<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the quarterly period ended September 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- --------------------
Commission file number
----------------------------------
UNIDYNE CORPORATION
(Exact name of small business issuer
as specified in its charter)
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<S> <C>
DELAWARE 23-2154902
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
118 PICKERING WAY, SUITE 104, EXTON, PA 19341
(Address of principal executive offices)
(610) 363-8237
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 7,555,628 AS OF SEPTEMBER
30, 1996
Transitional Small Business Disclosure Format (check one ): Yes No X
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<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
UNIDYNE CORPORATION
BALANCE SHEETS
(UNAUDITED)
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<CAPTION>
ASSETS
September 30, December 31,
1996 1995
(In thousands)
<S> <C> <C>
Current assets:
Cash $227 $193
Accounts receivable, net of allowance for doubtful
accounts of $25 and $24, respectively 2,202 2,488
Inventory 3,037 2,763
Prepaid expenses 71 33
Deferred income taxes 159 159
------- -------
5,696 5,636
------- ------
Property, plant and equipment
Land 160 160
Buildings 3,687 3,687
Machinery and equipment 6,000 5,862
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Accumulated depreciation 9,847 9,709
(1,182) (360)
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8,665 9,349
Investments 642 ---
Due from affiliate 647 47
Other assets 589 158
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$16,239 $15,190
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,275 $500
Current portion of long-term debt 413 1,543
Short-term debt 1,850 1,860
Accrued compensation 390 647
Other accrued liabilities 265 500
Income taxes payable 228 138
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4,421 5,188
------- -------
Long-term debt 2,088 2,399
Note payable to EATON 2,972 2,718
Deferred income taxes 61 61
Pension benefit obligations 1,967 1,810
Post retirement benefits other than pensions 3,168 2,955
Stockholders' equity
Common Stock 8 7
Additional paid-in capital 1,218 0
Retained earnings 336 52
------- -------
1,562 59
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$16,239 $15,190
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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UNIDYNE CORPORATION
STATEMENTS OF INCOME
(UNAUDITED)
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<CAPTION>
Three Months One Month Nine Months One Month
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net Sales $4,031 $1,668 $12,693 $1,668
Costs and expenses
Cost of products sold 2,649 921 7,880 921
Selling and administrative expense 1,259 446 3,336 446
Research and development expense 114 83 344 83
----------- ----------- ----------- -----------
4,022 1,450 11,560 1,450
----------- ----------- ----------- -----------
Income from operations 9 218 1,133 218
Interest expense 221 83 660 83
----------- ----------- ----------- -----------
Income (loss) before income taxes (212) 135 473 135
Income tax provision (benefit) (85) 54 189 54
----------- ----------- ----------- -----------
Net income (loss) ($127) $81 $284 $81
=========== =========== =========== ===========
Primary earnings (loss) per share ($0.02) $0.01 $0.04 $0.01
----------- ----------- ----------- -----------
Weighted average number of Common
Stock and equivalents outstanding 7,398,336 7,180,090 7,269,644 7,180,090
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 4
EDDY CURRENT DRIVES DIVISION
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN DIVISION EQUITY
FOR THE TWO AND EIGHT MONTHS ENDED AUGUST 31, 1995
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Two Months Eight Months
Ended Ended
August 31, 1995 August 31,1995
--------------- --------------
<S> <C> <C>
Revenues $2,582 $11,988
Expenses
Cost of products sold 1,900 7,764
Selling and administrative expense 656 3,219
Research and development expense 58 212
------------ ---------------
2,614 11,195
------------ ---------------
Revenues in excess of (less than) expenses (32) 793
Net repayments of corporate advances (1,121) (988)
Division Equity, beginning of period (4,192) (5,150)
------------ ---------------
Division Equity, end of period ($5,345) ($5,345)
============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
UNIDYNE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months One Month
Ended Ended
September 30, September 30,
1996 1995
---- ----
Cash flows from operating activities: (in thousands)
<S> <C> <C>
Net income $284 $81
Adjustments to reconcile net income to
cash flows from operating activities
Depreciation and amortization 855 99
Changes in-
Accounts receivable, net 286 (1,681)
Inventories (274) 357
Prepaid expenses and other assets (64) (185)
Accounts payable 775 882
Accrued compensation 80 309
Accrued expenses 20 269
Other liabilities 624 76
------------ -------------
Net cash provided by operating activities 2,586 207
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Cash flows for investing activities:
Purchase of property, plant and equipment (138) (12)
Cash flows from financing activities:
Net borrowings (repayments) on revolving loans (10) 163
Net borrowings on subordinated debenture --- 50
Issuance of Common Stock 75 ---
Offering related costs (438) ---
Principal payments on long-term debt (1,441) (5)
Advances to affiliate (600) ---
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Net cash provided by (used for) financing
activities (2,414) 208
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Net increase in cash 34 403
Cash, beginning of period 193 2
------------- -------------
Cash, end of period $227 $405
============= =============
Cash paid for:
Interest $243 $---
============= =============
Income taxes 100 ---
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
EDDY CURRENT DRIVES DIVISION
STATEMENT OF CASH FLOWS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Revenues in excess of expenses $793
Adjustments to reconcile revenues in excess of expenses
to cash flows from operating activities:
Depreciation and amortization 457
Changes in -
Accounts receivable, net (12)
Inventories 243
Prepaid expenses and other assets (381)
Accounts payable 239
Accrued compensation (124)
Accrued expenses (32)
Other liabilities (325)
----------------
Net cash provided by operating activities 858
----------------
Cash flows for investing activities:
Purchase of property, plant and equipment (192)
Proceeds on disposition of property, plant and equipment 240
---------------
Net cash provided by investing activities 48
Cash flows from financing activities:
Net repayments of corporate advances (988)
Net inter-divisional advances 63
----------------
Net cash used for financing activities (925)
----------------
Net decrease in cash (19)
Cash, beginning of period 42
----------------
Cash, end of period $23
================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ --
================
Income taxes --
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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UNIDYNE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION
On September 2, 1996, Blue Jay Enterprises, Inc. ("Blue Jay")
completed the acquisition of all the issued and outstanding stock of United
Dynamatics, Inc. ("UDI"), a Delaware corporation, and certain assets of Capital
Idea, Inc., a Colorado corporation. After the acquisition, Blue Jay changed
its name to UNIDYNE Corporation (the "Company"). The acquisition of UDI was
treated as a reverse acquisition for accounting purposes. Accordingly, the
accompanying financial statements of the Company include amounts for periods
prior to the acquisition.
On September 1, 1995, UDI acquired substantially all of the operating
assets of the Eddy Current Drives Division (the "Division") of Eaton
Corporation ("EATON"). Effective with the acquisition, the Division commenced
operations as Dynamatic Corporation ("Dynamatic"), a wholly-owned subsidiary of
UDI.
Dynamatic manufactures specialized electric motors and variable speed
drives and controls utilizing the Eddy Current Drive operating principal to
control motor speed. The variable speed drives are used in a variety of
products including stamping presses, pumps and special process equipment.
Dynamatic also manufactures engine dynamometers and transmission dynamometers
for a variety of large industrial customers, primarily in the automotive and
heavy equipment industries. The Company employs approximately 125 persons at
facilities in Kenosha, Wisconsin and Exton, Pennsylvania.
NOTE 2 - BASIS OF PRESENTATION
In the opinion of the management of the Company, the accompanying
consolidated financial statements reflect all adjustments (consisting only of
normally recurring accruals) which are necessary for a fair presentation of the
Company's results of operation and changes in financial position for the
interim periods presented.
NOTE 3 - INVESTMENTS
In September 1996, the Company acquired a 9% interest in Maxwell
Dynamometer Systems, Inc. ("Maxwell"), a Delaware corporation, in exchange
for 160,500 shares of the Company's common stock, par value $.001 per share
(the "Common Stock"). The majority owner of the Company is also the majority
owner of Maxwell. Maxwell manufactures and installs customized dynamometer
systems, primarily for trucks and buses. Maxwell employs approximately 16
persons at facilities in Exton, Pennsylvania.
NOTE 4 - DUE FROM AFFILIATE
During 1996, the Company advanced Maxwell $600,000. The advances were
used to fund operations of Maxwell relating to joint efforts between the
Company and Maxwell in sales to the emissions testing market.
NOTE 5 - OTHER ASSETS
In 1996, the Company incurred approximately $438,000 in professional
fees relating to a proposed offering of the Company's Common Stock.
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<PAGE> 8
UNIDYNE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - EQUITY
In September 1996, the Company established a stock option plan for
certain management and directors, pursuant to which the Company issued 700,000
options. The Company issued 154,538 shares of its Common Stock upon exercise
of a portion of the options in exchange for accrued salaries and fees totalling
$502,250. Common Stock, at December 31, 1995, has been restated to reflect
the acquisition of 100% of the outstanding common stock of UDI by Blue Jay.
NOTE 7 - SUBSEQUENT EVENTS
In November 1996, the Company and EATON agreed to amend the agreement
pursuant to which UDI purchased the assets of the Division from EATON (the
"Amendment"). Pursuant to the Amendment, the Company has been relieved of its
obligation to make $4.5 million in note payments. The present value of such
payments is carried on the balance sheet at $2,972,000 as of September 30,
1996. In exchange, the Company will issue up to 800,000 shares of its Common
Stock to EATON. The Amendment is contingent upon the Company's refinancing
of the mortgage held by EATON on the Company's operating facilities. The
transaction is expected to close on or before December 15, 1996.
NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 ("SFAS 123") "Accounting
for Stock-Based Compensation." The Company will implement the disclosure
requirements of SFAS 123 as required.
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<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
All amounts used herein are in thousands.
Effective September 1, 1995, UDI acquired substantially all the assets
of the Division. The foregoing financial statements of the Company reflect
the results of operations since the acquisition.
RESULTS OF OPERATIONS
During the three-month period ended September 30, 1996, the Company
had sales of $4,031, compared to sales of $4,250 during the three-month period
ended September 30, 1995. During the three-month period ended September 30,
1996, the Company's costs of sales was $2,649, or 65.7%, compared with
$2,821, or 66.4%, during the three-month period ended September 30, 1995.
During the three-month period ended September 30, 1996, the Company
had selling and administrative expenses and interest expense, respectively, of
$1,259, or 31.2%, of sales and $221, or 5.5%, of sales. Selling and
administrative expense reflects approximately $200 of non-recurring charges
relative to the acquisition of UDI during the three-month period ended
September 30, 1996.
During the nine-month period ended September 30, 1996, the Company had
sales of $12,693, a decrease of $963, or 7.1%, compared with sales of $13,656
in the nine-month period ended September 30, 1995. During the nine-month
period ended September 30, 1996, the Company had cost of sales of $7,880, or
62.1% to sales, a decrease of $805, or 9.3%, compared with costs of sales of
$8,685, or 63.6% to sales in the nine-month period ended September 30, 1995.
During the nine-month period ended September 30, 1996, the Company had
selling and administrative expense and interest expense, respectively, of
$3,336, or 26.3%, to sales and $660, or 5.2%, to sales. Selling and
administrative expense reflects approximately $300 of non-recurring charges
relative to the acquisition of UDI in the nine-month period ended September 30,
1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operating requirements, capital
expenditures and expenses associated with the acquisition of UDI through cash
flows from operations and financing arrangements.
At September 30, 1996, the Company's working capital was approximately
$1,275, compared to working capital of approximately $448 at December 31, 1995.
This increase is principally due to cash payments which reduced the current
portion of debt, the exchange of accrued salaries and fees for shares of the
Company's Common Stock, and was partially offset by an increase in accounts
payable. At September 30, 1996, the Company had approximately $100 available
under its existing line-of-credit arrangements.
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<PAGE> 10
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES.
On September 3, 1996, the Company filed an Amended and Restated
Certificate of Incorporation (the "Certificate") with the Delaware Secretary of
State. Among other items, the Certificate created a class of preferred stock,
par value $10.00 per share, of which 20,000,000 shares are authorized and none
are issued. In the event that the Company's preferred stock is issued, rights
of the holders of the Company's common stock, par value $.001 per share,
would become subordinated to those of the holders of the preferred stock.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On September 2, 1996, Robert M. Bernstein, as holder of approximately
51.9% of the outstanding common stock of the Company, executed a Written
Consent in lieu of Special Meeting of the Shareholders (the "Written Consent").
The matters determined in the Written Consent were disclosed in the Information
Statement and the Company's Form 8-K, filed with the Commission on September 9,
1996, which are hereby incorporated by reference.
Pursuant to the Written Consent, Robert M. Bernstein and Harvey
Kravetz were elected as directors of the Company. Mr. Bernstein and Mr.
Kravetz resigned from the Board of Directors on September 2, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
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<CAPTION>
(a) Exhibit No. Description
---------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the Company.*
3.2 Amended and Restated Bylaws of the Company.*
10.1 First Amended Purchase and Sale Agreement, dated July 31, 1996, among Robert M. Bernstein, Blue
Jay Enterprises, Inc. and certain shareholders of UDI.*
10.2 Second Amendment to Purchase and Sale Agreement, dated September 2, 1996, among Robert M.
Bernstein, Blue Jay Enterprises, Inc. and certain shareholders of UDI.*
10.3 Second Amended Purchase and Sale Agreement, dated September 2, 1996, among Robert M. Bernstein,
Blue Jay Enterprises, Inc. and Capital Idea, Inc.*
16.1 Letter of Jones, Jensen & Co.*
19.1 Section 14(c) Information Statement, dated August 12, 1996.**
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C>
19.2 Form 8-K, dated September 13, 1996.**
19.3 Form 8-K/A, dated September 17, 1996.**
27.1 Financial Data Schedule.**
</TABLE>
- -----------------------------
* Filed previously and incorporated herein by reference.
** Filed herewith.
(b) The Company filed a Report on Form 8-K on June 7, 1996. Item
5 of such Form 8-K reported on the Company's execution of
agreements to purchase all of the issued and outstanding
Common Stock of UDI and certain other assets.
(c) The Company filed a Report on Form 8-K on September 9, 1996.
Item 4 of such Form 8-K reported on the Change in Registrant's
Certifying Accountants. Item 5 of such Form 8-K reported on
the Company's amendment of its Certificate of Incorporation
and By-laws. The Company filed a Report on Form 8-K/A on
September 17, 1996 amending the Form 8-K.
(d) The Company filed a Report on Form 8-K on September 13, 1996.
Item 1 of such Form 8-K reported on the Changes in Control of
Registrant. Item 2 of such Form 8-K reported on the
Acquisition or Disposition of Assets. The Company filed a
Report on Form 8-K/A on November 14, 1996 providing financial
information relating to the Assets acquired.
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<PAGE> 12
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIDYNE CORPORATION
Date: November 14, 1996 /s/ C. Eugene Hutcheson
--------------------------------------------
C. Eugene Hutcheson, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: November 14, 1996 /s/ C. Eugene Hutcheson
--------------------------------------------
C. Eugene Hutcheson, Chairman, Chief
Executive Officer and President
Date: November 14, 1996 /s/ Timothy Flynn
--------------------------------------------
Timothy Flynn, Vice President and Assistant
Treasurer
Date: November 14, 1996 /s/ Charlotte Doremus
--------------------------------------------
Charlotte Doremus, Secretary and Treasurer
-12-
<PAGE> 1
EXHIBIT 19.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
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<S> <C>
/ / Preliminary Information Statement / / Confidential, for Use of the Commission
only (as permitted by Rule 14c-5(d)(2))
/x/ Definitive Information statement
</TABLE>
- -------------------------------------------------------------------------------
BLUE JAY ENTERPRISES, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1)Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2)Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
-------------------------------------------------------------------
(4)Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5)Total fee paid:
-------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
1
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/x/Fee paid previously with preliminary materials.
/ /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 paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
- -------------------------------------------------------------------------------
(2)Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3)Filing Party:
- -------------------------------------------------------------------------------
(4)Date Filed:
- -------------------------------------------------------------------------------
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<PAGE> 3
BLUE JAY ENTERPRISES, INC.
East Tower, Suite 705
11835 West Olympic Boulevard
Los Angeles, California 90064
NOTICE OF THE TAKING OF CORPORATE ACTION
WITHOUT A MEETING BY WRITTEN CONSENT
Notice is hereby given that Robert M. Bernstein, as holder of
approximately 51.9% of the outstanding capital stock of Blue Jay Enterprises,
Inc., a Delaware corporation (the "Company"), shall, on or about September 30,
1996 cause the Company to: (i) ratify the election of current directors; (ii)
adopt an Amended and Restated Certificate of Incorporation (the "Amended
Certificate") changing the name of the Company to UNIDYNE Corporation,
authorizing shares of preferred stock, par value $10.00 and related changes to
the Company's Common Stock, creating a classified board of directors, limiting
stockholder actions to actions taken at meetings of stockholders, providing for
limitation on the ability to amend certain provisions of the Amended
Certificate and by-laws, eliminating or limiting the personal liability of
directors to the Company or its stockholders for monetary damages for breach of
certain fiduciary duties as a director, and authorizing indemnification of the
Company's directors; and (iii) adopt the Blue Jay Enterprises, Inc., 1996 Stock
Option Plan (the "Plan").
The accompanying information statement is furnished pursuant to
Section 14(c) of the Securities Exchange Act of 1934.
By Order of the Board of Directors,
/s/ HARVEY KRAVETZ
Harvey Kravetz
Secretary
August 12, 1996
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
3
<PAGE> 4
BLUE JAY ENTERPRISES, INC.
East Tower, Suite 705
11835 West Olympic Boulevard
Los Angeles, California 90064
INFORMATION STATEMENT
This Information Statement is furnished in connection with the taking
of corporate action without a meeting by less than unanimous written consent of
stockholders. Robert M. Bernstein ("Bernstein"), as holder of 375,809 shares
of the common stock, par value $.001 per share (the "Common Stock"), of Blue
Jay Enterprises, Inc., a Delaware corporation (the "Company"), is entitled to
vote such shares or approximately 51.9% of the outstanding capital stock of
the Company. On or about September 30, 1996, Bernstein intends to (i) ratify
the election of directors; (ii) adopt an Amended and Restated Certificate of
Incorporation (the "Amended Certificate") changing the name of the Company to
UNIDYNE Corporation, authorizing shares of preferred stock, par value $10.00
and related changes to the Company's Common Stock, creating a classified Board
of Directors, limiting stockholder actions to actions taken at meetings of
stockholders, providing for limitation on the ability to amend certain
provisions of the Amended Certificate, and eliminating or limiting the personal
liability of directors to the Company or its stockholders for monetary damages
for breach of certain fiduciary duties as a director, and authorizing
indemnification of the Company's directors; and (iii) adopt the Blue Jay
Enterprises, Inc., 1996 Stock Option Plan (the "Plan"). Please be advised,
therefore, that this is only an Information Statement. WE ARE NOT ASKING YOU
FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement is first being sent or given to
stockholders on or about August 12, 1996. Record holders of the Common Stock at
the close of business on July 30, 1996 are entitled to receive a copy of this
Information Statement. Each stockholder is entitled to one vote for each share
of Common Stock held. On June 30, 1996, there were 724,059 shares of Common
Stock outstanding.
INTRODUCTORY STATEMENT
The Company was incorporated under the laws of Delaware on December 1,
1980 to engage in oil and gas exploration and development. In or about 1986,
the Company ceased operations in the oil and gas field and until 1990 confined
its activities to the winding up of matters arising out of prior years'
operations. The Company discontinued all business operations in or about 1990.
On May 17, 1996, the Company executed agreements (the "Agreements") to
acquire all of the issued and outstanding stock of United Dynamatics, Inc., a
Delaware corporation ("UDI"), and to acquire certain assets of Capital Idea,
Inc., a Colorado corporation (Capital Idea"), which is one of the UDI
shareholders in exchange for newly issued stock that would equal approximately
90 percent of the Company's outstanding common stock. The assets which the
Company was to acquire from Capital Idea included an option to acquire 81% of
the issued and outstanding common stock of Maxwell Dynamometer Systems, Inc., a
Delaware corporation ("Maxwell"), and certain debt instruments issued by
Maxwell evidencing debts in the amount of $723,000, including accrued interest
(the "Note"). Subsequently on July 30, 1996, the Agreements were modified to
provide that at closing the Note will be cancelled, to eliminate the option,
and to provide that the Company will acquire 81% of the issued and outstanding
common stock of Maxwell at closing.
UDI, through its wholly owned subsidiary Dynamatic Corporation
("Dynamatic"), manufactures specialized electric motors and variable speed
drives and controls utilizing the Eddy Current Drive (ECD) operating principal
to control motor speed. The variable speed drives are used in a variety of
products including stamping presses, pumps and special process equipment.
Dynamatic also manufactures engine dynamometers and transmission dynamometers
for a variety of large industrial customers, primarily in the automotive and
heavy equipment industries. UDI employs approximately 125 persons at
facilities in Kenosha, Wisconsin and Exton, Pennsylvania.
4
<PAGE> 5
Maxwell manufactures and installs customized dynamometer systems. Its
current focus is on large diameter dynamometers primarily used to perform
various tests on trucks and buses. Maxwell employs approximately 16 persons at
facilities in Exton, Pennsylvania.
The UDI and Maxwell transactions are contingent on the satisfaction of
certain conditions and the closing is expected to occur by September 30, 1996.
Assuming that these conditions are satisfied, the Board of Directors intends to
authorize the Company to close the transactions. No authorization from
shareholders for consummation of these transactions is required and none is
being sought. Concurrent with the closing and in accordance with the Company's
by-laws, the Board of Directors will elect four new directors. Immediately
thereafter, each of the two current members of the Board of Directors will
resign. No shareholder approval for election of the new directors is required
and none is being sought.
The following individuals will constitute the Board of Directors
following the resignation of the two current members of the Board:
C. EUGENE HUTCHESON, age 53, has been Chief Executive Officer and
Chairman of the Board of Directors of UDI since its inception. He was a
co-founder of UDI and is Chairman of the Board and President of Maxwell. Mr.
Hutcheson serves as Chairman and Chief Executive Officer of Dynamatic and of
Capital Idea, which he founded in 1989. Previously, he was the Chairman and
President of CIDCO Group, Inc., which developed and patented products for the
packaging and container industry. Mr. Hutcheson is co-holder of a patent
issued in September 1995 on a chassis dynamometer.
CHARLOTTE E. DOREMUS, age 52, Chief Administrative Officer, Secretary
and Director of UDI and Kenosha Corporation, is also Secretary/Treasurer and a
Director of Maxwell and Capital Idea. Ms. Doremus has been an investor in
start-up companies for more than ten years. Ms. Doremus has also been an
Assistant to the Research Director and head of the Portfolio Review Department
at Argus Research Corp; and a Registered Representative and Portfolio Analyst
for Dean Witter Reynolds in New York City.
DAVID M. BARRETT, ESQ., age 58, is a senior partner of the law firm of
Barrett & Schuler, Washington, D.C. Mr. Barrett has been an instructor in law
at Notre Dame Law School. He has been an Assistant United States Attorney for
the District of Columbia and was recently appointed Independent Counsel for an
investigation of a Cabinet Member of the President of the United States.
DR. FRANK B. HOLZE, age 58, founded and manages Holze International
Investment, a Monaco-based investment consulting firm. Dr. Holze was with ITT
Corporation for 12 years. Subsequently, Dr. Holze was Vice President and a
member of the board of management in Europe for the Thyssen-Bornemisza Group,
which is based in Monaco, and was general manager of a number of the Group's
companies.
RATIFICATION OF ELECTION OF DIRECTORS
Pursuant to this corporate action without a meeting, the election to
the Board of Directors of two directors, to serve until their successors are
elected and qualified, will be ratified.
The following information is furnished with respect to the directors
whose election is to be ratified:
ROBERT M. BERNSTEIN, age 62, has been a director of the Company since
1980 and President of the Company since 1980. Since 1988, Mr. Bernstein has
also been the President and a director of Material Technology, Inc., and its
predecessor Tensiodyne Corporation, a development stage corporation engaged in
the creation and development of a patented device that measures metal fatigue.
After closing of the UDI and Maxwell transactions, Mr. Bernstein will resign as
a director and officer and will become a consultant to the Company for a
minimum period of four years.
5
<PAGE> 6
HARVEY KRAVETZ, age 54, served as a director of the Company from 1990
to February 16, 1995 and from December 1, 1995 to the present. He has been a
certified financial planner. Since 1987, he has been engaged as a consultant
in the coffee distribution and sales business, including equipment sales,
retail setup and management and business development. After closing of the UDI
and Maxwell transactions, Mr. Kravetz will resign as a director and officer of
the Company.
THE BOARD OF DIRECTORS
During the year ended December 31, 1995, the Board of Directors of the
Company held no meetings and took action by written consent on 3 occasions .
The Board of Directors does not have an Audit Committee, a Compensation
Committee, a Nomination Committee or any other committee. All directors
participated in the giving of written consents on each occasion.
None of the directors received cash compensation from the Company for
his services as director and no options to purchase stock of the Company have
been granted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning all
stockholders known by the Company to be beneficial owners of five percent or
more of the Common Stock as of June 30, 1996.
<TABLE>
<CAPTION>
Amount and Nature Percent
of of
Name and Address Beneficial Ownership 1/ Class
- ---------------- ---------------------- -------
<S> <C> <C>
Robert M. Bernstein 375,809 51.9%
11835 W. Olympic Blvd.
East Tower 705
Los Angeles, CA 90064
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of June 30, 1996
regarding the ownership of Common Stock of the Company by each of the Company's
directors and executive officers and all of the Company's current directors and
executive officers as a group.
- ---------------------------------
1/ Mr. Bernstein has sole voting and investment power with respect to the
shares of Common Stock beneficially owned.
6
<PAGE> 7
<TABLE>
<CAPTION>
Number Approximate
of Percentage
Name Shares of Class
- ---- ------ -----------
<S> <C> <C>
Robert M. Bernstein 375,809 51.9%
Harvey Kravetz -0- -0-
All Directors and 375,809 51.9%
Executive Officers
as a group (2 Persons)
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
In the three years ended December 31, 1995, the Company has paid no
compensation to any executive officer, has granted no options to executive
officers and no officer has exercised any option.
ADOPTION OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
After consummation of the transactions with UDI and Maxwell, the
Company will be engaged in active business operations. The Company believes
that its Certificate of Incorporation should be amended so as to reflect this
change in circumstances and to assist the Company in the conduct of its
business. In addition, the Company believes that certain other amendments to
its certificate of incorporation - described below - will promote stability of
the Company's business and discourage attempted takeover of control of the
Company unless such takeover is in the best interest of the Company and its
stockholders. Accordingly, pursuant to corporate action without a meeting, the
Amended Certificate will be adopted.
Pursuant to the Amended Certificate, the Company will (i) change its
name to UNIDYNE Corporation, (ii) authorize a new class of preferred stock, par
value $10.00 (the "Preferred Stock"), of which 20,000,000 shares of preferred
stock are authorized, (iii) create a classified board of directors (iv) limit
stockholders action to actions taken at a meeting of stockholders (v) provide
for limitations on the ability to amend certain provisions of the Amended
Certificate and by-laws; and, (vi) eliminate or limit the personal liability of
a director to the Company and its stockholders for monetary damages for breach
of certain fiduciary duties as a director and authorize indemnification of the
Company's directors.
After adoption of the Amended Certificate, the authorized capital
stock of the Company will consist of 20,000,000 shares of Preferred Stock,
$10.00 par value, issuable in series and 50,000,000 shares of Common Stock,
$.001 par value. The following is a brief summary of certain provisions
relating to the Company's capital stock contained in the Amended Certificate
and in the laws of Delaware.
COMMON STOCK
Upon adoption of the Amended Certificate, the Company's authorized
Common Stock will consist of 50,000,000 shares, $ .001 par value, of which
724,059 shares will be issued and outstanding. Upon consummation of the UDI
and Maxwell transactions, approximately 7,597,337 shares of Common Stock will
be issued and outstanding. Holders of the Company's Common Stock will be
entitled to one vote for each share held of record on all matters submitted to
a vote of the stockholders. Each share of the Company's Common Stock will be
entitled
7
<PAGE> 8
to equal dividend rights and to equal rights in the assets of the Company
available for distribution to holders of Common Stock upon liquidation, subject
to the rights of outstanding series of Preferred Stock and applicable law. The
Company's Amended Certificate will not provide for preemptive rights to the
holders of its Common Stock.
PREFERRED STOCK
Upon adoption of the Amended Certificate, no shares of Preferred
Stock will be outstanding and the Company has no present intention to issue
shares of Preferred Stock. However, without further action by the Company's
stockholders, the Company's Board of Directors will be permitted, from time to
time, to direct the issuance of Preferred Stock in series and may, at the time
of issuance, determine the rights, preferences and limitations of each series.
Satisfaction of any dividend preferences of outstanding Preferred Stock would
reduce the amount of funds available for the payment of dividends on Common
Stock. Holders of Preferred Stock would normally be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up
of the Company before any payment is made to the holders of the Common Stock.
The issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
stockholders. The issuance of Preferred Stock with voting and conversion
rights may adversely affect the voting powers of the holders of Common Stock,
including the loss of voting control to others.
Certain provisions of the Certificate and the Company's by-laws which
are summarized below may affect potential changes in control of the Company.
The Company believes that these provisions are in the best interest of
stockholders because they will encourage a potential acquiror to negotiate with
the Company, which will be able to consider the interest of all stockholders in
a change of control situation. However, the cumulative effect of these terms
may be to make it more difficult to acquire and exercise control of the Company
and to make changes in management more difficult.
The Amended Certificate provides that as long as there are more than
two directors, each director will serve for a three-year term and that
approximately one-third of the directors will be elected annually. Candidates
for directors will be nominated only by the Board of Directors or by a
stockholder who gives written notice to the Company within a period which will
be prescribed by the by-laws. The number of directors of the Company will be
determined from time to time by the Board. The Board of Directors currently
consists of two members and will consists of four members after consummation of
the UDI and Maxwell transactions. Between stockholder meetings, the Board may
appoint new directors to fill vacancies or newly created directorships. A
director may be removed from office only for cause and only by the affirmative
vote of a majority of the combined voting power of the then outstanding shares
of stock entitled to vote generally in the election of directors.
The Amended Certificate further provides that stockholder action must
be taken at a meeting of stockholders and may not be effected by any consent in
writing. Special meetings of stockholders may be called only by a majority of
the Board of Directors. If a stockholder wishes to propose an agenda item for
consideration, he must give a brief description of each item to the Company
within a period which will be prescribed by the Company's by-laws. Notice to
the Company of director nominations must also be given to the Company in
advance of the time they receive notice of the meeting. The Company's by-laws
provide that notice of a stockholders meeting must be given not less than ten
or more than sixty days prior to the meeting date.
The Amended Certificate generally provides that the foregoing
provisions of the Amended Certificate may be amended or repealed by the
stockholders only with the affirmative vote of at least 80% of the shares
entitled to vote. These provisions exceed the usual majority vote requirement
of Delaware law and are intended to prevent the holders of less than 80% of the
voting power from circumventing the foregoing terms by amending the Certificate
or by-laws. These provisions, however, enable the holders of more than 20% of
the voting power to prevent amendments to the Amended Certificate or by-laws
even if they are approved by the holders of a majority of the voting power.
8
<PAGE> 9
The effect of such provisions of the Company's Amended Certificate and
by-laws may be to make more difficult the accomplishment of a merger or other
takeover or change in control of the Company. To the extent that these
provisions have this effect, removal of the Company's incumbent Board of
Directors and management may be rendered more difficult. Furthermore, these
provisions may make it more difficult for stockholders to participate in a
tender or exchange offer for Common Stock and in so doing may diminish the
market value of Common Stock. The Company is not aware of any proposed
takeover attempts or any proposed attempt to acquire a large block of Common
Stock.
PERSONAL LIABILITY OF DIRECTORS
Delaware law authorizes a Delaware corporation to eliminate or limit
the personal liability of a director to the corporation and its stockholders
for monetary damages for breach of certain fiduciary duties as director. The
Company believes that such a provision is beneficial in attracting and
retaining qualified directors, and accordingly the Amended Certificate includes
a provision eliminating liability for monetary damages for any breach of
fiduciary duty as a director, except as expressly limited by Delaware law.
Currently the Delaware General Corporation Law does not permit elimination of
personal laibility: (1) for any breach of the duty of loyalty to the Company or
its stockholders; (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (3) for any transaction
for which the director derived an improper personal benefit; or (4) for certain
other actions. Directors of the Company are not insulated from liability for
breach of their duty of loyalty (requiring that, in making a business decision,
directors act in good faith and in the honest belief that action was taken in
the best interest of the corporation), or for claims arising under the federal
securities laws. The foregoing provisions of the Certificate may reduce the
likelihood of derivative litigation against directors for breaches of their
fiduciary duties, even though such an action, if successful, might otherwise
have benefited the Company and its stockholders. Furthermore, the Company
intends to enter into indemnity agreements with present and future officers and
directors for the indemnification of and the advancing of expenses to such
persons to the full extent permitted by law.
Delaware law permits a corporation, subject to certain conditions and
limitations, to indemnify its officers, directors and certain other persons
against liabilities, losses and expenses incurred by reason of their serving as
officers, directors and in other capacities on behalf of the Company. The
Company believes that such provisions will be beneficial in attracting and
retaining qualified officers and directors. Accordingly, the Amended
Certificate contains provisions conferring on its officers, directors and
certain other persons certain rights to indemnification by the Company.
The Amended Certificate provides for the indemnification of the
Company's officers and directors, and any persons serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
entity, in connection with any threatened, pending or completed action, suit or
proceeding, whether criminal, civil, administrative or investigative, to which
they are threatened or become parties or otherwise involved by reason of acting
in such capacities. Such indemnification will be provided to the fullest
extent permitted by the Delaware General Corporation Law which requires a
determination, either by a majority vote of a quorum of disinterested directors
of the Company, by independent legal counsel or the stockholders, that (A) they
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the Company; (B) in any action, suit or
proceeding by or in the right of the Company, they were not, and have not been
adjudicated to have been, negligent or guilty of misconduct in the performance
of their duties to the Company; and (C) with respect to any criminal action or
proceeding, that they had no reasonable cause to believe that their conduct was
unlawful. The Delaware General Corporation Law provides that to the extent a
director or officer, or any such other person, has been successful on the
merits or otherwise in defense of any such action, suit or proceeding he shall
be indemnified against expenses reasonably incurred in connection therewith.
The Amended Certificate limits the right of any officer, director or
such other person from obtaining such indemnification with respect to any
proceeding brought by such officer, director or other person unless the Board
9
<PAGE> 10
of Directors has authorized such proceeding. In addition, subject to certain
conditions and limitations, the Amended Certificate provides that such
indemnification rights are contractual in nature and entitle the indemnitee to
receive advances on indemnifiable expenses prior to final disposition of the
pertinent proceeding.
Pursuant to the Amended Certificate the Company may grant rights of
indemnification and advances on expenses to any employee or agent of the
Company to the fullest extent of the provisions of the Amended Certificate with
respect to indemnification and advancement of expenses of officers and
directors of the Company and such other persons serving in official capacities
with other entities at the request of the Company. Furthermore, the
indemnification rights provided in the Amended Certificate are not the
exclusive rights of the Company's officers and directors or such other
specified persons, each of whom may acquire other rights by statute, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
At present there are no material claims, actions, suits or proceedings
pending where indemnification would be required under these provisions, and the
Company does not know of any such threatened claims, actions, suits or
proceedings which may result in a request for such indemnification.
ADOPTION OF STOCK OPTION PLAN
Pursuant to the corporate action without a meeting the Blue Jay
Enterprises, Inc., 1996 Stock Option Plan (the "Plan") is to be approved. The
Plan authorizes the issuance of 1,100,000 options to purchase shares of Common
Stock, and a total of 1,100,000 shares of Common Stock are subject to the Plan.
The shares of Common Stock subject to the Plan shall consist of unissued shares
or previously issued shares reacquired by the Company.
The purpose of the Plan is to encourage ownership of the Company's
Common Stock by key employees, advisors, consultants, directors and officers
providing services to the Company and its subsidiaries and to provide increased
incentives for such individuals to render services to the Company and its
subsidiaries in the future and to exert maximum effort for the success of the
business of the Company. The Plan will be administered by the Board of
Directors or a committee consisting of not less than two members of the Board
of Directors to administer the Plan on behalf of the Board (the "Committee").
From time to time, the Board of Directors may increase the size of the
Committee and appoint additional members thereto, fill vacancies on the
Committee, and remove all members of the Committee.
The Plan permits the issuance of Non-Qualified Stock Options and
Incentive Stock Options. Non-Qualified Stock Options are those options granted
pursuant to the Plan which do not qualify in whole or in part as an Incentive
Stock Option pursuant to the Internal Revenue Code of 1986, as amended (the
"Code"). Non-Qualified Stock Options may be granted under the Plan to the
Company's officers, directors, employees, advisors and consultants employed by
the Company or any of the Company's subsidiaries on a full-time or part-time
basis (collectively, "Employees") for a reason connected with their employment
or other service to the Company or any subsidiary.
Incentive Stock Options are options granted pursuant to the Plan or
other options granted to Employees which comply with the Code. Incentive Stock
Options may only be granted to Employees for a reason connected with their
employment by the Company or one of its subsidiaries. An Employee may only
exercise an Incentive Stock Option initially during any calendar year when the
aggregate fair market value of the option to be exercised is less than or equal
to $50,000.
Incentive Stock Options under the Plan may be granted only to
Employees in connection with their employment by the Company or one of the
Company's Subsidiaries. Pursuant to the Plan, a "Subsidiary" is defined as
"any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time the option is granted, each of the
corporations in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain." Non-Qualified Stock Options may be granted under
the Plan to Employees in connection with their
10
<PAGE> 11
employment or other service to the Company or any Subsidiaries. The grant to
an Employee of Incentive Stock Options or Non-Qualified Stock Options does not
preclude the grant of additional Plan options in the future. The Company
estimates that approximately 75 people will be eligible for participation in
the Plan based upon their status as Employees.
Each Incentive Stock Option or Non-Qualified Stock Option granted
pursuant to the Plan will be evidenced by a written agreement which will
specify, among other items, (i) the period for which the option is granted,
which may not exceed 10 years from the date of grant; (ii) the purchase price
of each share of Common Stock; (iii) the exercise period of the option; (iv)
the procedure by which the option may be exercised; (v) the termination of
options upon termination of an Employee's employment with the Company or any
subsidiary; (vi) applicable provisions upon disability or death of the option
holder; (vii) unless the shares issuable upon exercise of an option are
registered for public resale pursuant to the Securities Act of 1933 (the
"Act"), a representation of the option holder stating that, upon request of the
Committee, the option holder shall deliver a representation that the shares to
be acquired upon exercise of the option are to be acquired for investment and
not for resale or with a view to the distribution thereof; and (viii) the
nontransferability of the options granted pursuant to the Plan.
Non-Qualified Stock Options will not be granted for a period exceeding
10 years. Incentive Stock Options will not be granted for a period exceeding
five years if, on the date the option is granted, the Employee receiving the
option owns more than 10 percent of the outstanding stock of the Company, as
determined in accordance with Section 425(d) of the Code.
The purchase price of each share of Common Stock subject to any option
granted pursuant to the Plan will be determined by the Committee at the time
the option is granted. Except as provided below, the purchase price of each
share of Common Stock purchased pursuant to exercise of Incentive Stock Options
will not be less than the fair market value of a share of Common Stock on the
date the option is granted, as determined by the Committee. In the event that
the Employee granted the option owns more than 10 percent of the outstanding
stock of the Company on the date the option is granted, as determined in
accordance with Section 425(d) of the Code, the purchase price of each share of
Common Stock pursuant to exercise of Incentive Stock Options will not be less
than 110 percent of the fair market value of a share of Common Stock on such
date.
No option under the Plan may be exercised, in whole or in part, unless
the person exercising the option remains in the employment of the Company on
the date upon which the options may be exercised. In the event that an
Employee ceases to be employed by the Company or any of its Subsidiaries for
any reason other than death or disability, the options granted to him pursuant
to the Plan shall terminate. Any options which are exercisable on the date of
such termination may be exercised during a three-month period beginning on such
date. In the event that an Employee dies or experiences a disability during
the Employee's employment with the Company, the options previously granted to
him may be exercised at any time and from time to time within a one year period
after disability or death by the option holder or the option holder's executor,
administrator or estate, or the person or persons to whom such rights pass by
will or laws of descent and distribution. An Employee is deemed disabled if,
in the opinion of a physician selected by the Committee, he or she is incapable
of performing services for the Company or any of its Subsidiaries by reason of
any medically determinable physical or mental impairment which may be expected
to result in death or to be of long, continued and indefinite duration lasting
not less than 12 months.
At present the amounts which will be received by executive officers or
directors of the Company pursuant to the plan are not determinable. It is
anticipated, however, that Robert M. Bernstein, the current Chief Executive
Officer of the Company (who will become a consultant to the Company) will be
granted options to purchase 400,000 shares of Common Stock at a price of $3 per
share.
The Board of Directors may amend or alter the Plan unless such
amendment or alteration would impair the rights of an option holder without his
consent or, without the approval of the shareholders, would increase the total
number of shares reserved for Plan purposes or decrease the option price
(except as otherwise permitted
11
<PAGE> 12
pursuant to the Plan) or extend the expiration date of the Plan. The Board of
Directors may discontinue the Plan at any time.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's principal accountant for the fiscal year most recently
ended was Jones, Jensen & Company. No accountant has been retained by the
Company for the current fiscal year.
12
<PAGE> 1
EXHIBIT 19.2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 2, 1996
(Date of earliest event reported)
UNIDYNE CORPORATION
(Exact name of small business issuer
as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-10372 23-2154902
(State or other jurisdiction (Commission File No.) (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
118 PICKERING WAY, SUITE 104, EXTON, PENNSYLVANIA 19341
(Address of principal executive offices)
(610) 363-8237
(Issuer's telephone number)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On September 2, 1996, Registrant completed the acquisition of 100% of
the issued and outstanding shares of the common stock of United Dynamatics,
Inc., a Delaware corporation ("UDI"). In separate transactions, Registrant
also acquired nine percent (9%) of the issued and outstanding common stock of
Maxwell Dynamometer Systems, Inc., a Delaware corporation related to UDI
("Maxwell"), and approximately $1.05 million in principal amount of debt
instruments issued by Maxwell. The above transactions were effective as of
September 1, 1996. (The UDI common stock, the Maxwell common stock and the
Maxwell debt instruments are herein collectively referred to as the "Assets").
The Assets were acquired in exchange for a total of 6,677,031 shares
of newly issued shares of Registrant's common stock, $.001 par value per share
(the "Common Stock"). The number of shares issued in exchange for the Assets
constituted approximately 90% of Registrant's issued and outstanding Common
Stock at the time of issuance. Prior to acquisition of the Assets, Robert M.
Bernstein owned 51.9% of the Registrant's issued and outstanding Common Stock.
Immediately following acquisition, Robert M. Bernstein and Harvey
Kravetz, being all of the directors and officers of Registrant before
Registrant's acquisition of the Assets, resigned. The following persons were
elected as directors of Registrant:
C. EUGENE HUTCHESON, age 53, has been Chief Executive Officer and
Chairman of the Board of Directors of UDI since its inception in 1995. He was
a co-founder of UDI and is Chairman of the Board and President of Maxwell. Mr.
Hutcheson serves as Chairman and Chief Executive Officer of Dynamatic
Corporation ("Dynamatic"), a wholly owned subsidiary of UDI, and of Capital
Idea, Inc., a Colorado corporation which is the majority shareholder of Maxwell
("Capital Idea"). Previously, he was the Chairman and President of CIDCO
Group, Inc., which developed and patented products for the packaging and
container industry. Mr. Hutcheson is co-holder of a patent issued in September
1995 on a chassis dynamometer.
CHARLOTTE E. DOREMUS, age 52, Chief Administrative Officer, Secretary
and Director of UDI and Kenosha Corporation, is also Secretary/Treasurer and a
director of Maxwell and Capital Idea. Ms. Doremus has been an investor in
start-up companies for more than ten years. Ms. Doremus has also been an
Assistant to the Research Director and head of the Portfolio Review Department
at Argus Research Corp. and a Registered Representative and Portfolio Analyst
for Dean Witter Reynolds in New York City.
DAVID M. BARRETT, ESQ., age 58, is a senior partner of the law firm of
Barrett & Schuler, Washington, D.C. Mr. Barrett has been an instructor in law
at Notre Dame Law School. He has been an Assistant United States Attorney for
the District of Columbia and was recently appointed Independent Counsel for an
investigation of a Member of the Cabinet of the President of the United States.
DR. FRANK B. HOLZE, age 58, founded and manages Holze International
Investment, a Monaco-based investment consulting firm. Dr. Holze was with ITT
Corporation for 12 years. Subsequently, Dr. Holze was Vice President and a
member of the board of management in Europe for the Thyssen-Bornemisza Group,
which is based in Monaco, and was general manager of a number of the Group's
companies.
The following persons were elected as officers of Registrant:
C. EUGENE HUTCHESON - Chairman of the Board of Directors, President
and Chief Executive Officer
TIMOTHY M. FLYNN - Vice President and Assistant Treasurer
CHARLOTTE E. DOREMUS - Secretary and Treasurer
2
<PAGE> 3
The following persons are known by Registrant to be the beneficial
owners of more than five percent of Registrant's Common Stock as of September
6, 1996.
<TABLE>
<CAPTION>
Amount(1)
Name and Address and Nature Percentage
of Beneficial Owner of Ownership of Class
------------------- ------------ --------
<S> <C> <C>
Capital Idea, Inc. 4,603,860 57%
118 Pickering Way, Suite 104
Exton, PA 19341
C. Eugene Hutcheson 4,816,360(2) 59%
UNIDYNE Corporation
118 Pickering Way, Suite 104
Exton, PA 19341
Charlotte E. Doremus 4,816,360(3) 59%
UNIDYNE Corporation
118 Pickering Way, Suite 104
Exton, PA 19341
David M. Barrett 964,866(4) 12%
1000 Thomas Jefferson St., NW
Suite 305
Washington, D.C. 20007
Frank B. Holze 1,219,805(5) 15%
26 BIS Boulevard
Princess Charlotte
MC 98000 Monaco
</TABLE>
- --------------------
(1) Unless otherwise indicated, all ownership is direct.
(2) Includes 127,885 shares which Mr. Hutcheson has the right to acquire
within sixty days through the exercise of options and 4,603,860 shares owned by
Capital Idea, of which Mr. Hutcheson is Chairman and Chief Executive Officer and
a 50% shareholder.
(3) Includes 187,885 shares which Ms. Doremus has the right to acquire
within sixty days through the exercise of options and 4,603,860 shares owned
by Capital Idea, of which Ms. Doremus is a director, Secretary and Treasurer,
and a 50% shareholder.
(4) Includes 228,692 shares which Mr. Barrett has the right to acquire
within sixty days through the exercise of options.
(5) Includes 500,000 shares owned by Darnley Holdings, Ltd., a Bahamian
corporation, of which Mr. Holze is Director.
3
<PAGE> 4
The following is certain information regarding the Common Stock of
Registrant beneficially owned by each of its directors and executive officers
and all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount(1)
Name and Address and Nature Percentage
of Beneficial Owner Position of Ownership of Class
- ------------------- -------- ------------ ---------
<S> <C> <C> <C>
C. Eugene Hutcheson Chairman of the 4,816,360(2) 59%
Board of Directors,
Chief Executive
Officer and President
Timothy Flynn Vice President and 3,000(3) less than 1%
Assistant Treasurer
David M. Barrett Director 964,866(4) 12%
Frank B. Holze Director 1,219,805(5) 15%
Charlotte E. Doremus Secretary, Treasurer 4,816,360(6) 59%
and a Director
- -------------- ========= ==
Directors and executive
officers as a group 7,116,531 88%
</TABLE>
- --------------------
(1) Unless otherwise indicated, all ownership is direct.
(2) Includes 127,885 shares which Mr. Hutcheson has the right to acquire
within sixty days through the exercise of options and 4,603,860 shares owned by
Capital Idea, of which Mr. Hutcheson is Chairman and Chief Executive Officer and
a 50% shareholder.
(3) Includes 1,000 shares which Mr. Flynn has the right to acquire
within sixty days through the exercise of options.
(4) Includes 228,692 shares which Mr. Barrett has the right to
acquire within sixty days through the exercise of options.
(5) Includes 500,000 shares owned by Darnley Holdings, Ltd., a
Bahamian corporation, of which Mr. Holze is Director.
(6) Includes 187,885 shares which Ms. Doremus has the right to
acquire within sixty days through the exercise of options and
4,603,860 shares owned by Capital Idea, of which Ms. Doremus is a
director, Secretary and Treasurer, and a 50% shareholder.
4
<PAGE> 5
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Registrant acquired the Assets from Capital Idea, David M. Barrett,
Frank B. Holze, Gregory J. Layton and Sharon D. Long in exchange for a total of
6,677,031 shares of newly issued Common Stock of Registrant. The number of
shares issued in connection with these transactions was determined through
negotiation between Registrant and the former owners of the Assets. Prior to
Registrant's acquisition of the Assets, there was no material relationship
between Registrant or any of its affiliates, any director or officer of
Registrant or any associate of any such director or officer and the persons
from whom the Assets were acquired.
UDI, through its wholly owned subsidiary, Dynamatic, manufactures
specialized electric motors and variable speed drives and controls utilizing
the Eddy Current Drive operating principle to control motor speed. The
variable speed drives are used in a variety of products including stamping
presses, pumps and special process equipment. Dynamatic also manufactures
engine dynamometers and transmission dynamometers for a variety of large
industrial customers, primarily in the automotive and heavy equipment
industries. UDI products are manufactured in facilities located in Kenosha,
Wisconsin, consisting of approximately 261,600 square feet of manufacturing,
laboratory and testing facilities and 46,100 square feet of office space
located on approximately 13.3 acres of land. Maxwell, which is based in Exton,
Pennsylvania, manufactures and installs customized dynamometer systems.
It is impracticable to provide financial statements for the business
operation acquired by Registrant as of the date hereof. Such financial
statement will be filed as an amendment to this Form 8-K no later than 60 days
from the date hereof.
ITEM 7. EXHIBITS.
EXHIBIT NO.
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10.1 First Amended Purchase and Sale Agreement, dated July 31,
1996, among Robert M. Bernstein, Blue Jay Enterprises,
Inc. and certain shareholders of UDI.
10.2 Second Amendment to Purchase and Sale Agreement, dated
September 2, 1996, among Robert M. Bernstein, Blue Jay
Enterprises, Inc. and certain shareholders of UDI.
10.3 Second Amended Purchase and Sale Agreement, dated September
2, 1996, among Robert M. Bernstein, Blue Jay Enterprises, Inc.
and Capital Idea, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 13, 1996 /s/ C. Eugene Hutcheson
-----------------------
C. Eugene Hutcheson
Chairman, Chief Executive Officer
and President
5
<PAGE> 6
EXHIBIT 10.1
FIRST AMENDED
PURCHASE AND SALE AGREEMENT
This First Amended Purchase and Sale Agreement (the "Agreement") is
entered into this 31st day of July, 1996 by and between Blue Jay, Enterprises,
Inc., a Delaware corporation ("Blue Jay"), Robert M. Bernstein ("Bernstein"),
and the following shareholders of United Dynamatics Inc., a Delaware
corporation ("UDI"); Darnley Holdings, Ltd., a Bahamian corporation ("Darnley")
; Capital Idea, Inc., a Colorado corporation; and EETC Inc., a Delaware
corporation, Frank B. Holze and David M. Barrett (hereinafter the foregoing
shareholders collectively are referred to as "Shareholders" and individually
referred to as a "Shareholder").
RECITALS
WHEREAS, the parties hereto, except Darnley, entered into a
Purchase and Sale Agreement as of May 17, 1996 (the "May 17 Agreement").
WHEREAS, the parties desires to amend the May 17 Agreement to
read in its entirety as hereinafter set forth.
WHEREAS, Vintage Enterprises, Inc., a Delaware corporation,
was a party to the May 17 Agreement and will no longer be a party to the
transactions contemplated hereby and by the May 17 Agreement.
<PAGE> 7
NOW, THEREFORE, the parties hereby amend the May 17 Agreement
to read in its entirety as follows:
WHEREAS, Shareholders own 1,068 shares (the "UDI Shares") of common
stock, no par value per share, of UDI (the "UDI Common Stock"), which
constitute all of the outstanding UDI Common Stock.
WHEREAS, UDI owns all of the issued and outstanding stock of Dynamatic
Corporation ("Dynamatic") and Kenosha Corporation ("Kenosha"), each a Delaware
corporation.
WHEREAS, Shareholders and Blue Jay desire that Blue Jay
acquire the UDI Shares in exchange for shares of common stock, $.001 par value
per share, of Blue Jay ("Blue Jay Common Stock") that, together with the
transfer of certain assets of Capital Idea, Inc. ("Capital Idea") to Blue Jay
pursuant to a Purchase and Sale Agreement of even date herewith between Blue
Jay and Capital Idea (the "Capital Idea Agreement"), is intended to qualify as
a tax-free transfer under Section 351(a) of the Internal Revenue Code of 1986,
as amended, and upon completion of which UDI will be a wholly-owned subsidiary
of Blue Jay; and
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT:
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ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions set forth
herein, on the Final Closing Date (as hereinafter defined), the Shareholders,
severally and individually, shall sell and deliver to Blue Jay, and Blue Jay
shall purchase and accept from each Shareholder, the UDI Shares.
ARTICLE II
CONSIDERATION; CLOSING
2.1 Consideration. The consideration to be paid by Blue Jay for the
UDI Shares shall be in the form of shares of Blue Jay Common Stock in the ratio
of 3779.77 shares of newly issued Blue Jay Common Stock for each outstanding
share of UDI Common Stock, or an aggregate 4,036,794 shares of Blue Jay Common
Stock (the "Blue Jay Shares").
2.2 Escrow Arrangement. The Shareholders, Blue Jay and Firstar Trust
Company, as escrow agent (the "Escrow Agent"), have entered into an escrow
agreement, as amended, in the form attached
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<PAGE> 9
hereto as Exhibit A ("the Escrow Agreement") pursuant to which (a) the
Shareholders have delivered to the Escrow Agent the UDI Shares and (b) Blue Jay
has delivered to the Escrow Agent the Blue Jay Shares, all of which shares shall
be held by the Escrow Agent in accordance with the Escrow Agreement.
2.3 Closing. The closing in escrow of the transactions contemplated
hereby ("Escrow Closing") was held at Trafalgar Financial Services, Inc., 126
State Street, Boston, Massachusetts at 1:00 P.M. May 17, 1996. The "Final
Closing Date" shall mean the date on which the Escrow Agent releases the
documents pursuant to Section 3.1(a) of the Escrow Agreement which shall be the
first business day following satisfaction of all closing conditions set forth in
Article VIII and IX hereof.
2.4 Deliveries on the Final Closing Date. On the Final Closing Date:
(a) UDI, as representative of the Shareholders (in such capacity, the
"Representative"), and Blue Jay shall deliver to the Escrow Agent the Notice
of Release referred to in the Escrow Agreement;
(b) The Escrow Agent shall deliver to Blue Jay certificates
representing the UDI Shares, duly endorsed for transfer or in blank; and
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<PAGE> 10
(c) The Escrow Agent shall deliver to the Representative certificates
representing the Blue Jay Shares in the amounts set forth on Schedule 2.4 hereto
or such other allocations as may be mutually agreed to by the Shareholders.
ARTICLE III
INDIVIDUAL AND SEVERAL REPRESENTATIONS OF THE SHAREHOLDERS
In order to induce Blue Jay to enter into this Agreement, each
of the Shareholders, severally and individually, makes the following
representations and warranties to Blue Jay.
3.1 Ownership of Shares. Such Shareholder is the record and
beneficial owner of the kind and number of UDI Shares as are set forth opposite
such Shareholder's name on Schedule 3.1 hereto. Such Shareholder owns such
shares free and clear of all liens, encumbrances, pledges, claims and other
security interests and all such shares are validly issued, fully paid and
nonassessable (except to the extent otherwise provided by Section 180.0622(2)(b)
of the Wisconsin Statutes). None of the UDI Shares owned by such Shareholder is
subject to any marital property or other agreement, judgment, order, voting
trust or proxy or other agreement which either limits or restricts such
Shareholder's absolute authority to
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transfer its UDI Shares as herein provided or requires the holder thereof to
vote such shares in any particular manner.
3.2 Enforceability; Conflicting Obligations. Such Shareholder has all
necessary power and authority to enter into and consummate the transactions
contemplated by this Agreement in accordance with its terms and to sell to Blue
Jay the number of UDI Shares set forth opposite such Shareholder's name on
Schedule 3.1 hereto. This Agreement has been duly authorized by such
Shareholder and is such Shareholder's valid and binding obligation, enforceable
against such Shareholder in accordance with its terms. The execution and
delivery by such Shareholder of this Agreement do not, and the consummation of
the sale of the UDI Shares by such Shareholder contemplated hereby will not,
conflict with or violate the provisions of any order, writ, decree, agreement,
contract, restriction or organizational documents to which such Shareholder is a
party or to which such Shareholder is bound.
ARTICLE IV
JOINT AND SEVERAL REPRESENTATIONS OF THE SHAREHOLDERS
In order to induce Blue Jay to enter into this Agreement, the
Shareholders, jointly and severally, make the following representations and
warranties to Blue Jay.
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<PAGE> 12
4.1 Organization and Qualification. Each of UDI, Dynamatic and
Kenosha is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
4.2 Capitalization.
(a) Company. The entire authorized capital stock of UDI consists
of 1,500 shares of UDI Common Stock, of which 1,068 shares are outstanding and
owned by the Shareholders. Except as set forth on Schedule 4.2 hereof, there
are no outstanding options, warrants, convertible securities or other rights to
subscribe for or acquire any capital stock or securities convertible into
capital stock of UDI.
(b) Subsidiaries. Dynamatic and Kenosha (the "Subsidiaries")
constitute the only wholly-owned subsidiaries of UDI. The authorized capital
stock of Dynamatic consists of 1,500 shares of common stock, no par value per
share, of which 1,068 shares are outstanding, and the authorized capital stock
of Kenosha consists of 1,500 shares of common stock, no par value, of which
1,068 shares are outstanding. All such issued and outstanding shares of
Dynamatic and Kenosha are owned by UDI free and clear of all liens,
encumbrances, pledges, claims and other security interests.
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<PAGE> 13
4.3 Litigation. Except as set forth on Schedule 4.3, there are no
claims, suits, actions, arbitrations, administrative proceedings or
investigations, pending or, to UDI's knowledge, threatened against UDI or either
Subsidiary that could have a material adverse effect on the financial condition
of UDI and the Subsidiaries, taken as a whole, or restrict the ability of the
Shareholders to consummate the transactions contemplated by this Agreement.
4.4 Financial Information. The financial information of UDI that has
been previously provided to Bernstein fairly presents in all material respects
the financial position of UDI as of the dates indicated, all in conformity with
generally accepted accounting principles consistently applied during the periods
involved, except as otherwise noted therein.
4.5 Investment Intent. The Blue Jay Shares being acquired by the
Shareholders hereunder are being acquired for investment and not with a view
toward distribution thereof. The Shareholders acknowledge that such shares have
not been registered under the Securities Act of 1933, as amended (the "1933
Act"), or any state securities laws and may be resold only pursuant to an
effective registration covering such shares or pursuant to an available
exemption from registration. The Shareholders further acknowledge that the
certificates representing the Blue Jay Shares shall bear the following legend:
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<PAGE> 14
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state, but have been issued in reliance upon
exemptions therefrom. The securities may not be offered, sold, pledged
or otherwise transferred without registration under the Act or the
opinion of counsel satisfactory to the Corporation that an exemption from
registration is available or that such transfer may otherwise lawfully be
made.
4.6 Brokers. Neither the Shareholders, UDI, nor either of the
Subsidiaries has incurred or made commitments for any brokerage, finders' or
similar fees in connection with the transactions contemplated by this
Agreement, except the engagement letter, dated April 15, 1996, among Trafalgar
Financial Services, Inc., UDI and Capital Idea, Inc.
4.7 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information
concerning UDI or the Subsidiaries given to Blue Jay by or on behalf of the
Shareholders do not include any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein in order to make
the
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<PAGE> 15
statements herein or therein, in light of the circumstances under which they are
made, not misleading.
ARTICLE V
REPRESENTATIONS OF BLUE JAY
In order to induce the Shareholders to enter into this Agreement, Blue
Jay and Robert M. Bernstein, jointly and severally, make the following
representations and warranties to the Shareholders.
5.1 Organization. Blue Jay is duly organized, validly existing and
in good standing under the laws of the State of Delaware with all requisite
power and authority to own, lease and operate its properties and to conduct
its business as currently operated and conducted.
5.2 Capitalization of Blue Jay. The authorized capital stock of Blue
Jay consists of 50,000,000 shares of Common Stock, $.001 par value per share,
of which 724,059 shares are issued and outstanding. All of such outstanding
shares have been issued pursuant to and in accordance with effective
registration statements under the 1933 Act and in compliance with applicable
state securities laws or pursuant to valid exemptions from
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<PAGE> 16
registration under the 1933 Act and any applicable state securities laws and
rules and regulations under such laws. All of the outstanding shares of Blue
Jay Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are free of preemptive rights. There are no other shares
of capital stock or other equity securities (or debt securities with any
voting rights or convertible into securities with any voting rights) of Blue
Jay outstanding and no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of capital stock of Blue Jay,
except for an option ("Option") granted to Bernstein pursuant to an Option
Agreement (the "Option Agreement") of even date herewith in the form of
Exhibit C hereto.
5.3 Authorization. Blue Jay has full power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Blue Jay's Board of Directors
and no other corporate proceedings on the part of Blue Jay are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Blue Jay and is the legal,
valid and binding obligation of Blue Jay, enforceable against Blue Jay in
accordance with its terms. The Blue Jay Common Stock to be issued hereunder
and under the Capital Idea
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<PAGE> 17
Agreement, respectively, will be validly issued, fully paid and nonassessable.
5.4 Reports and Financial Statements. Blue Jay has filed all reports
on Form 10-Q, Form 10-QSB and Form 10-K required to be filed with the Securities
and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act") since 1986 (collectively, the "SEC Reports").
Each of the balance sheets (including the related notes) included in the SEC
Reports fairly presents in all material respects the financial position of Blue
Jay as of the date thereof, and each of the income statements and statements of
cash flow (including the related notes) included therein fairly present in all
material respects the results of operations and cash flows of Blue Jay for the
period or as of the date set forth therein, all in conformity with generally
accepted accounting principles consistently applied during the periods involved,
except as otherwise noted therein and subject, in the case of unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein.
5.5 Litigation. There are no claims, suits, actions, arbitrations,
administrative proceedings or investigations, pending or, to Blue Jay's or
Bernstein's knowledge, threatened against Blue Jay or Bernstein that could have
a material adverse effect on Blue Jay or restrict the ability of Blue Jay to
consummate the
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<PAGE> 18
transactions contemplated by this Agreement or the other agreements referred to
herein.
5.6 Investment Intent. The UDI Shares are being acquired for
investment and not with a view toward distribution thereof. Blue Jay
acknowledges that such shares have not been registered under the 1933 Act or any
state securities laws and may be resold only pursuant to an effective
registration covering such shares or pursuant to an available exemption from
registration. Blue Jay further acknowledges that the certificates representing
the UDI Shares shall bear the legend set forth in Section 4.5 hereof:
5.7 Brokers. Neither Blue Jay nor Bernstein has incurred or made
commitments for, any brokerage, finders' or similar fees in connection with the
transactions contemplated by this Agreement.
5.8 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information given
to the Shareholders by or on behalf of Blue Jay, do not include any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein in order to make the statements herein or therein, in
light of the circumstances under which they are made, not misleading.
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<PAGE> 19
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 Survival of Representations. None of the representations or
warranties made by any party to this Agreement shall survive the Final Closing
Date, unless the party making the representation or warranty knew such
representation or warranty was false at the time it was made or as of
the Final Closing Date.
6.2 Agreement to Indemnify.
(a) Bernstein shall indemnify, defend and hold harmless the
Shareholders, UDI, the Subsidiaries, and each officer, director, employee and
agent thereof (collectively the "Indemnified Parties"), from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by any Indemnified Party, directly or
indirectly, during the one-year period following the Closing, by reason of or
resulting from any claims by stockholders of Blue Jay challenging the fairness
of the transactions contemplated by this Agreement or any claims by
stockholders of Blue Jay or arising out of any transaction by or activities of
Blue Jay prior to the Closing Date.
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<PAGE> 20
(b) The obligations of Bernstein set forth in paragraph (a) above
shall be secured by and limited to a pledge by Bernstein to UDI, as
representative of the Indemnified Parties, of shares of Blue Jay Common Stock
and the Option Agreement pursuant to the Pledge Agreement in substantially the
form of Exhibit D attached hereto (the "Pledge Agreement").
(c) For purposes of satisfying any claim for Damages under this
Section 6.2, the value of the Blue Jay Common Stock pledged shall be
the average of the daily market prices of the Blue Jay Common Stock for the 10
trading days immediately preceding final agreement between Bernstein and the
Indemnified Parties, or final adjudication by a court of competent
jurisdiction, of such claim. For purposes of this Section 6.2(c), the market
price for each trading day shall be the closing price on such day on the
principal securities exchange or market in which the Blue Jay Common Stock is
then traded or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day.
ARTICLE VII
COVENANTS PENDING THE FINAL CLOSING DATE
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<PAGE> 21
7.1 Operation of Business. From the date hereof and until the Final \
Closing Date, without the prior written consent of the Representative, Blue
Jay shall not:
(a) Increase Compensation. Grant or promise any increase in
compensation to any shareholder, officer or director or employee, nor, by
means of any bonus, profit-sharing, incentive compensation payment, pension,
retirement, medical hospitalization, life insurance or other insurance plan or
plans, or otherwise, increase in any amount the benefits or compensation of
any such employees, directors or officers;
(b) Employment and Labor Contracts. Enter into, amend or renew or
extend any employment contract or collective bargaining agreement;
(c) Disposition of Assets. Sell or dispose of, or encumber,
mortgage or pledge any asset;
(d) Capital Expenditures. Make any capital expenditures, or enter
into any lease of capital equipment or real estate;
(e) Contracts. Enter into any contract, except as contemplated by
this Agreement.
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<PAGE> 22
(f) Create or Incur Indebtedness. Enter into any transaction, or
create, assume, incur or guarantee any indebtedness;
(g) Issue Stock; Distributions on Stock. Except for the Option
Agreement and any Blue Jay Common Stock to be issued thereunder, authorize or
issue any shares of capital stock or other securities convertible into or
exercisable for capital stock, or declare or pay any dividend or make any sale
of, or distribution with respect to, any capital stock or directly or indirectly
redeem, purchase or otherwise acquire any capital stock;
(h) Accounting Procedures. Change any accounting procedures or
practices or its financial structure;
(i) Charter Amendments. Make any amendments to or changes in its
certificate of incorporation or bylaws;
(j) Breach of Contract. Perform any act, or attempt to do any act,
or permit any act or omission to act, which will cause a breach of any
contract, agreement, instrument, document, lease, license, permit, indenture
or other obligation to which it is a party or to which it is bound.
7.2 Access Prior to Final Closing. Blue Jay shall permit the
Shareholders and their counsel, accountants and other
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<PAGE> 23
representatives full access during normal business hours to all of the offices,
properties, books and records and contracts of Blue Jay in order that the
Shareholders may have full opportunity to make such investigations as they shall
desire of Blue Jay in connection with the transactions contemplated by this
Agreement, and shall furnish the Shareholders during such period with all such
additional financial and operating data and other information as the
Shareholders or their representatives may from time to time reasonably request.
7.3 Blue Jay Acquisition Proposals. From and after the date hereof
and until the earlier of the consummation of the transactions contemplated by
this Agreement or the termination of this Agreement, neither Blue Jay nor
Bernstein shall (a) solicit or authorize any person to solicit, directly or
indirectly, any inquiries, proposals or offers from any person relating to any
acquisition or purchase of all or substantially all the assets of, or any equity
interest in, or any merger, consolidation or business combination with, Blue
Jay (a "Blue Jay Acquisition Transaction"), (b) enter into any agreement with
respect to any Blue Jay Acquisition Transaction, or (c) participate in any
negotiations regarding, cooperate with, facilitate or encourage a Blue Jay
Acquisition Transaction or furnish to any other person any non-public
information concerning Blue Jay in connection therewith. Blue Jay shall
immediately notify the Shareholders if any proposal or offer with respect
to a Blue Jay Acquisition Transaction is
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<PAGE> 24
received by Blue Jay and communicate to the Representative the terms of any such
proposal or offer.
7.4 UDI Acquisition Proposals. From and after the date hereof and
until the earlier of the consummation of the transactions contemplated by this
Agreement or the termination of this Agreement, UDI shall not (a) solicit or
authorize any person to solicit, directly or indirectly, any inquiries,
proposals or offers from any person relating to any acquisition or purchase of
all or substantially all the assets of, or any equity interest in, or any
merger, consolidation or business combination with, UDI (a "UDI Acquisition
Transaction"), (b) enter into any agreement with respect to any UDI Acquisition
Transaction, or (c) participate in any negotiations regarding, cooperate with,
facilitate or encourage a UDI Acquisition Transaction or furnish to any other
person any non-public information concerning UDI in connection therewith. UDI
shall immediately notify Blue Jay if any proposal or offer with respect to a UDI
Acquisition Transaction is received by UDI and communicate to Blue Jay the
terms of any such proposal or offer.
ARTICLE VIII
CONDITIONS OF SHAREHOLDERS' OBLIGATION TO CLOSE
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The obligation of the Shareholders to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction and
fulfillment, prior to the Final Closing Date of each of the following express
conditions precedent:
8.1 Representation and Warranties. The representations and
warranties in this Agreement made by Blue Jay and Bernstein shall be true and
correct in all respects as of and on the Final Closing Date.
8.2 Performance of Covenants and Obligations. Blue Jay shall have
performed and complied with all of its covenants, agreements and obligations
under this Agreement which are to be performed or complied with by Blue Jay
prior to or on the Final Closing Date.
8.3 Closing of Capital Idea, Inc. Agreement. The transactions
contemplated by the Capital Idea Agreement shall have been consummated prior
to or concurrently with the Final Closing Date.
8.4 Bernstein Agreements. Bernstein shall have cancelled Blue Jay's
Convertible Note dated January 16, 1988 in the principal amount of $10,000 for
Blue Jay's agreement to pay all liabilities of Blue Jay to Bernstein and others
as of the date hereof in an amount not to exceed $25,000 which will be paid
within
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<PAGE> 26
60 days of the final Closing Date and (ii) executed a Consulting Agreement in
the form attached hereto as Exhibit E.
8.5 Pledge Agreement. Bernstein shall have executed and delivered to
the Representative the Pledge Agreement.
8.6 Investigation of Blue Jay. The Shareholders shall have completed
their review of such books, records, accounts, contracts and documents of or
relating to the financial condition, liabilities, results of operations,
business and prospects of Blue Jay and such other inquiries or investigations
as they deem necessary or advisable and the results of such review and
investigation shall be satisfactory to the Shareholders in their sole
discretion. Without limiting the generality of the foregoing, the
Shareholders shall be satisfied that (a) Blue Jay has no liabilities or
obligations, whether absolute, accrued, contingent or otherwise and whether
due or to become due, that are not fully reflected on the balance sheet of
Blue Jay as of March 31, 1996, (b) there are no claims, suits, actions,
arbitrations, administrative proceedings or investigations pending or
threatened against Blue Jay that could have a material adverse effect on Blue
Jay, (c) that the Blue Jay Common Stock to be issued pursuant to this Agreement
and the Capital Idea Agreement when issued will be validly issued, fully paid
and nonassessable and (d) there is no reasonable basis for the assertion
against Blue Jay of any liability or obligation or for the assertion or
commencement of any
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<PAGE> 27
such claim, suit, action, arbitration, administrative proceeding or
investigation.
ARTICLE IX
CONDITIONS TO BLUE JAY'S OBLIGATION TO CLOSE
The obligation of Blue Jay to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to and on the Final Closing Date:
9.1 Representations and Warranties. The representations and
warranties in this Agreement made by the Shareholders shall be true and
correct in all respects as of and on the Final Closing Date.
9.2 Performance of Covenants and Obligations. The Shareholders shall
have performed and complied with all of their material covenants and obligations
under this Agreement.
9.3 Closing of the Capital Idea Agreement. The transactions
contemplated by the Capital Idea Agreement shall have been consummated prior
to or on the Final Closing Date.
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<PAGE> 28
9.4 Investigation of UDI. Blue Jay shall have completed its review
of such books, records, accounts, contracts and documents of or relating to the
financial condition, liabilities, results of operations, business and prospects
of UDI and such other inquiries or investigations as it deems necessary or
advisable and the results of such review and investigation shall be satisfactory
to Blue Jay in its sole discretion.
ARTICLE X
OTHER AGREEMENTS
10.1 Cooperation: Public Announcements. The Shareholders and Blue
Jay shall cooperate fully with each other and their respective counsel and
accountants in connection with any actions that may be required to be taken in
order to satisfy their respective obligations under this Agreement. The
Shareholders and Blue Jay shall cooperate with each other in the preparation of
any press releases in connection with the transactions contemplated by this
Agreement and in the preparation and filing of any documents with the
Securities and Exchange Commission or any state securities agency required as a
result of such transactions. Except upon the advice of counsel or as may be
required by law (and in either case upon notice to the other party), neither the
Shareholders nor Blue Jay will, without prior consultation with the other, make
any press
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<PAGE> 29
release or announcement to the public concerning the transactions contemplated
by this Agreement.
10.2 Confidentiality. Each party to this Agreement understands that
certain information which it has been furnished and will be furnished in
connection with this Agreement is confidential and proprietary, and agrees that
it will maintain the confidentiality of such information and will not disclose
it to others or use it, except in connection with the transaction contemplated
hereby, without the consent of the party furnishing such information.
Information which is generally known in the industry concerning a party or among
such party's creditors, generally, or which has been disclosed to the other
party by third parties which have right to do so, shall not be deemed
confidential or proprietary information for these purposes. In the event that a
party is at any time requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena or similar process) to disclose
any information supplied to such party in connection with such transaction, such
party agrees to provide the party furnishing such information with prompt notice
of such request(s) so that the party furnishing such information may seek an
appropriate protective order and/or waive compliance of the party receiving such
information with the terms of this Section 10.2. Notwithstanding the terms of
this Section 10.2, if, in the absence of a protective order or the receipt of a
waiver hereunder, the party receiving such information is nonetheless, in the
opinion
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of its counsel, required to disclose information obtained in connection with
such transaction or else stand liable for contempt or suffer other censure or
penalty, the party receiving such information may disclose such information, to
the extent and in the manner so required, without liability hereunder. In the
event that such transaction is not consummated, each party agrees to promptly
return all confidential materials (and all copies thereof) which have been
furnished to him regarding the business and financial condition of the other
party, including all financial statements, reports, contracts, customer lists,
accounts, records, tax returns, data, plans, processes and trade secrets except
to the extent any such documents shall otherwise be publicly available.
10.3 Directors. On or prior to the Closing Date, the Board of
Directors of Blue Jay shall take all action necessary (including amending the
bylaws of Blue Jay) to elect to the Board of Directors four persons designated
by the Shareholders. Immediately upon consummation of the Closing, all directors
of Blue Jay, other than the persons designated by the Shareholders, shall resign
as directors.
ARTICLE XI
TERMINATION
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11.1 Termination. This Agreement may be terminated in the following
circumstances:
(a) By mutual consent of the Shareholders and Blue Jay;
(b) By the Shareholders in the event the conditions in
Article VIII of this Agreement are not satisfied or waived on or before
September 30, 1996;
(c) By Blue Jay in the event the conditions in Article IX of
this Agreement are not satisfied or waived on or before September 30, 1996.
11.2 Effect of Termination. In the event this Agreement is terminated
pursuant to this Article XI, this Agreement shall be void and have no further
force and effect.
ARTICLE XII
MISCELLANEOUS
12.1 Notices, Etc. All notices, requests, demands, and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered
- 26 -
<PAGE> 32
by hand, telegram, telex or telecopy (receipt confirmed) or seventy-two hours
after being mailed, first call, certified mail, postage prepaid:
(a) To Blue Jay:
Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
Attention: Robert M. Bernstein
With copies to:
Joseph M. Berl
Baker & Hostetler
1050 Connecticut Ave., N.W.
Washington, DC 20036-5304
(202) 861-1500; Fax: _____________
Timothy Smoot, Esq.
7002 Moody Street
Suite 112
LaPalma, CA 90623
(310)402-1801, Fax: (310)402-0643
- 27 -
<PAGE> 33
(b) To Bernstein:
Robert M. Bernstein
c/o Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
With a copy to:
C. Timothy Smoot, Esq.
Suite 112
7002 Moody Street
LaPalma, CA 90623-1181
(310)402-1801, Fax: (310)402-0643
(c) To Shareholders:
United Dynamatics, Inc.
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
(610)363-8237; Fax: (610)524-8715
Attention C. Eugene Hutcheson
With copies to:
- 28 -
<PAGE> 34
Peggy E. Brever, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202
(414)271-6560: Fax: (414)277-0656
Barrett & Schuler
1000 Thomas Jefferson Street
Suite 305
Washington, DC 20007
Attention; David M. Barrett
(202) 728-0888; Fax: (202) 296-7490
12.2 Entire Agreement. This Agreement supersedes any other
discussions and agreement between the parties hereto with respect to he matters
contained herein, and this Agreement and the agreements to be executed and
delivered pursuant hereto and thereto contain the sole and entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein.
12.3 Amendments and Waivers. This Agreement may
be amended only by an instrument in writing executed by the party against whom
enforcement of the amendment is sought. The president or any vice president of
any corporate party may by a signed writing give any consent, take any action,
waive any inaccuracies in representations or other compliance by any other
party to any
- 29 -
<PAGE> 35
of the covenants or conditions herein, modify the terms of this Agreement to
take any other action deemed by him to be necessary or appropriate to
consummate the transactions contemplated by this Agreement.
12.4 Counterparts; Headings. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. The headings herein set out
are for convenience of reference only and shall not be deemed a part of this
Agreement.
12.5 Binding Effect; Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. The Shareholders shall have the right to assign
all or any portion of their rights under this Agreement to any of their
affiliates at any time without the consent of Blue Jay or Bernstein; provided,
however, that notwithstanding such assignment, the assigning Shareholder(s)
shall remain obligated to Blue Jay pursuant to the terms and conditions of this
Agreement.
12.6 Governing Law. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this First Amended
Agreement as of the date first written above.
- 30 -
<PAGE> 36
BLUE JAY ENTERPRISES, INC.
By: /s/ ROBERT M. BERNSTEIN
---------------------------
Robert M. Bernstein
President
/s/ ROBERT M. BERNSTEIN
---------------------------
Robert M. Bernstein
DARNLEY HOLDINGS, LTD.
By: /s/ C. EUGENE HUTCHESON PA /s/ FRANK HOLZE
---------------------------
E.E.T.C., Ltd.
By: /s/ C. EUGENE HUTCHESON PA /s/ FRANK HOLZE
---------------------------
Frank B. Holze
President
/s/ C. EUGENE HUTCHESON PA /s/ FRANK HOLZE
---------------------------
Frank B. Holze
CAPITAL IDEA, INC.
By: /s/ C. EUGENE HUTCHESON
---------------------------
C. Eugene Hutcheson
President
/s/ CHARLOTTE E. DOREMUS
---------------------------
Charlotte E. Doremus
Secretary
/s/ DAVID M. BARRETT
---------------------------
David M. Barrett
- 31 -
<PAGE> 37
INDEX OF EXHIBITS AND SCHEDULES
Schedule 2.4 Blue Jay Common Stock to be Received by each
Shareholder
Schedule 3.1 Ownership of Shares
Schedule 4.2 Options for UDI stock
Schedule 4.3 UDI, Dynamatic or Kenosha Litigation
Exhibit A Escrow Agreement
Exhibit B None
Exhibit C Bernstein Option Agreement
Exhibit D Pledge Agreement
Exhibit E Bernstein Consulting Agreement
<PAGE> 38
EXHIBIT 10.2
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This Second Amendment to the Purchase and Sale Agreement (the
"Agreement") is entered into this 2nd day of September, 1996 by and between
Blue Jay Enterprises, Inc., a Delaware corporation ("Blue Jay"), Robert M.
Bernstein ("Bernstein"), and the following shareholders of United Dynamatics
Inc., a Delaware corporation ("UDI"); Darnley Holdings, Ltd., a Bahamian
corporation ("Darnley"); Capital Idea, Inc., a Colorado corporation; and EETC,
Ltd., a Delaware corporation, Frank B. Holze and David M. Barrett (hereinafter
the foregoing shareholders collectively are referred to as "Shareholders" and
individually referred to as a "Shareholder").
RECITALS
WHEREAS, the parties hereto, except Darnley, entered into a Purchase
and Sale Agreement as of May 17, 1996, as amended by a July 31, 1996 First
Amended Purchase and Sale Agreement (collectively, the "Amended Agreements");
WHEREAS, the parties desires to further amend the Amended Agreements
as hereinafter set forth.
NOW, THEREFORE, the parties hereby further amend the Amended
Agreements as follows:
1. Section 2.1 of the Amended Agreements is hereby deleted in its
entirety and replaced with the following:
2.1 Consideration. The consideration to be paid by Blue
Jay for the UDI Shares shall be in the form of shares of Blue
Jay Common Stock in the ratio of 3826.59 shares of newly
issued Blue Jay Common Stock for each outstanding share of UDI
Common Stock, or an aggregate 4,086,794 shares of Blue Jay
Common Stock (the "Blue Jay Shares").
2. Schedule 2.4 to the Amended Agreements is deleted in its
entirety and replaced with Schedule 2.4 to this Agreement.
3. Except as expressly stated herein, the terms and conditions of
the Amended Agreements shall remain in full force and effect unchanged, and the
same are hereby ratified, confirmed and reaffirmed in all respects and Lender
shall not be deemed to have waived any of its rights thereunder.
4. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original,
<PAGE> 39
but all of which together shall constitute one and the same instrument.
5. The validity and effect of this Agreement shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BLUE JAY ENTERPRISES, INC.
By: /s/ ROBERT M. BERNSTEIN
---------------------------
Robert M. Bernstein
President
/s/ ROBERT M. BERNSTEIN
------------------------------
Robert M. Bernstein
DARNLEY HOLDINGS, LTD.
By: /s/ FRANK HOLZE
---------------------------
E.E.T.C., Ltd.
By: /s/ FRANK HOLZE
---------------------------
Frank B. Holze
Director
/s/ FRANK HOLZE
---------------------------
Frank B. Holze
CAPITAL IDEA, INC.
By: /s/ C. EUGENE HUTCHESON
---------------------------
C. Eugene Hutcheson
President
/s/ CHARLOTTE E. DOREMUS
---------------------------
Charlotte E. Doremus
Secretary
/s/ DAVID M. BARRETT
---------------------------
David M. Barrett
- 2 -
<PAGE> 40
Schedule 2.4
Blue Jay common stock to be received by each shareholder:
<TABLE>
<S> <C>
Capital Idea 2,174,123
Darnley 500,000
Holze 688,805
Barrett 723,866
---------
Total 4,086,794
</TABLE>
<PAGE> 41
EXHIBIT 10.3
SECOND AMENDED
PURCHASE AND SALE AGREEMENT
This SECOND AMENDED PURCHASE AND SALE AGREEMENT (the "Agreement") is
entered into this 2nd day of September, 1996 by and between Blue Jay
Enterprises, Inc., a Delaware corporation ("Blue Jay"), Robert M. Bernstein
("Bernstein") and Capital Idea, Inc. a Colorado corporation ("Seller").
RECITALS
WHEREAS, the parties hereto entered into a Purchase and Sale Agreement
dated as of May 17, 1996 and a First Amended Purchase and Sale Agreement dated
as of July 31, 1996 (collectively, the "Amended Agreements").
WHEREAS, the parties desire to further amend the Amended Agreements to
read in its entirety as hereinafter set forth.
NOW, THEREFORE, the parties hereby amend the Amended Agreements to
read in its entirety as follows:
WHEREAS, Seller is the owner of that certain 11% Subordinated Note due
2002 of Maxwell Dynamometer Systems, Inc. ("Maxwell") dated May 19, 1994 in
the principal amount of $542,000, that certain Promissory Note of Maxwell dated
August 15, 1996 in the principal amount of $313,000, and that certain Revenue
Note Agreement of Maxwell dated May 19, 1994 (collectively, the "Notes").
WHEREAS, Seller desires to sell and Blue Jay desires to purchase the
Notes on the terms and conditions hereinafter set forth for consideration of
shares of common stock, $.001 par value per share, of Blue Jay ("Blue Jay
Common Stock").
WHEREAS, this transaction, together with the transactions contemplated
by that Purchase and Sale Agreement of even date herewith between Blue Jay and
the shareholders of United Dynamatics, Inc. (the "UDI Agreement"), as amended,
is intended to qualify as a tax free exchange under Section 351(a) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, on the Final Closing Date (as
<PAGE> 42
hereinafter defined), Seller shall sell and deliver to Blue Jay, and Blue Jay
shall purchase from Seller, the Notes.
ARTICLE II
CONSIDERATION; CLOSING
2.1 Consideration. The consideration to be paid by Blue
Jay for the Notes shall be 2,429,737 shares of newly issued Blue Jay Common
Stock (the "Blue Jay Shares").
2.2 Escrow Arrangement. The Seller, Blue Jay and Firstar
Trust Company, as escrow agent (the "Escrow Agent"), have entered into an
escrow agreement in the form attached hereto as Exhibit B, as amended, ("the
Escrow Agreement") pursuant to which, (a) Seller is delivering to the Escrow
Agent the Notes and (b) Blue Jay is delivering to the Escrow Agent the Blue Jay
Shares, all of which shares shall be held by the Escrow Agent in accordance
with the Escrow Agreement.
2.3 Closing. The closing in escrow of the transactions
contemplated hereby ("Escrow Closing") was held at Trafalgar Financial
Services, Inc., 126 State Street, Boston, Massachusetts at 1:00 P.M. May 17,
1996. The "Final Closing Date" shall mean the date on which the Escrow Agent
releases the documents pursuant to Section 3.1(a) of the Escrow Agreement which
shall be the first business day following satisfaction of all closing
conditions set forth in Article VII and VIII hereof.
2.4 Deliveries on the Final Closing Date. On the Final
Closing Date:
(a) Seller and Blue Jay shall deliver to the Escrow Agent the
Notice of Release referred to in the Escrow Agreement;
(b) The Escrow Agent shall deliver to Blue Jay the Notes; and
(c) The Escrow Agent shall deliver to Seller certificates
representing the Blue Jay Shares.
ARTICLE III
REPRESENTATIONS OF SELLER
In order to induce Blue Jay to enter into this Agreement, Seller makes
the following representations and warranties to Blue Jay.
- 2 -
<PAGE> 43
3.1 Organization and Qualification. Seller is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Colorado.
3.2 Enforceability; Conflicting Obligations. Seller has
all necessary power and authority to enter into and consummate the transactions
contemplated by this Agreement in accordance with its terms and to sell and
transfer the Notes to Blue Jay. This Agreement has been duly authorized by
Seller, constitutes Seller's valid and binding obligation, and is enforceable
against Seller in accordance with its terms. The execution and delivery of
this Agreement do not, and the consummation of the sale of the Notes will not,
conflict with or violate the provisions of any order, writ, decree, agreement,
contract, restriction or organizational documents to which Seller is a party,
or to which such Seller is bound.
3.3 Investment Intent. The Blue Jay Common Stock being
acquired by Seller hereunder is being acquired for investment and not with a
view toward distribution thereof. Such shares have not been registered under
the Securities Act of 1933 or any state securities laws and may be resold only
pursuant to an effective registration covering such shares or pursuant to an
available exemption from registration. Certificates representing Blue Jay
Common Stock shall bear the following legend:
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or the Securities Laws
of any state, but have been issued in reliance upon exemptions
therefrom. The Securities may not be offered, sold, pledged or
otherwise transferred without registration under the Act or the
opinion of counsel satisfactory to the Corporation that an exemption
from registration is available or that such transfer may otherwise
lawfully be made.
3.4 Brokers. Seller has not incurred or made commitments
for, any brokerage, finders' or similar fees in connection with the
transactions contemplated by this Agreement except as set forth in that
engagement letter dated April 15, 1996 between Trafalgar Securities, Inc.,
United Dynamatics, Inc. and Seller.
3.5 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information given
to Blue Jay by or on behalf of Seller, do not include any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
therein in order to make the statements herein or therein, in
- 3 -
<PAGE> 44
light of the circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS OF BLUE JAY
In order to induce Seller to enter into this Agreement, Blue Jay makes
the following representations and warranties to the Shareholders.
4.1 Organization. Blue Jay is duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite power and authority to own, lease and operate its properties and to
conduct its business as currently operated and conducted.
4.2 Capitalization of Blue Jay. The authorized capital
stock of Blue Jay consists of 50,000,000 shares of Common Stock, $.001 par
value per share, of which 724,059 shares are issued and outstanding. All of
such outstanding shares have been issued pursuant to and in accordance with
effective registration statements under the 1933 Act and in compliance with
applicable state securities laws or pursuant to valid exemptions from
registration under the 1933 Act and any applicable state securities laws and
rules and regulations under such laws. All of the outstanding shares of Blue
Jay Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are free of pre-emptive rights. There are no other shares
of capital stock or other equity securities (or debt securities with any voting
rights or convertible into securities with any voting rights) of Blue Jay
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of capital stock of Blue Jay, except for
400,000 shares of Blue Jay Common Stock to be issued to Bernstein upon exercise
of the Option Agreement.
4.3 Authorization. Blue Jay has full power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by Blue Jay's Board
of Directors and no other corporate proceedings on the part of Blue Jay are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Blue Jay and is the
legal, valid and binding obligation of Blue Jay, enforceable against Blue Jay
in accordance with its terms.
- 4 -
<PAGE> 45
4.4 Reports and Financial Statements. Blue Jay has filed
all reports on Form 10-Q, Form 10-QSB and Form 10-K required to be filed with
the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act") since 1986 (collectively, the
"SEC Reports"). Each of the balance sheets (including the related notes)
included in the SEC Reports fairly presents in all material respects the
financial position of Blue Jay as of the date thereof, and each of the income
statements and statements of cash flow (including the related notes) included
therein fairly present in all material respects the results of operations and
cash flows of Blue Jay for the period or as of the date set forth therein, all
in conformity with generally accepted accounting principles consistently
applied during the periods involved, except as otherwise noted therein and
subject, in the case of unaudited interim financial statements, to normal
year-end adjustments and any other adjustments described therein.
4.5 Litigation. There are no claims, suits, actions,
arbitrations, administrative proceedings or investigations, pending or, to Blue
Jay's or Bernstein's knowledge, threatened against Blue Jay or Bernstein that
could have a material adverse effect on Blue Jay or restrict the ability of
Blue Jay to consummate the transactions contemplated by this Agreement or the
other agreements referred to herein.
4.6 Brokers. Neither Blue Jay nor Bernstein has incurred
or made commitments for, any brokerage, finders' or similar fees in connection
with the transactions contemplated by this Agreement.
ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 Survival of Representations. None of the
representations or warranties made by any party to this Agreement shall survive
the Final Closing Date, unless the party making the representation or warranty
knew such representation or warranty was false at the time it was made or as of
the Final Closing Date.
5.2 Agreement to Indemnify.
(a) Bernstein shall indemnify, defend and hold harmless Capital Idea
and each officer, director employee or agent (collectively the "Indemnified
Parties"), from and against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including
interest, penalties and reasonable attorneys' fees and expenses
- 5 -
<PAGE> 46
(collectively, "Damages"), asserted against, resulting to, imposed upon or
incurred by any Indemnified Party, directly or indirectly, during the one-year
period following the Closing, by reason of or resulting from any claims by
stockholders of Blue Jay challenging the fairness of the transactions
contemplated by this Agreement or any claims by stockholders of Blue Jay
arising out of any transaction by or activities of Blue Jay prior to the
Closing Date.
(b) The obligations of Bernstein set forth in paragraph (a) above
shall be secured by and limited to a pledge by Bernstein to Seller, of shares
of Blue Jay Common Stock and an option to purchase shares of Blue Jay Common
Stock pursuant to the Pledge Agreement in substantially the form of Exhibit C
attached hereto (the "Pledge Agreement").
(c) For purposes of satisfying any claim for Damages under this
Section 5.2, the value of the pledged Blue Jay Common Stock shall be the
average of the daily market prices of the Blue Jay Common Stock for the 10
trading days immediately preceding final agreement between Bernstein and the
Indemnified Parties, or final adjudication by a court of competent
jurisdiction, of such claim. For purposes of this Section 5.2(c), the market
price for each trading day shall be the closing price on such day on the
principal securities exchange or market in which the Blue Jay Common Stock is
then traded or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day.
ARTICLE VI
COVENANTS PENDING THE CLOSING DATE
6.1 Operation of Business. From the date hereof and
until the Closing Date, without the prior written consent of the Seller, Blue
Jay shall not:
(a) Increase Compensation. Grant or promise any increase
in compensation to any shareholder, officer, employee or director, nor, by
means of any bonus, profit-sharing, incentive compensation payment, pension,
retirement, medical hospitalization, life insurance or other insurance plan or
plans, or otherwise, increase in any amount the benefits or compensation of any
such employees, directors or officers;
(b) Employment and Labor Contracts. Enter into, amend or
renew or extend any employment contract or collective bargaining agreement;
(c) Disposition of Assets. Sell or dispose of, or
encumber, mortgage or pledge any asset;
- 6 -
<PAGE> 47
(d) Capital Expenditures. Make any capital expenditures,
or enter into any lease of capital equipment or real estate;
(e) Contracts. Enter into any contract, except as
contemplated by this Agreement.
(f) Create or Incur Indebtedness. Enter into any
transaction, or create, assume, incur or guarantee any indebtedness;
(g) Issue Stock; Distributions on Stock. Except for the
option referred to in Section 5.2(b) hereof, authorize or issue any shares of
capital stock or other securities convertible into or exercisable for capital
stock, or declare or pay any dividend or make any sale of, or distribution with
respect to, any capital stock or directly or indirectly redeem, purchase or
otherwise acquire any capital stock;
(h) Accounting Procedures. Change any accounting
procedures or practices or its financial structure;
(i) Charter Amendments. Make any amendments to or
changes in its certificate of incorporation or bylaws;
(j) Breach of Contract. Perform any act, or attempt to
do any act, or permit any act or omission to act, which will cause a breach of
any contract, agreement, instrument, document, lease, license, permit,
indenture or other obligation to which it is a party or to which it is bound.
6.2 Access Prior to Closing. Blue Jay shall permit the
Seller and its counsel, accountants and other representatives full access
during normal business hours to all of the offices, properties, books and
records and contracts of Blue Jay in order that the Seller may have full
opportunity to make such investigations as it shall desire of Blue Jay in
connection with the transactions contemplated by this Agreement, and shall
furnish the Seller during such period with all such additional financial and
operating data and other information as the Seller or its representatives may
from time to time reasonably request.
6.3 Acquisition Proposals. From and after the date
hereof and until the earlier of the consummation of the transactions
contemplated by this Agreement or the termination of this Agreement, neither
Blue Jay nor Bernstein shall (a) solicit or authorize any person to solicit,
directly or indirectly, any inquiries, proposals or offers from any person
relating to any acquisition or purchase of all or substantially all the assets
of, or any equity interest in, or any merger, consolidation or business
combination with, Blue Jay (an "Acquisition Transaction"), (b) enter into any
agreement with respect to any
- 7 -
<PAGE> 48
Acquisition Transaction, or (c) participate in any negotiations regarding,
cooperate with, facilitate or encourage an Acquisition Transaction or furnish
to any other person any non-public information concerning Blue Jay in
connection therewith. Blue Jay shall immediately notify the Seller if any
proposal or offer with respect to an Acquisition Transaction is received by
Blue Jay and communicate to the Representative the terms of any such proposal
or offer.
ARTICLE VII
CONDITIONS OF SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to or on the Final Closing Date, of each of the following conditions:
7.1 Representation and Warranties. The representations
and warranties in this Agreement made by Blue Jay and Bernstein shall be true
and correct in all respects as of and at the Final Closing Date.
7.2 Performance of Covenants and Obligations. Blue Jay
shall have performed and complied with all of its covenants and obligations
under this Agreement which are to be performed or complied with by Blue Jay
prior to or on the Final Closing Date.
7.3 Closing of UDI, Inc. Agreement. The transactions
contemplated by the UDI Agreement shall have been consummated prior to or on
the Final Closing Date.
7.4 Bernstein Agreements. Bernstein shall have cancelled
Blue Jay's Convertible Note dated January 16, 1988 in the principal amount of
$10,000 for Blue Jay's agreement to pay all liabilities of Blue Jay to
Bernstein as of the date hereof in an amount not to exceed $25,000 and (ii)
executed a Consulting Agreement in the form attached hereto as Exhibit D.
7.5 Pledge Agreement. Bernstein shall have executed and
delivered to Seller the Pledge Agreement.
7.6 Investigation of Blue Jay. The Seller shall have
completed its review of such books, records, accounts, contracts and documents
of or relating to the financial condition, liabilities, results of operations,
business and prospects of Blue Jay and such other inquiries or investigations
as it deems necessary or advisable and the results of such review shall be
satisfactory to the Seller in its sole discretion. Without limiting the
generality of the foregoing, the Seller shall be
- 8 -
<PAGE> 49
satisfied that (a) Blue Jay has no liabilities or obligations, whether
absolute, accrued, contingent or otherwise and whether due or to become due,
that are not fully reflected on the balance sheet of Blue Jay as of March 31,
1996, (b) there are no claims, suits, actions, arbitrations, administrative
proceedings or investigations pending or threatened against Blue Jay that could
have a material adverse effect on Blue Jay, (c) that the Blue Jay common Stock
to be issued pursuant to that Agreement and the UDI Agreement when issued will
be validly issued, fully paid and non assessable and (d) there is no reasonable
basis for the assertion against Blue Jay of any such liability or obligation or
for the assertion or commencement of any such claim, suit, action, arbitration,
administrative proceeding or investigation.
ARTICLE VIII
CONDITIONS TO BLUE JAY'S OBLIGATION TO CLOSE
The obligation of Blue Jay to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to or on the Final Closing Date of each of the following conditions:
8.1 Representations and Warranties. The representations
and warranties in this Agreement made by the Shareholders shall be true and
correct in all respects as of and at the Final Closing Date.
8.2 Performance of Covenants and Obligations. The Seller
shall have performed and complied with all of its material covenants and
obligations under this Agreement.
8.3 Closing of the UDI Agreement. The transactions
contemplated by the UDI Agreement shall have been consummated prior to or on
the Final Closing Date.
ARTICLE IX
OTHER AGREEMENTS
9.1 Cooperation: Public Announcements. Seller and Blue
Jay shall cooperate fully with each other and their respective counsel and
accountants in connection with any actions that may be required to be taken in
order to satisfy their respective obligations under this Agreement. Seller and
Blue Jay shall cooperate with each other in the preparation of any press
releases in connection with the transactions contemplated by this Agreement and
in the preparation and filing of any documents with
- 9 -
<PAGE> 50
the Securities and Exchange Commission or any state securities agency required
as a result of such transactions. Except upon the advice of counsel or as may
be required by law (and in either case upon notice to the other party), neither
Seller nor Blue Jay will, without prior consultation with the other, make any
press release or announcement to the public concerning the transactions
contemplated by this Agreement.
9.2 Confidentiality. Each party to this Agreement
understands that certain information which it has been furnished and will be
furnished in connection with this Agreement is confidential and proprietary,
and agrees that it will maintain the confidentiality of such information and
will not disclose it to others or use it, except in connection with the
transaction contemplated hereby, without the consent of the party furnishing
such information. Information which is generally known in the industry
concerning a party or among such party's creditors, generally, or which has
been disclosed to the other party by third parties which have right to do so,
shall not be deemed confidential or proprietary information for these purposes.
In the event that a party is at any time requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena or
similar process) to disclose any information supplied to such party in
connection with such transaction, such party agrees to provide the party
furnishing such information with prompt notice of such request(s) so that the
party furnishing such information may seek an appropriate protective order
and/or waive compliance of the party receiving such information with the terms
of this Section 9.2. Notwithstanding the terms of this Section 9.2, if, in the
absence of a protective order or the receipt of a waiver hereunder, the party
receiving such information is nonetheless, in the opinion of its counsel,
required to disclose information obtained in connection with such transaction
or else stand liable for contempt or suffer other censure or penalty, the party
receiving such information may disclose such information, to the extent and in
the manner so required, without liability hereunder. In the event that such
transaction is not consummated, each party agrees to promptly return all
confidential materials (and all copies thereof) which have been furnished to
him regarding the business and financial condition of the other party,
including all financial statements, reports, contracts, customer lists,
accounts, records, tax returns, data, plans, processes and trade secrets except
to the extent any such documents shall otherwise be publicly available.
- 10 -
<PAGE> 51
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated in the
following circumstances:
(a) By mutual consent of Seller and Blue Jay;
(b) By Seller in the event the conditions in
Article VII of this Agreement are not satisfied or waived on or before July 31,
1996;
(c) By Blue Jay in the event the conditions in
Article VIII of this Agreement are not satisfied or waived on or before July
31, 1996.
10.2 Effect of Termination. In the event this Agreement
is terminated pursuant to this Article X, this Agreement shall be void and have
no further force and effect.
ARTICLE XI
MISCELLANEOUS
11.1 Notices, Etc. All notices, requests, demands, and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered by hand, telegram, telex
or telecopy (receipt confirmed) or seventy-two hours after being mailed, first
call, certified mail, postage prepaid:
(a) To Blue Jay:
Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
Attention: Robert M. Bernstein
With copies to:
Joseph M. Berl
Baker & Hostetler
1050 Connecticut Ave., N.W.
Washington, DC 20036-5304
(202) 861-1500; Fax: (202)861-1783
- 11 -
<PAGE> 52
Timothy Smoot, Esq.
7002 Moody Street
Suite 112
LaPalma, CA 90623
(310)402-1801, Fax: (310)402-0643
(b) To Bernstein:
Robert M. Bernstein
c/o Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
(c) To Seller:
Capital Idea, Inc.
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
(610)363-8237; Fax: (610)524-8715
Attention C. Eugene Hutcheson
With copies to:
Peggy E. Brever, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202
(414)271-6560: Fax: (414)277-0656
Barrett & Schuler
1000 Thomas Jefferson Street
Suite 305
Washington, DC 20007
Attention; David M. Barrett
(202) 728-0888; Fax: (202) 296-7490
11.2 Entire Agreement. This Agreement supersedes any
other discussions and agreement between the parties hereto with respect to he
matters contained herein, and this Agreement and the agreements to be executed
and delivered pursuant hereto and thereto contain the sole and entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein.
11.3 Amendments and Waivers. This Agreement may be
amended only by an instrument in writing executed by the party against whom
enforcement of the amendment is sought. The president or any vice president of
any corporate party may by a signed writing give any consent, take any action,
waive any inaccuracies in representations or other compliance by any other
- 12 -
<PAGE> 53
party to any of the covenants or conditions herein, modify the terms of this
Agreement to take any other action deemed by him to be necessary or appropriate
to consummate the transactions contemplated by this Agreement.
11.4 Counterparts; Headings. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. The
headings herein set out are for convenience of reference only and shall not be
deemed a part of this Agreement.
11.5 Binding Effect; Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors and assigns. The Shareholders shall have the
right to assign all or any portion of their rights under this Agreement to any
of their affiliates at any time without the consent of Blue Jay or Bernstein;
provided, however, that notwithstanding such assignment, the assigning
Shareholder(s) shall remain obligated to Blue Jay pursuant to the terms and
conditions of this Agreement.
11.6 Governing Law. The validity and effect of this
Agreement shall be governed by and construed and enforced in accordance with
the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BLUE JAY ENTERPRISES, INC.
By: /s/ ROBERT M. BERNSTEIN
---------------------------
Robert M. Bernstein
President
By: /s/ HARVEY KRAVETZ
---------------------------
Harvey Kravetz
Secretary
CAPITAL IDEA, INC.
By: /s/ C. EUGENE HUTCHESON
---------------------------
C. Eugene Hutcheson
President
/s/ ROBERT M. BERNSTEIN
------------------------------
Robert M. Bernstein
- 13 -
<PAGE> 54
INDEX OF EXHIBITS AND SCHEDULES
Exhibit A None
Exhibit B Escrow Agreement
Exhibit C Pledge Agreement
Exhibit D Consulting Agreement
<PAGE> 1
EXHIBIT 19.3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 2, 1996
-----------------
(Date of earliest event reported)
UNIDYNE CORPORATION
(Exact name of small business issuer
as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 0-10372 23-2154902
(State or other jurisdiction (Commission File No.) (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
118 PICKERING WAY, SUITE 104, EXTON, PENNSYLVANIA 19341
(Address of principal executive offices)
(610) 363-8237
(Issuer's telephone number)
BLUE JAY ENTERPRISES, INC., 11835 WEST OLYMPIC BOULEVARD, EAST TOWER, LOS
ANGELES, CA 90064
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On September 2, 1996, Registrant, acting upon the authorization of its
Board of Directors, selected Arthur Andersen L.L.P. as its principal
independent accountant to replace Jones, Jensen & Co. Except as described
below, the reports of Registrant's prior principal accountant for the two most
recent fiscal years did not contain an adverse opinion or disclaimer of
opinion, or modification as to uncertainty, audit scope, or accounting
principles. The reports related to periods before Registrant acquired its
current business operations and to periods in which Registrant was a
development stage company. Accordingly, the reports noted that Registrant was
a development stage company which had no significant operating results to the
date of such reports and stated that unless Registrant was able to obtain
significant outside financing, there existed substantial doubt of its ability
to continue as a going concern.
There were no disagreements with the Registrant's former
principal accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
ITEM 5. OTHER EVENTS.
Effective September 3, 1996, the Registrant amended its
Certificate of Incorporation and Bylaws. Among other things, the Amended and
Restated Certificate of Incorporation changed the name of the Registrant to
Unidyne Corporation. Copies of the Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws are attached hereto as Exhibits
3.1 and 3.2, respectively.
ITEM 7. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- - -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of Blue Jay
Enterprises, Inc.
3.2 Amended and Restated Bylaws of Unidyne Corporation.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: September 9, 1996 /s/ C. Eugene Hutcheson
------------------------
C. Eugene Hutcheson
Chairman, Chief Executive Officer and President
2
<PAGE> 3
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BLUE JAY ENTERPRISES, INC.
BLUE JAY ENTERPRISES, INC., a corporation organized and existing under
the law of the State of Delaware (the "CORPORATION"), hereby certifies as
follows:
1. The Corporation was originally incorporated under the name
BLUE JAY PETROLEUM CORP., and the name was subsequently changed to BLUE JAY
ENTERPRISES, INC.
2. The original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of Delaware on December 1, 1980. The
original Certificate of Incorporation has heretofore been amended.
3. This Amended and Restated Certificate of Incorporation amends
the Certificate of Incorporation, as amended and heretofore in effect, to
change the name of the Corporation, authorize shares of preferred stock, par
value $10.00, create a classified board of directors, limit stockholder actions
to those actions taken at meetings of the stockholders, limit the ability to
amend certain provisions of the Certificate of Incorporation, as amended, or
the Corporation's bylaws, limit the personal liability of directors to the
Corporation or its stockholders, and authorize indemnification of the
Corporation's directors, and also integrates and restates the Certificate of
Incorporation, as amended and heretofore in effect and as further amended
hereby.
4. This Amended and Restated Certificate of Incorporation has
been proposed by the Board of Directors of the Corporation and adopted by the
stockholders of the Corporation in the manner and by the vote prescribed by
Sections 242 and 245 of the General Corporation Law of the State of Delaware
(the "CORPORATION LAW"), and is as follows:
FIRST: The name of the Corporation is UNIDYNE CORPORATION.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Corporation Law.
FOURTH: The total number of shares of stock which the Corporation has
authority to issue is Seventy Million (70,000,000)
<PAGE> 4
shares, of which Fifty Million (50,000,000) shares shall be Common Stock of the
par value of $0.001 per share (the "COMMON STOCK") and Twenty Million
(20,000,000) shares shall be Preferred Stock of the par value of $10.00 per
share (the "PREFERRED STOCK"). The Corporation shall be entitled to treat the
person in whose name any share of its stock is registered as the owner thereof
for all purposes and shall not be bound to recognize any equitable or other
claim to, or interest in, such share on the part of any other person, whether
or not the Corporation shall have notice thereof, except as expressly provided
by applicable law. The shares of the Preferred Stock and Common Stock,
respectively, shall have the following express terms:
SECTION 1. PREFERRED STOCK.
1.1 AUTHORITY OF THE BOARD OF DIRECTORS TO CREATE SERIES. The Board of
Directors of the Corporation is hereby expressly granted authority, to the full
extent now or hereafter permitted herein and by the Corporation Law, at any
time or from time to time, by resolution or resolutions, to create one or more
series of Preferred Stock, to fix the authorized number of shares of any such
series (which number of shares may vary as between series and be changed from
time to time by like action), and to fix the terms of such series, including
but not limited to, the following:
(i) the designation of such series, which may be by
distinguishing number, letter or title;
(ii) the rate or rates at which shares of such series
shall be entitled to receive dividends; the periods in respect of
which dividends are payable; the conditions upon, and times of payment
of, such dividends; the relationship and preference, if any, of such
dividends to dividends payable on any other class or classes or any
other series of stock; whether such dividends shall be cumulative and,
if cumulative, the date or dates from which such dividends shall
accumulate; and the other terms and conditions applicable to dividends
upon shares of such series;
(iii) the rights of the holders of the shares of such
series in case the Corporation be liquidated, dissolved or wound up
(which may vary depending upon the time, manner or voluntary or
involuntary nature or other circumstances of such liquidation,
dissolution or winding up) and the relationship and preference, if
any, of such rights to rights of holders of shares of stock of any
other class or classes or any other series of stock;
(iv) the right, if any, of the Corporation to redeem
shares of such series at its option, including any limitation of such
right, and the amount or amounts to be payable in respect of the
shares of such series in case
- 2 -
<PAGE> 5
of such redemption (which may vary depending on the time, manner or
other circumstances of such redemption), and the manner, effect and
other terms and conditions of any such redemption;
(v) the obligation, if any, of the Corporation to
purchase, redeem or retire shares of such series and/or to maintain a
fund for such purpose, and the amount or amounts to be payable from
time to time or such purpose or into such fund, or the number of
shares to be purchased, redeemed or retired, the per share purchase
price or prices, and the other terms and conditions of any such
obligation or obligations;
(vi) the voting rights, if any, which, if granted, may be
full, special, or limited, to be given the shares of such series,
including, without limiting the generality of the foregoing, the
right, if any, as a series or in conjunction with other series or
classes, to elect one or more members of the Board of Directors either
generally or at certain times or under certain circumstances, and
restrictions, if any, on particular corporate acts without a specified
vote or consent of holders of such shares (such as, among others,
restrictions on modifying the terms of such series or of the Preferred
Stock, restricting the permissible terms of other series or the
permissible variations between series of the Preferred Stock,
authorizing or issuing additional shares of the Preferred Stock,
creating debt, or creating any class of stock ranking prior to or on a
parity with the Preferred Stock or any series thereof as to dividends,
or assets remaining for distribution to the stockholders in the event
of the liquidation, dissolution, or winding up of the Corporation);
(vii) the right, if any, to exchange or convert the shares
into shares of any other series of the Preferred Stock or into shares
of any other class of stock of the Corporation or the securities of
any other corporation, and the rate or basis, time, manner, terms and
conditions of exchange or conversion or the method by which the same
shall be determined; and
(viii) the other special rights, if any, and the
qualifications, limitations or restrictions thereof, of the shares of
such series.
The Board of Directors shall fix the terms of each series of the
Preferred Stock by resolution or resolutions adopted at any time prior to the
issuance of the shares thereof, and the terms of each such series may, subject
only to restrictions, if any, imposed by this Amended and Restated Certificate
of Incorporation or by applicable law, vary from the terms of other series to
the extent
- 3 -
<PAGE> 6
determined by the Board of Directors from time to time and provided in the
resolution or resolutions fixing the terms of the respective series of the
Preferred Stock.
1.2 STATUS OF CERTAIN SHARES. Shares of any series of the
Preferred Stock, whether provided for herein or by resolution or resolutions of
the Board of Directors, which have been redeemed (whether through the operation
of a sinking fund or otherwise) or which, if convertible or exchangeable, have
been converted into or exchanged for shares of stock of any other class or
classes, or which have been purchased or otherwise acquired by the Corporation,
shall have the status of authorized and unissued shares of the Preferred Stock
of the same series and may be reissued as a part of the series of which they
were originally a part or may be reclassified and reissued as part of a new
series of the Preferred Stock to be created by resolution or resolutions of the
Board of Directors or as part of any other series of the Preferred Stock, all
subject to the conditions or restrictions on issuance set forth herein or in
the resolution or resolutions adopted by the Board of Directors providing for
the issue of any series of the Preferred Stock.
1.3 CHANGES IN NUMBER OF AUTHORIZED SHARES. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the outstanding Common Stock, without a vote of
the holders of the Preferred Stock, or of any series thereof, unless a vote of
any such holders is required pursuant to the express terms of the Preferred
Stock or any series thereof as fixed or determined pursuant to this Section 1
of this Article FOURTH.
SECTION 2. COMMON STOCK.
2.1 ISSUANCE, CONSIDERATION AND TERMS. Any unissued or treasury
shares of the Common Stock may be issued from time to time for such
consideration as may be fixed from time to time by the Board of Directors. The
Common Stock shall be subject to the express terms of the Preferred Stock and
any series thereof. Each share of Common Stock shall be of equal rank and shall
be identical to every other share of Common Stock. Holders of Common Stock
shall have such rights as are provided herein and by law.
2.2 VOTING RIGHTS. Except as expressly required by law or as
provided in or fixed and determined pursuant to Section 1 of this Article
FOURTH, the entire voting power and all voting rights shall be vested
exclusively in the Common Stock. Each holder of shares of Common Stock shall
be entitled to one (1) vote for each share standing in such holder's name on
the books of the Corporation.
2.3 DIVIDENDS. Subject to Section 1 of this Article FOURTH, the
holders of Common Stock shall be entitled to receive, and shall share equally
share for share, when and as declared by the Board of
- 4 -
<PAGE> 7
Directors, out of the assets of the Corporation which are by law available
therefor, dividends or distributions payable in cash, in property or in
securities of the Corporation.
FIFTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by such holders. Except as otherwise required by law and subject to
the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Corporation for any purpose or purposes may be called only
by the Board of Directors pursuant to a resolution stating the purpose or
purposes thereof approved by a majority of the total number of directors which
the Board of Directors of the Corporation would have if there were no vacancies
(the "WHOLE BOARD") or by the Chairman of the Board of Directors of the
Corporation and any power of stockholders to call a special meeting is
specifically denied. No business other than that stated in the notice shall be
transacted at any special meeting. Notwithstanding anything contained in this
Amended and Restated Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the voting power of all
shares of the Corporation entitled to vote generally in the election of
directors (the "VOTING STOCK") then outstanding, voting together as a single
class, shall be required to alter, amend, or adopt any provision inconsistent
with or repeal this Article FIFTH.
SIXTH: The following provisions of this Article SIXTH shall apply
with respect to the Board of Directors of the Corporation:
SECTION 1. NUMBER, ELECTION AND TERMS.
Except as otherwise fixed by or pursuant to the provisions of Article
FOURTH hereof relating to the rights of the holders of any shares of the
Preferred Stock or any series thereof having a preference over the Common Stock
as to dividends or upon liquidation to elect additional directors under
specified circumstances, the number of the directors of the Corporation shall
be fixed from time to time exclusively pursuant to a resolution adopted by a
majority of the Whole Board (but shall not be less than two). So long as there
shall be more than two directors, the directors, other than those who may be
elected by the holders of any shares of Preferred Stock or series thereof
having a preference over the Common Stock as to dividends or upon liquidation,
shall be classified, with respect to the time for which they severally hold
office, into, three classes, as nearly equal in number as possible, one class
to be originally elected for a term expiring at the annual meeting of
stockholders to be held in 1997, another class to be originally elected for a
term expiring at the annual meeting of stockholders to be held in 1998, and
another class to be originally elected for a term expiring at the annual
meeting of stockholders to be held in 1999, with each class to hold office
until its
- 5 -
<PAGE> 8
successor is duly elected and qualified. At each succeeding annual meeting of
stockholders, directors elected to succeed those directors whose terms then
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election, with each director to hold
office until such person's successor shall have been duly elected and
qualified. Election of directors need not be by written ballot unless and to
the extent that the Bylaws of the Corporation so provide.
SECTION 2. STOCKHOLDER NOMINATIONS AND PROPOSALS.
Advance notice of stockholder nominations for the election of
directors and of the proposal of business by stockholders shall be given in the
manner provided in the Bylaws of the Corporation, as amended and in effect from
time to time.
SECTION 3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Except as otherwise provided for or fixed by or pursuant to the
provisions of Article FOURTH hereof relating to the rights of the holders of
any class or series of the Preferred Stock having a preference over the Common
Stock as to dividends or upon liquidation to elect directors under specified
circumstances, newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other cause shall be filled by
the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board of Directors, and not by the
stockholders. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of directors
in which the new directorship was created or the vacancy occurred and until
such director's successor shall have been duly elected and qualified. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
SECTION 4. REMOVAL.
Subject to the rights of any class or series of the Preferred Stock
having a preference over the Common Stock as to dividends or upon liquidation
to elect Directors under specified circumstances, any director may be removed
from office only for cause by the affirmative vote of the holders of at least a
majority of the voting power of all Voting Stock then outstanding, voting
together as a single class.
SECTION 5. AMENDMENT, REPEAL, ETC.
Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the voting power
- 6 -
<PAGE> 9
of all Voting Stock then outstanding, voting together as a single class, shall
be required to alter, amend, adopt any provision inconsistent with or repeal
this Article SIXTH.
SEVENTH: The Bylaws of the Corporation may be altered or
repealed and new Bylaws may be adopted either: (1) at any annual or special
meeting of stockholders, by the affirmative vote of the holders of a majority
of the voting power of the stock issued and outstanding and entitled to vote
thereat, provided that any proposed alteration or repeal of, or the adoption of
any Bylaw inconsistent with this sentence, by the stockholders shall require
the affirmative vote of the holders of at least 80% of the voting power of all
Voting Stock then outstanding, voting together as a single class; and provided,
further, that in the case of any such stockholder action at a special meeting
of stockholders, notice of the proposed alteration, repeal or adoption of the
new Bylaw or Bylaws must be contained in the notice of such special meeting; or
(2) by the affirmative vote of a majority of the Whole Board.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 80% of the voting
power of all Voting Stock then outstanding, voting together as a single class,
shall be required to alter, amend, adopt any provision inconsistent with or
repeal this Article SEVENTH.
EIGHTH: The Corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provision contained in this
Amended and Restated Certificate of Incorporation, and any other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed by law; and,
except as set forth in Article ELEVENTH, all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other
persons whomsoever by and pursuant to this Amended and Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject
to the right reserved in this Article EIGHTH. Notwithstanding anything
contained in this Amended and Restated Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 80% of the Voting
Stock then outstanding, voting together as a single class, shall be required to
alter, amend, adopt any provision inconsistent with or repeal Articles FIFTH,
SIXTH, SEVENTH or EIGHTH hereof.
NINTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for such liability as is expressly not
subject to limitation under the Corporation Law as the same exists or hereafter
may be amended. Neither the amendment nor repeal of this Article NINTH shall
eliminate or reduce the effect of Section 1 of this Article NINTH in respect of
any matter occurring, or any cause of action, suit or
- 7 -
<PAGE> 10
claim that, but for this Article NINTH would accrue or arise, prior to such
amendment or repeal.
TENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of the Corporation Law or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of the Corporation Law, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ELEVENTH: The Corporation shall indemnify the persons described in the
following provisions of this Article ELEVENTH to the extent set forth herein:
SECTION 1. INDEMNIFICATION.
Each person who was or is made a party to, or is threatened to be made
a party to, or who was or is made a nonparty witness or otherwise involved as a
nonparty in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereafter a
"PROCEEDING") by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was or has agreed to become a director
or officer of the Corporation, or is or was serving or has agreed to serve at
the request of the Corporation as a director, officer, trustee, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such action, suit or proceeding is alleged in an official capacity
as a director, officer, employee, agent or trustee or in any other capacity
while serving as a director, officer, employee, agent or trustee, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Corporation Law (as the same now exists or hereafter may be
amended, but in the event of any such amendment only to the extent that such
amendment
- 8 -
<PAGE> 11
authorizes broader indemnification rights than the Corporation Law permitted
prior to such amendment) from and against any and all liability, loss and
expense (including attorneys' fees, judgments, fines, ERISA excise taxes and
penalties and amounts paid or to be paid in settlement) actually and reasonably
incurred or suffered by such person in connection with such proceeding and any
appeal therefrom and such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person; provided
that, except as provided in Section 2 of this Article ELEVENTH, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section 1 of this Article
ELEVENTH shall be a contract right and shall include the right to have the
Corporation pay the expenses incurred in defending any such proceeding in
advance of its final disposition; any advance payments to be paid by the
Corporation shall be paid within 30 calendar days after the receipt by the
Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time; provided, however, that, if and to the
extent the Corporation Law requires, the payment of such expenses incurred by a
director or officer in such person's capacity as a director or officer (and not
in any other capacity) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under this Article ELEVENTH or otherwise. The Corporation may,
to the extent authorized from time to time by the Board of Directors, grant
rights to indemnification, and rights to have the Corporation pay the expenses
incurred in defending any proceeding in advance of its final disposition, to
any employee or agent of the Corporation to the fullest extent of the
provisions of this Article ELEVENTH with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
SECTION 2. RIGHT OF CLAIMANT TO BRING SUIT.
If a claim under Section 1 of this Article ELEVENTH is not paid in
full by the Corporation within 30 calendar days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the Corporation)
that the claimant has not met the standard of conduct which makes it
permissible
- 9 -
<PAGE> 12
under the Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because the claimant has met the
applicable standard of conduct set forth in the Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
SECTION 3. NON-EXCLUSIVITY OF RIGHTS.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article ELEVENTH shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of this Amended and
Restated Certificate of Incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. No repeal or
modification of this Article ELEVENTH shall in any way diminish or adversely
affect the rights herein conferred on any director or officer of the
Corporation, or any other person specified herein, in respect of any occurrence
or matter arising prior to any such repeal or modification.
SECTION 4. INSURANCE.
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Corporation Law.
SECTION 5. SEVERABILITY.
If any provision or provisions of this Article ELEVENTH shall be held
to be invalid, illegal or unenforceable for any reason whatsoever: (1) the
validity, legality and enforceability of the remaining provisions of this
Article ELEVENTH (including, without limitation, each portion of any paragraph
of this Article ELEVENTH containing any such provision held to be invalid,
illegal or unenforceable, that is not itself held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (2) to
the fullest extent possible, the provisions of this Article ELEVENTH
(including, without limitation, each such portion of any paragraph of this
Article ELEVENTH containing any such provision held to be invalid, illegal or
unenforceable) shall
- 10 -
<PAGE> 13
be construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by its President and
attested by its Secretary as of this 2nd day of September, 1996.
UNIDYNE CORPORATION
BY:
---------------------
ROBERT M. BERNSTEIN
PRESIDENT
ATTEST:
- ---------------------------
HARVEY KRAVETZ
SECRETARY
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<PAGE> 14
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
of
UNIDYNE CORPORATION
As adopted September 3, 1996
<PAGE> 15
UNIDYNE CORPORATION
A DELAWARE CORPORATION
BYLAWS
----------------------
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETING. An annual meeting of
stockholders for the purpose of electing directors and of transacting such
other business as may come before it shall be held each year at such date,
time, and place, either within or without the State of Delaware, as may be
specified by the Board of Directors.
SECTION 1.2 SPECIAL MEETINGS. Special meetings of
stockholders for any purpose or purposes may be held at any time upon call of
the Chairman, the President, the Secretary, or a majority of the Board of
Directors, at such time and place either within or without the State of
Delaware as may be stated in the notice.
SECTION 1.3 NOTICE OF MEETINGS. Written notice of
stockholders' meetings, stating the place, date, and hour thereof, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given by the President or the Secretary to each stockholder
entitled to vote thereat at least ten days but not more than sixty days before
the date of the meeting, unless a different period is prescribed by law.
SECTION 1.4 QUORUM. Except as otherwise provided by
law or in the Certificate of Incorporation or these Bylaws, at any
<PAGE> 16
meeting of stockholders, the holders of a majority of the outstanding shares of
each class of stock entitled to vote at the meeting shall be present or
represented by proxy in order to constitute a quorum for the transaction of any
business. In the absence of a quorum, a majority in interest of the
stockholders present or the chairman of the meeting may adjourn the meeting
from time to time in the manner provided in Section l.5 of these Bylaws until a
quorum shall attend.
SECTION 1.5 ADJOURNMENT. Any meeting of
stockholders, annual or special, may adjourn from time to time to reconvene at
the same or some other place, and notice need not be given of any such
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting, the corporation may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
SECTION 1.6 ORGANIZATION. The Chairman shall call
to order meetings of stockholders and shall act as chairman of such meetings.
The Board of Directors or, if the Board fails to act, the stockholders may
appoint any stockholder, director, or officer of the corporation to act as
chairman of any meeting in the absence of the Chairman. The Secretary shall
act as secretary of all meetings of stockholders, but, in the absence of the
Secretary, the
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<PAGE> 17
chairman of the meeting may appoint any other person to act as secretary of the
meeting.
SECTION 1.7 VOTING. Except as otherwise provided by
law or in the Certificate of Incorporation or these Bylaws and except for the
election of directors, at any meeting duly called and held at which a quorum is
present, a majority of the votes cast at such meeting upon a given question by
the holders of outstanding shares of stock of all classes of stock of the
corporation entitled to vote thereon who are present in person or by proxy
shall decide such question. At any meeting duly called and held for the
election of directors at which a quorum is present, directors shall be elected
by a plurality of the votes cast by the holders (acting as such) of shares of
stock of the corporation entitled to elect such directors.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER AND TERM OF OFFICE. The
business, property, and affairs of the Corporation shall be managed by or under
the direction of a Board of Directors consisting of no less than three and no
more than seven; provided, however, that the Board, by resolution adopted by
vote of a majority of the then authorized number of directors, may increase or
decrease the number of directors. The Board of Directors shall be divided into
three classes, which are hereby designated Class A, Class B and Class C. The
term of office of the initial Class A directors shall expire at the next annual
meeting of shareholders, that of the initial
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<PAGE> 18
Class B directors at the second succeeding annual meeting of shareholders, and
that of the initial Class C directors at the third succeeding annual meeting of
shareholders. At each annual meeting after the initial classification of
directors, directors to replace those whose terms expire at such annual meeting
shall be elected to hold office until the third succeeding annual meeting. The
directors shall be elected by the holders of shares entitled to vote thereon at
the annual meeting of shareholders, and each shall serve until his respective
successor has been elected and qualified. Directors need not be shareholders.
SECTION 2.2 MEETINGS. Regular meetings of the Board
of Directors may be held without notice at such time and place as shall from
time to time be determined by the Board. Special meetings of the Board of
Directors shall be held at such time and place as shall be designated in the
notice of the meeting whenever called by the President or by one of the
directors then in office.
SECTION 2.3 NOTICE OF SPECIAL MEETINGS. The
Secretary, or in his absence any other officer of the corporation, shall give
each director notice of the time and place of holding of special meetings of
the Board of Directors at least twenty-four hours before the meeting, whether
by mail, telegram, cable, radiogram, or personal service. Unless otherwise
stated in the notice thereof, any and all business may be transacted at any
meeting without specification of such business in the notice.
SECTION 2.4 QUORUM AND ORGANIZATION OF MEETINGS. A
majority of the total number of members of the Board of Directors
- 4 -
<PAGE> 19
as constituted from time to time shall constitute a quorum for the transaction
of business, but, if at any meeting of the Board of Directors (whether or not
adjourned from a previous meeting) there shall be less than a quorum present, a
majority of those present may adjourn the meeting to another time and place,
and the meeting may be held as adjourned without further notice or waiver.
Except as otherwise provided by law or in the Certificate of Incorporation or
these Bylaws, a majority of the directors present at any meeting at which a
quorum is present may decide any question brought before such meeting.
Meetings shall be presided over by the Chairman, or in the absence of the
Chairman, by such other person as the directors may select. The Secretary of
the corporation shall act as secretary of the meeting, but in his absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
SECTION 2.5 COMMITTEES. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence of disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in
- 5 -
<PAGE> 20
the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business, property, and affairs of the corporation, and may authorize the seal
of the corporation to be affixed to all papers which may require it; but no
such committee shall have power or authority in reference to amending the
Certificate of Incorporation of the corporation (except that a committee may,
to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors pursuant to
authority expressly granted to the Board of Directors by the Certificate of
Incorporation, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
corporation, or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other
class or classes of stock of the corporation), adopting an agreement of merger
or consolidation under Section 251 or 252 of the General Corporation Law of the
State of Delaware, recommending to the stockholders the sale, lease, or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of dissolution, or amending these Bylaws; and, unless the resolution
expressly so provided, no such committee shall have the power or authority to
declare a dividend, to authorize the issuance of stock, or to adopt a
certificate of ownership and merger pursuant to Section 253 of the
- 6 -
<PAGE> 21
General Corporation Law of the State of Delaware. Each committee which may be
established by the Board of Directors pursuant to these Bylaws may fix its own
rules and procedures. Notice of meetings of committees, other than of regular
meetings provided for by the rules, shall be given to committee members. All
action taken by committees shall be recorded in minutes of the meetings.
SECTION 2.6 ACTION WITHOUT MEETING. Nothing
contained in these Bylaws shall be deemed to restrict the power of members of
the Board of Directors or any committee designated by the Board to take any
action required or permitted to be taken by them without a meeting.
SECTION 2.7 TELEPHONE MEETINGS. Nothing contained
in these Bylaws shall be deemed to restrict the power of members of the Board
of Directors, or any committee designated by the Board, to participate in a
meeting of the Board, or committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
ARTICLE III
OFFICERS
SECTION 3.1 EXECUTIVE OFFICERS. The executive
officers of the corporation shall be a President, one or more Vice Presidents,
a Treasurer, and a Secretary, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint such other officers
(including a Controller and one or more Assistant Treasurers and Assistant
Secretaries) as it
- 7 -
<PAGE> 22
may deem necessary or desirable. Each officer shall hold office for such term
as may be prescribed by the Board of Directors from time to time. Any person
may hold at one time two or more offices.
SECTION 3.2 POWERS AND DUTIES. The Chairman shall
preside at all meetings of the stockholders and of the Board of Directors. In
the absence of the Chairman, the President, or a Vice President appointed by
the President or, if the President fails to make such appointment, by the
Board, shall perform all the duties of the Chairman. The officers and agents
of the corporation shall each have such powers and authority and shall perform
such duties in the management of the business, property, and affairs of the
corporation as generally pertain to their respective offices, as well as such
powers and authorities and such duties as from time to time may be prescribed
by the Board of Directors.
ARTICLE IV
RESIGNATIONS, REMOVALS, AND VACANCIES
SECTION 4.1 RESIGNATIONS. Any director or officer
of the corporation, or any member of any committee, may resign at any time by
giving written notice to the Board of Directors, the President, or the
Secretary of the corporation. Any such resignation shall take effect at the
time specified therein or, if the time be not specified therein, then upon
receipt thereof. The acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4.2 REMOVALS. (a) The Board of Directors,
by a vote of not less than a majority of the entire Board, at any
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<PAGE> 23
meeting thereof, or by written consent, at any time, may, to the extent
permitted by law, remove with or without cause from office or terminate the
employment of any officer or member of any committee and may, with or without
cause, disband any committee.
(b) Any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares entitled at the time to vote at an election of directors.
SECTION 4.3 VACANCIES. Any vacancy in the office of
any director or officer through death, resignation, removal, disqualification,
or other cause, and any additional directorship resulting from increase in the
number of directors, may be filled at any time by a majority of the directors
then in office (even though less than a quorum remains) or, in the case of any
vacancy in the office of any director, by the stockholders, and, subject to the
provisions of this Article IV, the person so chosen shall hold office until his
successor shall have been elected and qualified; or, if the person so chosen is
a director elected to fill a vacancy, he shall (subject to the provisions of
this Article IV) hold office for the unexpired term of his predecessor.
ARTICLE V
CAPITAL STOCK
SECTION 5.1 STOCK CERTIFICATES. The certificates
for shares of the capital stock of the corporation shall be in such form as
shall be prescribed by law and approved, from time to time, by the Board of
Directors.
- 9 -
<PAGE> 24
SECTION 5.2 TRANSFER OF SHARES. Shares of the
capital stock of the corporation may be transferred on the books of the
corporation only by the holder of such shares or by his duly authorized
attorney, upon the surrender to the corporation or its transfer agent of the
certificate representing such stock properly endorsed.
SECTION 5.3 FIXING RECORD DATE. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion, or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which, unless otherwise provided by law,
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.
SECTION 5.4 LOST CERTIFICATES. The Board of
Directors or any transfer agent of the corporation may direct a new certificate
or certificates representing stock of the corporation to be issued in place of
any certificate or certificates theretofore issued by the corporation, alleged
to have been lost, stolen, or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate to be lost, stolen, or
destroyed. When authorizing such issue of a new certificate or
- 10 -
<PAGE> 25
certificates, the Board of Directors (or any transfer agent of the corporation
authorized to do so by a resolution of 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 certificates, or his
legal representative, to give the corporation a bond in such sum as the Board
of Directors (or any transfer agent so authorized) shall direct to indemnify
the corporation against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed or
the issuance of such new certificates, and such requirement may be general or
confined to specific instances.
SECTION 5.5 REGULATIONS. The Board of Directors
shall have power and authority to make all such rules and regulations as it may
deem expedient concerning the issue, transfer, registration, cancellation, and
replacement of certificates representing stock of the corporation.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 CORPORATE SEAL. The corporate seal
shall have inscribed thereon the name of the corporation and shall be in such
form as may be approved from time to time by the Board of Directors.
SECTION 6.2 FISCAL YEAR. The fiscal year of the
corporation shall begin on the 1st day of January in each year and terminate on
the 31st day of December in each succeeding year.
- 11 -
<PAGE> 26
SECTION 6.3 NOTICES AND WAIVERS THEREOF. (a)
Whenever any notice whatever is required by law, the Certificate of
Incorporation, or these Bylaws to be given to any stockholder, director, or
officer, such notice, except as otherwise provided by law, may be given
personally, or by mail, or, in the case of directors or officers, by telegram,
cable, or radiogram, addressed to such address as appears on the books of the
corporation. Any notice given by telegram, cable, or radiogram shall be deemed
to have been given when it shall have been delivered for transmission and any
notice given by mail shall be deemed to have been given when it shall have been
deposited in the United States mail with postage thereon prepaid.
(b) Whenever any notice is required to be given by
law, the Certificate of Incorporation, or these Bylaws, a written waiver
thereof, signed by the person entitled to such notice, whether before or after
the meeting or the time stated therein, shall be deemed equivalent in all
respects to such notice to the full extent permitted by law.
SECTION 6.4 STOCK OF OTHER CORPORATIONS OR OTHER
INTERESTS. Unless otherwise ordered by the Board of Directors, the President,
the Secretary, and such attorneys or agents of the corporation as may be from
time to time authorized by the Board of Directors or the President shall have
full power and authority on behalf of this corporation to attend and to act and
vote in person or by proxy at any meeting of the holders of securities opound
sterling any corporation or other entity in which this corporation may own or
- 12 -
<PAGE> 27
hold shares or other securities, and at such meetings shall possess and may
exercise all the rights and powers incident to the ownership of such shares or
other securities which this corporation, as the owner or holder thereof, might
have possessed and exercised if present. The President, the Secretary, or such
attorneys or agents, may also execute and deliver on behalf of this corporation
powers of attorney, proxies, consents, waivers, and other instruments relating
to the shares or securities owned or held by this corporation.
ARTICLE VII
AMENDMENTS
The holders of shares entitled at the time to vote
for the election of directors shall have power to adopt, amend, or repeal the
Bylaws of the corporation by vote of not less than a majority of such shares,
and except as otherwise provided by law, the Board of Directors shall have
power equal in all respects to that of the stockholders to adopt, amend, or
repeal the Bylaws by vote of not less than a majority of the entire Board.
However, any Bylaw adopted by the Board may be amended or repealed by vote of
the holders of a majority of the shares entitled at the time to vote for the
election of directors.
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET AND STATEMENT OF OPERATIONS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 227
<SECURITIES> 0
<RECEIVABLES> 2,227
<ALLOWANCES> 25
<INVENTORY> 3,037
<CURRENT-ASSETS> 5,696
<PP&E> 9,847
<DEPRECIATION> (1,182)
<TOTAL-ASSETS> 16,239
<CURRENT-LIABILITIES> 4,421
<BONDS> 5,060
0
0
<COMMON> 8
<OTHER-SE> 1,552
<TOTAL-LIABILITY-AND-EQUITY> 16,239
<SALES> 4,031
<TOTAL-REVENUES> 4,031
<CGS> 2,649
<TOTAL-COSTS> 4,022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221
<INCOME-PRETAX> (212)
<INCOME-TAX> (85)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127)
<EPS-PRIMARY> ($0.02)
<EPS-DILUTED> ($0.02)
</TABLE>
