SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended February 28, 1998
Commission File Number 0-3498
TAYLOR DEVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 16-0797789
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
90 TAYLOR DRIVE, NORTH TONAWANDA, NEW YORK 14120-0748
Address of principal executive offices Zip Code
Registrant's telephone number, including area code - 716-694-0800
Indicate by check mark whether the registrant (1) has filed all
annual, quarterly, and other reports required to be filed with all
the Commission and (2) has been subject to the filing requirements
for at least the past 90 days.
Yes X No
Indicate the number of shares outstanding, of each of the Issuer's
classes of common stock as of the close of the period covered by
this report.
CLASS Outstanding at February 28, 1998
Common Stock 2,760,180
(2-1/2 cents par value)
FORM 10-QSB
TAYLOR DEVICES, INC. - INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Condensed Balance Sheets
February 28, 1998, and May 31, 1997.
Consolidated Condensed Statements of Income 4
for nine months ended February 28, 1998 and
February 28, 1997, and three months ended
February 28, 1998 and February 28, 1997.
Consolidated Condensed Statement of 5
Cash Flows - nine months ended
February 28, 1998 and February 28, 1997.
Notes to Consolidated Condensed Financial 6
Statements.
Item 2. Management's Discussion and Analysis of the 7
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to Vote of Security 10
Holders
Item 5. Other Information 10
Item 6. Exhibits and Report on Form 8-K 10
SIGNATURES
FORM 10-QSB TAYLOR DEVICES, INC. - CONSOLIDATED BALANCE SHEET
ASSETS 2/28/98 5/31/97
Current
Cash $1,210,011 $1,096,456
Funds Held By Trustee - 0 - 108,041
Trade Accounts Receivable 2,220,245 1,423,829
Inventories 2,443,743 2,412,265
Prepaid and Refundable Income Taxes (77,481) 57,630
Prepaid Expenses 128,214 130,258
Total Current Assets $5,924,732 $5,228,479
Investments - Affiliate, at equity 210,567 194,922
Property and Equipment - Net 2,997,260 2,564,613
Other Assets
Other 344,086 353,070
Total Other Assets $ 344,086 $ 353,070
TOTAL ASSETS $9,476,645 $8,341,084
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current Portion of Long Term Debt $ 661,846 $ 352,685
Payables - Trade 817,873 989,077
Affiliate-Current 110,964 69,487
Construction-in-Progress - 0 - - 0 -
Accrued Income Tax (78,463) 99,462
Accrued Expenses 205,700 449,329
Advanced Payments - Customers 741,128 419,901
Total Current Liabilities $2,459,048 $2,379,941
Non Current
Long Term Debt $2,064,973 $1,457,714
Deferred Income Tax - 0 - - 0 -
Total Non Current Liabilities $2,064,973 $1,457,714
Minority Stockholders' Interest $ 262,111 $ 245,001
STOCKHOLDERS' EQUITY
Common Stock, par value $.025 a
share, authorized 8,000,000 shares $ 69,005 $ 68,536
Paid - In Capital 2,540,523 2,468,888
Retained Earnings 2,164,138 1,801,096
Less: Cost of Treasury Stock:
28,432 shares & 27,859 respectively 83,153 80,092
TOTAL STOCKHOLDERS' EQUITY $4,690,513 $4,258,428
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $9,476,645 $8,341,084
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
NINE MONTHS THREE MONTHS
ENDED FEBRUARY 28 ENDED FEBRUARY 28
1998 1997 1998 1997
NET SALES $7,437,578 $7,341,336 $2,264,101 $2,731,734
COST OF PRODUCT SOLD 4,942,775 4,729,463 1,382,570 1,697,989
Gross Profit 2,494,803 2,611,873 881,531 1,033,745
EXPENSES
Selling and
Administrative 1,874,419 2,029,006 637,353 752,050
Profit(loss)from
Operations 620,384 582,867 244,178 281,695
OTHER INCOME/(EXPENSE)
Rental - Affiliates 7,500 7,500 2,500 2,500
Miscellaneous 5,091 23,104 1,484 5,345
Interest (107,883) (106,861) (40,667) (34,286)
NET OTHER (95,292) (76,257) (36,683) (26,441)
NET INCOME BEFORE
PROVISION FOR TAXES 525,092 506,610 207,495 255,254
Provision for Income
Taxes 160,585 150,000 49,885 71,000
INCOME BEFORE EQUITY IN
EARNINGS OF AFFILIATES 364,507 356,610 157,610 184,254
EQUITY IN EARNINGS OF
AFFILIATES 15,645 15,002 5,265 4,847
NET INCOME BEFORE MINORITY
STOCKHOLDERS' INTEREST 380,152 371,612 162,875 189,101
Minority Stockholders'
Interest 17,110 16,044 6,526 5,628
NET INCOME $ 363,042 $ 355,568 $ 156,349 $ 183,473
Earnings Per Share $ .131 $ .131 $ .056 $ .068
FORM 10-QSB
TAYLOR DEVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 28
1998 1997
Cash Flows From Operating Activities
Net income $363,042 $355,568
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 205,840 89,259
Equity in net income of affiliate (15,645) (15,002)
Increase in cash value - life insurance -0- -0-
Deferred income taxes -0- -0-
Tax benefit - stock option plan -0- -0-
Minority stockholder's interest 17,110 16,024
Common stock issued, charged to
compensation expense, net -0- -0-
Interest income - funds held by trustee -0- -0-
Changes in:
Receivables (796,416) (302,767)
Inventories (31,478) 100,746
Prepaid expenses 2,044 43,979
Payables - trade (171,204) (70,287)
Payables - affiliates 41,477 37,729
Advance payments, customers 321,227 (112,110)
Accrued income taxes (33,470) (94,271)
Accrued expenses (243,629) 70,506
Net cash provided by operating
activities (341,102) 119,374
Cash Flows From Investing Activities
Acquisition of property and equipment (638,487) (228,819)
Proceeds from sale of tax free money fund
held by trustee -0- -0-
Cash received from trustee -0- -0-
Cash remitted to trustee 108,041 106,639
Net cash used for investing
activities (530,446) (122,180)
Cash Flows From Financing Activities
Financing costs paid -0- -0-
Borrowings - bank demand notes 520,000 -0-
Repayments - bank demand notes (160,000) -0-
- long-term debt 556,060 (180,161)
Proceeds from issuance of common stock
- employee stock purchase plan 47,856 66,648
- exercise of stock options 21,187 14,066
Net cash used for financing
activities 985,103 (99,447)
Net increase/(decrease) in cash and
cash equivalents 113,555 (102,253)
Cash and Cash Equivalents Balance at
Beginning of Year 1,096,456 913,284
Cash & Cash Equivalents Balance at
End of Period 1,210,011 811,031
FORM 10-QSB
TAYLOR DEVICES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENT
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments necessary to present fairly the financial
position as of February 28, 1998 and May 31, 1997 and
the results of operations for the three months and nine
months ended February 28, 1998 and February 28, 1997
and changes in financial position for the nine months
then ended.
2. There is no provision nor shall there be any provisions for
profit sharing, dividends, or any other benefits of any
nature at any time for this fiscal year.
3. To calculate the earnings per share for the nine month period
ended February 28, 1998, the profit was divided by 2,760,180
less Treasury Shares of 28,432. For the nine month period
ended February 28, 1997, the profit was divided by 2,705,643
less the Treasury Shares of 26,733 to calculate the earnings
per share.
4. The results of operations for the nine month period ended
February 28, 1998 are not necessarily indicative of the
results to be expected for the full year.
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of
certain significant factors which have affected the Company's
earnings during the periods included in the accompanying
consolidated condensed statements of income.
The Private Securities Litigation Reform Act of 1995 provides
a "safe harbor" for forward-looking statements. Certain matters
discussed in this section and elsewhere in this report, which are
not historical facts, are forward-looking statements. As such,
these statements involve risks and uncertainties including, but not
limited to, economic conditions, product demand and industry
capacity, competition, pricing pressures, the need for the Company
to keep pace with customer needs and technological developments,
and other risks.
A summary of the period to period changes in the principal
items included in the consolidated statements of income is shown
below:
Comparisons of nine months ended
February 28, 1998 - February 28, 1997
Increase (decrease)
Net Sales $ 96,242
Cost of Sales 213,312
Selling, General and (154,587)
Administrative Expenses
Other Expenses - 0 -
Other Income (18,013)
Interest Expense 1,022
Net Profit Before Tax and 18,482
Minority Shareholders' Interest
Provision for Income Tax 10,585
Net Profit Before Equity in 7,897
Earnings of Affiliates
Equity in Earnings of Affiliates 643
Minority Stockholders' Interest 1,066
Net Income 7,474
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
Shipments for the nine months year-to-date at February 28,
1998 reached a record level. Year-to-date profits exceeded those
of the prior year as substantial savings from the administrative
functions offset somewhat lower gross margin results. For the
three months ending February 28, 1998, improved gross margin and
administrative performance helped offset a reduced sales figure.
RESULTS FOR THE NINE MONTHS YEAR-TO-DATE
For the nine month period ending February 28, 1998 (98YTD),
Net Sales increased to $7,437,578 from the $7,341,336 reported for
the nine months ending February 28, 1997 (97YTD). The Gross Margin
on these shipments were $2,494,803 or 33.5% of net sales compared
to $2,611,873 or 35.5% for the 97YTD. Through the first nine
months of FY98, the product mix continues to impact the gross
margin percentage as does the impact of the construction of the new
test facility. This is addressed in more detail in the paragraph
below. Selling, General and Administrative (SGA) expense totaled
$1,874,419 or 25.2% in 98YTD, down from $2,029,006 or 27.6% in
97YTD. This improvement is attributable to significantly reduced
costs for corporate insurance, EDP consulting fees and external
commission expenses. All other Income Statement line items
displayed remained stable from year to year, resulting in a Net
Income of $363,042 and an earnings per share of $.131 for 98YTD,
versus $355,568 and $.131 in 97YTD.
RESULTS FOR THE THIRD QUARTER
For the third quarter of Fiscal Year (Q398) shipments totaled
$2,264,101, compared to $2,731,734 for the third quarter of Fiscal
Year 1997 (Q397). This change is primarily attributable to two
factors; a shift in the production schedule for a large seismic
project and a delay in the construction of the new 9,000 square
foot test facility, which has delayed some shipments and impacted
overheads. Gross Margin on shipments in Q398 was $881,531 or 38.9%
of net sales, compared to $1,033,745 or 37.8% for Q397 as both
quarters experienced a good product mix. SGA expense was $637,353
or 28.2% for Q398, compared to $752,050 or 27.5% for Q397.
Interest expense increased in Q398 to $40,667 from $34,286 in Q397
as financing costs for the new test facility and a large seismic
project made an impact. Net Income for Q398 before Provision for
FORM 10-QSB
TAYLOR DEVICES, INC.
MANAGEMENT'S DISCUSSION (CON'T)
Taxes was $207,495, compared to $255,254 in Q397, due almost
entirely to the sales volume. The adjustments for Equity in the
Earnings of Affiliates and for Minority Shareholders' Interest were
similar from year to year resulting in a Net Income of $156,349 for
Q398 and an earnings per share of $.056 compared to $183,473 or
$.068 for Q397.
In the nine months year-to-date of FY98, the Company has taken
some significant steps to improve its productivity and market
position. Two tangible examples are the recently completed test
facility and the currently in-process horizontal test fixture.
These two items have required a noticeable input of capital - both
outside funding and internal labor - but are thought to be
essential to the consolidation of the Company's position in the
seismic protection market.
At the time of this report, two other items are having an
impact on the Company's cash flow. The progress payments
re-started on the previously announced off-shore project are
helping produce a favorable reported cash balance and the Company
has received approximately 70% of the total payments due from the
Los Angeles City Hall project.
As reported previously, the Company's third quarter shipments
and earnings were impacted by an unanticipated (and prolonged)
delay in the release to the production of a large seismic order.
At this time it appears this delay, more than any other single
factor, will result in holding FY98 shipments to a level
essentially equal to the FY97 figure of approximately $10 million.
Net Income, benefitting from improved SGA performance, is also
anticipated to be close to the FY98 figure.
FORM 10-QSB
TAYLOR DEVICES, INC.
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings
- The Company is not currently engaged in
any litigation.
ITEM 2 Changes in Securities
- None
ITEM 3 Defaults Upon Senior Securities
- None
ITEM 4 Submission of Matters to Vote of Securities
Holders
- None
ITEM 5 Other Information
- In the period of 6/1/97 to 2/28/98, the
Company's reported total of outstanding shares
increased by 18,735, as itemized below:
1. Employee Stock Ownership Plan 15,060
2. Director Stock Option Plan 3,675
18,735
ITEM 6 Exhibits and Reports of Form 8-K
- Documents filed as part of this report:
1. Written Consent to Action in Lieu of Meeting,
dated August 22, 1996, amending the Company's
By-laws to delete in its entirety the second
sentence of Article V Section 1; and to add
an additional subsection to Article V.
2. Extract of Minutes to Meeting of the Board of
Directors of the Company, held January 28,
1998 amending the By-laws to add Sections
11 through 13 of Article 1; and to reaffirm
its existing proxy review guidelines ("Proxy
Review Guidelines.")
FORM 10-QSB
TAYLOR DEVICES, INC.
3. Proxy Review Guidelines, reaffirmed by action
of the Board of Directors, January 28, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TAYLOR DEVICES, INC.
(Registrant)
By /s/ Douglas P. Taylor Date: 4/10/98
Douglas P. Taylor
Chairman of the Board of Directors
President
(Principal Executive Officer)
AND
By /s/ Kenneth G. Bernstein Date: 4/10/98
Kenneth G. Bernstein
Chief Accounting Officer
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 1,210,011
<SECURITIES> 0
<RECEIVABLES> 2,220,245
<ALLOWANCES> 18,000
<INVENTORY> 2,443,743
<CURRENT-ASSETS> 5,924,732
<PP&E> 6,107,588
<DEPRECIATION> 3,110,328
<TOTAL-ASSETS> 9,476,645
<CURRENT-LIABILITIES> 2,459,048
<BONDS> 1,016,621
0
0
<COMMON> 69,005
<OTHER-SE> 4,621,508
<TOTAL-LIABILITY-AND-EQUITY> 9,476,645
<SALES> 7,437,578
<TOTAL-REVENUES> 7,437,578
<CGS> 4,942,775
<TOTAL-COSTS> 1,874,419
<OTHER-EXPENSES> (12,591)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,883
<INCOME-PRETAX> 525,092
<INCOME-TAX> 160,585
<INCOME-CONTINUING> 364,507
<DISCONTINUED> 0
<EXTRAORDINARY> (1,465)
<CHANGES> 0
<NET-INCOME> 363,042
<EPS-PRIMARY> .131
<EPS-DILUTED> .126
</TABLE>
10-QSB Exhibit(10)(xii)
TAYLOR DEVICES, INC.
WRITTEN CONSENT TO ACTION IN LIEU OF MEETING
The undersigned, being all members of the Board of Directors
of TAYLOR DEVICES, INC., a New York corporation (the "Company"),
hereby consent, pursuant to Section 708(b) of the Business
Corporation Law of New York, to the adoption of the following
Resolutions authorizing the actions indicated therein, without a
meeting:
WHEREAS, the Board of Directors believes that it is in
the best interest of the Company to continue to retain and
attract quality candidates to serve on its Board of Directors,
and as its executive officers; and
WHEREAS, such persons are entitled to and should be
provided with protection against personal liability to the
full extent permitted by law, the Company's Certificate of
Incorporation and By-laws, as each may be amended from time to
time.
NOW THEREFORE, it is
RESOLVED, that in accordance with Article VIII, Section
1 of the Company's By-laws, such By-laws shall be and hereby
are amended to delete in its entirety the second sentence of
Section 1 of Article V; and to add an additional subsection to
the first sentence of the original Section 1, so that Article
V shall hereinafter read in its entirety, as follows:
ARTICLE V
INDEMNITY
Section 1. To the full extent authorized by law,
the Corporation shall indemnify any person made, or
threatened to be made, a party to an action or
proceeding, whether criminal or civil, by reason of the
fact that he, his testator or intestate is or was a
Director or officer of the Corporation or serves or
served any other corporation in any capacity at the
request of the Corporation.
Section 2. The Corporation shall have authority
to enter into agreements, from time to time and as
amended, with any Director or officer (each such person
hereinafter referred to as an "Indemnitee") to indemnify
and advance the expenses of any Indemnitee to the full
extent permitted by the New York Business Corporation
Law, as the same now exists or as may hereafter be
amended ("Indemnity Agreement").
The indemnification and advancement of expenses
granted to an Indemnitee pursuant to this Article shall
not be exclusive of or limiting as to any other rights to
which such Indemnitee may be entitled, when authorized by
(a) a resolution of shareholders or (b) a resolution of
directors, or (c) an Indemnity Agreement. No amendment,
modification, or rescission of these By-laws shall be
effective to limit any person's right to indemnification
with respect to any cause of action that accrues, or
other incident or matter that occurs, prior to the date
on which such modification, amendment or rescission is
adopted.
AND it was further
RESOLVED, that the indemnity agreement, proposed to be
entered into by the Company with each member of the Board of
Directors and such executive officers of the Company as this
Board shall hereinafter identify, be and hereby is, adopted in
substantially the form attached to this Written Consent as
Exhibit A (the "Indemnity Agreement"); and it was further
RESOLVED, that the President be and hereby is authorized
on behalf of the Company to enter into the Indemnity Agreement
between and with each member of the Board of Directors of the
Company; and it was further
RESOLVED, that upon recommendation of the President, the
Company be and hereby is authorized to enter into an Indemnity
Agreement with Kenneth G. Bernstein, Treasurer of the Company;
and it was further
RESOLVED, that following ratification, approval and
confirmation of these actions by the affirmative vote of a
majority of the common shares cast by shareholders of the
Corporation at a meeting duly called and held, the Secretary
of the Company be and hereby is directed to file a copy of
fully executed Indemnity Agreements with the minutes of such
Shareholder Meeting, or place such copies in the Secretary's
File.
IN WITNESS WHEREOF, the undersigned have executed this Written
Consent as the entire Board of Directors of TAYLOR DEVICES, INC.
this 22 day of August, 1996.
/s/Douglas P. Taylor
DOUGLAS P. TAYLOR
/s/Richard G. Hill
RICHARD G. HILL
/s/Joseph P. Gastel
JOSEPH P. GASTEL
/s/Donald B. Hofmar
DONALD B. HOFMAR
/s/Randall L. Clark
RANDALL L. CLARK
10-QSB Exhibit(3)(vi)
TAYLOR DEVICES, INC.
EXTRACT OF MINUTES OF MEETING
January 28, 1998
RESOLVED, that in accordance with Article VIII, Section
1 of the Company's By-laws, such By-laws shall be and hereby
are amended to add the following sections 11 through 13 to
Article I:
Section 11. Notice of Business. At any
meeting of shareholders, only such business shall
be conducted as shall have been brought before the
meeting (i) by or at the direction of the Board of
Directors, or (ii) by any shareholder of the
Corporation who is a shareholder of record at the
time of the giving of notice provided in this
Section, and entitled to vote at such meeting, and
who complies with all notice procedures set forth
in this Section. For business to be properly
brought before a meeting of shareholders by a
shareholder, the shareholder shall have given
timely notice thereof in writing to the Secretary.
"Timely", for purposes of this Section, shall mean
that the notice shall be delivered to, or mailed by
first class United States mail, postage prepaid and
received at, the principal executive office of the
Corporation not less than 30 days prior to the
meeting; provided however, that should less than 40
days' notice or prior public disclosure of the date
of the meeting be given or made to shareholders,
such written notice from the shareholder must be
delivered or mailed, and presented, not later than
the close of business on the tenth day following
the day on which the Notice of Meeting was mailed,
or such public disclosure was made, whichever first
occurs.
Each notice referred to in the preceding
paragraph shall set forth, as to each matter the
shareholder proposes to bring before the meeting,
(1) a brief description of the business desired to
be brought before the meeting, the reasons for
conducting such business at the meeting and, in the
event that such business includes a proposal to
amend either the Certificate of Incorporation or
the By-Laws, the specific text of the proposed
amendment; (2) the name and the business and
residence address of the shareholder or
shareholders proposing such business; (3) the class
and number of shares of capital stock of the
Corporation which are beneficially owned by such
shareholder or shareholders; and (4) a brief
description of the material interest, if any, of
such shareholder in such business.
Notwithstanding anything in these By-Laws
to the contrary, any reference in any Notice of
Meeting of the Shareholders, referring to the
transaction of "other business", shall be limited
to procedural matters only, and no item of business
shall be conducted at a shareholders' meeting,
except in accordance with this Section. The
Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that
the item of business was not properly brought
before the meeting or in accordance with this
Section, and, if the Chairman should so determine,
shall declare that such item of business shall not
be transacted.
Section 12. Shareholder Nominations.
Nominations for the election of directors may be
made by a shareholder entitled to vote for the
election of directors only in accordance with these
By-Laws. Such nominations must be made by notice
in writing, delivered or mailed by first class
United States mail, postage prepaid, to the
Secretary at the principal executive office of the
Corporation not less than 30 days prior to any
meeting of the shareholders called for the election
of directors; provided, however, that should less
than 40 days' notice or prior public disclosure of
the date of the meeting be given or made to
shareholders, such written nomination by a
shareholder must be delivered or mailed, and
presented, not later than the close of business on
the tenth day following the day on which the Notice
of Meeting was mailed or such public disclosure was
made, whichever first occurs.
Each notice referred to in the preceding
paragraph shall set forth, (1) as to each nominee
proposed in such notice, such person's name, age,
business address and if, known, residence address,
together with all information regarding such person
as would be required to be disclosed in a proxy
statement soliciting proxies for election of
directors filed pursuant to Regulation 14A of the
Securities and Exchange Commission under the
Securities Exchange Act of 1934, (2) the name,
business and residence addresses and number of
shares of the Corporation's capital stock
beneficially owned by each person making the
nomination or nominations, and (3) a description of
all arrangements or understandings between each
such shareholder and any nominee or any other
person or persons (naming such person or persons)
in connection with or relating to the making of the
nomination or nominations to serve on the Board of
Directors, if elected.
The Chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with
the procedures set forth in this Section, and, if
the Chairman should so determine, shall declare the
nomination defective and to be disregarded.
Section 13. Conduct of Shareholder
Meetings. The Board of Directors may, from time to
time, adopt rules of conduct and proxy review
guidelines for shareholder meetings. If any
provision of such rules of conduct and proxy review
guidelines shall conflict with the Certificate of
Incorporation of the Corporation or with these By-Laws,
the Certificate of Incorporation or these By-Laws, as the case may
be, shall control.
AND it was further
RESOLVED, that in accordance with Article I,
Section 13 of the By-Laws, as here amended,
Guidelines in substantially the form presented to
this meeting be, and they hereby are, approved,
ratified and confirmed; and it is further
RESOLVED, that the Secretary of the
Corporation is hereby directed to (a) file copies
of the above amendments to the By-Laws and
Guidelines with the Securities and Exchange
Commission prior to or with filing of the
Corporation's Annual Report on Form 10-KSB; (b)
place a copy of the By-Laws, as here amended, in
the Minute Book of the Corporation; and (c) place a
copy of the Guidelines, as adopted by this meeting
and as may be amended from time to time, in the
Minute Book with the By-Laws.
/S/Douglas P. Taylor
DOUGLAS P. TAYLOR
/s/Richard G. Hill
RICHARD G. HILL
/s/Joseph P. Gastel
JOSEPH P. GASTEL
/s/Donald B. Hofmar
DONALD B. HOFMAR
/s/Randall L. Clark
RANDALL L. CLARK
10-QSB Exhibit(3)(vii) Adopted: January 28, 1998
TAYLOR DEVICES, INC.
____________________
PROXY REVIEW GUIDELINES
TABLE OF CONTENTS
ARTICLE TITLE PAGE
I General Rules 1
II Guardians and Minors 3
III Joint Owners 4
IV Fiduciaries 4
V Banks and Trust Companies 5
VI Conservators or Committees 6
VII Receivers 6
VIII Pledgees and Pledgors 6
IX Corporations, Associations, Etc. 7
X Partnerships 7
XI Nominee Proxies 8
XII Broker's Proxies 9
XIII Dates and Postmarks 10
XIV Conflict of Law 11
PROXY REVIEW GUIDELINES
These guidelines are adopted to favor an interpretation
giving validity to proxies and avoiding disenfranchisement of
shareholders. The intent of a shareholder, when discernible, shall
prevail. In applying these guidelines, the inspectors of election
shall act accordingly. Any matter not covered herein shall be so
determined as to further, where possible, the validity of
shareholders' proxies. "Proxy" shall be deemed to include "Power
of Attorney" as well as "Proxy".
I. GENERAL RULES
1.01 Any proxy bearing a handwritten or hand printed
signature or signed by stamped, typewritten, or facsimile signature
is presumptively valid.
1.02 Any copy, facsimile, telecommunication or other
reliable reproduction of the writing or transmission in lieu of the
original writing or transmission shall be presumptively valid
provided that such copy, facsimile, telecommunication or other
reliable reproduction (1) is a complete reproduction of the entire
original writing or transmission; and (2) either sets forth or is
submitted with information from which it can be reasonably
determined by the inspectors of election that it was authorized by
the shareholders.
1.03 Proxies may be signed in pencil.
1.04 Changes or variations in spelling as between
the registered name of the shareholder and his indicated signature
will not void the proxy, if the name as signed is phonetically
similar to the name as registered.
1.05 The addition of an address different from that
appearing in the stock register will not void the proxy.
1.06 Titles such as Mr., Mrs., Miss, or Doctor or
equivalent may be added or omitted and, even if included in the
registered name, need not be included in the indicated signature.
1.07 Initials may be used for first and/or middle
names, and an initial may be added or omitted and names may be used
for the first and/or middle initial. The proxy will not be voided
merely because a middle initial differs from a middle initial
appearing on the stock records.
1.08 The addition or omission of Jr. or Sr. or Roman
or Arabic numerals after the signature will not render the proxy
void.
1.09 Where the shareholder's name is signed by
someone other than the shareholder, the proxy is presumptively
valid if the signer has designated his capacity as attorney, power
of attorney, attorney in fact, relative (such as parents, brother,
or uncle), agent, per, by, or any abbreviation of any of the
foregoing.
1.10 All shareholders shall be presumed to have
voted all the shares registered in their respective names (although
appearing in more than one account and different addresses in the
same community on the record of shareholders) which they are
entitled to vote, in the absence of any indication to the contrary.
A broker or nominee proxy which does not specify or otherwise limit
the proxy to a designated number of shares shall be valid for the
total number of shares registered in the name of such broker or
nominee and held for its account by any depositary which has
submitted an omnibus proxy.
1.11 A power of attorney or proxy will be sufficient
to confer authority to execute another power of attorney or proxy
even though it contains no power of substitution.
1.12 Where shares are registered in the name of a
fiduciary, even absent a fiduciary designation as part of the
signature, the proxy will be valid.
1.13 The designation of the capacity of any
signatory is acceptable in any language.
1.14 Where shares are held in the name of a
shareholder, both in his individual capacity and in some fiduciary
or other representative capacity, any single proxy shall be deemed
as voting the shares in all capacities, unless otherwise indicated.
1.15 Unless otherwise indicated in the proxy, any
proxy shall be deemed to vote all shares of stock which the person
executing the proxy is entitled to vote as record holder or
otherwise.
1.16 Where a woman signs her married name to a
proxy, and the stock is registered in her maiden name, or vice
versa, the proxy will be valid. If the registered surname and the
surname in the signature differ, the inspectors of election may
assume the variation is the result of change in marital status.
II. GUARDIANS AND MINORS
2.01 Shares registered in the name of a guardian or
custodian may be voted by such guardian or custodian, or by the
beneficial owner.
2.02 Shares registered in the name of a shareholder
under the guardianship or custodianship of a designated person may
be voted either by such guardian or custodian, or by such
shareholder.
III. JOINT OWNERS
3.01 Shares held by two or more persons, whether as
joint tenants, tenants in common, tenants by the entirety, members
of a partnership, owners of community property, or otherwise, may
be voted in person or by proxy by any of such persons. If more
than one of such persons shall vote such shares, the vote of the
majority shall be binding, or if evenly divided, then the vote
shall be divided among them in proportion to the number of such
persons voting in person or by proxy, even though the name of one
of the signers does not appear as a record holder.
3.02 Where the surnames are identical, they need not
be repeated in the signature -- for example, a proxy in the names
of "John Jones and Mary Jones" will be valid if signed "John and
Mary Jones" or "Mr. and Mrs. John Jones".
IV. FIDUCIARIES
4.01 Shares held by an administrator, executor,
guardian, committee, curator, trustee, agent, attorney, personal
representative, or other fiduciary, or by two or more persons
having the same fiduciary relationship respecting the same shares,
may be voted by him or them, either in person or by proxy as
provided in this Section IV without transfer of such shares into
his or their name, provided that evidence of such representative
capacity is produced.
4.02 Assuming compliance with 4.01 above, a proxy
signed by any such person which does not indicate the name of the
person for whom he is acting, even though the name of the signer
does not appear on the shareholder list on the record date, will be
valid.
4.03 Where shares are held by more than one of the
persons referred to in this Section IV, the shares shall be voted
as determined by a majority of such persons, except that (1) if
they be equally divided as to a vote, the vote of the shares shall
be divided equally, and (2) if only one such person shall vote,
either in person or by proxy, such vote shall be sufficient to vote
all the shares.
V. BANKS AND TRUST COMPANIES
5.01 Where a proxy is executed by a bank or trust
company, it need only be signed in such name as registered, and
when so executed, shall be deemed properly executed without
supporting evidence of corporate authority or identity of the
person signing. No corporate seal, attestation, copy of by-laws,
resolution conferring authority or proof of identity is necessary.
Where the name of the bank or trust company appears on the face of
the proxy, failure to repeat such name as part of the signature or
to indicate the capacity of the signatory will not invalidate the
proxy.
VI. CONSERVATORS OR COMMITTEES
6.01 Shares standing in the name of a conservator or
committee may be voted by such conservator or committee or by the
beneficial owner, either in person or by proxy.
6.02 Shares registered in the name of a shareholder
under the conservatorship of a designated person may be voted by
such conservator or by such shareholder.
6.03 Shares registered in the name of a shareholder,
in care of a person designated as conservator, may be voted by such
conservator or by such shareholder.
VII. RECEIVERS
7.01 Shares registered in the name of a receiver may
be voted by such receiver whether or not he designates himself as
such.
VIII. PLEDGEES AND PLEDGORS
8.01 The vote of any person whose stock is pledged
shall be valid unless in the transfer by the pledgor on the books
of the Corporation such person has expressly empowered the pledgee
to vote thereon, in which case only the vote of the pledgee or his
proxy shall be valid.
IX. CORPORATIONS, ASSOCIATIONS, ETC.
9.01 A proxy representing shares registered in the
name of a corporation, association, church, religious, education,
charitable, fraternal or social organization, foundation, society,
pension, retirement, profit sharing or other similar plan, or
group, or governmental unit, or political group is valid if it
bears the handwritten, hand printed, typed, facsimile or stamped
signature of the registered holder even though the name of the
person signing on behalf of the registered holder does not appear.
Proxies apparently executed in the name of any of the foregoing
entities shall be valid. If the name of the shareholder is not
handwritten, hand printed, typed, in facsimile or stamped, but such
proxy is so signed by an officer or other person purporting to act
in behalf of such shareholder, the proxy shall be valid. No
corporate seal, attestation, or copy of by-laws or resolution
conferring authority is necessary. Where the shareholder's name
appears on the face of the proxy, failure to repeat such name as
part of the signature will not invalidate the proxy.
X. PARTNERSHIPS
10.01 Where shares are registered in the name of a
partnership, proxies bearing handwritten, hand printed, typed,
facsimile, or stamped signatures in the partnership name only, or
signed in the partnership name will be valid. Where the
shareholder's name appears on the face of the proxy, failure to
repeat such name as part of the signature will not invalidate the
proxy.
10.02 A proxy representing shares in the name of an
investment club and signed either by an individual, in his own name
(without designation or any title or authority), or signed with
solely the name of the investment club, is valid.
XI. NOMINEE PROXIES
11.01 A nominee proxy may be signed in the name of
the nominee as registered, whether an individual, partnership or
corporation, without requiring the signature of an individual as a
partner or as an officer. A nominee proxy may also be signed by an
individual without repeating the nominee name or without indicating
his capacity or source of authority.
11.02 A proxy signed by a nominee bearing one account
number or other identifying number or symbol will not revoke any
other proxy signed by the same nominee bearing a different account
number or other identifying number or symbol.
11.03 Where (1) the total number of shares
represented by proxy submitted by a single nominee exceeds the
total of shares registered in the name of that nominee, or (2)
where in the opinion of the inspectors of election any other
inconsistency or ambiguity exists with respect to the number of, or
manner in which, shares are voted by a nominee, the inspectors may,
if they deem it advisable, procure such information from such
nominee or otherwise as the inspectors may deem sufficient to
determine the manner in which it was intended that the shares be
voted by such nominee.
XII. BROKER'S PROXIES
12.01 All proxies received from a broker, which
specify a designated number of shares, will be counted regardless
of date, provided the total number of shares represented by such
proxies do not exceed the total number of shares registered in the
name of such broker or its nominees. No proxy or proxies received
from a broker shall be deemed to revoke any prior proxy or proxies
unless there is specific language to that effect in addition to the
printed language of the proxy form. Any such proxy which shall, by
such specific language in addition to the printed language of the
proxy form, revoke any prior proxy or proxies, shall be deemed
effective only with respect to the shares voted by such proxy.
12.02 Where (1) the total number of shares
represented by proxies submitted by a single broker exceeds the
total number of shares registered in the name of such broker or its
nominees, or (2) where in the opinion of the inspectors of election
any other inconsistency or ambiguity exists with respect to the
number of, or manner in which, shares are voted by a broker, the
inspectors may, if they deem it advisable, procure such information
from such broker or otherwise, as the inspectors may deem
sufficient to determine the manner in which it was intended that
the shares be voted by such broker.
XIII. DATES AND POSTMARKS
13.01 No printed proxy shall be deemed valid unless
the printed form requests (by format or direction) that the
shareholder to sign and date the proxy, and a space is specifically
left for the date.
13.02 An undated proxy accompanied by an envelope
bearing a postmark shall be deemed to be dated as of the date of
the postmark.
13.03 An undated proxy, not accompanied by an
envelope bearing a postmark, shall not be valid, unless a majority
of the inspectors of election agree otherwise.
13.04 A dated proxy, or an undated proxy accompanied
by an envelope bearing a postmark, shall be deemed later than an
undated proxy not accompanied by an envelope bearing a postmark,
(if, in the latter case, such proxy is validated).
13.05 Where the vote of any shareholder is in doubt
because a dated proxy with an envelope has been submitted as well
as an undated proxy with an envelope, both proxies shall be deemed
to be dated as of the date of the respective envelope postmark.
13.06 Where proxies from the same shareholder bear
the same date or are construed under this Section XIII to bear the
same date, and the vote of such shareholder is in doubt, the proxy
bearing the latest postmark date and hour on the accompanying
envelope shall be deemed the later; if in such case the postmark
hours are also identical they shall be acceptable only for purposes
of a quorum.
13.07 If the signature on the proxy and the date on
the proxy are in different colors of ink or in ink and pencil, the
proxy shall be valid only if accompanied by its postmarked envelope
and the date of the postmark shall be the date of the proxy.
13.08 Assuming validity, an undated proxy received by
telecommunication, facsimile or other reliable transmission shall
be dated the date of facsimile or transmission.
XIV. CONFLICT OF LAW
14.01 In case of any conflict of law with respect to
the validity of proxies, as between the law of the state in which
the proxy is executed and the law of the State of New York, the law
of the State of New York shall govern, irrespective of conflict of
laws.
