distributions in Partial Liquidation. The Board of
------------ ------------------------------------
Directors of the Corporation may, from time to time, distribute to the
shareholders in partial liquidation, out of unrestricted capital surplus of the
Corporation, a portion of its assets in cash or property, subject to the
following conditions:
(1) No such distribution shall be made at a time when the
Corporation is insolvent or when such distribution would render the
Corporation insolvent.
<PAGE>
(2) No such distribution shall be made unless such distribution shall have
been authorized by the prior affirmative vote, obtained within one
(1) year of such distribution, of the holders of at least a
majority of the outstanding shares of each class, whether or not
entitled to vote thereon by the provisions of the Articles of
Incorporation or these Bylaws;
(3) No such distribution shall be made to the holders of any class of
shares unless all cumulative dividends accrued on all classes of
shares entitled to preferential dividends, prior to dividends on
the shares to the holders of which such distribution is to be made,
shall have been fully paid;
(4) No such distribution shall be made to the holders of any class of
shares which would reduce the remaining net assets of the
Corporation below the aggregate preferential amount payable in
event of voluntary liquidation to the holders of shares having
preferential rights to the assets of the Corporation in the event
of liquidation;
(5) Each such distribution, when made, shall be identified as a
distribution in partial liquidation and the amount per share
disclosed to the shareholders receiving the same concurrently with
the distribution thereof.
ARTICLE XII. MISCELLANEOUS.
- ----------- -------------
Section 1201. Fiscal Year. The fiscal year of the Corporation shall begin
------------ -----------
on the 1st day of January in each year and end on the 31st day of December in
each year.
Section 1202. Signing Checks. All checks or demands for money and notes
------------ --------------
of the Corporation shall be signed by such officer, officers, or other person or
persons as the Board of Directors may from time to time designate.
Section 1203. Designation of Presiding and Recording Officers. The
------------ -----------------------------------------------
Chairman of the Board of Directors shall preside at any meeting of directors or
shareholders, as the case may be, and shall have the right to designate any
person, whether or not an officer, director of shareholder to record the
proceedings of, such meeting.
Section 1204. Written Notice of Meetings. Whenever written notice is
------------ --------------------------
required to be given to any person pursuant to law, the Articles of
Incorporation or these Bylaws, it may be given to such person, either personally
or by sending a copy thereof through the mail, or by telegram, charges prepaid,
to his address appearing on the books of the Corporation, or to his business or
other address supplied by him to the Corporation for the purpose of notice. If
the notice is sent by mail or by telegraph, it shall be deemed to have been
given to the person entitled thereto when deposited in the United States mail or
with a telegraph office for transmission to such person. Such notice shall
specify the place, day and hour of the meeting and, in case of a special meeting
of the shareholders, the general nature of the business to be transacted.
<PAGE>
Section 1205. Waiver of Notice. Whenever any written notice is required
------------ ----------------
to be given pursuant to law, by the Articles of Incorporation or these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Except in the case of a special meeting
of shareholders, neither the business to be transacted at, nor the purpose of,
the meeting need be specified in the waiver of notice of such meeting.
Attendance of a person, either in person or by proxy, at any meeting, shall
constitute a waiver of notice of such meeting, except where a person attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened.
Section 1206. Text of Proposed Resolution in Written Notice. Whenever the
------------ ---------------------------------------------
language of a proposed resolution is included in a written notice to
shareholders, the shareholders' meeting considering the resolution may adopt it,
with such clarifying or other amendments as do not enlarge its original purpose,
without further notice to shareholders not present in person or by proxy.
Section 1207. Interpretation of Bylaws. All words, terms and provisions
------------ ------------------------
of these Bylaws shall be defined by and in accordance with the New Jersey
Business Corporation Act as that Act and these Bylaws are interpreted by the
Corporation's counsel.
Section 1208. Absentee Participation in Meetings. One or more directors
------------ ----------------------------------
may participate in a meeting of the Board of Directors, or of a commit of the
Board, by means of a conference telephone or similar communications equipment,
by means of which all persons participating in the meeting can hear each other.
Section 1209. Severability. If any provision of these Bylaws becomes
------------ ------------
illegal or unenforceable as such, such illegality or unenforceability shall not
affect any other provision of these Bylaws and such other provisions shall
continue in full force and effect.
ARTICLE XIII. AMENDMENTS.
- ------------ ----------
Section 1301. Amendment by Shareholders. These Bylaws may be altered,
------------ -------------------------
amended or repealed by a majority vote of all of the shares of stock of the
Corporation issued and outstanding and entitled to vote at any annual or special
meetings of the shareholders duly convened after appropriate notice to the
shareholders of such proposed alteration, amendment or repeal.
Section 1302. Amendment by the Board of Directors. These Bylaws may be
------------ -----------------------------------
altered, amended or repealed by the affirmative vote of a majority of the Board
of Directors at any regular or special meeting of the Board duly convened after
appropriate notice to the directors of such proposed alteration, amendment or
repeal.
Section 1303. Recording Amendments and Alterations. The text of all
------------ ------------------------------------
amendments and alterations to these Bylaws shall be attached to the Bylaws with
a notation of the date of each such amendment or alteration and a notation of
whether such amendment or alteration was adopted by the shareholders or the
Board of Directors.
<PAGE>
ARTICLE XIV. ADOPTION OF BYLAWS RECORD OR AMENDMENT.
- ----------- --------------------------------------
Section 1401. These Bylaws have been adopted and filed with the
------------
undersigned on the day of , 19 , and shall be effective as of this date.
______________________________
Section 1402. Amendments to Bylaws.
------------ --------------------
<TABLE>
<CAPTION>
Section Amended Date Amended Adopted By
- --------------- ------------ ----------
<S> <C> <C>
Art. III, Section 302 2-21-85 Board of Directors
Art. VI, Section 601 8-26-86 Board of Directors
Art. IV, Section 418 2-13-92 Board of Directors
Art. IV, Section 421 2-13-92 Board of Directors
Art. IV, Section 422 2-13-92 Board of Directors
Art. IV, Section 402 2-13-92 Board of Directors
Art. III, Section 302 2-27-92 Board of Directors
Art. IV, Section 410 10-22-94 Board of Directors
</TABLE>
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<PAGE>
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