PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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TOTAL CONTAINMENT, INC.
_________________________________________________________________
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_________________________________________________________________
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<PAGE>
TOTAL
CONTAINMENT
March 31, 1997
Dear Stockholder:
Total Containment, Inc.'s Annual Meeting of Stockholders
will be held on Friday, April 11, 1997, at 2:00 p.m., Eastern
Time. The Annual Meeting will be held at the Company's offices
located at 422 Business Center, A130 North Drive, Oaks,
Pennsylvania 19456.
The matters to be acted on at the Annual Meeting are:
(a) the election of two Class I directors, (b) a proposal to
adopt an Agreement and Plan of Merger pursuant to which TCI will
change its state of incorporation from Delaware to Pennsylvania
by merging into a newly formed wholly-owned Pennsylvania
subsidiary, (c) a proposal to approve the Total Containment, Inc.
1997 Stock Compensation Plan, and (d) the ratification of the
appointment by the Board of Directors of TCI of Price Waterhouse
LLP as its independent auditors for 1997. These matters are
described in the enclosed Notice of Annual Meeting of
Stockholders and Proxy Statement.
Thank you for your interest in TCI. I look forward to
seeing you at the Annual Meeting.
Sincerely,
Marc Guindon,
Chairman of the Board
Please sign and date your proxy card and return it in the
enclosed envelope as soon as possible.
<PAGE>
TOTAL
CONTAINMENT
422 Business Center
A130 North Drive
P.O. Box 939
Oaks, Pennsylvania 19456
Notice of Annual Meeting of Stockholders
to be held April 11, 1997
To the Stockholders of Total Containment, Inc.:
Notice is hereby given that the Annual Meeting (the "Annual
Meeting") of the holders of common stock, $0.01 par value (the
"Common Stock"), of Total Containment, Inc. (the "Company") will
be held at the offices of the Company located at 422 Business
Center, A130 North Drive, P.O. Box 939, Oaks, Pennsylvania 19456
on Friday, April 11, 1997, at 2:00 p.m., Eastern Time:
1. To elect two Class I directors to hold office
until the 2000 Annual Meeting of Stockholders and until 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 will change 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.
Holders of record of issued and outstanding shares of Common
Stock at the close of business on February 28, 1997, are entitled
to notice of, and to vote at, the Annual Meeting. Such
stockholders may vote in person or by proxy. The stock transfer
books of the Company will not be closed.
The Board of Directors of the Company cordially invites you
to attend the Annual Meeting. Whether or not you are personally
present, your shares should be represented at the Annual Meeting.
Accordingly, please sign and return your proxy in the enclosed
envelope.
By Order of the Board of Directors,
Jeffrey A. Boehmer, Secretary
Dated: Oaks, Pennsylvania
March 31, 1997
Stockholders are urged to sign, date and mail the enclosed
proxy promptly in the accompanying envelope. The proxy is
revocable at any time by a written instrument, including a later
dated proxy, signed in the same manner as the proxy and received
by the Secretary of the Company at or before the Annual Meeting.
If you attend the Annual Meeting, you may, if you wish, revoke
your proxy by voting in person.
<PAGE>
Total Containment, Inc.
422 Business Center
A130 North Drive
P.O. Box 939
Oaks, Pennsylvania 19456
Proxy Statement
for Annual Meeting
GENERAL
Introduction
Total Containment, Inc. (the "Company") is a Delaware
business corporation headquartered at 422 Business Center, A130
North Drive, Oaks, Pennsylvania 19456.
Solicitation of Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of the Company
to be used at the Annual Meeting (the "Annual Meeting") of
holders of Common Stock, $0.01 par value (the "Common Stock"), of
the Company to be held at the offices of the Company located at
422 Business Center, A130 North Drive, P.O. Box 939, Oaks,
Pennsylvania 19456, at 2:00 p.m., Eastern Time, on Friday,
April 11, 1997, and at any adjournment or adjournments thereof.
The approximate date upon which this Proxy Statement and the
accompanying proxy were first sent, given or otherwise made
available to shareholders was March 31, 1997. In addition to the
use of the mails, proxies may be solicited by personal interview
and telephone by directors, officers and employees of the Company
and its subsidiaries. The Company will pay all costs of
soliciting proxies.
Voting Securities
Holders of record of the Common Stock at the close of
business on February 28, 1997 (the "Record Date"), are entitled
to notice of, and to vote at, the Annual Meeting.
At the Annual Meeting, each stockholder is entitled to one
vote for each share of the Common Stock registered in the
stockholder's name at the close of business on February 28, 1997.
On February 28, 1997, there were 4,641,600 shares of the Common
Stock outstanding and, accordingly, holders of the Common Stock
are entitled to cast a total of 4,641,600 votes at the Annual
Meeting. Holders of the Common Stock are not entitled to
cumulate votes in election of directors.
Of the 4,641,600 shares of Common Stock outstanding,
2,649,000 shares, representing 57.07% of the issued and
outstanding shares of Common Stock, are owned of record by
Placements CMI Inc., a corporation organized under the laws of
the Province of Quebec, Canada ("CMI"). Mr. Marcel Dutil, a
director of the Company and President of CMI, beneficially owns
99.49% of the issued and outstanding voting capital stock of CMI.
Mr. Dutil has informed the Board that he intends to cause all of
the 2,649,000 shares of Common Stock of the Company owned by CMI
to be voted "FOR" the election of the nominees of the Board of
Directors of the Company ("Matter No. 1"), "FOR" the proposal to
adopt the Agreement and Plan of Merger pursuant to which the
Company will change its state of incorporation from Delaware to
Pennsylvania by merging with and into a newly formed wholly-owned
Pennsylvania subsidiary ("Matter No. 2"), "FOR" the approval of
the 1997 Plan ("Matter No. 3"), and "FOR" the ratification of the
appointment of Price Waterhouse LLP as the Company's independent
auditors for 1997 ("Matter No. 4").
If the enclosed form of proxy is appropriately marked,
signed and returned in time to be voted at the Annual Meeting,
the shares represented by the proxy will be voted in accordance
with the instructions marked thereon. Signed proxies not marked
to the contrary will be voted "FOR" Matter No. 1, "FOR" Matter
No. 2, "FOR" Matter No. 3, and "FOR" Matter No. 4. Signed
proxies will be voted "FOR" or "AGAINST" each other matter which
properly comes before the Annual Meeting or any adjournment or
adjournments thereof, at the discretion of the persons named as
proxyholders.
With respect to the election of directors (Matter No. 1),
each stockholder may cast such holder's votes "FOR" all the
nominees or may "WITHHOLD AUTHORITY" to vote for all or for any
individual nominee. Votes which are withheld will not be counted
for purposes of the election of directors or for the purpose of
establishing a quorum.
With respect to the proposal to adopt the Agreement and Plan
of Merger pursuant to which the Company will change its state of
incorporation from Delaware to Pennsylvania by merging with and
into a newly formed wholly-owned subsidiary (Matter No. 2), each
stockholder may cast all of such holder's votes "FOR" or
"AGAINST" such proposal, or may "ABSTAIN" from voting.
Abstentions will be counted as present for purposes of
determining the existence of a quorum. However, because the
approval of Matter No. 2 requires the affirmative vote of a
majority of the outstanding shares of Common Stock, abstentions
will have the effect of a negative vote. Under applicable
Delaware law, appraisal rights are not available to a stockholder
who dissents with respect to Matter No. 2.
With respect to the proposal to approve the 1997 Plan
(Matter No. 3), each stockholder may cast all of such holder's
votes "FOR" or "AGAINST" such proposal, or may "ABSTAIN" from
voting. Abstentions will be counted as present for purposes of
determining the existence of a quorum. However, because the
approval of Matter No. 3 requires the affirmative vote of a
majority of shares present, in person or by proxy, and entitled
to vote, abstentions will have the effect of a negative vote.
With respect to the ratification of the appointment of
auditors (Matter No. 4), each stockholder may cast all of such
holder's votes "FOR" or "AGAINST" such proposal, or may "ABSTAIN"
from voting. Abstentions will be counted as present for purposes
of determining the existence of a quorum. However, because the
ratification of auditors requires the affirmative vote of a
majority of shares present, in person or by proxy, and entitled
to vote, abstentions will have the effect of a negative vote.
Under applicable Delaware law, broker non-votes will be
counted as present for purposes of determining whether a quorum
exists at the Annual Meeting, but a broker non-vote with respect
to Matters No. 1, 3 or 4 will not be counted as present for
purposes of such Matters and, as a result, will have no effect on
the outcome of such Matters because approval of such Matters
requires only the affirmative vote of a majority of shares
present, in person or by proxy. However, a broker non-vote with
respect to Matter No. 2 will have the effect of a negative vote
because Matter No. 2 requires the affirmative vote of a majority
of outstanding shares of Common Stock.
Right of Revocation
Any stockholder giving a proxy has the power to revoke it by
a written instrument, including a later dated proxy, signed in
the same manner as the proxy and received by the Secretary of the
Company prior to its exercise. Any stockholder attending the
Annual Meeting may also revoke his proxy by voting in person at
the Annual Meeting.
Quorum
Under the Company's Bylaws, holders of a majority of the
shares entitled to vote at the Annual Meeting must be present, in
person or by proxy, to constitute a quorum for the transaction of
business at the Annual Meeting. CMI has informed the Board that
it intends to be present, in person or by proxy, at the Annual
Meeting so that a quorum will be present.
Principal Stockholders
The following table sets forth information, as of
February 28, 1997, as to beneficial owners, either directly or
indirectly, of 5% or more of the outstanding shares of the Common
Stock.
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership Class
Placements CMI Inc.(1)....... 2,649,000 57.07
c/o Heenan Blaikie
1250 Rene-Levesque Blvd. West
Suite 2500
Montreal, Quebec H3B 4YI
Marcel Dutil(2).............. 2,649,000 57.07
270 Chemin du Tremblay
Boucherville, Quebec
J43 5X9
__________________
(1) Marcel Dutil, a director of the Company and President of
CMI, beneficially owns 99.49% of the issued and outstanding
voting capital stock of CMI.
(2) Consists of the 2,649,000 shares owned by CMI.
On January 16, 1996, CMI, in a series of transactions,
acquired indirectly from Mr. Guindon, the former Chief Executive
Officer of the Company and the current Chairman of the Board of
Directors of the Company, that portion of the capital stock of
Groupe Treco Ltee ("Treco") that it did not own. Treco owned
2,601,000 shares of Common Stock. In a series of transactions,
the 2,601,000 shares of Common Stock held by Treco, were
transferred, without value, to CMI. As a result of the
foregoing, CMI directly, and Mr. Dutil indirectly through his
control of CMI, now owns 2,649,000 shares (representing 57.07%)
of the Common Stock of the Company.
The purchase price paid by CMI for the acquisition of the
capital stock of Treco was $5,000,000 payable $2,000,000 in cash
and $3,000,000 in seller financing due in equal $1,500,000
installments on June 15, 1997 and December 15, 1998. CMI will
pay additional consideration if the 2,601,000 shares of Common
Stock of the Company indirectly acquired by CMI are sold as
follows:
(i) 8.62% of the amount by which the sale price
exceeds approximately $5.00 per share, if such shares are
sold before June 15, 1997; and
(ii) 4.31% of the amount by which the sale price
exceeds approximately $5.00 per share, if such shares are
sold after June 15, 1997 and before December 15, 1998.
The purchase price was arrived at through arms length
negotiations between the parties and represented Treco's
investment in the Company valued at $5.00 per share less the
assumption of Treco's accrued liabilities.
Because Mr. Dutil beneficially owns approximately 57% of the
outstanding shares of Common Stock, Mr. Dutil will be able to
elect the two Class I nominees as directors, approve the proposal
to adopt the Agreement and Plan of Merger pursuant to which the
Company will change its state of incorporation from Delaware to
Pennsylvania by merging with and into its wholly-owned
Pennsylvania subsidiary, approve the 1997 Plan, and ratify the
appointment of Price Waterhouse LLP regardless of how other
stockholders of the Company may vote at the Annual Meeting.
<PAGE>
MATTER NO. 1
ELECTION OF DIRECTORS
General
The Bylaws of the Company provide that the Company's
business shall be managed by a Board of Directors. The number of
directors shall be determined by the Board of Directors. The
Company's Board, as provided in its Bylaws, is divided into three
classes: Class I, Class II and Class III, each class being as
nearly equal in number as possible. Under the Company's Bylaws,
a person elected to fill a vacancy on the Board of Directors
serves as a director for the remaining term of office of the
Class to which he or she was elected. The directors in each
Class serve terms of three years each and until their successors
are elected and qualified.
The Board of Directors fixed the number of directors in
Class I at two and has nominated Mr. Jean Claude Arpin and
Mr. Marc Guindon for election as Class I directors.
Messrs. Arpin and Guindon are presently directors of the Company.
On March 5, 1996, Mr. James L. Lawrence resigned as
President and Chief Operating Officer of the Company and as a
Director of the Company. Mr. Bernard Gouin was elected as a
Class II director at the 1996 Annual Meeting to fill the vacancy
created by the resignation of Mr. Lawrence. In September 1996,
the Board of Directors of the Company increased the number of
directors from seven to eight members. Mr. Pierre Desjardins,
President and Chief Executive Officer of the Company, was
appointed by the Board of Directors as a Class II director to
fill the vacancy created by the increase in the size of the Board
of Directors.
The Bylaws of the Company permit nominations for election to
the Board of Directors to be made by the Board of Directors or by
any stockholder entitled to vote for the election of directors.
All nominations are referred to the Board of Directors for
consideration. In determining the nominees for director for
1998, the Board will consider nominees recommended by
stockholders. Such stockholder recommendations should be made in
writing no later than January 1, 1998, addressed to Corporate
Secretary, 422 Business Center, A130 North Drive, P.O. Box 939,
Oaks, Pennsylvania 19456.
Under the Bylaws, nominations for director to be made at the
Annual Meeting by stockholders entitled to vote for the election
of directors must be preceded by notice in writing, delivered or
mailed and received at the principal executive office of the
Company not less than 30 days prior to the Annual Meeting, which
notice must contain certain information specified in the Bylaws.
Such notice should be delivered or mailed to the attention of the
Secretary of the Company. No notice of nomination for election
as a director has been received from any stockholder as of the
date of this Proxy Statement. If a nomination is attempted at
the Annual Meeting which does not comply with the procedures
required by the Bylaws or if any votes are cast at the Annual
Meeting for any candidate not duly nominated, then such
nomination and/or such votes may be disregarded.
The two nominees who receive the highest number of votes at
the Annual Meeting will be elected as Class I directors. Shares
represented by properly executed proxies will be voted for the
two Class I nominees listed below unless otherwise specified on a
stockholder's proxy card. Any stockholder who wishes to withhold
authority from the proxyholders to vote for the election of
directors, or to withhold authority to vote for any individual
nominee, may do so by marking the proxy to that effect. No proxy
may be voted for a greater number of persons than the number of
nominees named.
If any of the nominees listed below become unable to accept
the nomination or election, the proxyholders may exercise their
voting power in favor of such other person or persons as the
Board of Directors may recommend. The Company, however, at
present has no reason to believe that any nominee listed below
will be unable to serve as a director, if elected.
Nominees and Continuing Directors for Election as Director
The following tables set forth, as to each of the nominees
for election as Class I directors and as to each of the
continuing Class II and Class III directors, his or her age and
the period during which he or she has served as a director of the
Company. There are no family relationships between any of the
persons listed below.
Director
Name Age Since
NOMINEES FOR ELECTION IN 1997 AS CLASS I
DIRECTORS TO SERVE UNTIL 2000
Jean Claude Arpin............................ 50 1994
Marc Guindon................................. 53 1990
CONTINUING CLASS III DIRECTORS TO SERVE UNTIL 1998
Charles Frey, Sr............................. 70 1991
Paul Gobeil.................................. 54 1994
Nycol Pageau-Goyette......................... 52 1994
CONTINUING CLASS II DIRECTORS TO SERVE UNTIL 1999
Pierre Desjardins............................ 55 1996
Marcel Dutil................................. 54 1990
Bernard Gouin................................ 44 1996
The principal occupation and business experience during the
last five years of each nominee for election as a director of the
Company and of each continuing director of the Company is as
follows:
Jean Claude Arpin. Since 1988, Mr. Arpin has been a Vice
President of Royal Bank Capital Corporation, a wholly-owned
subsidiary of the Royal Bank of Canada.
Pierre Desjardins. Since September 1996, Mr. Desjardins has
served as President and Chief Executive Officer of the Company.
From 1990 to 1994, he was President and Chief Executive Officer
of Domtar, Inc., a publicly owned Canadian pulp and paper
corporation. He is currently a director for Discreet Logic, a
publicly owned Canadian company that develops, assembles, markets
and supports systems for creating, editing and compositing
imagery and special effects for film and video.
Marcel Dutil. Since 1973, Mr. Dutil has been Chairman of
the Board and Chief Executive Officer of Canam Manac Group, Inc.,
a publicly owned Canadian industrial corporation engaged in the
manufacture of construction steel components and trailers in
Canada, the United States, France and Mexico. Mr. Dutil serves
as a director of The National Bank of Canada, Quebec Telephone,
Pharmacies Jean Coutu and Vauquelin Mines Ltd., each of which is
a publicly owned company.
Charles Frey, Sr. Since 1989, Mr. Frey has been Vice
President and a minority shareholder of Areo-Power Unitized
Fueler, Inc. From 1961 to 1992, Mr. Frey was Chief Executive
Officer of the Bigbee division of Highland Tank and Manufacturing
Company, a manufacturer of steel tanks.
Paul Gobeil. Since October 1990, Mr. Gobeil has served as
Vice Chairman of the Board of Directors of Metro-Richelieu, Inc.,
a publicly owned Canadian food corporation. From December 1989
through September 1993, Mr. Gobeil served as Chairman of the
Board of Royal Trust Company, a trust corporation. He also
served as Chairman of the Board of Domtar Inc, a publicly owned
Canadian pulp and paper corporation, from April 1993 through
October 1994. Mr. Gobeil is currently a director of Canam Manac
Group, Inc., Alimentation CoucheTard Inc., a food corporation,
and the National Bank of Canada, all of which are publicly owned
Canadian corporations.
Bernard Gouin. Since February 1997, Mr. Gouin has been
Chief Financial Officer of the Canam Manac Group, a publicly
owned Canadian industrial corporation for which Mr. Gouin served
as Chief Financial Officer from 1991 to 1992. From 1994 to early
1997, he was President of Belgo Corporation, a distributor of
electricity-saving products and a provider of financial
management services. From 1992 to 1994, he served as Executive
Vice President of Canam Steel Corporation, a manufacturer of
construction steel components and the American subsidiary of The
Canam Manac Group.
Nycol Pageau-Goyette. Since 1977, Ms. Pageau-Goyette has
served as President and Chief Executive Officer of Pageau-Goyette
Associates, a management company.
Marc Guindon. Mr. Guindon was co-founder of the Company and
has served as Chairman of the Board and as a director of the
Company since 1990, and as Chief Executive Officer from May 1993
to September 1996. From 1985 to 1991, Mr. Guindon served as
President and Chief Executive Officer of a privately-held
Canadian corporation which, until February 13, 1996, held a
majority of the Common Stock of the Company.
Security Ownership of Management
The following table sets forth information concerning the
number of shares of Common Stock held as of February 28, 1997 by
each nominee for director, each present director, each executive
officer named in the compensation table set forth elsewhere
herein, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
Total Sole Voting Shared Voting Percent
Beneficial or Dispositive or Dispositive of
Ownership Power Power Class(1)
<S> <C> <C> <C> <C>
Name of Beneficial Owner
Jean Claude Arpin(2)........... 5,000 5,000 -- --
Pierre Desjardins(3)........... 1,000 -- 1,000(4) --
Marcel Dutil(5)................ 2,649,000 2,649,000 -- 57.07%
Charles Frey, Sr............... 4,000 4,000 -- --
Paul Gobeil.................... 7,000 7,000 -- --
Bernard Gouin.................. -- -- -- --
Marc Guindon(2)................ -- -- -- --
Nycol Pageau-Goyette........... -- -- -- --
Other Named Executive Officers
Homer A. Holden(6)............. 36,000 36,000 -- --
All directors and named executive
officers as a group
(9 persons).................. 2,702,000 2,701,000 1,000 57.76%
</TABLE>
(1) Unless otherwise indicated, amount owned does not exceed 1%
of the total number of shares of Common Stock outstanding as
of February 28, 1997.
(2) Indicates a nominee for election as a Class I director at
the Annual Meeting.
(3) Does not include options to acquire 225,000 shares of Common
Stock granted by the Company to Mr. Desjardins in connection
with his employment in September 1996, none of which are
vested.
(4) Includes 1,000 shares of Common Stock owned by
Mr. Desjardins' spouse with respect to which Mr. Desjardins
disclaims beneficial ownership.
(5) Includes 2,649,000 shares of Common Stock owned by CMI.
Marcel Dutil beneficially owns 99.49% of the voting stock of
CMI. In addition, Marcel Dutil is President and a director
of CMI.
(6) Includes 36,000 shares which may be acquired by Mr. Holden
upon the exercise of options granted under the Company's
1994 Stock Compensation Plan (the "1994 Plan") and which are
vested and presently exercisable or exercisable within
60 days after February 28, 1997. Does not include 44,000
shares which may be acquired by Mr. Holden in the future in
connection with options granted under the 1994 Plan which
are not vested and are not exercisable within 60 days after
February 28, 1997.
Committees of the Board of Directors
The Board of Directors of the Company has a standing Audit
Committee and Compensation Committee. The entire Board of
Directors of the Company assumes the role of a nominating
committee. Pursuant to the Company's Bylaws, the Board of
Directors is authorized to create such other permanent or
temporary committees as it deems necessary. The Chief Executive
Officer of the Company is an ex-officio member of all committees
of the Board of Directors.
The Audit Committee serves as the principal liaison among
the Board of Directors, the Company's independent accountants and
the Company's internal staff in connection with the Company's
audit function. In addition, the Audit Committee makes
recommendations to the Board of Directors concerning the
selection of independent accountants to audit the books and
accounts of the Company and the performance of nonaudit services.
The present members of the Audit Committee are Messrs. Arpin,
Dutil and Gobeil. The Audit Committee met one time during 1996.
The Compensation Committee makes recommendations to the
Board of Directors with respect to compensation of members of the
Company's executive staff. The members of the Compensation
Committee are Messrs. Dutil, Gobeil and Desjardins. The
Compensation Committee met two times during 1996.
Board Meetings
During 1996, the Board of Directors held eight regular
meetings. Five members of the Board attended all, and two
members of the Board attended all but one, of the aggregate
number of meetings of the Board and of committees of which he or
she is a member. Mr. Desjardins became a director in September
1996 and attended all subsequent board meetings.
Compensation Paid to Directors
Directors of the Company who are not executive officers of
the Company are paid a quarterly retainer of $2,500 plus $500 per
Board meeting attended. In addition, outside directors receive
$250 for each regular committee meeting they attend.
The Company maintains a directors' and officers' liability
insurance policy with National Union Fire Insurance Company of
Pittsburgh, Pennsylvania. The policy covers all directors,
officers and employees of the Company and its subsidiaries for
liability, loss, damage and expense which they may incur in their
capacities as such (subject to certain exclusions and
exceptions), at a premium cost to the Company, as of the date of
the Annual Meeting, of approximately $135,000 per year.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Role of the Compensation Committee
The role of the Compensation Committee of the Board of
Directors of the Company is to establish the compensation
philosophy of the Company and monitor compensation plans and
amounts for conformity with the philosophy.
The Compensation Committee's role includes establishing
company-wide compensation and benefits plans, reviewing and
adopting the Chief Executive Officer's (the "CEO")
recommendations for compensation for executive and other senior
officers, and reviewing and determining the compensation for the
CEO.
The Compensation Committee generally meets once a year. All
actions of the Compensation Committee are reported to the full
Board of Directors for ratification. The CEO is a member of the
Compensation Committee but does not vote on any matters impacting
the CEO's compensation or employment status.
Executive Compensation Philosophy
The Company's executive officer compensation program is
predicated on a pay for performance philosophy, and as such, a
substantial part of the executives' compensation is performance
based. Within this framework, the total compensation program
must enable the Company to attract, retain, motivate, and reward
executive officers who are critical to the success of the
Company.
Total compensation for executive officers at the Company is
a mixture of non-variable elements such as salary and benefits
and variable elements such as short-term and long-term
incentives. Total compensation can vary from year to year given
the Company's considerable emphasis on the incentive compensation
programs. Therefore, total compensation for executive officers
at the Company is highly contingent on incentive plans which are
themselves tied to the Company's financial performance.
The Revenue Reconciliation Act of 1993 imposes a limit of
$1,000,000 on annual compensation to certain executives or the
corporation loses the ability to deduct compensation in excess of
such amount, subject to certain exceptions. The Compensation
Committee did not specifically design the Company's compensation
program for 1997 to meet the requirements of the Act because the
Compensation Committee does not believe that compensation payable
to any executive officer during 1997 will result in any loss of
deduction to the Company.
Specific Executive Compensation Programs
In connection with setting executive compensation, the
Compensation Committee reviews (a) the compensation paid to the
executive in the preceding year against the executive officer's
performance as outlined by the CEO and the President of the
Company, (b) the results of operations of the Company for the
year against the projected results of operations of the Company
for the period, and (c) any other factor which the Committee
deems relevant, in any applicable year, in assessing the
performance of an executive (the "Compensation Criteria").
The components of total compensation at the Company include
salary, short-term and long-term incentives, benefits, and
perquisites. The following commentary identifies the practices
for each of these components.
Salary
Salary serves as the foundation for the Company's total
compensation program. Salaries have been established for all
positions including executive officers. Salaries are based on
competitive pay practices and on the Company's assessment of the
importance of the position. Certain executive officers have
entered into employment agreements with the Company which provide
for the payment of a pre-established base salary that is subject
to an annual review by the entire Board for the purpose of
considering possible increases in such salaries. See "Employment
Contracts, Termination of Employment and Change-in-Control
Arrangements" herein. Salary adjustments for all positions are
considered at the beginning of each calendar year and are based
on the Compensation Criteria.
Incentive Plans
The Company awards cash bonuses to its executive officers as
its short-term incentive plan. The cash bonus plan for executive
officers is designed to reward the accomplishment of specific
annual financial objectives. Awards, in the form of cash
compensation, are made to plan participants based upon the
Company's pre-tax income. Under the cash bonus plan, each
executive officer is entitled to receive a cash bonus in an
amount equal to 20% of base salary if the Company earned a
pre-determined target amount of pre-tax income (the "Target
Income") for the year ended December 31, 1996. In addition,
executive officers are entitled to receive an aggregate cash
bonus in an amount equal to 10% of pre-tax income in excess of
the Target Income. The maximum cash bonus an executive officer
may receive is limited to 60% of base salary.
The Company uses a stock compensation plan as its long-term
incentive plan. The purpose of this plan is to motivate and
reward long-term performance defined as the creation of
stockholder value and the achievement of consistent, long-term
return on equity goals.
The stock option plan relates a significant portion of
executive compensation to increases in stockholder value. The
plan promotes increased ownership of Common Stock by executives,
as well as providing a meaningful compensation opportunity when
shares are sold at a price in excess of the exercise price.
All grants under the option plan are made at fair market
value as of the date of grant. The number of options granted to
each executive officer is based on the Compensation Criteria and
on the potential long-term value of any options granted and the
total number of options to be granted in any year as a percentage
of total shares outstanding.
Benefits and Perquisites
The Company's executives participate in the same benefit
program as applies to all employees of the Company. There are no
additional insurance programs or welfare benefits for executives.
Any perquisites for executives are business related and are
intended to allow the executive to operate in as efficient a
manner as possible.
Summary
The Compensation Committee believes that the Company's
overall executive compensation program has performed well in
attracting, retaining and rewarding executives.
COMPENSATION COMMITTEE
Marcel Dutil, Pierre Desjardins,
Paul Gobeil
<PAGE>
Executive Compensation
The following table sets forth information for each of the
three years ended December 31, 1996, concerning compensation for
services in all capacities awarded to, earned by or paid to
(i) the chief executive officer, and (ii) the other executive
officers of the Company who earned more than $ 100,000 during
1996 (collectively, the "Named Executives").
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards Payouts
Other Securities All
Annual Underlying Other
Compensa- Restricted Options/ LTIP Compen-
tion(1) Stock Awards SARs(2) Payouts sation
Name and Principal Position Year Salary ($) Bonus($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marc Guindon.................. 1996 $200,000 $ 0 N/A N/A - N/A N/A
Chairman of the 1995 200,000 0 N/A N/A - N/A N/A
Board and Director 1994 150,000 67,150 N/A N/A N/A N/A N/A
Pierre Desjardins............. 1996 100,000 N/A N/A N/A 225,000 N/A N/A
President and Chief 1995 0 0 N/A N/A - N/A N/A
Executive Officer 1994 0 0 N/A N/A - N/A N/A
Homer N. Holden............... 1996 110,000 0 A N/A 30,000 N/A N/A
Vice President- 1995 110,000 0 A N/A - N/A N/A
Research and Product 1994 110,000 26,900 N/A N/A 50,000 N/A N/A
Development
</TABLE>
_______________
"N/A" indicates that the column is not applicable because no
compensation of the category required to be disclosed in the
column was received.
"A" indicates that the column is applicable but that no amount is
required to be disclosed.
(1) The costs of certain perquisites and other personal benefits
are not included because they did not exceed, in the case of
each Named Executive, the lesser of $50,000 or 10% of the
total of annual salary and bonus reported in the columns
above.
(2) Indicates number of shares for which options were granted
under the Stock Compensation Plan during the applicable
periods. Grant information for 1994 represents grants made
in March 1994, in connection with the initial public
offering (the "Offering") by the Company, and grant
information for 1996 represents grants made in April 1996.
The following table sets forth information concerning grants
of stock options for the fiscal year ended December 31, 1996 to
the named executive officers.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total
Securities Options/ Potential Realizable
Underlying SARs Value at Assumed
Options/ Granted to Exercise Annual Rates of
SARs Employees or Base Price Appreciation
Granted(1) in Fiscal Price(2) Expiration for Option Term
(#) Year ($/Sh) Date 5%($)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C>
Marc Guindon......... 0 N/A N/A N/A N/A N/A
Pierre Desjardins(4). 225,000 46.88 $2.88 9/03/01 $179,030 $395,610
Homer N. Holden(5)... 30,000 6.25 2.50 4/19/06 47,167 119,531
_____________________
</TABLE>
(1) All amounts represent incentive stock options; no SARs or
SARs granted in tandem with options were granted during
1996. Options are not exercisable following an optionee's
voluntary termination of employment other than by reason of
retirement or disability. The options to acquire 30,000
shares of Common Stock were issued to Mr. Holden under the
terms of the 1994 Plan. The options issued to
Mr. Desjardins were not issued under the 1994 Plan.
(2) In the case of each option grant, the exercise price per
share is equal to the fair market value on the date the
option was granted. The exercise price may be paid in cash,
in shares of Common Stock valued at fair market value on the
date of exercise or pursuant to a cashless exercise
procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased
shares and to remit to the Company, out of the sale
proceeds, an amount equal to the exercise price plus all
applicable withholding taxes.
(3) The dollar amounts set forth under these columns are the
result of calculations made at the 5% and 10% appreciation
rates set forth in Securities and Exchange Commission
regulations and are not intended to indicate future price
appreciation, if any, of the Common Stock.
(4) The options granted have a term of five years from the date
of grant. Options vest at the rate of one-third per year
for three consecutive years, beginning one year from the
date of grant.
(5) Options have a term of ten years from the date of grant.
Options vest at the rate of 20% per year for five
consecutive years beginning one year from the date of grant.
The following table sets forth information concerning the
exercise of options to purchase shares of Common Stock by the
Named Executives during the fiscal year ended December 31, 1996,
as well as the number of securities underlying unexercised
options and potential value of unexercised options (both options
which are presently exercisable and options which are not
presently exercisable) as of December 31, 1996.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Value(1)
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
(#) ($)(2)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise(#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Marc Guindon......... 0 0 0/0 0/0
Pierre Desjardins.... 0 0 0/225,000 0/111,375
Homer N. Holden...... 0 0 20,000/60,000 0/ 26,250
</TABLE>
_____________________
(1) All amounts represent stock options. No SARs or SARs
granted in tandem with stock options were either exercised
during 1996 or outstanding at fiscal year-end 1996.
(2) "In-the-money options" are stock options with respect to
which the market value of the underlying shares of Common
Stock exceeded the exercise price at December 31, 1996. The
value of such options is determined by subtracting the
aggregate exercise price for such options from the aggregate
fair market value of the underlying shares of Common Stock
on December 31, 1996.
Employment Contracts, Termination of Employment and Change-in-
Control Arrangements
As of September 3, 1996, the Company entered into an
Employment Agreement with Pierre Desjardins under which
Mr. Desjardins serves as President and Chief Executive Officer of
the Company. The initial term of the Employment Agreement is
three years, subject to an automatic one year extension on each
anniversary date thereof, unless the Company gives written notice
to Mr. Desjardins of an intention not to renew. Mr. Desjardins
will receive an annual base salary of $300,000 per year under the
Employment Agreement. The Employment Agreement also provides for
the award of options to purchase 225,000 shares of Common Stock.
The Company may terminate the Employment Agreement for cause. In
the event the Company terminates the Employment Agreement without
cause (as defined in the Employment Agreement), Mr. Desjardins is
entitled to, among other things, an amount equal to the total
salary due for the unexpired term of the Employment Agreement.
In 1994, the Company entered into Employment Agreements with
Marc Guindon and Homer N. Holden. Mr. Guindon originally agreed
to serve as Chairman of the Board and Chief Executive Officer
under this Employment Agreement, but by mutual agreement,
Mr. Guindon now serves exclusively as Chairman of the Board.
Homer N. Holden serves as Vice President of Research and Product
Development under his Employment Agreement. The initial term of
each Employment Agreement is three years, subject to an automatic
one year extension on each anniversary date thereof, unless
either party gives notice to the other of an intention not to
renew. In accordance with the terms of the Employment
Agreements, the Company paid, in 1996, an annual base salary of
$200,000 to Mr. Guindon and $110,000 to Mr. Holden. The
Employment Agreements provide for an annual review by the Board
of the executives' base salaries for purposes of considering
possible increases thereto. The Employment Agreements also
provide for the payment of bonuses and the award of stock options
in such amounts as shall be determined by the Board. In
addition, in the event of termination by the Company of an
executive as a result of disability or without cause (as defined
in the Employment Agreements), the terminated executive is
entitled to continued payments of his base salary for a period
not to exceed the lesser of: (a) six (6) months or (b) the date
of the executive's death, which amount will be offset by any
payments received by the executive under any disability plan
sponsored by the Company. The Employment Agreements also contain
certain confidentiality, non-competition and non-solicitation
provisions. Neither Employment Agreement contains a change-in -
control provision.
Additional Information Regarding Directors and Officers
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires the Company's directors
and officers, and any persons owning ten percent or more of the
Common Stock, to file in their personal capacities initial
statements of beneficial ownership, statements of changes in
beneficial ownership and annual statements of beneficial
ownership with the Securities and Exchange Commission (the
"SEC"). Persons filing such beneficial ownership statements are
required by SEC regulation to furnish the Company with copies of
all such statements filed with the SEC. The rules of the SEC
regarding the filing of such statements require that "late
filings" of such statements be disclosed in the Company's proxy
statement. Based solely on the Company's review of any copies of
such statements it received and on written representations from
directors and officers, the Company believes that all such
statements were timely filed in 1996.
Compensation Committee Interlocks and Insider Participation
Mr. Pierre Desjardins, President and Chief Executive Officer
of the Company, serves as a member of the Compensation Committee,
although he does not participate in or vote on matters concerning
his own benefits or awards. The Board of Directors believes that
Mr. Desjardins' position with the Company provides him with
perspective valuable to the Compensation Committee in connection
with performance of its duties.
Performance Graph
The following graph compares the percentage change in the
cumulative total stockholder return on the Company's Common Stock
against the cumulative total return on the Nasdaq Market Value
Index and the Peer Group Index for the periods indicated.
Because there was no public market for the Common Stock prior to
the Offering, information is presented only for the period from
February 25, 1994 (the date the Common Stock commenced trading on
the Nasdaq Stock Market) through December 31, 1996. The graph
assumes an initial investment of $ 100.00 with dividends, if any,
reinvested over the periods indicated.
[graph]
Fiscal Year Ended
1994 1994 1995 1996
The Company 100.00 86.42 39.51 33.33
Peer Group Index (1) 100.00 86.53 100.31 145.22
NASDAQ Market Value Index 100.00 97.21 126.09 156.68
(1) The Peer Group Index consists of those companies that
comprise Media General Industry Group Index 083 Other
Business and Institutional Equipment. The composition of
the Peer Group Index is as follows: Educational Dev CP, Hon
Ind, Inc., Jansko, Inc., Kimbal International B, Lear
Seating Co., Micro General CP, Miller Herman, Inc., Mity
Lite, Inc., Norwood Promotional Prod., Plasti-Line, Inc.,
Tab Products Co., Virco Manufacturing CP., Winsloew
Furniture, Inc.
<PAGE>
MATTER NO. 2
PROPOSAL TO REINCORPORATE IN PENNSYLVANIA
General
The stockholders of the Company are being asked to approve
and adopt the Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which the Company will change its state
of incorporation from Delaware to Pennsylvania by means of a
merger (the "Merger") of the Company with and into a newly-formed
Pennsylvania corporation, TCI New Corp., which is a wholly-owned
subsidiary of the Company (the "Pennsylvania Corporation"). A
copy of the Merger Agreement is attached as Exhibit A to this
Proxy Statement.
In accordance with the Merger Agreement, each share of
Common Stock will be automatically converted into one share of
the common stock of the Pennsylvania Corporation (the "Common
Shares"). After the Merger, the capital structure of the
Pennsylvania Corporation will be identical to the present capital
structure of the Company. See "Conversion of Shares," below.
Upon completion of the Merger, the separate existence of the
Company will terminate and the Pennsylvania Corporation will
succeed to and engage in the Company's business. The Merger will
have no effect on the conduct of the daily business operations of
the Company, the location of its principal executive offices, or
its management. See "No Change in Business Plan, Management,
Assets, Liabilities or Net Worth."
The internal affairs of the Pennsylvania Corporation will be
governed by the Articles of Incorporation (the "New Articles")
and the Bylaws (the "New Bylaws") of the Pennsylvania Corporation
and by Pennsylvania law. The New Articles and the New Bylaws
appear as attachments to Exhibit A, the Merger Agreement. For a
description of certain differences between the provisions of the
Company's existing Certificate of Incorporation and Bylaws and
the New Articles and New Bylaws, see "Certain Differences Between
the Corporation Statutes of Delaware and Pennsylvania" below.
Principal Reasons for the Reincorporation
The Company expects, by reason of the reincorporation,
(i) to reduce the Company's state tax liability and, (ii) because
of the different standards of fiduciary duties applicable to
directors and officers under Pennsylvania and Delaware law and
the resulting decrease in the potential liability of directors by
reason of reincorporation in Pennsylvania, to ultimately reduce
the premiums the Company pays for directors' and officers'
liability insurance.
The primary reason for originally incorporating in Delaware
in 1986 as opposed to Pennsylvania was to take advantage of the
modern and less restrictive provisions of the Delaware General
Corporation Law ("DGCL"). However, the adoption of
Pennsylvania's new Business Corporation Law of 1988, as amended
("PBCL"), affords Pennsylvania-domiciled corporations substantial
flexibility and other advantages over the DGCL. As a result, the
primary reason for a corporation headquartered in Pennsylvania to
be incorporated in Delaware has been substantially eliminated.
In addition, the Company will be conforming its legal residence
to its actual residence. The Company's executive offices are
located in Oaks, Pennsylvania.
The Board of Directors of the Company believes that, in view
of earnings expected from tax reductions and reduced director and
officer liability insurance premiums, the location of the
Company's principal executive offices in Pennsylvania, and the
modernization of the PBCL in recent years, the interests of the
Company will be better served by changing the Company's state of
incorporation from Delaware to Pennsylvania.
Conversion of Shares
The Company's Certificate of Incorporation authorizes the
issuance of up to 20,000,000 shares of Common Stock and up to
1,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). As of February 28, 1997, 4,641,600 shares of
Common Stock and no shares of Preferred Stock were issued and
outstanding.
The New Articles authorize the issuance of up to 20,000,000
shares of common stock, par value $.01 per share, and 1,000
shares of preferred stock, par value $.01 per share, of the
Pennsylvania Corporation.
At the time the Merger becomes effective, each outstanding
share of Common Stock of the Company, par value $.01 per share,
will automatically be converted on a one-for-one basis into
Common Shares, par value $.01 per share, of the Pennsylvania
Corporation. Such conversion of shares will not result in any
change in the present ownership of shares of stock of the
Company. All shares of Common Stock held in treasury will be
cancelled. Upon completion of the merger, there will be
4,641,600 shares of common stock and no shares of preferred stock
of the Pennsylvania Corporation issued and outstanding.
After the Merger, certificates that previously represented
shares of Common Stock will be deemed to represent an equal
number of Common Shares. Certificates that previously
represented Common Stock will be replaced by certificates
representing Common Shares only when submitted to the transfer
agent with a request that they be so replaced or when they are
presented for transfer.
IT WILL NOT BE NECESSARY FOR THE STOCKHOLDERS OF THE COMPANY TO
EXCHANGE THEIR EXISTING CERTIFICATES FOR NEW CERTIFICATES
REPRESENTING COMMON SHARES OF THE PENNSYLVANIA CORPORATION.
Corporation Employee Benefit Plans
The Company's employee benefit plans will not be changed in
any material respect by the Merger. For example, the options to
acquire Common Stock under the Company's 1994 Stock Option Plan
which are outstanding immediately prior to the Merger will be
converted into options to purchase the same number of Common
Shares on the same terms and conditions as those in effect
immediately prior to the Merger, and future options granted under
such plan or similar plans will be for Common Shares.
Trading of Pennsylvania Common Shares
After the Merger, the Pennsylvania Corporation will be a
publicly held company, its Common Shares will be quoted on the
NASDAQ National Market System under the "TCIX" ticker symbol
(which quotation is a condition of the Merger) and it will file
with the SEC and provide to its shareholders the same type of
information that the Company has previously filed and provided.
Stockholders whose Common Stock is fully tradable before the
Merger will receive freely tradable Common Shares of the
Pennsylvania Corporation shares. Stockholders holding restricted
stock of the Company will be subject to the same restrictions on
transfer as those to which their present shares of stock in the
Company are subject. For purposes of computing compliance with
the holding period of SEC Rule 144, shareholders will be deemed
to have acquired their shares in the Pennsylvania Corporation on
the date they acquired their shares in the Company. In summary,
the Pennsylvania Corporation and its shareholders will be in the
same respective position under the federal securities laws after
the Merger as were the Company and its stockholders prior to the
Merger.
No Change in Business Plan, Management, Assets, Liabilities or
Net Worth
The proposed reincorporation will not result in any change
in the business, assets, liabilities or net worth of the Company.
Upon completion of the Merger, the name of the Pennsylvania
Corporation will be Total Containment, Inc. After the Merger,
the Board of Directors of the Pennsylvania Corporation will be
comprised of those persons elected to the Board of Directors of
the Company at the Annual Meeting and the other members of the
Company's Board whose terms of office do not expire at the Annual
Meeting. The persons then holding office as directors of the
Company will continue to hold such office as directors of the
Pennsylvania Corporation for the same terms for which they would
otherwise serve as directors of the Company.
The persons who currently serve as executive officers of the
Company will serve as executive officers of the Pennsylvania
Corporation after the Merger.
Effective Date
The Merger will take effect on the date specified in
Articles of Merger to be filed with the Department of State of
the Commonwealth of Pennsylvania (the "Effective Date"), which
date is anticipated to be as soon as practicable following the
adoption and approval of the Merger Agreement by the stockholders
of the Company, subject to the terms and conditions of the Merger
Agreement.
Amendments, Deferral or Termination of the Merger Agreement
The Merger Agreement provides that the Boards of Directors
of the Company and the Pennsylvania Corporation may amend, modify
or supplement the Merger Agreement prior to or after approval of
the Merger by the stockholders of the Company, but not later than
the Effective Date, except that no such amendment, modification
or supplement may be made which is not approved by such
stockholders if, in the judgment of the Board of Directors of the
Company, it would have a materially adverse effect upon the
rights of such stockholders.
The Merger Agreement also provides that the Board of
Directors of the Company may terminate and abandon the Merger or
may defer its consummation for a reasonable period,
notwithstanding stockholder approval, if in the opinion of the
Board of Directors such action would be in the best interests of
the Company and its stockholders.
Certain Federal Income Tax Consequences
It is a condition to the consummation of the Merger that the
Company receive an opinion of tax counsel satisfactory to the
Company to the effect that, on the basis of facts and assumptions
set forth in such opinion, for federal income tax purposes:
1. no gain or loss will be recognized by the Company,
the Pennsylvania Corporation or stockholders of the Company by
reason of the completion of the Merger.
2. each shareholder's tax basis in the Common Shares
into which his or her Common Stock is converted will be the same
as the tax basis of the Common Stock held by the stockholder
immediately prior to the completion of the Merger, and
3. a stockholder who holds Common Stock as a capital
asset will include in his or her holding period for the Common
Shares the period during which the stockholder held the Common
Stock converted into such Common Shares.
No information is provided herein as to the state, local or
foreign tax consequences of the Merger. The federal income tax
discussion set forth above is for general information only. EACH
STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO
THESE AND ANY OTHER TAX CONSEQUENCES OF THE MERGER.
Accounting Treatment
For financial reporting purposes, the Merger will be
accounted for in a manner substantially identical to a pooling of
interests. Accordingly, the Pennsylvania Corporation will
succeed to all of the financial attributes of the Company.
Federal and State Regulatory Requirements
There are no federal or state regulatory requirements with
which the Company must comply, or federal or state approvals
which must be obtained by the Company in connection with the
Merger.
Charter and Bylaws
Upon effecting the reincorporation, the internal corporate
affairs of the Pennsylvania Corporation will be governed by the
New Articles and New Bylaws. The New Articles and the New Bylaws
will be similar in certain respects to the existing Certificate
of Incorporation and Bylaws of the Company, but will also differ
in certain respects due to differences in the corporation
statutes of the two states, as discussed below.
Certain Differences Between the Corporation Statutes of Delaware
and Pennsylvania
Although the DGCL and the PBCL are similar in many respects,
there are a number of differences between the two statutes which
should be carefully considered by the stockholders in evaluating
the proposed Merger. The following summary, which sets forth
certain material differences between the two statutes, does not
purport to be a complete statement of all differences between the
DGCL and the PBCL, nor does it purport to be a complete statement
of the provisions of the two statutes which it compares.
All statements contained in the following summary are
qualified in their entirety by the laws of Delaware and
Pennsylvania and reference is made to those laws for a complete
statement of their provisions. Among the more significant
differences affecting the rights, obligations and relationships
between a corporation and its shareholders are the following:
Fiduciary Duties of Directors. Both Delaware and
Pennsylvania law provide that the board of directors has the
ultimate responsibility for managing the business and affairs of
a corporation. In discharging this function, directors of
Pennsylvania and Delaware corporations owe fiduciary duties of
care and loyalty to the corporations for which they serve as
directors. Directors of Delaware corporations also owe fiduciary
duties of care and loyalty to stockholders.
The fiduciary duty provisions included in the PBCL, which
would be applicable to the Pennsylvania Corporation, provide
significantly broader discretion, and increased protection from
liability, to directors in exercising their fiduciary duties,
particularly in a change in control context.
The following summarizes certain aspects of Pennsylvania and
Delaware law, including the PBCL and the DGCL, as they relate to
fiduciary duties of directors:
Standard of Care
A director of a Pennsylvania business corporation stands in
a fiduciary relationship to the corporation (and, in contrast to
Delaware, not, by statute, to shareholders) and must perform his
duties as a director, in good faith, in a manner he reasonably
believes to be in the best interests of the corporation and with
such care, including reasonable inquiry, skill and diligence, as
a person of ordinary prudence would use under similar
circumstances.
Delaware courts have held that the directors of a Delaware
corporation are required to exercise an informed business
judgment in the performance of their duties. An informed
business judgment means that the directors have informed
themselves of all material information reasonably available to
them. Delaware courts have also imposed a heightened standard of
conduct upon directors in matters involving a contest for control
of the corporation.
Justifiable Reliance
In performing his duties, a director of a Pennsylvania
business corporation is entitled to rely, in good faith, on
information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or
presented by any of the following: (i) one or more officers or
employees who the director reasonably believes to be reliable and
competent in the matters presented; (ii) counsel, public
accountants, investment bankers or other persons as to matters
which the director reasonably believes to be within the
professional competence of such person; and (iii) a committee of
the board upon which he does not serve, duly designated in
accordance with law, as to matters within its designated
authority, which committee the director reasonably believes to
merit confidence. A director will not be considered to be acting
in good faith if he has knowledge concerning the matter in
question which would cause his reliance to be unwarranted.
A director of a Delaware corporation, in the performance of
his duties, is fully protected in relying, in good faith, upon
the records of the corporation and upon such information,
opinions, reports or statements presented to the corporation by
any of the corporation's officers or employees, or committees of
the board of directors, or by any other person as to matters the
member reasonably believes are within such other person's
professional or expert competence and who has been selected with
reasonable care by or on behalf of the corporation.
Consideration of Factors
The PBCL provides that in discharging the duties of their
respective positions, the board of directors, committees of the
board and individual directors of a Pennsylvania corporation may,
in considering what is in the best interests of the corporation,
consider, to the extent they deem appropriate (i) the effects of
any action upon any or all groups affected by such action,
including shareholders, employees, suppliers, customers and
creditors of the corporation, and on communities served by the
corporation, without prioritization of these constituencies,
(ii) the corporation's short-term and long-term interests,
including benefits which may accrue to the corporation from its
long-term plans and the possibility that these interests may be
best served by the corporation's continued independence,
(iii) the resources, intent and conduct (past, stated and
potential) of any person seeking to acquire control of the
corporation, and (iv) all other pertinent factors. The DGCL does
not contain any statutory provision permitting the board of
directors, committees of the board and individual directors, when
discharging the duties of their respective positions, to consider
the interests of any constituencies other than the corporation or
its stockholders.
The board of directors, committees of the board and
individual directors of a Pennsylvania corporation are not
required, in considering what is in the corporation's best
interests or the effects of any action on the corporation, to
regard any corporate interest or the interests of any particular
group affected by such action as a dominant or controlling
interest or factor. Thus, unlike the laws of most other states
(including Delaware), under Pennsylvania law, not only does a
director of a Pennsylvania corporation owe a duty only to the
corporation (and not to the shareholders), but in considering
what is in the best interests of the corporation, may choose to
subordinate the interests of shareholders to the interests of
employees, suppliers, customers or creditors of the corporation
or to the interests of the communities served by the corporation.
In addition, the duty of the board of directors, committees
of the board and individual directors of a Pennsylvania
corporation may be enforced directly by the corporation or may be
enforced by a shareholder, as such, by an action in the right of
the corporation, but, unlike the law of other states (including
Delaware), may not be enforced directly by a shareholder or by
any other person or group.
Specific Applications
In exercising corporate powers, and in no way limiting their
discretion, the fiduciary duty of directors of a Pennsylvania
corporation does not require them to act solely because of the
effect such action might have on an acquisition or potential or
proposed acquisition of control of the corporation or the
consideration which might be offered or paid to shareholders in
such an acquisition. In particular, directors of a Pennsylvania
corporation are not required to redeem rights issued under any
shareholder rights plan, and under existing case law, have the
statutory authority under the PBCL to "just say no" with respect
to a potential or proposed acquisition of the corporation's
shares.
In contrast, Delaware courts have imposed a heightened
standard of conduct upon directors of a Delaware corporation who
take any action designed to defeat a threatened change in control
of the corporation. The heightened standard has two elements.
First, it must be demonstrated that there is some basis for a
board to conclude that a proper corporate purpose is served by
implementation of any defensive measure, and, second, that
measure must be found reasonable in relation to the perceived
threat posed by the change in control.
In addition, under Delaware law, unlike Pennsylvania law,
when the board of directors of a Delaware corporation approves
the sale of the corporation, the board of directors may have a
duty to obtain the highest value reasonably available to the
stockholders.
Presumption
Under Pennsylvania law, absent a lack of good faith or
self-dealing, any act of the board of directors, a committee of
the board or an individual director is presumed to be in the
corporation's best interests. In assessing whether a director of
a Pennsylvania corporation has met his or her statutory duty of
care, there is not any greater obligation to justify, or higher
burden of proof with respect to, any act relating to or affecting
an acquisition or potential or proposed acquisition of control of
the corporation than is applied to any other action.
Notwithstanding the preceding, any board action relating to
or affecting an acquisition or potential or proposed acquisition
of control which is approved by a majority of the corporation's
"disinterested directors" (i.e., directors who (i) are not
affiliated with the person seeking control and (ii) are not
officers or employees of the corporation) is presumed to satisfy
the statutory duty of care under Pennsylvania law, unless it is
proven by clear and convincing evidence that the disinterested
directors did not assent to such act in good faith, after
reasonable investigation.
Under Delaware law, it is presumed that the directors of a
Delaware corporation acted on an informed basis, in good faith
and in the honest belief that the action taken was in the best
interest of the corporation. This presumption may be overcome,
however, if it is shown by a preponderance of the evidence that
the directors' decision involved a breach of fiduciary duty such
as fraud, overreaching, lack of good faith, failure of the board
to inform itself properly or actions by the board to entrench
itself in office.
The net effect of the differences between Pennsylvania and
Delaware law is that the board of directors of a Pennsylvania
corporation is afforded more discretion, and therefore more
protection against liability, in connection with a decision to
engage in, or decline to engage in, almost any transaction. This
discretion even extends to accepting an offer to acquire the
corporation at a price lower than a competing bid.
Under the PBCL, a Pennsylvania corporation may elect an
alternative fiduciary duty standard for its directors which is
more similar to the standard applicable to the directors of a
Delaware corporation under the DGCL. However, the Pennsylvania
Corporation has elected not to adopt this alternative fiduciary
duty standard.
Limitation of Director Liability. Both Delaware and
Pennsylvania law permit a corporation's certificate or articles
of incorporation to limit a director's exposure to monetary
liability for breach of fiduciary duty.
The Company's Certificate of Incorporation currently
eliminates a director's personal liability for monetary damages
to the fullest extent permitted by Delaware law. Pursuant to
Delaware law, this means that a director presently has no
monetary liability except for liability for (i) breach of the
duty of loyalty, (ii) acts or omissions not in good faith or
constituting intentional misconduct or knowing violation of the
law, (iii) declaration of an improper dividend or an improper
redemption of stock, or (iv) any transaction from which the
director derived an improper personal benefit.
Similarly, the New Bylaws will eliminate a director's
liability to the fullest extent permitted by Pennsylvania law.
Pursuant to Pennsylvania law, this means that a director will
have no monetary liability for any action taken or omitted unless
(i) the director breached or failed to perform his or her duties
and (ii) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. Under
Pennsylvania law, a director will also remain personally liable
where the responsibility or liability is pursuant to any criminal
statute or is for the payment of taxes under Federal, State or
local law.
Indemnification. The Company's Bylaws presently require
indemnification of its directors and officers to the fullest
extent permitted under Delaware law. The New Bylaws provide for
such indemnification to the fullest extent permitted by
Pennsylvania law.
Both Delaware and Pennsylvania law permit a corporation to
indemnify any person involved in a third party action by reason
of his being an officer or director of the corporation, against
expenses, judgments, fines and settlement amounts paid in such
third party action (and against expenses incurred in any
derivative action), if such person acted in good faith and
reasonably believed that his actions were in, or not opposed to,
the best interests of the corporation and, with respect to any
criminal proceeding, had no reasonable cause to believe that his
conduct was unlawful. Furthermore, both states' laws provide
that a corporation may advance expenses incurred in defending any
action upon receipt of an undertaking by the person to repay the
amount advanced if it is ultimately determined that such person
is not entitled to indemnification.
In general, no indemnification for expenses in derivative
actions is permitted under either state law where the person has
been adjudged liable to the corporation, unless a court finds him
entitled to such indemnification. If, however, the person has
been successful in defending a third party or derivative action,
indemnification for expenses incurred is mandatory under both
states' laws.
In both states the statutory provisions for indemnification
are non-exclusive with respect to any other rights, such as
contractual rights (and, in the case of a Pennsylvania
corporation, under any bylaw, vote of shareholders, vote of
disinterested directors or otherwise), to which a person seeking
indemnification may be entitled. Unlike Delaware law, however,
Pennsylvania law expressly permits such contractual or other
rights to provide for indemnification against judgments and
settlements paid in a derivative action unless a court determines
that the act or omission giving rise to the claim for
indemnification constituted willful misconduct or recklessness.
The New Bylaws incorporate this broader right to indemnification
in the context of derivative actions.
Anti-takeover Laws. Chapter 25 of the PBCL contains certain
"anti-takeover" provisions which apply to a "registered
corporation," unless the registered corporation elects not to be
governed by such provisions. The Pennsylvania Corporation will
be a "registered corporation" within the meaning of Chapter 25 of
the PBCL because the common stock of the Pennsylvania Corporation
is entitled to vote generally in the election of directors and
will be registered under the Exchange Act. The relevant
provisions are contained in Subchapters 25E through 25H of the
PBCL.
Subchapter 25E of the PBCL (relating to control
transactions) provides that if any person or group acquires 20%
or more of the voting power of a covered corporation, the
remaining shareholders may demand from such person or group the
fair value of their shares, including a proportionate amount of
any control premium.
Subchapter 25F of the PBCL (relating to business
combinations) delays for five years and imposes conditions upon
"business combinations" between an "interested shareholder" and
the corporation. The term "business combination" is defined
broadly to include various transactions utilizing a corporation's
assets for purchase price amortization or refinancing purposes.
For this purpose, an "interested shareholder" is defined
generally as the beneficial owner of at least 20% of a
corporation's voting shares.
Subchapter 25G of the PBCL (relating to control-share
acquisitions) prevents a person who has acquired 20% or more of
the voting power of a covered corporation from voting such shares
unless the "disinterested" shareholders approve such voting
rights. Failure to obtain such approval exposes the owner to the
risk of a forced sale of the shares to the issuer.
Subchapter 25H of the PBCL (relating to disgorgement)
applies in the event that (i) any person or group publicly
discloses that the person or group may acquire control of the
corporation or (ii) a person or group acquires (or publicly
discloses an offer or intent to acquire) 20% or more of the
voting power of the corporation and, in either case, sells shares
within 18 months thereafter. Any profits from sales of equity
securities of the corporation by the person or group during such
18-month period belong to the corporation if the securities that
were sold were acquired during the 18-month period or within
24 months prior thereto.
Subchapter 25I (relating to severance payments) of the PBCL
provides for a minimum severance payment to certain employees
terminated within two years of the approval of a control-share
acquisition under Subchapter 25G of the PBCL. Subchapter 25J
(relating to labor contracts) of the PBCL prohibits, in
connection with a control-share acquisition under Subchapter 25G
of the PBCL, the abrogation of certain labor contracts, if any,
prior to their stated date of expiration.
Subchapters 25E through 25H of the PBCL contain a wide
variety of transactional and status exemptions, exclusions and
safe harbors. As permitted under the PBCL, the Pennsylvania
Corporation has opted out of the provisions of Subchapters 25E
(relating to control transactions), 25F (relating to business
combinations), 25G (relating to control-share acquisitions) and
25H (relating to disgorgement). As a result of the Company
opting out of Subchapter 25G (relating to control-share
acquisitions) the Pennsylvania Corporation is not subject to
Subchapter 25I (relating to severance payments) or Subchapter 25J
(relating to labor contracts). Such action can be reversed under
certain circumstances.
Amendments to Charter. Under Delaware law, amending the
Certificate of Incorporation of the Company requires the approval
of the holders of a majority of the shares entitled to vote.
Pennsylvania law only requires the affirmative vote of a majority
of the votes actually cast on a proposed amendment at a meeting
at which a quorum is present, unless the articles require a
greater percentage. Pennsylvania law also eliminates the need
for shareholder approval of certain non-material amendments to
the articles of incorporation. Thus, it will be easier under
Pennsylvania law to adopt future amendments to the New Articles,
except with respect to those provisions that may only be amended
by super-majority vote.
Mergers and Other Fundamental Transactions. Under Delaware
law, fundamental corporate transactions (such as mergers, sales
of all or substantially all of the corporation's assets,
dissolutions, etc.) require the approval of the holders of a
majority of the shares of the Company. Pennsylvania law reduces
the approval threshold to a majority of the votes actually cast
by the shareholders at a meeting at which a quorum is present.
Delaware and Pennsylvania laws each permit a corporation to
increase the minimum percentage vote required. The New Articles
do not contain any super-majority vote requirements to approve
any fundamental transaction.
Issuance of Additional Shares of Capital Stock. The
Company's Certificate of Incorporation authorizes the issuance of
up to 20,000,000 shares of Common Stock and up to 1,000 shares of
Preferred Stock. As of February 28, 1997, 4,641,600 shares of
Common Stock and no shares of Preferred Stock were issued and
outstanding.
The New Articles authorize the issuance of up to 20,000,000
shares of common stock, par value $.01 per share, and 1,000
shares of preferred stock, par value $.01 per share, of the
Pennsylvania Corporation. Upon completion of the merger, there
will be 4,641,600 shares of common stock and no shares of
preferred stock of the Pennsylvania Corporation issued and
outstanding.
The Board of Directors of the Company may, without further
action by the Company's stockholders (except as may be required
under NASD rules), from time to time, direct the issuance of
additional shares of Common Stock. In addition, the Company's
Board of Directors may, without further action by the Company's
stockholders, from time to time, direct the issuance of Preferred
Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series.
The Board of Directors of the Pennsylvania Corporation has
the same authority as the Board of Directors of the Company with
respect to the issuance of additional shares of common stock and
preferred stock of the Pennsylvania Corporation.
Preemptive Rights. Holders of the Common Stock are not
entitled to preemptive rights, and, after completion of the
Merger, holders of the Common Shares will not be entitled to
preemptive rights.
Dividends. Delaware law permits dividends to be paid out of
(i) surplus (the excess of net assets of the corporation over
capital), or (ii) net profits for the current or immediately
preceding fiscal year, unless the net assets are less than the
capital of any outstanding preferred stock. Pennsylvania law
permits the payment of dividends unless they would render the
corporation insolvent, meaning either (i) the corporation would
be unable to pay its debts as they become due in the ordinary
course of business, or (ii) the total assets of the corporation
would be less than the sum of its total liabilities plus the
amount that would be needed upon dissolution of the corporation
to pay the holders of shares having a liquidation preference.
Stock Repurchases. Under Delaware law, a corporation may
not purchase or redeem its own shares when the capital of the
corporation is impaired or when such purchase or redemption would
cause an impairment of the capital of the corporation. A
Delaware corporation may, however, purchase or redeem out of
capital any of its preferred shares if such shares will be
retired upon acquisition, thereby reducing the capital of the
corporation. In contrast, Pennsylvania law permits a corporation
to redeem any and all classes of its shares and treats such
redemption or repurchase like a dividend, subject to the same
limitations described under "Dividends."
Voting Rights. Under Delaware law cumulative voting in the
election of directors is only permitted if expressly authorized
in a corporation's charter. The Certificate of Incorporation of
the Corporation does not authorize cumulative voting. Under
Pennsylvania law, however, shareholders automatically have
cumulative voting rights unless the Pennsylvania charter provides
otherwise. Therefore, in order to maintain the status quo, the
New Articles state expressly that shareholders do not have
cumulative voting rights.
Appraisal or Dissenters' Rights. The rights of stockholders
to demand payment in cash by a corporation of the fair value of
their shares under certain circumstances are called appraisal
rights under the DGCL and dissenters' rights under the PBCL.
Delaware law does not afford appraisal rights to holders of
shares which are either listed on a national securities exchange,
quoted on the NASDAQ National Market System or held of record by
more than 2,000 stockholders when the plan of merger or
consolidation converts such shares into stock of the surviving
corporation (such as the Pennsylvania Corporation in the case of
the Merger) or stock of another corporation which is either
listed on a national securities exchange, quoted on the NASDAQ
National Market System or held of record by more than
2,000 stockholders. For this reason, stockholders of the Company
will not have appraisal rights in connection with the Merger.
Pennsylvania law with respect to dissenters' rights is similar to
Delaware law regarding appraisal rights, except that Pennsylvania
law provides dissenters' rights to holders of shares which are
quoted on the NASDAQ National Market System unless such shares
are held of record by more than 2,000 shareholders or listed on a
national securities exchange. As a result of the Merger, until
the Pennsylvania Corporation has more than 2,000 shareholders of
record or the Pennsylvania Corporation's shares are listed on a
national securities exchange, such as the Philadelphia Stock
Exchange, shareholders of the Pennsylvania Corporation will have
dissenters' rights with respect to certain corporate actions,
including mergers, consolidations or share exchanges, which they
did not have as stockholders of the Company.
The definition of "fair value" in payment for shares upon
exercise of appraisal or dissenters' rights is substantially
identical under both states' laws. Any valuation methods may be
used which are generally acceptable in the financial community.
APPRAISAL RIGHTS ARE NOT AVAILABLE TO HOLDERS OF THE COMMON
STOCK OF THE COMPANY WITH RESPECT TO THE MERGER OF THE COMPANY
INTO THE PENNSYLVANIA CORPORATION.
Amendments to Bylaws. Under Delaware law, if the
certificate of incorporation confers on the board of directors
the power to amend the Bylaws, as does the Corporation's
Certificate of Incorporation, the DGCL does not limit the power
of the board to make changes in the Bylaws. Under Pennsylvania
law, however, the board's power to adopt or amend Bylaw
provisions on specified subjects is limited absent a contrary
provision in the Bylaws. In order to maintain the existing power
of the Corporation's board to amend its Bylaws, the New Bylaws
expressly authorize the board to amend the New Bylaws, subject to
the power of shareholders to change such action.
Under Delaware law, a corporation's Bylaws may be amended
by the stockholders at any annual meeting, without the need to
obtain the consent of the board of directors or to give prior
notice that such action would be taken at the meeting.
Pennsylvania law is more restrictive because it requires that a
copy of any proposed amendment to the Bylaws, or a summary
thereof, be included with the notice of the meeting at which the
shareholders wish to amend a Pennsylvania corporation's Bylaws.
This difference in the two laws will not initially affect the
stockholders of the Company since both the Bylaws of the Company
and New Bylaws of the Pennsylvania Corporation require that
shareholders provide advance notice of any matter they wish to
submit to a vote of shareholders at any annual or special
meeting.
Action by Written Consent. Delaware law permits a majority
of shareholders to consent in writing to any action without a
meeting. With respect to registered corporations, such as the
Corporation, Pennsylvania law also permits shareholder action by
majority written consent, but only where the articles
specifically authorize less than unanimous consent. To remain
consistent, the New Articles will permit shareholder action by
written consent of a majority of outstanding shares.
Special Meeting of Shareholders. Both Delaware and
Pennsylvania laws permit a special meeting of the shareholders to
be called by the board of directors or such other person as may
be authorized by the corporation's charter or bylaws.
Pennsylvania law, however, explicitly states that shareholders of
a registered corporation, such as the Pennsylvania Corporation,
shall not have a statutory right to call special meetings. The
New Articles provide, as do the Company's Bylaws, that special
meetings of the shareholders may only be called by (i) the Chief
Executive Officer of the Pennsylvania Corporation, (ii) the
Executive Committee of the Board of Directors of the Pennsylvania
Corporation, or (iii) a majority of the full Board of Directors
of the Pennsylvania Corporation.
Annual Meeting of Shareholders. Under Delaware law, if the
annual meeting for the election of directors is not held on a
designated date, the directors are required to cause such meeting
to be held as soon thereafter as may be convenient. If they fail
to do so for a period of 30 days after the designated date, or if
no date has been designated, for a period of 13 months after the
organization of the corporation or after its last annual meeting,
the Court of Chancery may summarily order a meeting to be held
upon application of any stockholder or director.
Under Pennsylvania law, if the annual meeting of
shareholders for election of directors is not called and held
within six months after the designated time, any shareholder may
call such meeting at any time thereafter without application to
any court.
Case Law and Court Systems. There is a substantial body of
case law in Delaware interpreting the corporation laws of that
state. A comparable body of judicial interpretations does not
exist in Pennsylvania. Delaware also has established a system of
Chancery Courts to adjudicate matters arising under the DGCL.
Pennsylvania is considering, but has not yet established, an
equivalent court system. As a result of these factors there may
be less certainty as to the outcome of matters governed by the
PBCL or by the New Articles or New Bylaws (and therefore it may
be more difficult to obtain legal guidance as to such matters)
than would be the case under Delaware law.
Vote Required
Approval of the Merger Agreement requires the affirmative
vote of a majority of the outstanding shares of Common Stock.
Marcel Dutil, the beneficial owner of 2,649,000 shares
(representing 57.07%) of the Common Stock has informed the
Company that he intends to cause all of such shares to be voted
for approval of the Merger Agreement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
PROPOSED MERGER. All proxies will be voted "FOR" approval of the
Merger unless a stockholder specifies to the contrary on such
stockholder's proxy card.
<PAGE>
MATTER NO. 3
Stock Compensation Plan
General Information
The Board of Directors believes that the Company's
stock compensation programs constitute an important ingredient in
the Company's policy of encouraging its executive management to
increase their stake in the Company and, thus, to more
significantly align the interests of management with those of the
Company's stockholders.
Stockholders have previously authorized grants of
options to employees under the 1994 Stock Compensation Plan (the
"1994 Plan"). However, the 1994 Plan is outdated in a number of
respects due to recent amendments to the Securities Act of 1933,
as amended, and the number of shares available for option grants
thereunder is insufficient to provide options in accordance with
the Company's policies.
Therefore, subject to stockholder approval, on
February 27, 1997, the Board of Directors of the Company approved
and adopted the 1997 Stock Compensation Plan in the form attached
to this Proxy Statement as Exhibit "B" (the "1997 Plan"). The
1997 Plan is substantially identical to the 1994 Plan. The
purpose of the 1997 Plan is to provide incentive compensation
opportunities for selected officers and key employees of the
Company. The 1997 Plan is intended to advance the interests of
the Company and its stockholders by giving participants a
proprietary and vested interest in the Company and an increased
incentive to contribute to the success of the Company. The 1997
Plan will also aid the Company in attracting, retaining and
encouraging competent and dedicated management level employees.
Summary of Proposed Plan
The following summary of the 1997 Plan is qualified in
its entirety by reference to the text of the 1997 Plan.
The 1997 Plan authorizes the issuance of up to 400,000
shares of the Common Stock of the Company to employees of the
Company and its subsidiaries. The number of shares authorized to
be issued under the 1997 Plan and outstanding awards granted
under the 1997 Plan are subject to adjustment in the event of
stock dividends, stock splits and similar transactions. Awards
may be granted in the form of nonqualified stock options,
incentive stock options, stock appreciation rights. performance
units and restricted stock. Shares which are issued pursuant to
awards granted under the 1997 Plan will be authorized but
previously unissued shares or treasury shares. Shares issuable
pursuant to awards which by reason of the expiration,
cancellation or other termination of awards prior to issuance are
not issued will be available for issuance in connection with
future awards, except that restricted shares that are forfeited
after issuance will not be available for issuance pursuant to
future awards. The 1997 Plan will be administered by the Stock
Compensation Committee (the "Committee").
Subject to the terms of the 1997 Plan and Board
approval, the Committee has authority to determine the employees
who will receive awards under the 1997 Plan, the number of shares
which will be awarded under the 1997 Plan, and the time and
frequency at which awards will be granted. Employees who are
performing or who have been engaged to perform services of
special importance to the management, operation or development of
the Company and its subsidiaries are eligible to receive awards
under the 1997 Plan. Members of the Board who are not employees
are not eligible to receive awards under the 1997 Plan. Although
it is anticipated that certain executive officers of the Company
will participate in the 1997 Plan, this decision will be made by
the Committee, subject to Board approval. The Committee has
authority to grant awards of one type or of several types and in
such combinations as the Committee may, in its discretion,
determine, subject to Board approval. Each award granted under
the 1997 Plan will be evidenced by an award agreement (an "Award
Agreement") which will set forth the type of award, the terms and
conditions of the award and the manner in which it may be
exercised.
Amendments to Plan
To the extent permitted by law and subject to certain
limitations set forth in the 1997 Plan, the Board of Directors of
the Company may amend, suspend or terminate the 1997 Plan at any
time provided, however, that with respect to incentive stock
options, no amendment may be adopted that will increase the
number of shares reserved for awards under the 1997 Plan, change
the option price, or change the provisions required for
compliance with Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and regulations issued thereunder. The
amendment or termination of the 1997 Plan shall not, without the
consent of the participant, alter or impair any rights or
obligations under any award previously granted. In the event of
a change in control of the Company (as defined in the 1997 Plan),
the Committee may, in its discretion, provide for the
acceleration of any time periods relating to the exercise or
realization of any award, provide for the purchase of awards from
participants, make adjustments to outstanding awards, or cause
outstanding awards to be assumed or new rights of equivalent
value to be substituted therefor by the successor corporation in
any such change of control.
The following is a summary of the terms and conditions
of the awards which may be granted under the 1997 Plan:
Nonqualified Stock Options: The option price of
nonqualified stock options and the period during which each
option may be exercised will be established by the Committee,
subject to the limitation under the 1997 Plan that the exercise
price of a nonqualified stock option may not be less than 100
percent of the fair market value of the shares on the day the
option is granted. As of March 3, 1997, the closing price of the
Company's Common Stock as reported on the Nasdaq National Market
System was $2.625.
Unless otherwise provided in an Award Agreement, a
nonqualified stock option may be exercised by a participant only
while he is an employee of the Company or a subsidiary, except in
the case of death, disability or retirement. Upon the exercise
of a nonqualified stock option, payment may be made in cash, in
shares of the Common Stock, or by combination of cash and shares
of Common Stock, unless otherwise provided in an Award Agreement.
For federal income tax purposes, a participant who receives a
nonqualified stock option will not recognize taxable income upon
the grant of the option; however, upon exercise of a nonqualified
stock option, the participant will recognize taxable income in an
amount equal to the excess of the fair market value of the stock
on the date the option is exercised over the price paid for the
stock. The Company will be entitled to a deduction in the year
of exercise in an amount equal to the amount of income recognized
by the participant. The foregoing tax discussion is intended as
a summary only and the federal income tax consequences to a
participant and to the Company may vary from those described
above, depending upon individual actions and circumstances.
The Committee may in its discretion grant a reload
option in connection with the grant of a nonqualified stock
option. A reload option is a nonqualified stock option which
entitles the participant to purchase from the Company a number of
shares of Common Stock equal to the number of shares of Common
Stock tendered to the Company in payment of the exercise price of
an option. The exercise price of a reload option may not be less
than 100 percent of the fair market value of the shares on the
date on which the grant of the reload option becomes effective
and a reload option must be exercised prior to the expiration of
the term of the option in respect of which the grant of the
reload option becomes effective.
Incentive Stock Options: The Committee will fix the
option price and the period during which each incentive stock
option may be exercised, but in no case may the option price be
less than 100 percent of the fair market value of the shares on
the day an incentive stock option is granted. If the participant
owns more than 10 percent of the total combined voting power of
all classes of stock of the Company, the option price may not be
less than 110 percent of the fair market value of the Common
Stock on the day the incentive stock option is granted.
An incentive stock option may not be exercised later
than 10 years after the date it is granted. An incentive stock
option may be exercised by a participant only while he is an
employee of the Company or a subsidiary, except in the case of
death, disability or retirement. Upon exercise of an incentive
stock option, payment may be made in cash, in shares of Common
Stock, or by a combination of cash and shares of Common Stock,
unless otherwise provided in the Award Agreement.
The Committee may, in its discretion, grant a reload
option in connection with the grant of an incentive stock option.
Incentive stock options granted under the 1997 Plan are
intended to qualify as incentive stock options as defined in
Section 422 of the Code. Under the provisions of the Code, an
employee who acquires stock through the exercise of an incentive
stock option will not recognize taxable income upon either the
grant of the option or upon the exercise of the option. For
federal income tax purposes, if the stock acquired by the
exercise of an incentive stock option is held until the later of:
(i) two years from the date of the grant, and (ii) one year from
the date of exercise, any gain (or loss) recognized on the sale
or exchange of the stock will be treated as long-term capital
gain (or loss) and the Company will not be entitled to any
deduction. If stock acquired by the exercise of an incentive
stock option is sold or exchanged before the expiration of the
required holding period, the participant will recognize ordinary
income in the year of disposition in an amount equal to the
difference between the option price and the lesser of: (i) the
fair market value of the shares on the date of exercise, and (ii)
the selling price. In addition, if the shares are sold or
exchanged at a price which is greater than the fair market value
of the shares on the date the option was exercised, the amount of
the difference will be recognized as short-term or long-term
capital gain, depending upon how long the shares were held prior
to disposition. In the event of such a nonqualifying
disposition, the Company will be entitled to a compensation
expense deduction in the year in which the disposition occurs in
an amount equal to the amount of ordinary income recognized by
the participant. The foregoing tax discussion is intended as a
summary only and the federal income tax consequences to a
participant and to the Company may vary from those described
above, depending upon individual actions and circumstances.
Stock Appreciation Rights: A stock appreciation right
entitles a participant to receive from the Company an amount
equal to the positive difference between the fair market value of
a share of Common Stock at the time an award is granted and the
fair market value of a share of Common Stock on the date of
exercise of the stock appreciation right or some percentage of
such difference, as determined by the Committee. Stock
appreciation rights may be granted in tandem with an option, in
addition to an option, or may be freestanding and unrelated to an
option.
A stock appreciation right may not be exercised earlier
than six months after the date of grant. Unless otherwise
provided in an Award Agreement, a stock appreciation right must
be exercised by a participant while he is an employee of the
Company or a subsidiary, except in the case of death, disability
or retirement. The Committee may determine whether a stock
appreciation right will be settled in cash, in shares of the
Company's Common Stock or in a combination of cash and shares of
the Company's Common Stock.
Performance Units: Performance units entitle a
participant to earn a designated number shares of Common Stock or
a designated dollar amount, based upon the achievement of
performance goals established in advance by the Committee during
a period of time established as a performance cycle by the
Committee. At the expiration of a performance cycle, the
Committee will determine the number of performance units which
have been earned by a participant on the basis of performance in
relation to established performance goals. Unless otherwise
provided in an Award Agreement, payment for a performance unit
may be made in cash, shares of Common Stock, shares of restricted
stock issued under the 1997 Plan, or nonqualified stock options
issued under the 1997 Plan with an aggregate discount from fair
market value not in excess of the value of the earned performance
unit with respect to which payment is being made, or by a
combination of the foregoing. A participant must be an employee
of the Company or a subsidiary at the end of a performance cycle
in order to be entitled to payment of performance units, except
that, in the case of death, disability or retirement, the
Committee may in its discretion authorize payment with respect to
some or all of the performance units.
Restricted Stock: Restricted stock awards may be
granted in such form as the Committee shall approve from time to
time. The Committee shall determine the number of shares of
restricted stock to be granted to a participant, the duration of
the restricted period and the conditions under which the
restricted stock will vest. Unless otherwise provided in an
Award Agreement, if a participant ceases to be an employee during
the restricted period for reasons other than death or disability,
all then unvested shares of restricted stock will be forfeited.
In the event of a participant's death or disability during the
restricted period, the restrictions imposed will lapse and all
shares of restricted stock will immediately vest.
No grant of awards under the 1997 Plan has been made.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR ADOPTION OF THE 1997 PLAN. The affirmative vote of a
majority of the shares present, in person or by proxy, at the
Annual Meeting is required to adopt the 1997 Plan. All proxies
will be voted "FOR" adoption of the 1997 Plan unless a
stockholder specifies to the contrary on such stockholder's proxy
card.<PAGE>
MATTER NO. 4
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm
of Price Waterhouse LLP, independent accountants, to provide
auditing and accounting services for the Company and its
subsidiary during fiscal year 1997. Such appointment is being
submitted to stockholders for ratification.
Price Waterhouse LLP has audited the books of account and
financial statements of the Company since 1987. The Company has
been advised that neither the firm nor any of its partners
possesses any other material direct or indirect relationship with
the Company, its subsidiaries or its officers or directors, in
their capacities as such. Representatives of Price Waterhouse
LLP are expected to attend the Annual Meeting, will be afforded
an opportunity to make a statement, if they desire to do so, and
will be available to respond to questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR THE 1997 FISCAL YEAR. The
affirmative vote of a majority of the shares present, in person
or by proxy, at the Annual Meeting is required to ratify the
appointment. All proxies will be voted "FOR" ratification of the
appointment unless a stockholder specifies to the contrary on
such stockholder's proxy card.
STOCKHOLDER PROPOSALS FOR 1998
Stockholders may propose matters for consideration at annual
meetings of stockholders by notice in writing, delivered to or
mailed and received by the Secretary of the Company or the
Pennsylvania Corporation, as the case may be, not less than 30
days prior to such annual meeting, which notice must contain
certain information specified in the Bylaws or the New Bylaws, as
the case may be.
The 1998 Annual Meeting of Stockholders of the Company or
the Pennsylvania Corporation, as the case may be, will be held on
or about April 17, 1998. Any stockholder desiring to submit a
proposal to be considered for inclusion in the 1998 proxy
materials must submit such proposal or proposals in writing,
addressed to the Company or the Pennsylvania Corporation, as the
case may be, at 422 Business Center, A130 North Drive, Oaks,
Pennsylvania 19456, Attention: Secretary, on or before
December 1, 1997.
OTHER MATTERS
The Board of Directors does not intend to bring any other
matter before the Annual Meeting and is not presently informed of
any other business which others may bring before the Annual
Meeting. If any other matters should properly come before the
Annual Meeting, or any adjournment or adjournments thereof,
however, it is the intention of the persons named in the
accompanying proxy to vote on such matters as they, in their
discretion, may determine.
BY ORDER OF THE BOARD OF DIRECTORS
Jeffrey A. Boehmer, Secretary
March 31, 1997
PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW.
<PAGE>
EXHIBIT "A"
AGREEMENT AND PLAN OF MERGER
BETWEEN
TOTAL CONTAINMENT, INC.
(a Delaware corporation)
AND TCI NEW CORP.
(a Pennsylvania corporation)
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of
March 26, 1997, made by and between TOTAL CONTAINMENT, INC., a
Delaware corporation ("TCI"), and TCI NEW CORP., a Pennsylvania
corporation and wholly owned subsidiary of TCI ("Newco"), (which
corporations are sometimes hereinafter collectively called the
"Constituent Corporations").
WITNESSETH:
WHEREAS, TCI has authority to issue 20,001,000 of
capital stock, consisting of 20,000,000 common shares, par value
$.01 per share, and 1,000 preferred shares, par value $.01 per
share (collectively, the "TCI Capital Stock"); and
WHEREAS, Newco on the Effective Date (as hereinafter
defined) will have the authority to issue 20,000,200 shares of
capital stock, consisting of 20,000,000 common shares, par value
$.01 per share (the "Common Shares"), and 1,000 Preferred Shares,
par value $.01 per share (collectively, the "Newco Capital
Stock"); and
WHEREAS, the Board of Directors of each of the
Constituent Corporations deems it advisable and in the best
interests of each of the Constituent Corporations and its
shareholder or stockholders that TCI be merged with and into
Newco as permitted by the General Corporation Law of the State of
Delaware ("DGCL") and the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania ("PBCL") under and pursuant to the
terms and conditions hereinafter set forth; and
WHEREAS, the Board of Directors of each of the
Constituent Corporations has approved this Agreement and directed
that this Agreement be submitted to its stockholders or
shareholders;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements and covenants herein contained and in
accordance with the applicable provisions of the DGCL and the
PBCL, the parties hereto have agreed and covenanted, and do
hereby agree and covenant, as follows:
ARTICLE I
THE MERGER, THE SURVIVING CORPORATION AND
THE EFFECTIVE DATE
1. As soon as practicable following the fulfillment
(or waiver, to the extent permitted therein) of the conditions
specified in Article IV hereof, taking into consideration the
closing of accounting periods, TCI shall be merged with and into
Newco (the "Merger") and Newco shall survive the Merger.
2. The date on which the Merger occurs and becomes
effective is hereinafter called the Effective Date. The Merger
shall occur and be effective on the hour and on the date set
forth as the effective date in Articles of Merger incorporating
this Agreement filed in the Department of State of the
Commonwealth of Pennsylvania as provided in Subchapter 19C
(relating to merger, consolidation, share exchanges and sale of
assets) of the PBCL, if prior thereto a duly certified, executed
and acknowledged copy of this Agreement or certificate of merger
with respect thereto has been filed with the Secretary of State
of Delaware as provided in Sections 103 and 252 of the DGCL.
3. Newco, as the surviving corporation (the
"Surviving Corporation"), shall continue its corporate existence
under the laws of the Commonwealth of Pennsylvania. On the
Effective Date, the separate existence and corporate organization
of TCI, except insofar as it may be continued by operation of
law, shall be terminated and cease.
ARTICLE II
ARTICLES OF INCORPORATION, BYLAWS, DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION
1. The Articles of Incorporation of Newco on the
Effective Date, in the form set forth in Attachment I hereto,
shall be the Articles of Incorporation of the Surviving
Corporation, until amended or repealed in accordance with the
provisions thereof and of applicable law. Following the Merger,
the Surviving Corporation shall operate under the name "Total
Containment, Inc."
2. The Bylaws of Newco on the Effective Date, in the
form set forth in Attachment II hereto, shall on the Effective
Date become and be the Bylaws of the Surviving Corporation, until
amended or repealed in accordance with the provisions thereof, of
the Articles of Incorporation and of applicable law.
3. The directors and officers of TCI on the Effective
Date will be the directors and officers, respectively, of Newco
on and after the Effective Date until expiration of their current
terms and until their successors are elected and qualified, or
their prior resignation, removal or death, subject to the
Articles of Incorporation and Bylaws of Newco.
ARTICLE III
TREATMENT OF SHARES OF EACH OF THE
CONSTITUENT CORPORATIONS
1. On the Effective Date:
(a) each share of Common Stock of TCI, par value
$.01 per share, outstanding immediately prior to the Merger
shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become one
Common Share of Newco, par value $.01 per share;
(b) each share of Newco Capital Stock outstanding
immediately prior to the Merger shall cease to exist and be
cancelled;
(c) each share of TCI Capital Stock issued and
held in the treasury of TCI, if any, on the Effective Date
shall be cancelled, and no shares or other securities of
Newco shall be issuable with respect thereto; and
(d) each option outstanding under TCI's Stock
Option Plan immediately prior to the Merger shall, by virtue
of the Merger and without any action on the part of the
holder thereof, be converted into and become an option to
purchase the same number of Common Shares of Newco at the
same price and otherwise upon the same terms and conditions.
2. Certificates representing shares of Newco Capital
Stock outstanding immediately prior to the Merger shall be
cancelled. No certificate for shares of Newco Capital Stock will
be issued to holders of any of the shares of TCI Capital Stock
upon the Merger. Certificates representing shares of TCI Capital
Stock (other than certificate representing shares which are
cancelled pursuant to Section 1(c) of this Article III) shall
upon the Merger be deemed for all purposes to represent an equal
number of shares of the same class and series of Newco Capital
Stock. After the Effective Date, whenever certificates which
formerly represented shares of TCI Capital Stock are presented
for exchange or registration of transfer, Newco will cause to be
issued in respect thereof certificates representing an equal
number of shares of Newco Capital Stock of the same class and
series.
ARTICLE IV
CONDITIONS, DEFERRAL, TERMINATION AND AMENDMENT
1. The obligation of TCI and Newco to effect the
transactions contemplated hereby is subject to satisfaction of
the following conditions (any or all of which may be waived by
TCI and Newco in their sole discretion to the extent permitted by
law):
(a) TCI as sole shareholder of Newco shall have
approved this Agreement in accordance with the PBCL;
(b) the stockholders of TCI entitled to vote
thereon shall have adopted this Agreement at a meeting
thereof duly held in accordance with the DGCL;
(c) The Newco Common Shares to be issued in the
Merger or reserved for issuance shall have been approved for
quotation on the NASDAQ National Market System, subject to
official notice of issuance;
(d) TCI shall have received an opinion of its tax
counsel, satisfactory to TCI and substantially to the effect
that, for federal income tax purposes (i) no gain or loss
will be recognized by TCI, Newco or the stockholders of TCI
by reason of the consummation of the Merger, (ii) each TCI
stockholder's tax basis in Newco Capital Stock as converted
will be the same as the tax basis of the TCI Capital Stock
held by such stockholder immediately prior to consummation
of the Merger and (iii) a TCI stockholder who holds TCI
Capital Stock as a capital asset will include in his holding
period for the Newco Capital Stock the period during which
he held the TCI Capital Stock converted into such Newco
Capital Stock; and
(e) a duly certified, executed and acknowledged
copy to this Agreement or certificate of merger with respect
thereto shall have been filed with the Secretary of State of
Delaware in accordance with Sections 103 and 252 of the
DGCL.
2. Consummation of the Merger may be deferred by the
Board of Directors of TCI for a reasonable period of time, not
later than December 31, 1997, if the Board of Directors
determines that deferral would be in the best interest of TCI and
its stockholders.
3. (a) This Agreement may be terminated by the Board
of Directors of TCI or Newco at any time before or after the
adoption and approval thereof by the shareholder of Newco or
the stockholders of TCI or both, but not later than the
Effective Date. In the event of a termination after
Articles of Merger have been filed in the Department of
State of the Commonwealth of Pennsylvania and before the
Effective Date, a timely statement of termination may be
filed in the Department of State by the terminating
corporation.
(b) In the event of termination of this Agreement
as above provided, this Agreement shall become wholly void
and of no effect, and there shall be no liability on the
part of either Constituent Corporation or its Board of
Directors or its stockholders or shareholder except as
provided in Section 4 of this Article IV.
4. If the Merger becomes effective, the Surviving
Corporation shall assume and pay all expenses in connection
therewith not theretofore paid by the respective parties. If for
any reason the Merger shall not become effective, TCI shall pay
all expenses incurred in connection with all the proceedings
taken in respect of this Agreement or relating thereto.
5. The parties hereto, by mutual consent of their
respective Boards of Directors, may amend, modify or supplement
this Agreement in such manner as may be agreed upon by them in
writing at any time before or after adoption and approval of this
Agreement by the shareholder of Newco and stockholders of TCI,
but not later than the Effective Date, except that no such
amendment, modification or supplement not adopted and approved by
the shareholder of Newco and the stockholders of TCI shall affect
the rights of such shareholder and stockholders in a manner which
is materially adverse to them, in the sole judgment of the Board
of Directors of TCI.
ARTICLE V
TRANSFER OF ASSETS AND LIABILITIES
1. On the Effective Date, the rights, privileges,
powers and franchises, both of a public as well as of a private
nature, of each of the Constituent Corporations shall be vested
in and possessed by the Surviving Corporation, subject to all the
disabilities, duties and restrictions of or upon each of the
Constituent Corporations; and all the rights, privileges, powers
and franchises of each of the Constituent Corporations on
whatever account, as well for stock subscriptions and all things
in action or belonging to each of the Constituent Corporations
shall be transferred to and vested in the Surviving Corporation;
and all property, rights, privileges, and all and every other
interest, shall be thereafter the property of the Surviving
Corporation as they were of the Constituent Corporations, and the
title to any real estate vested by deed or otherwise in either of
the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger, but all rights of creditors and
all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of each of the Constituent Corporations
shall attach to the Surviving Corporation, and may be enforced
against it to the same extent as if such debts, liabilities and
duties had been incurred or contracted by it.
2. The parties hereto agree that from time to time
and as and when requested by the Surviving Corporation, or by its
successors or assigns, to the extent permitted by law, the
officers and directors of TCI and of the Surviving Corporation
are fully authorized in the name of TCI or otherwise to execute
and deliver all such deeds, assignments, confirmations,
assurances and other instruments and to take or cause to be taken
all such further action as the Surviving Corporation may deem
necessary or desirable in order to vest, perfect, confirm in or
assure the Surviving Corporation title to and possession of all
of said property, rights, privileges, powers and franchises and
otherwise to carry out the intent and purposes of this Agreement.
ARTICLE VI
MISCELLANEOUS
For the convenience of the parties and to facilitate
any filing and recording of this Agreement, any number of
counterparts hereof may be executed, each of which shall be
deemed to be an original of this Agreement but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties to this
Agreement, pursuant to the approval and authority duly given by
resolutions adopted by its Board of Directors, has caused these
presents to be executed by its President or a Vice President and
its corporate seal affixed and attested to by its Secretary or an
Assistant Secretary, all as of the day and year first above
written.
(Corporate Seal) TCI NEW CORP.
(a Pennsylvania corporation)
By:/s/ Pierre Desjardins
Pierre Desjardins, President
ATTEST:
By:/s/ Jeffrey A. Boehmer
Jeffrey A. Boehmer, Secretary
(Corporate Seal) Total Containment, Inc.
(a Delaware corporation)
By:/s/ Pierre Desjardins
Pierre Desjardins, President
ATTEST:
By:/s/ Jeffrey A. Boehmer
Jeffrey A. Boehmer, Secretary
<PAGE>
ATTACHMENT I
ARTICLES OF INCORPORATION
OF
TCI NEW CORP.
FIRST. The name of the Corporation is TCI New Corp.
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 March, 1997.
/s/ Kathleen S. Wetzel
Kathleen S. Wetzel,
Incorporator<PAGE>
ATTACHMENT II
BY LAWS
OF
TCI NEW CORP.
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:
(i) may be treated as properly executed; and
(ii) 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:
(i) 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
(ii) 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 - The authority to make,
amend, alter, change or repeal these bylaws is hereby expressly
vested in the board of directors of the corporation, subject to
the power of the shareholders to change such action. 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.
<PAGE>
EXHIBIT "B"
TOTAL CONTAINMENT, INC.
STOCK COMPENSATION PLAN
SECTION 1
PURPOSE OF THE PLAN
The purpose of the Total Containment, Inc. Stock
Compensation Plan (the "Plan") is to provide incentive
compensation opportunities for selected officers and key
employees of Total Containment, Inc. (the "Company") and its
subsidiaries. In providing these opportunities, the Company
seeks to generate in the participants a proprietary and vested
interest in the performance of the Company and an increasing
incentive to contribute to the Company's future success and
prosperity, thereby benefitting all stockholders. Providing
incentive compensation opportunities to key employees will aid
the Company in attracting, retaining, and encouraging the kind of
management it requires to realize its long term financial
objectives.
SECTION 2
EFFECTIVE DATE OF PLAN
This Plan shall become effective February 27, 1997, the date
on which it was adopted by the Board of Directors of the Company,
subject to approval by the stockholders of the Company.
SECTION 3
DEFINITIONS
The following terms, when capitalized and used herein, shall
have the meanings set forth below unless the context clearly
indicates otherwise:
3.1 Award: means a nonqualified stock option, an incentive
stock option, a stock appreciation right, a performance unit, or
restricted stock, or a combination of the foregoing, granted
pursuant to the terms of this Plan.
3.2 Board: means the Board of Directors of the Company.
3.3 Code: means the Internal Revenue Code of 1986, as
amended from time to time.
3.4 Committee: means the Committee designated by the Board
to administer the Plan.
3.5 Common Stock: means the $.01 par value common stock of
the Company.
3.6 Company: means Total Containment, Inc., a Delaware
business corporation, and any successor by merger thereto.
3.7 Disability: means permanent and total disability such
that an individual is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or
which has lasted or is expected to last for a continuous period
of not less than 12 months. All determinations as to disability
shall be made by the Committee and shall be final and binding.
3.8 Employee: means any employee of the Company or any
Subsidiary.
3.9 Fair Market Value: means (i) in the event that the
Common Stock is listed on an established exchange, the closing
price of the Common Stock on the relevant date or, if no trade
occurred on that day, on the next preceding day on which a trade
occurred, (ii) in the event that the Common Stock is not listed
on an established exchange, but is then quoted on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the average of the closing bid and
asked quotations of the Common Stock for the five (5) trading
days immediately preceding the relevant date, or (iii) in the
event that the Common Stock is not then listed on an established
exchange or quoted on NASDAQ, the average of the average of the
closing bid and asked quotations of the Common Stock for the five
(5) trading days immediately preceding the relevant date as
reported by two (2) brokerage firms to be selected by the
Committee which are then making a market in the Common Stock. In
the event that the Common Stock is not listed on an established
exchange and no closing bid and asked quotations are available,
Fair Market Value shall be determined in good faith by the
Committee. In the case of (ii) or (iii) above, in the event that
no closing bid or asked quotation is available on one or more of
such trading days, Fair Market Value shall be determined by
reference to the five (5) trading days immediately preceding the
relevant date on which closing bid and asked quotations are
available.
3.10 Option: means an incentive stock option or a
nonqualified stock option (including a Reload Option) granted to
a Participant permitting the Participant to purchase shares of
Common Stock, subject to the terms and conditions described in
the Plan.
3.11 Participant: means an Employee who is selected by the
Committee to receive an Award under the Plan.
3.12 Performance Cycle: means the period of months or years
selected by the Committee during which performance is measured
for the purpose of determining the extent to which an award of
Performance Units has been earned.
3.13 Performance Goals: means the objectives established by
the Committee for a Performance Cycle for the purpose of
determining the extent to which an award of Performance Units has
been earned.
3.14 Performance Unit: means a fixed or variable dollar
denominated unit contingently awarded to a Participant subject to
the terms and conditions as described in the Plan.
3.15 Reload Option: means a nonqualified stock option which
entitles the Participant to purchase from the Company a number of
shares of Common Stock equal to the number of shares of Common
Stock tendered to the Company in payment of the exercise price of
an Option, subject to such terms and conditions as the Committee
may in its discretion set forth in an Award Agreement; provided,
that the option price of a Reload Option shall not be less than
100% of the fair market value of the shares of Common Stock
subject to the Reload Option on the date on which the grant of
the Reload Option becomes effective; provided further that a
Reload Option must be exercised prior to the expiration of the
term of the Option in respect of which the grant of that Reload
Option becomes effective.
3.16 Restricted Period: means the period of months or years
selected by the Committee during which a grant of Restricted
Stock may be forfeited to the Company.
3.17 Restricted Stock: means shares of Common Stock
contingently granted to a Participant subject to the terms and
conditions as described in the Plan.
3.18 Retirement: means the voluntary termination of
employment by a Participant on or after attainment of age 65 or
the voluntary termination of employment by a Participant on or
after attainment of age 55 if the Participant has been an
Employee for at least fifteen (15) years.
3.19 Subsidiary: means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the grant of an Award, each of the
corporations other than the last corporation in the unbroken
chain owns stock possessing 50 percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
SECTION 4
STOCK SUBJECT TO AWARDS
Subject to the provisions of Section 6 of this Plan, the
maximum number of shares of Common Stock that may be issued
pursuant to all Awards granted under the Plan shall be
400,000 shares. Such shares may be treasury or authorized, but
unissued, shares of Common Stock. Shares issuable pursuant to
Awards which, by reason of the expiration, cancellation or other
termination of Awards prior to issuance, are not issued, shall
again be available for future Awards, except that Restricted
Shares that are forfeited after issuance shall not be available
for reissuance pursuant to future Awards.
SECTION 5
ADMINISTRATION
5.1 Committee Members. The Plan shall be administered by
the Committee, which shall be composed of at least two members of
the Board who the full Board designates.
5.2 Committee Authority. The Committee shall have
authority, subject to Board approval, (i) to grant Awards upon
terms (not inconsistent with the provisions of this Plan) as the
Committee may consider appropriate, (ii) to determine the
Employees to whom Awards will be made under the Plan, and
(iii) to determine the time and frequency at which Awards will be
made and the number of shares to be optioned or awarded. The
Committee shall have authority, subject to Board approval, to
grant Awards of one type or of several types and in such
combinations as the Committee shall determine.
Notwithstanding anything to the contrary herein, the
Committee may, in its discretion, subject to Board approval,
accelerate the time at which: (i) any Option or stock
appreciation right may be exercised, (ii) any Performance Units
shall be earned, or (iii) restrictions on Restricted Stock shall
lapse.
In addition, the Committee shall have authority, subject to
Board approval, to construe and interpret all provisions of this
Plan, to adopt, amend and rescind rules and regulations
pertaining to the administration of the Plan, and to make all
other determinations necessary or advisable for the
administration of this Plan.
Any decision made, or action taken, by the Committee in
connection with the administration of the Plan or in connection
with any Award shall be final and conclusive, subject to Board
approval. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan. All expenses of
administering this Plan shall be borne by the Company.
SECTION 6
STOCK ADJUSTMENTS
In the event of any change in the number of issued and
outstanding shares of Common Stock of the Company which results
from a stock split, reverse stock split, the payment of a stock
dividend or any other change in the capital structure of the
Company, the Committee shall proportionately adjust the maximum
number of shares reserved under Section 4 and shall appropriately
adjust the number of shares subject to each outstanding Award,
and (where appropriate) the price per share thereof (but not the
total Award price), so that upon exercise or realization of such
Award, the Participant shall receive the same number of shares he
would have received had he been the holder of all shares subject
to his outstanding Award immediately before the effective date of
such change in the number of issued and outstanding shares of
Common Stock of the Company. Such adjustment shall not, however,
result in the issuance of fractional shares.
Any adjustment under this Section shall be made by the
Committee, subject to approval by the Board. No adjustment shall
be made that would cause an incentive stock option to fail to
continue to qualify as an incentive stock option within the
meaning of Section 422 of the Code. The grant of an Award
pursuant to the Plan shall not affect in any way the right of the
Company to make adjustments, reclassifications, reorganizations,
or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any
part of its business or assets.
SECTION 7
ELIGIBILITY
Employees, as may be designated by the Committee, who are
performing or who have been engaged to perform services of
special importance to the management, operation, or development
of the Company shall be eligible to receive Awards under the
Plan. Members of the Board who are not Employees shall not be
eligible for Awards under the Plan.
SECTION 8
GRANT OF AWARDS
Each Award granted under this Plan shall be evidenced by an
agreement (an "Award Agreement") executed by the Company and the
Participant. The Award Agreement shall set forth the type of
Award, the terms and conditions of the Award, and the manner in
which it may be exercised, subject to the provisions of this
Plan. Each Award Agreement shall be consistent with the
applicable provisions of this Plan and may contain such terms,
conditions and other provisions as the Committee may in its
discretion determine to be appropriate and which are not
inconsistent with the provisions of this Plan.
SECTION 9
TERMS AND CONDITIONS
9.1 Nonqualified Stock Options. The grant of a
nonqualified stock option entitles the Participant to purchase
from the Company a stated number of shares of Common Stock,
subject to the following terms and conditions:
A. Price. The Committee shall establish the Option price
at the time each nonqualified stock option is granted,
which price shall not be less than 100% of the Fair
Market Value of the shares of Common Stock on the day
the Option is granted.
B. Exercise of Options. The Option price of each share as
to which a nonqualified stock option is exercised shall
be paid in full at the time of such exercise. Unless
otherwise provided in an Award Agreement, such payment
shall be made in cash, by tender of shares of Common
Stock which have been owned by the Participant for at
least six (6) months, or by a combination of cash and
such shares of Common Stock. In addition, at the
request of the Participant and to the extent permitted
by applicable law, the Company in its discretion may
selectively approve arrangements with a brokerage firm
under which such brokerage firm, on behalf of the
Participant, shall pay to the Company the exercise
price of the Options being exercised, and the Company,
pursuant to an irrevocable notice from the Participant,
shall promptly deliver the shares being purchased to
such brokerage firm.
C. Time Period for Exercise. The Committee may establish
time periods after which unexercised nonqualified stock
options shall expire. The Committee may determine that
a nonqualified stock option shall become exercisable in
installments and may determine that the right to
exercise such nonqualified stock option as to such
installments shall expire on different dates or on the
same date.
D. Termination of Employment. Unless otherwise provided
in an Award Agreement, a Participant may exercise a
nonqualified stock option only while he is an Employee,
except that: (i) in the case of a Participant who
ceases to be an Employee for reasons of Disability or
death, a nonqualified stock option may be exercised by
the Participant or by the Participant's personal
representative or beneficiary (as the case may be) for
a period of twelve (12) months following the date of
Disability or death, and (ii) a Participant who ceases
to be an Employee because of Retirement may exercise a
nonqualified stock option for a period of three (3)
months following the date of Retirement.
E. Reload Option. The Committee may in its discretion
grant a Reload Option in connection with the grant of a
nonqualified stock option.
9.2 Incentive Stock Options. Incentive stock options
granted under the Plan are intended to qualify as "incentive
stock options" as defined in Section 422 of the Code, and shall
entitle the Participant to purchase from the Company a stated
number of shares of Common Stock, subject to the following terms
and conditions:
A. Price. The Committee shall establish the Option price
at the time each incentive stock option is granted,
which price shall not be less than 100% of the Fair
Market Value of the shares of Common Stock on the day
the Option is granted. If an Employee, at the time the
incentive stock option is granted, owns stock
possessing more than 10% of the total combined voting
power of all classes of stock of the Company, the
Option price shall not be less than 110% of the Fair
Market Value of the shares of Common Stock on the day
the option is granted.
B. Ten Year Limitation. Incentive stock options shall not
be granted under this Plan later than ten (10) years
after the earlier of: (i) the date this Plan is
adopted, or (ii) the date this Plan is approved by the
stockholders of the Company. An incentive stock option
which is granted under this Plan shall not be
exercisable later than ten (10) years after its date of
grant. The Committee may determine that any incentive
stock option shall become exercisable in installments
and may determine that the right to exercise such
incentive stock option as to such installments shall
expire on different dates or on the same date.
C. Termination of Employment. A Participant may exercise
an incentive stock option only while he is an Employee,
except that: (i) in the case of a Participant who
ceases to be an Employee for reasons of Disability or
death, an incentive stock option may be exercised by
the Participant or by the Participant's personal
representative or beneficiary (as the case may be) for
a period of twelve (12) months following the date of
Disability or death, and (ii) a Participant who ceases
to be an Employee because of Retirement may exercise an
incentive stock option for a period of three (3) months
following the date of Retirement.
D. Exercise of Options. The option price of each share as
to which an incentive stock option is exercised shall
be paid in full at the time of such exercise. Unless
otherwise provided in an Award Agreement, such payment
shall be made in cash, by tender of shares of Common
Stock owned by the Participant for at least six (6)
months, or by a combination of cash and such shares of
Common Stock. In addition, at the request of the
Participant and to the extent permitted by applicable
law, the Company in its discretion may selectively
approve arrangements with a brokerage firm under which
such brokerage firm, on behalf of the Participant,
shall pay to the Company the exercise price of the
Options being exercised, and the Company, pursuant to
an irrevocable notice from the Participant, shall
promptly deliver the shares being purchased to such
brokerage firm.
E. Reload Option. The Committee may in its discretion
grant a Reload Option in connection with the grant of
an incentive stock option.
9.3 Stock Appreciation Rights. A stock appreciation right
shall entitle the Participant to receive from the Company an
amount equal to the positive difference between the Fair Market
Value of a share of Common Stock at the time the Award is granted
and the Fair Market Value of a share of Common Stock on the date
of exercise of the stock appreciation right, or some percentage
of such difference as the Committee may determine at the time of
grant, subject to the following terms and conditions:
A. Grant and Exercisability. Stock appreciation rights
may be granted in tandem with an Option, in addition to
an Option, or may be freestanding and unrelated to an
Option. Stock appreciation rights granted in tandem or
in addition to an Option may be granted either at the
same time as the Option or at a later time. No stock
appreciation right shall be exercisable earlier than
six (6) months after its grant.
B. Payment. The Committee shall determine and the Award
Agreement shall specify whether a stock appreciation
right shall be settled in cash, shares of Common Stock
or a combination of cash and shares of Common Stock.
C. Termination of Employment. Unless otherwise provided
in an Award Agreement, a Participant may exercise a
stock appreciation right only while he is an Employee,
except that: (i) in the case of a Participant who
ceases to be an Employee for reasons of Disability or
death, a stock appreciation right may be exercised by
the Participant or by the Participant's personal
representative or beneficiary (as the case may be) for
a period of twelve (12) months following the date of
Disability or death, and (ii) a Participant who ceases
to be an Employee because of Retirement may exercise a
stock appreciation right for a period of three (3)
months following the date of Retirement.
9.4 Performance Units. Performance Units entitle a
Participant to earn a designated number of shares of Common Stock
or a designated dollar amount, contingent upon the attainment of
certain goals by the Company, subject to the following terms and
conditions:
A. Grant. The Committee shall determine the number of
Performance Units to be granted, if any, and the number
of such shares and units for each Performance Cycle,
and shall determine the duration of each Performance
Cycle and the value of each Performance Unit. There
may be more than one Performance Cycle in existence at
any one time, and the duration of Performance Cycles
may differ from each other.
B. Performance Goals. The Committee shall establish
Performance Goals for each Performance Cycle on the
basis of such criteria and to accomplish such
objectives as the Committee may from time to time
determine. During any Performance Cycle, the
Committee, in its discretion, may adjust the
Performance Goals for such Performance Cycle as it
deems equitable in recognition of unusual or non-
recurring events affecting the Company, changes in
applicable tax laws or accounting principles, or
similar events.
C. Earned Awards. At the end of each Performance Cycle,
the Committee shall determine the number of Performance
Units which have been earned by Participants on the
basis of performance in relation to the established
Performance Goals. The determination by the Committee
shall be final and binding.
D. Payment. At the expiration of a Performance Cycle,
unless otherwise provided in an Award Agreement,
payment for Performance Units shall be in (i) cash;
(ii) shares of Common Stock; (iii) shares of Restricted
Stock; or (iv) in nonqualified stock options with an
aggregate discount from Fair Market Value not in excess
of the value of the earned Performance Unit for which
payment is being made, in such proportions as the
Committee shall determine at the end of the Performance
Cycle.
E. Termination of Employment. Unless otherwise provided
in an Award Agreement, a Participant must be an
Employee at the end of a Performance Cycle in order to
be entitled to payment of Performance Units in respect
of such Performance Cycle, except that in the event of
a Participant's death, Disability or Retirement prior
to the end of a Performance Cycle, the Committee, in
its discretion and after taking into consideration the
performance of such Participant and the performance of
the Company during that portion of the Performance
Cycle, may authorize payment to such Participant or his
successor with respect to some or all of the
Performance Units deemed earned for that Performance
Cycle. The determination of the Committee shall be
final and binding.
9.5 Restricted Stock. Restricted Stock may be contingently
granted to a Participant, subject to the following terms and
conditions:
A. Grant. At the time of making a grant of Restricted
Stock, the Committee shall determine the number of
shares of Restricted Stock to be granted to each
Participant, the duration of the Restricted Period
after which, and the conditions under which, all or
part of the Restricted Stock may vest in the
Participant, the price to be paid (if any) for the
Restricted Stock, and any terms and conditions of the
Award in addition to those contained in this Section
9.5, including, but not limited to, the establishment
of criteria which would permit the Restricted Stock to
vest on an accelerated basis.
B. Certificates and Payment. Certificates issued in
respect of shares of Restricted Stock shall be
registered in the name of the Participant and deposited
by him, together with a stock power endorsed in blank,
with the Company. At the expiration of the Restricted
Period, the Company shall deliver to the Participant or
his legal representative such certificates representing
shares which have vested.
C. Termination of Employment. Unless otherwise provided
in an Award Agreement: (i) in the event that a
Participant ceases to be an Employee during the
Restricted Period for reasons other than death or
Disability, all shares of Restricted Stock which have
not previously vested in the Participant shall be
forfeited to the Company, and (ii) in the event of a
Participant's death or Disability during the Restricted
Period, the restrictions imposed under the Award
Agreement shall lapse and all shares of Restricted
Stock shall immediately vest in the Participant.
SECTION 10
PLAN TERMINATION, AMENDMENT OR CHANGE OF CONTROL
10.1 Plan Termination or Amendment. To the extent permitted
by law, the Board may amend, suspend, or terminate the Plan at
any time; provided, however, that with respect to incentive stock
options, except as specified in Section 6, no amendment may be
adopted that will increase the number of shares reserved for
Awards under the Plan, change the option price, or change the
provisions required for compliance with Section 422 of the Code
and regulations issued thereunder. The amendment or termination
of this Plan shall not, without the consent of the Participant,
alter or impair any rights or obligations under any Award
previously granted hereunder.
10.2 Change of Control. In order to maintain the
Participants' rights in the event of a "Change of Control" of the
Company, the Committee, in its sole discretion, may,
notwithstanding anything to the contrary contained in the Plan or
an Award Agreement, either at the time an Award is made or at any
time prior to or simultaneously with a "Change of Control":
(i) provide for the acceleration of any time periods relating to
the exercise or realization of such Awards so that such Awards
may be exercised or realized in full on or before a date fixed by
the Committee; (ii) provide for the purchase of such Awards by
the Company, upon the Participant's request, for an amount of
cash equal to the amount which could have been attained upon the
exercise or realization of such rights had such Awards been
currently exercisable or payable; (iii) make such adjustment to
the Awards then outstanding as the Committee deems appropriate to
reflect such change; or (iv) cause the Awards then outstanding to
be assumed or new rights of equivalent value substituted
therefor, by the successor corporation in such change.
"Change of Control" means the occurrence of: (i) a person
(including a group as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) becoming, directly or
indirectly, the beneficial owner (as defined under the Securities
Exchange Act of 1934) of twenty-five percent (25%) or more of the
shares of Common Stock of the Company, or (ii) during any period
of two consecutive years, individuals who at the beginning of
such period constituted the Board, ceasing for any reason to
constitute at least a majority of the Board, unless the election
of each director of the Board, who was not a director of the
Board at the beginning of such period, was approved by a vote of
at least two-thirds of the directors then still in office who
were directors at the beginning of such period, or (iii) the
Company merging or consolidating with or having its assets
purchased by another corporation and as a result of such merger,
consolidation or sale of assets, less than a majority of the
outstanding voting stock of the surviving, resulting or
purchasing corporation being owned, immediately after the
transaction, by the holders of the voting stock of the Company
outstanding immediately before the transaction.
SECTION 11
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be
awarded or issued, no certificates for shares of Common Stock
shall be delivered, and no payment shall be made under this Plan
except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on
which the Company's shares are now or may in the future be
listed. The Company shall have the right to rely on an opinion
of its counsel as to such compliance. Any share certificate
issued to evidence Common Stock may bear such legends and
statements as the Committee may deem advisable to assure
compliance with federal and state laws and regulations.
No Option shall be exercisable, no Common Stock shall be
awarded or issued, no certificate for shares shall be delivered,
and no payment shall be made under this Plan until: (a) the
Company has obtained such consent or approval as the Committee
may deem advisable from regulatory bodies having jurisdiction
over such matters, and (b) the Participant either: (i) authorizes
the Company to withhold in accordance with applicable law from
any compensation payable to the Participant, or (ii) agrees to
remit to the Company (in either case as, and upon such terms as,
the Committee may require) any taxes required to be withheld by
the Company under federal, state or local law. A Participant may
(with the consent of the Company) authorize the Company to
withhold shares otherwise issuable to the Participant in order to
satisfy any applicable tax withholding requirements.
Without limiting the foregoing, the shares of Common Stock
to be issued under this Plan shall be registered as soon as
practicable under the Securities Act of 1933 by the Company by
filing an appropriate registration statement. No Option shall be
exercisable, no Common Stock shall be awarded or issued, and no
certificates for shares of Common Stock shall be delivered until
such registration statement is effective.
SECTION 12
GENERAL PROVISIONS
12.1 Effect on Employment. No person shall have any claim
or right to be granted an Award and the grant of an Award shall
not be construed as giving a Participant the right to be retained
in the employ of the Company or any of its subsidiaries. Neither
the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan, including, without
limitation, any Award Agreement, shall in any way affect any
right and power of the Company or any subsidiary of the Company
to terminate the employment of any person at any time with or
without assigning a reason therefor.
12.2 Rights as a Stockholder. No Participant shall have any
rights as a stockholder with respect to any Award granted to him
unless and until certificates for shares of Common Stock are
issued to him, except that in the event an Award is made in the
form of Restricted Stock, the Participant shall have all rights
of a stockholder (subject to the provisions of Section 9.5),
including but not limited to, the right to receive all dividends
paid on such shares (if any) and the right to vote such shares.
12.3 Notices. Every direction, revocation or notice
authorized or required by the Plan shall be deemed delivered to
the Company: (i) on the date it is personally delivered to the
Secretary of the Company at its principal executive offices, or
(ii) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to the Secretary at
such offices. Notice shall be deemed delivered to a Participant:
(i) on the date it is personally delivered to him, or (ii) three
business days after it is sent by registered or certified mail,
postage prepaid, addressed to him at the last address shown for
him on the records of the Company.
12.4 Indemnification. With respect to liabilities arising
under or relating to this Plan, the Company shall indemnify each
member of the Committee and each other officer or employee of the
Company to whom any duty or power relating to the Plan may be
allocated or delegated, to the fullest extent permitted under the
laws of the Commonwealth of Pennsylvania and the Bylaws of the
Company.
12.5 Governing Law. All questions pertaining to
construction, validity and effect of the provisions of this Plan
and the rights of all persons hereunder shall be governed by the
laws of the Commonwealth of Pennsylvania.
12.6 Transferability. Awards may be sold, assigned,
transferred, pledged or otherwise encumbered, including, without
limitation, by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by
the Code. Upon the death of a Participant, an Award shall be
exercisable, to the extent permitted, by the Participant's estate
or by a person who acquired the right to exercise such Award by
bequest or inheritance or by reason of the death of the
Participant. Notwithstanding anything to the contrary herein, a
Participant shall not sell, transfer or otherwise dispose of any
shares of Common Stock acquired pursuant to this Plan unless at
least six (6) months have elapsed from the date the Award was
granted, if at the time of such disposition the Participant is
subject to Section 16 of the Securities Exchange Act of 1934.
12.7 Unfunded Plan. The Plan, insofar as it provides for
grants of Awards, shall be unfunded, and the Company shall not be
required to segregate any assets that may at any time be
represented by Awards under this Plan. Any liability of the
Company to any person with respect to any Awards under this Plan
shall be based solely upon any contractual obligations that may
be created pursuant to this Plan. No such obligation of the
Company shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Company.
12.8 Rules of Construction. Headings are given to the
sections of this Plan solely as a convenience to facilitate
reference. The reference to any statute, regulation, or other
provision of law shall be construed to refer to any amendment to
or successor of such provision of law. All words herein shall be
construed to be of such number and gender as the context
requires.
<PAGE>
PROXY CARD
TOTAL CONTAINMENT, INC.
THIS PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
I/We hereby appoint Homer N. Holden, David L. Gilbert and
Jeffrey A. Boehmer, or any one of them acting in the absence of
others, as proxyholders, each with the power to appoint his
substitute, and hereby authorize them to represent and to vote,
as designated on the reverse side, all the shares of Common Stock
of Total Containment, Inc. (the "Company") held of record by
me/us on February 28, 1997, at the Annual Meeting of Stockholders
to be held on April 11, 1997, or at any adjournment thereof.
This proxy when properly executed will be voted in the
manner directed on the reverse side. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR
DIRECTOR, FOR THE ADOPTION OF THE AGREEMENT AND PLAN OF MERGER,
FOR THE APPROVAL OF THE STOCK COMPENSATION PLAN AND FOR THE
RATIFICATION OF INDEPENDENT AUDITORS. This proxy will be voted,
in the discretion of the proxyholders, upon such other business
as may properly come before the Annual Meeting of Stockholders or
any adjournment thereof.
(Please vote and sign on the other side)
FOR all WITHHOLD
nominees AUTHORITY
listed at to vote for
right (except) all nominees
as marked to listed at Nominees:
the contrary) right Jean Claude Arpin
Marc Guindon
MATTER NO. 1
ELECTION OF
CLASS I
DIRECTORS [ ] [ ]
FOR AGAINST ABSTAIN
MATTER NO. 2
ADOPTION OF
PLAN OF MERGER [ ] [ ] [ ]
FOR AGAINST ABSTAIN
MATTER NO. 3
APPROVAL OF STOCK
COMPENSATION PLAN [ ] [ ] [ ]
FOR AGAINST ABSTAIN
MATTER NO. 4
RATIFICATION OF
INDEPENDENT AUDITORS [ ] [ ] [ ]
DIRECTORS
Please mark, sign, date and return the proxy
card promptly using the enclosed envelope
Signature________________________________ Date__________________
Signature________________________________ Date__________________
Signature if held jointly
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
