UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1997.
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 0-23454
Total Containment, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2394872
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
422 Business Center, A130 North Dr., Oaks, Pennsylvania 19456
(Address of principal executive offices) (Zip Code)
(610) 666-7777
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date: 4,641,600 shares of Common Stock, par value
$0.01 per share were outstanding at July 30, 1997.
<PAGE>
Total Containment, Inc.
Index
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet -
June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statement of Income -
Three months and six months ended June 30, 1997
and 1996 4
Condensed Consolidated Statement of Cash Flows
- Six months ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial
Statements - June 30, 1997 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 12
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, December 31,
1997 1996
(In thousands) (In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 363 $ 616
Accounts receivable, net 8,389 7,453
Inventories - Note 2 9,052 7,248
Other assets 3,837 3,677
Total current assets 21,641 18,994
Molds and tooling costs, net 1,223 1,362
Property and equipment, net 3,186 2,511
Patents, patent rights and
licenses, net 5,034 5,155
Goodwill, net 5,462 5,545
Other assets 632 1,398
Total assets $37,178 $34,965
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit borrowings $ 4,432 $ 3,677
Current portion of long-term
debt 1,176 770
Accounts payable and accrued
expenses 7,316 5,125
Warranty reserve 1,525 1,161
Total current liabilities 14,449 10,733
Long-term debt 2,224 1,894
Warranty reserve 1,489 3,322
Total liabilities 18,112 15,949
Shareholders' Equity:
Common stock - $0.01 par value;
authorized 20,000,000 shares;
4,641,600 shares issued and
outstanding 46 46
Capital in excess of par value 3,729 13,729
Retained earnings 5,331 5,217
Equity adjustment from foreign
currency translation (40) 24
Total shareholders' equity 19,066 19,016
Total liabilities & shareholders'
equity $37,178 $34,965
See notes to condensed consolidated financial statements.
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
(In thousands, except share data)
<S> <C> <C> <C> <C>
Net sales 12,080 9,865 20,339 16,910
Cost of sales 7,520 6,214 13,142 10,677
Gross profit 4,560 3,651 7,197 6,233
Selling, general and
administrative 3,335 2,444 6,427 4,802
Amortization of patents,
licenses and goodwill 136 126 272 252
Income from operations 1,089 1,081 498 1,179
Interest expense 161 73 308 125
Income before income taxes 928 1,008 190 1,054
Income tax expense 371 387 76 419
Net income 557 621 114 635
Net income per share $ 0.12 $ 0.13 $ 0.02 $ 0.14
Weighted average shares and
share equivalents used in
computation of net income
per share 4,641,600 4,641,600 4,641,600 4,641,600
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
Six months ended
June 30,
1997 1996
(In thousands)
Cash flows from operating activities:
Net cash used for operating activities $ (427) $ (658)
Cash flows from investing activities:
Purchase of property and equipment (1,132) (1,597)
Other 121 -
Net cash used for investing activities (1,011) (1,597)
Cash flows from financing activities:
Net borrowings on long-term debt 430 486
Net borrowings under line of credit 755 1,816
Net cash provided by financing
activities 1,185 2,302
Net increase (decrease) in cash $ (253) $ 47
See notes to condensed consolidated financial statements.
<PAGE>
TOTAL CONTAINMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The unaudited Condensed Consolidated Financial Statements of
Total Containment, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and disclosures required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The results of
operations of the Company for the three month period ended,
June 30, 1997, are not necessarily indicative of the results that
may be expected for any other interim period or for a full year.
For further information, refer to the Consolidated Financial
Statements and notes thereto included in the Registrant Company's
Annual Report and Form 10-K for the year ended December 31, 1996.
Note 2 - Inventories
The components of inventory consist of the following:
June 30, December 31,
1997 1996
(In thousands)
Raw materials $ 692 $ 503
Finished goods 8,360 6,745
$9,052 $7,248
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a Pennsylvania corporation and was organized
in 1986. The Company is a leading manufacturer and distributor
of underground systems and products for the conveyance and
containment of petroleum and alcohol based motor vehicle fuels
from underground storage tanks to aboveground fuel dispensers.
The principal end users of the Company's products are service
stations, convenience stores and other retail sellers of
gasoline, gasohol and other motor vehicle fuels, government
bodies, utilities and other fleet vehicle operators.
Net Sales
The Company's net sales for the quarter and six months ended
June 30, 1997, were $12.1 million and $20.3 million,
respectively, as compared to $9.9 million and $16.9 million for
the corresponding periods in 1996. Net sales increased 22.5%
during the quarter and 20.3% for the first six months of 1997 as
compared to the same periods in the previous fiscal year. The
increases for both the quarter and six months were primarily
attributable to sales from American Containment, Inc., as well as
additional sales of underground flexible piping systems in the
United States.
Gross Profit
The primary component of the Company's cost of sales is the
product manufacturing costs paid to various third party
manufacturers. Other components are the variable and fixed costs
of operating the Company's warehouses, depreciation of molds,
tools, and equipment, and warranty expense. The Company's gross
profits for the quarter and six months ended June 30, 1997 were
$4.6 million and $7.2 million, respectively, as compared to
$3.7 million and $6.2 million for the corresponding periods in
1996.
The Company's gross profit percentage was 37.7% for the
quarter and 35.4% for the six months ended June 30, 1997, as
compared to 37.0% and 36.9% for the same periods in the previous
fiscal year. The Company's gross profit percentage increased in
the quarter due mainly to reductions in direct material costs.
The decrease in gross profit percentage for the six months was
primarily attributable to an increase in freight costs and
manufacturing overhead which was partially offset by the
reductions in direct material costs.
Operating Expense
Selling, general and administrative expenses consist
primarily of salaries and related employee benefits, payroll
taxes, commissions, royalties, legal expenses, and other general,
administrative, and overhead costs. Selling, general and
administrative expenses for the quarter and six months ended
June 30, 1997, were $3.3 million and $6.4 million, respectively,
as compared to $2.4 million and $4.8 million for the
corresponding periods in 1996. Selling, general and
administrative expenses increased 36.5% during the quarter and
increased 33.3% for the six months of 1997 as compared to the
same periods in the previous fiscal year. The increases for the
quarter and six months were due to the additional administrative
costs associated with the acquisition of American Containment,
Inc. as well as increased legal expense for litigation.
Interest Expense
Interest expenses for the quarter and six months ended
June 30, 1997, were $161,000 and $308,000, respectively, as
compared to $73,000 and $125,000 for the corresponding periods in
1996. The increases for the quarter and six months were due to
increased borrowings on term loans for expansion purposes and an
increase in the Company's line of credit activity.
Amortization of Intangibles
Amortization of intangibles consists of the amortization of
goodwill over a period of 40 years and the amortization of
various patents and licenses that are amortized on a straight-
line basis over the estimated lives of the patents (which range
from 13 to 18 years) at the acquisition date or subsequent
issuance date.
Income Taxes
Income taxes for the quarter and six months ended June 30,
1997 were $371,000 and $76,000, respectively, as compared to
$387,000 and $419,000 for the corresponding periods in 1996. The
decreases were due to the decreases in the Company's income
before income taxes.
Net Income
The Company's net income for the quarter and six months
ended June 30, 1997, were $557,000 and $114,000, respectively, as
compared to $621,000 and $635,000 for the corresponding periods
in 1996. Net income decreased 10.3% during the quarter and 82%
for the first six months of 1997 as compared to the same periods
in the previous fiscal year. The decreases in net income for
both the quarter and six months ended June 30, 1997 were due to a
reduction in earnings before income taxes caused by an increase
in general and administrative costs associated with the
acquisition of American Containment, Inc., and legal and interest
expense.
Liquidity and Capital Resources
The Company had working capital of $7.2 million and
$8.3 million at June 30, 1997 and December 31, 1996,
respectively. The decrease in working capital was due to, among
other things, warranty charges related primarily to the
Enviroflex pipe, as well as purchases for expansion purposes.
The Company satisfies its working capital needs primarily
through funds generated by operations by borrowings under a
$6.0 million unsecured line of credit facility with a commercial
bank.
The Company believes that its presently available funds,
existing credit facility and the cash flow expected to be
generated from operations will be adequate to satisfy its
anticipated working capital requirements for the foreseeable
future.
<PAGE>
Item 1. Legal Proceedings
The Company was a defendant in connection with
counterclaims asserted by Mr. Keith Osborne, OPW Fueling
Components ("OPW"), Buffalo Environmental Products Corporation
("Buffalo") and Intelpro Corporation ("Intelpro") in an action
instituted by the Company in October, 1996, in the United States
District Court for the Eastern District of Pennsylvania. The
counterclaims asserted that the Company breached contractual
undertakings under a settlement agreement to consent to a
transfer by Mr. Osborne of his business, including his retained
rights thereunder. The counterclaims also asserted tortious
interference with contract. The matter was tried in April 1997
and the Court held that the Company did not breach a contractual
undertaking to consent to the transfer, but also held that
Mr. Osborne was entitled to transfer to OPW Mr. Osborne's
business, including patent rights with respect to the
retractability feature of an underground containment system sold
by the Company. The Company did not appeal the Court's decision.
A description of the Company's other pending legal
proceedings has been previously reported in the Company's Annual
Report and Form 10-K for the fiscal year ended December 31, 1996.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 1997 Annual Meeting of Stockholders (the "Meeting")
of the Company was held on April 11, 1997. Notice of
the Meeting was mailed to stockholders on or about
March 31, 1997, together with proxy solicitation
materials prepared in accordance with Section 14(a) of
the Securities Exchange Act of 1934, as amended, and
the regulations promulgated thereunder.
The Meeting was held for the following purposes:
1. To elect two Class I directors to hold office
until the 2000 Annual Meeting of Stockholders and
their successors shall have been elected and
qualified (Matter No. 1);
2. To consider a proposal to adopt an Agreement and
Plan of Merger pursuant to which the Company
changed its state of incorporation from Delaware
to Pennsylvania by merging with and into a newly
formed wholly-owned Pennsylvania subsidiary
(Matter No. 2);
3. To consider a proposal to approve the Company's
1997 Stock Compensation Plan (the "1997 Plan")
(Matter No. 3);
4. To ratify the appointment by the Company's Board
of Directors of Price Waterhouse LLP as the
Company's independent auditors for the fiscal year
ending December 31, 1997 (Matter No. 4); and
5. To transact such other business as may properly
come before the Annual Meeting or any adjournment
or adjournments thereof.
There was no solicitation in opposition to the nominees
of the Board of Directors for election to the Board of
Directors. All nominees of the Board of Directors were
elected. The number of votes cast for or withheld, as
well as the number of abstentions and broker nonvotes
for each of the nominees for election to the Board of
Directors were as follows:
Abstentions
and Broker
Nominee For Withheld Nonvotes
Jean-Claude Arpin 2,719,929 -- --
Marc Guindon 2,719,929 -- --
Matter No. 2 was approved by stockholders at the Meeting.
The votes cast on this matter was as follows:
Abstentions
and Broker
For Against Nonvotes
No. 2 2,649,000 70,929 --
Matter No. 3 was approved by stockholders at the Meeting.
The votes cast on this matter was as follows:
Abstentions
and Broker
For Against Nonvotes
No. 3 2,649,000 70,929 --
Matter No. 4 was approved by stockholders at the Meeting.
The votes cast on this matter was as follows:
Abstentions
and Broker
For Against Nonvotes
No. 4 2,719,929 -- --
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
11 Statement re: Computation of Earnings Per
Share (unaudited)
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<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.
Total Containment, Inc.
Date August 14, 1997 By /s/ Pierre Desjardins
Pierre Desjardins
President and Chief Executive
Officer
Date August 14, 1997 By /s/ Jeffrey A. Boehmer
Jeffrey A. Boehmer
Principal Financial Officer
<PAGE>
Exhibit Index
Exhibit No. Description
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
11 Statement re: Computation of Earnings Per share
(unaudited
27 Financial Data Schedule
EXHIBIT 3.1
ARTICLES OF INCORPORATION
of
TOTAL CONTAINMENT, INC.
FIRST. The name of the Corporation is Total Containment,
Inc.
SECOND. The location and post office address of the
Corporation's registered office in this Commonwealth is
422 Business Center, A130 North Drive, Oaks, Montgomery County,
Pennsylvania 19456.
THIRD. The purpose of the Corporation is and it shall have
unlimited power to engage in and to do any lawful act concerning
any or all lawful business for which corporations may be
incorporated under provisions of the Business Corporation Law of
1988, the Act approved December, 1988, P.L. 1444, as amended (the
"Pennsylvania Business Corporation Law").
FOURTH. The term of the Corporation's existence is
perpetual.
FIFTH. The aggregate number of shares of capital stock
which the Corporation shall have authority to issue is 20,001,000
shares, divided into two classes consisting of 20,000,000 shares
of common stock, par value $.01 per share ("Common Stock"), and
1,000 shares of preferred stock, par value $.01 per share
("Preferred Stock").
SIXTH. The Preferred Stock may be issued from time to time
as a class without series or, if so determined by the board of
directors of the Corporation, either in whole or in part, in one
or more series. There is hereby expressly granted to and vested
in the board of directors of the Corporation authority to fix and
determine (except as fixed and determined herein), by resolution,
the par value, voting powers, full or limited, or no voting
powers, and such designations, preferences and relative,
participating, optional or other special rights, if any, and the
qualifications, limitations or restrictions thereof, if any,
including specifically, but not limited to, the dividend rights,
conversion rights, redemption rights and liquidation preferences,
if any, of any wholly unissued series of Preferred Stock (or the
entire class of Preferred Stock if none of such shares have been
issued), the number of shares constituting any such series and
the terms and conditions of the issue thereof. Prior to the
issuance of any shares of Preferred Stock, a statement setting
forth a copy of each such resolution or resolutions and the
number of shares of Preferred Stock of each such class or series
shall be executed and filed in accordance with the Pennsylvania
Business Corporation Law. Unless otherwise provided in any such
resolution or resolutions, the number of shares of capital stock
of any such class or series so set forth in such resolution or
resolutions may thereafter be increased or decreased (but not
below the number of shares then outstanding), by a statement
likewise executed and filed setting forth a statement that a
specified increase or decrease therein had been authorized and
directed by a resolution or resolutions likewise adopted by the
board of directors of the Corporation. In case the number of
such shares shall be decreased, the number of shares so specified
in the statement shall resume the status they had prior to the
adoption of the first resolution or resolutions.
SEVENTH. Each holder of record of Common Stock shall have
the right to one vote for each share of Common Stock standing in
such holder's name on the books of the Corporation. No
shareholder shall be entitled to cumulate any votes for the
election of directors.
EIGHTH. The management, control and government of the
Corporation shall be vested in a board of directors consisting of
not less than one (1) nor more than twenty-five (25) members in
number, as fixed by the board of directors of the Corporation
from time to time. The directors of the Corporation shall be
divided into three classes: Class I, Class II and Class III.
Each Class shall be as nearly equal in number as possible. If
the number of Class I, Class II or Class III directors is fixed
for any term of office, it shall not be increased during that
term, except by a majority vote of the board of directors. The
term of office of the initial Class I directors shall expire at
the annual election of directors by the shareholders of the
Corporation in 1998; the term of office of the initial Class II
directors shall expire at the annual election of directors by the
shareholders of the Corporation in 1999; and the term of office
of the initial Class III directors shall expire at the annual
election of directors by the shareholders of the Corporation in
2000. After the initial term of each Class, the term of office
of each Class shall be three (3) years, so that the term of
office of one class of directors shall expire each year when
their respective successors have been duly elected by the
shareholders and qualified. At each annual election by the
shareholders of the Corporation, the directors chosen to succeed
those whose terms then expire shall be identified as being of the
same class as the directors they succeed. If, for any reason, a
vacancy occurs on the board of directors of the Corporation, a
majority of the remaining directors shall have the exclusive
power to fill the vacancy by electing a director to hold office
for the unexpired term in respect of which the vacancy occurred.
No director of the Corporation shall be removed from office, as a
director, by the vote of shareholders, unless the votes of
shareholders cast in favor of the resolution for the removal of
such director constitute at least a majority of the votes which
all shareholders would be entitled to cast at an annual election
of directors.
NINTH. No holder of any class of capital stock of the
Corporation shall have preemptive rights, and the Corporation
shall have the right to issue and to sell to any person or
persons any shares of its capital stock or any option, warrant or
right to acquire capital stock, or any securities having
conversion or option rights without first offering such shares,
rights or securities to any holder of any class of capital stock
of the Corporation.
TENTH. The presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes which all
shareholders are entitled to cast shall constitute a quorum of
shareholders at any annual or special meeting of shareholders of
the Corporation.
ELEVENTH. A special meeting of the shareholders of the
Corporation may be called only by: (i) the Chief Executive
Officer, (ii) the Executive Committee of the Board of Directors,
or (iii) the Board of Directors pursuant to a resolution adopted
by a majority of the total number of directors which the
Corporation would have if there were no vacancies on the Board of
Directors.
TWELFTH. The Control Transactions provisions of the
Pennsylvania Business Corporation Law (15 Pa. Cons. Stat.
Section 2541 et. seq.) shall not be applicable to the
Corporation.
The Business Combinations provisions of the Pennsylvania
Business Corporation Law (15 Pa. Cons. Stat. Section 2551 et.
seq.) shall not be applicable to the Corporation.
The Control-Share Acquisitions provisions of the
Pennsylvania Business Corporation Law (15 Pa. Cons. Stat.
Section 2561 et. seq.) shall not be applicable to the
Corporation.
The Disgorgement By Certain Controlling Shareholders
Following Attempt to Acquire Control provisions of the
Pennsylvania Business Corporation Law (15 Pa. Cons. Stat.
Section 2577 et. seq.) shall not be applicable to the
Corporation.
THIRTEENTH. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in its Articles
of Incorporation in the manner now or hereafter prescribed by
statute and all rights conferred upon shareholders and directors
herein are hereby granted subject to this reservation; provided,
however, that the provisions set forth in Articles SEVENTH,
EIGHTH and TENTH through THIRTEENTH, inclusive, of these Articles
of Incorporation may not be repealed, altered or amended, in any
respect whatsoever, unless such repeal, alteration or amendment
is approved by either (a) the affirmative vote of shareholders of
the Corporation entitled to cast at least 80 percent (80%) of the
votes which all shareholders of the Corporation are then entitled
to cast or (b) the affirmative vote of 80 percent (80%) of the
members of the board of directors of the Corporation and the
affirmative vote of shareholders of the Corporation entitled to
cast at least a majority of the votes which all shareholders of
the Corporation are then entitled to cast.
FOURTEENTH. The name and post office address of the
incorporator is:
Name Address
Kathleen S. Wetzel STEVENS & LEE
111 North Sixth Street
P.O. Box 679
Reading, PA 19603-0679
IN TESTIMONY WHEREOF, the Incorporator has signed these
Articles of Incorporation this 14th day of August, 1997.
/s/ Kathleen S. Wetzel
Kathleen S. Wetzel,
Incorporator
EXHIBIT 3.2
BYLAWS
OF
TOTAL CONTAINMENT, INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 - Annual Meeting -
(a) General. The annual meeting of shareholders shall be
held on such day each year as may be fixed from time to
time by the board of directors, or, if no day be so
fixed, on the fourth Tuesday of April of each year;
provided, however, that if such day falls upon a legal
holiday, then on the next business day thereafter. If
the annual meeting shall not have been called and held
within six (6) months after the designated time, any
shareholder may call the meeting at any time
thereafter. At each annual meeting of shareholders,
directors shall be elected, reports of the affairs of
the corporation shall be considered, and such other
business as may properly come before the meeting may be
transacted.
(b) Conduct of Meetings. At every meeting of the
shareholders, the Chairman of the Board or, in his
absence, the officer designated by the Chairman of the
Board, or, in the absence of such designation, a
chairman (who shall be one of the officers, if any is
present) chosen by a majority of the members of the
board of directors shall act as chairman of the
meeting. The chairman of the meeting shall have any
and all powers and authority necessary in the
chairman's sole discretion to conduct an orderly
meeting and preserve order and to determine any and all
procedural matters, including imposing reasonable
limits on the amount of time at the meeting taken up in
remarks by any one shareholder or group of
shareholders. In addition, until the business to be
completed at a meeting of the shareholders is
completed, the chairman of a meeting of the
shareholders is expressly authorized to temporarily
adjourn and postpone the meeting from time to time.
The Secretary of the corporation or in his absence, an
assistant secretary, shall act as Secretary of all
meetings of the shareholders. In the absence at such
meeting of the Secretary or assistant secretary, the
chairman of the meeting may appoint another person to
act as Secretary of the meeting.
Section 1.02 - Special Meetings - Special meetings of the
shareholders may be called only in accordance with the articles
of incorporation of the corporation. Upon written request to the
Chief Executive Officer or the Secretary, sent by registered mail
or delivered to such officer in person, of any person or persons
entitled to call a special meeting of the shareholders, it shall
be the duty of the Secretary to fix the time of the meeting,
which shall be held not more than sixty (60) days after the
receipt of the request. If the Secretary neglects or refuses to
fix the time of the meeting, the person or persons duly calling
the meeting may do so.
Section 1.03 - Place of Meeting - All meetings of the
shareholders shall be held at such place, within or outside the
Commonwealth of Pennsylvania, as may be designated by the board
of directors in the notice of meeting. In the absence of such
designation, shareholders' meetings shall be held at the
registered office of the corporation.
Section 1.04 - Notice of Meetings of Shareholders - Except as
provided otherwise in these bylaws or required by law, written
notice of every meeting of the shareholders shall be given by, or
at the direction of, the Secretary or other authorized person, to
each shareholder of record entitled to vote at the meeting at
least ten (10) days prior to the day named for the meeting.
Section 1.05 - Contents - The notice of the meeting shall specify
the place, day and hour of the meeting and, in the case of a
special meeting, the general nature of the business to be
transacted. If the purpose, or one of the purposes, of the
meeting is to consider the adoption, amendment or repeal of the
bylaws, there shall be included in, enclosed with, or accompanied
by, the notice a copy of the proposed amendment or a summary of
the changes to be made by the amendment.
Section 1.06 - Quorum - A meeting of the shareholders duly called
shall not be organized for the transaction of business unless a
quorum is present. The presence in person or by proxy of
shareholders entitled to cast at least a majority of the votes
that all shareholders are entitled to cast on a particular matter
to be acted upon at the meeting shall constitute a quorum for the
purposes of consideration and action on such matter. The
shareholders present at a duly organized meeting can continue to
do business until adjournment notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
Section 1.07 - Adjournments - If a meeting of the shareholders
duly called cannot be organized because a quorum has not
attended, the chairman of the meeting or a majority of
shareholders present in person or by proxy and entitled to vote
may adjourn the meeting to such time and place as they may
determine.
At any meeting at which directors are to be elected and which has
previously been adjourned for lack of a quorum, the shareholders
present and entitled to vote, although less than a quorum as
fixed herein, shall nevertheless constitute a quorum for the
purpose of electing directors. In other cases, those
shareholders entitled to vote who attend a meeting of the
shareholders that has been previously adjourned for one or more
periods aggregating at least fifteen (15) days because of an
absence of quorum, although less than a quorum as fixed herein,
shall nonetheless constitute a quorum for the purpose of acting
upon any matter stated in the notice of the meeting, provided the
notice of meeting states that shareholders who attend such
adjourned meeting shall nonetheless constitute a quorum for the
purpose of acting upon the matter.
When a meeting of the shareholders is adjourned, it shall not be
necessary to give any notice of the adjourned meeting or of the
business to be transacted at the adjourned meeting other than by
announcement at the meeting at which the adjournment is taken,
unless the board of directors fixes a new record date for the
adjourned meeting or unless notice of the business to be
transacted was required by the Pennsylvania Business Corporation
Law of 1988, as it may be amended, to be stated in the original
notice of the meeting and such notice had not been previously
provided.
Section 1.08 - Action by Shareholders - Whenever any corporate
action is to be taken by vote of the shareholders, it shall be
authorized upon receiving the affirmative vote of a majority of
the votes cast by all shareholders entitled to vote thereon and,
if any shareholders are entitled to vote thereon as a class, upon
receiving the affirmative vote of the majority of the votes cast
by the shareholders entitled to vote as a class on the matter,
except when a different vote is required by law, or the articles
of incorporation, or these bylaws.
Section 1.09 - Voting Rights of Shareholders - Unless otherwise
provided in the articles of incorporation, every shareholder of
the corporation shall be entitled to one vote for every share
outstanding in the name of the shareholder on the books of the
corporation.
Section 1.10 - Voting and Other Action by Proxy -
(a) General. Every shareholder entitled to vote at a
meeting of shareholders or to express consent or
dissent to corporate action in writing without a
meeting may authorize another person or persons to act
for that shareholder by proxy. The presence of, or
vote or other action at a meeting of shareholders, or
the expression of consent or dissent to corporate
action in writing, by a proxy of a shareholder shall
constitute the presence of, or vote or action by, or
written consent or dissent of the shareholder.
Where two or more proxies of a shareholder are present,
the corporation shall, unless otherwise expressly
provided in the proxy, accept as the vote of all shares
represented thereby the vote cast by a majority of them
and, if a majority of the proxies cannot agree whether
the shares represented shall be voted, or upon the
manner of voting the shares, the voting of the shares
shall be divided equally among those persons.
(b) Minimum Requirements. Every proxy shall be executed in
writing by the shareholder or by the duly authorized
attorney-in-fact of the shareholder and filed with the
Secretary of the corporation. A telegram, telex,
cablegram, datagram or similar transmission from a
shareholder or attorney-in-fact, or a photographic,
facsimile or similar reproduction of a writing executed
by a shareholder or attorney-in-fact:
(1) may be treated as properly executed; and
(2) shall be so treated if it sets forth a
confidential and unique identification number or
other mark furnished by the corporation to the
shareholder for the purposes of a particular
meeting or transaction.
(c) Revocation. A proxy, unless coupled with an interest,
shall be revocable at will, notwithstanding any other
agreement or any provision in the proxy to the
contrary, but the revocation of a proxy shall not be
effective until written notice thereof has been given
to the Secretary of the corporation. An unrevoked
proxy shall not be valid after three years from the
date of its execution unless a longer time is expressly
provided therein. A proxy shall not be revoked by the
death or incapacity of the maker unless, before the
vote is counted or the authority is exercised, written
notice of the death or incapacity is given to the
Secretary of the corporation.
Section 1.11 - Voting by Fiduciaries and Pledgees - Shares of the
corporation standing in the name of a trustee or other fiduciary
and shares held by an assignee for the benefit of creditors or by
a receiver may be voted by the trustee, fiduciary, assignee or
receiver. A shareholder whose shares are pledged shall be
entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the
pledgee, but nothing in this section shall affect the validity of
a proxy given to a pledgee or nominee.
Section 1.12 - Voting of Joint Holders of Shares -
(a) General. Where shares of the corporation are held
jointly or as tenants in common by two or more persons,
as fiduciaries or otherwise:
(1) if only one or more of such persons is present in
person or by proxy, all of the shares standing in
the name of such persons shall be deemed to be
represented for the purpose of determining a
quorum and the corporation shall accept as the
vote of all the shares the vote cast by a joint
owner or a majority of them; and
(2) if the persons are equally divided upon whether
the shares held by them shall be voted or upon the
manner of voting the shares, the voting of the
shares shall be divided equally among the persons
without prejudice to the rights of the joint
owners or the beneficial owners thereof among
themselves.
(b) Exception. If there has been filed with the Secretary
of the corporation a copy, certified by an attorney at
law to be correct, of the relevant portions of the
agreement under which the shares are held or the
instrument by which the trust or estate was created or
the order of court appointing them or of an order of
court directing the voting of the shares, the persons
specified as having such voting power in the document
latest in date of operative effect so filed, and only
those persons, shall be entitled to vote the shares but
only in accordance therewith.
Section 1.13 - Voting by Corporations - Any corporation that is a
shareholder of this corporation may vote by any of its officers
or agents, or by proxy appointed by any officer or agent, unless
some other person, by resolution of the board of directors of the
other corporation or a provision of its articles or bylaws, a
copy of which resolution or provision certified to be correct by
one of its officers has been filed with the Secretary of this
corporation, is appointed its general or special proxy in which
case that person shall be entitled to vote the shares.
Section 1.14 - Determination of Record Date - The board of
directors may fix a time prior to the date of any meeting of
shareholders as a record date for the determination of the
shareholders entitled to notice of, or to vote at, the meeting,
which time, except in the case of an adjourned meeting, shall be
not more than 90 days prior to the date of the meeting of
shareholders. Only shareholders of record on the date fixed
shall be so entitled notwithstanding any transfer of shares on
the books of the corporation after any record date fixed as
provided in this section. The board of directors may similarly
fix a record date for the determination of shareholders of record
for any other purpose. When a determination of shareholders of
record has been made as provided in this section for purposes of
a meeting, the determination shall apply to any adjournment
thereof unless the board fixes a new record date for the
adjourned meeting.
Section 1.15 - Voting List - The officer or agent having charge
of the transfer books for shares of the corporation shall make a
complete list of the shareholders entitled to vote at any meeting
of shareholders, arranged in alphabetical order, with the address
of and the number of shares held by each. The list shall be
produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
Failure to comply with the requirements of this section shall not
affect the validity of any action taken at a meeting prior to a
demand at the meeting by any shareholder entitled to vote thereat
to examine the list. The original share register or transfer
book, or a duplicate thereof kept in Pennsylvania, shall be prima
facie evidence as to who are the shareholders entitled to examine
the list or share register or transfer book or to vote at any
meeting of shareholders.
Section 1.16 - Judges of Election - In advance of any meeting of
shareholders of the corporation, the board of directors may
appoint judges of election, who need not be shareholders, to act
at the meeting or any adjournment thereof. If judges of election
are not so appointed, the presiding officer of the meeting may,
and on the request of any shareholder shall, appoint judges of
election at the meeting. The number of judges shall be one or
three. No person who is a candidate for office to be filled at
the meeting shall act as a judge of election.
In the event any person appointed as a judge fails to appear or
fails or refuses to act, the vacancy may be filled by appointment
made by the board of directors in advance of the convening of the
meeting or at the meeting by the presiding officer thereof.
The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear
and determine all challenges and questions in any way arising in
connection with the right to vote, count and tabulate all votes,
determine the result and do such acts as may be proper to conduct
the election or vote with fairness to all shareholders. The
judge or judges of election shall perform their duties
impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three judges of
election, the decision, act or certificate of a majority shall be
effective in all respects as the decision, act or certificate of
all.
On request of the presiding officer of the meeting, or of any
shareholder, the judge or judges shall make a report in writing
of any challenge or question or matter determined by them, and
execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facie evidence of the
facts stated therein.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01 - General - Unless otherwise provided by statute,
all powers vested by law in the corporation shall be exercised by
or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the board of
directors of the corporation.
Section 2.02 - Number, Qualifications, Selection and Term of
Office - The board of directors of the corporation shall consist
of at least one (1) and not more than twenty-five (25) directors,
the exact number to be set from time to time by resolution of the
board of directors. Each director shall be a natural person of
full age and not less than one-third of the directors shall be
persons who are not officers or employees of the corporation or
of any entity controlling, controlled by or under common control
with the corporation and who are not beneficial owners of a
controlling interest in the voting stock of the corporation or of
any such entity. No person shall be eligible for election as a
member of the board of directors following such person's
attainment of the age of seventy (70) years; provided, however,
that this provision shall not be applicable to the initial term
as a director of any person serving on the board of directors on
March 1, 1997. Any person elected to the board of directors
prior to attainment of the age of seventy (70) years shall be
permitted to serve as a member of the board for the full term for
which such director was elected. Each director shall hold office
until the expiration of the term for which he or she was selected
and until a successor has been selected and qualified or until
his or her earlier death, resignation or removal. A decrease in
the number of directors shall not have the effect of shortening
the term of any incumbent director.
Section 2.03 - Nominations for Directors - Nominations for the
election of directors may be made by the board of directors or by
any shareholder entitled to vote for the election of directors.
Nominations made by a shareholder entitled to vote for the
election of directors shall be made by notice in writing,
delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the corporation not less than ninety
(90) days prior to any meeting of the shareholders called for the
election of directors; provided, however, that if less than
fifteen (15) days' notice of the meeting is given to
shareholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the corporation not later than
the close of the third day following the day on which notice of
the meeting was mailed to shareholders. Notice of nominations
which are proposed by the board of directors shall be given by
the Chairman of the Board or any other appropriate officer. Each
notice of nominations made by a shareholder shall set forth
(i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice, (ii) the
principal occupation or employment of each such nominee, and
(iii) the number of shares of capital stock of the corporation
which are beneficially owned by each such nominee. Upon
receiving a notice of nomination made by a shareholder, the board
of directors shall be entitled to request any other information
relating to such nominee deemed relevant by the board. The
Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 2.04 - Election - Except as otherwise provided in these
bylaws, directors of the corporation shall be elected by the
shareholders. In elections for directors, voting need not be by
ballot unless required by vote of the shareholders before the
voting for election of directors begins. The candidates
receiving the highest number of votes, up to the number of
directors to be elected, shall be elected.
Section 2.05 - Vacancies -
(a) Vacancies. Vacancies in the board of directors shall
exist in the case of the happening of any of the
following events: (i) the death or resignation of any
director; (ii) if at any annual or special meeting the
shareholders at which directors are to be elected, the
shareholders fail to elect the full authorized number
of directors to be voted for at that meeting; (iii) an
increase in the number of directors by resolution of
the board of directors; (iv) the removal of a director
by the affirmative vote of shareholders of the
corporation in accordance with the articles of
incorporation of the corporation; or (v) the removal of
a director by the board of directors or a court of
competent jurisdiction in accordance with these bylaws
or otherwise in accordance with law.
(b) Filling Vacancies. Vacancies in the board of
directors, including vacancies resulting from an
increase in the number of directors, may be filled by a
majority vote of the remaining members of the board
though less than a quorum, or by a sole remaining
director, and each person so selected shall be a
director to serve for the balance of the unexpired term
and until his or her successor has been selected and
qualified or until his or her earlier death,
resignation or removal.
Section 2.06 - Removal and Resignation -
(a) Removal by Shareholders. A director may be removed by
shareholders only in accordance with the articles of
incorporation of the corporation.
(b) Removal by Action of the Directors. The board of
directors may declare vacant the office of a director
if that director: (i) has been judicially declared of
unsound mind; (ii) has been convicted of an offense
punishable by imprisonment for a term of more than one
year; or (iii) if within sixty (60) days after notice
of his or her election, the director does not accept
such office either in writing or by attending a meeting
of the board of directors and fulfilling such other
requirements of qualification as these bylaws or the
articles of incorporation may provide.
(c) Resignation. Any director may resign at any time from
his or her position as a director upon written notice
to the corporation. The resignation shall be effective
upon its receipt by the corporation or at such later
time as may be specified in the notice of resignation.
Section 2.07 - Regular Meetings - The board of directors of the
corporation shall hold an annual meeting for the election of
officers and the consideration of other proper business either as
soon as practical after, and at the same place as, the annual
meeting of shareholders of the corporation, or at such other day,
hour and place as may be fixed by the board. The board of
directors may designate by resolution the day, hour and place,
within or outside the Commonwealth of Pennsylvania, of other
regular meetings.
Section 2.08 - Special Meetings - Special meetings of the board
of directors may be called by the Chairman of the Board, the
Chief Executive Officer, or the President of the corporation or a
majority of the directors then in office. The person or persons
calling the special meeting may fix the day, hour and place,
within or outside the Commonwealth of Pennsylvania, of the
meeting.
Section 2.09 - Notice of Meetings -
(a) General. No notice of any annual or regular meeting of
the board of directors of the corporation need be
given. Written notice of each special meeting of the
board of directors, specifying the place, day and hour
of the meeting, shall be given to each director at
least 24 hours before the time set for the meeting.
Neither the business to be transacted at, nor the
purpose of, any annual, regular or special meeting of
the board need be specified in the notice of the
meeting.
(b) Validation of Meeting Defectively Called or Noticed.
The transactions of any meeting of the board of
directors, however called and noticed or wherever held,
are as valid as though taken at a meeting duly held
after regular call and notice, if a quorum is present
and if, either before or after the meeting, each of the
directors not present signs a waiver of notice. All
such waivers shall be filed with the corporate records
or made a part of the minutes of the meeting.
Attendance of a director at any meeting shall
constitute a waiver of notice of such meeting except
where a director attends a meeting for the express
purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 2.10 - Quorum and Action by Directors - A majority of the
directors in office shall be necessary to constitute a quorum for
the transaction of business; provided, however, that at least one
director who is not an officer or employee of the corporation or
of any entity controlling, controlled by or under common control
with the corporation and who is not a beneficial owner of a
controlling interest in the voting stock of the corporation or of
any such entity must be present in order to constitute a quorum.
The acts of a majority of directors present and voting at a
meeting at which a quorum is present shall be the acts of the
board of directors, except where a different vote is required by
law, the articles of incorporation or these bylaws. Every
director shall be entitled to one vote.
Any action required or permitted to be taken at a meeting of the
board of directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of
the directors in office is filed with the Secretary of the
corporation.
Section 2.11 - Presumption of Assent - A director of the
corporation who is present at a meeting of the board of
directors, or of a committee of the board, at which action on any
corporate matter is taken on which the director is generally
competent to act, shall be presumed to have assented to the
action taken unless his or her dissent is entered in the minutes
of the meeting or unless that director files his or her written
dissent to the action with the Secretary of the meeting before
its adjournment or submits the dissent in writing to the
Secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director
who voted in favor of the action. Nothing in this section shall
bar a director from asserting that the minutes of a meeting
incorrectly omitted that director's dissent if, promptly upon
receipt of a copy of those minutes, the director notified the
Secretary, in writing, of the asserted omission or inaccuracy.
Section 2.12 - Presiding Officer - All meetings of the board of
directors of the corporation shall be called to order and
presided over by the Chairman of the Board of Directors, or in
the Chairman's absence, by the Chief Executive Officer of the
corporation or, in the absence of the Chairman and the Chief
Executive Officer, by a chairman of the meeting elected at such
meeting by the board of directors. The Secretary of the
corporation shall act as Secretary of the board of directors
unless otherwise specified by the board of directors. In case
the Secretary shall be absent from any meeting, the chairman of
the meeting may appoint any person to act as secretary of the
meeting.
Section 2.13 - Committees - The board of directors may, by
resolution adopted by a majority of the directors in office,
establish one or more committees. Each committee is to consist
of at least two (2) directors of the corporation and not less
than two-thirds of the members of each committee shall be persons
who are not officers or employees of the corporation or of any
entity controlling, controlled by or under common control with
the corporation and who are not beneficial owners of a
controlling interest in the voting stock of the corporation or of
any such entity. The Chief Executive Officer shall be an
ex-officio member of each committee of the board of directors,
except the Compensation and Audit Committees. The board may
designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at
any meeting of the committee or for purposes of any written
action of the committee.
A committee, to the extent provided in the resolution of the
board of directors creating it, shall have and may exercise all
of the powers and authority of the board of directors except that
a committee shall not have any power or authority regarding:
(i) the submission to shareholders of any action requiring the
approval of shareholders under the Pennsylvania Business
Corporation Law of 1988, as it may be amended, (ii) the creation
or filling of vacancies in the board of directors, (iii) the
adoption, amendment or repeal of these bylaws, (iv) the
amendment, adoption or repeal of any resolution of the board of
directors that by its terms is amendable or repealable only by
the board of directors, or (v) any action on matters committed by
the bylaws or resolution of the board of directors to another
committee of the board. Each committee of the board shall serve
at the pleasure of the board.
Section 2.14 - Executive Committee - There shall be a standing
committee of the Board of Directors to be known as the Executive
Committee consisting of the Chairman of the Board, the President
and at least one (1) other director. The Executive Committee,
during the intervals between meetings of the Board of Directors,
shall to the extent permitted by law, exercise all the powers and
authority of the Board of Directors in the management of the
business and affairs of the corporation.
The Executive Committee shall keep minutes of its proceedings and
shall report on its activities at each regular meeting of the
Board of Directors.
Section 2.15 - Compensation Committee - There shall be a standing
Compensation Committee of the Board of Directors which shall be
responsible for making annual recommendations to the Board of
Directors with respect to officer and employee compensation and
benefits.
The Compensation Committee shall keep minutes of its proceedings
and shall report on its activities at each regular meeting of the
Board of Directors.
Section 2.16 - Audit Committee - There shall be a standing
committee of the board of directors to be known as the Audit
Committee. The members of the Audit Committee shall consist
exclusively of directors who are not officers or employees of the
corporation or of any entity controlling, controlled by or under
common control with the corporation and who are not beneficial
owners of a controlling interest in the voting stock of the
corporation or of any such entity. The Audit Committee shall:
(i) make recommendations to the board of directors as to the
independent accountants to be appointed by the board, (ii) review
with the independent accountants the scope of their examination,
(iii) receive the reports of the independent accountants and meet
with the representatives of such accountants for the purpose of
reviewing and considering questions relating to their examination
and such reports, (iv) review the internal accounting and
auditing procedures of the corporation, and (v) perform such
other duties as may be assigned to it from time to time by the
board of directors.
Section 2.17 - Personal Liability of Directors - To the fullest
extent permitted by Pennsylvania law, a director of the
corporation shall not be personally liable for monetary damages
for any action taken, or any failure to take any action, unless
the director has breached or failed to perform the duties of his
or her office under Subchapter B of Chapter 17 of the
Pennsylvania Business Corporation Law of 1988, as it may be
amended, and such breach or failure to perform constitutes self-
dealing, willful misconduct or recklessness; provided, however,
that the foregoing provision shall not eliminate or limit (i) the
responsibility or liability of that director under any criminal
statute, or (ii) the liability of a director for the payment of
taxes according to local, state or federal law. Any repeal,
modification or adoption of any provision inconsistent with this
section shall be prospective only, and neither the repeal or
modification of this bylaw nor the adoption of any provision
inconsistent with this bylaw shall adversely affect any
limitation on the personal liability of a director of the
corporation existing at the time of such repeal or modification
or the adoption of such inconsistent provision.
ARTICLE III
OFFICERS
Section 3.01 - Officers and Qualifications - The corporation
shall have a Chairman of the Board, a Chief Executive Officer, a
President, a Secretary, and a Treasurer, each of whom shall be
elected or appointed by the board of directors. The board may
also elect one or more vice presidents, and such other officers
and assistant officers as the board deems necessary or advisable.
All officers shall be natural persons of full age. Any two or
more offices may be held by the same person. It shall not be
necessary for officers to be directors of the corporation.
Officers of the corporation shall have such authority and perform
such duties in the management of the corporation as is provided
by or under these bylaws or in the absence of controlling
provisions in these bylaws as is determined by or under
resolutions or orders of the board of directors.
Section 3.02 - Election- Term and Vacancies - The officers and
assistant officers of the corporation shall be elected by the
board of directors at the annual meeting of the board or from
time to time as the board shall determine, and each officer shall
hold office for one (1) year and until his or her successor has
been duly elected and qualified or until that officer's earlier
death, resignation or removal. A vacancy in any office occurring
in any manner may be filled by the board of directors and, if the
office is one for which these bylaws prescribe a term, shall be
filled for the unexpired portion of the term.
Section 3.03 - Subordinate Officers, Committees and Agents - The
board of directors may from time to time elect such other
officers and appoint such committees, employees or other agents
as the business of the corporation may require, including one or
more assistant secretaries, and one or more assistant treasurers,
each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these
bylaws or as the board of directors may from time to time
determine. The board of directors may delegate to any officer or
committee the power to elect subordinate officers and to retain
or appoint employees or other agents, or committees thereof and
to prescribe the authority and duties of such subordinate
officers, committees, employees or other agents.
Section 3.04 - Removal; Resignation and Bonding -
(a) Removal. Any officer or agent of the corporation may
be removed by the board of directors with or without
cause, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall
not of itself create contract rights.
(b) Resignation. Any officer may resign at any time upon
written notice to the corporation. The resignation
shall be effective upon its receipt by the corporation
or at such later time as may be specified in the notice
of resignation.
(c) Bonding. The corporation may secure the fidelity of
any or all of its officers by bond or otherwise.
Section 3.05 - Chairman of the Board - The Chairman of the Board
of Directors of the corporation, if one is elected, shall preside
at all meetings of the shareholders and of the directors at which
he or she is present, and shall have such authority and perform
such other duties as the board of directors may from time to time
designate.
Section 3.06 - Chief Executive Officer - The Chief Executive
Officer shall, in the absence of the Chairman of the Board,
preside at all meetings of the shareholders and of the board of
directors at which he or she is present. Subject to the control
of the board of directors of the corporation and, within the
scope of their authority, any committees thereof, the Chief
Executive Officer shall (a) have general and active management of
all the business, property and affairs of the corporation,
(b) see that all orders and resolutions of the board of directors
and its committees are carried into effect, (c) appoint and
remove subordinate officers and agents, other than those
appointed or elected by the board of directors, as the business
of the corporation may require, (d) have custody of the corporate
seal, or entrust the same to the Secretary, (e) act as the duly
authorized representative of the board in all matters, except
where the board has formally designated some other person or
group to act, (f) sign, execute and acknowledge, in the name of
the corporation, deeds, mortgages, bonds, contracts or other
instruments authorized by the board of directors, except in cases
where signing and execution thereof shall be expressly delegated
by the board of directors, or by these bylaws, to some other
officer or agent of the corporation, and (g) in general perform
all the usual duties incident to the office of Chief Executive
Officer and such other duties as may be assigned to such person
by the board of directors.
Section 3.07 - President - The President shall perform the duties
of Chief Executive Officer either when he has been chosen as
Chief Executive Officer or when the Chief Executive Officer is
absent or unable to perform the duties of his office. The
President shall have such other powers and perform such other
duties as from time to time as may be prescribed by him by the
board of directors or prescribed by the bylaws.
Section 3.08 - Vice Presidents - Each vice president, if any,
shall perform such duties as may be assigned to him or her by the
board of directors or the Chief Executive Officer. One vice
president shall be designated by the board of directors to
perform the duties of the Chief Executive Officer, in the event
of the absence or disability of the Chief Executive Officer.
Section 3.09 - Secretary - The Secretary shall (a) keep or cause
to be kept the minutes of all meetings of the shareholders, the
board of directors, and any committees of the board of directors
in one or more books kept for that purpose, (b) have custody of
the corporate records, stock books and stock ledgers of the
corporation, (c) keep or cause to be kept a register of the
address of each shareholder, which address has been furnished to
the Secretary by the shareholder, (d) see that all notices are
duly given in accordance with law, the articles of incorporation,
and these bylaws, and (e) in general perform all the usual duties
as may be assigned to him or her by the board of directors or the
Chief Executive Officer.
Section 3.10 - Assistant Secretary - The Assistant Secretary, if
any, or Assistant Secretaries if more than one, shall perform the
duties of the Secretary in his or her absence and shall perform
other duties as the board of directors, the Chief Executive
Officer or the Secretary may from time to time designate.
Section 3.11 - Treasurer - The Treasurer shall have general
supervision of the fiscal affairs of the corporation and shall be
the Chief Financial Officer of the corporation. The Treasurer
shall, with the assistance of the Chief Executive Officer and
managerial staff of the corporation: (a) see that a full and
accurate accounting of all financial transactions is made;
(b) invest and reinvest the capital funds of the corporation in
such manner as may be directed by the board of directors, unless
that function shall have been delegated to a nominee or agent;
(c) deposit or cause to be deposited in the name and to the
credit of the corporation, in such depositories as the board of
directors shall designate, all monies and other valuable effects
of the corporation not otherwise employed; (d) prepare any
financial reports that may be requested from time to time by the
board of directors; (e) cooperate in the conduct of any annual
audit of the corporation's financial records by certified public
accountants duly appointed by the board of directors; and (f) in
general perform all the usual duties incident to the office of
treasurer and such other duties as may be assigned to him or her
by the board of directors or the Chief Executive Officer.
Section 3.12 - Officer Salaries - Unless otherwise provided by
the board of directors of the corporation, the salaries of each
of the officers elected by the board of directors shall be fixed
from time to time by the board of directors and the salaries of
all other officers of the corporation shall be fixed from time to
time by the Chief Executive Officer or such other person as may
be designated from time to time by the Chief Executive Officer or
the board of directors.
No officer shall be prevented from receiving such salary or other
compensation by reason of the fact that the officer is also a
director of the corporation.
ARTICLE IV
SHARE CERTIFICATES AND TRANSFERS
Section 4.01 - Share Certificates - Share certificates shall be
in such form as shall be approved by the board of directors and
shall state: (i) that the corporation is incorporated under the
laws of the Commonwealth of Pennsylvania, (ii) the name of the
person to whom issued, and (iii) the number and class of shares
and the designation of the series, if any, that the share
certificate represents.
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.
Section 4.02 - Issuance - The share certificates of the
corporation shall be numbered and registered in the share
register or transfer books of the corporation as they are issued.
They shall be signed on behalf of the corporation by the
President or a vice president and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer;
but where a certificate is signed by a transfer agent or a
registrar, the signature of any corporate officer upon the
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 with the same effect as
if the officer had not ceased to be such at the date of its
issue. The provisions of this section shall be subject to any
inconsistent or contrary agreement at the time between the
corporation and any transfer agent or registrar.
Section 4.03 - Transfer of Shares - Transfer of shares shall be
made on the books of the corporation upon surrender of the
certificates therefor, endorsed by the person named in the
certificate or by his attorney, lawfully constituted in writing.
No transfer shall be made which is inconsistent with law.
Section 4.04 - Lost, Destroyed, Mutilated or Stolen
Certificates - If the registered owner of a share certificate
claims that the security has been lost, destroyed, mutilated or
wrongfully taken, another may be issued in lieu thereof in a
manner and upon such terms as the board of directors may
authorize and shall be issued in place of the original security,
in accordance with law, if the owner: (a) so requests before the
corporation has notice that the security has been acquired by a
bona fide purchaser; (b) files with the corporation, if requested
by the corporation, a sufficient indemnity bond; and
(c) satisfies any other reasonable requirements imposed by the
corporation.
ARTICLE V
NOTICE, WAIVERS, AND MEETINGS
Section 5.01 - Manner of Giving Notice - Whenever written notice
is required to be given to any person under the provisions of the
Pennsylvania Business Corporation Law of 1988, as it may
hereafter be amended, or by the articles of incorporation or
these bylaws, it may be given to the person either personally or
by sending a copy of it by any class of mail or express mail,
postage prepaid; or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier
service, charges prepaid; or by facsimile transmission, to the
shareholder's address (or to shareholder's telex, TWX, or
facsimile number) appearing on the books of the corporation; or,
in the case of directors, supplied by the director to the
corporation for the purpose of notice. Notice sent by mail, by
telegraph or by courier service shall be deemed to have been
given to the person entitled thereto when deposited in the United
States mail or with a telegraph office or courier service for
delivery to that person, or in the case of telex or TWX, when
dispatched or in the case of fax, when received except that, in
the case of directors, notice sent by regular mail shall be
deemed to have been given 48 hours after being deposited in the
United States mail or, in the case of telex, TWX, or facsimile,
when dispatched.
A notice of meeting shall specify the place, day and hour of the
meeting and any other information required by any other provision
of the Business Corporation Law of 1988, the articles of
incorporation or these bylaws.
Section 5.02 - Waiver of Notice - Whenever any written notice is
required to be given by statute or the articles of incorporation
or these bylaws, a waiver of the notice in writing, signed by the
person or persons entitled to the notice, whether before or after
the time stated in it, shall be deemed equivalent to the giving
of the notice. Neither the business to be transacted at, nor the
purpose of, a meeting need be specified in the waiver of notice
of such meeting. Attendance of a person, either in person or by
proxy, at any meeting shall constitute a waiver of notice of the
meeting, except where the person attends the meeting for the
express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting was not
lawfully called or convened.
Section 5.03 - Modification of Proposal - Whenever the language
of a proposed resolution is included in a written notice of a
meeting required to be given under the provisions of the Business
Corporation Law of 1988, as it may be amended, or the articles
of incorporation or these bylaws, the meeting considering the
resolution may without further notice adopt it with such
clarifying or other amendments as do not enlarge its original
purpose.
Section 5.04 - Use of Conference Telephone and Similar
Equipment - One of more persons may participate in a meeting of
the directors, or of any committee of directors, by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other. Such participation shall constitute presence in person at
the meeting.
ARTICLE VI
INDEMNIFICATION AND INSURANCE
Section 6.01 - Indemnification -
(a) Indemnification of Directors and Officers. The
corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or
investigative (including, without limitation, actions
by or in the right of the corporation), by reason of
the fact that such person is or was a director or
officer of the corporation, or is or was serving at the
request of the corporation as a director, officer,
employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise, against
expenses (including attorneys' fees), amounts paid in
settlement, judgments, and fines actually and
reasonably incurred by such person in connection with
such action, suit, or proceeding; provided, however,
that no indemnification shall be made in any case where
the act or failure to act giving rise to the claim for
indemnification is determined by a court to have
constituted willful misconduct or recklessness.
(b) Indemnification of Others. The corporation may, at its
discretion, indemnify any person who was or is a party
or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or
investigative (including, without limitation, actions
by or in the right of the corporation), by reason of
the fact that such person is or was an employee or
agent of the corporation who is not entitled to rights
under Section 6.01(a) hereof, or such person is or was
serving at the request of the corporation as an
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against
expenses (including attorneys' fees), amounts paid in
settlement, judgments, and fines actually and
reasonably incurred by such person in connection with
such action, suit, or proceeding; provided, however,
that no indemnification shall be made in any case where
the act or failure to act giving rise to the claim for
indemnification is determined by a court to have
constituted willful misconduct or recklessness.
(c) Advancing Expenses. Expenses (including attorneys'
fees) incurred in defending a civil or criminal action,
suit, or proceeding shall be paid by the corporation in
advance of the final disposition of such action, suit,
or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee, or agent to
repay such amount if it shall be ultimately determined
that he is not entitled to be indemnified by the
corporation as authorized in this Article Six.
(d) Rights Not Exclusive. The indemnification and
advancement of expenses provided by this Article Six
shall not be deemed exclusive of any other right to
which persons seeking indemnification and advancement
of expenses may be entitled under any agreement, vote
of shareholders or disinterested directors, or
otherwise, both as to actions in such persons' official
capacity and as to their actions in another capacity
while holding office, and shall continue as to a person
who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
(e) Insurance; Other Security. The corporation may
purchase and maintain insurance on behalf of any
person, may enter into contracts of indemnification
with any person, may create a fund of any nature (which
may, but need not be, under the control of a trustee)
for the benefit of any person, and may otherwise secure
in any manner its obligations with respect to
indemnification and advancement of expenses, whether
arising under this Article Six or otherwise, to or for
the benefit of any person, whether or not the
corporation would have the power to indemnify such
person against such liability under the provisions of
this Article Six.
Section 6.02 - Contract Rights; Amendment or Repeal - All rights
under this Article Six shall be deemed a contract between the
corporation and the indemnified representative pursuant to which
the corporation and each indemnified representative intend to be
legally bound. Any repeal, amendment or modification hereof
shall be prospective only and shall not affect any rights or
obligations then existing.
Section 6.03 - Reliance on Provisions - Each person who shall act
as an indemnified representative of the corporation shall be
deemed to be doing so in reliance upon the rights provided by
this Article Six.
Section 6.04 - Interpretation - The provisions of this Article
are intended to constitute bylaws authorized by 15 Pa. C.S.
Section 1746.
ARTICLE VII
MISCELLANEOUS
Section 7.01 - Registered Office - The registered office of the
corporation, required by law to be maintained in the Commonwealth
of Pennsylvania, may be, but need not be, the principal place of
business of the corporation. The address of the registered
office may be changed from time to time by the board of directors
of the corporation.
Section 7.02 - Other Offices - The corporation may have
additional offices and business in such places, within or outside
the Commonwealth of Pennsylvania, as the board of directors of
the corporation may designate or as the business of the
corporation may require.
Section 7.03 - Corporate Seal - The corporation may have a
corporate seal, which shall have inscribed on it the name of the
corporation, the year of organization, and the words "Corporate
Seal--Pennsylvania" or such inscription as the board of directors
of the corporation may determine. The seal may be used by
causing it or a facsimile of it to be impressed or affixed, or in
any manner reproduced.
Section 7.04 - Fiscal Year - The fiscal year of the corporation
shall be the calendar year.
Section 7.05 - Checks - All checks, notes, bills of exchange or
other orders in writing shall be signed by such person or persons
as the board of directors or, any person authorized by resolution
of the board of directors may from time to time designate.
Section 7.06 - Contracts - Except as otherwise provided in the
Business Corporation Law of 1988, as it may be amended, in the
case of transactions that require action by the shareholders, the
board of directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on
behalf of the corporation, and such authority may be general or
confined to specific instances.
Any note, mortgage, evidence of indebtedness, contract or other
document, or any assignment or endorsement thereof, executed or
entered into between the corporation and any other person, when
signed by one or more officers or agents having actual or
apparent authority to sign it, or by the Chief Executive Officer,
the President or a vice president and the Secretary or Assistant
Secretary or Treasurer or Assistant Treasurer of the corporation,
shall be held to have been properly executed for and on behalf of
the corporation, without prejudice to the rights of the
corporation against any person who shall have executed the
instrument in excess of his or her actual authority.
Section 7.07 - Amendment of Bylaws - These bylaws may be amended,
altered, changed or repealed as provided in the articles of
incorporation. Any change in the bylaws shall take effect when
adopted unless otherwise provided in the resolution effecting the
change.
Section 7.08 - Severability - If any provision of these bylaws or
the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of these
bylaws and the application of such provisions to other persons or
circumstances shall not be affected thereby and shall be deemed
to be applicable to the greatest extent permitted by law.
EXHIBIT 11
TOTAL CONTAINMENT, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
Six months ended
June 30,
1997 1996
(In thousands)
4,444 4,444
Primary:
Average shares outstanding 4,642 4,642
Options were anti-dilutive - -
Totals 4,642 4,642
Net Income $ 114 $ 635
Per share amount $0.02 $0.14
Fully diluted:
Average shares outstanding 4,642 4,642
Options were anti-dilutive - -
Totals 4,642 4,642
Net Income $ 114 $ 635
Per share amount $0.02 $0.14
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 363
<SECURITIES> 0
<RECEIVABLES> 8,389
<ALLOWANCES> (50)
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<CURRENT-ASSETS> 21,641
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<SALES> 20,339
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<CGS> 13,142
<TOTAL-COSTS> 19,569
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