SECURITIES AND EXCHANGE COMMISSION
Washington, DC 10549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR QUARTER ENDED JUNE 30, 1996.
Commission File Number 0-2958
TSI INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 41-0843524
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
500 Cardigan Road, Shoreview, Minnesota 55126
(Address of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 20 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practical date.
Date: July 1, 1996 Number of Common Shares Outstanding: 5,615,644
TSI INCORPORATED
FORM 10-Q
For the Quarter Ended June 30, 1996
Page
PART I. FINANCIAL INFORMATION 2
Item 1. Financial Statements
Consolidated Statements of Earnings 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Note to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-8
PART II. OTHER INFORMATION 9
EXHIBIT 3 (i) Second Amended and Restated Articles of
Incorporatation
(ii) Restated By-Laws of TSI Incorporated
Adopted Effective July 18, 1996
EXHIBIT 11 Computation of Per Share Earnings
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
THREE MONTHS ENDED JUNE 1996 1995
<S> <C> <C>
Net sales $19,497,118 $13,769,918
Cost of products sold 8,513,589 5,849,840
GROSS PROFIT 10,983,529 7,920,078
Operating expenses
Research and product development 2,489,987 2,083,581
Selling 4,263,387 3,636,012
Administrative 1,4l4,417 1,159,547
8,167,791 6,879,140
OPERATING INCOME 2,815,738 1,040,938
Other income 65,208 104,164
EARNINGS BEFORE INCOME TAXES 2,880,946 1,145,102
Provision for income taxes 1,008,000 401,000
NET EARNINGS $ 1,872,946 $ 744,102
EARNINGS PER COMMON SHARE $ .16 $ .07
Weighted average number of shares for
computation of earnings per common share 11,662,317 10,738,922
</TABLE>
See notes to consolidated financial statements.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30 March 31 June 30
1996 1996 1995
(UNAUDITED) (unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,821,818 $ 688,055 $ 1,813,934
Accounts receivable 14,542,798 15,533,541 9,805,537
Prepaid expenses 602,858 310,483 470,668
Inventories
Finished products 2,635,699 2,462,381 2,043,771
Work-in-process 2,424,232 1,782,462 1,579,184
Materials and supplies 6,614,051 6,635,571 4,713,137
11,673,982 10,880,414 8,336,092
TOTAL CURRENT ASSETS 28,641,456 27,412,493 20,426,231
INTANGIBLES AND OTHER ASSETS
Goodwill 2,846,883 2,991,222 2,638,398
Note receivable 610,000 610,000 610,000
Deferred income tax benefit 721,020 721,020 289,073
Other assets 2,297,078 2,377,558 2,590,969
6,474,981 6,699,800 6,128,440
PROPERTY, PLANT AND EQUIPMENT
Land 128,503 128,503 128,503
Buildings 3,564,863 3,564,863 1,039,070
Construction in progress 370,772 236,747 2,564,706
Machinery and equipment 16,832,046 16,301,710 13,549,419
20,896,184 20,231,823 17,281,698
Less allowance for depreciation 12,234,491 11,831,980 10,494,015
8,661,693 8,399,843 6,787,683
TOTAL ASSETS $43,778,130 $42,512,136 $33,342,354
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 3,752,340 $ 4,863,403 $ 3,647,733
Employee compensation 2,489,449 3,118,417 1,926,276
Taxes, other than income taxes 588,635 306,227 347,601
Income taxes payable 1,455,706 626,139 548,336
TOTAL CURRENT LIABILITIES 8,286,130 8,914,186 6,469,946
TOTAL LIABILITIES 8,286,130 8,914,186 6,469,946
SHAREHOLDERS' EQUITY
Common shares, $.10 par value 1,122,979 559,083 522,636
Additional paid-in capital 8,385,893 8,800,846 6,068,126
Retained earnings 25,850,780 24,202,036 20,031,259
Equity adjustment from translation 132,348 35,985 250,387
TOTAL SHAREHOLDERS' EQUITY 35,492,000 33,597,950 26,872,408
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $43,778,130 $42,512,136 $33,342,354
</TABLE>
See notes to consolidated financial statements.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited )
THREE MONTHS ENDED JUNE 30 1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 1,872,946 $ 744,102
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for losses on accounts receivable -- 14,170
Depreciation and amortization of property, plant and equipment 439,555 302,698
Amortization of goodwill 144,339 29,062
Changes in operating assets and liabilities:
Accounts receivable 990,743 (1,430,152)
Prepaid expenses (292,375) (166,582)
Inventories (793,568) (919,453)
Other assets 80,480 48,160
Accounts payable and accrued expenses (1,111,063) (345,455)
Employee compensation payable (628,968) (578,997)
Taxes, other than income taxes 282,408 74,644
Current income taxes payable 829,567 368,338
Foreign currency translation gain (loss) 83,643 (96,756)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,897,707 (1,956,221)
INVESTING ACTIVITIES
Additions to property, plant and equipment (707,866) (1,197,371)
Purchase of companies, net of cash acquired -- (4,496,850)
NET CASH USED IN INVESTING ACTIVITIES (707,866) (5,694,221)
FINANCING ACTIVITIES
Proceeds from stock options exercised 148,943 66,784
Dividends paid (224,202) (156,424)
NET CASH USED IN FINANCING ACTIVITIES (75,259) (89,640)
Effect of exchange rate changes on cash and cash equivalents 19,181 2,463
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,133,763 (7,737,619)
Cash and cash equivalents at beginning of year 688,055 9,551,552
CASH AND CASH EQUIVALENTS AT END OF THREE MONTH PERIOD $ 1,821,818 $ 1,813,933
</TABLE>
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
Note 1. Basis of Presentation
The information included in the accompanying interim financial
statements is unauditied. In the opinion of management, all
adjustments, consisting of normal recurring accruals necessary for a
fair presentation of the results of operations, financial position and
cash flows for the interim periods presented have been reflected
herein. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the entire
year.
Note 2. Earnings Per Share
See Exhibit 11, Computation of Per Share Earnings, of this document.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three month period ended June 30, 1996 were $19,497,000. This
represents an increase of 42 percent from $13,770,000 for the same period a year
ago.
Sales of products for the Comfort, Safety and Health of People accounted for 68
percent of the Company's total business and experienced 41 percent growth in net
sales during the first quarter, compared to the same quarter a year ago. This
area accounted for 66 percent of the Company's business in fiscal 1996, ended
March 31, 1996. Contributing to this growth was shipments of about $3.1 million
under contracts with the U.S. Army and German Army to furnish respirator fit
testers for bio-hazard protection.
Sales of products for Productivity and Quality Improvement were at 32 percent of
total sales for the fiscal 1997 first quarter and net sales increased about 43
percent over last year's first quarter. Most of the sales increase for the
quarter in this category came from the October, 1996 acquisition of Aerometrics,
Inc.
Sales to U.S. and state government agencies including defense, comprised about
21 percent of the Company's net sales for the fiscal 1997 first quarter, as
compared to 18 percent for the same fiscal 1996 quarter. A higher percentage of
governmental sales was experienced during the first quarter of fiscal 1997,
mostly because of shipments of respirator fit testers to the U.S. Army and there
were not such shipments during the fiscal 1996 first quarter. Since sales to
government agencies represent a significant portion of the Company's sales, it
is important to consider the potential effects of changes in government
spending. Due to the Company's diverse line of products, sales normally occur in
a wide range of U.S. and state government agencies, so total government sales
have been quite stable as a percentage of total sales. However, shifts have
occurred because of changes from quarter-to-quarter and year-to-year in
shipments under contracts with the U.S. Army for the Company's PORTACOUNT(R)
respirator fit testers and the typical percentage was lowered due to a normally
lower percentage of sales to government agencies for the two acquisitions made
during fiscal 1996.
During the first quarter, backlog of orders decreased from $30.0 million at
March 31, 1996 to $25.3 million at June 30, 1996, compared to backlog of $18.5
million at June 30, 1995. The backlog decrease since March 31, 1996 was mainly
due to shipments under the previously referenced army contracts, which were
added to backlog during fiscal 1996. Also, no major new contracts were added to
backlog during the first quarter of this year.
Gross profit for this quarter was 56.3 percent of net sales compared to 57.5
percent for the first quarter last year. The lower gross profit percentage for
the first three months this year was due to the effect of normally lower gross
profit margins at the companies acquired in fiscal 1996.
Research and product development expenses were 12.8 percent of net sales for the
three month period ended June 30, 1996, as compared to 15.1 percent of net sales
for the same period last year. The decrease in research and product development
expenses as a percentage of net sales is mostly the result of increased sales in
the fiscal 1997 period as compared to fiscal 1996. Actual research and product
development spending was up about 20 percent in the quarter and acquisitions
accounted for about 75 percent of that increase. Development of new technologies
and products continues to be a significant contribution to the Company's growth
strategies. For all of fiscal 1997 research and product development expenses are
expected to continue in the Company's historical range of 12 to 14 percent of
sales.
Selling expenses were 22 percent of net sales for the first three months of
fiscal 1997 compared to 26 percent of net sales for the same period in fiscal
1996. The decrease in selling expenses as a percentage of net sales corresponded
to higher sales volume in this year's first quarter. Actual expenses rose 17
percent due to acquisitions previously discussed, the higher volume of sales,
several major trade shows and sales meetings during this year's first quarter.
Administrative expenses were 7.3 percent and 8.4 percent for the quarters ending
June 30, 1997 and 1997 receptively. The Company expects administrative costs to
continue in an operating range of 7 to 9 percent of net sales through the
remainder of fiscal 1997.
Other income was $65,000 in the first quarter of fiscal 1997 compared to
$104,000 in the first quarter of fiscal 1996. This decrease is primarily due to
lower interest income this year and fluctuations in foreign currency
transactions.
The provision for income taxes was at the rate of 35 percent of pre-tax earnings
for the first quarters of both fiscal 1997 and 1996.
Liquidity and Capital Resources
Cash and cash equivalents increased by $1,134,000 to $1,822,000 at June 30, 1996
from $688,000 at March 31, 1996. The increase is mainly attributable to
increased net earning.
The ratio of current assets to current liabilities was 3.5 as of June 30, 1996
compared to 3.1 as of March 31, 1996. Working capital increased $1.9 million to
$20.4 million at the end of the first quarter of fiscal 1997, compared to $14.0
million at the end of fiscal 1996.
Management believes internally-generated funds and short-term borrowings on
existing credit lines will provide adequate resources for supporting operations
during the remainder of fiscal 1997.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a vote of Security Holders.
On July 18, 1996, the Company conducted its annual meeting of
stockholders. Of the 5,612,544 shares of the Company's common stock
entitled to vote at the meeting, 5,004,205 shares were present at the
meeting in person or by proxy.
The three people designated by the Company's Board of Directors as
nominees for director were elected, with voting as follows:
Nominee Total Votes For Total Votes Withheld
John F. Carlson 4,779,347 224,800
James E. Doubles 4,779,347 224,712
Lowell D. Nystrom 4,779,347 224,575
Stockholders voted to ratify the appointment of KPMG Peat Marwick LLP
as the independent auditors for the Company for the fiscal year ending
March 31, 1997. There were 4,996,958 votes in favor of ratification,
3,550 votes against ratification and 3,697 shares specifically
abstained from voting on the matter.
Stockholders also voted to adopt the Second Amended and Restated
Articles of Incorporation of the Company, as presented in the Proxy
Statement dated 25 June 1996, which increased the number of authorized
shares of common stock of the Company from 8,000,000 to 30,000,000,
revised language considering the management of the Company to conform
with current Minnesota law and practice, made the language of the
Articles gender neutral and corrected the Company's address. There were
4,266,991 votes in favor, 715,100 votes against and 22,114 votes
abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3 -
(i) Second Amended and Restated Articles of
Incorporation
(ii) Restated By-Laws of TSI Incorporated Adopted
Effective July 18, 1996.
Exhibit 11 - Computation of Per Share Earnings
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the Registrant
during the quarter for which this report is being filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
thereunto duly authorized.
Registrant: TSI Incorporated
13 August 1996 By: /s/_______________________________
James E. Doubles
President & COO
By: /s/_______________________________
Lowell D. Nystrom
Vice President & CFO
<TABLE>
<CAPTION>
EXHIBIT 11
TSI Incorporated
Computation of Per Share Earnings*
Three Months Ended June 30, 1996
1996 1995
------------- ---------------
<S> <C> <C>
Primary
Average shares outstanding 11,217,990 10,432,708
Net effect of dilutive stock options, based on the
treasury stock method using average market price 452,162 306,214
----------- -----------
Total 11,670,151 10,738,922
Net Earnings $ 1,872,946 $ 744,102
Primary per share amounts $ .16 $ .07
Fully Diluted
Average shares 11,217,990 10,432,708
Net effect of dilutive stock options, based on the
treasury stock method using the period-end market
price, if higher than the average market price 452,162 306,214
----------- -----------
Total 11,670,151 10,738,922
Net Earnings $ 1,872,946 $ 744,102
Fully diluted per share amounts $ .16 $ .07
- ----------------------
*Data on number of shares outstanding and earnings per share has been restated
retroactively to reflect the two-for-one stock dividend declared on July 18,
1996.
</TABLE>
EXHIBIT 3 (i)
RESTATED ARTICLES OF INCORPORATION
OF
TSI INCORPORATED
ARTICLE I
The name of this corporation is TSI Incorporated.
ARTICLE II
This corporation has been formed for general business purposes.
ARTICLE III
The corporation shall have all of the powers granted or available under
the laws of the State of Minnesota and laws amendatory thereof and supplementary
thereto, including but not limited to the following:
1. The power to acquire, own, pledge, dispose of and deal in shares of
capital stock, rights, bonds, debentures, notes, trust receipts and other
securities, obligations, chooses in action and evidences of indebtedness or
interest issued or created by any corporation (including this corporation),
associations, firms, trusts or persons, public or private, or by the government
of the United States of America, or by any foreign government or by any state,
territory, province, municipality or other political subdivision or by any
governmental agency, domestic or foreign, and as owner thereof to possess and
exercise all the rights, powers and privileges of ownership, including the right
to execute consents and vote thereon and to do any and all acts and things
necessary or advisable for the preservation, protection, improvement and
enhancement in value thereof.
2. The power to aid in any manner any corporation, association, firm or
individual, any of whose securities, evidences of indebtedness, obligations or
stock are held by the corporation directly or indirectly, or in which, or in the
welfare of which, the corporation shall have any interest, and to guarantee
securities, evidences of indebtedness and obligations of other persons, firms,
associations and corporations.
3. The power to carry out all or any part of the purposes of this
corporation as principal or agent, or in conjunction, or as a partner or member
of a partnership, syndicate or joint venture or otherwise, and in any part of
the world to the same extent and as fully as natural persons might or could do.
ARTICLE IV
The duration of the corporation shall be perpetual.
ARTICLE V
The location and post office address of this corporation's registered
office in this state shall be 500 Cardigan Road, Shoreview, Minnesota
55126-3996.
ARTICLE VI
The minimum amount of stated capital of this corporation shall not be
less than One Thousand Dollars ($1,000.00).
ARTICLE VII
The total authorized capital stock of this corporation shall consist of
thirty million (30,000,000) shares of common stock of the par value of ten cents
($.10) per share. Each holder of shares of common stock shall, at every meeting
of shareholders, be entitled to one vote in person or by proxy for each share of
stock held by such shareholder. All shares of common stock shall be equal in
every respect.
There shall be no cumulative voting. The shareholders of this
corporation shall have no pre-emptive or preferential rights to subscribe for or
purchase or receive any part of any unissued stock or securities of the
corporation, whether now or hereafter authorized, or of any stock or securities
issued and thereafter acquired by this corporation.
ARTICLE VIII
The business and affairs of this corporation shall be managed by or
under the direction of a Board of Directors consisting of not more than nine (9)
persons. The exact number of directors within the maximum limitation specified
in the preceding sentence shall be fixed from time to time by the Board of
Directors pursuant to a resolution adopted by a majority of the entire Board of
Directors, but no decrease in the number of directors shall change the term of
any director at the time thereof. The Board of Directors shall be divided into
three classes, as nearly equal in number of directors as possible, as determined
by the Board of Directors. Each class shall be elected for a term expiring at
the annual meeting of shareholders held in the third successive year thereafter;
provided, however, that at the 1986 annual meeting of shareholders one class
shall be elected for a term expiring at the 1987 annual meeting of shareholders,
one class for a term expiring at the 1988 annual meeting of shareholders, and
one class for a term expiring at the 1989 annual meeting of shareholders. Each
director shall continue in office until the annual meeting of shareholders in
the year which his or her term expires and thereafter until his or her successor
is duly elected and qualified, unless a prior vacancy shall occur by reason of
his or her death, resignation or removal from office.
Newly created directorships resulting from any increase in the
authorized number of directors and any vacancies in the Board of Directors may
be filled (a) by the affirmative vote of a majority of the directors then in
office, even though less than a quorum, or (b) by the affirmative vote of the
holders of a majority of the shares present and entitled to vote for the
election of directors. Directors so chosen by the Board of Directors or the
shareholders to fill a vacancy or newly created directorship shall hold office
for a term expiring at the annual meeting of shareholders at which the term of
the class to which they have been appointed or elected expires.
Any director, or the entire Board of Directors, may be removed from
office at any time, with or without cause, but only by the affirmative vote of
the holders of at least 75% of the voting power of all of the shares of this
corporation entitled to vote for the election of directors.
The affirmative vote of the holders of at least 75% of the voting power
of all of the shares of this corporation entitled to vote for the election of
directors shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article VIII.
ARTICLE IX
The authority to make and alter the By-Laws of this corporation is
hereby vested in the Board of Directors of this corporation to the full extent
permitted by law, subject, however, to the power of the shareholders of this
corporation to repeal or alter such By-Laws.
Authority is hereby conferred upon and vested in the Board of Directors
of this corporation to accept or reject subscriptions for shares of its capital
stock, whether such subscriptions be made before or after its incorporation. The
Board of Directors shall have the authority to issue shares of stock and
securities of the corporation to the full amount authorized by these Articles of
Incorporation, and shall have the authority to grant and issue rights to convert
securities of the corporation into shares of stock of the corporation, options
to purchase shares or securities convertible into shares, warrants, and other
such rights or options, and to fix the terms, provisions and conditions of such
rights, options and warrants, including the option price or prices at which
shares may be purchased or subscribed for and the conversion basis or bases of
such rights, options and warrants.
ARTICLE X
Except as provided in Article VIII and Article XI of the Articles of
Incorporation, the shareholders of this corporation may, by a majority vote of
all shares issued, outstanding and entitled to vote:
1. Authorize the Board of Directors to sell, lease, exchange
or otherwise dispose of all, or substantially all, of its property and
assets, including its goodwill, upon such terms and conditions and for
such considerations, which may be money, shares, bonds, or other
instruments for the payment of money or other property, as the Board of
Directors deems expedient and in the best interests of the corporation;
2. Amend the Articles of Incorporation of this corporation for
any reason or lawful purpose, and in the event that any such amendment
adversely affects the rights of holders of shares of different classes,
the affirmative vote of a majority of each such class shall be
sufficient to adopt the amendment; and
3. Adopt and approve an agreement of merger or consolidation
presented to them by the Board of Directors.
ARTICLE XI
A. In addition to the requirements of any applicable statute, the
affirmative vote of shareholders holding not less than 75% of the outstanding
shares of "Voting Stock" (as hereinafter defined) shall be required for the
approval of any "Business Combination" (as hereinafter defined) involving this
corporation and for the approval or authorization by this corporation, in its
capacity as a shareholder, of any Business Combination involving a subsidiary of
this corporation which requires the approval or authorization of the
shareholders of the subsidiary, provided, however, that the 75% voting
requirement shall not be applicable if:
1. A majority of all of the "Continuing Directors" (as
hereinafter defined) by vote have expressly approved the Business
Combination; or
2. The Business Combination is a merger, consolidation,
exchange of shares or sale of all or substantially all of the assets of
this corporation and the cash to be received per share in the Business
Combination by holders of the common stock of this corporation (other
than the "Related Person", as hereinafter defined) is not less than the
highest per share price (including brokerage commissions, transfer
taxes, soliciting dealers' fees and dealer-management compensation)
paid by the Related Person in acquiring any of its holdings of this
corporation's common stock (with appropriate adjustments for
recapitalizations, stock splits, stock dividends and other changes to
the corporation's capital structure).
B. For purposes of this Article XI.
1. The term "Business Combination" shall mean:
(a) any merger or consolidation of this corporation
or a subsidiary of this corporation with or into a Related
Person;
(b) any sale, lease, exchange, transfer or other
disposition (in one transaction or in series of related
transactions), including, without limitation, a mortgage or
any other security device, of all or any "Substantial Part"
(as hereinafter defined) of the assets of this corporation
(including, without limitation, any voting securities of a
subsidiary of this corporation) or a subsidiary of this
corporation to a Related Person;
(c) any sale, lease, exchange, transfer or other
disposition (in one transaction or in a series of related
transactions) of all or any Substantial Part of the assets of
a Related Person to this corporation or a subsidiary of this
corporation;
(d) any issuance, sale, exchange, transfer or other
disposition of any securities of this corporation or a
subsidiary of this corporation to a Related Person (except
common stock issuable pursuant to the exercise of employee
options to purchase, for each employee, during any
twelve-month period, not more than one percent of the common
stock outstanding during such period), including without
limitation, any exchange of shares of this corporation or a
subsidiary of this corporation for shares of a Related Person
which, in the absence of this Article, would have required the
affirmative vote of at least a majority of the voting power of
the outstanding shares of this corporation entitled to vote or
the affirmative vote of this corporation in its capacity as a
shareholder of the subsidiary;
(e) any acquisition by this corporation or a
subsidiary of this corporation of any securities of a Related
Person or any securities of this corporation or a subsidiary
of this corporation from a Related Person;
(f) any recapitalization or reclassification of the
securities of this corporation or a subsidiary of this
corporation which would have the effect of increasing the
voting power of the Related Person;
(g) any plan or proposal for the liquidation of this
corporation proposed by or on behalf of a Related Person; and
(h) any agreement, contract or other arrangement
providing for any of the transactions described in this
definition of Business Combination.
2. The term "Related Person" shall mean and include any
"Person" (as hereinafter defined) which, together with its "Affiliates"
and "Associates" (as hereinafter defined), beneficially owns in the
aggregate 20% or more of the voting power of the Voting Stock, and any
Affiliate or Associate of any such Person. Beneficial ownership shall
be determined under Rule 13d-3 of the Securities Exchange Act of 1934,
as amended, as in effect on June 27, 1986; provided, however, a Person
shall also be deemed to be the beneficial owner of (a) any shares of
Voting Stock which such Person or any of its Affiliates or Associates
has the right to acquire at any time pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options or otherwise, and (b) any shares of Voting Stock
beneficially owned by any other Person with which such Person or any of
its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of the shares of Voting Stock.
3. The term "Person" shall mean any individual, corporation,
partnership or other person or entity.
4. The term "Affiliate", used to indicate a relationship to a
specified person, shall mean a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, such specified person.
5. The term "Associate", used to indicate a relationship with
a specified person, shall mean (a) any corporation or organization
(other than this corporation or a majority-owned subsidiary of this
corporation) of which such specified person is an officer or partner r
is, directly or indirectly, the beneficial owner or ten percent or more
of any class of equity securities, (b) any trust or other estate in
which such specified person has a substantial beneficial interest or as
to which such specified person serves as trustee or in a similar
fiduciary capacity, and (c) any relative or spouse of such specified
person, or any relative of such spouse, who has the same home as such
specified person or who is a director or officer of this corporation or
any of its parents or subsidiaries.
6. The term "Voting Stock" shall mean all outstanding shares
of capital stock of this corporation entitled to vote generally in the
election of directors. Each reference to a proportion of shares of
Voting Stock shall refer to such proportion of the votes entitled to be
case by such shares.
7. The term "Continuing Director" shall mean any person then
serving as a director of this corporation (a) who was a member of the
Board of Directors of this corporation on July 17, 1986, or (b) who
became a director after July 17, 1986 and whose election, or nomination
for election by this corporation's shareholders was approved by a
majority of all of the Continuing Directors, either by a specific vote
or by approval of the proxy statement issued by this corporation on
behalf of the Board of Directors in which such person is named as
nominee for director; provided, however, that in no event shall a
director who announces that he or she has a conflict of interest with
respect to, and refrains from voting on, the Business Combination in
question be deemed to be a Continuing Director for purposes of such
vote.
8. The term "Substantial Part" shall mean more than 25% of the
fair market value of the total assets of the corporation in question,
as of the end of its most recent fiscal year ending prior to the time
the determination is being made.
C. For the purposes of this Article XI, the Continuing Directors by a
majority vote shall have the power to make a binding determination as to: (i)
the number of shares of Voting Stock of this corporation that any person or
entity beneficially owns; (ii) whether a person or entity is an Affiliate or
Associate of another; (iii) whether the assets subject to any Business
Combination constitute a Substantial Part; (iv) whether any Business Combination
is one in which a Related Person has an interest; (v) whether the cash to be
received per share by holders of common stock of this corporation other than the
Related Person in a Business Combination is an amount at least equal to the
highest per share price paid by the Related Person; and (vi) such other matters
with respect to which a determination is required under this Article XI.
D. The affirmative vote of the holders of at least 75% of the
outstanding shares of Voting Stock of this corporation shall be required to
amend or repeal, or to adopt any provision inconsistent with this Article XI.
ARTICLE XII
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for (i) liability based on a breach of the duty of
loyalty to the corporation or the shareholders; (ii) liability for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) liability under Sections 302A.559 or 80A.23 of the
Minnesota Statutes; (iv) liability for any transaction from which the director
derived an improper personal benefit; or (v) liability for any act or omission
occurring prior to the date when this Article becomes effective. If Chapter
302A, the Minnesota Business Corporation Act, hereafter is amended to authorize
the further elimination or limitation of the liability of directors, then the
liability of a director or the corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Chapter 302A, the Minnesota Business Corporation Act.
Any repeal or modification of this Article by the shareholders of the
corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such repeal or modification.
<TABLE>
<CAPTION>
Exhibit 3 (ii)
RESTATED BY-LAWS OF TSI INCORPORATED
ADOPTED EFFECTIVE JULY 18, 1996
TABLE OF CONTENTS
<S> <C>
ARTICLE I OFFICES, CORPORATE SEAL.................................................................................1
SECTION 1. REGISTERED OFFICE.....................................................................................1
SECTION 2. CORPORATE SEAL........................................................................................1
ARTICLE II MEETINGS OF SHAREHOLDERS...............................................................................1
SECTION 1. ANNUAL MEETING........................................................................................1
SECTION 2. RECORD DATE...........................................................................................1
SECTION 3. SPECIAL MEETINGS......................................................................................2
SECTION 4. NOTICE OF MEETINGS....................................................................................2
SECTION 5. QUORUM................................................................................................3
SECTION 6. VOTING AND PROXIES....................................................................................3
SECTION 7. PARLIAMENTARY PROCEDURE...............................................................................4
SECTION 8. TABULATION OF PROXIES.................................................................................4
SECTION 9. CLOSING OF THE POLLS..................................................................................5
SECTION 10. ADJOURNED MEETING TO REPORT ELECTION RESULT..........................................................5
ARTICLE III DIRECTORS.............................................................................................5
SECTION 1. POWERS, NUMBER AND TERM...............................................................................5
SECTION 2. QUORUM AND VOTING.....................................................................................6
SECTION 3. MEETINGS..............................................................................................7
SECTION 4. QUALIFICATION; RETIREMENT.............................................................................8
SECTION 5. COMMITTEES............................................................................................8
SECTION 6. REMUNERATION..........................................................................................8
SECTION 7. VACANCIES AND NEWLY CREATED DIRECTORSHIPS.............................................................8
ARTICLE IV OFFICERS...............................................................................................9
SECTION 4.1 NUMBER AND QUALIFICATION.............................................................................9
SECTION 4.2 ELECTION AND TERM OF OFFICE..........................................................................9
SECTION 4.3 REMOVAL AND VACANCIES................................................................................9
SECTION 4.4 CHAIR...............................................................................................10
SECTION 4.5 CHIEF EXECUTIVE OFFICER.............................................................................10
SECTION 4.6 CHIEF FINANCIAL OFFICER.............................................................................10
SECTION 4.7 DELEGATION..........................................................................................11
ARTICLE V AMENDMENTS OF BY-LAWS..................................................................................11
ARTICLE VI INDEMNIFICATION.......................................................................................12
SECTION 1. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES OF THIS CORPORATION.............................12
SECTION 2. INDEMNIFICATION OF PERSONS OTHER THAN DIRECTORS, OFFICERS, AND EMPLOYEES OF THIS CORPORATION.........12
SECTION 3. INDEMNIFICATION NOT EXCLUSIVE........................................................................12
SECTION 4. INSURANCE............................................................................................13
ARTICLE VII NOTICES..............................................................................................13
SECTION 1. DIRECTORS............................................................................................13
SECTION 2. SHAREHOLDERS.........................................................................................13
ARTICLE VIII CERTIFICATES OF STOCK...............................................................................14
SECTION 1. CERTIFICATES.........................................................................................14
SECTION 2. TRANSFER OF SHARES...................................................................................15
ARTICLE IX CONTRACTS, LOANS, CHECKS AND DEPOSITS.................................................................15
SECTION 1. CONTRACTS............................................................................................15
SECTION 2. LOANS................................................................................................15
SECTION 3. CHECKS, DRAFTS, ETC..................................................................................16
SECTION 4. DEPOSITS.............................................................................................16
SECTION 5. PROXIES..............................................................................................16
ARTICLE X MISCELLANEOUS..........................................................................................17
SECTION 1. DIVIDENDS............................................................................................17
SECTION 2. RESERVES.............................................................................................17
SECTION 3. FISCAL YEAR..........................................................................................17
ARTICLE XI SUBSIDIARIES AND DIVISIONS............................................................................17
SECTION 1. DIVISIONAL OFFICERS..................................................................................17
SECTION 2. VOTING STOCK OF SUBSIDIARIES.........................................................................18
SECTION 3. STATUS OF DIVISIONAL AND SUBSIDIARY OFFICERS.........................................................18
</TABLE>
RESTATED BY-LAWS
OF
TSI INCORPORATED
ARTICLE I
Offices, Corporate Seal
Section 1. Registered Office. The registered office of this corporation
shall be 500 Cardigan Road, Shoreview, Minnesota 55126, and this corporation may
have offices at such other places as the Board of Directors shall from time to
time determine.
Section 2. Corporate Seal. The corporate seal shall be circular in form
and shall have inscribed thereon in a circle the name of the corporation and the
word "Minnesota" and the words "Corporate Seal" within the circle.
ARTICLE II
Meetings of Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders of
this corporation shall be held at its registered office, or at any place within
or without the state as may be designated by the Board of Directors, on the
third Thursday of July in each year or such other day in such year as may be
determined by the Board of Directors, at which time the shareholders entitled to
vote thereat shall elect directors in accordance with Section I of Article III
of these By-Laws and shall transact such other business as shall properly come
before them.
Section 2. Record Date. Only shareholders of record at the close of
business on the record date forty-five (45) days prior to the date of the annual
meeting, or such other record date as may be fixed by the Board of Directors,
shall be entitled to vote at such meeting.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes appropriate for action by shareholders, may be called by
the Chair, by the President or by the Board of Directors or any two or more
members of the Board. Such meeting shall be held on such date and at such time
and place as shall be fixed by the person or persons calling the meeting and
designated in the notice of meeting. Special meetings may also be called by one
or more shareholders holding not less than ten percent (10%) of the voting power
of all shares of the corporation entitled to vote by delivering to the Chief
Executive Officer or the Chief Financial Officer a written demand for a special
meeting, which demand shall contain the purposes of the meeting. Within thirty
(30) days after the receipt of a written demand for a special meeting of
shareholders by the Chief Executive Officer or the Chief Financial Officer, the
Board of Directors shall cause a special meeting of shareholders to be called
and held on notice no later than ninety (90) days after the receipt of such
written demand, all at the expense of the corporation. Business transacted at
any special meeting of shareholders shall be limited to the purpose or purposes
stated in the notice of meeting. Any business transacted at any special meeting
of shareholders that is not included among the stated purposes of such meeting
shall be voidable by or on behalf of the corporation unless all of the
shareholders have waived notice of the meeting. Such meetings shall be held at
the registered office of the corporation or at any other place within or without
the state as may be designated by the Board of Directors in any resolution or
resolutions adopted by the Board at any time or from time to time.
Section 4. Notice of Meetings. There shall be mailed to each person
shown by the books of this corporation to be, on the record date for determining
shareholders entitled to vote, a holder of record of voting shares, at his or
her address as shown by the books of this corporation, a notice setting out the
time and place of the meeting, which notice shall be mailed at least ten (10)
days and not more than sixty (60) days prior thereto. In the case of a special
meeting, the notice shall contain a statement of the purposes of the meeting.
Notice shall be deemed received when it is given.
Section 5. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If a quorum is present when a duly called or held meeting
is convened, the shareholders present may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
Section 6. Voting and Proxies. At each meeting of the shareholders
every shareholder shall be entitled to one vote in person or by proxy for each
share of voting capital stock held by such shareholder, but no proxy shall be
entitled to vote after eleven (11) months from the date of its execution, unless
otherwise provided in the proxy. Every proxy shall be in writing and signed by
the shareholder granting it, and shall be filed with the Secretary or Assistant
Secretary of the corporation before or at the time of the meeting. When a quorum
is present at any meeting, the vote of the holders of the majority of the shares
having voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which by
express provision of the Minnesota Statutes or of the Articles of Incorporation
or these By-Laws a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 7. Parliamentary Procedure. Meetings of shareholders generally
shall follow accepted rules of parliamentary procedure, subject to the
following:
(a) The Chair of the meeting shall have absolute authority
over matters of procedure, and there shall be no appeal from the ruling
of the Chair. If, in his or her absolute discretion, the Chair deems it
advisable to dispense with the rules of parliamentary procedure as to
any one meeting of shareholders or part thereof, he or she shall so
state and shall clearly state the rules under which the meeting or
appropriate part thereof shall be conducted.
(b) If disorder should arise which prevents the continuation
of the legitimate business of the meeting, the Chair may quit the chair
and announce the adjournment of the meeting; and upon his or her so
doing, the meeting is immediately adjourned.
(c) The Chair may ask or require that anyone not a bona fide
shareholder or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote only
if proposed by a shareholder or a duly authorized proxy and seconded by
a shareholder or a duly authorized proxy other than the individual who
proposed the resolution or motion.
Section 8. Tabulation of Proxies. In the tabulation of votes cast by
proxies, it shall not be necessary for proxies to execute a ballot on matters,
voting instructions for which are contained on the form of proxy itself, and in
the absence of a ballot executed by such proxies, the proxy itself will be
deemed a written ballot and tabulated in accordance with the directions
contained thereon. Where the proxy statement soliciting such proxy indicates
that returned proxies containing no voting instructions regarding a particular
item will be voted in a certain manner, then returned, executed proxies
containing no voting instructions with respect to such item will be deemed
written ballots voted in accordance with the recommendation contained on such
proxy statement.
Section 9. Closing of the Polls. The person presiding at a meeting of
the shareholders may close the polls after the request for submission of proxies
and ballots, upon the temporary adjournment of the meeting called to tabulate
the proxies and ballots, or within a reasonable time thereafter. After the polls
are closed, no proxy, revocation of proxy or ballot shall be accepted by or
considered in the tabulation of proxies and ballots.
Section 10. Adjourned Meeting to Report Election Result. In the event
it becomes necessary to adjourn a meeting of shareholders beyond the day of the
scheduled meeting in order to determine the results of any election or vote,
said meeting may be adjourned from time to time by the person presiding or
entitled to preside, with such meeting to be reconvened at the principal offices
of the corporation. The only matter to be acted upon at such reconvened meeting
shall be the acceptance and filing of the report from the inspectors of
election.
ARTICLE III
Directors
Section 1. Powers, Number and Term. The business and property of this
corporation shall be managed by or under the direction of its Board of
Directors. The Board of Directors shall consist of not more than nine (9)
directors. The exact number of directors within the maximum limitation specified
in the preceding sentence shall be fixed from time to time by the Board of
Directors pursuant to resolution adopted by a majority of the entire Board of
Directors, but no decrease in the number of directors shall change the term of
any director at the time thereof. The Board of Directors shall be divided into
three classes, as nearly equal in number of directors as possible, as determined
by the Board of Directors. Each class shall be elected for a term expiring at
the annual meeting of shareholders held in the third successive year thereafter;
provided, however, that at the 1986 annual meeting of shareholders, one class
shall be elected for a term expiring at' the 1987 annual meeting of
shareholders, one class for a term expiring at the 1988 annual meeting of
shareholders, and one class for a term expiring at the 1989 annual meeting of
shareholders. Each director shall continue in office until the annual meeting of
the shareholders of this corporation in the year in which his or her term
expires and thereafter until his or her successor is duly elected and qualified,
unless a prior vacancy shall occur by reason of his or her death, resignation,
or removal from office. Any director may be removed from the Board of Directors
at any time, with or without cause, but only by the affirmative vote of the
holders of at least 75% of the voting power of all of the shares of this
corporation entitled to vote for the election of directors.
Section 2. Quorum and Voting. A majority of the Board of Directors
shall constitute a quorum for the transaction of business; provided, however,
that if any vacancies exist by reason of death, resignation, removal or
otherwise, a majority of the remaining directors shall constitute a quorum for
the filling of such vacancies. In the absence of a quorum, a majority of the
directors present may adjourn the meeting from time to time until a quorum is
present. If a quorum is present when a duly called or held meeting is convened,
the directors present may continue to transact business until adjournment, even
though the withdrawal of a number of directors originally present leaves less
than the number otherwise required for a quorum.
The Board of Directors shall take action by the affirmative vote of a
majority of the directors present at any duly held meeting, except as to any
question upon which any different vote is required by law, the Articles of
Incorporation, or these By-Laws. A director may give advance written consent or
objection to a proposal to be acted upon at a meeting of the Board of Directors.
If the proposal acted on at the meeting is substantially the same or has
substantially the same effect as the proposal to which the director has
consented or objected, such consent or objection shall be counted as a vote for
or against the proposal and shall be recorded in the minutes of the meeting.
Such consent or objection shall not be considered in determining the existence
of a quorum.
Section 3. Meetings. The directors shall meet annually at the place of
and immediately after the annual meeting of shareholders, or as soon thereafter
as is practicable, or at such other time and place, within or without the state,
as may be fixed by the written consent of all of the directors. Regular meetings
of the Board of Directors shall be held from time to time at such time and
place, within or without the state, as may from time to time be fixed by
resolution adopted by a majority of the whole Board of Directors. Notice of the
annual meeting and of all regular meetings shall be given to each director at
least five (5) days prior thereto by mail, telegraph, telephone, or in person.
Special meetings of the Board of Directors may be held at such time and place,
within or without the state, as may from time to time be designated in the
notice or waiver of notice of the meeting. Special meetings of the Board of
Directors may be called by the Chair, or the President or by any two (2)
directors. Notice of such special meetings shall be given to each director at
least forty-eight (48) hours prior thereto by mail, telegraph, telephone or in
person. Notwithstanding the foregoing, if the date, time and place of a meeting
of the Board of Directors have been provided in the Articles of Incorporation or
these By-Laws or announced at a previous meeting of the Board of Directors, no
notice of the meeting is required.
Section 4. Qualification; Retirement. Directors need not be
shareholders of this corporation. Directors shall not stand for election or
re-election after attaining the age of 68. A director shall offer his or her
resignation from the Board at such time as a director changes his or her basic
business or professional activity or affiliation.
Section 5. Committees. The Board of Directors may appoint such
committees and delegate to such committees such powers and responsibilities as
it may from time to time deem appropriate.
Section 6. Remuneration. Directors and members of any committee of this
corporation contemplated by these By-Laws or otherwise provided for by
resolution of the Board of Directors, who are not salaried employees of this
corporation, shall receive such fixed sum per meeting attended, or such fixed
annual sum, as shall be determined from time to time by resolution of the Board
of Directors. All directors and members of any such committee shall receive
their expenses, if any, of attendance at meetings of the Board of Directors or
of such committee. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving proper
compensation therefor.
Section 7. Vacancies and Newly Created Directorships. Any vacancy
occurring in the Board of Directors and any newly created directorship resulting
from an increase in the authorized number of directors may be filled by the
affirmative vote of a majority of the directors then in office, even though less
than a quorum. Any vacancy or newly created directorship may be filled by
resolution of the shareholders by the affirmative vote of the holders of a
majority of the shares present and entitled to vote for the election of
directors. Directors so chosen by the Board of Directors or the shareholders to
fill a vacancy or newly created directorship shall hold office for a term
expiring at the annual meeting of shareholders at which the term of the class to
which they have been appointed or elected expires.
ARTICLE IV
Officers
Section 4.1. Number and Qualification. The officers of the corporation
shall consist of one or more natural persons elected by the Board of Directors
exercising the functions of the offices, however designated, of chief executive
officer and chief financial officer. The Board of Directors may also appoint
such other officers and assistant officers as it may deem necessary. Except as
provided in these Bylaws, the Board of Directors shall fix the powers, duties,
and compensation of all officers. The Chair, if any, shall be a director; other
officers may, but need not, be directors of the corporation.
Section 4.2. Election and Term of Office. At the annual meeting of the
Board of Directors, the Board shall elect such officers as may be deemed
advisable. An officer shall hold office until the next annual meeting of the
Board of Directors or until a successor shall have been duly elected, unless
prior thereto such officer shall have resigned or been removed from office as
hereinafter provided.
Section 4.3. Removal and Vacancies. Any officer or agent elected or
appointed by the Board of Directors shall hold office at the pleasure of the
Board of Directors and may be removed, with or without cause, at any time by the
vote of a majority of the Board of Directors. In the event of the absence, death
or disability of the Chief Executive Officer, the President, or in the event
that there is no President, the Vice Presidents, in the order in which they are
elected, shall succeed to the powers and duties of the Chief Executive Officer
until such time as a new Chief Executive Officer is elected. Any vacancy in an
office of the corporation shall be filled by action of the Board of Directors.
Section 4.4. Chair. The Chair, if any, shall preside at all meetings of
the shareholders and the directors, shall advise the officers and directors of
the corporation and shall have such other duties as may be prescribed from time
to time by the Board of Directors.
Section 4.5 Chief Executive Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the chief executive officer: (a)
shall have general active management of the business of the corporation; (b)
shall see that all orders and resolutions of the Board of Directors are carried
into effect; (c) shall sign and deliver in the name of the corporation any
deeds, mortgages, bonds, contracts, or other instruments pertaining to the
business of the corporation, except in cases in which the authority to sign and
deliver is required by law to be exercised by another person or is expressly
delegated by the Articles of Incorporation, these Bylaws, or the Board of
Directors to some other officer or agent of the corporation; (d) may maintain
records of and certify proceedings of the Board of Directors and shareholders;
and (e) and shall perform such other duties as may from time to time be
prescribed by the Board of Directors. In addition, in the absence of the Chair
or if the office of Chair is vacant, the chief executive officers shall preside
at meetings of the shareholders and Board of Directors.
Section 4.6. Chief Financial Officer. Unless provided otherwise by a
resolution adopted by the Board of Directors, the chief financial officer: (a)
shall keep accurate financial records for the corporation; (b) shall deposit all
monies, drafts, and checks in the name of and to the credit of the corporation
in such banks and depositories as the Board of Directors shall designate from
time to time; (c) shall endorse for deposit all notes, checks, and drafts
received by the corporation as ordered by the Board of Directors, making proper
vouchers therefor; (d) shall disburse corporate funds and issue checks and
drafts in the name of the corporation as ordered by the Board of Directors; (e)
shall render to the chief executive officer and the Board of Directors, whenever
requested, an account of all such officer's transactions as chief financial
officer and of the financial condition of the corporation; and (f) shall perform
such other duties as may be prescribed by the Board of Directors or the chief
executive officer from time to time.
Section 4.7. Delegation. Unless prohibited by a resolution approved by
the affirmative vote of a majority of the directors present, an officer elected
or appointed by the Board of Directors may delegate in writing some or all of
the duties and powers of such person's office to other persons.
ARTICLE V
Amendments of By-Laws
These By-Laws may be amended or altered by the vote of a majority of the whole
Board of Directors at any meeting, provided that notice of such proposed
amendment shall have been given in the notice given to the directors of such
meeting; provided, however, that the Board of Directors shall not adopt, amend
or repeal a by-law fixing a quorum for meetings of shareholders, prescribing
procedures for removing directors or filling vacancies in the Board of
Directors, or fixing the number of directors or their classifications,
qualifications or terms of office, except that the Board of Directors may adopt
or amend a by-law to increase the number of directors within the limits
established by the Articles of Incorporation; provided further, that the Board
of Directors may not amend or repeal a by-law, such as Sections 1 and 7 of
Article III, which has been adopted by the shareholders. Such authority in the
Board of Directors is subject to the power of the shareholders entitled to vote
to change or repeal such By-Laws by a majority vote of the shareholders entitled
to vote, present and represented at any annual meeting or at any special
meetings called for such purpose.
ARTICLE VI
Indemnification
Section 1. Indemnification of Directors, Officers and Employees of This
Corporation. Each director, officer or employee, past and present, of the
corporation, and each director, officer or employee of the corporation who,
while a director, officer or employee of the corporation, serves or served at
the request of the corporation or as a part of the duties of that position as a
director, officer, partner, trustee, employee or agent of another organization
or employee benefit plan, and their respective heirs and legal representatives,
shall be indemnified by the corporation in accordance with, and to the fullest
extent permissible under, the provisions of Chapter 302A of the Minnesota
Statutes, as now enacted or as hereafter amend
Section 2. Indemnification of Persons Other Than Directors, Officers,
and Employees of This Corporation. Every person who, while not a director,
officer or employee of the corporation, serves or served at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another corporation, organization, or employee benefit plan in which the
corporation has, or had at the time of such service, an economic interest, and
such person's heirs and legal representatives, shall be indemnified to the same
extent and subject to the same conditions that a director, officer or employee
of the corporation who serves or served at the request of the corporation in
such a capacity would be indemnified under the preceding paragraph.
Section 3. Indemnification Not Exclusive. The indemnification provided
by this By-Law shall not exclude any other right to which such person may be
entitled under any agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his or her former or present official capacity
and as to action in another capacity while holding such office, and shall not
imply that the corporation may not provide lawful indemnification not expressly
provided for in this By-Law.
Section 4. Insurance. The corporation may purchase and maintain
insurance on behalf of a person in that person's official capacity against any
liability asserted against and incurred by such person in or arising out of that
capacity whether or not the corporation would be required or has the power under
this By-Law and applicable laws to indemnify that person against such liability.
ARTICLE VII
Notices
Section 1. Directors. Any director may waive notice of any meeting. A
waiver of notice by a director is effective whether given before, at, or after
the meeting, and whether given orally, in writing, or by attendance. The
attendance of a director at any meeting shall constitute a waiver of notice of
such meeting, unless such director objects at the beginning of the meeting to
the transaction of business on grounds that the meeting is not lawfully called
or convened and does not participate thereafter in the meeting.
Section 2. Shareholders. Any shareholder may waive notice of any
meeting of shareholders. Waiver of notice shall be effective whether given
before, at, or after the meeting and whether given orally, in writing, or by
attendance. Attendance by a shareholder at a meeting is a waiver of notice of
that meeting, except where the shareholder objects at the beginning of the
meeting to the transaction of business because the meeting is not lawfully
called or convened and does not participate thereafter in the meeting, or
objects before a vote on an item of business because the item may not lawfully
be considered at that meeting and does not participate in the consideration of
that item at the meeting.
ARTICLE VIII
Certificates of Stock
Section 1. Certificates. Certificates representing shares of the
corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chief Executive Officer,
President or a Vice-President and by the Secretary or an Assistant Secretary. If
a certificate is signed (i) by a transfer agent or an assistant transfer agent
or (ii) by a transfer clerk acting on behalf of the corporation and a registrar,
the signature of any such Chief Executive Officer, President, Vice President,
Secretary or Assistant Secretary may be a facsimile. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on any such certificate or certificates, shall cease to be such officer or
officers of the corporation, whether because of death, resignation or otherwise,
before such certificate or certificates have been delivered by the corporation,
such certificate or certificates may nevertheless be adopted by the corporation
and be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the corporation.
The seal of the corporation or a facsimile thereof may, but need not, be affixed
to certificates of stock. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the
shares represented thereby are issued with the number of shares and date of
issue shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancel led and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the corporation as the Board of Directors may
prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his or her legal representative who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
ARTICLE IX
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation, and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances. The corporation shall not lend money
to, guarantee the obligation of, become a surety for, or otherwise financially
assist any person unless the transaction, or class of transactions to which the
transaction belongs, has been approved by the affirmative vote of a majority of
directors present, and:
(a) is in the usual and regular course of business of the
corporation;
(b) is with, or for the benefit of, a related corporation, an
organization in which the corporation has a financial interest, an
organization with which the corporation has a business relationship, or
an organization to which the corporation has the power to make
donations;
(c) is with, or for the benefit of, an officer or other
employee of the corporation or a subsidiary, including an officer or
employee who is a director of the corporation or a subsidiary, and may
reasonably be expected, in the judgment of the Board of Directors, to
benefit the corporation; or
(d) has been approved by (i) the holders of two-thirds of the
voting power of the shares entitled to vote which are owned by persons
other than the interested person or persons, or (ii) the unanimous
affirmative vote of the holders of all outstanding shares, whether or
not entitled to vote.
Section 3. Checks, Drafts, Etc.. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as the Board of Directors
or its designee may select.
Section 5. Proxies. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the corporation may be
executed and delivered from time to time on behalf of the corporation by the
Chief Executive Officer, the President, or in his or her absence by any Vice
President, or by any other person or persons thereunto authorized by the Board
of Directors.
ARTICLE X
Miscellaneous
Section 1. Dividends. The Board of Directors may from time to time
declare, and the corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
Section 2. Reserves. There may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for the purchase of additional property, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve.
Section 3. Fiscal Year. The fiscal year of the corporation shall begin
on the first day of April and end on the thirty-first day of March in each year.
ARTICLE XI
Subsidiaries and Divisions
Section 1. Divisional Officers. The Board of Directors or the Chief
Executive Officer may, as they shall deem necessary, designate certain
individuals as divisional officers. Any titles given to divisional officers may
be withdrawn at any time, with or without cause, by the Board of Directors or
the Chief Executive Officer. A divisional officer may, but need not be, a
director or an executive officer of the corporation. All divisional officers
shall perform such duties and exercise such authority as the Board of Directors
or the Chief Executive Officer shall prescribe.
Section 2. Voting Stock of Subsidiaries. The Chief Executive Officer
and the President or the Chief Financial Officer, acting jointly, or any other
person or persons designated by the Board of Directors, may vote the shares of
stock owned by the corporation in any subsidiary, whether wholly or partly owned
by the corporation, in such manner as they may deem in the best interests of the
corporation, including, without limitation, for the election of directors of any
such subsidiary corporation, or for any amendments to the charter or By-Laws of
any such subsidiary corporation, or for the liquidation, merger, or sale of
assets of any such subsidiary corporation. The Board of Directors or the Chief
Executive Officer and the President or Chief Financial Officer, acting jointly,
may cause to be elected to the Board of Directors of any such subsidiary
corporation such persons as they shall designate, any of whom may, but need not
be, directors, executive officers, or other employees or agents of the
corporation.
Section 3. Status of Divisional and Subsidiary Officers. Divisional
officers, and the officers of any subsidiary corporation, shall not, by virtue
of holding such title and position, be deemed to be officers of the corporation,
nor shall any such divisional officer or officer of a subsidiary corporation,
unless he or she shall also be a director or officer of the corporation, be
entitled to have access to any files, records or other information relating or
pertaining to the corporation, its business and finances, or to attend or
receive the minutes of any meetings of the Board of Directors or any committee
of the corporation, except as and to the extent authorized and permitted by the
Board of Directors or the Chief Executive Officer.
The foregoing Restated By-Laws were duly adopted by the Board of
Directors and made effective as of July 18, 1996.
s/ __________________________________
Laura J. Cochrane, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,821,818
<SECURITIES> 0
<RECEIVABLES> 14,809,266
<ALLOWANCES> 266,468
<INVENTORY> 11,673,982
<CURRENT-ASSETS> 28,641,456
<PP&E> 20,896,184
<DEPRECIATION> 12,234,491
<TOTAL-ASSETS> 43,778,130
<CURRENT-LIABILITIES> 8,286,130
<BONDS> 0
0
0
<COMMON> 1,122,979
<OTHER-SE> 35,492,000
<TOTAL-LIABILITY-AND-EQUITY> 43,778,130
<SALES> 19,497,118
<TOTAL-REVENUES> 19,497,118
<CGS> 8,513,589
<TOTAL-COSTS> 8,167,791
<OTHER-EXPENSES> (65,208)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,880,946
<INCOME-TAX> 1,008,000
<INCOME-CONTINUING> 1,872,946
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,872,946
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
