<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
--------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission File Number 0-13716
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NORTH PITTSBURGH SYSTEMS, INC.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1485389
-------------------------------- ------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4008 Gibsonia Road, Gibsonia, Pennsylvania 15044-9311
-------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
412 443-9600
--------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-------- ----------
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock Outstanding
------------------------
At August 1, 1996, the Registrant had 15,040,000 shares of common stock
outstanding, par value $.15625 per share, the only class of such stock issued.
See Part II, "Other Information", Item 4, for details of a recent two-for-one
stock split.
<PAGE>
PART I
ITEM 1
FINANCIAL STATEMENTS
NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(Thousands - Except Per Share Amounts)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30 Ended June 30
---------------------- -------------------
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues:
Local network services $ 2,062 $ 1,928 $ 4,176 $ 3,667
Long distance and access services 10,308 9,834 20,774 19,159
Directory advertising, billing & other services 538 525 1,086 1,055
Telecommunication equipment sales 723 467 1,443 958
Other operating revenues 1,079 317 2,095 707
------- ------- ------- -------
Total Operating Revenues 14,710 13,071 29,574 25,546
------- ------- ------- -------
Operating expenses:
Depreciation and amortization 2,340 1,918 4,647 3,771
Network and other operating expenses 6,559 5,245 12,525 10,259
State and local taxes 620 544 1,284 1,137
Telecommunication equipment expenses 623 432 1,294 874
------- ------- ------- -------
Total Operating Expenses 10,142 8,139 19,750 16,041
------- ------- ------- -------
Net Operating Revenues 4,568 4,932 9,824 9,505
------- ------- ------- -------
Other expense (income), net:
Interest expense 385 397 780 801
Interest income (198) (210) (395) (575)
Sundry expense (income), net 97 14 88 78
------- ------- ------- -------
284 201 473 304
------- ------- ------- -------
Earnings before income taxes 4,284 4,731 9,351 9,201
------- ------- ------- -------
Income taxes:
Current 1,664 1,906 3,675 3,691
Deferred - - - -
------- ------- ------- -------
1,664 1,906 3,675 3,691
------- ------- ------- -------
Net earnings $ 2,620 $ 2,825 $ 5,676 $ 5,510
======= ======= ======= =======
Average common shares outstanding 15,040 15,040* 15,040 15,040*
======= ======= ======= =======
Earnings per share of common stock $.17 $.19* $.38 $.37*
======= ======= ======= =======
Dividends per share of common stock $.13 $.12* $.26 $.24*
======= ======= ======= =======
</TABLE>
*Adjusted for a two-for-one stock split effective May 22, 1996.
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Thousands of Dollars)
<TABLE>
<CAPTION>
ASSETS June 30 Dec. 31
1996 1995
-------- --------
<S> <C> <C>
Current Assets:
Cash and temporary investments $ 9,786 $ 9,359
Marketable securities available for sale 807 1,593
Marketable securities held to maturity 4,414 6,569
Accounts receivable:
Customers 3,696 3,725
Access service settlements and other 6,173 5,120
Inventories of construction and operating materials and
supplies 2,353 2,381
Prepaid taxes 482 -
-------- --------
Total current assets 27,711 28,747
-------- --------
Property, plant and equipment:
Telephone plant in service:
Land 461 461
Buildings 8,943 8,943
Equipment 100,451 97,334
Miscellaneous physical property 59 48
-------- --------
109,914 106,786
Less accumulated depreciation and amortization 56,633 52,675
-------- --------
53,281 54,111
Construction in progress 7,273 4,505
-------- --------
Total property, plant and equipment, net 60,554 58,616
Investments 4,015 3,876
Deferred financing costs 1,107 1,159
Prepaid pension cost 1,076 689
Other assets 1,460 3,069
-------- --------
$ 95,923 $ 96,156
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 733 $ 702
Accounts payable 5,000 6,337
Accrued interest 117 123
Dividend payable 1,955 1,805
Taxes other than income taxes 521 610
Accrued vacation 673 673
Other liabilities 352 404
Federal and state income taxes 18 291
-------- --------
Total current liabilities 9,369 10,945
-------- --------
Long-term debt 21,317 21,694
Unamortized investment tax credits 419 470
Deferred income taxes 5,597 5,670
Postretirement benefits 4,369 4,250
Other liabilities 1,665 1,600
Shareholders' equity:
Capital stock/Common stock 2,350 2,350
Capital in excess of par value 2,215 2,215
Retained earnings 48,579 46,814
Unrealized gain (loss) on available for sale securities, net 43 148
-------- --------
Total shareholders' equity 53,187 51,527
-------- --------
$ 95,923 $ 96,156
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)
<TABLE>
<CAPTION>
For the Six
Months
Ended June 30
------------------
1996 1995
------- -------
<S> <C> <C>
Cash from operating activities:
Net earnings $ 5,676 $ 5,510
Adjustments to reconcile net earnings to net cash from
operating activities:
Depreciation and amortization 4,654 3,773
Equity (income) losses of affiliated companies 75 25
Provision for postretirement benefits other than pensions 119 104
Investment tax credit amortization (51) (76)
Deferred income taxes - -
Changes in assets and liabilities:
Accounts receivable (1,024) (645)
Inventories of construction and operating materials &
supplies 27 8
Prepaid federal and state taxes (482) (454)
Accounts payable (1,337) 1,231
Taxes other than income taxes (89) (304)
Other liabilities and accrued interest 7 (9)
Federal and state income taxes (273) 425
Deferred financing costs, prepaid pension costs
and other assets 1,273 (551)
Other, net (87) 26
------- -------
Total adjustments 2,812 3,553
------- -------
Net cash from operating activities 8,488 9,063
------- -------
Cash used for investing activities:
Expenditures for property and equipment (6,693) (9,236)
Net salvage on retirements 92 38
------- -------
Net capital additions (6,601) (9,198)
------- -------
Purchase of marketable securities held to maturity (102) (3,821)
Proceeds from redemption of marketable securites held to maturity 2,211 2,967
Purchase of marketable securities available for sale (143) (352)
Proceeds from sale of marketable securities available for sale 894 1,163
Investments in affiliated entities (214) (40)
------- -------
Net cash used for investing activities (3,955) (9,281)
------- -------
Cash used for financing activities:
Cash dividends (3,760) (3,459)
Retirement of debt (346) (327)
------- -------
Net cash used for financing activities (4,106) (3,786)
------- -------
Net (decrease) increase in cash and temporary investments 427 (4,004)
Cash and temporary investments at beginning of period 9,359 14,779
------- -------
Cash and temporary investments at end of period $ 9,786 $10,775
======= =======
Interest paid $ 734 $ 753
======= =======
Income taxes paid $ 4,103 $ 3,841
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL
-------
The condensed consolidated financial statements included herein have
been prepared by the Registrant, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Consolidated
herein are the financial results of the Registrant's wholly-owned
subsidiaries, North Pittsburgh Telephone Company (North Pittsburgh),
Penn Telecom, Inc., Pinnatech, Inc. (Pinnatech) and Management
Consulting Solutions, Inc. (MCSI). Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
Nevertheless, the Registrant believes that its disclosures herein are
adequate to make the information presented not misleading and, in the
opinion of management, all adjustments (which consisted only of normal
recurring accruals) necessary to present fairly the results of
operations for the interim periods have been reflected. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Registrant's latest annual report to the Securities and
Exchange Commission on Form 10-K.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Financial Condition
-------------------
(a) General
-------
There were no material changes in the Registrant's consolidated general
financial condition from the end of its preceding fiscal year on
December 31, 1995 to June 30, 1996, the end of the six-month period
reported herein.
(b) Liquidity and Capital Resources
-------------------------------
Consolidated capital expenditure commitments for the purchase and
installation of communications and other equipment at June 30, 1996
amounted to approximately $3,760,046 with such amount being part of the
1996 Construction Program. Funds for financing construction
expenditures in the six-month period ended June 30, 1996 were generated
from internal sources. Based on its 1996 construction budget and its
preliminary budget for 1997 and cash flows, North Pittsburgh
anticipates financing most, if not all, of its telephone plant
construction from cash reserves and internally generated funds during
this period. In the future, a portion of the funds used for
construction is expected to be obtained from additional debt financing.
At June 30, 1996, construction work in progress is $7,272,708. An
additional $8,681,375 will be expended to complete these projects.
The Registrant and its subsidiaries have not experienced any difficulty
in the past meeting either long-term or short-term cash commitments.
Cash flow generated through regular operations has been adequate to not
only finance a significant portion of the capital requirements of the
Registrant as discussed in the previous paragraph but also to meet
principal and interest payments on long-term debt and all working
capital requirements. It is anticipated that future long-term interest
and principal payments will be made from the same source of internally
generated funds.
4
<PAGE>
(c) Regulatory/Competition
----------------------
The Federal Communications Commission (FCC) is presently working on
Rulemakings that spell out the specifics of the Telecommunications Act
of 1996 (1996 Act) and the Pennsylvania Public Utility Commission (PA
PUC) must choose a course of action to implement the 1996 Act as
enacted, or to the extent possible and permissible, change the manner
in which such regulations are implemented in Pennsylvania before the
impact on North Pittsburgh, a Rural Telephone Company under the 1996
Act, can be fully understood and measured. However, the clear intent of
the 1996 Act is to open up the local exchange market to competition.
This appears to mandate, among other items, that North Pittsburgh, at
some point in time, permit the resale of its service at wholesale
rates, provide number portability if feasible, provide dialing parity,
provide interconnection to any requesting carrier for the transmission
and routing of telephone exchange service and exchange access and
provide access to network elements.
The 1996 Act, regulatory proceedings in Pennsylvania, and the thrust
towards a fully competitive marketplace have created some uncertainty
in respect to the levels of North Pittsburgh's revenue growth in the
future. However, its unique location in a growing
commercial/residential suburban traffic corridor to the north of the
City of Pittsburgh, its state-of-the-art switching transmission and
transport facilities and its extensive fiber network place North
Pittsburgh in a solid position to meet competition and minimize any
loss of revenues. In addition, North Pittsburgh continues to make its
network flexible and responsive to the needs of its customers to meet
competitive threats. New services, access line growth and anticipated
usage growth will lessen or offset any reductions in North Pittsburgh's
revenue sources.
2. Results of Operations
---------------------
Total operating revenues increased $4,028,000 (15.8%) in the six-month
period ended June 30, 1996 over the comparable period in 1995. This
change was due to increases in long distance and access services of
$1,615,000 (8.4%), local network services of $509,000 (13.9%),
telecommunication equipment sales of $485,000 (50.6%) and other
operating revenues of $1,388,000 (196.3%). Higher long distance and
access service revenues were generally the result of an increase in the
number of customers and in minutes of use. Increased local network
service revenues were attributable to customer growth. The increase in
telecommunication equipment sales reflects an increase in the number of
systems sold in 1996 as compared to 1995. The increase in other
operating revenues is the direct result of start-up business activities
of Pinnatech and MCSI.
Total operating expenses for the six-month period ended June 30, 1996,
increased $3,709,000 (23.1%) over the preceding year. That change is
principally the result of an increase in network and other operating
expenses of $2,266,000 (22.1%), an increase in depreciation and
amortization of $876,000 (23.2%), and an increase in telecommunication
equipment expenses of $420,000 (48.1%). Approximately 79% of the
increase in network and other operating expenses is the direct result
of start-up activities of Pinnatech and MCSI. The increase in
depreciation and amortization is due to a change in the lives of
equipment and asset growth. The increase in telecommunication equipment
expenses is related to the increase in equipment sales discussed above.
The increase in total operating revenues discussed above coupled with
the increase in total operating expenses resulted in a 3.4% increase in
net operating revenues in 1996 as compared to the same period in 1995.
Interest income decreased $180,000 primarily due to decreased interest
rates available on marketable securities, as well as decreased levels
of investment in such instruments.
The increase in net operating revenues for the six-month period ended
June 30, 1996, in conjunction with the increase in other expense
(income), net, resulted in an increase of $150,000 (1.6%) in earnings
before income taxes.
5
<PAGE>
Fluctuations in the revenues and expenses for the three-month period
ended June 30, 1996, as compared to the same quarterly period in 1995
are generally attributable to the same reasons above in the year-to-
date comparisons. However, net income decreased $205,000 (7.3%)
primarily due to increased net losses for start-up subsidiaries in the
three-month period ended June 30, 1996 versus the comparable period in
1995. Short-term net losses for the two start-up subsidiaries are
anticipated through the end of 1996.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------
(a) The 1996 Annual Meeting of Shareholders was held on May
17, 1996.
(c) The first matter voted upon at the Annual Meeting was the
election of Directors. The vote tabulation in respect to
the Directors elected at such meeting to serve until the
1997 Annual Meeting of Shareholders and until their
successors are elected is shown in the following table:
<TABLE>
<CAPTION>
Number of Number of
Shares Shares
Name Voted in Favor Withheld
-----------------------------------------------------------------
<S> <C> <C>
Harry R. Brown 6,895,863 67,107
Dr. Charles E. Cole 6,919,009 43,961
Gerald A. Gorman 6,933,633 29,337
Richard R. Kauffman 6,897,539 65,431
Frank D. Reese 6,928,331 34,639
Jay L. Sedwick 6,930,195 32,775
Charles E. Thomas, Sr. 6,930,911 32,059
Charles E. Thomas, Jr. 6,938,633 24,307
Barton B. Williams 6,938,140 24,830
</TABLE>
The second matter voted upon at the Annual Meeting was on the amendment
to the Company's Articles of Incorporation to increase the total
authorized Capital Stock from 10,000,000 to 50,000,000 shares and
effect a two-for-one stock split-up. The vote tabulation is shown in
the following table:
<TABLE>
<CAPTION>
Number of Votes
---------------
<S> <C>
In Favor of the Resolutions 6,793,451
Against the Resolutions 52,773
Abstain from Voting on the Resolutions 91,225
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
------ --------------------------------
(a) Exhibits-Exhibit Index for Quarterly Reports on Form 10-Q.
--------
<TABLE>
<CAPTION>
Exhibit
Number Subject Applicability
----------- --------------------- ---------------------
<S> <C> <C>
(2) Plan of acquisition, reorganization, Not Applicable
arrangement, liquidation or
succession
(3) (i) Articles of Attached Hereto
Incorporation
(3) (ii) By-Laws Attached Hereto
(4) Instruments defining the rights of Provided in Registration of
security holders including indentures Securities of Certain
Successor Issuers on Form 8-B
filed on June 25, 1985 and
Incorporated Herein by
Reference.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
(10) Material Contracts Not Applicable
(11) Statement re computation of per Attached Hereto
share earnings
(15) Letter re unaudited interim financial Not Applicable
information
(18) Letter re change in accounting Not Applicable
principles
(19) Report furnished to security holders Not Applicable
(22) Published report regarding matters Not Applicable
submitted to a vote of security holders
(23) Consents of experts and counsel Not Applicable
(24) Power of attorney Not Applicable
(27) Financial Data Schedule Attached Hereto
(99) Additional exhibits Not Applicable
</TABLE>
(b) Reports on Form 8-K - No reports on Form 8-K were filed
-------------------
during the quarter ended June 30, 1996.
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.
NORTH PITTSBURGH SYSTEMS, INC.
------------------------------
(Registrant)
Date August 7, 1996 /s/ G. A. Gorman
------------------- -------------------------------------
G. A. Gorman, President
Date August 7, 1996 /s/ A. P. Kimble
------------------- -------------------------------------
A. P. Kimble, Vice President,
Secretary & Treasurer
7
<PAGE>
PAGE 1 OF 16
EXHIBIT 3(i)
<TABLE>
<S> <C> <C>
84641648
APPLICANT'S ACC'T NO. 841529 Filed this 17th day of
----------------------- October, 1984
DSCB:BCL--204 (REV. 8-72) (Line for numbering) Commonwealth of Pennsylvania
Department of State
FILING FEE: $75
AIB-7 /s/ William R. Davis
Articles of COMMONWEALTH OF PENNSYLVANIA Secretary of the Commowealth
Incorporation-- DEPARTMENT OF STATE
Domestic Business Corporation CORPORATION BUREAU
- ------------------------------------------------------------------------------------------------------
(Box for Certification)
</TABLE>
In compliance with the requirements of section 204 of the Business Corporation
Law, act of May 5, 1933 (P. L. 364) (15 P. S. (S)1204) the undersigned, desiring
to be incorporated as a business corporation, hereby certifies (certify) that:
1. The name of the corporation is:
North Pittsburgh Systems, Inc.
- --------------------------------------------------------------------------------
2. The location and post office address of the initial registered office of the
corporation in this Commonwealth is:
4008 Gibsonia Road
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Gibsonia Pennsylvania 15044 (02)
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The corporation is incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania for the following purpose or purposes:
To own telecommunication systems and provide other services and equipment
which are related to telecommunication services or which can be provided
in conjunction with telecommunication activities.
To acquire, purchase, sell, trade, hypothecate, pledge, deal in and hold
its own securities and securities of other corporations and to deal in
real and personal property or any interest therein;
The Corporation which is incorporated under the provisions of the Business
Corporation Law shall have unlimited power to engage in and to do any
lawful act concerning any and all lawful business for which corporations
may be incorporated under the provisions of the Business Corporation Law.
4. The term for which the corporation is to exist is: Perpetually
-------------------------
5. The aggregate number of shares which the corporation shall have authority to
issue is:
1,000,000 shares of Common Stock, par value $3.125 per share 3,125,000.
<PAGE>
PAGE 2 OF 16
84641649
DSCB:BCL--204 (Rev. 8-72)-2
6. The name(s) and post office address(es) of each incorporator(s) and the
number and class of shares subscribed by such incorporator(s) is (are):
<TABLE>
<CAPTION>
NAME ADDRESS NUMBER AND CLASS OF SHARES
(including street and number if any)
<S> <C> <C>
Frank D. Reese 4008 Gibsonia Road, Gibsonia, PA 15044 1 share Common
- ------------------------------------------------------------------------------------------------
Gerald A. Gorman 4008 Gibsonia Road, Gibsonia, PA 15044 1 share Common
- ------------------------------------------------------------------------------------------------
Allen P. Kimble 4008 Gibsonia Road, Gibsonia, PA 15044 1 share Common
- ------------------------------------------------------------------------------------------------
</TABLE>
7. The Board of Directors, by a majority vote of its members, shall have the
power to make, alter, amend, and repeal the by-laws of the corporation not
inconsistent with its Articles or with law, subject always to the power of
the shareholders to change such action.
8. No holder of any Common Stock of the Corporation shall be entitled of right
to subscribe for, purchase, or receive any proportionate share of any Common
Stock to be issued and the Board of Directors may dispose of all or any
portion of such stock if and when it may determine, whether by offering the
same to stockholders or by sale or other disposition as the Board may deem
advisable.
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed and sealed these
Articles of Incorporation this 16th day of October, 1984.
/s/ Frank D. Reese (SEAL) /s/ Gerald A. Gorman (SEAL)
- -------------------------- ---------------------------------
/s/ Allen P. Kimble (SEAL)
---------------------------------
INSTRUCTIONS FOR COMPLETION OF FORM:
A. For general instructions relating to the incorporation of business
corporations see 19 Pa. Code Ch. 35 (relating to business corporations
generally). These instructions relate to such matters as corporate name,
stated purposes, term of existence, authorized share structure and related
authority of the board of directors, inclusion of names of first directors
in the Articles of Incorporation, optional provisions on cumulative voting
for election of directors, etc.
B. One or more corporations or natural persons of full age may incorporate a
business corporation.
C. Optional provisions required or authorized by law may be added as
Paragraphs 7, 8, 9...etc.
D. The following shall accompany this form:
(1) Three copies of Form DSCB:BCL--206 (Registry Statement Domestic or
Foreign Business Corporation).
(2) Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of
Name) or Form DSCB:17.3 (Consent to Use of Similar Name).
(3) Any necessary governmental approvals.
E. BCL (S)205 (15 Pa. S. (S)1205) requires that the incorporators shall
advertise their intention to file or the corporation shall advertise the
filing of articles of incorporation. Proofs of publication of such
advertising should not be delivered to the Department, but should be filed
with the minutes of the corporation.
DEP'T OF STATE
OCT 17 4:00 PM '84
<PAGE>
PAGE 3 OF 16
<TABLE>
<S> <C> <C>
APPLICANT'S ACC'T NO._______ 86722018 Filed this 9th day of
----------------------- December, A.D. 1986
DSCB:BCL-806 (REV. 8-72) 841529 Commonwealth of Pennsylvania
Department of State
FILING FEE: $40
AB-2 /s/ Robert A. Gleason, Jr.
Articles of COMMONWEALTH OF PENNSYLVANIA Secretary of the Commowealth
Amendment-- DEPARTMENT OF STATE
Domestic Business Corporation CORPORATION BUREAU
- ------------------------------------------------------------------------------------------------------
DEC 09 1986
</TABLE>
In compliance with the requirements of section 806 of the Business
Corporation Law, act of May 5, 1933 (P. L. 364) (15 P. S. (S)1806), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is:
North Pittsburgh Systems, Inc.
- -------------------------------------------------------------------------------
2. The location of its registered office in this Commonwealth is (the Department
of State is hereby authorized to correct the following statement to conform
to the records of the Department):
4008 Gibsonia Road
- -------------------------------------------------------------------------------
(NUMBER) (STREET)
Gibsonia Pennsylvania 15044
- -------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The statute by or under which it was incorporated is:
Business Corporation Law, Act of May 5, 1933 (P.L. 364) as amended
- -------------------------------------------------------------------------------
4. The date of its incorporation is: October 17,1984
-------------------------------------------
5. (Check, and if appropriate, complete one of the following):
[X] The meeting of the shareholders of the corporation at which the amendment
was adopted was held at the time and place and pursuant to the kind and period
of notice herein stated:
Time: The 5th day of December , 1986.
------------- ------------------------- --
Place: 4008 Gibsonia Road, Gibsonia, Pennsylvania
----------------------------------------------------------------------
Kind and period of notice Written notice more than ten days before the
---------------------------------------------
meeting, to each shareholder entitled to vote thereon setting forth the proposed
- --------------------------------------------------------------------------------
amendments in full.
- -------------------
[ ] The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote thereon and
filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
752,000
- -------------------------------------------------------------------------------
(b) The number of shares entitled to vote was:
752,000
- -------------------------------------------------------------------------------
<PAGE>
PAGE 4 OF 16
86722019
DSCB:BCL--806 (Rev. 8-72)-2
7. In the action taken by the shareholders: See attachment
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. The amendment adopted by the shareholders, set forth in full, is as follows:
See Attachment
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of
Amendment to be signed by a duly authorized officer and its corporate seal, duly
attested by another such officer, to be hereunto affixed this 5th day of
-------
December , 1986.
- --------- --
North Pittsburgh Systems, Inc.
----------------------------------------
(NAME OF CORPORATION)
Attest: By /s/ F. D. Reese
----------------------------------------
/s/ G. A. Gorman (SIGNATURE)
- ----------------------------------
(SIGNATURE) President
----------------------------------------
(TITLE: PRESIDENT, VICE PRESIDENT, ETC.)
Secretary
- ----------------------------------
(TITLE: SECRETARY, ASSISTANT
SECRETARY, ETC.)
(CORPORATE SEAL)
INSTRUCTIONS FOR COMPLETION OF FORM:
A. Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of Name)
or Form DSCB:17.3 (Consent to Use of Similar Name) shall accompany Articles
of Amendment effecting a change of name.
B. Any necessary governmental approvals shall accompany this form.
C. Where action is taken by partial written consent pursuant to the Articles,
the second alternate of Paragraph 5 should be modified accordingly.
D. If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other
classes entitled to vote should be set forth in Paragraph 6(b).
E. If the shares of any class were entitled to vote as a class, the number of
shares of such class and the number of shares of all other classes voted
for and against such amendment respectively should be set forth in
Paragraphs 7(a) and 7(b).
F. BCL (S)807 (15 P. S. (S)1807) requires that the corporation shall advertise
its intention to file or the filing of Articles of Amendment. Proofs of
publication of such advertising should not be delivered to the Department,
but should be filed with the minutes of the corporation.
DEP'T OF STATE
DEC 9 2:41 PM '86
<PAGE>
PAGE 5 OF 16
86722020
North Pittsburgh Systems, Inc.
Articles of Amendment
Attachment in Response to
Paragraph No. 7
Separate votes were taken on Amendments to the Articles of Incorporation
relating to Articles 5, 9 and 10. The following is the vote as to each
amendment.
(a) The number of shares voted in favor of the amendment to Article 5
was: 675,510.
(b) The number of shares voted against the amendment to
Article 5 was: 8,596.
(c) The number of shares voted in favor of the amendment adding Article 9
was: 597,449.
(d) The number of shares voted against the amendment adding
Article 9 was: 83,313.
(e) The number of shares voted in favor of the amendment adding Article
10 was: 601,121.
(f) The number of shares voted against the amendment adding Article 10
was: 77,955.
DEP'T OF STATE
DEC 9 2:41 PM '86
<PAGE>
PAGE 6 OF 16
86722021
North Pittsburgh Systems, Inc.
Articles of Amendment
Attachment in Response to
Paragraph No. 8
Article 5 of the Company's Articles of Incorporation is restated and
amended to read in its entirety as follows:
"5. The aggregate number of shares which the corporation shall be authorized
to issue is: 10,000,000 shares of Common Stock, par value $.625 per share,
aggregate par value $6,250,000."
A new Article, Article 9 is added to the Articles of Incorporation of
the Company to read in its entirely as follows:
"9. The holders of shares of stock entitled to vote in the election of
Directors of the corporation shall not be entitled to cumulate votes for
the purpose of such election."
A new Article, Article 10 is added to the Articles of Incorporation of
the Company to read in its entirely as follows:
"10. In addition to any affirmative vote required by law or these Articles,
the affirmative vote of the holders of a majority of the outstanding shares of
"Voting Stock" (as hereinafter defined) held by shareholders other than "Related
Persons" (as hereinafter defined) shall be required for the approval or
DEP'T OF STATE
DEC 9 2:41 PM '86
<PAGE>
PAGE 7 OF 16
86722022
authorization of any "Business Combination" (as hereinafter defined) or of any
series of transactions which, if taken together, would constitute a Business
Combination of the corporation or any subsidiary with any Related Person;
provided, however, that a majority vote of shareholders other than Related
Persons shall not be required if:
(1) The "Continuing Directors" of the corporation (as hereinafter defined)
by a majority vote (a) have expressly approved in advance the acquisition of
Voting Stock of the corporation that caused the Related Person to become a
Related Person, or (b) have approved the Business Combination; or
(2) The Business Combination is a merger or consolidation and the cash
or fair market value of the property, securities or other consideration to be
received per share by holders of Common Stock of the corporation in the Business
Combination is not less than the highest per share price (with appropriate
adjustments for recapitalizations and for stock splits, stock dividends and like
distributions) paid by the Related Person in acquiring any of its holdings of
the corporations's Common Stock either in or subsequent to the transaction or
series of transactions in which the Related Person became a Related Person.
Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that a lesser percentage may be specified, by law or in
any applicable agreement with any national securities exchange or otherwise.
<PAGE>
PAGE 8 OF 16
86722023
For the purpose of this Article 10:
(a) The term "Business Combination" shall mean (i) any merger or
consolidation of the corporation or a subsidiary with or into a Related Person,
(ii) any sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all or any "Substantial
Part" (as hereinafter defined) of the assets either of the corporation
(including without limitation any voting securities of a subsidiary) or of a
subsidiary, to a Related Person, (iii) any merger or consolidation of a Related
Person with or into the corporation or a subsidiary of the corporation, (iv) any
sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or other security device, of all or any Substantial Part
of the assets of a Related Person to the corporation or a subsidiary of the
corporation, (v) the issuance or transfer of any securities of the corporation
or a subsidiary of the corporation to a Related Person other than the issuance
on a pro rata basis to all holders of shares of the same class pursuant to a
stock split or stock dividend, or a distribution of warrants or rights, (vi) any
reclassification of securities (including a reverse stock split) or
recapitalization that would have the effect of increasing the voting power of a
Related Person, (vii) the adoption of any plan or proposal for the liquidation
or dissolution of the corporation proposed by or on behalf of any Related
Person, and (viii) any agreement, contract or other arrangement providing for
any of the transactions described in this definition of Business Combination.
<PAGE>
PAGE 9 OF 16
86722024
(b) The term "Related Person" shall mean and include any individual,
corporation, partnership or other person or entity, other than any trustee or
fiduciary when acting in such capacity with respect to any employee benefit plan
or trust of the corporation or any of its wholly-owned subsidiaries, which,
together with its "Affiliates" and "Associates" (as defined on March 27, 1985 in
Rule 12b-2 under the Securities Exchange Act of 1934), "Beneficially Owns" (as
defined on March 27, 1985 in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934) in the aggregate 10 percent or more of the outstanding Voting Stock
of the corporation, any Affiliate or Associate of any such individual,
corporation, partnership or other person or entity, and any assignee of any of
the foregoing. For purposes of determining shareholders whose votes shall be
excluded pursuant to the first paragraph of this Article 10, the term (Related
Person) (i) shall include any shareholder acting jointly or in concert with a
Related Person in connection with a Business Combination and any shareholder who
will be treated differently than other shareholders in any Business Combination
(other than a shareholder who is entitled to the rights of a dissenting
shareholder under applicable law), (ii) but shall exclude a Related Person who
(x) is not the Related Person who is a party to the Business Combination being
voted upon, and (y) is not a shareholder described in clause (i) of this
sentence.
(c) The term "Substantial Part" shall mean more than 30 percent of the
fair market value as determined by a majority of
DEP'T OF STATE
DEC 9 2:41 PM '86
<PAGE>
PAGE 10 OF 16
86722025
the Continuing Directors of the total consolidated assets of the corporation in
question and its subsidiaries taken as a whole, as of the end of its most recent
fiscal year ending prior to the time the determination is being made.
(d) Without limitation, any shares of Voting Stock of the corporation that
any Related Person has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise, shall be
deemed beneficially owned by the Related Person.
(e) For the purposes of section (2) of this Article 10, the term "other
consideration to be received" shall include, without limitation, Common Stock of
the corporation retained by its existing public shareholders in the event of a
Business Combination in which the corporation is the surviving corporation.
(f) The term "Voting Stock" shall mean all outstanding shares of capital
stock of the corporation or another corporation entitled to vote generally in
the election of directors and each reference to a proportion of shares of Voting
Stock shall refer to such proportion of the votes entitled to be cast by such
shares.
(g) The term "Continuing Director" shall mean a director who either (i) was
a member of the Board of Directors of the
<PAGE>
PAGE 11 OF 16
86722026
corporation immediately prior to the time that the Related Person involved in a
Business Combination became a Related Person or (ii) was designated (before his
or her initial election as director) as a Continuing Director by a majority of
the then Continuing Directors.
Notwithstanding any other provision in these Articles, this Article 10 may
not be repealed or amended in any respect, and no provision inconsistent with
this Article 10 may be adopted, unless such action is approved by the
affirmative vote of the holders of a majority of the outstanding shares of
Voting Stock held by shareholders other than Related Persons."
DEP'T OF STATE
DEC 9 2:41 PM '86
<PAGE>
PAGE 12 OF 16
Microfilm Number 9281-799 Filed with the Department of State on OCT 23 1992
---------- -----------
Entity Number 841529 /s/ Brenda K. Mitchell
------------ --------------------------------------------------
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. (S)1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: North Pittsburgh Systems, Inc.
------------------------------------------
- --------------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 4008 Gibsonia Road Gibsonia PA 15044 Allegheny
---------------------------------------------------------------------------
Number and Street City State Zip County
(b)c/o:-----------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: Business Corporation
--------------------
Law, Act of May 5, 1933 (P.L. 364) as amended
--------------------------------------------------------------------------
4. The original date of its incorporation is: October 17, 1984
---------------------------------
5. (Check, and if appropriate complete, one of the following):
----- The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
X The amendment shall be effective on: October 30, 1992 at 5:00 p.m.
----- ---------------- ------------
Date Hour
6. (Check one of the following):
The amendment was adopted by the shareholders pursuant to 15
------ Pa.C.S. (S)1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to 15
------ Pa.C.S. (S) 1914(c).
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full, is
------ as follows:
"5. The aggregate number of shares which the corporation shall be
authorized to issue is: 10,000,000 shares of Common Stock, par value
$.3125 per share, aggregate par value $3,125,000."
The amendment adopted by the corporation as set forth in full in
------ Exhibit A, attached hereto and made a part hereof.
<PAGE>
PAGE 13 OF 16
9281-800
DSCB:15-1915 (Rev 89)-2
8. (Check if the amendment restates the Articles):
The restated Articles of Incorporation supersede the original
----- Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
22nd day of October ,1992.
- ------ ---------- --
North Pittsburgh Systems, Inc.
-------------------------------------------
(Name of Corporation)
BY: /s/ F. D. Reese
----------------------------------------
(Signature)
TITLE:
-------------------------------------
President
92 OCT 23 AM 8:56
PA DEPT. OF STATE
<PAGE>
PAGE 14 OF 16
Microfilm Number 9636-806 Filed with the Department of State on MAY 20 1996
-------- -----------
Entity Number 841529 /s/ Yvette Kane
------------ --------------------------------------------------
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. (S) 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: North Pittsburgh Systems, Inc.
-------------------------------------------
- --------------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Comonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 4008 Gibsonia Road Gibsonia PA 15044 Allegheny
---------------------------------------------------------------------------
Number and Street City State Zip County
(b)c/o: -------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.
3. The statute by or under which it was incorporated is: Business Corporation
--------------------
Law, Act of May 5, 1933 (P.L. 364) as amended
--------------------------------------------------------------------------
4. The date of its incorporation is: October 17, 1984
---------------------------------
5. (Check, and if appropriate complete, one of the following):
X
----- The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
The amendment shall be effective on: at
----- ---------------- ------------
Date Hour
6. (Check one of the following):
X
------ The amendment was adopted by the shareholders (or members) pursuant
to 15 Pa.C.S. (S) 1914(a) and (b).
------ The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. (S) 1914(c).
7. (Check, and if appropriate complete, one of the following):
------ The amendment adopted by the corporation, set forth in full, is
as follows:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
X The amendment adopted by the corporation is set forth in full in
------ Exhibit A attached hereto and made a part hereof.
MAY 20 96
PA Dept. of State
<PAGE>
PAGE 15 OF 16
9636-807
DSCB:15-1915 (Rev 90)-2
8. (Check if the amendment restates the Articles):
------ The restated Articles of Incorporation supersede the
original Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
17th day of May, 1996.
- ---- --- ----
North Pittsburgh Systems, Inc.
-------------------------------------------
(Name of Corporation)
BY: /s/ Gerald A. Gorman
----------------------------------------
(Signature)
TITLE: President
-------------------------------------
<PAGE>
PAGE 16 OF 16
9636-808
EXHIBIT A
"5. The aggregate number of shares which the corporation shall have
authority to issue is:
(a) The Corporation shall have the authority to issue a total of 50,000,000
shares of Capital Stock. Of the 50,000,000 shares of Capital Stock, 40,000,000
shares shall be Common Stock, par value $.15625 per share. The Board of
Directors, at such time or times as it believes appropriate, may divide the
remaining 10,000,000 shares of Capital Stock of the Corporation into one or more
classes of shares of Common Stock, the voting power per share of which shall not
be greater than the voting power per share of the Common Stock issued and
outstanding on April 9, 1996, and/or one or more classes and series of Preferred
Stock, with par or stated value. The determination of the voting rights,
preferences, qualifications, privileges, limitations, restrictions, options,
conversion rights and other special or relative rights of the shares of any such
class or classes of stock shall be accomplished by an amendment to this Article
5 solely by action of the Board of Directors, which shall have the full
authority permitted by law to make such divisions and determinations."
<PAGE>
EXHIBIT 3(ii)
AS ADOPTED OCTOBER 26, 1984
AS AMENDED MAY 17, 1996
BY-LAWS
OF
NORTH PITTSBURGH SYSTEMS, INC.
------------------------------
ARTICLE I
GENERAL
Section 1. Principal Office. The principal office of the Corporation
----------------
shall be located at Gibsonia, Allegheny County, Pennsylvania.
Section 2. Branch Offices. The Corporation may establish and
--------------
maintain such other office or offices at such place or places as the Board of
Directors may, from time to time, deem necessary, desirable or expedient.
Section 3. Seal. The corporate seal of this Corporation shall have
----
inscribed thereon the name of the Corporation, the year of its incorporation and
the State where it was incorporated, and such seal may be used by any of the
corporate officers by causing an impression or facsimile thereof to be impressed
or placed upon the paper or document to be sealed.
Section 4. Fiscal Year. The fiscal year of the Corporation shall
-----------
begin January 1 and end December 31.
Section 5. Waiver of Notice. Any notice required by these By-Laws to
----------------
be given directors or shareholders for any meeting may be waived by any director
or shareholder in writing, signed by such director or shareholder, or by his
attorney thereunto authorized, and filed with the Secretary of the Corporation.
Attendance of a person at any directors' meeting and attendance of a person
either in person or by proxy at any shareholders' meeting shall constitute a
waiver of such notice of meeting except where such person attends a meeting for
the express purpose of objecting to the transacting of any business because a
meeting was not lawfully called or convened.
Section 6. Dividends. Dividends may be declared and paid out of the
---------
net profits or surplus of the Corporation as often and at such times and to such
extent as the Board of Directors may determine, consistent with the provisions
of the charter of the Corporation and the law of the Commonwealth.
<PAGE>
Section 7. Audit. An annual examination and audit of the financial
-----
status, property and affairs of the Corporation shall be made by an audit
committee or an approved firm of accountants who shall be appointed by the
Board. Such annual examination and audit shall be undertaken and completed a
sufficient time before the annual meeting of the shareholders to permit the
submission of an appropriate report at such meeting.
Section 8. Checks and Notes. Checks, notes, drafts, acceptances,
----------------
bills of exchange, and other obligations for the payment of money, made,
accepted or endorsed, shall be signed by such officer or officers, or person or
persons, as the Board of Directors shall from time to time determine.
Section 9. Repeal of Prior By-Laws. Any and all By-Laws heretofore
-----------------------
existing for this Corporation are hereby repealed.
ARTICLE II
SHAREHOLDERS
Section 1. Place. All meetings of shareholders shall be held at the
-----
principal office of the Corporation or at such other place or places within
Pennsylvania as the directors may from time to time determine.
Section 2. Annual Meeting. There shall be an annual meeting of the
--------------
shareholders of the Corporation for the purpose of electing directors and
transacting other proper business, on the third Friday of May of each year at
2:00 o'clock p.m., unless such day be a legal holiday, in which case, the
meeting shall be held at the same hour on the next day following that is not a
legal holiday.
Section 3. Special Meetings. Special meetings of the shareholders
----------------
may be called by the Chairman of the Board, the President or the Board of
Directors at any time, and shall be called by the President upon the written
request of three or more common shareholders. Such request must specify the
purpose of the proposed meeting and the business transacted thereat shall be
confined to the object or objects stated in the call.
Section 4. Notice. Written notice of every meeting of the
------
shareholders stating the purpose or purposes for which the meeting is called and
the time and place where it is to be held shall be served either personally or
by mail upon each shareholder of record entitled to vote at such meeting, not
less than five days before the meeting, unless a longer period of notice is
required by law. If mailed, such notice shall be directed to each shareholder
at his last known address as shown on the records of the Corporation.
2
<PAGE>
Section 5. Quorum. The holders of record of a majority of the stock
------
issued and outstanding and entitled to vote at any shareholders' meeting,
present in person or represented by proxy, shall constitute a quorum for
transacting business, unless otherwise provided by law.
Section 6. Adjournment. If a quorum shall not be present in person
-----------
or by proxy, the shareholders present in person or by proxy shall have the power
to adjourn the meeting from time to time without notice other than announced at
the meeting, until the requisite amount of stock shall be represented. At such
adjourned meeting at which the requisite amount of stock shall be represented,
any business may be transacted which might have been transacted at the meeting
as originally notified.
Section 7. Right to Vote. Except as otherwise provided by law, each
-------------
common shareholder of record shall be entitled, at every meeting of the
Corporation, to cast one vote for each share of common stock standing in the
name of such common shareholder on the books of the Corporation. Each preferred
shareholder of record shall be entitled at every meeting of the Corporation (at
which such preferred shareholder is entitled to vote by the charter of the
Corporation or the law of the Commonwealth), to cast one vote
for each share of preferred stock standing in the name of such preferred
shareholder on the books of the Corporation.
Section 8. Proxies. Votes may be cast at shareholders' meetings
-------
either in person or by written proxy, duly executed by the shareholder, and
dated not more than two months prior to the meeting involved, which meeting
shall be named therein.
Section 9. Mode of Voting. All voting, unless required by law or by
--------------
these By-Laws to be by ballot, shall be viva voce, unless a stock vote shall
be called for, in which event the vote shall be by ballot, each ballot to state
the name of the shareholder voting, the number of shares owned by him, and in
addition, if such ballot be cast by proxy, the name of the proxy. Any qualified
voter may demand a stock vote and in such event a stock vote shall immediately
be taken.
Section 10. Judges of Election. Prior to each meeting of the
------------------
shareholders, the Board of Directors shall appoint two Judges of Election, or
such number as may be required by law, who shall perform the duties required by
law at such meeting and any adjournment thereof. If any Judge shall refuse to
serve, or neglect to attend at the election, or his office becomes vacant, the
presiding officer shall appoint a Judge in his place. Judges of Election shall
be sworn.
Section 11. List of Shareholders. A complete list of the
--------------------
shareholders entitled to vote at any meeting shall be compiled by the Secretary
of the Corporation at least five days before each meeting of shareholders and
kept
3
<PAGE>
Section 11. List of Shareholders. cont.
---------------------
on file at the Corporation's principal office, subject to the inspection of any
proper party at any time during the usual business hours and such list shall
also be exhibited at the meetings. Said list shall be arranged alphabetically
giving the address of each shareholder entitled to vote and the number of shares
held by each.
ARTICLE III
DIRECTORS
Section 1. Number of Directors. The property, affairs and business
-------------------
of the Corporation shall be managed and controlled by a board of not less than
seven (7) nor more than nine (9) directors who may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law, the
charter of the Corporation, or its By-Laws, required to be exercised or to be
done by the shareholders.
The number of directors to be elected shall be determined by the Board
of Directors prior to the annual meeting at which such directors are to be
elected.
Section 2. Qualification and Term. A Director need not be a
----------------------
shareholder of the Corporation. The Directors shall be elected by ballot at the
annual meeting of the shareholders. After their election they shall continue in
office until the next annual meeting of shareholders and until their successors
have been elected and qualified.
Section 3. Vacancies. In the case of any vacancy in the Board of
---------
Directors, the remaining directors, by affirmative vote of a majority thereof,
may elect a successor to hold office for the unexpired portion of the term of
the director whose place shall be vacant and until the election and
qualification of his successor.
Section 4. Place of Meeting. Meetings of the Board of Directors
----------------
shall be held at the principal office of the Corporation or at such other place
or places within or without the Commonwealth of Pennsylvania as may from time to
time be fixed by resolution of the Board, or as may be specified in the call of
any meeting.
Section 5. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held at such times as may be fixed by resolution of the
Board, provided that a regular meeting of the Board shall be held within 30 days
following each annual meeting of the shareholders and that a regular meeting of
the Board shall be held at least once every two months thereafter. No notice
shall be required for any regular meeting of the Board.
4
<PAGE>
Section 6. Special Meetings. Special meetings of the Board of
----------------
Directors may be held at any time upon the call of the Chairman of the Board,
the President or of three of the directors then in office, by oral, telegraphic
or written notice duly served on or sent or mailed to each director not less
than twenty-four hours before such meeting.
Section 7. Quorum. A majority of the members of the Board of
------
Directors then holding office shall constitute a quorum for the transaction of
business, but if there shall be less than a quorum at any meeting of the Board,
a majority of those present (or if only one be present, then that one) may
adjourn the meeting from time to time and the meeting may be held as adjourned
without further notice.
Section 8. Election of Officers. The Board of Directors, at the
--------------------
first regular meeting held after the annual meeting of the shareholders of the
Corporation, shall elect a Chairman of the Board, (who shall be a director), a
President, a Vice President, a Secretary, a Treasurer, and such additional Vice
Presidents, Assistant Secretaries, Assistant Treasurers, and other officers, as
it may deem necessary or desirable. Except as otherwise provided by law, the
duties of more than one office may be discharged by one person. Any officers or
agents elected or appointed by the directors shall be removed at any time by the
affirmative vote of a majority of the whole Board of Directors.
Section 9. Resignation of Whole Board. In case the entire Board of
--------------------------
Directors shall die or resign, any shareholder may call a special meeting in the
same manner as the Chairman of the Board or the President may call such a
meeting and directors for the unexpired terms may be elected at any such special
meeting in the same manner as that provided for their election at annual
meetings.
Section 10. Interest in Contracts. No directors shall be
---------------------
disqualified from voting or acting on behalf of the Corporation in contracting
with any other company because of the fact that he may be an officer, director
or shareholder therein.
Section 11. Committees. The Board of Directors may, in its
----------
discretion, by resolution adopted by a majority of the whole Board, appoint
committees which shall have and may exercise such powers as shall be conferred
or authorized by the resolution appointing them. The Board shall have the power
at any time to change the members of any such committee, to fill vacancies
thereon, and to discharge any such committee.
Section 12. Expenses. Directors may be reimbursed for expenses
--------
incurred in attending any meeting of the Board of Directors or of any committee
of the Board. Nothing herein contained shall preclude any directors in serving
in any other capacity and receiving compensation therefore.
5
<PAGE>
Section 13. Telephonic Meetings. Any meeting of the Board of
-------------------
Directors or of a committee thereof, including the Executive Committee, may be
held in which any one or more or all of the directors or participants may
participate as if present in person, by means of conference telephone or similar
communication equipment in a manner by which all persons participating in the
meeting can hear each other.
Section 14. Personal Liability of Directors. To the fullest extent
-------------------------------
that the laws of the Commonwealth of Pennsylvania, as now in effect or as
hereafter amended, permit elimination or limitation of the liability of
directors, no director of the Company shall be personally liable for monetary
damages as such for any action taken, or any failure to take any action, as a
director. Further, any amendment or repeal of Section 14 which has the effect
of increasing director liability shall operate prospectively only, and shall not
affect any action taken, or any failure to act, prior to its adoption.
ARTICLE IV
OFFICERS
Section 1. Election. The executive officers of the Corporation shall
--------
be a Chairman of the Board, a President, a Vice President, a Secretary, a
Treasurer, and such additional Vice Presidents, Assistant Secretaries, Assistant
Treasurers, and other officers as the Board of Directors may by resolution
determine. All of such officers shall be elected by the Board of Directors in
the manner set forth in Article III hereof and they shall be subject to removal
at any time by a majority vote of the whole Board. The officers of the
Corporation shall each have such powers and duties as are hereinafter set forth
and as generally pertain to their respective offices and in addition thereto,
such powers and duties as may from time to time be conferred upon them by the
Board of Directors.
Section 2. Chairman of the Board. The Chairman of the Board shall be
---------------------
the titular head of the Corporation, and shall preside at meetings of the
shareholders and of the Board of Directors. He shall advise and consult with
the other members of the Board, the President and the other officers concerning
the property, business and affairs of the Company, and he shall perform such
other duties and shall have supervision over such other matters as the Board may
from time to time prescribe. He shall be ex-officio a member of all Committees
of the Board of Directors.
Section 3. President. The President shall, in the absence of or at
---------
the direction of the Chairman of the Board, preside at all meetings of the
shareholders and the Board of Directors. He shall be ex-officio a member of all
Committees of the Board of Directors and he shall perform such other
6
<PAGE>
Section 3. President. cont.
---------
duties as may be assigned to him from time to time by the Board of Directors. He
may sign and execute all contracts in the name of the Corporation and shall with
the Treasurer, sign all certificates of stock of the Corporation. He shall have
general control and direction of the business of the Corporation, and he shall
perform all acts and things incident to the position of President. He shall
have power to sign all notes, drafts, checks and orders for the payment of money
in the event of the temporary absence or inability of the Treasurer.
Section 4. Vice President. Any Vice President shall have such power
--------------
and perform such duties as the Board of Directors may from time to time
prescribe and shall also perform such duties as may be assigned to him from time
to time by the President. In the event of the death, absence, or inability of
the President to perform any duties imposed upon him by these By-Laws or by the
Board of Directors, a Vice President may exercise his powers and perform his
duties, subject to the control of the Board of Directors.
Section 5. Secretary. The Secretary shall attend the meetings of the
---------
shareholders and the Board of Directors and shall keep careful record of all
such meetings; the proceedings whereof shall be transcribed into the record book
over his signature. He shall give due notice of any and all meetings of the
shareholders and of the Board of Directors unless notice is directed by law or
by these By-Laws to be otherwise given. He shall be the custodian of the seal
and the stock book of the Corporation and shall keep a proper registry of all
outstanding certificates of stock. At all meetings of the shareholders, he
shall furnish the Judges with lists of the shareholders of the Corporation, as
shown by the books of the Corporation, which lists shall show the number of
shares owned by each shareholder. He shall safely keep all books, documents and
papers of the Corporation committed to his charge. The Secretary shall supervise
and control the manner in which the records and files of the Corporation shall
be kept and shall perform such other duties as may be assigned to him by the
Board of Directors. The Board of Directors shall have the authority to assign
the duty of attending and keeping minutes at any Shareholders' Meeting or at any
Board of Directors' Meeting(s) to another person other than the Secretary,
including an officer or member of the Board of Directors, in those circumstances
in which a majority of the Board of Directors believes appropriate. Any minutes
so recorded and approved shall be transcribed in the Company's record book of
minutes over the signature of the person designated by the Board to take such
minutes. Any such minutes shall make reference to such appointment.
Section 6. Treasurer. The Treasurer shall have the care and custody
---------
of all the funds of the Corporation, which may come into his hands and to
deposit the same in the name of the Corporation in such bank or banks or
depository, as the Board may designate. He shall sign all drafts, notes and
7
<PAGE>
Section 6. Treasurer. cont.
---------
orders for the payment of money, and he shall pay out and dispose of the same
under the direction of the Board. He shall, with the President, sign all
certificates of stock. He shall render a statement of his cash account to the
Board of Directors as often as they shall require the same. He shall enter
regularly, in books to be kept by him, for that purpose, a full and accurate
account of all moneys received and paid to him on account of the Corporation and
shall perform all acts and things incident to the position of Treasurer. The
Treasurer, and other officers as the Board of Directors may determine, be bonded
in respect to the faithful performance of their duties in such sums as the Board
of Directors may agree upon.
Section 7. Assistants. Any Assistant Secretary, Assistant Treasurer, or any
----------
other assistant officer elected by the Board of Directors, shall perform such
duties as the Secretary, the Treasurer, or any other officer elected by the
Board of Directors, as the case may be, or the Board of Directors, may from time
to time assign to him.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates. Certificates for shares of the capital stock of
------------
the Corporation shall be in such form not inconsistent with law as approved by
the Board of Directors, and shall state that the Corporation is incorporated
under the laws of Pennsylvania, the name of the person to whom issued, and the
number and class of shares and the designation of the series (if any) that the
certificate represents and such other terms and provisions as may be required by
statute or authorized by the Board of Directors. The share register or transfer
books and blank share certificates shall be kept by the Secretary or by any
transfer agent or registrar designated by the Board of Directors for that
purpose. The share certificates of the Corporation shall be numbered and
registered in the share register or transfer books of the Corporation as they
are issued. Unless otherwise directed by the Board of Directors, certificates
shall be signed by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, any of such
signatures may be a facsimile except at least one of such signatures shall be
manual. Certificates shall bear the corporate seal, which may be embossed, a
facsimile, engraved or printed. Where any such certificate is signed by a
transfer agent or a registrar, the signature of any corporate officer upon such
certificate may be a facsimile, engraved or printed. In case any officer who
has signed, or whose facsimile signature has been placed upon, any share
certificate shall have ceased to be such officer because of death, resignation
or otherwise, before the certificate is issued, it may be issued
8
<PAGE>
Section 1. Certificates. cont.
-------------
with the same effect as if the officer had not ceased to be such at the date of
its issue. Every shareholder of record shall be entitled to a single share
certificate representing the total number of shares of each class owned by
him/her/it. If a shareholder desires to have share certificates issued or
reissued to him/her/it in a manner inconsistent with the immediately preceding
sentence, all costs of issuance or reissuance shall be at the sole expense of
the requesting shareholder in accordance with a schedule of costs established by
the President or a Vice President and approved by the Board of Directors.
Section 2. Transfers. Transfers of shares shall only be made upon the books
---------
of the Corporation by the holder in person or by his legal representative or by
power of attorney duly executed and filed with the Corporation, and on the
surrender and cancellation of the certificate or certificates of such shares
properly assigned.
The Board of Directors shall have power and authority to make all such rules
and regulations as they may deem expedient concerning the issue, transfer and
registration of certificates of shares in the capital stock of the Corporation.
Section 3. Closing of Stock Transfer Books and Fixing of Record Date for
-------------------------------------------------------------
Determination of Shareholders. The Board of Directors of the Corporation may
- -----------------------------
close the Stock Transfer books of the Corporation for a period not exceeding
forty (40) days preceding the date of any meeting of shareholders, or the date
for the payment of any dividend, or the date for the allotment of any rights, or
the date when any exchange or conversion, or exchange of capital stock shall go
into effect, or may fix, in advance, a date not exceeding forty (40) days
preceding any of the aforesaid dates as a record date for the determination of
the shareholders entitled to vote at any such meeting, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to exercise
the rights in respect to any such exchange or conversion, or exchange of capital
stock. In case the Stock Transfer books are closed, as aforesaid, ten (10)
days' written notice thereof shall be mailed to the shareholders at their last
known address as the same appears on the books of the Corporation.
Section 4. Lost Certificates. No certificate of shares in the capital stock
-----------------
of the Corporation shall be issued in place of any certificate alleged to have
been lost, stolen or destroyed, except on delivery to the Corporation of a bond
of indemnity, with sufficient surety, against such lost, stolen or destroyed
certificate, to be approved by the Board of Directors. Proper and legal
evidence of such loss, theft or destruction shall be produced to the Board, if
they require the same. The Board of Directors may in their discretion refuse to
issue such new certificate, save upon the order of a court having jurisdiction
in such matters.
9
<PAGE>
Section 5. Aggregate Number of Shares. The aggregate number of shares which
---------------------------
the Corporation shall have authority to issue is:
(a) The Corporation shall have the authority to issue a total of 50,000,000
shares of Capital Stock. Of the 50,000,000 shares of Capital Stock, 40,000,000
shares shall be Common Stock, par value $.15625 per share. The Board of
Directors, at such time or times as it believes appropriate, may divide the
remaining 10,000,000 shares of Capital Stock of the Corporation into one or more
classes of shares of Common Stock, the voting power per share of which shall not
be greater than the voting power per share of the Common Stock issued and
outstanding on April 9, 1996 and/or one or more classes and series of Preferred
Stock, with par or stated value. The determination of the voting rights,
preferences, qualifications, privileges, limitations, restrictions, options,
conversion rights and other special or relative rights of the shares of any such
class or classes of stock shall be accomplished by an amendment to this Article
5 solely by action of the Board of Directors, which shall have the full
authority permitted by law to make such divisions and determinations.
ARTICLE VI
AMENDMENTS TO BY-LAWS
These By-Laws may be amended, altered, modified or added to by the majority
of the members present and constituting a quorum at any regular or special
meeting of the Board of Directors. The authority of the Board of Directors to
amend, alter or modify the By-Laws is subject always to the authority of the
shareholders of the Corporation entitled to vote thereon to rescind or alter
such amendment or to amend, alter or modify the By-Laws by a majority vote of
all such stock represented in person or by proxy at an annual or special meeting
of the shareholders provided that written notice shall be mailed to each of said
shareholders at least five (5) days prior to said meeting.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Except as prohibited by law, every
------------------------
director and officer of the Company shall be entitled as of right to be
indemnified by the Company against reasonable expense and any liability paid or
incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, civil, criminal, administrative, investigative or
other, whether brought by or in the right of the Company or otherwise, in which
he or she may be involved, as a party or otherwise, by reason of such person
being or having been a director or officer of the Company or by reason
10
<PAGE>
Section 1. Right to Indemnification. cont.
-------------------------
of the fact that such person is or was serving at the request of the Company as
a director, officer, employee, fiduciary or other representative of another
corporation, partnership, joint venture, trust, employee benefit plan or other
entity (such claim, action, suit or proceeding hereinafter being referred to as
"Action"). Such indemnification shall include the right to have expenses
incurred by such person in connection with an Action paid in advance by the
Company prior to final disposition of such Action, subject to such conditions as
may be prescribed by law. Persons who are not directors or officers of the
Company may be similarly indemnified in respect of service to the Company or to
another such entity at the request of the Company to the extent the Board of
Directors at any time designates such person as entitled to the benefits of this
Section. As used herein, "expense" shall include fees and expenses of counsel
selected by such person; and "liability" shall include amounts of judgments,
excise taxes, fines and penalties, and amounts paid in settlement.
Section 2. Right of Claimant to Bring Suit. If a claim for indemnification
-------------------------------
by any person eligible to be indemnified under Section 1 is not paid in full by
the Company within thirty days after a written claim has been received by the
Company, the claimant may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim, and, if successful in whole or in
part, the claimant shall also be entitled to be paid the expense of prosecuting
such claim. It shall be a defense to any such suit that the conduct of the
claimant was such that under Pennsylvania law the company would be prohibited
from indemnifying the claimant for the amount claimed, but the burden of proving
such defense shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel and its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the claimant is proper in the circumstances because
the conduct of the claimant was not such that indemnification would be
prohibited by law, nor an actual determination by the Company (including its
Board of Directors, independent legal counsel or its shareholders) that the
conduct of the claimant was such that indemnification would be prohibited by
law, shall be a defense to the suit or create a presumption that the conduct of
the claimant was such that indemnification would be prohibited by law.
Section 3. Insurance and Funding. The Company may purchase and maintain
---------------------
insurance to protect itself and any person eligible to be indemnified hereunder
against any liability or expense asserted or incurred by such person in
connection with any Action, whether or not the Company would have the power to
indemnify such persons against such liability or expense by law or under the
provisions of this Article VII. The Company may create a trust fund, grant a
security interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of such sums as
may become necessary to effect indemnification as provided herein.
11
<PAGE>
Section 4. Non-Exclusivity; Nature and Extent of Rights. The right of
--------------------------------------------
indemnification provided for herein (l) shall not be deemed exclusive of any
other rights, whether now existing or hereafter created, to which those seeking
indemnification hereunder may be entitled under any agreement, by-law or charter
provision, vote of shareholders or directors or otherwise, (2) shall be deemed
to create contractual rights in favor of persons entitled to indemnification
hereunder, (3) shall continue as to persons who have ceased to have the status
pursuant to which they were entitled or were denominated as entitled to
indemnification hereunder and shall inure to the benefit of the heirs and legal
representatives of persons entitled to indemnification hereunder and (4) shall
be applicable to Actions commenced after the adoption hereof, whether arising
from acts or omissions occurring before or after the adoption hereof. The right
of indemnification provided for herein may not be amended, modified or repealed
so as to limit in any way the indemnification provided for herein with respect
to any acts or omissions occurring prior to the effective date of any such
amendment, modification or repeal.
12
<PAGE>
NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
Exhibit No. (11) - Statement - computation of per share earnings
Statement of Computations of Earnings per Share
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30 Ended June 30
---------------------------- ----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Earnings $ 2,620,000 $ 2,825,000 $ 5,676,000 $ 5,510,000
=========== =========== =========== ===========
Average common shares outstanding 15,040,000 15,040,000* 15,040,000 15,040,000*
=========== =========== =========== ===========
Earnings per share of common stock $ .17 $ .19* $ .38 $ .37*
=========== =========== =========== ===========
</TABLE>
*Adjusted for a two-for-one stock split effective May 22, 1996.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996 QUARTERLY REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 9,786
<SECURITIES> 5,221
<RECEIVABLES> 9,869
<ALLOWANCES> 0
<INVENTORY> 2,353
<CURRENT-ASSETS> 27,711
<PP&E> 117,187
<DEPRECIATION> 56,633
<TOTAL-ASSETS> 95,923
<CURRENT-LIABILITIES> 9,369
<BONDS> 21,317
<COMMON> 2,350
0
0
<OTHER-SE> 50,837
<TOTAL-LIABILITY-AND-EQUITY> 95,923
<SALES> 1,443
<TOTAL-REVENUES> 29,574
<CGS> 1,294
<TOTAL-COSTS> 19,750
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 780
<INCOME-PRETAX> 9,351
<INCOME-TAX> 3,675
<INCOME-CONTINUING> 5,676
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,676
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
