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SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Exchange Act Rule 14a-11(c) or Rule 14a-12
MET-PRO CORPORATION
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(Name of registrant as specified in its charter)
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/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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[GRAPHIC OMITTED]
160 Cassell Road, Harleysville, Pennsylvania 19438
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To Be Held On June 11, 2003
To the Stockholders of
MET-PRO CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of
MET-PRO CORPORATION, a Delaware corporation (the "Company"), will be held at the
Best Western Inn at Towamencin, Sumneytown Pike, Kulpsville, Pennsylvania, on
June 11, 2003, at the hour of 9:30 a.m. for the following purposes:
1. To elect two Directors to serve until the 2006 Annual Meeting of
Stockholders.
2. To consider a proposal to change the Company's state of
incorporation from Delaware to Pennsylvania.
3. To ratify the selection of Margolis & Company P.C. as independent
certified public accountants for the Company's fiscal year ending
January 31, 2004.
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 18, 2003,
the record date fixed by the Board of Directors, are entitled to notice of, and
to vote at, said meeting.
Gary J. Morgan,
Secretary
Harleysville, Pennsylvania
April 28, 2003
Whether or not you plan to attend the meeting, please sign and date the
enclosed proxy, which is solicited by the Board of Directors of the Company, and
return it to the Company. The proxy may be revoked at any time before it is
voted, and stockholders executing proxies may attend the meeting and vote there
in person, should they so desire.
MET-PRO CORPORATION
160 Cassell Road, Harleysville, Pennsylvania 19438
PROXY STATEMENT
The Board of Directors of Met-Pro Corporation (the "Company" or
"Met-Pro") presents this proxy statement to all stockholders and solicits their
proxies for the Annual Meeting of Stockholders to be held on June 11, 2003. All
proxies duly executed and received will be voted on all matters presented at the
meeting in accordance with the specifications made in such proxies. If the
Met-Pro shares that you own are registered in the name of your broker ("street
name"), your broker, in the absence of specific instructions from you on the
proxy card, will vote your shares in favor of the named nominees to the
Company's Board of Directors and the ratification of the selection of Margolis &
Company P.C. as independent certified public accountants. However, if you do not
specifically indicate on the proxy card that you vote in favor of the approval
of the change of the Company's state of incorporation from Delaware to
Pennsylvania, your broker will not be permitted to vote on this proposal, which
will have the effect of being a vote against this proposal. If your Met-Pro
shares are registered directly in your name, in the absence of your specific
vote on the proxy card, your shares will be voted in favor of the named nominees
to the Company's Board of Directors and in favor of each of the other proposals.
Management does not know of any other matters that may be brought before the
meeting nor does it foresee or have reason to believe that proxy holders will
have to vote for a substitute or alternate nominee. In the event that any other
matter should come before the meeting or any nominee is not available for
election, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies not marked to the contrary with respect to such
matters in accordance with their best judgment. The proxy may be revoked at any
time before being voted by written notice to such effect received by the
Company, 160 Cassell Road, Harleysville, Pennsylvania 19438, attention:
President, prior to exercise of the proxy, by delivery of a later proxy or by a
vote cast in person at the meeting. The Company will pay the entire expense of
soliciting these proxies, which solicitation will be by use of the mail.
The total number of shares of Common Stock of the Company outstanding as
of April 18, 2003 was 6,216,369. The Common Stock is the only class of
securities of the Company entitled to vote, each share being entitled to one
noncumulative vote. Only stockholders of record as of the close of business on
April 18, 2003 will be entitled to vote. Directors are elected by a plurality of
the votes cast. In order to be approved, the proposal to change the Company's
state of incorporation from Delaware to Pennsylvania must be approved by the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Company. Other matters to be voted upon at the Annual
Meeting are determined by a majority of the votes cast. Shares represented by
proxies that are marked "withhold authority" with respect to the election of one
or more nominees as Directors, by proxies that are marked "abstain" on other
proposals, and by proxies that are marked to deny discretionary authority on
other matters that may be properly brought before the meeting will be counted as
present for quorum purposes but will not be counted in determining whether a
majority vote was obtained in such matters. In instances where brokers are
prohibited from exercising discretionary authority for beneficial owners who
have not returned proxies to the brokers (so-called "broker non-votes"), those
shares will be counted as present for quorum purposes but will not be included
in the vote totals and, therefore, will have no effect on the vote.
A list of stockholders entitled to vote at the meeting will be available
at the Company's offices, 160 Cassell Road, Harleysville, Pennsylvania 19438,
for a period of ten days prior to the meeting for examination by any
stockholder.
These proxy materials were first mailed to stockholders of the Company
on or about April 28, 2003.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended,
provides for a classified Board of Directors, with the Board divided into three
classes whose terms expire at different times. At the meeting, two Directors,
Alan Lawley and Gary J. Morgan, whose terms of office expire with this meeting,
will be nominated for re-election for terms that expire at the 2006 Annual
Meeting. Information regarding the Board's two nominees is set forth on page 2.
Information regarding the Directors whose terms do not expire with the 2003
Annual Meeting is also set forth on pages 2 and 3.
Unless otherwise indicated in valid proxies received pursuant to this
solicitation, such proxies will be voted for the election of the persons listed
below as nominees for the terms set forth below. Management has no reason to
believe that the nominees will not be available or will not serve if elected.
These proxies may not be voted for more than two persons. If either Messrs.
Lawley or Morgan should become unavailable to serve as a Director, full
discretion is reserved to the persons named as proxies to vote for such other
person as may be nominated.
The following sets forth certain information as to the nominees for
election as Directors and for each other person whose term of office as a
Director will continue after this Annual Meeting of Stockholders:
1
FIRST YEAR
OF SERVICE
AS A
NAME AGE PRINCIPAL OCCUPATION DIRECTOR
NOMINEES FOR TERMS TO EXPIRE IN 2006
Alan Lawley 69 Dr. Lawley is the Grosvenor Professor of Metallurgy in the Department of 1990
Materials Engineering at Drexel University, Philadelphia, Pennsylvania. He
is a member of the National Academy of Engineering, a Fellow of ASM and
APMI International, a former President of the Metallurgical Society (1982)
and of AIME (1987), and is Editor-in-Chief of the International Journal of
Powder Metallurgy. He is an expert in physical and mechanical metallurgy,
powder metallurgy, composite materials, and materials engineering design.
He has consulted, lectured and published in these areas. Dr. Lawley served
as the Chairman of the Company's Compensation and Stock Option Committee
during the last year, and also serves on the Company's Audit Committee.
Gary J. Morgan 48 Mr. Morgan has been the Vice President-Finance, Secretary, Treasurer and 1998
Chief Financial Officer of the Company since October 1997. He is a
Certified Public Accountant. Immediately prior to October 1997, Mr. Morgan
was the Corporate Controller of the Company. He has been employed by the
Company since 1980.
The Board of Directors recommends a vote FOR the election of the above nominees as Directors.
DIRECTORS WHOSE TERMS EXPIRE IN 2005
Michael J. Morris 68 Mr. Morris is the retired President and Chief Executive Officer of both 1999
Transport International Pool (TIP) and GE Modular Buildings (GEM). Mr.
Morris is a member of the Board of Managers of Beneficial Savings Bank and
a Director of Philadelphia Consolidated Holding Corporation. Mr. Morris
served as the Chairman of the Audit Committee during the last year, and
also serves on the Company's Compensation and Stock Option Committee.
Jeffrey H. Nicholas 49 Mr. Nicholas is a partner and a member of the Executive Committee of the 1998
Philadelphia law firm of Fox Rothschild LLP. Mr. Nicholas has practiced law
since 1982. His practice areas include securities and corporate finance,
general corporate and commercial law matters. He has served as the
Company's Chief Counsel for more than five years.
2
FIRST YEAR
OF SERVICE
AS A
NAME AGE PRINCIPAL OCCUPATION DIRECTOR
DIRECTORS WHOSE TERMS EXPIRE IN 2004
William L. Kacin 71 Mr. Kacin has been the Chairman of the Board of Directors of the Company 1993
since June 1999. Mr. Kacin served as the President and Chief Executive
Officer of the Company from February 1993 until March 2003. Prior to
February 1993, he was Vice President and General Manager of the Company's
Sethco Division for seventeen years.
Nicholas DeBenedictis 57 Mr. DeBenedictis is Chairman of the Board, President and Chief Executive 1997
Officer of Philadelphia Suburban Corporation and Chairman of the Board of
Philadelphia Suburban Water Company, positions that he has held for more
than five years. Mr. DeBenedictis is also a Director of P.H. Glatfelter
Company and Exelon Inc. as well as a member of the Board of Trustees of
Drexel University. Mr. DeBenedictis serves on the Company's Audit Committee
and the Company's Compensation and Stock Option Committee.
Raymond J. De Hont 49 Mr. De Hont was appointed the Company's President and Chief Executive 2003
Officer effective March 1, 2003. In February 2003, the Board of Directors
appointed Mr. De Hont a Director of the Company for a term expiring with
the 2004 Annual Meeting of Stockholders. From June 2000 until March 2003,
Mr. De Hont was the Chief Operating Officer of the Company, and from June
1995 through June 2000, was Vice President and General Manager of the
Company's Fybroc Division. In addition, for the period October 1999 to June
2000 Mr. De Hont also assumed the responsibilities of General Manager for
the Company's Dean Pump Division.
3
BOARD AND BOARD COMMITTEE MEETINGS
The Board of Directors of the Company held seven meetings during the
fiscal year ended January 31, 2003.
The Audit Committee of the Board of Directors is composed of Mr. Morris,
Chairman, Dr. Lawley and Mr. DeBenedictis. The Board of Directors of Met-Pro has
determined that each of the members of the Audit Committee is independent of
management of Met-Pro and is free of any relationship that would interfere with
his exercise of independent judgment as a committee member. The Audit Committee
met four times during fiscal year 2003, with two of such meetings being by
telephonic conference call.
The focus of the Audit Committee is upon: (i) the adequacy of the
Company's internal controls and financial reporting process and the reliability
of the Company's financial statements; (ii) the independence and performance of
the Company's independent auditors; and (iii) the Company's compliance with
designated legal and regulatory requirements. Further information regarding the
functions of the Audit Committee are set forth in the "Report of the Audit
Committee" below and "Audit Committee Charter" which is included as Appendix A
to this Proxy Statement.
The Compensation and Stock Option Committee of the Board, composed of
Dr. Lawley, Chairman, Mr. Morris and Mr. DeBenedictis, reviews and recommends to
the Board appropriate action with respect to all matters pertaining to officers'
compensation as well as stock option grants for Directors, officers and other
key employees of the Company. See the Committee's report on pages 8 and 9 of
this proxy statement. The Compensation and Stock Option Committee met two times
in fiscal year 2003.
Each Director of the Company attended all the meetings held by the Board
of Directors and by the Committees on which he served.
The Company does not have a standing nominating committee charged with
the search for and recommendation to the Board of potential nominees for Board
positions. This function is performed by the Board as a whole. It has been, and
continues to be, the Board's policy to entertain stockholder recommendations for
prospective Board nominees. Any such recommendations may be submitted to the
Board, in writing, addressed to the Chairman.
Until such time as a majority of the Company' s Directors are
"independent Directors" within the meaning of applicable New York Stock Exchange
and other applicable requirements, the Board has adopted a policy that in any
contested vote in which the vote of the independent Directors as a group is
contrary to the vote of the non-independent Directors as a group, the vote of
the independent Directors shall prevail. For purposes of this policy, Messrs.
Kacin, De Hont, Morgan and Nicholas are each considered not to be independent
Directors.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal controls.
In this context, the Committee has met and held discussions with
management and the independent auditors. Management represented to the Committee
that the Company's consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee has reviewed
and discussed the consolidated financial statements with management and the
independent auditors. The Committee discussed with the independent auditors
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).
In addition, the Committee has discussed with the independent auditors
the auditors' independence from the Company and its management, including the
matters in the written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions With Audit Committees). The Committee
has also considered whether the independent auditors' other non-audit services
to the Company are compatible with the auditors' independence and has concluded
that they are.
Prior to the commencement of the audit, the Committee discussed with the
Company's independent auditors the overall scope and plans for their respective
audits. The Committee meets with the independent auditors to discuss the results
of their examinations, the evaluations of the Company's internal controls, and
the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the
Committee and the Board of Directors have recommended, and the Board has
approved, that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 2003, for
filing with the Securities and Exchange Commission. The Committee and the Board
also have recommended the selection of the Company's independent auditors.
Michael J. Morris (Chairman)
Nicholas DeBenedictis
Dr. Alan Lawley
April 2, 2003
4
INDEPENDENT AUDITORS FEES
Audit Fees
The aggregate fees billed by Margolis & Company P.C. for the annual
audit of Met-Pro's consolidated financial statements for the fiscal year ended
January 31, 2003 and the reviews of the Company's Quarterly Reports on Form 10-Q
for the same fiscal year were $94,100.
All Other Fees
The aggregate fees billed by Margolis & Company P.C. for other services,
which pertain to audits of our employee benefits plans and preparation of
corporate income tax returns, for the fiscal year ended January 31, 2003 were
$44,500. The Audit Committee has considered whether the provision of these other
services by Margolis & Company P.C. is compatible with maintaining the principle
independent auditors independence and has concluded that they are independent.
COMPENSATION OF DIRECTORS
The present policies of the Board as to Director compensation are as
follows: non-employee Directors receive (i) a retainer of $10,000 per year, paid
quarterly; (ii) a meeting fee of $1,250 for each Board meeting (but no fees for
special telephone meetings or for stockholders meetings) and $700 for each
Committee meeting; and (iii) an annual stock option grant of up to 5,000 shares
of Common Stock of the Company on terms that are intended to be substantially
similar to the terms of the options granted to the Company's officers. These
terms, which the Board has the authority to change from time to time, subject to
the terms of the Company's stock option plans, in general, are as follows: an
exercise price that is equal to the market price of the Company's Common Stock
on the date of grant; a vesting period of two years, with one-third of the
shares covered by the option being immediately exercisable; provided, however,
in the event of a "change of control", any unvested portion of the option shall
become immediately exercisable. The term of the option shall be for up to ten
years, subject to earlier termination under various conditions. Those Directors
who are employees of the Company do not receive any compensation for their
services as Directors.
In connection with this, on February 24, 2003, the Board granted options
on the foregoing terms to purchase 5,000 shares to Messrs. DeBenedictis, Lawley,
Morris and Nicholas at the average of the high and low of the Company's Common
Stock as quoted on the New York Stock Exchange on February 24, 2003, or $13.08
per share.
The Board's current policy as to an annual grant of options for
non-employee Directors was intended to replace participation by non-vested
Directors in the Directors' Retirement Plan that the Board had established in
1994 (the "Directors' Plan"). Of the Company's current Directors, only Messrs.
Kacin and Lawley will receive benefits in the future under the Directors' Plan
as a result of the fact that each such person was vested as of December 16,
1999, the date of the Board's action on this plan. The accrual of benefits under
the Directors' Plan for Dr. Lawley ceased as of December 16, 1999, in that Dr.
Lawley elected to receive options as aforementioned for continued Director
service in lieu of participation under the Directors' Plan. The Directors' Plan,
which was established in 1994, provides that Directors who have completed six
years of service will be eligible to receive deferred compensation after they
cease to serve or reach age 70, whichever last occurs. Payment will be made in
annual installments based on $1,000 for each year of service as a Director, up
to a maximum of $10,000 and for a period equal to the length of service, up to a
maximum of 15 installments. Directors who have served as a Chief Executive
Officer for at least six years will be eligible to receive additional annual
deferred compensation at the rate of $1,000 for each year of service as an
officer and/or Director, up to a maximum of $20,000, for a period equal to the
length of such service, up to twenty years. In the event of death before
payments have been completed, the remaining annuity payments will be paid to the
Director's surviving spouse. If there is no surviving spouse, a lump sum payment
will be paid to the Director's estate equal to the sum of ten annual retirement
payments, less the total paid prior to death.
The Directors' Plan further provides that if a Director's services are
terminated at or after a "change in control" of the Company, the Director is
entitled to an immediate lump sum payment of the benefits then applicable to
such Director, and future payments due under the Plan to former Directors shall
be accelerated and shall be immediately due and payable. For purposes of the
Plan, a "change in control" shall be deemed to occur if any person or group of
persons as defined shall become the beneficial owner of 30% or more of the
Company's voting securities, or there shall be a change in the majority
composition of a Company's Board of Directors, or the stockholders of the
Company shall approve a merger or other similar reorganization in which the
persons who were stockholders of the Company prior to such merger do not
immediately thereafter own more than 50% of the voting securities of the
Company, or in the event of a change of control as defined in any other
agreement or plan of the Company.
5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, Directors and greater than ten percent stockholders are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that all filing requirements applicable to
its officers and Directors were complied with during the fiscal year ended
January 31, 2003.
6
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of January 31, 2003 the number and
percentage of shares held by all persons who, to the knowledge of the Company's
management, are the record and/or beneficial owners of, or who otherwise
exercise voting or dispositive control over, 5% or more of the Company's
outstanding shares of Common Stock. This table also includes security ownership
as of January 31, 2003 by each Director and nominee for Director of the Company,
each executive officer of the Company named in the Summary Compensation Table
and by all Directors, nominees and executive officers as a group. Unless
otherwise stated, the beneficial owners exercise sole voting and/or investment
power over their shares.
Company Common Stock
Right to Acquire
Ownership Under Options Percent
Name of Beneficial Owner Shares Owned Exercisable Within 60 Days of Class (a)
- ------------------------ ------------ -------------------------- ------------
Royce & Associates, LLC 399,300 (b) - 6.2%
1414 Avenue of Americas
New York, NY 10019
Dimensional Fund Advisors, Inc. 358,219 (c) - 5.5%
1299 Ocean Avenue
Santa Monica, CA 90401
William L. Kacin 82,355 (d) 50,833 2.1%
Raymond J. De Hont 4,746 (e) 21,550 *
Nicholas DeBenedictis 10,943 9,999 *
Alan Lawley 27,385 23,999 *
Gary J. Morgan 12,637 (f) 32,383 *
Michael J. Morris 8,000 13,999 *
Jeffrey H. Nicholas 6,923 24,399 *
Thomas Edwards 1,914 (g) 7,200 *
William F. Mersch 2,782 (h) 12,600 *
All Directors, nominees and 256,628 (i) 262,562 8.0%
executive officers as a group (17 persons)
(a) Any securities not currently outstanding, but subject to options
exercisable within 60 days of January 31, 2003, are deemed to be
outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such persons.
(b) Royce and Associates, LLC, a registered investment advisor, is deemed to
have beneficial ownership of 399,300 shares, as described on a Schedule
13G filed with the Securities and Exchange Commission on February 3,
2003.
(c) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 358,219 shares, as
described in a Schedule 13G filed with the Securities and Exchange
Commission on February 3, 2003. These shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional Fund Advisors, Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(d) The number of shares held by Mr. Kacin include 2,207 shares of Common
Stock beneficially held through the Met-Pro Corporation Salaried
Employee Stock Ownership Trust and through the Company's 401(k) Plan.
(e) The number of shares held by Mr. De Hont include 2,243 shares of Common
Stock beneficially held through the Met-Pro Corporation Salaried
Employee Stock Ownership Trust and through the Company's 401(k) Plan.
7
(f) The number of shares held by Mr. Morgan include 8,120 shares of Common
Stock beneficially held through the Met-Pro Corporation Salaried
Employee Stock Ownership Trust and through the Company's 401(k) Plan.
(g) The number of shares held by Mr. Edwards include 1,701 shares of Common
Stock beneficially held through the Met-Pro Corporation Salaried
Employee Stock Ownership Trust and through the Company's 401(k) Plan.
(h) The number of shares held by Mr. Mersch include 2,782 shares of Common
Stock beneficially held through the Met-Pro Corporation Salaried
Employee Stock Ownership Trust and through the Company's 401(k) Plan.
(i) The number of shares held by all seventeen executive officers and
Directors as a group include 72,157 shares of Common Stock beneficially
held through the Met-Pro Corporation Salaried Employee Stock Ownership
Trust and through the Company's 401(k) Plan.
(*) Less than one percent of the Company's outstanding share of Common
Stock.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Compensation
Committee" or "Committee") is composed only of independent non-employee members
of the Board of Directors. The Committee makes recommendations to the Board of
Directors (the "Board") concerning compensation policies for the Company's
executive officers and Directors. The Committee makes every effort to ensure
that the Company's compensation program is consistent with the values of Met-Pro
Corporation and furthers its business strategy.
The Compensation Committee has established a compensation plan (the
"Management Incentive Plan") applicable to the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer, and the operating officers
of the Company's divisions and subsidiaries (herein collectively "divisions")
who generally have the title of Vice President/General Manager. This
compensation policy is based upon three primary components: salary; eligibility
for a bonus; and eligibility for an award of stock options. These components are
intended to facilitate fulfillment of the following compensation objectives: (i)
aligning the interests of management with those of the Company's stockholders;
(ii) retaining competent management; (iii) relating executive compensation to
the achievement of the Company's goals and financial performance; and (iv)
rewarding management for the attainment of short and long-term accomplishments.
Consistent with these objectives, in adopting the Management Incentive
Plan, the Board, following the Committee's recommendations, set salary ranges
for each of the various officer positions. In establishing these salary ranges,
as well as in determining the other features of the Management Incentive Plan,
the Committee drew in part upon the data supplied to it by an independent
consulting firm. The Committee periodically reviews, and as appropriate,
modifies these salary ranges. On an annual basis, the Committee requests the
Chief Executive Officer to make salary recommendations for the officers of the
Company (other than himself) within these ranges.
Under the terms of the Management Incentive Plan instituted by the
Board, in order to be eligible for a bonus, certain objective threshold results
must be met. For Vice Presidents/General Managers of divisions, the threshold is
the attainment of a stated operating income for the division(s) managed by the
Vice President/General Manager. For the Company's Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer, the threshold is the attainment
of a stated earnings per share result for the Company for the fiscal year. Each
officer's bonus eligibility levels are considered and set by the Committee
during a meeting held following the completion of the Company's annual budgeting
process and are tied to the operating plan that the Board approves on an annual
basis prior to the commencement of the fiscal year. In the event of a failure to
attain the threshold figure, the officer is not eligible for a bonus.
The incentive levels of the bonuses are at stated percentages of the
year's salary that increase with responsibility. If the threshold performance
goal has been attained so as to qualify the executive for a bonus, the actual
amount of the bonus is a function of attainment of other stated goals, such as a
stated net sales figure, a stated operating income figure, and stated personal
objectives, which can be "quantitative", such as being linked to inventory
turnover or accounts receivable days outstanding, as well as "qualitative", such
as being linked to improved divisional leadership. The Management Incentive Plan
further provides that each of the stated goals is assigned a stated percentage
set by the Chief Executive Officer within a stated range set by the Board. The
percentages for the Chief Executive Officer are set by the Compensation
Committee.
The Committee notes that the Management Incentive Plan provides for an
accrual of the bonus amount in the reported results of operations for the fiscal
year to which the bonus relates.
As to the stock option component of the Management Incentive Plan
adopted by the Board, the Chief Executive Officer is requested to make
recommendations as to the award to the Company's officers (other than for
himself) of stock options up to a stated maximum amount per year, subject to the
maximum grant amounts that the Board has set for each of the officer positions.
The Committee views stock options as an incentive for long term performance.
Subject to this, the Committee's approach is to consider a grant of stock
options in part in the context of the level of performance demonstrated by the
officer during the fiscal year most recently ended.
8
It is the Committee's present practice to meet following the end of each
fiscal year in order to review any bonuses payable under the eligibility levels
of the Management Incentive Plan that were set prior to the beginning of such
fiscal year, set salaries for the current fiscal year, consider the grant of
stock options, and take other action as it deems appropriate.
At its meeting following the completion of the fiscal year ended January
31, 2003, the Committee, after discussing with the Chief Executive Officer his
recommendations as to salary increases and stock option awards for the Company's
officers other than for himself, substantially accepted the Chief Executive
Officer's recommendations. The salary increases and stock option awards that the
Committee has approved are within the ranges previously approved by the Board
and are based in part upon current data supplied by an independent consulting
firm regarding executive compensation practices of other comparable companies.
The Committee provided incentive for long-term performance with an award of
stock options aggregating an amount similar in number to the prior year. The
Committee has determined to grant a bonus outside of the Management Incentive
Plan to Mr. Morgan to reflect contributions to the Company during the fiscal
year. The Committee has established a salary for and awarded stock options
within the guidelines to Mr. De Hont in order to reflect his election as the
Company's Chief Executive Officer effective March 1, 2003, and has established a
salary and awarded stock options within the guidelines and the Company's past
practices to Mr. Kacin in order to take into account his leadership of the
Company during a time of management transition and the nature of his expected
continued role in the Company.
Dr. Alan Lawley (Chairman)
Michael J. Morris
Nicholas DeBenedictis
February 24, 2003
COMPENSATION AND STOCK OPTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
No member of the Company's Compensation and Stock Option Committee is or
ever was an employee or officer of the Company or any of its subsidiaries, nor
has had any relationship with the Company the disclosure of which is required
under Item 404 of Regulation S-K promulgated by the Securities and Exchange
Commission. None of the Company's executive officers of the Company serve as
Directors or members of the compensation committee of any other "entity" (as
defined by applicable rules).
9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended January 31, 2001,
2002 and 2003, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to each of the five most
highly compensated executive officers of the Company where cash compensation
exceeded $100,000 (the "Named Executive Officers") in all capacities in which
they served.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
---------------------------------- ----------------------
Awards
------
Fiscal Other Annual | All Other
Name and Principal Year Ended Salary Bonus(a) Compensation | Options(b) Compensation (c)
Position January 31, ($) ($) ($) | (#) ($)
- ------------------ ----------- -------- -------- ------------| --------- -----------------
William L. Kacin (d) 2003 $345,000 $0 $0 | 10,000 $4,436
Chairman 2002 345,000 0 0 | 17,500 3,425
2001 330,000 142,146 0 | 15,000 1,323
|
Raymond J. De Hont (e) 2003 $185,000 $0 $0 | 15,000 $3,870
President & Chief 2002 185,000 0 0 | 7,500 3,417
Executive Officer 2001 163,375 48,000 0 | 7,500 2,250
|
Gary J. Morgan 2003 $155,000 $10,000 $0 | 7,500 $3,439
Vice President-Finance, 2002 155,000 0 0 | 6,500 3,400
Secretary, Treasurer & 2001 145,000 50,500 0 | 6,500 2,491
Chief Financial Officer |
|
William F.Mersch 2003 $133,000 $26,264 $0 | 4,200 $2,938
Vice President & General 2002 130,000 0 0 | 4,200 2,590
Manager, Stiles-Kem 2001 124,000 0 0 | 3,000 2,434
Division/Pristine |
Hydrochemical Inc. |
|
Thomas V. Edwards 2003 $114,000 $42,750 $0 | 4,200 $2,520
Vice President & General 2002 114,000 0 0 | 4,200 2,280
Manager, Systems 2001 109,000 0 0 | 3,000 2,117
Division |
(a) The amounts shown under the Bonus column represent cash bonuses awarded for
the indicated fiscal years.
(b) The number of options under the Option column represents stock options
awarded for the indicated fiscal years.
(c) The total amount shown in this column for fiscal years ended January 31,
2003, 2002, 2001 are contributions to the Company's 401(k) plan as described
on page 12. There are no other Long-Term Compensation Programs other than a
Pension Plan and Directors' Retirement Plan as discussed on pages 5, 12 and
13.
(d) Mr. Kacin served as the Company's President and Chief Executive Officer from
February 1993 until March 1, 2003.
(e) Mr. De Hont was appointed President and Chief Executive Officer effective as
of March 1, 2003. He was the Company's Chief Operating Officer from June
2000 until March 1, 2003.
10
Stock Option Plans
The Company's 1997 Stock Option Plan (the "1997 Plan") was adopted by
the Company's Board of Directors on February 24,1997 and was approved by the
stockholders on June 4, 1997. The Company's 2001 Stock Option Plan (the "2001
Plan") was adopted by the Company's Board of Directors on February 26, 2001, and
was approved by the stockholders on June 20, 2001. An aggregate of 445 options
for the Company's Common Stock are presently available for grant under the 1997
Plan, and an aggregate of 221,700 options for the Company's Common Stock are
presently available for grant under the 2001 Plan, plus an indeterminate number
of additional shares resulting from anti-dilution adjustments.
These Plans provide for the grant of options, which are intended to
satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as
well as options which are not intended to satisfy such requirements.
The following table sets forth stock options granted for the fiscal year
ended January 31, 2003 to each of the Company's executive officers named in the
Summary Compensation Table and stock options granted to all employees as a
group. The table also sets forth the hypothetical gains that would exist for the
options at the end of their ten-year terms for the executive officers named in
the Summary Compensation Table and for all employees as a group (assuming their
options had ten year terms) at assumed compound rates of stock appreciation of
5% and 10%. The actual future value of the options will depend on the market
value of the Company's Common Stock. All options exercise prices are based on
market price on the date of grant.
OPTION GRANTS
Number of Percentage of Potential Realizable Value
Securities Total Options of Assumed Annual Rates
Underlying Granted to Exercise Latest of Stock Price Appreciation
Date of Options Employees Price Expiration for Option Term (a)
Name Grant Granted in Fiscal Year $/Share Date 5% ($) 10% ($)
- ---- ----- ------- -------------- ------- ---- ------ -------
William L. Kacin 2/24/03 10,000 14.86% $13.08 2/24/13 $82,259 $208,462
Raymond J. De Hont 2/24/03 15,000 22.29% 13.08 2/24/13 123,389 312,692
Gary J. Morgan 2/24/03 7,500 11.14% 13.08 2/24/13 61,695 156,346
William F. Mersch 2/24/03 4,200 6.24% 13.08 2/24/13 34,549 87,554
Thomas V. Edwards 2/24/03 4,200 6.24% 13.08 2/24/13 34,549 87,554
All Employees as a Group 2/24/03 67,300 100.00% $13.08 2/24/13 $553,603 $1,402,949 (b)
5% 10%
-- ---
Total potential stock price appreciation from February 24, 2003 to February 24,
2013 for all stockholders at assumed rates of stock appreciation. (c) $51,135,489 $129,587,369
Potential actual realizable value of options granted to all employees, assuming
ten-year option terms, as a percentage of total potential stock price
appreciation from February 24, 2003 to February 24, 2013 for all stockholders
at assumed rates of stock price appreciation. 1.08% 1.08%
(a) These amounts, based on assumed appreciation rates of 5% and 10% prescribed
by the Securities and Exchange Commission rules, are not intended to
forecast possible future appreciation, if any, of the Company's stock price.
(b) No gain to the optionees is possible without an increase in stock price,
which will benefit all stockholders.
(c) Based on the closing price of $13.08 per share on February 24, 2003, and a
total of 6,216,369 shares of Common Stock outstanding.
11
Option Exercises and Holdings
The following table sets forth the number of shares acquired on exercise
of stock options and the aggregate gains realized on exercise in the fiscal year
ended January 31, 2003 by the Company's executive officers named in the Summary
Compensation Table. The table also sets forth the number of shares covered by
exercisable and unexercisable options held by such executives on January 31,
2003 and aggregate gains that would have been realized had these options been
exercised on January 31, 2003, even though these options were not exercised and
the unexercised options could not have been exercised on January 31, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE
Value of Unexercised
Shares Number of Unexercised In-The-Money
Acquired Options at Options at FY-End (b)
On Value FY-End (#) ($)
Exercise Realized (a) -------------------------- --------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ------------ ----------- ------------- ----------- -------------
William L. Kacin - - 50,833 6,667 $87,983 $3,467
Raymond J. De Hont - - 21,550 12,650 31,667 6,403
Gary J. Morgan - - 32,383 7,167 38,061 3,575
William F. Mersch - - 12,600 4,200 23,933 2,086
Thomas V. Edwards - - 7,200 4,200 6,488 2,086
(a) Market value on the date of exercise of shares covered by options exercised,
less option exercise price.
(b) Market value of shares covered by in-the-money options on January 31, 2003
less option exercise price. Options are in-the- money if the market value of
the shares covered thereby is greater than the option exercise price.
Termination of Employment and Change of Control Arrangements
Mr. De Hont is party to a Key Employee Severance Agreement with the
Company which provides that in the event the Company terminates his employment,
other than for cause, within eighteen months following a "change of control", or
if Mr. De Hont voluntarily terminates such employment within eighteen months
subsequent to a "change of control", the Company shall be obligated to pay him a
sum of money equal to two years' of base compensation. Payment would be made in
a lump sum upon cessation of employment or, at Mr. De Hont's option, in equal
monthly installments over a two-year period. The base annual salary currently
payable to Mr. De Hont is $240,000.
Mr. Morgan is also party to a Key Employee Severance Agreement on terms
that are identical to those to which Mr. De Hont is party, except that the
amount of compensation is equal to eighteen months of base compensation. Mr.
Morgan's base annual salary is currently $170,000.
The Directors' Plan also provides for the payment of certain benefits in
the event of a "change of control", as discussed under "Board and Committee
Participation/Compensation of Directors" elsewhere herein. In addition, as
disclosed in such section of this Proxy Statement, the Company's stock option
agreements provide for the immediate vesting of all unvested stock options upon
a "change of control".
401(k) Profit Sharing Plan
Effective April 1, 1999, the Company implemented a 401(k) Profit Sharing
Plan (the "401(k) Plan"). All employees of the Company in the United States are
eligible to participate in the 401(k) Plan following completion of one year of
service and attaining age 21. Pursuant to this 401(k) Plan, employees can
contribute up to 25% of their compensation to the 401(k) Plan. The Company will
match, in the form of Met-Pro Common Stock, up to 50% of the employee's
contribution up to 4% of compensation. During the Company's three fiscal years
ended January 31, 2003, the Company made contributions to the 401(k) Plan in the
amount of $9,184 for William L. Kacin, $9,537 for Raymond J. De Hont, $9,330 for
Gary J. Morgan, $7,962 for William F. Mersch, $6,917 for Thomas V. Edwards and
$79,125 for all executive officers as a group (12 persons).
Salaried Employee Stock Ownership Plan
Pursuant to the Company's Salaried Employee Stock Ownership Plan (the
"Ownership Plan"), the Company may make discretionary contributions to the
Company's Salaried Employee Stock Ownership Trust (the "Trust") either in cash
or in Company Common Stock. The Trust uses the cash contributions and dividends
received to purchase shares of the Company's Common Stock. All full-time
salaried employees who are at least 21 years of age and who have been employed
by the Company on a full- time basis for at least one year are eligible to
participate in the Ownership Plan. All shares acquired by the Trust are
allocated to the accounts of eligible employees based on their respective
salaries. Employees nearing retirement have discretion to diversify a portion of
their investment. There were no contributions by the Company to the Employee's
Stock Ownership Trust in fiscal years ended in 2003, 2002 and 2001.
12
Pension Plans
The Salaried Pension Plan (the "Retirement Plan") is a funded,
tax-qualified noncontributory defined benefit pension plan that covers certain
employees, including the Named Executive Officers. Benefits under our Retirement
Plan are calculated as an annuity of one percent of the participant's final
average earnings for the five highest consecutive years of the last ten years
multiplied by year of service. Earnings covered by the Retirement Plan include
annual salary and cash bonus paid pursuant to the Company's Management Incentive
Plan. The amount of annual earnings that may be considered in calculating
benefits under the Retirement Plan is limited by law. For 2003, the annual
limitation is $200,000.
Effective February 1, 2000, the Board of Directors adopted a Pension
Restoration Plan for Messrs. Kacin and Morgan. Mr. De Hont was added to the
Pension Restoration Plan effective February 1, 2001. The Pension Restoration
Plan is an unfunded supplemental plan that provides out of our general assets an
amount substantially equal to the difference between the amount that would have
been payable under the Retirement Plan, in the absence of legislation limiting
pension benefits and earnings that may be considered in calculating pension
benefits, and the amount actually payable under the Retirement Plan.
The following table shows the estimated annual Retirement Plan and
Pension Restoration Plan benefits on a straight life (no death benefit) basis
payable for various earnings levels upon retirement at age 65, after 15, 20, 25,
30 and 35 years of credited service to the Company:
Years of Service
----------------------------------------------------------------------------
Five Year Average Earnings 15 20 25 30 35
-------------------------- -- -- -- -- --
$100,000 $15,000 $20,000 $25,000 $30,000 $35,000
125,000 18,750 25,000 31,250 37,500 43,750
150,000 22,500 30,000 37,500 45,000 52,500
170,000 25,500 34,000 42,500 51,000 59,500
175,000 26,250 35,000 43,750 52,500 61,250
200,000 (a) 30,000 40,000 50,000 60,000 70,000
225,000 33,750 45,000 56,250 67,500 78,750
250,000 37,500 50,000 62,500 75,000 87,500
300,000 45,000 60,000 75,000 90,000 105,000
350,000 52,500 70,000 87,500 105,000 122,500
400,000 60,000 80,000 100,000 120,000 140,000
450,000 67,500 90,000 112,500 135,000 157,500
500,000 75,000 100,000 125,000 150,000 175,000
(a) Internal Revenue Code Section 401(a)(17) limits earnings used to calculate
Retirement Plan benefits totaled $200,000 for 2001 and 2002, respectively.
As of January 31, 2003, Messrs. Kacin, De Hont and Morgan had accrued
26, 7 and 22 years service under the Retirement Plan and the related Pension
Restoration Plan. Messrs. Mersch and Edwards each had accrued 7 years of service
under the Retirement Plan for this same period.
In 2000, the Company established a Supplemental Executive Retirement
Plan ("SERP") for Mr. Kacin. This Plan, which is a non-qualified and unfunded
plan, was approved by the Board of Directors and is intended to provide Mr.
Kacin with a total retirement benefit, in combination with the Retirement Plan,
Pension Restoration Plan and Directors Retirement Pension Plan, that is
commensurate with the retirement benefits for the Chief Executive Officers of
other comparable companies. Under the terms of the SERP, Mr. Kacin will be
eligible to receive benefits under the SERP at normal retirement equal to the
difference between (i) the monthly benefit that would be payable under the
Retirement Plan, except that the amount shall be determined without regard to
the ERISA limitations and the one percent benefit in the Retirement Plan will be
replaced with a two percent benefit and (ii) the benefits payable to Mr. Kacin
under the Retirement Plan, Pension Restoration Plan, Directors Pension Plan and
Social Security retirement benefit.
Certain Business Relationships
The Company utilized the services of the law firm of Fox Rothschild LLP,
during the fiscal year ended January 31, 2003. Jeffrey H. Nicholas, a Director
of the Company, is a partner in that law firm.
13
STOCK PERFORMANCE GRAPH
The total return on investment assumes $100 invested at the beginning of
the period in (i) the Common Stock of the Company, (ii) the Peer Group and (iii)
the Russell 2000 Index. Total return assumes reinvestment of dividends.
Historical stock price performance is not necessarily indicative of future price
performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Met-Pro Corporation, Peer Group Index
and
Russell 2000 Index
$160 o Met-Pro Corporation
- Peer Group
* Russell 2000
$140
-
$120
* *
*
- -
$100 o-* o
*
o *
- o
$80
o
-
o
$60 ---------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
- --------------------------------------------------------------------------------
Met-Pro Corporation $100.00 $76.10 $68.77 $83.31 $97.91 $103.38
Peer Group Index 100.00 72.24 91.42 106.86 132.41 105.19
Russell 2000 Index 100.00 99.34 115.39 118.20 112.33 86.53
- --------------------------------------------------------------------------------
(a) The Peer Group is made up of the following securities: BHA Group Holding
Inc.; Crown Andersen Inc.; Cuno Inc.; Flanders Corporation; Flowserve
Corporation; Gorman-Rupp Company; Idex Corporation; Ionics Inc.; Met-Pro
Corporation; Osmonics Inc.; Peerless Manufacturing; Robbins & Myers Inc.;
Roper Industries Inc.; and Waterlink Inc. Flanders Corporation, Cuno Inc.
and Waterlink Inc. started public trading in February 1996, September 1996
and June 1997, respectively.
14
PROPOSAL NO. 2
APPROVAL OF THE CHANGE IN THE COMPANY'S STATE OF INCORPORATION
FROM DELAWARE TO PENNSYLVANIA
At the Annual Meeting, you will be asked to vote upon a proposal to
change the Company's state of incorporation from Delaware to Pennsylvania. This
is commonly called a "reincorporation".
The principal reason for reincorporating the Company in Pennsylvania is
to eliminate the Company's annual liability under the Delaware franchise tax,
which amounted to $31,600 for the twelve-month period ended January 31, 2003. A
secondary consideration is the Board's belief that the differences in
stockholder rights and the powers of management under Pennsylvania and Delaware
law provide desirable flexibility in the management of the Company and enhance
the Board's ability to pursue the long-term interests of the stockholders of the
Company and the other constituencies served by the Company.
At one time, the Delaware General Corporation Law (the "Delaware GCL")
was generally viewed as being more modern and less restrictive than the
corporation laws of Pennsylvania. However, the Company believes that many of the
differences between the Delaware and Pennsylvania corporation laws were
eliminated several years ago when Pennsylvania adopted sweeping changes in the
Pennsylvania Business Corporation law (the "Pennsylvania BCL") that afforded
Pennsylvania corporations significant operating flexibility.
As a result of the large number of corporations incorporated in
Delaware, the Delaware courts have developed a considerable expertise in dealing
with corporate issues and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations. The Board of Directors believes, however, that the tax
savings and other advantages of reincorporating in Pennsylvania outweigh these
benefits of being incorporated in Delaware.
If approved, this reincorporation will be accomplished by merging the
Company into a wholly-owned Pennsylvania subsidiary that was recently formed by
the Company solely for the purpose of effecting the reincorporation, referred to
as the "merger". The Company as currently incorporated in Delaware will
sometimes be referred to as "Met-Pro Delaware", and the Company as
reincorporated in Pennsylvania will be referred to as "Met-Pro Pennsylvania".
THE REINCORPORATION WILL NOT RESULT IN ANY CHANGE IN THE NAME, BUSINESS,
MANAGEMENT, BENEFIT PLANS, LOCATION, ASSETS, LIABILITIES, NET WORTH, CAPITAL
STRUCTURE OR NUMBER OF PRESENTLY ISSUED AND OUTSTANDING SHARES OF THE COMPANY.
On the effective date of the merger, each outstanding share of common
stock of Met-Pro Delaware will automatically be converted into one share of
common stock of Met-Pro Pennsylvania, and stockholders of Met-Pro Delaware will
become shareholders of Met-Pro Pennsylvania. IT WILL NOT BE NECESSARY FOR
STOCKHOLDERS OF THE COMPANY TO EXCHANGE THEIR EXISTING CERTIFICATES FOR NEW
CERTIFICATES REPRESENTING COMMON SHARES OF MET-PRO PENNSYLVANIA. Certificates
that previously represented Company common stock will be replaced by
certificates representing common shares of Met-Pro Pennsylvania only when
submitted to the transfer agent for transfer or with a request that they be
replaced. Upon completion of the merger, certificates for shares in Met-Pro
Delaware will automatically represent an equal number of common shares of
Met-Pro Pennsylvania.
The merger will be effected pursuant to the terms and conditions of an
Agreement and Plan of Merger, which is referred to as the "merger agreement", a
copy of which is included as Appendix B to this proxy statement.
The reincorporation will effect certain changes in your rights as a
shareholder primarily as a result of (i) differences between the Articles of
Incorporation (the "Pennsylvania Articles") and Bylaws (the "Pennsylvania
Bylaws") of Met-Pro Pennsylvania and the Restated Certificate of Incorporation,
as amended (the "Delaware Certificate") and Bylaws as amended (the "Delaware
Bylaws") of the Company, (ii) differences between the Pennsylvania BCL and the
Delaware GCL and (iii) as a result of other differences referred to herein.
Copies of the Pennsylvania Articles and the Pennsylvania Bylaws are
included as Appendices C and D to this proxy statement. Copies of the Delaware
Certificate and Delaware Bylaws as currently in effect are available for
inspection at the headquarters of the Company and will be sent to stockholders
without cost upon request. The Delaware GCL refers to "stockholder" whereas the
Pennsylvania BCL uses the term "shareholder". The term shareholder is used
throughout the discussion below because "stockholder" and "shareholder" have the
same meaning under those statutes.
The merger agreement was approved by unanimous vote of the Board of
Directors of the Company at its meeting on April 2, 2003. Under Delaware law and
the Delaware Certificate, consummation of the merger will require that the
merger agreement be adopted by the affirmative vote of the holders of record of
a majority of the outstanding shares of common stock of the Company. The merger
and reincorporation will be effected as soon as practicable after the merger
agreement has been approved by the shareholders. The merger and reincorporation
may be abandoned or the merger agreement may be amended, either before or after
shareholder approval, if, in the opinion of the Board of Directors,
circumstances arise that make it inadvisable to proceed. However, after
shareholder approval, the principal terms of the merger may not be amended
without further shareholder approval. If the merger agreement is not approved by
the shareholders, the merger and reincorporation will not be consummated and the
Company will remain a Delaware corporation.
15
COMPARATIVE RIGHTS OF SHAREHOLDERS BEFORE AND AFTER THE REINCORPORATION
General
In general, the rights of shareholders of Pennsylvania and Delaware
business corporations are governed by and subject to the provisions of the
Pennsylvania BCL and the Delaware GCL, respectively. If the reincorporation
proposal is adopted, the rights of shareholders will be governed by and subject
to the provisions of the Pennsylvania BCL rather than the Delaware GCL and also
will be governed by the Pennsylvania Articles and Pennsylvania Bylaws rather
than the provisions of the Delaware Certificate and Delaware Bylaws. A summary
of the material differences in the rights of shareholders before and after the
reincorporation follows. Although the summary below discusses the Pennsylvania
Articles, the Pennsylvania Bylaws, the Delaware Certificate, the Delaware
Bylaws, the Pennsylvania BCL and the Delaware GCL, this discussion contains
neither an exhaustive description of all differences between the Pennsylvania
Articles and Pennsylvania Bylaws and the Delaware Certificate and Delaware
Bylaws nor an exhaustive description of the differences between the laws of the
two states, and is qualified by the actual terms of those documents and laws.
Fundamental Corporate Transactions; Amendments to Charter
The Delaware Certificate provides that if a majority of the entire Board
of Directors of the Company has approved certain fundamental transactions such
as a merger or sale of substantially all of the assets, the approval of the
holders of a majority of the outstanding shares entitled to vote on the matter
is needed to approve the transaction. If, however, a majority of the entire
Board of Directors has not approved the transaction, then the Delaware
Certificate requires the approval of the holders of at least 80% of the
outstanding shares to approve the transaction. The Delaware Certificate also
requires approval by the holders of at least 80% of the outstanding shares of a
transaction involving the purchase of stock or assets of another corporation in
exchange for shares of the Company's stock, unless a majority of the entire
Board of Directors has approved the transaction. The Pennsylvania Articles are
similar to the Delaware Certificate in respect of the foregoing.
Amendments to the Delaware Certificate, other than an amendment that
changes the percentage of votes required for shareholder approval of a given
item, requires the approval of a majority of the outstanding shares entitled to
vote on the matter. Amendments to the Delaware Certificate to amend the
percentage of votes required for shareholder approval of a given item require
the approval of a majority of the outstanding shares entitled to vote on the
matter unless a majority of the entire Board of Directors has not approved of
the amendment, in which case the amendment requires the approval of at least 80%
of the shareholders. The Pennsylvania Articles are similar in this respect.
The Pennsylvania Articles also provide that such 80% approval is
required in order to amend the Pennsylvania Articles with respect to (a) the
provisions of Article 6 eliminating cumulative voting otherwise provided under
Pennsylvania law (similarly, there is no cumulative voting under the Delaware
Certificate); (b) the provisions of Article 7 relating to right of the Board of
Directors to adopt, amend, and repeal the Bylaws and the requirements for
shareholder amendments to the Bylaws (see "Amendments to Bylaws" below); (c) the
provisions of Article 8 relating to the lack of the right of shareholders to
take action by written consent (see "Shareholder Action by Partial Written
Consent" below) and the lack of the right of shareholders to call a special
meeting of shareholders; (d) the provisions of Article 9 as to the number of
directors and the filling of vacancies on the Board as well as the provision for
a classified Board of Directors (similarly, the Delaware Certificate provides
for a classified Board of Directors); and (e) amending the foregoing provisions.
Notwithstanding the foregoing, in the event that a majority of the Board of
Directors approves such an amendment, or an amendment to the percentage of votes
required for approval of a given item, the Pennsylvania Articles may be amended
by the affirmative vote of a majority of the votes actually cast by all
shareholders then entitled to vote, as is the case with respect to amendments to
the remaining provisions of the Pennsylvania Articles. The Pennsylvania BCL does
not require shareholder approval of certain non-material amendments to the
articles of incorporation, such as changing the corporate name or increasing the
number of authorized shares to effectuate a stock dividend where the corporation
has only one class of shares outstanding.
Amendments to Bylaws
The Delaware GCL and the Delaware Certificate permit the Board of
Directors to alter or repeal the Delaware Bylaws. The Delaware Certificate and
the Delaware Bylaws permit the shareholders to amend the Delaware Bylaws only
upon the affirmative vote of the holders of not less than 80% of the outstanding
shares entitled to vote at a meeting at which such matter is considered. Under
the Pennsylvania BCL, the power of the Board of Directors to adopt or amend
by-law provisions on certain specified subjects is limited unless the power to
adopt or amend these bylaw provisions is granted to the Board in the articles of
incorporation. The Pennsylvania Articles grant this power to amend the
Pennsylvania Bylaws to the Board of Directors. As is the case before the merger,
shareholders may amend the Pennsylvania Bylaws by the affirmative vote of at
least 80% of the votes that all shareholders are entitled to cast on the matter.
Removal of Directors
The Delaware Bylaws provide that a director may be removed at any time
"without cause" by an affirmative vote of at least 80% of the outstanding shares
entitled to vote at a duly convened regular or special meeting of the
shareholders. The Pennsylvania Bylaws provide for the same "without cause"
removal, but in addition provide that a director may be removed at any time "for
cause" by an affirmative vote of a majority of the outstanding shares entitled
to vote at a duly convened regular or special meeting of the shareholders.
16
Shareholder Action by Partial Written Consent
Under the Pennsylvania BCL, if permitted by the Bylaws, any action
required or permitted to be taken at a meeting of shareholders may be taken
without a meeting upon the consent of shareholders who would have been entitled
to cast the minimum number of votes that would be necessary to authorize the
action at a meeting at which all shareholders entitled to vote were present and
voting. The Delaware GCL is similar, except that the restriction of such right
must appear in the certificate of incorporation. The Delaware Certificate does
not restrict the right of shareholders of the Company to take action by partial
written consent. Under the Pennsylvania Articles and the Pennsylvania Bylaws, no
action that is required or permitted to be taken by shareholders at an annual or
special meeting may be taken by consent of the shareholders in lieu of a meeting
of shareholders.
Shareholders Meetings
Pennsylvania law provides that in the event that an annual meeting for
election of directors is not called and held within six months after the date
designated in a Pennsylvania corporation's bylaws, any shareholder may call the
meeting at any time thereafter. Also, Pennsylvania law provides that special
meetings of shareholders may be called by the Board of Directors and the
officers or other persons as may be provided in the Pennsylvania corporation's
bylaws. The Pennsylvania BCL does not permit the shareholders of a registered
corporation to call a special meeting of shareholders, and the Pennsylvania
Articles expressly provide that a special meeting of shareholders may be called
only by the Board of Directors acting pursuant to the Pennsylvania corporation's
bylaws or the Chairman of the Board.
Under Delaware law, if the annual meeting for the election of directors
is not held within 30 days after the date provided in a Delaware corporation's
bylaws, or if no date has been designated for a period of 13 months after the
organization of the corporation or after its last annual meeting, the Court of
Chancery may summarily order a meeting to be held upon the request of any
shareholder or director. Also, Delaware law provides that special meetings of
shareholders may be called by the Board of Directors or by such persons as may
be authorized by the certificate of incorporation or bylaws. The Delaware Bylaws
provide that special meetings of the shareholders may be called by the President
or Secretary at the request of the Board of Directors or at the request of
stockholders owning a majority of issued and outstanding stock. The Pennsylvania
Bylaws provide that special meetings of the shareholders may be called only by
the Board of Directors or the Chairman of the Board. Both Pennsylvania law and
the Delaware Certificate prohibit shareholders from calling a special meeting.
Appraisal or Dissenters Rights
The rights of shareholders to demand payment in cash by a corporation of
the fair value of their shares in the event of certain fundamental corporate
transactions are called dissenters rights in Pennsylvania and appraisal rights
in Delaware. Under the Pennsylvania BCL, dissenters rights are generally
afforded to shareholders in the event of corporate actions such as mergers,
share exchanges, transfers of all or substantially all of the assets of the
corporation and certain other fundamental transactions in which the corporation
is not the acquiring corporation. Under the Delaware GCL, stockholders generally
have appraisal rights in the event of a merger but not in the event of the sale
of all or substantially all of the assets of the corporation.
Under both Pennsylvania and Delaware law, certain corporations whose
securities are broadly held or market traded are not required to provide
dissenters or appraisal rights. The Pennsylvania BCL does not provide dissenters
rights to holders of shares that are listed on a national securities exchange
such as the New York Stock Exchange, as are the Company's shares, when a plan of
merger converts the shares into shares of the acquiring, surviving, new or other
corporation (whether or not the shares of the acquiring, surviving, new or other
corporation are listed on an exchange or privately held). The Delaware GCL does
not afford appraisal rights to holders of shares that are listed on a national
securities exchange such as the New York Stock Exchange when a plan of merger
converts such shares into stock of the surviving corporation or stock of another
corporation that is listed on a national securities exchange, quoted on the
Nasdaq National Market System or held of record by more than 2,000 shareholders.
Dividends
Under Pennsylvania law, a corporation has the power, subject to
restrictions in its bylaws, to pay dividends or make other distributions to its
shareholders, unless after giving effect to the dividends (i) the corporation
would not be able to pay its debts as they become due in the usual course of
business or (ii) the corporation's total assets would be less than the sum of
its total liabilities plus (unless otherwise provided in its articles of
incorporation) the amount that would be needed upon the dissolution of the
corporation to satisfy the preferential rights, if any, of shareholders having
superior preferential rights to the shareholders receiving the distribution. The
Pennsylvania Bylaws do not limit the power to make distributions to
shareholders.
Under Delaware law, directors may, subject to any restrictions in the
corporation's certificate of incorporation, declare and pay dividends either (i)
out of its surplus or (ii) in case there is no surplus, out of the net profits
for the fiscal year in which the dividend is declared and/or the preceding
fiscal year. The directors of a Delaware corporation may not declare a dividend
out of net profits, however, if the capital of the corporation is less than the
aggregate amount of capital represented by the issued and outstanding stock of
all classes having a preference upon the distribution of assets. The Delaware
Certificate does not restrict the payment of dividends.
17
Fiduciary Duty of Directors
Both Pennsylvania and Delaware law provide that the Board of Directors
has the ultimate responsibility for managing the business and affairs of a
corporation. In discharging this function, directors of Pennsylvania and
Delaware corporations owe fiduciary duties of care and loyalty to the
corporations for which they serve as directors. Directors of Delaware
corporations also owe fiduciary duties of care and loyalty to the corporation's
shareholders.
Under Pennsylvania law, a director of a Pennsylvania business
corporation stands in a fiduciary relationship to the corporation and must
perform his or her duties as a director in good faith, in a manner he or she
reasonably believes to be in the best interests of the corporation and with such
care, including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. In performing these duties, the
director is entitled to rely, in good faith, on information, opinions, reports
or statements, including financial statements and other financial data, in each
case prepared by any of the following: (i) one or more officers or employees
whom the director reasonably believes to be reliable and competent in the
matters presented; (ii) counsel, public accountants or other persons as to
matters which the director reasonably believes to be within the professional
competence of these persons; and (iii) a committee of the Board upon which the
director does not serve, duly designated in accordance with law, as to matters
within its designated authority, which committee the director reasonably
believes to merit confidence. A director will not be considered to be acting in
good faith if the director has knowledge concerning the matter in question that
would cause his or her reliance to be unwarranted.
Under Delaware law, Delaware courts have held that the directors of a
Delaware corporation are required to exercise an informed business judgment in
the performance of their duties. An informed business judgment means that the
directors have informed themselves of all material information reasonably
available to them. Delaware courts have also imposed a heightened standard of
conduct upon directors in matters involving a contest for control of the
corporation. A director of a Delaware corporation, in the performance of his or
her duties, is fully protected in relying, in good faith, upon the records of
the corporation and upon such information, opinions, reports or statements
presented to the corporation by any of the corporation's officers or employees,
or committees of the Board, or by any other person as to matters the director
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
corporation.
The Pennsylvania BCL provides that, in discharging the duties of their
respective positions, the Board of Directors, committees of the Board and
individual directors may, in considering the best interests of the corporation,
consider the effects of any action upon other constituencies, including
employees, suppliers and customers of the corporation and communities in which
offices or other establishments of the corporation are located and all other
pertinent factors. Absent a breach of a fiduciary duty, lack of good faith or
self-dealing, actions taken as a director are presumed to be in the best
interests of the corporation. In contrast, the Delaware GCL does not contain any
statutory provision permitting the Board of Directors, committees of the Board
and individual directors, when discharging the duties of their respective
positions, to consider the interests of any constituencies other than the
corporation or its shareholders.
It is unclear under the current state of development of Delaware law
whether and the extent to which the Board of Directors, committees of the Board
and individual directors may, in considering what is in the corporation's best
interests or the effects of any action on the corporation, take into account the
interests of any constituency other than the shareholders of the corporation.
Consequently, the fiduciary duty provisions of the Pennsylvania BCL may provide
significantly broader discretion, and increased protection from liability, to
directors in exercising their fiduciary duties, particularly in the context of a
threatened change in control.
Limitation of Director Liability
Both the Delaware Certificate and the Pennsylvania Articles contain
similar provisions that limit the monetary liability of directors. As a result
of the provision contained in the Pennsylvania Articles, as permitted by
Pennsylvania law, a director of Met-Pro Pennsylvania will not be personally
liable for monetary damages for any action taken, or any failure to take any
action, unless the director has breached or failed to perform the duties of his
or her office and the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness. Such limitation does not apply to the
responsibility or liability of a director pursuant to any criminal statute or
the liability of a director for the payment of taxes.
Under Delaware law and the provision set forth in the Delaware
Certificate, a director is excused from monetary liability for breach of
fiduciary duty as a director unless the liability is for breach of the duty of
loyalty, for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, for a willful or negligent payment of
an unlawful dividend or unlawful stock purchase or redemption, or for any
transaction from which the director derived an improper personal benefit.
Indemnification of Officers and Directors
Both Pennsylvania and Delaware law permit a corporation to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement reasonably incurred by them in connection with any pending,
threatened or completed action or proceeding to which they were or are parties
or were threatened to be made parties by reason of the fact that they are or
were directors or officers of the corporation. Both states' laws also permit
indemnification against expenses reasonably incurred in connection with any
pending, threatened or completed derivative action, if the director or officer
has acted in good faith and in a manner the director reasonably believed to be
in or not opposed to the best interests of the corporation and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. Under both states' laws, court approval is required with respect
18
to any payment made with respect to a derivative action. Furthermore, both the
Pennsylvania BCL and the Delaware GCL provide that expenses incurred in
defending any action or proceeding may be paid by the corporation in advance of
the final disposition upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that the
director or officer is not entitled to be indemnified by the corporation.
In both Pennsylvania and Delaware, the statutory provisions for
indemnification and advancement of expenses are non-exclusive of any other
rights, such as rights under contract, a bylaw or by vote of shareholders or
disinterested directors, to which a person seeking indemnification or
advancement of expenses may be entitled. Both the Delaware Certificate and the
Pennsylvania Articles require indemnification of directors and officers to the
fullest extent permitted by the laws of the respective state. With respect to
the Pennsylvania Articles, these boundaries would be dictated by the
Pennsylvania BCL, which provides for indemnification of a director or officer
unless the conduct of the director or officer is determined by a court to
constitute willful misconduct or recklessness. The Delaware GCL does not contain
such an express restriction on indemnification, although the Delaware courts
have held that indemnification cannot be given with respect to willful and
intentional misconduct.
The directors and officers of Met-Pro Pennsylvania would be entitled to
the benefits of the indemnification provisions set forth in the Pennsylvania
Articles. Because these persons have a financial interest in these arrangements,
the adoption of these provisions could be deemed an interested transaction under
the Pennsylvania BCL. The Pennsylvania BCL provides that an interested
transaction will not be void or voidable if the material facts as to the
interest and the transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the transaction is specifically approved in good
faith by vote of the shareholders. The text of the Pennsylvania Articles,
providing for indemnification of its directors and officers, is set forth in
Appendix C. The adoption of the Pennsylvania Articles will not be subject to
challenge as an interested transaction if shareholder approval of the merger is
obtained. In addition, shareholder approval will deny a shareholder or third
party the right to challenge the validity or enforceability of these provisions
on other grounds. The indemnification provisions of the Pennsylvania Articles
have not been adopted in response to any recent, pending or threatened
litigation.
Derivative Suits
Under Pennsylvania law, a shareholder may maintain a derivative suit
even if the shareholder was not a shareholder at the time of the alleged
wrongdoing if a court determines that a preliminary showing has been made that
there is a strong prima facie case in favor of the claim and that serious
injustice would result without such suit. In contrast, Delaware law provides
that a shareholder may bring a derivative suit only if he or she was a
shareholder at the time of the alleged wrongdoing or obtained the stock
thereafter by operation of law.
Rights Plan and Anti-takeover Laws
Pennsylvania statutory law explicitly approves shareholders' rights
plans (also known as "poison pills") such as the Company's Stockholders' Rights
Plan adopted in January 2000 (the "Rights Plan"), but specific rights plans will
probably still be subject to evaluation on a case-by-case basis. In Delaware,
stockholders' rights plans have been sanctioned by court decisions. In that
regard, differences between Delaware and Pennsylvania's court systems and legal
precedents may affect the outcome of any legal challenge to the Rights Plan. The
Rights Plan was written to meet the standards established in Delaware law, and
if the merger is approved, the Company may revise its Rights Plan if it
determines that Pennsylvania standards are materially different than Delaware's.
Although the reincorporation is not proposed as a means by which to increase the
anti-takeover defenses available to the Company, the Company's ability to defend
against an unwanted takeover of the Company are likely to be strengthened by the
reincorporation. The reincorporation is not proposed in connection with any
specific event or expression of interest in or threat to seek control of the
Company.
Both Delaware and Pennsylvania have adopted a "business combination"
type of takeover statute. Business combination statutes generally prohibit a
target corporation from engaging in any "business combination" with an
"interested stockholder" of the target corporation for a set period of time
following the date on which the interested stockholder became such. An
interested stockholder is typically defined as the direct or indirect beneficial
owner of a specified percentage of the target corporation's outstanding shares.
Section 203 of the Delaware GCL provides that a person who acquires 15%
or more of the outstanding voting stock of a Delaware corporation becomes an
"interested stockholder", and the corporation may not effect mergers or certain
other "business combinations" with the interested stockholder for a period of
three years, unless (i) prior to such date, the Board of Directors approved
either the business combination or the transaction that resulted in the
stockholder's becoming an interested stockholder; or (ii) upon becoming an
interested stockholder, the stockholder then owned at least 85% of the voting
stock, as defined in Section 203; or (iii) subsequent to such date, the business
combination is approved by both the Board of Directors and by at least 66-2/3%
of the corporation's outstanding voting stock, excluding shares owned by the
interested shareholder. For these purposes, the term "business combination"
includes mergers, asset sales and other similar transactions with an interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or, within the prior three years, did own) 15%
or more of the corporation's voting stock.
Pennsylvania law provides a registered corporation the option, under
certain circumstances, to avail itself of certain statutory anti-takeover
measures set forth in the Pennsylvania BCL. In general but with certain
exceptions, a registered corporation must "opt out" of these provisions by way
of a provision in its articles of incorporation, or by way of an amendment to
its articles of incorporation approved by the shareholders. The following is a
list of the principal optional anti-takeover provisions that are provided in the
Pennsylvania BCL for Pennsylvania registered corporations:
19
- Section 1715, which expressly states that the fiduciary duty of
directors does not require them to redeem any rights under or render
inapplicable any shareholder rights plan or certain of the anti-takeover
provisions of the Pennsylvania BCL;
- Section 2538, which relates to shareholder approval of transactions
between a corporation and an "interested shareholder";
- Subchapter 25E, which, with certain exceptions, entitles the
shareholders to be paid the fair value of their shares by anyone who
acquires 20% or more of the outstanding voting power of the corporation;
- Subchapter 25F, which imposes certain financial requirements and
restrictions on business combinations with interested shareholders;
- Subchapter 25G, which, with certain exceptions, limits the voting
rights of persons who have acquired 20% or more of the outstanding
voting power of the corporation;
- Subchapter 25H, which requires disgorgement of certain profits made by
controlling shareholders following their attempts to gain control of the
corporation;
- Subchapter 25I, relating to severance compensation for employees
terminated following certain control-share acquisitions; and
- Subchapter 25J, relating generally to labor contracts.
The Pennsylvania BCL and the Pennsylvania Articles contain provisions
pursuant to which Met-Pro Pennsylvania has elected not to be governed by the
provisions of Section 2538 or Subchapters 25E, 25G, 25I and 25J of the BCL.
Following the merger, the provisions of Section 1715 and Subchapters 25F and 25H
of the BCL will apply to the Company. These provisions are described in more
detail below.
Section 1715
Section 1715 of the Pennsylvania BCL permits the board of directors, in
considering the best interests of the corporation, to consider to the extent
they deem appropriate the effects of any action upon any or all groups affected
by such action, including shareholders, employees, suppliers, customers and
creditors of the corporation, and upon communities in which offices or other
establishments of the corporation are located. Section 1715 of Pennsylvania's
BCL authorizes the directors to consider the short-term and long-term interests
of the corporation and the potential benefit of these interests to the continued
independence of the corporation. In taking action, the directors may also
consider the resources, intent and conduct (past, stated and potential) of any
person seeking to acquire control of the corporation. Section 1715 of the
Pennsylvania BCL further provides that the board of directors shall not be
required, in considering the best interests of the corporation or the effects of
any action, to regard any corporate interest or the interests of any particular
group affected by such action as a dominant or controlling interest or factor.
Under Section 1715, directors are not required to redeem any rights
under a shareholder rights plan or to act as the board solely because of the
effect such action might have on a potential or proposed acquisition of control
of a corporation. Directors are not required to act under Pennsylvania's BCL
solely because of the consideration that might be offered or paid to
shareholders in such an acquisition.
Section 1715 codifies the presumption that is reflected in the "business
judgment rule" that absent breach of fiduciary duty, lack of good faith or self
dealing, any act as the Board of Directors, a committee or any individual
director shall be presumed to be in the best interests of the corporation. In
assessing whether a director has discharged his duties with the applicable
standard of care, the Pennsylvania BCL protects the actions of a majority board
of disinterested directors in resisting unsolicited takeovers by retaining the
ordinary business judgment rule with respect to the adoption of defensive
measures.
Subchapter 25F--Shareholder Approval of Certain Business Combinations
The Pennsylvania BCL contains certain provisions designed to make
certain kinds of "unfriendly" corporate takeovers, or other transactions
involving a corporation and one or more of its significant stockholders, more
difficult. Under Subchapter F of Chapter 25 of the Pennsylvania BCL ("Subchapter
25F"), certain "business combinations" by Pennsylvania corporations with
"interested shareholders" are subject to a five-year moratorium unless specified
conditions are met. Section 203 of the Delaware GCL provides a similar provision
to Subchapter 25F. The Pennsylvania Articles do not opt out of Subchapter 25F,
and accordingly, following the effective date of the merger, Subchapter 25F will
apply to the Company.
Subchapter 25F prohibits a Pennsylvania corporation from engaging in a
"business combination" with an "interested shareholder" for five years following
the date that such person becomes an interested shareholder. With certain
exceptions, an interested shareholder is a person or group who or which owns 20%
or more of the corporation's outstanding voting stock (including any rights to
acquire stock pursuant to an option, warrant, agreement, arrangement or
understanding, or upon the exercise of conversion or exchange rights, and stock
with respect to which the person has voting rights only), or is an affiliate or
associate of the corporation and was the owner of 20% or more of such voting
stock at any time within the previous five years.
20
For purposes of Subchapter 25F, the term "business combination" is
defined broadly to include mergers with or caused by the interested shareholder;
sales or other dispositions to the interested shareholder of assets of the
corporation or a subsidiary equal to 10% or more of the aggregate market value
of the corporation's consolidated assets or its outstanding stock or
representing 10% or more of its earning power or net income; the issuance or
transfer by the corporation or a subsidiary of stock of the corporation or such
subsidiary to the interested shareholder equal to 5% or more of the aggregate
market value of the corporation's outstanding stock (except for transfers in a
conversion or exchange or a pro rata distribution or certain other transactions,
none of which increase the interested shareholder's proportionate ownership of
any class or series of the corporation's or such subsidiary's stock); the
adoption of any plan for the liquidation or dissolution of the corporation
proposed by or with the interested shareholder; or receipt by the interested
shareholder (except proportionately as a shareholder), directly or indirectly,
of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation or a subsidiary.
The five-year moratorium imposed on business combinations by Subchapter
25F does not apply if: (i) prior to the date on which a shareholder becomes an
interested shareholder the Board of Directors approves either the business
combination or the transaction that resulted in the person becoming an
interested shareholder; (ii) the business combination is approved by the holders
of a majority of the outstanding voting stock (excluding the voting stock owned
by the interested shareholder) and at the time of such vote the interested
shareholder owns 80% of the corporation's voting stock; or (iii) the business
combination is approved by (A) the holders of all of the outstanding voting
stock or (B) the holders of a majority of the outstanding voting stock
(excluding the voting stock owned by the interested shareholder) no earlier than
five years after the date such person became an interested shareholder.
A Pennsylvania corporation may elect not to be governed by Subchapter
25F by a provision in its original articles of incorporation or an amendment to
the articles or the Pennsylvania corporation's bylaws, which amendment must be
approved by a majority of the outstanding voting stock and may not be further
amended by at least 85% of the members of the Board of Directors.
Subchapter 25H--Anti-Greenmail Provisions
Subchapter H of Chapter 25 of the Pennsylvania BCL ("Subchapter 25H")
applies in the event that (i) any person or group publicly discloses that the
person or group may acquire control of the corporation or (ii) a person or group
acquires (or publicly discloses an offer or intent to acquire) 20% or more of
the voting power of the corporation and, in either case, sells shares within 18
months thereafter. Any profits from sales of equity securities of the
corporation by the person or group during such 18 month period belong to the
corporation if the securities that were sold were acquired during the 18 month
period or within 24 months prior thereto. The Pennsylvania Articles do not opt
out of Subchapter 25H, and accordingly, following the effective date of the
merger, Subchapter 25H will apply to the Company.
The purpose of Subchapter 25H is to deter so-called "raiders" who do not
genuinely seek control of the corporation but merely wish to put it "in play,"
which is typically followed by an increase in the market price, so that they can
then either exact "greenmail" from the corporation by selling their stock to it
or sell their stock in the open market, in either case at a substantial premium.
There are two separate sets of circumstances that may result in the
characterization of someone as a "controlling person" (or group) under
Subchapter 25H. The first is the actual acquisition of, the offer to acquire, or
the public disclosure of an interest to acquire, 20 percent of the voting power
of the corporation. The second is any public disclosure that a person may seek
to acquire control of the corporation.
There is a specific safe harbor provision to the effect that the
disgorgement provisions will not apply to proxy contests so long as they are not
used to put the corporation in play or in an attempt to acquire control.
Subchapter 25H does not apply to traditional proxy contests, including the
routine election of directors or corporate governance matters.
Certain transfers (either the acquisition or disposition) of equity
securities are exempt from the disgorgement provisions. The disgorgement
provisions do not apply to certain specifically identified acquisitions or
dispositions of stock so long as they have been approved by the directors and
ratified by shareholders. The dispositions must also have been made by a
controlling person or group that is "in control of the corporation". Only the
corporation or any shareholder in a derivative action may enforce the obligation
to disgorge the profits realized by the controlling person.
Federal Income Tax Consequences of the Reincorporation
The reincorporation provided for in the merger agreement is intended to
be a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Provided the reincorporation qualifies as a reorganization, no gain or
loss will be recognized to the holders of capital stock of the Company as a
result of consummation of the reincorporation, and no gain or loss will be
recognized by Met-Pro Delaware or Met-Pro Pennsylvania. Each former holder of
capital stock of the Company will have the same basis in the capital stock of
Met-Pro Pennsylvania received by such holder pursuant to the reincorporation as
such holder has in the capital stock of the Company held by such holder at the
time of consummation of the reincorporation. Each shareholder's holding period
with respect to Met-Pro Pennsylvania's capital stock will include the period
during which such holder held the corresponding Company capital stock, provided
the latter was held by such holder as a capital asset at the time of
consummation of the reincorporation.
The Board of Directors recommends that you specifically indicate on the
proxy card your vote in favor of this proposal. Otherwise, if your Met-Pro
shares are registered in the name of your broker, your broker will not be
permitted to vote in favor of this proposal in the absence of your specific
direction on the proxy card, the effect of which will be the same as a vote
against this proposal.
21
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Unless instructed to the contrary, the persons named in the enclosed
proxy intend to vote the same in favor of the ratification of the selection of
Margolis & Company P.C. as independent certified public accountants to the
Company to serve until the next Annual Meeting of Stockholders, unless such
engagement shall be earlier terminated. That firm, which has acted as
independent auditors of the Company's accounts since 1971, has reported to the
Company that none of its members has any direct financial interest or material
indirect financial interest in the Company.
A representative of Margolis & Company P.C. is expected to attend the
meeting and have an opportunity to make a statement and/or respond to
appropriate questions from stockholders.
The Board of Directors recommends a vote FOR the ratification of the
selection of Margolis & Company P.C. as independent certified public accountants
for the fiscal year ending January 31, 2004.
PROPOSAL NO. 4
OTHER BUSINESS
The Board of Directors is not aware of any other matters to come before
this meeting. However, if any other matters properly come before the meeting, it
is the intention of the persons named in the enclosed proxy to vote said proxy
in accordance with their judgment in such matters.
STOCKHOLDER PROPOSALS
Any stockholder wishing to submit a proposal for inclusion in the
written proxy statement for the 2004 Annual Meeting of Stockholders must submit
the proposal to Secretary, Met-Pro Corporation, 160 Cassell Road, P.O. Box 144,
Harleysville, PA 19438 prior to January 15, 2004 in order to be considered for
inclusion in the proxy statement. The submission of such proposals by
stockholders and the consideration of such proposals by the Company for
inclusion in next year's proxy statement and form of proxy are subject to
applicable rules and regulations of the Securities and Exchange Commission.
Stockholders who wish to present Director nominations or any other
business at the 2004 Annual Meeting of Stockholders, which the Company expects
to hold on June 9, 2004, are required by the Company's Bylaws to notify the
Secretary in writing prior to March 11, 2004, and, in the event the
reincorporation is approved after, February 10, 2004. The notice from the
stockholder must provide certain information that is described in Section 13 of
the Company's Bylaws or in Section 2.3 of the Pennsylvania Bylaws if the
reincorporation is approved. A copy of these Bylaw requirements will be provided
upon written request to the Secretary at the address given in the preceding
paragraph, and the notice to the Secretary containing the required information
should be sent to this address as well.
The Company retains discretion to vote proxies it receives with respect
to proposals received after March 11, 2004. The Company retains discretion to
vote proxies it receives with respect to proposals received prior to March 11,
2004, provided (i) the Company includes in its proxy statement advice on the
nature of the proposal and how it intends to exercise its voting discretion, and
(ii) the proponent does not issue his or her own proxy statement.
Gary J. Morgan,
Secretary
Harleysville, Pennsylvania
April 28, 2003
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2003, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE DIRECTED TO
GARY J. MORGAN, SECRETARY, MET-PRO CORPORATION, 160 CASSELL ROAD, P.O. BOX 144,
HARLEYSVILLE, PENNSYLVANIA 19438.
22
Appendix A
Met-Pro Corporation
Audit Committee Charter
Status
The Audit Committee is a committee of the Board of Directors.
Membership
The Audit Committee shall consist of three or more directors all of whom
in the judgment of the Board of Directors shall be Independent in accordance
with New York Stock Exchange listing standards. Each member shall in the
judgment of the Board of Directors have the ability to read and understand the
Company's basic financial statements or shall at the time of appointment
undertake training for that purpose. At least one member of the Audit Committee
shall in the judgment of the Board of Directors be an audit committee financial
expert in accordance with the rules and regulations of the Securities and
Exchange Commission and at least one member (who may also serve as the audit
committee financial expert) shall in the judgment of the Board of Directors have
accounting or related financial management expertise in accordance with New York
Stock Exchange listing standards.
Purpose
The Audit Committee shall represent and assist the Board of Directors
with the oversight of: (a) the integrity of the Company's financial statements
and internal controls, (b) the Company's compliance with legal and regulatory
requirements, (c) the independent auditor's qualifications and independence and
(d) the performance of the Company's internal audit function and the independent
auditor. Except as otherwise required by applicable laws, regulations or listing
standards, all major decisions are considered by the Board of Directors as a
whole.
Responsibilities
1. Select and retain (subject to approval by the Company's stockholders), and
terminate when appropriate, the independent auditor, set the independent
auditor's compensation, and pre-approve all audit services to be provided by
the independent auditor.
2. Pre-approve all permitted non-audit services to be performed by the
independent auditor and establish policies and procedures for the engagement
of the independent auditor to provide permitted non-audit services.
3. Receive and review: (a) a report by the independent auditor describing the
independent auditor's internal quality-control procedures and any material
issues raised by the most recent internal quality-control review, or peer
review, of the independent auditing firm, or by any inquiry or investigation
by governmental or professional authorities, within the preceding five
years, respecting one or more independent audits carried out by the firm,
and any steps taken to deal with any such issues; and (b) other required
reports from the independent auditor.
4. At least annually, consider the independence of the independent auditor,
including whether the provision by the independent auditor of permitted
non-audit services is compatible with independence, and obtain and review a
report from the independent auditor describing all relationships between the
auditor and the Company.
5. Review with the independent auditor: (a) the scope and results of the audit;
(b) any problems or difficulties that the auditor encountered in the course
of the audit work, and management's response; and (c) any questions,
comments or suggestions the auditor may have relating to the internal
controls, and accounting practices and procedures, of the Company or its
subsidiaries.
6. Review, at least annually, the scope and results of the internal audit
program, including then current and future programs of the Company's
Internal Audit Department, procedures for implementing accepted
recommendations made by the independent auditor, and any significant matters
contained in reports from the Internal Audit Department.
7. Review with the independent auditor, the Company's Internal Audit
Department, and management: (a) the adequacy and effectiveness of the
systems of internal controls (including any significant deficiencies and
significant changes in internal controls reported to the Audit Committee by
the independent auditor or management), accounting practices, and disclosure
controls and procedures (and management reports thereon), of the Company and
its subsidiaries; and (b) current accounting trends and developments, and
take such action with respect thereto as may be deemed appropriate.
23
8. Review with management and the independent auditor the annual and quarterly
financial statements of the Company, including: (a) the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations"; (b) any material changes in accounting
principles or practices used in preparing the financial statements prior to
the filing of a report on Form 10-K or 10-Q with the Securities and Exchange
Commission; and (c) the items required by Statement of Auditing Standards 61
as in effect at that time in the case of the annual statements and Statement
of Auditing Standards 71 as in effect at that time in the case of the
quarterly statements.
9. Recommend to the Board of Directors, based on the review described in
paragraphs 4 and 8 above, whether the financial statements should be
included in the annual report on Form 10-K.
10. Review Company practices with respect to earnings press releases and
financial information provided to analysts and rating agencies.
11. Review Company policies with respect to establishment, maintenance and
assessment of disclosure controls.
12. Discuss Company policies with respect to risk assessment and risk
management, and review contingent liabilities and risks that may be material
to the Company and major legislative and regulatory developments which could
materially impact the Company's contingent liabilities and risks.
13. Review: (a) the status of compliance with laws, regulations, and internal
procedures; and (b) the scope and status of systems designed to promote
Company compliance with laws, regulations and internal procedures, through
receiving reports from management, legal counsel and third parties as
determined by the Audit Committee.
14. Establish procedures for the confidential and anonymous receipt, retention
and treatment of complaints regarding the Company's accounting, internal
controls and auditing matters.
15. Establish policies for the hiring of employees and former employees of the
independent auditor.
16. Obtain the advice and assistance, as appropriate, of independent counsel and
other advisors as necessary to fulfill the responsibilities of the Audit
Committee.
17. Conduct an annual performance evaluation of the Audit Committee and annually
evaluate the adequacy of its charter.
Meetings
The Audit Committee shall meet at least four times each year and at such other
times as it deems necessary to fulfill its responsibilities.
Report
The Audit Committee shall prepare and approve the Committee's report included in
the proxy statement for the Company's annual meeting of shareholders, and such
other reports as may from time to time be necessary or appropriate.
24
Appendix B
AGREEMENT AND PLAN OF MERGER
OF
MET-PRO PENNSYLVANIA, INC.
(A PENNSYLVANIA CORPORATION)
AND
MET-PRO CORPORATION
(A DELAWARE CORPORATION)
THIS AGREEMENT AND PLAN OF MERGER, dated as of _________ ___, 2003, is
between Met-Pro Pennsylvania, Inc. ("Met-Pro Pennsylvania"), a Pennsylvania
---------------------
corporation, and Met-Pro Corporation ("Met-Pro Delaware"), a Delaware
------------------
corporation. Met-Pro Pennsylvania and Met-Pro Delaware are sometimes referred to
herein collectively as the "Constituent Corporations".
------------------------
RECITALS
Met-Pro Pennsylvania is a corporation duly organized and existing under
the laws of the Commonwealth of Pennsylvania and has a total authorized capital
stock consisting of 18,000,000 shares of Common Stock, $.10 par value. As of the
date hereof, and before giving effect to the transactions contemplated hereby,
100 shares of Common Stock were outstanding, all of which were held by Met-Pro
Delaware.
Met-Pro Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has a total authorized capital stock
consisting of 18,000,000 shares of Common Stock, $.10 par value. As of April 18,
2003, and before giving effect to the transactions contemplated hereby,
6,216,369 shares of Common Stock were outstanding.
Met-Pro Pennsylvania is a wholly-owned subsidiary of Met-Pro Delaware.
The Board of Directors of Met-Pro Delaware has determined that, for the
purpose of effecting the reincorporation of Met-Pro Delaware in the Commonwealth
of Pennsylvania, it is advisable and in the best interests of Met-Pro Delaware
that Met-Pro Delaware merge with and into Met-Pro Pennsylvania upon the terms
and conditions herein provided.
The respective Boards of Directors of Met-Pro Pennsylvania and Met-Pro
Delaware have approved this Agreement and have directed that this Agreement be
submitted to a vote of the stockholders of the respective corporations and be
executed by the undersigned officers.
Agreement
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Met-Pro Pennsylvania and Met-Pro Delaware hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Pennsylvania Business Corporation Law and the Delaware General Corporation Law,
Met-Pro Delaware shall be merged with and into Met-Pro Pennsylvania (the
"Merger"), the separate existence of Met-Pro Delaware shall cease and Met-Pro
------
Pennsylvania shall change its name to "Met-Pro Corporation". Met-Pro
---------------------
Pennsylvania shall be, and is herein sometimes referred to as, the "Surviving
---------
Corporation".
- -----------
1.2 FILING AND EFFECTIVENESS. The Merger shall not become effective
until the following actions shall be completed:
(a) This Agreement and the Merger shall have been adopted and
approved by the stockholders of Met-Pro Delaware and the sole shareholder of
Met-Pro Pennsylvania in accordance with the requirements of the Delaware General
Corporation Law and the Pennsylvania Business Corporation Law, respectively;
(b) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied or duly waived by
the party entitled to satisfaction thereof;
(c) Executed Articles of Merger meeting the requirements of the
Pennsylvania Business Corporation Law shall have been filed with the Department
of State of the Commonwealth of Pennsylvania; and
(d) An executed Certificate of Merger meeting the requirements of
the Delaware General Corporation Law shall have been filed with the Secretary of
State of the State of Delaware.
The date and time when the Merger shall become effective as aforesaid is
herein called the "Effective Date of the Merger".
----------------------------
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of Met-Pro Delaware shall cease, and Met-Pro Pennsylvania, as
the Surviving Corporation: (i) shall continue to possess all of its assets,
25
rights, powers and property as constituted immediately prior to the Effective
Date of the Merger, (ii) shall be subject to all actions previously taken by its
and Met-Pro Delaware's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Met-Pro Delaware
in the manner more fully set forth in Section 1929 of the Pennsylvania Business
Corporation Law, (iv) shall continue to be subject to all of the debts,
liabilities and obligations of Met-Pro Pennsylvania as constituted immediately
prior to the Effective Date of the Merger, and (v) shall succeed, without other
transfer, to all of the debts, liabilities and obligations of Met-Pro Delaware
in the same manner as if Met-Pro Pennsylvania had itself incurred them, all as
more fully provided under the applicable provisions of the Pennsylvania Business
Corporation Law and the Delaware General Corporation Law.
II. ORGANIZATIONAL DOCUMENTS, DIRECTORS AND OFFICERS
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Met-Pro
Pennsylvania as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Articles of Incorporation of the
Surviving Corporation, except that the name of the Surviving Corporation shall
be changed to "Met-Pro Corporation".
2.2 BYLAWS. The Bylaws of Met-Pro Pennsylvania as in effect immediately
prior to the Effective Date of the Merger shall continue in full force and
effect as the Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of Met-Pro
Pennsylvania immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their successors shall
have been duly elected and qualified or until as otherwise provided by law, the
Articles of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 MET-PRO DELAWARE COMMON SHARES. Upon the Effective Date of the
Merger, (i) each share of Met-Pro Delaware Common Stock, $.10 par value,
outstanding immediately prior thereto shall by virtue of the Merger and without
any action by either of the Constituent Corporations, the holder of such share
or any other person, be converted into and exchanged for one fully paid and
nonassessable share of Common Stock, $.10 par value, of the Surviving
Corporation and (ii) each share of Met-Pro Delaware Common Stock held as
treasury stock, if any, shall be canceled.
3.2 MET-PRO DELAWARE OPTIONS.
(a) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume and continue the Directors' Retirement Plan that the
Board had established in 1994, the Met-Pro Corporation Salaried Employee Stock
Ownership Trust, the Management Incentive Plan, the Pension Restoration Plan,
401(k) Profit Sharing Plan, the 1997 Stock Option Plan, the 2001 Stock Option
Plan, the 2000 Employee Stock Purchase Plan and all other employee benefit plans
of Met-Pro Delaware. Each outstanding and unexercised option to purchase Met-Pro
Delaware Common Stock shall become an option to purchase the Surviving
Corporation's Common Stock on the basis of one share of the Surviving
Corporation's Common Stock for each share of Met-Pro Delaware Common Stock
issuable pursuant to any such option on the same terms and conditions and at an
exercise price per share equal to the respective exercise price per share
applicable to any such Met-Pro Delaware option at the Effective Date of the
Merger.
(b) A number of shares of the Surviving Corporation's Common
Stock shall be reserved for issuance upon the exercise of options equal to the
number of shares of Met-Pro Delaware Common Stock so reserved immediately prior
to the Effective Date of the Merger.
3.3 MET-PRO PENNSYLVANIA COMMON STOCK. Upon the Effective Date of the
Merger, each share of Common Stock, $.10 par value, of Met-Pro Pennsylvania
issued and outstanding immediately prior thereto shall, by virtue of the Merger
and without any action by Met-Pro Pennsylvania, the holder of such shares or any
other person, be canceled and returned to the status of authorized but unissued
shares.
3.4 EXCHANGE OF CERTIFICATES.
(a) After the Effective Date of the Merger, each holder of an
outstanding certificate representing shares of Met-Pro Delaware Common Stock may
surrender the same for cancellation to American Stock Transfer and Trust Company
or such other agent designated by the Surviving Corporation from time to time
(the "Exchange Agent"), and each such holder shall be entitled to receive in
exchange therefor a certificate or certificates representing the number of
shares of the Surviving Corporation's Common Stock into which the surrendered
shares were converted as herein provided. Until so surrendered, each outstanding
certificate theretofore representing shares of Met-Pro Delaware Common Stock
shall be deemed for all purposes to represent the number of shares of the
Surviving Corporation's Common Stock into which shares of Met-Pro Delaware
Common Stock were converted in the Merger.
(b) The registered owner on the books and records of the
Surviving Corporation or the Exchange Agent of any such outstanding certificate
shall, until such certificate shall have been surrendered for transfer or
conversion or otherwise accounted for to the Surviving Corporation or the
Exchange Agent, have and be entitled to exercise any voting and other rights
with respect to and to receive dividends and other distributions upon the shares
of Common Stock of the Surviving Corporation represented by such outstanding
certificate as provided above.
26
(c) Each certificate representing Common Stock of the Surviving
Corporation so issued in the Merger shall bear the same legends, if any, with
respect to the restrictions on transferability as the certificates of Met-Pro
Delaware so converted and given in exchange therefor, unless otherwise
determined by the Board of Directors of the Surviving Corporation in compliance
with applicable laws, or other such additional legends as agreed upon by the
holder and the Surviving Corporation.
(d) If any certificate for shares of Met-Pro Pennsylvania Common
Stock is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a condition of
issuance thereof that the certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer, that such transfer otherwise be
proper and comply with applicable securities laws and that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of issuance of such new certificate in a name other than that of the
registered holder of the certificate surrendered or establish to the
satisfaction of Met-Pro Pennsylvania that such tax has been paid or is not
payable.
IV. GENERAL
4.1 COVENANTS OF MET-PRO PENNSYLVANIA. Met-Pro Pennsylvania covenants
and agrees that it will, on or before the Effective Date of the Merger:
(a) File any and all documents with the Secretary of State of
the State of Delaware necessary for the assumption by Met-Pro Pennsylvania of
all of the franchise tax liabilities of Met-Pro Delaware.
(b) Take such other actions as may be required by the Delaware
General Corporation Law.
4.2 FURTHER ASSURANCES. From time to time, as and when required by
Met-Pro Pennsylvania or by its successors or assigns, there shall be executed
and delivered on behalf of Met-Pro Delaware such deeds and other instruments,
and there shall be taken or caused to be taken by it such further and other
actions as shall be appropriate or necessary in order to vest or perfect in or
confirm of record or otherwise by Met-Pro Pennsylvania the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Met-Pro Delaware and otherwise
to carry out the purposes of this Agreement, and the officers and directors of
Met-Pro Pennsylvania are fully authorized in the name and on behalf of Met-Pro
Delaware or otherwise to take any and all such action and to execute and deliver
any and all such deeds and other instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger,
this Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Met-Pro Delaware or of Met-Pro
Pennsylvania, or of both, notwithstanding the approval of this Agreement by the
stockholders of Met-Pro Delaware.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations
may amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Department of State of the Commonwealth of
Pennsylvania, provided that an amendment made subsequent to the adoption of this
Agreement by the stockholders of either Constituent Corporation shall not: (a)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (b) alter
or change any term of the Articles of Incorporation of the Surviving Corporation
to be effected by the Merger or (c) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely affect
the holders of any class or series of capital stock or any Constituent
Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving
Corporation in the Commonwealth of Pennsylvania is to be located at 160 Cassell
Road, Harleysville, Pennsylvania 19438.
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 160 Cassell Road,
Harleysville, Pennsylvania 19438, and copies thereof will be furnished to any
stockholder of either Constituent Corporation, upon request and without cost.
4.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
Commonwealth of Pennsylvania and, so far as applicable, the merger provisions of
the Delaware General Corporation Law.
4.8 COUNTERPARTS. In order to facilitate the filing and recording of
this Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
27
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Boards of Directors of Met-Pro Pennsylvania, Inc., a
Pennsylvania corporation, and Met-Pro Corporation, a Delaware corporation, is
hereby executed on behalf of each of such two corporations and attested by their
respective officers thereunto duly authorized.
MET-PRO PENNSYLVANIA, INC., MET-PRO CORPORATION,
a Pennsylvania corporation a Delaware corporation
By: By:
---------------------------------------- ----------------------------------------
Raymond J. De Hont Raymond J. De Hont
President & Chief Executive Officer President & Chief Executive Officer
Attest: Attest:
By: By:
---------------------------------------- ----------------------------------------
Gary J. Morgan Gary J. Morgan
Secretary Secretary
28
Appendix C
ARTICLES OF INCORPORATION
OF
MET-PRO PENNSYLVANIA, INC.
In compliance with the requirements of the applicable provisions of 15
Pa.C.S. (relating to corporations and unincorporated associations), the
undersigned, desiring to incorporate a corporation for profit, hereby states
that:
ARTICLE 1: The name of the corporation is Met-Pro Pennsylvania, Inc.
(the "Company").
-------
ARTICLE 2: The address of the registered office of the Company in the
Commonwealth of Pennsylvania is 160 Cassell Road, Harleysville, Pennsylvania
19438.
ARTICLE 3: The Company is incorporated under the provisions of the
Pennsylvania Business Corporation Law of 1988, as amended (the "BCL").
---
ARTICLE 4: The total number of shares of stock which the Company shall
have authority to issue is Eighteen Million (18,000,000), each share to be
designated as a Common Share and to have a par value of Ten Cents ($0.10).
ARTICLE 5: The following provisions of the BCL shall not apply to the
Company:
(a) Section 2538 (relating to approval of transactions with
interested shareholders);
(b) Subchapter 25E (relating to control transactions); and
(c) Subchapter 25G (relating to control share acquisitions).
ARTICLE 6: The shareholders of the Company shall not have the right to
cumulate their votes for the election of directors of the Company.
ARTICLE 7: The Board of Directors is expressly authorized to adopt,
amend and repeal the Bylaws of the Company or any provision thereof and to adopt
new Bylaws. The Bylaws may be amended and repealed, and new Bylaws may be
adopted, by the shareholders only if approved by the affirmative vote of at
least 80% of the outstanding shares entitled to vote at any regular or special
meeting duly convened after written notice to the shareholders that the purpose,
or one of the purposes, of the meeting is to consider the amendment or repeal of
the Bylaws.
ARTICLE 8:
(a) From and after the effective date of the merger between the
Company and Met-Pro Corporation, a Delaware corporation, pursuant to an
Agreement and Plan of Merger dated as of the date of these Articles of
Incorporation between the Company and Met-Pro Corporation, no action that is
required or permitted to be taken by the shareholders of the Company at an
annual or special meeting of the shareholders may be taken by consent of the
shareholders in lieu of a meeting of shareholders.
(b) Special meetings of shareholders of the Company may be
called only by the Board of Directors pursuant to the terms of the Bylaws, or
the Chairman of the Board, and may not be called by any other person or persons.
ARTICLE 9: The number of directors of the Company shall be such as from
time to time shall be fixed by, or in the manner provided in the Bylaws, but
shall not be less than three. Election of directors need not be by ballot unless
the Bylaws so provide. Directors shall be divided into three classes, each class
to be as nearly equal in number as possible, the number assigned to each class
to be determined by the directors prior to the election of a particular class.
Vacancies among the directors and newly created directorships resulting from an
increase in the number of directors shall be filled in the manner provided in
the Bylaws.
ARTICLE 10: The affirmative vote of at least 80% of the outstanding
shares entitled to vote at a duly convened regular or special meeting of the
shareholders shall be required to approve (a) a merger or consolidation of the
Company in which the shareholders of the Company receive cash, securities or
other consideration in exchange for shares of the Company's capital stock, other
than a merger or consolidation effected for the sole purpose of changing the
state of incorporation of the Company, (b) a disposition of all or substantially
all of the assets of the Company, or (c) any purchase, lease or other
acquisition by the Company or any of its subsidiaries of any assets or
securities of any other corporation, person or entity in exchange for securities
of the Company or any of its subsidiaries. Notwithstanding the foregoing, (1) if
a majority of the Board of Directors approves any of the transactions set forth
in clauses (a) or (b) of this Article 10, then the affirmative vote of more than
50% of the outstanding shares entitled to vote at a duly convened regular or
special meeting of the shareholders shall be sufficient to approve such
transaction; and (2) if a majority of the Board of Directors approves a
transaction set forth in clause (c) of this Article 10, then no vote of the
outstanding shares shall be necessary to approve such transaction unless a
shareholder vote is required by the BCL.
29
ARTICLE 11:
(a) (1) A director of the Company shall stand in a fiduciary
relation to the Company and shall perform his or her duties as a director,
including the director's duties as a member of any committee of the Board of
Directors upon which the director may serve, in good faith, in a manner the
director reasonably believes to be in the best interests of the Company, and
with such care, including reasonable inquiry, skill and diligence, as a person
of ordinary prudence would use under similar circumstances. In performing his or
her duties, a director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by any of the following: (i)
one or more officers or employees of the Company whom the director reasonably
believes to be reliable and competent in the matters presented; (ii) legal
counsel, public accountants or other persons as to matters which the director
reasonably believes to be within the professional or expert competence of such
persons; or (iii) a committee of the Board of Directors upon which the director
does not serve, duly designated in accordance with law, as to matters within its
designated authority, which committee the director reasonably believes to merit
confidence. A director shall not be considered to be acting in good faith if the
director has knowledge concerning the matter in question that would cause the
director's reliance to be unwarranted.
(2) In discharging the duties of their respective positions,
the Board of Directors, committees of the Board of Directors and individual
directors may, in considering the best interests of the Company, consider the
effects of any action upon employees, suppliers and customers of the Company and
communities in which offices or other establishments of the Company are located,
and all other pertinent factors. The consideration of these factors shall not
constitute a violation of Article 11(a)(1) hereof.
(3) Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the Company.
(4) A director of the Company shall not be personally
liable, as such, for monetary damages for any action taken, or any failure to
take any action, unless: (i) the director has breached or failed to perform the
duties of his or her office under Article 11(a)(1) through Article 11(a)(3)
hereof; and (ii) the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
(5) The provisions of Article 11(a)(4) hereof shall not
apply to: (i) the responsibility or liability of a director pursuant to any
criminal statute; or (ii) the liability of a director for the payment of taxes
pursuant to local, state or federal law.
(b) Neither any amendment nor repeal of this Article 11, nor the
adoption of any provision of these Articles of Incorporation inconsistent with
this Article 11, shall eliminate or reduce the effect of this Article 11 in
respect of any matter occurring, or any action or proceeding accruing or arising
or that, but for this Article 11, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE 12:
(a) Every person who is or was a director or officer of the
Company shall be indemnified by the Company to the fullest extent allowed by the
BCL against all liabilities and expenses imposed upon or incurred by that person
in connection with any proceeding in which that person may be made, or
threatened to be made, a party, or in which that person may become involved by
reason of that person being or having been a director or officer of or serving
or having served in any capacity with any other enterprise at the request of the
Company, whether or not that person is a director or officer or continues to
serve the other enterprise at the time the liabilities or expenses are imposed
or incurred.
(b) To the fullest extent permitted by applicable law, the
Company is authorized to provide indemnification of (and advancement of expenses
to) agents of the Company (and any other persons to which Pennsylvania law
permits the Company to provide indemnification) through By-law provisions,
agreements with such agents or other persons, votes of shareholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by the BCL subject only to limits created by
applicable Pennsylvania law (statutory or non-statutory), with respect to
actions for breach of duty to the Company, its shareholders and others.
(c) Neither any amendment nor repeal of this Article 12, nor the
adoption of any provision of these Articles of Incorporation inconsistent with
this Article 12, shall eliminate or reduce the effect of this Article 12 in
respect of any matter occurring, or any action or proceeding accruing or arising
or that, but for this Article 12, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE 13: These Articles of Incorporation may be amended at any time
as permitted by law, subject to the express terms hereof, and all rights
conferred upon the shareholders or others herein are granted subject to this
reservation. Any amendment that (a) changes the shareholder vote percentage for
approval of an item specified by these Articles of Incorporation or (b) changes
the provisions of Article 6, Article 7, Article 8, Article 9, or this Article
13, must be first approved by an affirmative vote of at least 80% of the
outstanding shares entitled to vote at a duly convened regular or special
meeting of the shareholders. Notwithstanding the foregoing, if a majority of the
Board of Directors approves an amendment that (a) changes the shareholder vote
percentage for approval of an item specified by these Articles of Incorporation
or (b) changes the provisions of Article 6, Article 7, Article 8, Article 9, or
this Article 13, then the affirmative vote of more than 50% of the outstanding
shares entitled to vote at a duly convened regular or special meeting of the
shareholders shall be sufficient to approve such amendment.
30
ARTICLE 14: The name and address of the incorporator is Jeffrey H.
Nicholas, Fox Rothschild LLP, 102 N. Main Street, P.O. Box 1589, Doylestown,
Pennsylvania 18901-0700.
IN TESTIMONY WHEREOF, the incorporator has signed these Articles of
Incorporation this _____ day of _____, 2003.
------------------------------------
Jeffrey H. Nicholas
31
Appendix D
BYLAWS
OF
MET-PRO PENNSYLVANIA, INC.
ARTICLE 1
CORPORATION OFFICE
SECTION 1.1 The Corporation shall have and continuously maintain in the
Commonwealth of Pennsylvania a registered office at an address to be designated
from time to time by the Board of Directors, which may, but need not, be the
same as its place of business.
SECTION 1.2 The Corporation may also have offices at such other places
as the Board of Directors may from time to time designate or the business of the
Corporation may require.
ARTICLE 2
SHAREHOLDER MEETINGS
SECTION 2.1 All meetings of the shareholders shall be held at such time
and geographic location, within or without the Commonwealth of Pennsylvania, as
may be determined from time to time by the Board of Directors and need not be
held at the executive offices of the Corporation. If a meeting of the
shareholders is held by means of the Internet or other electronic communications
technology in a fashion pursuant to which the shareholders have the opportunity
to read or hear the proceedings substantially concurrently with their
occurrence, vote on matters submitted to the shareholders and pose questions to
the directors, the meeting need not be held at a particular geographic location.
SECTION 2.2 An annual meeting of the shareholders for the election of
directors and the transaction of such other business as may properly be brought
before the meeting shall be held in each calendar year at such time and place as
may be determined by the Board of Directors.
SECTION 2.3
(a) The provisions of this Section 2.3(a) shall apply to shareholder
proposals relating to nominations for and election of directors:
(1) Nominations by a shareholder of a candidate for election to
the Board of Directors by shareholders at a meeting of shareholders may be made
only if the shareholder complies with the procedures set forth in this Section
2.3(a), and any candidate proposed by a shareholder not nominated in accordance
with such provisions shall not be considered or acted upon at such meeting of
shareholders.
(2) A proposal by a shareholder for the nomination of a
candidate for election by shareholders as a director at any meeting of
shareholders at which directors are to be elected may be made only by notice in
writing, delivered in person or by first class United States mail postage
prepaid, or by reputable overnight delivery service, charges prepaid, to the
Board of Directors of the Corporation in care of the Secretary of the
Corporation at the principal office of the Corporation, within the time limits
specified herein.
(3) In the case of an annual meeting, to be timely, any such
written proposal of nomination must be delivered to or mailed and received at,
the principal executive offices of the Corporation not less than 90 days nor
more than 120 calendar days prior to the scheduled meeting, regardless of any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than 70 days' notice or prior public disclosure
of the date of the scheduled meeting is given or made, such written proposal of
nomination to be timely must be so delivered or received not later than the
close of business on the tenth (10th) day following the earlier of the day on
which such notice of the date of the scheduled meeting was mailed or the day on
which such public disclosure was made.
(4) In the case of a special meeting of shareholders, any such
written proposal of nomination must be received by the Board of Directors not
less than five business days after the earlier of the date the Corporation shall
have mailed notice to its shareholders that a special meeting of shareholders
will be held, issued a press release, filed a periodic report with the
Securities and Exchange Commission or otherwise publicly disseminated notice
that a special meeting of shareholders will be held.
32
(5) Such written proposal of nomination shall set forth: (A) the
name and address of the shareholder who intends to make the nomination (the
"Nominating Shareholder"), (B) the name, age, business address and, if known,
-----------------------
residence address of each person so proposed, (C) the principal occupation or
employment of each person so proposed for the past five years, (D) the number of
shares of capital stock of the Corporation beneficially owned within the meaning
of Securities and Exchange Commission Rules 13d-3 and 13d-5 by each person so
proposed and the earliest date of acquisition of any such capital stock, (E) a
description of any arrangement or understanding between each person so proposed
and the shareholder(s) making such nomination with respect to such person's
proposal for nomination and election as a director and actions to be proposed or
taken by such person if elected a director, (F) the written consent of each
person so proposed to serve as a director if nominated and elected as a director
and (G) such other information regarding each such person as would be required
under the proxy solicitation rules of the Securities and Exchange Commission if
proxies were to be solicited for the election as a director of each person so
proposed.
(6) If a written proposal of nomination submitted to the Board
of Directors fails, in the reasonable judgment of the presiding officer of the
meeting or the Board of Directors or a nominating committee established by it,
to contain the information specified in clause (5) of this Section 2.3(a) or is
otherwise deficient, the presiding officer of the meeting or the Board of
Directors or the nominating committee shall, as promptly as is practicable under
the circumstances, provide written notice to the shareholder(s) making such
nomination of such failure or deficiency in the written proposal of nomination
and such nominating shareholder shall have five business days from receipt of
such notice to submit a revised written proposal of nomination that corrects
such failure or deficiency in all material respects.
(7) Compliance by a shareholder with the provisions of this
Section 2.3(a) shall not be deemed to require the acceptance of the written
proposal or nomination.
(b) The provisions of this Section 2.3(b) shall apply to shareholder
proposals relating to matters other than nominations for and elections of
directors:
(1) At a meeting of shareholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
brought before the such meeting (i) by, or at the direction of, the Board of
Directors or (ii) by any shareholder of the Corporation who complies with all of
the procedures set forth in this Section (a "Shareholder Matter"). For a
proposal to be properly brought before a meeting by a shareholder, the
shareholder must have given timely notice in writing, delivered in person or by
first class United States mail postage prepaid or by reputable overnight
delivery service, charges prepaid, to the Board of Directors of the Corporation
in care of the Secretary of the Corporation at the principal office of the
Corporation, within the time limits specified in this Section 2.3(b).
(2) In the case of an annual meeting, to be timely, a
shareholder's notice must be delivered to or mailed and received at, the
principal executive offices of the Corporation not less than 90 days nor more
than 120 calendar days prior to the scheduled meeting, regardless of any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than 70 days' notice or prior public disclosure
of the date of the scheduled meeting is given or made, notice by the shareholder
to be timely must be so delivered or received not later than the close of
business on the tenth (10th) day following the earlier of the day on which such
notice of the date of the scheduled meeting was mailed or the day on which such
public disclosure was made. In the case of a special meeting of shareholders,
any such written notice of a proposal of a Shareholder Matter must be received
by the Board of Directors not less than five business days after the earlier of
the date the Corporation shall have mailed notice to its shareholders that a
special meeting of shareholders will be held, issued a press release, filed a
periodic report with the Securities and Exchange Commission or otherwise
publicly disseminated notice that a special meeting of shareholders will be
held.
(3) A shareholder's notice to the Secretary shall set forth as
to each matter the shareholder proposes to bring before the meeting of
shareholders information regarding such Shareholder Matter equivalent to the
information regarding such Shareholder Matter that would be required under the
proxy solicitation rules of the Securities and Exchange Commission if proxies
were solicited for shareholder consideration, including (a) a brief description
of the proposal desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (ii) the name and address, as they
appear on the Corporation's books, of the shareholder proposing such business
and any other shareholders known by such shareholder to be supporting such
proposal, (b) the class and number of shares of the Corporation's stock which
are beneficially owned by the shareholder on the date of such shareholder notice
and by any other shareholders known by such shareholder to be supporting such
proposal on the date of such shareholder notice, and (c) any financial interest
of the shareholder in such proposal.
(4) If a written notice of a proposal of a Shareholder Matter
submitted to the Board of Directors fails, in the reasonable judgment of the
presiding officer of the meeting or the Board of Directors, to contain the
information specified in clause (3) hereof or is otherwise deficient, the Board
of Directors shall, as promptly as is practicable under the circumstances,
provide written notice to the shareholder who submitted the written notice of
presentation of a Shareholder Matter of such failure or deficiency in the
written notice of presentation of a Shareholder Matter and such shareholder
shall have five business days from receipt of such notice to submit a revised
written notice of presentation of a matter that corrects such failure or
deficiency in all material respects.
(5) Compliance by a shareholder with the provisions of this
Section 2.3(b) shall not be deemed to require the acceptance of the Shareholder
Matter.
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SECTION 2.4 Special meetings of the shareholders may be called at any
time by the Board of Directors or the Chairman of the Board, who may fix the
date, time and place of the meeting. If the Board of Directors or the Chairman
of the Board does not fix the date, time or place of the meeting, it shall be
the duty of the Secretary to do so. A date fixed by the Secretary shall not be
more than 60 days after the date of the adoption of the resolution of the Board
of Directors calling the special meeting.
SECTION 2.5 Written notice of each meeting other than an adjourned
meeting of shareholders, stating the place and time, and, in the case of a
special meeting of shareholders, the general nature of the business to be
transacted, shall be provided to each shareholder of record entitled to vote at
the meeting at such address as appears on the books of the Corporation. Such
notice shall be given, in accordance with the provisions of Article 30 of these
Bylaws, at least (a) ten days prior to the day named for a meeting to consider a
fundamental change under Chapter 19 of the Pennsylvania Business Corporation Law
of 1988 (the "BCL") or (b) five days prior to the day named for the meeting in
any other case.
SECTION 2.6
(a) Whenever the Corporation has been unable to communicate with a
shareholder for more than 24 consecutive months because communications to the
shareholder are returned unclaimed or the shareholder has otherwise failed to
provide the Corporation with a current address, the giving of notice to such
shareholder pursuant to Section 2.5 of these Bylaws shall not be required. Any
action or meeting that is taken or held without notice or communication to that
shareholder shall have the same validity as if the notice or communication had
been duly given. Whenever a shareholder provides the Corporation with a current
address, this Section 2.6(a) shall cease to be applicable to such shareholder
until such later time, if any, as the terms of this Section 2.6(a) shall again
become applicable.
(b) The Corporation shall not be required to give notice to any
shareholder pursuant to Section 2.5 hereof if and for as long as communication
with such shareholder is unlawful.
SECTION 2.7 The Board of Directors may provide by resolution with
respect to a specific meeting or with respect to a class of meetings that one or
more shareholders may participate in such meeting or meetings of shareholders by
means of conference telephone or other electronic technology by means of which
all persons participating in the meeting can hear one another, including,
without limitation, the Internet. The presence or participation, including
voting and taking other action, at the meeting, or the expression of consent or
dissent to corporate action, by a shareholder by such means, including, without
limitation, the Internet, shall constitute presence of, or vote or action by, or
consent or dissent of the shareholder at the meeting. Any notice otherwise
required to be given in connection with any meeting at which participation by
conference telephone or other communications equipment is permitted shall so
specify.
ARTICLE 3
QUORUM OF SHAREHOLDERS
SECTION 3.1 A meeting of shareholders duly called shall not be organized
for the transaction of business unless a quorum is present.
SECTION 3.2 The presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes that all shareholders are
entitled to cast on a particular matter to be acted upon at the meeting shall
constitute a quorum for purposes of consideration and action on such matter.
SECTION 3.3 The shareholders present at a duly organized meeting may
continue to do business until adjournment notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
SECTION 3.4 If a meeting of shareholders cannot be organized because a
quorum is not present, those present in person or by proxy, may, except as
otherwise provided by statute, adjourn the meeting to such time and place as
they may determine, without notice other than an announcement at the meeting,
until the requisite number of shareholders for a quorum shall be present in
person or by proxy.
SECTION 3.5 Notwithstanding the provisions of Sections 3.1, 3.2, 3.3 and
3.4 of these Bylaws:
(a) Any meeting of shareholders, including one at which directors are to
be elected, may be adjourned for such period as the shareholders present and
entitled to vote shall direct.
(b) Those shareholders entitled to vote who attend a meeting that has
been previously adjourned for one or more periods aggregating at least 15 days
because of an absence of a quorum, although less than a quorum as fixed in these
Bylaws, 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.
(c) Notwithstanding the provisions of Section 3.5(b) of these Bylaws,
those shareholders entitled to vote who attend a meeting called for election of
directors that has been previously adjourned for lack of a quorum, although less
than a quorum as fixed in these Bylaws, shall nevertheless constitute a quorum
for the purpose of electing directors.
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ARTICLE 4
VOTING RIGHTS
SECTION 4.1 Except as may be otherwise provided by the Articles of
Incorporation, at every meeting of shareholders, every shareholder entitled to
vote thereat shall be entitled to one vote for every share having voting power
standing in his or her name on the books of the Corporation on the record date
fixed for the meeting.
SECTION 4.2 Except as otherwise provided by statute or by the Articles
of Incorporation or by these Bylaws, at any duly organized meeting of
shareholders the vote of the holders of a majority of the votes cast shall
decide any question brought before such meeting.
SECTION 4.3 The election of such directors need not be by ballot unless
required by vote of the shareholders before the voting for election of directors
begins.
ARTICLE 5
PROXIES
SECTION 5.1 Every shareholder entitled to vote at a meeting of
shareholders may authorize another person or persons to act for such shareholder
by proxy. Every proxy shall be executed or authenticated by the shareholder or
his or her duly authorized attorney-in-fact and filed with or transmitted to the
Secretary of the Corporation or its designated agent. A shareholder or his or
her duly authorized attorney-in-fact may execute or authenticate a writing or
transmit an electronic message authorizing another person to act for such
shareholder by proxy. 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 notice thereof has been given to the Secretary of the Corporation or its
designated agent in writing or by electronic transmission. An unrevoked proxy
shall not be valid after three years from the date of its execution,
authentication or transmission 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 or its
designated agent.
SECTION 5.2 Where two or more proxies of a shareholder are present, the
Corporation shall, unless otherwise expressly provided in the proxy, accept as
the vote of all shares represented thereby the vote cast by a majority of them,
and, if a majority of the proxies cannot agree whether the shares represented
shall be voted or upon the manner of voting the shares, the voting of the shares
shall be divided equally among those persons.
ARTICLE 6
RECORD DATE
SECTION 6.1 The Board of Directors may fix a time prior to the date of
any meeting of shareholders as a record date for the determination of the
shareholders entitled to notice of, or to vote at, the meeting, which time,
except in the case of an adjourned meeting, shall not be more than 60 days and
not less than 10 days prior to the date of the meeting of shareholders. Only
shareholders of record on the date so fixed shall be entitled to notice of, or
to vote at, such meeting, notwithstanding any transfer of shares on the books of
the Corporation after any record date fixed as aforesaid. The Board of Directors
may similarly fix a record date for the determination of shareholders of record
for any other purpose, such as the payment of a distribution or a conversion or
exchange of shares.
SECTION 6.2 The Board of Directors may by resolution adopt a procedure
whereby a shareholder of the Corporation may certify in writing to the
Corporation that all or a portion of the shares registered in such shareholder's
name are held for the account of a specified person or persons. Such resolution
may set forth: (a) the classification of shareholder who may certify; (b) the
purpose or purposes for which the certification may be made; (c) the form of
certification and information to be contained therein; (d) if the certification
is with respect to a record date, the time after the record date within which
the certification must be received by the Corporation; and (e) such other
provisions with respect to the procedure as are deemed necessary or desirable.
Upon receipt by the Corporation of a certification complying with the procedure,
the persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
ARTICLE 7
SHAREHOLDER LIST
SECTION 7.1 The officer or agent having charge of the share transfer
books of the Corporation shall make a complete alphabetical list of the
shareholders entitled to vote at any meeting, showing their addresses and the
number of shares held by each. The list shall be produced and kept open at the
time and place of the meeting for inspection by any shareholder during the
entire meeting except that, if the Corporation has 5,000 or more shareholders,
in lieu of the making of the list, the Corporation may make the information
available at the meeting by other means.
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SECTION 7.2 Failure to comply with the provisions of Section 7.1 of
these Bylaws shall not affect the validity of any action taken at a meeting
prior to a demand at the meeting by any shareholder entitled to vote thereat to
examine the list.
SECTION 7.3 The original transfer books for shares of the Corporation,
or a duplicate thereof kept in the Commonwealth of Pennsylvania, shall be prima
facie evidence as to who are the shareholders entitled to examine the list or
transfer books for shares or to vote at any meeting.
ARTICLE 8
JUDGES OF ELECTION
SECTION 8.1 Prior to any meeting of shareholders, the Board of Directors
may appoint judges of election, who may but need not be shareholders, to act at
such meeting or any adjournment thereof. If judges of election are not so
appointed, the presiding officer of any such meeting may, and on the request of
any shareholder or his or her proxy shall, make such appointment at the meeting.
The number of judges shall be one or three. No person who is a candidate for an
office to be filled at the meeting shall act as a judge of election.
SECTION 8.2 In case any person appointed as a judge of election fails to
appear or fails or refuses to act, the vacancy so created may be filled by
appointment made by the Board of Directors in advance of the convening of the
meeting or at the meeting by the presiding officer thereof.
SECTION 8.3 The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies.
The judges of election shall also receive votes or ballots, hear and determine
all challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes, determine the result and do such other acts
as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as practicable. If
there are three judges of election, the decision, act or certificate of a
majority shall be the decision, act or certificate of all.
SECTION 8.4 On request of the presiding officer of the meeting or of any
shareholder, the judges of election shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them. Any report or certificate made by them shall be prima
facie evidence of the facts found by them.
ARTICLE 9
CONSENT OF SHAREHOLDERS IN LIEU OF MEETING NOT PERMITTED
SECTION 9.1 Shareholders shall not have the right to take any action
required or permitted to be taken at a meeting of the shareholders by written
consent in lieu of a meeting of shareholders.
ARTICLE 10
DIRECTORS
SECTION 10.1 The number of directors comprising the first Board of
Directors shall be as provided in the original Articles of Incorporation, but
shall not be less than three or more than seven. Thereafter, the number of
directors shall be determined by the Board of Directors from time to time. Each
director shall be a natural person of full age and need not be a resident of the
Commonwealth of Pennsylvania or a shareholder of the Corporation.
SECTION 10.2 The Board of Directors shall elect a Chairman of the Board.
The Chairman of the Board shall preside at all meetings of shareholders and
directors.
SECTION 10.3 Except as otherwise provided in Article 12 of these Bylaws,
directors shall be elected by the shareholders. The candidates receiving the
highest number of votes from the shareholders, or each class or group of
classes, if any, entitled to elect directors separately, up to the number of
directors to be elected by the shareholders, or class or group of classes, if
any, shall be elected. The directors shall be divided into three classes,
designated Class I, Class II and Class III, and each class shall be as nearly
equal in number as possible. Each class shall serve for a term of three years,
ending on the annual meeting of shareholders in 2004 (in the case of the Class I
directors), in 2005 (in the case of the Class II directors) and in 2006 (in the
case of the Class III directors), and for each three-year period thereafter. At
each annual meeting of shareholders, that number of directors whose terms shall
then expire shall be elected to serve for a term of three years and until their
successors have been elected or until their earlier death, resignation or
removal. A decrease in the number of directors shall not have the effect of
shortening the term of any incumbent director.
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ARTICLE 11
REMOVAL OF DIRECTORS
SECTION 11.1 Unless otherwise provided in the Articles of Incorporation,
the entire Board of Directors, or any class of the Board of Directors, or any
individual director may be removed at any time (a) for cause by an affirmative
vote of a majority of the outstanding shares entitled to vote at a duly convened
regular or special meeting of the shareholders; or (b) without cause by an
affirmative vote of at least 80% of the outstanding shares entitled to vote at a
duly convened regular or special meeting of the shareholders. If any directors
are so removed, new directors may be elected at the same meeting.
SECTION 11.2 The Board of Directors may declare vacant the office of a
director who has been judicially declared of unsound mind or who has been
convicted of an offense punishable by imprisonment for a term of more than one
year.
ARTICLE 12
VACANCIES ON BOARD OF DIRECTORS
SECTION 12.1 Vacancies on 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, or by a sole remaining director, and each person so elected shall
be a director to serve for the balance of the unexpired term.
SECTION 12.2 If one or more directors shall resign from the Board of
Directors effective at a future date, the directors then in office, including
those who have so resigned, shall have the power by a majority vote to fill the
vacancies, the vote thereon to take effect when the resignations become
effective.
ARTICLE 13
POWERS OF BOARD
SECTION 13.1 The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors, which may exercise all
such powers of the Corporation and do all such lawful acts and things as are
directed or required to be exercised and done by statute, the Articles of
Incorporation or these Bylaws.
SECTION 13.2 The Board of Directors may, by resolution adopted by a
majority of the directors in office, establish one or more committees consisting
of one or more directors as may be deemed appropriate or desirable by the Board
of Directors to serve at the pleasure of the Board. Any committee, to the extent
provided in the resolution of the Board of Directors pursuant to which it was
created, shall be advisory in nature as to the whole of the Board of Directors
but may, if affirmatively determined by the Board of Directors, have and may
exercise all of the powers and authority of the Board of Directors, except that
in no event shall any committee have any power or authority as to the following:
(a) The submission to shareholders of any action requiring approval of
shareholders;
(b) The creation or filling of vacancies in the Board of Directors;
(c) The adoption, amendment or repeal of these Bylaws;
(d) The amendment or repeal of any resolution of the Board of Directors
that by its terms is amendable or repealable only by the Board of Directors; and
(e) Action on matters committed by these Bylaws or resolution of the
Board of Directors to another committee of the Board of Directors.
ARTICLE 14
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 14.1 A meeting of the Board of Directors may be held immediately
following the annual meeting of shareholders at which directors have been
elected without the necessity of notice to the directors.
SECTION 14.2 Meetings of the Board of Directors shall be held at such
times and places within or without the Commonwealth of Pennsylvania as the Board
of Directors may from time to time appoint or as may be designated in the notice
of the meeting. One or more directors may participate in any meeting of the
Board of Directors, or of any committee thereof, by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear one another. Participation in a meeting by
such means shall constitute presence in person at the meeting.
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SECTION 14.3 Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President of the Corporation on one day's
notice to each director, either by telephone, or if in writing, in accordance
with the provisions of Article 30 of these Bylaws. Special meetings shall be
called by the Chairman of the Board, the President or Secretary in like manner
and on like notice upon the written request of a majority of the directors in
office.
SECTION 14.4 At all meetings of the Board of Directors a majority of the
directors in office shall constitute a quorum for the transaction of business,
and the acts of a majority of the directors present and voting at a 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 or by these Bylaws.
ARTICLE 15
ACTION BY WRITTEN CONSENT OF THE BOARD
SECTION 15.1 Any action required or permitted to be taken at a meeting
of the Board of Directors may be taken without a meeting if, prior or subsequent
to the action, a consent or consents thereto signed by all of the directors is
filed with the Secretary of the Corporation.
ARTICLE 16
COMPENSATION OF DIRECTORS
SECTION 16.1 Directors, as such, may receive a stated salary for their
services or a fixed sum and expenses for attendance at regular and special
meetings or any combination of the foregoing as may be determined from time to
time by resolution of the Board of Directors, and nothing contained herein shall
be construed to preclude any director from receiving compensation for services
rendered to the Corporation in any other capacity.
ARTICLE 17
LIABILITY OF DIRECTORS
SECTION 17.1 A director of the Corporation shall stand in a fiduciary
relation to the Corporation and shall perform his or her duties as a director,
including the director's duties as a member of any committee of the Board of
Directors upon which the director may serve, in good faith, in a manner the
director reasonably believes to be in the best interests of the Corporation, and
with such care, including reasonable inquiry, skill and diligence, as a person
of ordinary prudence would use under similar circumstances. In performing his or
her duties, a director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by any of the following: (a)
one or more officers or employees of the Corporation whom the director
reasonably believes to be reliable and competent in the matters presented; (b)
legal counsel, public accountants or other persons as to matters which the
director reasonably believes to be within the professional or expert competence
of such persons; or (c) a committee of the Board of Directors upon which the
director does not serve, duly designated in accordance with law, as to matters
within its designated authority, which committee the director reasonably
believes to merit confidence. A director shall not be considered to be acting in
good faith if the director has knowledge concerning the matter in question that
would cause the director's reliance to be unwarranted.
SECTION 17.2 In discharging the duties of their respective positions,
the Board of Directors, committees of the Board of Directors and individual
directors may, in considering the best interests of the Corporation, consider
the effects of any action upon employees, suppliers and customers of the
Corporation and communities in which offices or other establishments of the
Corporation are located, and all other pertinent factors. The consideration of
these factors shall not constitute a violation of Section 17.1 hereof.
SECTION 17.3 Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the Corporation.
SECTION 17.4 A director of the Corporation shall not be personally
liable, as such, for monetary damages for any action taken, or any failure to
take any action, unless: (a) the director has breached or failed to perform the
duties of his or her office under Sections 17.1 through 17.3 hereof; and (b) the
breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness.
SECTION 17.5 The provisions of Section 17.4 hereof shall not apply to:
(a) the responsibility or liability of a director pursuant to any criminal
statute; or (b) the liability of a director for the payment of taxes pursuant to
local, state or federal law.
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ARTICLE 18
OFFICERS
SECTION 18.1 The Corporation shall have a Chairman of the Board, a
President, a Secretary and a Treasurer, or persons who shall act as such,
regardless of the name or title by which they may be designated, elected or
appointed and may have such other officers and assistant officers as the Board
of Directors may authorize from time to time. The Chairman of the Board,
President and Secretary shall be natural persons of full age. The Treasurer may
be a corporation, but if a natural person shall be of full age. It shall not be
necessary for any officer, other than the Chairman of the Board, to be a
director. Any number of offices may be held by the same person. Each officer
shall hold office at the pleasure of the Board of Directors and until his or her
successor has been elected or until his or her earlier death, resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation. The resignation shall be effective upon receipt thereof by the
Corporation or at such subsequent time as may be specified in the notice of
resignation. The Corporation may secure the fidelity of any or all of the
officers by bond or otherwise.
SECTION 18.2 Except as otherwise provided in the Articles of
Incorporation, an officer shall perform his or her duties as an officer in good
faith, in a manner the officer reasonably believes to be in the best interests
of the Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his or her duties shall not be liable by
reason of having been an officer of the Corporation.
SECTION 18.3 Any officer or agent of the Corporation may be removed by
the Board of Directors with or without cause. The removal shall be without
prejudice to the contract rights, if any, of any person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
If the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors.
ARTICLE 19
THE CHAIRMAN OF THE BOARD
SECTION 19.1 The Chairman shall preside at all meetings of the
shareholders and the Board of Directors and shall have responsibility for the
general management and control of the business and affairs of the Corporation.
Unless otherwise directed by the Board of Directors from time to time, the
Chairman shall have the power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of shareholders of or with
respect to any action of shareholders of any other corporation in which the
Corporation may hold securities and otherwise to exercise any and all rights and
powers which the Corporation may possess by reason of its ownership of
securities in such other corporation.
ARTICLE 20
THE PRESIDENT
SECTION 20.1 The President shall be the chief operating officer of the
Corporation and, subject to the provisions of these Bylaws and to the direction
of the Board of Directors, the President shall perform such duties and have such
powers as may from time to time be assigned to him or her by the Chairman of the
Board or the Board of Directors. The President shall perform the duties and
exercise the powers of the Chairman of the Board in the absence or disability of
the Chairman.
ARTICLE 21
THE VICE PRESIDENT
SECTION 21.1 The Vice President or, if more than one, the Vice
Presidents in the order, if any, established by the Board of Directors shall, in
the absence or incapacity of the President, have the authority to exercise all
the powers and perform the duties of the President. The Vice Presidents,
respectively, shall also have such other authority and perform such other duties
as may be provided in these Bylaws or as shall be determined by the Board of
Directors or the President. Any Vice President may, in the discretion of the
Board of Directors, be designated as "executive", "senior" or by departmental or
functional classification.
ARTICLE 22
THE SECRETARY
SECTION 22.1 The Secretary shall attend all meetings of the Board of
Directors and of the shareholders and keep accurate records thereof in one or
more minute books kept for that purpose and shall perform the duties customarily
performed by the secretary of a corporation and such other duties as may be
assigned to him or her by the Board of Directors or the President.
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ARTICLE 23
THE TREASURER
SECTION 23.1 The Treasurer shall be responsible for the custody of the
corporate funds and securities; shall be responsible for full and accurate
accounts of receipts and disbursements in books belonging to the Corporation;
and shall perform such other duties as may be assigned to the Treasurer by the
Board of Directors or the President. The Treasurer shall give bond in such sum
and with such surety as the Board of Directors may from time to time direct.
ARTICLE 24
ASSISTANT OFFICERS
SECTION 24.1 Each assistant officer shall assist in the performance of
the duties of the officer to whom such person is assistant and shall perform
such duties in the absence of the officer. An assistant officer shall perform
such additional duties as the Board of Directors, the President or the officer
to whom such person is assistant may from time to time assign such person. Such
officers may be given such functional titles as the Board of Directors shall
from time to time determine.
ARTICLE 25
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SECTION 25.1 The Corporation shall indemnify any director or officer,
and may indemnify any other employee or agent, who was or is a party to, or is
threatened to be made a party to, or who is called as a witness in connection
with, any threatened, pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, including an action by or in
the right of the Corporation, by reason of the fact that such person 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 domestic or foreign corporation, for profit or not-for-profit,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding unless the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
SECTION 25.2 The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article 25 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any Bylaw, agreement, contract, vote of shareholders or
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office. It is the policy of the
Corporation that indemnification of, and advancement of expenses to, directors
and officers of the Corporation shall be made to the fullest extent permitted by
law. To this end, the provisions of this Article 25 shall be deemed to have been
amended for the benefit of directors and officers of the Corporation effective
immediately upon any modification of the BCL or any modification, or adoption of
any other law that expands or enlarges the power or obligation of corporations
organized under the BCL to indemnify, or advance expenses to, directors and
officers of corporations.
SECTION 25.3 The Corporation shall pay expenses incurred by an officer
or director, and may pay expenses incurred by any other employee or agent, in
defending an action, or proceeding referred to in this Article 25 in advance of
the final disposition of such action 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 such person is not entitled to be indemnified by
the Corporation.
SECTION 25.4 The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article 25 shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
SECTION 25.5 The Corporation shall have the authority to create a fund
of any nature, which may, but need not, be under the control of a trustee, or
otherwise secure or insure in any manner, its indemnification obligations,
whether arising under these Bylaws or otherwise. This authority shall include,
without limitation, the authority to: (a) deposit funds in trust or in escrow;
(b) establish any form of self-insurance; (c) secure its indemnity obligation by
grant of a security interest, mortgage or other lien on the assets of the
Corporation; or (d) establish a letter of credit, guaranty or surety arrangement
for the benefit of such persons in connection with the anticipated
indemnification or advancement of expenses contemplated by this Article 25. The
provisions of this Article 25 shall not be deemed to preclude the
indemnification of, or advancement of expenses to, any person who is not
specified in Section 25.1 of this Article 25 but whom the Corporation has the
power or obligation to indemnify, or to advance expenses for, under the
provisions of the BCL or otherwise. The authority granted by this Section 25.5
shall be exercised by the Board of Directors of the Corporation.
SECTION 25.6 The Corporation shall have the authority to enter into a
separate indemnification agreement with any officer, director, employee or agent
of the Corporation or any subsidiary providing for such indemnification of such
person as the Board of Directors shall determine up to the fullest extent
permitted by law.
SECTION 25.7 As soon as practicable after receipt by any person
specified in Section 25.1 of this Article 25 of notice of the commencement of
any action, suit or proceeding specified in Section 25.1 of this Article 25,
such person shall, if a claim with respect thereto may be made against the
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Corporation under Article 25 of these Bylaws, notify the Corporation in writing
of the commencement or threat thereof; however, the omission so to notify the
Corporation shall not relieve the Corporation from any liability under Article
25 of these Bylaws unless the Corporation shall have been prejudiced thereby or
from any other liability which it may have to such person other than under
Article 25 of these Bylaws. With respect to any such action as to which such
person notifies the Corporation of the commencement or threat thereof, the
Corporation may participate therein at its own expense and, except as otherwise
provided herein, to the extent that it desires, the Corporation, jointly with
any other indemnifying party similarly notified, shall be entitled to assume the
defense thereof, with counsel selected by the Corporation to the reasonable
satisfaction of such person. After notice from the corporation to such person of
its election to assume the defense thereof, the Corporation shall not be liable
to such person under Article 25 of these Bylaws for any legal or other expenses
subsequently incurred by such person in connection with the defense thereof
other than as otherwise provided herein. Such person shall have the right to
employ his or her own counsel in such action, but the fees and expenses of such
counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at the expense of such person unless: (a) the
employment of counsel by such person shall have been authorized by the
Corporation; (b) such person shall have reasonably concluded that there may be a
conflict of interest between the Corporation and such person in the conduct of
the defense of such proceeding; or (c) the Corporation shall not in fact have
employed counsel to assume the defense of such action.
The Corporation shall not be entitled to assume the defense of any
proceeding brought by or on behalf of the Corporation or as to which such person
shall have reasonably concluded that there may be a conflict of interest. If
indemnification under Article 25 of these Bylaws or advancement of expenses is
not paid or made by the Corporation, or on its behalf, within 90 days after a
written claim for indemnification or a request for an advancement of expenses
has been received by the Corporation, such person may, at any time thereafter,
bring suit against the Corporation to recover the unpaid amount of the claim or
the advancement of expenses. The right to indemnification and advancements of
expenses provided hereunder shall be enforceable by such person in any court of
competent jurisdiction. The burden of proving that indemnification is not
appropriate shall be on the Corporation. Expenses reasonably incurred by such
person in connection with successfully establishing the right to indemnification
or advancement of expenses, in whole or in part, shall also be indemnified by
the Corporation.
SECTION 25.8 The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who 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 domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article 25.
ARTICLE 26
SHARES; SHARE CERTIFICATES
SECTION 26.1 All shares issued by the Corporation shall be represented
by certificates. The share certificates of the Corporation shall be numbered and
registered in a share register as they are issued; shall state that the
Corporation is incorporated under the laws of the Commonwealth of Pennsylvania;
shall bear the name of the registered holder, the number and class of shares and
the designation of the series, if any, represented thereby, the par value, if
any, of each share or a statement that the shares are without par value, as the
case may be; shall be signed by the Chairman of the Board, the President or a
Vice President, and the Secretary or the Treasurer or any other person properly
authorized by the Board of Directors, and shall bear the corporate seal, which
seal may be a facsimile engraved or printed. Where the certificate is signed by
a transfer agent or a registrar, the signature of any corporate officer on such
certificate may be a facsimile engraved or printed. In case any officer who has
signed, or whose facsimile signature has been placed upon, any share certificate
shall have ceased to be such officer because of death, resignation or otherwise
before the certificate is issued, such share certificate may be issued by the
Corporation with the same effect as if the officer had not ceased to be such at
the date of its issue.
ARTICLE 27
TRANSFER OF SHARES
SECTION 27.1 Upon surrender to the Corporation of a share certificate
duly endorsed by the person named in the certificate or by attorney duly
appointed in writing and accompanied where necessary by proper evidence of
succession, assignment or authority to transfer, a new certificate shall be
issued to the person entitled thereto and the old certificate cancelled and the
transfer recorded on the share register of the Corporation. Except as otherwise
provided pursuant to Section 6.2 hereof, a transferee of shares of the
Corporation shall not be a record holder of such shares entitled to the rights
and benefits associated therewith unless and until the share transfer has been
recorded on the share transfer books of the Corporation. No transfer shall be
made if it would be inconsistent with the provisions of Article 8 of the
Pennsylvania Uniform Commercial Code.
ARTICLE 28
LOST CERTIFICATES
SECTION 28.1 Where a shareholder of the Corporation alleges the loss,
theft or destruction of one or more certificates for shares of the Corporation
and requests the issuance of a substitute certificate therefor, the Board of
Directors may direct a new certificate of the same tenor and for the same number
of shares to be issued to such person upon such person's making of an
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affidavit in form satisfactory to the Board of Directors setting forth the facts
in connection therewith, provided that prior to the receipt of such request the
Corporation shall not have either registered a transfer of such certificate or
received notice that such certificate has been acquired by a bona fide
purchaser. When authorizing such issue of a new certificate the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate, or
such person's heirs or legal representatives, as the case may be, to advertise
the same in such manner as it shall require and/or give the Corporation a bond
in such form and sum and with surety or sureties, with fixed or open penalty, as
shall be satisfactory to the Board of Directors, as indemnity for any liability
or expense that it may incur by reason of the original certificate remaining
outstanding.
ARTICLE 29
FISCAL YEAR
SECTION 29.1 The fiscal year of the Corporation shall be as determined
by the Board of Directors.
ARTICLE 30
MANNER OF GIVING NOTICE; WAIVERS OF NOTICE
SECTION 30.1 Except for any notice under Section 2.3 of these Bylaws,
which shall be governed by the provisions of Section 2.3, any notice required to
be given to any person under the provisions of these Bylaws shall be given to
the person either personally or by sending a copy thereof:
(a) By first class or express mail, postage prepaid, or courier service,
charges prepaid, to his or her postal address appearing on the books of the
Corporation or, in the case of written notice to directors, supplied by each
director to the Corporation for the purpose of the notice. A notice pursuant to
this subparagraph shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a courier service for
delivery to that person.
(b) By facsimile transmission, e-mail or other electronic communication
to his or her facsimile number or address for e-mail or other electronic
communications supplied by him or her to the Corporation for the purpose of
notice. Notice pursuant to this subparagraph shall be deemed to have been given
to the person entitled thereto when sent.
SECTION 30.2 Any notice required to be given to any person under the
provisions of statute, the Corporation's Articles of Incorporation or these
Bylaws may be waived in a writing signed by the person entitled to such notice
whether before or after the time stated therein. Except as otherwise required by
statute, and except in the case of a special meeting, neither the business to be
transacted at, nor the purpose of, a meeting need be specified in the waiver of
notice. In the case of a special meeting of shareholders, the waiver of notice
shall specify the general nature of the business to be transacted. Attendance of
any person, whether 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, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened.
ARTICLE 31
AMENDMENTS
SECTION 31.1 These Bylaws may be amended and repealed, and new Bylaws
may be adopted, by the shareholders only if approved by the affirmative vote of
at least 80% of the outstanding shares entitled to vote at a duly convened
regular or special meeting of the shareholders duly convened after written
notice to the shareholders that the purpose, or one of the purposes, of the
meeting is to consider the amendment or repeal of these Bylaws. There shall be
included in, or enclosed with, the notice a copy of the proposed amendment or a
summary of the changes to be effected thereby.
SECTION 31.2 These Bylaws may be amended or repealed, and new Bylaws
adopted, by the affirmative vote of a majority of the members of the Board of
Directors at any regular or special meeting duly convened, subject to the power
of the shareholders to change such action of the Board of Directors in
accordance with the provisions of Section 31.1 of these Bylaws.
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Please date, sign and mail your
proxy card back as soon as possible
Annual Meeting of Stockholders
MET-PRO CORPORATION
June 11, 2003
Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------
- --- Please mark your
X votes as in this
- --- this example.
WITHHOLD
AUTHORITY
FOR to vote for
1. ELECTION [ ] [ ] NOMINEES: Two Directors for a term expiring in 2006:
OF Alan Lawley
DIRECTORS. Gary J. Morgan
(To withhold authority to vote for any nominee(s), write
the name(s) of the nominee(s) in the space that follows)
- --------------------------------------------------------
For Against Abstain
2. Approval of the change in the Company's State of Incorporation from Delaware [ ] [ ] [ ]
to Pennsylvania
For Against Abstain
3. Proposal to Ratify the appointment of Margolis & Company P.C. as independent [ ] [ ] [ ]
certified public accountants.
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed, will be voted in the manner directed here by
the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR Proposals 1, 2 and 3, unless your shares are registered in the name of your
broker, in which case they will not be voted at all as to Proposal 2, which will
have the same effect as a vote AGAINST Proposal 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature _____________________________ Signature if held jointly _________________________________ Dated: ____________, 2002
Note: Please sign exactly as name appears. When shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
PROXY
MET-PRO CORPORATION
160 Cassell Road
Harleysville, Pennsylvania 19438
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints William L. Kacin and Alan Lawley as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and vote, as designated on the reverse side, all the shares of
Common Stock of Met-Pro Corporation held of record by the undersigned on April
18, 2003 at the Annual Meeting of the Stockholders to be held on June 11, 2003
or any adjournment thereof.
(Continued on reverse side)