UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
X EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
_____ EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-3108
TRION, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0922753
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 760, 101 McNeill Road, Sanford, North Carolina 27331-0760
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 919-775-2201
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of October 31, 1997.
7,064,797 shares of Common Stock, par value $.50
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<TABLE>
Part I
Item 1. Financial Statements
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Nine Months Three Months
Ended September 30 Ended September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . $47,037 $46,727 $15,708 $12,936
Cost and expenses:
Cost of products sold . . . . . 31,545 31,386 10,422 8,803
Selling, administration
and engineering expenses . . . 13,017 13,006 4,334 4,355
Interest . . . . . . . . . . . . 738 628 263 218
Amortization . . . . . . . . . . 258 258 86 86
Acquisition Expense . . . . . . - 414 - 414
Other expense (income), net. . . (69) (79) (36) (20)
45,489 45,613 15,069 13,856
Income (loss) before income taxes . 1,548 1,114 639 (920)
Income tax expense (benefit). . . . 507 438 105 (320)
Net income (loss) for the period. . $ 1,041 $ 676 $ 534 $ (600)
Net income (loss) per common share. $ 0.15 $ 0.10 $ 0.08 $ (0.09)
Cash dividends declared
per common share. . . . . . . . $ .06 $ .06 $ 0.02 $ 0.02
See notes to consolidated condensed financial statements
</TABLE>
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<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<CAPTION>
ASSETS
September 30 December 31
_ 1997* _ _ 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . $ 2,167 $ 2,073
Trade accounts receivable, less allowance
for doubtful accounts (1997 - $420,000 and
1996 - $448,000) . . . . . . . . . . . . . . 11,352 11,650
Inventories . . . . . . . . . . . . . . . . . 9,741 9,329
Prepaid expenses and other current assets . . 795 882
Deferred current income taxes . . . . . . . . 94 94
Total current assets . . . . . . . . . . . 24,149 24,028
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . 78 78
Building . . . . . . . . . . . . . . . . . . . 5,435 5,467
Machinery and equipment . . . . . . . . . . . 19,401 16,928
Allowance for depreciation . . . . . . . . . . (14,401) (13,250)
10,513 9,223
OTHER ASSETS
Goodwill less accumulated amortization:
($746,000 in 1997 and $486,000 in 1996) . . 6,135 6,393
Deferred income taxes . . . . . . . . . . . . 338 338
Other non-current assets . . . . . . . . . . . 733 814
7,206 7,545
$41,868 $40,796
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accruals . . . . . . . . $ 7,005 $ 7,182
Current portion of long-term debt . . . . . . 4,964 2,664
Total current liabilities . . . . . . . . . 11,969 9,846
LONG-TERM DEBT . . . . . . . . . . . . . . . . . 8,253 9,908
20,222 19,754
SHAREHOLDERS' EQUITY
Common stock, par value $0.50 a share:
Authorized 20,000,000 shares
Issued and outstanding:
1997 - 7,061,797 and
1996 - 6,997,519 . . . . . . . . . . . . 3,531 3,499
Additional paid-in capital . . . . . . . . . . 1,162 1,017
Retained earnings . . . . . . . . . . . . . . 16,815 16,193
Foreign currency translation . . . . . . . . . 138 333
21,646 21,042
$41,868 $40,796
<FN>
See notes to consolidated condensed financial statements
* Unaudited
</TABLE>
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<TABLE>
TRION, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Nine Months
Ended September 30
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . $ 1,041 $ 676
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . 1,346 1,242
Amortization . . . . . . . . . . . . . . . . . 258 258
Deferred income taxes . . . . . . . . . . . . . - (17)
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . 298 2,176
Inventory and prepaid expenses . . . . . . . (325) (585)
Accounts payable and accrued expenses . . . (177) (3,667)
Gain on disposal of equipment . . . . . . . . . - (3)
Foreign currency transaction loss . . . . . . . (18) (68)
Net cash provided by
operating activities . . . . . . . . . . . 2,423 12
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net . . . (2,636) (2,651)
Net cash used by investing activities . . . (2,636) (2,651)
FINANCING ACTIVITIES
Net proceeds from master credit facility . . . . . . 2,000 3,000
Principal payments on long-term debt . . . . . . . . (1,355) -
Payoff of acquired debt . . . . . . . . . . . . . . - (710)
Stock issued . . . . . . . . . . . . . . . . . . . . 177 1,378
Cash dividends paid . . . . . . . . . . . . . . . . (419) (388)
Net cash provided by
financing activities . . . . . . . . . . . 403 3,280
Effect of foreign exchange rate changes on cash . . . . (96) 73
Increase in cash . . . . . . . . . . . . . . . . . . . 94 714
Cash and cash equivalents at beginning of period . . . 2,073 497
Cash and cash equivalents at end of period . . . . . . $ 2,167 $ 1,211
See notes to consolidated condensed financial statements
</TABLE>
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TRION, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 1997
Note A - Basis of presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore
do not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been reflected in the
reported financial information. For further information, refer to the
consolidated financial statements and footnotes included in the Registrant's
annual report on Form 10-K for the year ended December 31, 1996.
Certain amounts in the consolidated condensed financial statements for the
period ended September 30, 1996 have been reclassified to conform with the
presentations and classifications consistent with the unaudited consolidated
condensed financial statements for the nine month period ended September 30,
1997.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, Disclosures about Segments of an Enterprise and Related Information
("FASB 131"), which establishes standards for the reporting of finanical
information from operating segments in annual and interim financial
statements. This Statement requires that financial information be reported on
the basis that it is reported internally for evaluating segment performance
and deciding how to allocate resources to segments. Because this Statement
addresses how supplemental financial information is disclosed in annual and
interim reports, the adoption will have no impact on the financial statements.
FASB 131 will become effective in 1998.
It is a standard and accepted practice used by the Company in the preparation
of the financial statements in conformity with generally accepted accounting
principles that estimates and assumptions are used by management that affect
the amounts reported in the financial statements. Actual results could differ
from those estimates.
Note B - Net Income per Share of Common Stock
The pro forma weighted average shares outstanding for the period ended
September 30, 1996 gives effect to the issuance of 500,000 shares of the
Company's common stock as the purchase price of Herrmidifier. These shares
are included in the computation of pro forma weighted average shares
outstanding as if they had been issued as of January 1, 1996.
Net income per share of common stock is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
periods. The average number of common shares outstanding for the nine month
period ended September 30 was 7,012,595 in 1997 and 6,972,093 in 1996, and
7,035,912 and 6,978,519 for the three month periods ended September 30, 1997
and 1996. Outstanding stock options are not considered in computing earnings
per share as the effect would not be material.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share ("FASB 128"), which is required to be adopted on
December 31, 1997. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The impact
of adopting FASB 128 is not expected to be material.
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Note C - Inventories
The Registrant does not maintain an integrated dollar perpetual inventory
system. During the interim periods, inventories are charged with actual costs
incurred and relieved at products standard costs. Such standards are updated
at least annually. Based upon the components of inventory at the preceding
physical inventory date and charges to and relief of inventories during the
interim period, the components of inventory are estimated as follows (in
thousands):
September 30 December 31
__ 1997 ___ 1996
Raw materials . . . . . . . . . . . . . $ 5,268 $ 4,939
Work-in-process and finished goods. . . 4,473 4,390
$ 9,741 $ 9,329
Cost of domestic raw materials inventory is determined by the last-in, first-
out method. No provision has been made during the interim period to reflect
changes in last-in, first-out values since the preceding December 31.
Management believes that such provision, if any, would not be significant.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
<TABLE>
SEGMENT DATA
(Unaudited)
(In thousands)
<CAPTION>
Nine Months Ended Three Months Ended
September 30 _ September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers:
North American Operations:
Engineered Products . . . . . . $32,782 $35,604 $10,810 $ 9,170
Consumer Products . . . . . . . 9,482 6,904 2,718 2,304
European Operations . . . . . . . 4,773 4,219 2,180 1,462
47,037 46,727 15,708 12,936
Income (loss) from operations:
North American Operations:
Engineered Products . . . . . . 3,570 3,410 1,149 72
Consumer Products . . . . . . . 197 100 (65) (8)
European Operations . . . . . . . 204 (5) 343 (31)
3,971 3,505 1,427 33
General Corporate:
Other income . . . . . . . . . . 69 79 36 20
Interest (U.S.) . . . . . . . . . (738) (628) (263) (218)
Other expense . . . . . . . . . . (1,754) (1,842) (561) (755)
(2,423) (2,391) (788) (953)
Income (loss) before income taxes. . $ 1,548 $ 1,114 $ 639 $ (920)
</TABLE>
Consolidated net sales for the quarter ended September 30, 1997 were
$15,708,000 compared to $12,936,000 from the same period a year ago, a 21
percent increase from 1996. This increase was attributable to higher sales
volumes in all of the Company's reported segments. In North America, both the
engineered products and consumer products areas recorded an 18 percent
increase in net sales. A large portion of the increase in the engineered
products sector was attributable to the expected improvement in the
performance of Envirco Corporation ("Envirco"), a Company subsidiary acquired
in August 1995, whose principal customers are in the microelectronics and
semiconductor manufacturing industry. The increase in consumer products
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is directly related to the earlier 1997 introduction of a new line of
appliance products. The Company's European operation posted a 49 percent gain
over the previous year due to a general improvement in order levels and third
quarter customer required shipment dates for engineered products in the
locations served. Normally, the third quarter in Europe is soft due to lower
activity in the summer months in Europe. Management expects that the
performance of all segments will continue to improve over the long-term, but
does not anticipate trends at the level recorded in the third quarter.
Net sales for the nine months ended September 30, 1997 were $47,037,000 as
compared to $46,727,000 for the same period the year before, an increase of 1
percent. The primary reason for this increase was the aforementioned
improvement in consumer products and European operations, partially offset by
lower year to date performance of Envirco, which was impacted by a decrease in
capital spending by the semiconductor and microelectronics industry in the
first half of 1997.
The Company's backlog of unshipped customer orders was $7,263,000 at September
30, 1997, a 5 percent increase over December 31, 1996 year-end backlog of
$6,912,000, reflecting an increase in orders for the Company's specialized
product line equipment. Backlog of unshipped customer orders at September 30,
1996 was $6,175,000. The 18 percent increase from prior year was primarily
due to increases in backlog at Envirco and the Company's European Operations.
On a consolidated basis, the cost of products sold as a percentage of sales
for the quarter and nine months ended September 30, 1997 were 66.3 percent and
67.1 percent, respectively, as compared to 68.1 percent and 67.2 percent,
respectively, a year ago. These improvements were primarily due to higher
sales volumes and improved absorption of fixed overheads offset by higher net
sales in the Consumer Products segment which traditionally has a higher cost
of products sold percentage than the Company's other segments. Additionally
on a year to date basis, cost of sales was impacted by start up costs incurred
as a result of the introduction of the new appliance product line and
operational improvements which included manufacturing process changes and the
relocation of production lines into the Company's Sanford facility. The
Company has not incurred any significant price increases for raw materials as
compared to those experienced a year ago. Consolidated gross profit for the
third quarter ended September 30, 1997 was $5,286,000 as compared to
$4,133,000 in the 1996 period, the difference being primarily attributable to
the higher sales volume. Consolidated gross profit for the nine months ended
September 30, 1997 was $15,492,000 as compared to $15,341,000 for the same
period in 1996.
Consolidated selling, administrative and engineering expenses as a percentage
of net sales decreased to 27.6 percent during the third quarter ended
September 30, 1997, as compared to 33.7 percent in 1996. This decrease is
primarily attributable to the higher sales volume. Consolidated selling,
administrative and engineering expenses as a percentage of net sales for the
current nine months period was 27.7 percent as compared to 27.8 percent a year
ago.
Interest expense during the third quarter and first nine months of 1997 was
$263,000 and $738,000, respectively, as compared to $218,000 and $628,000 the
year before due to additional borrowings needed to fund new products and
process improvements.
The Company incurred onetime charges of $414,000 in connection with the
acquisition of the Herrmidifier Company, Inc. ("Herrmidifier") of Lancaster,
Pennsylvania in August 1996. Herrmidifier manufactures residential,
commercial and industrial humidification products.
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Income taxes for the third quarter and first nine months of 1997 were $105,000
and $507,000, respectively. The 1997 and 1996 comparison of income taxes as a
percentage of income before income taxes reflects the improved performance in
the Company's European Operations segment whose income is offset by operating
loss carryforwards.
Consolidated net income for the third quarter ended September 30, 1997 was
$534,000 as compared to a loss of $600,000 reported a year ago. The
difference is primarily attributable to the higher net sales, a lower rate of
cost of products sold, the aforementioned onetime acquisition costs associated
with Herrmidifier and the lower effective income tax rate. Consolidated net
income for the nine months ended September 30, 1997 was $1,041,000 as compared
to $676,000 reported a year ago. This difference is attributable to several
factors: the lower sales volumes of Envirco offset by the higher consumer
products net sales; the related cost of products sold impact of these sales as
previously discussed; and the aforementioned onetime acquisition costs
associated with Herrmidifier.
The resulting earnings per share reported for the third quarter and first nine
months of 1997 were $0.08 and $0.15, respectively, as compared to a loss of
$0.09 for the third quarter of 1996 and income of $0.10 for the nine months
period in 1996.
Liquidity and Sources of Capital
The financial condition of the Company is strong with the current ratio at
2.0:1. Working capital decreased to $12,180,000 from the $14,182,000 at 1996
year-end. This change is primarily the result of the Company's continued
investment in tooling and capital equipment necessary to bring new products to
market and improve and streamline production processes. Long-term debt is 38.1
percent of equity and total shareholders' equity is $21,646,000. The Company
recently amended its existing credit agreement to incorporate grid pricing for
the interest rates charged on borrowings. Originally, the Company borrowed
funds at the London Interbank Offering Rate ("LIBOR") of interest plus 1.3
percent. Under the revised terms the Company will borrow at LIBOR plus 1.0
percent to 1.75 percent - depending upon specified performance criteria. The
rate charged during the third quarter was 1.75 percent over LIBOR, or
approximately 7.5% per annum.
The Company uses numerous software applications and computer programs
throughout the various functions within its organization which may require
modification in order to address the upcoming millennium change in the year
2000. The Company's assessment of the year 2000 issue, the impact on
operations and the estimated cost will be completed during 1998. The cost of
making the necessary corrections will be expensed as incurred. Management
does not expect these costs to have a material impact on the Company's ongoing
results of operations.
Management believes working capital and current credit arrangements will be
adequate to meet its operating and capital requirements during the foreseeable
future.
The foregoing discussion contains forward-looking statements about the
Company's financial condition and results of operations, which are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which reflect management's judgment only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements
to reflect events and circumstances that arise after the date hereof.
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Factors that may cause actual results to differ materially from these forward-
looking statements are: changes in capital spending by the microelectronics
and semiconductor industry; changes in the purchasing activities of major
consumer products customers; and foreign currency fluctuations or economic
volatility in both Europe and the Asia Pacific arenas.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
PART II
Item 5. Other Information
At a meeting of the Registrant's Board of Directors held July 25, 1997, Joseph
W. Deering was appointed Chairman of the Board, to act in the capacity of lead
director.
Item 6(a). Exhibits
The following exhibits are filed herewith:
3.1 Amendment to Bylaws
3.2 Bylaws, as Amended
27 Financial Data Schedule
Item 6(b). Report on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the period
covered by this report.
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.
TRION, INC.
(Registrant)
Date: November 13, 1997 /s/ Steven L. Schneider
Steven L. Schneider
President and
Chief Executive Officer
Date: November 13, 1997 /s/ Calvin J. Monsma
Calvin J. Monsma
Vice President and
Chief Financial Officer
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Exhibit 3.1
At the meeting of the Board of Directors held on October 24, 1997 the
following resolution to amend the Company's Bylaws was passed unanimously:
RESOLVED, that the last sentence of Section 6.4 and the first sentence of
Section 6.5, respectively, of the Corporation's Amended and Restated Bylaws
be, and they hereby are, amended, in the case of the last sentence of Section
6.4, to read in its entirety as follows:
"In the absence of or at the request of the Chairman of the Board, or if
the Chief Executive Officer is also the Chairman of the Board, the
Chief Executive Officer shall preside at meetings of the shareholders
and of the Board of Directors.";
and, in the case of the first sentence of Section 6.5, to read in its entirety
as follows:
"The Chairman of the Board may, in his discretion, preside at all
meetings of the shareholders and of the Board of Directors."
Previously, the sentences that were replaced read as follows:
Section 6.4
"In the absence of the Chairman of the Board, or if the Chief Executive
Officer is also the Chairman of the Board, the Chief Executive Officer
shall preside at meetings of the shareholders and of the Board of
Directors.";
Section 6.5
"The Chairman of the Board shall preside at all meetings of the
shareholders and of the Board of Directors."
AS AMENDED THROUGH 10/24/97
TRION, INC.
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
OFFICES
Section 1.1. Principal Office. The principal office of the
Corporation shall be at 101 McNeill Road, Sanford, Lee County, North Carolina.
Section 1.2. Registered Office. The Corporation shall have and
continuously maintain in Pennsylvania a registered office at an address to be
designated from time to time by the Board of Directors.
Section 1.3. Other Offices. The Corporation may also have
additional offices at such other places both within and without the
Commonwealth of Pennsylvania as the Board of Directors may from time to time
determine and as the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1. Place of Meetings. All meetings of shareholders shall
be held at such place, within or without the Commonwealth of Pennsylvania, as
shall be fixed from time to time by the Board of Directors.
Section 2.2. Annual Meeting. The annual meeting of shareholders
for the election of directors and the transaction of such other business as
may properly come before the meeting shall be held at such date and time as
may be designated by the Board of Directors, and if not so designated shall be
held on the third Tuesday in April of each year, if not a legal holiday, and
if a legal holiday, then on the next full business day following.
Section 2.3. Special Meetings. Special meetings of the
shareholders may be called by the Chairman or President and shall be called by
the Chairman, President or Secretary at the request in writing of a majority
of the Board of Directors or at the request in writing of shareholders
entitled to cast at least one-fifth (1/5) of the votes which all shareholders
are entitled to cast at such meeting. Any request shall state the purpose or
purposes of the proposed meeting. Business transacted at any special meeting
of shareholders shall be limited to that specified in the notice of meeting
and matters incidental thereto.
Section 2.4. Notice of Meetings. A written notice stating the
place, day, and hour of each meeting and, in the case of a special meeting,
the general nature of the business to be transacted shall be given by, or at
the direction of, the Secretary or the person or persons authorized to call
the meeting to each shareholder of record entitled to vote at such meeting, at
least twenty (20) days prior to the date of the meeting, unless a greater
period of time is required by law in a particular case.
Section 2.5. Record Date. The Board of Directors may fix a time not
more than fifty (50) days prior to the date of any meeting of shareholders as
the record date for the determination of shareholders entitled to notice of, or
to vote at, any such meeting. In such case, only such shareholders as shall be
shareholders of record on the date so fixed shall be entitled to notice of, or
to vote at, such meeting.
Section 2.6. Quorum. (a) A shareholders' meeting 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 which all shareholders are entitled to cast on a
particular matter shall constitute a quorum for purposes of considering such
matter. The shareholders present in person or by proxy at a duly organized
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meeting can continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. If a meeting
of shareholders cannot be organized because a quorum has not attended, those
present in person or by proxy may, except as otherwise provided by statute or
these By-laws, adjourn the meeting to such time and place as they may
determine.
(b) Notwithstanding the foregoing,
(i) those shareholders entitled to vote who attend a meeting
called for the election of directors that has been previously adjourned
for lack of a quorum, although less than a quorum as fixed by statute or
in these By-laws, shall nevertheless constitute a quorum for the purpose
of electing directors.
(ii) those shareholders entitled to vote who attend a meeting
of shareholders that has been previously adjourned for one or more periods
periods aggregating at least fifteen (15) days because of an absence of a
quorum, although less than a quorum as fixed by statute or in these By-
laws, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in the notice of the meeting if the notice
states that those shareholders who attend the adjourned meeting shall
nevertheless constitute a quorum for the purpose of acting upon the
matter.
Section 2.7. Voting. Unless otherwise provided in the Articles of
Incorporation, every shareholder is entitled to one vote for every share
standing in his name on the books of the Corporation. In each election of
directors, every shareholder entitled to vote (or his proxies) shall have the
right to multiply the number of votes to which he may be entitled by the total
number of directors to be elected in the same election by the holders of the
class or classes of shares of which his shares are a part and he (or his
proxies) may cast the whole number of his votes for one candidate or
distribute them among any two or more candidates.
Section 2.8. Action by Shareholders. Except as otherwise provided
by statute, the Articles of Incorporation or these By-laws, 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.
Section 2.9. Voting Confidentiality. Each shareholder of the
Corporation shall be entitled to elect voting confidentiality as provided in
this Section 2.9 on all matters submitted to shareholders by the Board of
Directors; and each form of proxy, consent, ballot or other written voting
instruction distributed by the Corporation to shareholders shall include a
check box or other appropriate mechanism by which shareholders who desire to
do so may so elect voting confidentiality.
All inspectors of election, vote tabulators and other persons
appointed or engaged by or on behalf of the Corporation to process voting
instructions (none of whom shall be a director or officer of the Corporation
or any of its affiliates) shall be advised of and instructed to comply with
this Section 2.9 and, except as required or permitted hereby, not at any time
to disclose to any person (except to other persons engaged in processing
voting instructions), the identity and individual vote of any shareholder
electing voting confidentiality; provided, however, that voting
confidentiality shall not apply and the name and individual vote of any
shareholder may be disclosed to the Corporation or to any person (i) to the
extent that such disclosure is required by applicable law or is appropriate to
assert or defend any claim relating to voting or (ii) with respect to any
matter for which votes of shareholders are solicited in opposition to any of
the nominees or one or more of the recommendations of the Board of Directors
unless the persons engaged in such opposition solicitation provide
shareholders of the Corporation with voting confidentiality (which, if not
otherwise provided, will be requested by the Corporation) comparable in the
opinion of the Corporation to the voting confidentiality provided by this
Section 2.9.
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Section 2.10. Informal Action. Any action which may be taken at a
meeting of the shareholders may be taken without a meeting, if a consent or
consents in writing setting forth the action so taken shall be signed by all
of the shareholders who would be entitled to vote at a meeting for such
purpose and shall be filed with the Secretary of the Corporation.
Section 2.11. Duration of Proxies. 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 (3) 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 such death or incapacity is given to the
Secretary of the Corporation.
Section 2.12. Adjournments. Adjournment or adjournments of any
annual or special meeting, including one at which directors are to be elected,
may be taken for such period as may be directed by the affirmative vote of a
majority of the votes cast by all shareholders entitled to vote thereon. When
a meeting is adjourned, it shall not be necessary to give any notice of the
adjourned meeting or of the business to be transacted at an adjourned meeting,
other than by announcement at the meeting at which such adjournment is taken,
unless the Board fixes a new record date for the adjourned meeting or notice
of the business to be transacted was required by statute to be given and such
notice has not previously been given.
ARTICLE III
DIRECTORS
Section 3.1. Powers of Directors. The business and affairs of the
Corporation shall be managed by the Board of Directors, which may exercise all
such powers of the Corporation and do all such lawful acts and things as are
not by statute, the Articles of Incorporation or these By-laws directed or
required to be exercised or done by the shareholders.
Section 3.2. Number, Election, Term of Office. The number of
directors which shall constitute the whole Board of Directors shall be not
less than three nor more than fifteen members as determined from time to time
by the Board of Directors. The directors shall be classified in respect to
the time for which they shall severally hold office by division into three
classes, and the term of office of one class shall expire at the annual
meeting of shareholders in each year. The number of members of each class
shall be as determined from time to time by the Board of Directors; provided,
that the membership of all classes shall be as nearly equal in number as
possible. If, at any meeting of shareholders, due to a vacancy or vacancies,
or otherwise, directors of more than one such class are to be elected, each
class of directors to be elected at the meeting shall be elected in a separate
election. At each annual meeting each of the successors to the director or
directors of the class whose terms shall expire in that year shall be elected
for a term of three years and shall serve until the third succeeding annual
meeting of the shareholders and until his successor shall have been duly
elected and qualified or until his earlier death, resignation or removal.
Directors need not be shareholders of the Corporation.
Section 3.3. Vacancies. Vacancies in the Board of Directors,
including vacancies resulting from an increase in the number of directors,
shall be filled by a majority vote of the remaining members of the Board of
Directors, though less than a quorum, and each person so elected shall hold
office until the next selection of the class for which such director has been
chosen, and until his successor has been selected and qualified or until his
earlier death, resignation or removal. The occurrence of a vacancy which is
not filled by action of the Board of Directors shall constitute a
determination by the Board of Directors that the number of directors is
reduced so as to eliminate such vacancy, unless the Board of Directors shall
specify otherwise.
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<PAGE>
Section 3.4. Meetings of Directors. Regular meetings of the Board
of Directors shall be held at such times and places as the Board of Directors
shall from time to time determine, and no notice shall be required to be given
of any such regular meeting. Special meetings of the Board of Directors may
be called by the Chairman or President or by a majority of the members of the
Board of Directors by giving two (2) days' notice to each director but the
presence of all directors at any special meeting shall ipso facto constitute a
waiver of any notice required to be given of such meeting, except where a
person attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully called or
convened.
Section 3.5. Quorum, Action by Board. At all meetings of the Board
of Directors a majority of the directors then in office shall constitute a
quorum for the transaction of business and the acts of a majority of the
directors present and voting at any meeting at which a quorum is present shall
be the acts of the Board of Directors, except as may be otherwise specifically
provided by statute or by the Articles of Incorporation. If a quorum shall
not be present at any meeting of the Board of Directors the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 3.6. Telephone Participation in Meetings. One or more
directors may participate in any meeting of the Board of Directors, or of any
Committee thereof of which he is a member, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other. Participation in a meeting by means of
such conference telephone or similar communications equipment shall constitute
presence in person at such meeting for all purposes.
Section 3.7. Informal Action. Any action which may be taken at any
meeting of the Board of Directors, or of any Committee thereof, may be taken
without a meeting, if a written consent or consents thereto shall be signed by
all members of the Board or of the Committee, as the case may be, and shall be
filed with the Secretary of the Corporation.
Section 3.8. Compensation. Directors (other than a director who is
an employee of the Corporation or any of its subsidiaries) may receive a
stated salary for their services, or a fixed sum and expenses for attendance
at regular and special meetings of the Board of Directors and Committees
thereof, or any combination of the foregoing and such other benefits as may be
determined from time to time by resolution adopted by a majority of the whole
Board of Directors. No such payments shall preclude any directors from
serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
COMMITTEES OF DIRECTORS
Section 4.1. Committees Generally. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
committees, each of which shall consist of two (2) or more of the directors of
the Corporation. 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. To the extent provided in the resolution
designating any committee, such committee shall have and exercise the
authority of the Board of Directors in the management of the business and
affairs of the Corporation; provided, however, that no such committee shall
have the authority to (a) submit to shareholders any matter which by statute,
the Articles of Incorporation, or these By-laws requires approval of
shareholders, (b) change the number of directors or fill any vacancy in the
Board of Directors, (c) adopt, amend or repeal By-laws, (d) declare any
dividend or distribution, (e) reduce earned surplus or capital surplus, (f)
prescribe or change the time or place of any regular meeting of the Board of
Directors, (g) amend or repeal any resolution of the Board of Directors which
by its terms is amendable or repealable only by the Board, (h) take action on
any matter committed by the By-laws or by resolution of the Board to another
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<PAGE>
committee of the Board, or (i) designate or propose any candidate for election
to the office of director.
Section 4.2. Standing Committees. The Board of Directors shall
have standing audit, compensation and nominating committees, each of which
shall have such authority and perform such duties as may be designated from
time to time by the Board of Directors.
Section 4.3. Absence, Disqualification of Committee Member. In the
absence or disqualification of any member of any such committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may by unanimous action appoint
another director to act at the meeting in the place of any such absent or
disqualified member.
Section 4.4. Rules and Regulations. The Board of Directors may
establish reasonable rules and regulations for the conduct of the proceedings
of any such committee and may appoint a chairman of the committee who shall be
a member thereof and a secretary of the committee who need not be a member
thereof. To the extent that the Board of Directors shall not exercise such
powers, they may be exercised by the Committee.
ARTICLE V
NOTICES AND WAIVERS THEREOF
Section 5.1. Notices. Notices to directors and shareholders shall
be in writing and delivered either personally or by sending a copy thereof by
first class 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 his address (or to
his telex, TWX or facsimile number) appearing on the books of the Corporation
or, in the case of directors, supplied by him to the Corporation for the
purpose of notice. If the notice is sent by mail, telegraph or courier
service, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX, when
dispatched. Such notice shall specify the place, day and hour of the meeting
and, in the case of a special meeting of shareholders, the general nature of
the business to be transacted.
Section 5.2. Waivers of Notice. Whenever any notice is required to
be given under the provisions of applicable law or of the Articles of
Incorporation or by these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Except in the case of a special meeting of shareholders, neither the business
to be transacted at nor the purpose of the meeting need be specified in the
waiver of notice of such meeting. Attendance of a person, either in person or
by proxy, at any meeting shall constitute a waiver of notice of such meeting,
except where a person attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting was not lawfully called
or convened.
ARTICLE VI
OFFICERS
Section 6.1. Enumeration. The officers of the Corporation shall be
elected by the Board of Directors at the organization meeting following each
annual meeting of shareholders and shall consist of a Chairman, if so elected,
a President, a Vice President, a Secretary and a Treasurer. The Board of
Directors may also elect additional Vice Presidents, and one or more Assistant
Secretaries and Assistant Treasurers. Any two or more offices may be held by
the same person.
Section 6.2. Other Officers and Agents. The Board of Directors may
appoint such other officers and agents as it shall deem necessary who shall
hold their offices for terms and shall exercise such powers and perform such
duties, as shall be determined from time to time by the Board.
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<PAGE>
Section 6.3. Term and Compensation. Each officer or assistant
officer shall serve at the pleasure of the Board of Directors. The
compensation of all officers and assistant officers and any agents
specifically appointed by the Board of Directors shall be fixed by, or
pursuant to authority delegated by, the Board of Directors from time to time.
Section 6.4. Chief Executive Officer. The President of the
Corporation shall be the Chief Executive Officer unless the Board of Directors
shall at any time elect a Chairman of the Board and shall specify by
resolution that the Chairman of the Board, rather than the President, shall be
the Chief Executive Officer of the Corporation. The officer so designated
shall be the Chief Executive Officer until further specification by the Board.
The Chief Executive Officer shall be the chief executive officer and general
manager of the Corporation and shall have general and active charge and
control over the business and affairs of the Corporation, subject to the Board
of Directors. In the absence of or at the request of the Chairman of the
Board, or if the Chief Executive Officer is also the Chairman of the Board,
the Chief Executive Officer shall preside at meetings of the shareholders and
of the Board of Directors.
Section 6.5. Chairman of the Board. The Chairman of the Board may,
in his discretion, preside at all meetings of the shareholders and of the
Board of Directors. If the Chairman of the Board shall be the Chief Executive
Officer, the Chairman of the Board also shall have the powers and perform the
duties of the Chief Executive Officer. If the Chairman of the Board shall not
be the Chief Executive Officer, the Chairman of the Board shall have such
other powers and perform such other duties as shall from time to time be
specified by the Board of Directors.
Section 6.6. President. If the President shall be the Chief
Executive Officer, the President shall have the powers and
perform the duties of the Chief Executive Officer. If the President shall not
be the Chief Executive Officer, the President shall have all of the powers and
perform all of the duties of the Chief Executive Officer during the absence or
inability to act of the Chief Executive Officer, shall be the chief operating
officer of the Corporation and shall have such other powers and perform such
other duties as shall from time to time be specified by the Board of Directors
or delegated to the President by the Chief Executive Officer. The President
shall have general and active management and supervision of the business
affairs and property of the Corporation, and shall see that all policies,
orders and resolutions of the Board are carried into effect. The President
shall sign all certificates for shares of the capital stock of the Corporation
and may, together with the Secretary, execute on behalf of the Corporation any
contract which has been approved by the Board of Directors.
Section 6.7. Vice Presidents. The Vice President, or if there
shall be more than one, the Vice Presidents in the order determined by the
Board of Directors, shall, in the absence or disability of the President,
perform all of the duties and exercise all of the powers of the President and
shall perform such other duties and have such powers as the Board of Directors
may from time to time prescribe.
Section 6.8. Secretary. The Secretary shall attend all meetings of
the shareholders and all meetings of the Board of Directors or of any
committee thereof and shall keep a record of the minutes of the proceedings of
such meetings in a book to be kept for that purpose. The Secretary shall
give, or cause to be given, if required by statute or by these By-laws, notice
of all such meetings. The Secretary shall have custody of the seal of the
Corporation and of all books, records, and papers of the Corporation, except
such as shall be in the charge of the Treasurer or of some other person
authorized to have custody and possession thereof by resolution of the Board
of Directors. The Secretary, or an Assistant Secretary, shall have authority
to affix the seal to any instrument requiring it and when affixed, it may be
attested by his signature or by the signature of such Assistant Secretary.
The Board of Directors may give general authority to any other officer to
affix the seal of the Corporation and to attest the affixing by his signature.
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<PAGE>
The Secretary may, together with the President, execute on behalf of the
Corporation any contract which has been approved by the Board of Directors.
The Secretary shall also have such other powers and perform such other duties
as are incident to the office of the secretary of a corporation as shall from
time to time be prescribed by, or pursuant to authority delegated by, the
Board of Directors.
Section 6.9. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities, shall keep full and accurate accounts of
the receipts and disbursements of the Corporation in books belonging to the
Corporation and shall deposit all moneys and other valuable effects of the
Corporation in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer
shall also have such other powers and perform such other duties as are
incident to the officer of the treasurer of a corporation or as shall from
time to time be prescribed by, or pursuant to authority delegated by, the
Board of Directors.
Section 6.10. Other Officers and Assistant Officers. The powers
and duties of each other officer or assistant officer who may from time to
time be chosen by the Board of Directors shall be as specified by, or pursuant
to authority delegated by, the Board of Directors at the time of the
appointment of such other officer or assistant officer or from time to time
thereafter. In addition, each assistant officer shall assist in the
performance of the duties of the officer to which he or she is assistant, and
shall have the powers and perform the duties of such officer during the
absence or inability to act of such officer.
ARTICLE VII
DIRECTORS' LIABILITY
Section 7.1. Directors' Personal Liability. A director of the
Corporation shall not be personally liable for monetary damages for any action
taken, or any failure to take any action; provided however, that this
provision shall not eliminate or limit the liability of a director to the
extent that such elimination or limitation of liability is expressly
prohibited by Section 1713 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL") (or any successor statute or provision), as in
effect at the time of the alleged action or failure to take action by such
director.
Section 7.2. Preservation of Rights. Any repeal or modification of
this Article VII by the shareholders of the Corporation shall not adversely
affect any right or protection existing at the time of such repeal or
modification to which any director or former director may be entitled under
this Article VII. The rights and protection conferred by this Article VII
shall continue as to any person who has ceased to be a director of the
Corporation and shall inure to the benefit of the heirs, executors, and
administrators of such person.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Mandatory Indemnification of Directors and Officers.
The corporation shall indemnify, to the fullest extent now or hereafter
permitted by law, each director or officer (including each former director or
officer) of the Corporation who was or is made a party to or a witness in or
is threatened to be made a party to or a witness in any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he is or was an
authorized representative of the Corporation, against all expenses (including
attorneys' fees and disbursements), judgments, fines (including excise taxes
and penalties), and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding.
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<PAGE>
Section 8.2. Mandatory Advancement of Expenses to Directors and
Officers. The Corporation shall pay expenses (including attorneys' fees and
disbursements) incurred by a director or officer of the Corporation referred
to in Section 8.1 of this Article in defending or appearing as a witness in
any civil or criminal action, suit, or proceeding described in Section 8.1 of
this Article in advance of the final disposition of such action, suit, or
proceeding. The expenses incurred by such director or officer shall be paid
by the Corporation in advance of the final disposition of such action, suit,
or proceeding only upon receipt of an undertaking by or on behalf of such
director or officer to repay all amounts advanced if and to the extent that it
shall ultimately be determined that he is not entitled to be indemnified by
the Corporation with respect to such expenses.
Section 8.3. Permissive Indemnification and Advancement of
Expenses. The Corporation may, as determined by the Board of Directors from
time to time, indemnify to the fullest extent now or hereafter permitted by
law, any person who was or is a party to or a witness in or is threatened to
be made a party to or a witness in, or is otherwise involved in, any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that he is
or was an authorized representative of the Corporation, both as to action in
his official capacity and as to action in another capacity while holding such
office or position, against all expenses (including attorneys' fees and
disbursements), judgments, fines (including excise taxes and penalties), and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding. The Corporation may, as
determined by the Board of Directors from time to time, pay expenses incurred
by any such person by reason of his participation in an action, suit, or
proceeding referred to in this Section 8.3 in advance of the final disposition
of such action, suit, or proceeding upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation.
Section 8.4. Mandatory Indemnification with Respect to Expenses.
To the extent that a director, officer, employee, or agent of the Corporation
has been successful on the merits or otherwise in the defense of any action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative, to which such person shall have been made a party by reason of
the fact that he is or was a director, officer, employee, or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, interest, or other enterprise, or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses (including
attorneys' fees and disbursements) actually and reasonably incurred by him in
connection therewith.
Section 8.5. Scope of Indemnification. This Article is intended to
provide indemnification in accordance with its terms to the fullest extent
permitted by law, including, without limitation, pursuant to Section 1746 of
the BCL (or any successor provision or statute as in effect at the time of
such alleged action or failure to take action), whether the Corporation would
have the power to so indemnify under any other provisions of law except
Subchapter D of the BCL (or successor statute) and whether or not the
indemnified liability arises or arose from any threatened, pending, or
completed action by or in the right of the Corporation; indemnification under
this Article shall not be made by the Corporation in any case where
indemnification for the alleged act or failure to act giving rise to the claim
for indemnification is expressly prohibited by the said Section 1746 or any
successor statute as in effect at the time of such alleged action or failure
to take action.
Section 8.6. Funding to Meet Indemnification Obligations. The
Board of Directors, without further approval of the shareholders, shall have
the power to borrow money on behalf of the Corporation, including the power to
pledge the assets of the Corporation, from time to time to discharge the
Corporation's obligations with respect to indemnification and the advancement
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<PAGE>
and reimbursement of expenses, and for the purchase and maintenance of
insurance on behalf of each director or officer against any liability asserted
against or incurred by such director or officer in any capacity.
Section 8.7. Miscellaneous. Each director and officer of the
Corporation shall be deemed to act in such capacity in reliance upon such
rights of indemnification and advancement of expenses as are provided in this
Article. The rights of indemnification and advancement of expenses provided
by this Article shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses may be entitled
under any agreement, vote of shareholders or disinterested directors, statute,
or otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office or position, and shall
continue as to a person who has ceased to be an authorized representative of
the Corporation and shall inure to the benefit of the heirs, executors, and
administrators of such person. Any repeal or modification of this Article
VIII by the shareholders or the Board of Directors of the Corporation shall
not adversely affect any right or protection existing at the time of such
repeal or modification to which any person may be entitled under this Article.
Section 8.8. Definition of Corporation. For purposes of this
Article, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in consolidation or merger that, if its separate
existence had continued, would have had power and authority to indemnify its
authorized representatives so that any person who is or was an authorized
representative of such constituent corporation shall stand in the same
position under this Article with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
Section 8.9. Definition of Authorized Representative. For the
purposes of this Article, the term "authorized representative" shall mean a
director, officer, employee, or agent of the Corporation or of any subsidiary
of the Corporation or a trustee, custodian, administrator, committeeman, or
fiduciary of any employee benefit plan established and maintained by the
Corporation or by any subsidiary of the Corporation, or a person serving
another corporation, partnership, joint venture, trust, or other enterprise in
any of the foregoing capacities at the request of the Corporation.
ARTICLE IX
SHARES OF CAPITAL STOCK
Section 9.1. Issuance of Shares. Shares of capital stock of any
class now or hereafter authorized, securities convertible into or exchangeable
for such shares, or options or other rights to purchase such shares or
securities, may be issued or granted in accordance with the authority granted
by resolution of the Board of Directors.
Section 9.2. Share Certificates. Certificates for shares of the
capital stock of the Corporation shall be in the form adopted by the Board of
Directors, shall be signed (in facsimile or otherwise, as permitted by law) by
the President or a Vice President and by the Secretary or an Assistant
Secretary. All such certificates shall be numbered consecutively, and the
name of the person owning the shares represented thereby, with the number of
such shares and the date of issue, shall be entered on the books of the
Corporation.
Section 9.3. Transfer of Shares. Shares of capital stock of the
Corporation shall be transferred only on the books of the Corporation by the
Secretary of the Corporation, or by one or more Transfer Agents acting on
behalf of the Corporation, by the holder of record in person or by the
holder's duly authorized representative, upon surrender to the Corporation of
the certificate for such shares duly endorsed for transfer, together
with such other documents (if any) as may be required to effect such transfer.
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<PAGE>
Section 9.4. Lost, Stolen, Destroyed or Mutilated Certificates.
New stock certificates may be issued to replace stock certificates which have
been lost, stolen, destroyed or mutilated, upon such terms and conditions,
including proof of destruction or loss, and the giving of a satisfactory bond
of indemnity, as the Board of Directors from time to time may determine.
Section 9.5. Rules and Regulations. The Board of Directors shall
have the power and authority to make all such rules and regulations not
inconsistent with these By-laws or any provision of law as it may deem
expedient concerning the issue, transfer and registration of certificates of
stock of the Corporation.
Section 9.6. Holders of Record. The Corporation shall be entitled
to treat the holder of record of any share or shares of capital stock of the
Corporation as the holder and owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or right, title, or
interest in, such share or shares on the part of any other person, whether or
not the Corporation shall have express or other notice thereof, except as
otherwise provided by the laws of the Commonwealth of Pennsylvania.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall end on such day as shall be
fixed by resolution of the Board of Directors, or if not so fixed, shall end
on December 31 of each year.
ARTICLE XI
BY-LAWS
Section 11.1. Effect of By-laws. No provision in these By-laws
shall vest any property right in any shareholder.
Section 11.2. Amendments. These By-laws may be altered, amended,
or repealed, and new By-laws may be adopted, by the affirmative vote of a
majority of the votes cast by all shareholders entitled to vote thereon, or by
the affirmative vote of a majority of the members of the Board of Directors of
the Corporation, at any regular or special meeting duly convened after notice
to such shareholders or directors (whoever are to act with respect thereto),
of that purpose, subject always to the power of the shareholders to change any
such action taken by the Board of Directors.
ARTICLE XII
INAPPLICABILITY OF ACT 36
Section 12.1. Inapplicability of Section 1715(a)-(d). Subsections
(a) through (d) of Section 1715 of the BCL shall not be applicable to the
Corporation.
Section 12.2. Inapplicability of Subchapter 25G. Subchapter G of
Chapter 25 of the BCL, relating to control-share acquisitions, shall not be
applicable to the Corporation.
Section 12.3. Inapplicability of Subchapter 25H. Subchapter H of
Chapter 25 of the BCL, relating to disgorgement of profits by certain control
shareholders, shall not be applicable to the Corporation.
-10-
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