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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File number 0-1298
LUNN INDUSTRIES INC.
---------------------
(Exact name of Registrant as specified in its charter)
Delaware 11-1581582
---------------------------- ---------------
(State or other jurisdiction of incorporation (Federal Employer
or organization) Identification No.)
1 Garvies Point Road, Glen Cove, New York 11542-2828
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (516) 671-9000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
The aggregate number of shares of Common Stock outstanding as of November
11, 1996 was 11,396,999
Transitional Small Business Disclosure Format (check one)
Yes ___ No X
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LUNN INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
================================================================================
ASSETS
================================================================================
Sept. 30,
1996
(unaudited)
================================================================================
CURRENT ASSETS
Cash and cash equivalent $ 7,281
Accounts Receivable - trade, less allowance
for doubtful accounts of $211,379 3,391,196
Inventories 4,768,180
Prepaid expense and other current assets 478,922
-----------
TOTAL CURRENT ASSETS 8,645,579
-----------
PROPERTY AND EQUIPMENT - Net of Accumulated
Depreciation of $4,472,297 7,789,188
-----------
Other Assets:
Security deposits and other assets 114,834
Intangible assets - net 437,928
-----------
Total other assets 552,762
TOTAL ASSETS $16,987,529
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LUNN INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
================================================================================
SEPT. 30
1996
(unaudited)
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade 1,293,382
Accrued liabilities 958,249
Accrued income taxes 3,774
Notes payable 820,250
Capital lease obligations 90,085
------------
TOTAL CURRENT LIABILITIES 3,165,740
------------
LONG-TERM LIABILITIES:
Notes Payable 3,202,664
Capital Lease Obligations 154,947
TOTAL LONG TERM LIABILITIES 3,357,611
------------
TOTAL LIABILITIES 6,523,351
------------
STOCKHOLDERS' EQUITY:
Common stock: par value, $.01 per share, authorized 113,970
30,000,000 shares and Preferred stock: par value $. 01 per
share, authorized 1,000,000. Outstanding 11,396,999,
common stock
Additional paid-in capital 13,860,953
Accumulated deficit (3,510,408)
------------
10,464,515
Less treasury stock (150 shares) (337)
------------
TOTAL STOCKHOLDERS' EQUITY 10,464,178
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,987,529
============
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LUNN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
UNAUDITED
<TABLE>
<CAPTION>
---------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
===============================================================
---------------------------------------------------------------
1996 1995 1996 1995
---------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES 4,508,480 3,547,439 13,363,484 10,697,076
Cost of Sales 3,473,256 3,022,257 10,415,876 8,573,311
------------ ------------ ------------ ------------
Gross Profit (Loss) 1,035,224 525,182 2,947,608 2,123,765
Selling, General and Administrative Expenses 720,124 442,928 2,114,909 1,637,668
------------ ------------ ------------ ------------
Operating Income 315,100 82,254 832,699 486,097
Other Income (Expense)
Interest Income (Expense) (126,319) (116,166) (374,040) (330,376)
Other Income (Expense) (13,085) 110,165 11,865 130,755
------------ ------------ ------------ ------------
(139,404) (6,001) (362,175) (199,621)
------------ ------------ ------------ ------------
Income (loss) from Continuing Operations Before
Income Taxes, Discontinued Operations,
Extraordinary Items and Change of Accounting
Principal 175,696 76,253 470,524 286,476
Benefit from (Provisioning for) Income Tax 0 0 0 0
------------ ------------ ------------ ------------
NET INCOME $ 175,696 $ 76,253 $ 470,524 $ 286,476
============ ============ ============ ============
Weighted Average Number of Common Shares 13,159,823 7,654,630 9,974,298 7,479,837
and Common Equivalent Shares Outstanding
Income (Loss) Per Common Share $ 0.01 $ 0.01 $ 0.05 $ 0.04
Dividends None None None None
</TABLE>
4
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LUNN INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 470,524 $ 286,476
Adjustments to Reconcile Net Income
Provided by Operating Activities:
Depreciation and Amortization 898,264 776,446
Allowance for Doubtful Accounts 86,373 0
Expenses Paid Through Issuance of Stock 71,800 0
Debt Paid Through Issuance of Stock 46,666 0
Changes in Assets & Liabilities:
Accounts Receivable (Increase) (1,212,148) (720,161)
Inventory (Increase) (662,239) (432,193)
Prepaid Exp & Other Assets (Increase) (140,885) (21,064)
Accounts Payable - Increase (Decrease) (335,988) 402,714
Accrued Liabilities Increase (Decrease) 156,000 (344,316)
Customer Advances Increase (Decrease) 117,085 0
----------- -----------
Net Cash (Used) Provided by Operating Activities (504,548) (52,098)
CASH FLOW FROM INVESTING ACTIVITIES
Sale of Property, Plant & Equipment (Purchase) (586,431) (1,052,244)
Intangibles 0 (549,565)
Proceeds from Disposal of Property & Equipment 0 173,900
Leasehold Improvements (32,194) 0
Construction in Progress (536,383) 0
----------- -----------
Net Cash used in Investing Activities (1,155,008) (1,427,909)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Overdraft -- (8,417)
Repayment of Debt (990,889) (137,513)
New Borrowing 925,649 1,475,000
Sale of Capital Stock 1,294,350 152,975
Increase Capital Lease Obligations 231,652 (2,038)
----------- -----------
Net Cash Provided by Financing Activities 1,460,762 1,480,007
Net Increase (Decrease) in Cash (198,794) 0
Cash Balance - Beginning 206,075 0
----------- -----------
Cash Balance - Ending $ 7,281 $ 0
=========== ===========
5
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LUNN INDUSTRIES, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED
CONDENSED STATEMENTS
NOTE 1 - CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The information contained in the condensed consolidated financial
statements for the period ended September 30, 1996 is unaudited, but includes
all adjustments, consisting of normal recurring adjustments, which the Company
considers necessary for a fair presentation of the financial position and the
results of operations for these periods.
The financial statements and notes are presented as permitted by Form
10-QSB, and do not contain certain information included in the Company's annual
statements and notes. Those financial statements should be read in conjunction
with the Company's annual financial statement as reported in its most recent
Annual Report on Form 10-KSB.
The unaudited results of operations for the period ended September 30,
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE 2 - STOCK OFFERING
On March 21, 1996, the Company sold 3.5 million shares of its common
stock for $.40 per share in a private placement. Total proceeds, net of
underwriting, commissions and expenses were $1,244,000. The Company has used
$581,000 of the proceeds to reduce its bank debt obligations, pay down a portion
of the outstanding balance due to bridge lenders, and reduce its obligation to a
shareholder. The balance has been applied toward working capital. In addition,
during the first quarter of 1996, the Company issued 229,666 shares of its
common stock to pay expenses and reduce debt valued at $97,000.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
The Company reported profitable operating results for the third quarter
ended September 30, 1996, marking the seventh consecutive quarter the Company
has reported profitable results. Consolidated sales during the third quarter of
1996 increased 25% to $4.5 million compared to $3.6 million in the third quarter
of 1995. Consolidated sales for the first nine months of 1996 were $13.4 million
compared to $10.7 million in 1995, a similar increase of 25%.
Sales for the aluminum honeycomb segment for the third quarter and the
first nine months of 1996 increased to $2.8 and $8.9 million, respectively,
compared to $2.2 and $7.5 million during similar periods in 1995. Honeycomb
sales increases resulted from the accelerating demand for aluminum, nomex and
phosphoric acid anodized (PAA) honeycomb for both commercial and military
aircraft applications. Additionally, demand for value-added special process and
advanced machining detailed parts increased as major aircraft manufacturers
continued to ramp-up production rates and increase off-loading of major assembly
and sub-assembly manufacturing.
Sales for the composite segment for the third quarter and first nine
months of 1996 increased to $1.7 and $4.5 million respectively, compared to $1.3
and $3.2 million for 1995. The increase in composite sales resulted from
increased military orders for composite fuel cells, mast fairings and major
structural components for submarines, including those required for the latest
class of submarines, the Seawolf. Increased composite sales also resulted from
increased orders for commercial and military aircraft bonded assemblies. In
addition, nine months operations results for 1995 were negatively impacted by
the relocation and consolidation of the Company's composite businesses from
Wyandanch, New York and Newtown, Connecticut to Glen Cove, New York at the
beginning of 1995.
The backlog of customer orders as of September 30, 1996 was
approximately $19.6 million, an increase of $6.6 million or 51% compared to
backlog of $13.0 million at the end of the third quarter of 1995. Approximately
$10.7 million or 55% of the backlog is released for shipment during the last
quarter of 1996 and 12 months of 1997.
Consolidated operating income for the third quarter 1996 rose
approximately 284% to $315 thousand compared to $82 thousand in the third
quarter of 1995. Consolidated operating income for the first nine months of 1996
rose 71% to $833 thousand compared to $486 thousand for the comparable period of
1995. Improvement in operating income resulted from the combination of several
factors, including increased honeycomb and composite sales, favorable
value-added product mix and the steady improvement of gross margin to 22% during
the first nine months of 1996 versus 19.9% during a similar period in 1995.
7
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Third quarter 1996 operating income for the honeycomb segment rose 207%
to $175 thousand compared to $57 thousand in the third quarter 1995. Operating
income for the first nine months of 1996 rose 67% to $663 thousand compared to
$397 thousand for the comparable period of 1995. Improvement in the honeycomb
segment operating income resulted from increased sales and improved gross
margins, 22.6% in the first nine months of 1996 versus 18.5% during a similar
period in 1995.
Third quarter 1996 operating income for the composite segment rose 454%
to $140 thousand compared to $25 thousand in the third quarter 1995. Operating
income for the first nine months of 1996 rose 90% to $170 thousand compared to
$89 thousand for the comparable period of 1995. Improvement in the composite
segment operating income for 1996 resulted from higher sales as well as reduced
SG&A expenses, 17.2% of sales in the first nine months of 1996 compared to a
20.1% during a similar period in 1995.
Consolidated net income for the third quarter 1996 was $176 thousand
compared to $76 thousand in the third quarter of 1995, an increase of 131%.
Consolidated net income for the first nine months of 1996 was $471 thousand
compared to $286 thousand for the comparable period of 1995, an increase of 64%.
Interest expense for the third quarter and first nine months of 1996 increased
$10 thousand and $44 thousand, respectively, due primarily to the higher levels
of borrowings needed to fund current operations. Other non-recurring income for
1996 decreased $119 thousand compared to 1995. This non-recurring income
represented a reduction in liabilities.
FINANCIAL CONDITION and LIQUIDITY
Net cash used in operating activities during the first nine months of
1996 was $505 thousand compared to $52 thousand used in the corresponding period
of 1995. This was comprised of $471 thousand net income, plus $1.1 million in
non-cash items, offset by approximately $2.1 million changes in assets and
liabilities related to increased accounts receivable, inventory, other assets,
and accrued liabilities, and a decrease in accounts payable. Net cash used in
operating activities during the first nine months of 1995 was $52 thousand;
comprised of $286 thousand net income plus non-cash items of approximately $776
thousand offset by changes in assets and liabilities of $1.1 million.
Net cash used in investing activities during 1996 was $1.2 million,
comprised of approximately $600 thousand for the purchase of machinery and
equipment and $600 thousand for leasehold improvements and construction in
progress at the Company's New York and Maryland facilities.
8
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Net cash provided by financing activities was approximately $1.5
million. This was comprised of approximately $1.29 million from the sale of
common stock, plus $1.16 million from the combination of increased borrowing on
the existing revolving line of credit, and capital leases, offset by the use of
approximately $1.0 million to repay certain outstanding loan obligations.
On March 21, 1996, the Company sold 3.5 million shares of its common
stock for $.40 per share in a private placement. Total proceeds, net of
underwriting commissions and expenses were $1,244,000. The Company utilized
approximately $580 thousand of proceeds to repay outstanding loan obligations to
a bank, certain bridge lenders, and a single shareholder. The balance has been
applied to working capital. In addition, during the first quarter of 1996, the
Company issued 229,666 shares of its common stock to pay expenses and reduce
debt.
The Company, based on operating results and continued improvements in
backlog, is actively working with a new lender to establish an improved credit
facility prior to the end of 1996 with increased availability, reduced rates and
provisions for future expansion. The Company believes cash flow from future
operations and funds available under its new credit facilities will be
sufficient to meet its working capital requirements for the foreseeable future.
FORWARD LOOKING STATEMENTS - CAUTIONARY FACTORS
Except for the historical information and statements contained in this
Report, the matters and items set forth in this Report are forward looking
statements that involve uncertainties and risks some of which are discussed at
appropriate points in the Report and are also summarized as follows:
1. The U.S. Government is a significant customer of the Company representing
12.1 percent of its revenue. With the ever increasing pressure to reduce
government spending, in addition to the world-wide political climate creating
the environment of less visible military threats to the United States, the
de-emphasis in military spending is expected to continue. This could potentially
have a material adverse effect upon the future projects upon which the Company's
backlog is based, and upon the programs that the Company is presently bidding.
2. The continued consolidation of many of the Company's commercial customers may
have a downward effect upon pricing and further reduce the market of the
Company's products. This could result in decreased profit margins.
3. The Company is presently negotiating an expanded credit facility to support
increased backlog and increase planned shipment rates. There is no certainty
that these discussions will result in a new credit facility, or that this credit
facility will be available to the Company for the foreseeable future. Should an
expanded credit facility
9
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not be available to the Company, the Company may not be able to generate
sufficient funds internally or raise capital externally to support planned
growth.
4. The Company should benefit from the growth in the commercial and general
aviation markets. However, should this growth not reach the levels that are
generally expected in the industry, this would adversely affect the growth
projections of the Company.
5. The Company's ability to achieve its planned growth include increased
competition for the Company's phosphoric acid anodized (PAA) honeycomb business
in both commercial and military aviation applications with the addition of a
newly qualified source approved by Boeing. On balance this action by Boeing
should improve the market by adding increased stability to the supplier base at
a time when demand is increasing at a rate that could outstrip prudently
increased supply.
OUTLOOK [See "Forward Looking Statements - Cautionary Factors"]
Lunn Industries has recently completed a major turn-around program
started in March 1994 to effectively recover profitability, establish two
primary businesses, reduce the Company's dependence on military sales, broaden
the Company's participation in new markets, and set the stage to resume
meaningfully growth. The turnaround effort was begun and virtually completed
during a period of time when the two major markets served by the Company,
commercial aircraft and military, were in a period of extended decline. The
Company undertook a program to mitigate the effect of these two markets and is
now actively serving a number of major new markets including aerospace and space
applications, transportation, construction, nuclear waste transportation and
storage, and other commercial applications as well as continuing to serve the
Company's traditional markets of commercial and general aviation, military
aviation and military non-aviation niche applications.
Starting in early 1996, the commercial aviation and general aviation
markets, spurred primarily by Boeing, began a major period of growth projected
to continue for several years into the future. The Company is well positioned
and currently benefiting from the resurgence of this market, and has projected
its growth plans in part on the continuation of growth in these markets. Both of
Lunn's primary business operations benefit from the aviation markets, and any
material change in these markets that would slow planned production rate
increases could negatively impact Lunn's business.
Although the Company, as noted above, has materially reduced its
dependence on military and defense procurement, selected niche applications for
military composite structures and bonded assemblies continue to be important to
Lunn. The military and defense market has been in decline for over ten years,
and there is little indication the situation will change materially in the near
future. The Company has included continued niche military sales in its overall
growth plans, but has deliberately projected
10
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flat to nominal growth for these areas in the near future.
A noted exception to this situation involves military transport
aircraft where the current administration has embarked on a major program to
continue building the transportation base necessary to support rapid movement of
military forces in the event of an emergency. Lunn's honeycomb operation is
currently involved in several major programs to support production of these type
aircraft, and growth plans for the operation project continued and increased
participation in this market. Additionally, planning is currently underway to
expand the honeycomb manufacturing facilities in Belcamp, Maryland to insure
adequate capacity not only for planned growth in commercial and general aviation
mentioned above, but also to support increased demand for honeycomb products for
military aviation applications as well. Should there be material changes in the
government's plans for military transport aircraft, Lunn's honeycomb business
could be materially effected.
In addition to the two market situations discussed above, Lunn has
worked to increase its participation in commercial and military space and
aerospace applications for both the honeycomb and composite operations. The
Company anticipates demand for its products will continue to increase in this
market as the demand for communications and infrastructure continues to grow.
Risks related to this market generally tie into the overall economy, and to the
extent the economy experiences recession and slowdown Lunn's business could be
materially effected.
The Company's outlook for the remainder of 1996 is positive with
expectations for sales, operating income, net income and backlog all to be
improved over 1995. Backlog of new orders (up 51% at the end of the third
quarter) is projected to continue growing, approximately doubling by the end of
1996 to $28 to $30 million. Outlook for 1997, based on this increased backlog is
for continuing improved sales and commensurate increases in operating and net
income levels. Each of the risk factors discussed above could materially effect
these projections, as could the Company's ability to adequately finance the
growth required to realize the increased backlog and increased market demand. As
noted previously, the Company is actively working to establish a new credit
facility with increased availability to insure that sufficient working capital
will be available on a timely basis to support the planned growth.
Other risk factors that could effect the Company's ability to achieve
its planned growth include increased competition for the Company's phosphoric
acid anodized (PAA) honeycomb business in both commercial and military aviation
applications with the addition of a newly qualified source approved by Boeing.
On balance this action by Boeing should improve the market by adding increased
stability to the supplier base at a time when demand is increasing at a rate
that could outstrip prudently increased supply.
Other competitive factors that could effect Lunn composites include
low end,
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poorly facilitated composite manufacturers who have been allowed by the
government to compete on existing niche military applications. To the extent
that specifications and acceptance criteria are lowered appreciably to
effectively achieve lower prices, Lunn could well be forced to by-pass certain
business opportunities in the market.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Shareholders Meeting on September 27, 1996.
The following items were voted upon by the shareholders at the meeting:
(1) To approve the various amendments to the Corporation's
Certificate of Incorporation as set forth in this Definitive
Proxy Statement.
Proposal No. 1 was approved.
Vote: For 5,435,249 Against 178,522 Abstain 8,260
(2) To approve an increase in the total number of shares of all
classes of stock that the Corporation shall have authority to
issue to 31 million shares, of which 1 million shares shall be
Preferred Stock, having a par value of $.01 per share
("Preferred Stock"), and 30 million shall be Common Stock,
having a par value of $.01 per share ("Common Stock").
Proposal No. 2 was approved.
Vote: For 5,248,348 Against 344,654 Abstain 20,660
(3) To elect five persons as Directors to hold office until their
respective terms expire or until their respective successors
are elected and qualified; All five nominees were reelected.
Vote: Alan Baldwin For 7,323,095 Withheld 289,369
William Lewis For 7,323,095 Withheld 289,369
John Menzel For 7,307,727 Withheld 304,737
Warren Haber For 7,323,095 Withheld 289,369
John Simon For 7,383,095 Withheld 229,369
(4) To approve an amendment to the Corporation's 1994 Stock
Incentive Plan.
Proposal No. 4 was approved.
Vote: For 5,464,380 Against 460,089 Abstain 20,660
(5) To ratify the selection by the Board of Directors of Coopers &
Lybrand LLP. as the independent accountants to audit the
Corporation's financial statements for 1996.
Proposal No. 5 was approved.
Vote: For 7,555,139 Against 0 Abstain 57,325
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Item 6. Exhibits and Reports
(a) Exhibits
3.1 Restated Certificate of Incorporation filed with the Secretary of State
of Delaware on October 31, 1996 and filed with this Report herein..
3.2 By-laws of the Company filed with this Report herein.
10.1 Amendment to the Company's 1994 Stock Incentive Plan adopted at the
1996 Annual Shareholders Meeting on September 27, 1996 filed with this
Report herein.
(b) Reports on Form 8-K.
None
LUNN INDUSTRIES, 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 duly authorized.
LUNN INDUSTRIES, INC.
Dated: November 12, 1996
By: s/ Lawrence Schwartz
Lawrence Schwartz
Vice President, Secretary,
Treasurer and
Chief Accounting Officer
14
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INDEX OF EXHIBITS
3.1 Restated Certificate of Incorporation filed with the Secretary of State
of Delaware on October 31, 1996 and filed with this Report herein..
3.2 By-laws of the Company filed with this Report herein.
10.1 Amendment to the Company's 1994 Stock Incentive Plan adopted at the
1996 Annual Shareholders Meeting on September 27, 1996 filed with this
Report herein.
15
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Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
Lunn Industries, Inc.
Lunn Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Lunn Industries, Inc. . The date of
filing of its original Certificate of Incorporation with the
Secretary of State was March 25, 1987.
2. This Restated Certificate of Incorporation restates and integrates
and further amends the Certificate of Incorporation of this
corporation by: (1) deleting the present Article VII and to
substitute a new Article VII in its place; (2) adding a new Article
XIV; and (3) deleting the present Article IV and to substitute a new
Article IV in its place;
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein
set forth in full:
RESTATED CERTIFICATE OF INCORPORATION
OF
LUNN INDUSTRIES, INC.
I, the undersigned, for the purposes of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
execute this Certificate of Incorporation and do hereby certify as follows:
ARTICLE I
The name of the Corporation is Lunn Industries, Inc.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801,
County of New Castle. The name of the Corporation's registered agent is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV
A. Authorized Shares.
The total number of shares of all classes of stock that the Corporation
shall have the authority to issue is 31,000,0000 shares, of which 1,000,000
shares shall be Preferred Stock, having a par value of $0.01 per share
("Preferred Stock"), and 30,000,000 shall be Common Stock, having a par value of
$0.01 per share
16
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("Common Stock"). The Board of Directors is expressly authorized to provide for
the classification and reclassification of any unissued shares of Preferred
Stock or Common Stock and issuance thereof in one or more classes or series
without the approval of the stockholders of the Corporation.
B. Common Stock.
(1) Relative Rights.
The Common Stock shall be subject to all of the rights, privileges,
preferences and priorities of the Preferred Stock as set forth in the
certificate or certificates of designation filed to establish the respective
series of Preferred Stock. Each share of Common Stock shall have the same
relative rights as and be identical in all respects to all the other shares of
Common Stock.
(2) Voting Rights.
Each holder of shares of Common Stock shall be entitled to attend all
special and annual meetings of the stockholders of the Corporation and, share
for share and without regard to class, together with the holders of all other
classes of stock entitled to attend such meetings and to vote (except any class
or series of stock having special voting rights), to cast one vote for each
outstanding share of Common Stock so held upon any matter or thing (including,
without limitation, the election of one or more directors) properly considered
and acted upon by the stockholders, except as otherwise provided in this
Certificate of Incorporation or by applicable law.
(3) Dividends.
Whenever there shall have been paid or declared and set aside for payment,
to the holders of shares of any class of stock having preference over the Common
Stock as to the payment of dividends, the full amount of dividends and of
sinking fund or retirement payments, if any, to which such holders are
respectively entitled in preference to the Common Stock, then the holders of
record of the Common Stock and any class or series of stock entitled to
participate therewith as to dividends, shall be entitled to receive dividends,
when, as, and if declared by the Board of Directors, out of any assets legally
available for the payment of dividends thereon.
(4) Dissolution, Liquidation, Winding Up.
In the event of any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of record of the
Common Stock then outstanding, and all holders of any class or series of stock
entitled to participate therewith in whole or in part, as to distribution of
assets, shall become entitled to participate in the distribution of any assets
of the Corporation remaining after the Corporation shall have paid, or set aside
for payment, to the holders of any class of stock having preference over the
Common Stock in the event of dissolution, liquidation or winding up, the full
preferential amounts (if any) to which they are entitled, and shall have paid or
provided for payment of all debts and liabilities of the Corporation.
C. Preferred Stock.
(1) Issuance, Designations, Powers, Etc.
The Board of Directors expressly is authorized, subject to limitations
prescribed by the Delaware General Corporation Law and the provisions of this
Certificate of Incorporation, to provide, by resolution and by filing a
certificate of designations pursuant to the Delaware General Corporation Law,
for the issuance from time to time of the shares of Preferred Stock in one or
more series, to establish from time to time the number of shares to be included
in each series, and to fix the designation, powers, preferences and other rights
of the shares of each such series and to fix the qualifications, limitations and
restrictions thereon, including, but without limiting the generality of the
foregoing, the following:
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(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series;
(c) whether that series shall have voting rights, in addition to
voting rights provided by law, and, if so, the terms of such voting rights;
(d) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provisions for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
(e) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(h) any other relative powers, preferences and rights of that
series, and qualifications, limitations or restrictions on that series.
(2) Dissolution, Liquidation, Winding Up.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock of
each series shall be entitled to receive only such amount or amounts as shall
have been fixed by the certificate of designations or by the resolution or
resolutions of the Board of Directors providing for the issuance of such series.
ARTICLE V
The name and mailing address of the Incorporator is Stuart Stein, Esq.,
Squadron, Ellenoff, Plesent & Lehrer, 551 Fifth Avenue, New York, NY, 10017.
ARTICLE VI
The powers of the Incorporator shall terminate upon the filing of this
Certificate of Incorporation. The name and mailing address of the person who is
to serve as the sole director of the Corporation until the first annual meeting
of the stockholders of the Corporation, or until his successor is elected and
qualified, is Theodore Ellenoff, Esq., Squadron, Ellenoff, Plesent & Lehrer, 551
Fifth Avenue, New York, NY, 10017.
ARTICLE VII
A. Classification.
Except as may be provided in a certificate of designations relating to the
rights of the holders of any class
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or series of Preferred Stock, voting separately by class or series, to elect
additional directors under specified circumstances, the number of directors of
the Corporation shall be as fixed from time to time by or pursuant to the
By-laws of the Corporation. The directors, other than those who may be elected
by the holders of any class or series of Preferred Stock voting separately by
class or series, shall be classified, with respect to the time for which they
severally hold office, into three classes, Class I, Class II and Class III,
which shall be as nearly equal in number as possible. Each initial director in
Class I shall hold office for a term expiring at the 1997 annual meeting of
stockholders, each initial director in Class II shall hold office initially for
a term expiring at the 1998 annual meeting of stockholders, and each initial
director in Class III shall hold office for a term expiring at the 1999 annual
meeting of stockholders. Notwithstanding the foregoing provisions of Section A,
each director shall serve until such director's successor is duly elected and
qualified or until such director's earlier death, resignation or removal. At
each annual meeting of stockholders, the successors to the class of directors
whose term expires at the meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election but in any event until any such director's successor
has been duly elected and qualified or until any such director's earlier death,
resignation or removal.
B. Removal.
(1) Except as may be provided in a certificate of designations relating to
the rights of the holders of any class or series of Preferred Stock, voting
separately by class or series, to elect directors under specified circumstances,
any director or directors may be removed from office at any time, but only for
cause (as defined in Section B(2) hereof) and only by the affirmative vote, at
an annual meeting of the stockholders or a special meeting of the stockholders
called for such a purpose, of not less than two thirds of the total number of
votes of the then outstanding shares of stock of the Corporation entitled to
vote generally in the election of directors, voting together as a single class,
and, in the case of a removal proposed at a special meeting, only if notice of
the proposal was contained in the notice of the meeting. The person proposing
the removal of a director shall provide written notice to the director of the
proposal and of the facts alleged to constitute cause for the removal. In the
event that the shareholders are provided with at least 40 days' notice of the
meeting, the written notice to the director shall be delivered at least 30 days
before the meeting. In the event that the shareholders are provided with less
than 40 days' notice of the meeting, the written notice to the director shall be
delivered no later than 10 days after the shareholders are provided with written
notice of the meeting. Any vacancy in the Board of Directors resulting from any
such removal or otherwise shall be filled only by vote of a majority of the
directors then in office, although less than a quorum, and any director so
chosen shall hold office until the next election of the class for which such
director shall have been chosen and until such director's successor shall be
elected and qualified or until such director's earlier death, resignation or
removal.
(2) For purposes of this Section B(2), "cause" shall mean (i) conduct as a
director of the Corporation or any subsidiary involving dishonesty of a material
nature; (ii) willful conduct by the director that is demonstrably and materially
injurious to the Corporation, monetarily or otherwise; or (iii) conduct by the
director that results in a felony conviction, including a conviction resulting
from a plea of nolo contendere. No act, or failure to act, on the director's
part shall be deemed "willful" unless done, or omitted to be done, by the
director not in good faith and without reasonable belief that the director's
action or omission was in the best interest of the Corporation.
C. Change of Authorized Number.
In the event of any increase or decrease in the authorized number of
directors, the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to maintain such classes as nearly equal as
possible. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
ARTICLE VIII
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Unless and except to the extent that the By-laws of the Corporation shall
so require, the election of directors of the Corporation need not be by written
ballot.
ARTICLE IX
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized and
empowered to make, alter and repeal the By-laws of the Corporation, subject to
the power of the stockholders of the Corporation to alter or repeal any By-law
made by the Board of Directors. In order for the stockholders of the Corporation
to exercise their power to alter or repeal any Bylaw made by the Board of
Directors, the action must be approved by the holders of at least two thirds of
the issued and outstanding shares of the Corporation's common stock.
ARTICLE X
A director of this Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omission occurring prior to such repeal or
modification.
ARTICLE XI
The Corporation shall indemnify to the full extent permitted by law (such
as it presently exists or may hereafter be amended) any person made, or
threatened to be made, a defendant or witness to any action, suit or proceeding,
(whether civil, criminal, administrative or investigative) by reason of the fact
that he is or was a director or officer of the Corporation or by reason of the
fact that such director or officer, at the request of the Corporation, is or was
serving any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in any capacity.
Any repeal or modification of the foregoing paragraph shall not adversely
affect any right to indemnification provided hereunder with respect to any act
or omission occurring prior to such repeal or modification.
ARTICLE XII
The Corporation reserves the right at any time, and from time to time, to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and 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 all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
article.
ARTICLE XIII
Subject to any affirmative vote required by law, the affirmative vote of
not less than eighty percent of the Voting Stock (as hereinafter defined) shall
be required for the adoption or authorization of a Business Combination (as
hereinafter defined), unless:
(1) Two-thirds of the Disinterested Directors (as hereinafter defined)
determine that:
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(i) The Interested Stockholder (as hereinafter defined), is the
beneficial owner (as hereinafter defined) of not less than eighty percent of the
Voting Stock and has declared its intention to vote in favor of or approve such
Business Combination; or
(ii) (A) The fair market value of the consideration per share to
be received or retained by the holders of each class or series of stock of the
Corporation in the Business Combination is equal to the highest price per share
(including brokerage commissions, transfer taxes and soliciting dealer's fees)
paid by such Interested Stockholder for any shares of such class of stock
previously within the two year period prior to the Business Combination, whether
before or after the Interested Stockholder became an Interested Stockholder; and
(B) the Interested Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance provided by the Corporation,
whether in anticipation of or in connection with such Business Combination or
otherwise; or
(2) The Business Combination has been approved by two-thirds of the
Disinterested Directors.
In the event any vote of holders of Voting Stock is required for the
adoption or approval of any Business Combination, a proxy or information
statement describing the Business Combination and complying with the
requirements of the 1934 Act (as hereinafter defined) shall be mailed at a date
determined by the Disinterested Directors to all stockholders of the Corporation
whether or not such statement is required under the 1934 Act. The statement
shall contain any recommendations as to the advisability (or inadvisability) of
the Business Combination which the Disinterested Directors, or any of them, may
choose to state and, if deemed advisable by the Disinterested Directors, an
opinion of a reputable national investment banking firm as to the fairness of
the terms of such Business Combination. Such firm shall be selected by
two-thirds of the Disinterested Directors and paid a reasonable fee for its
services by the Corporation as approved by the Disinterested Directors.
For purposes of this Article:
(i) "Affiliate" and "beneficial owner" are used herein as defined
in Rule 12b-2 and Rule 13d-3, respectively, under the Securities Exchange Act of
1934, as amended, as in effect on March 16, 1987 ("1934 Act"). The term
"Affiliate" as used herein shall exclude the Corporation, but shall include the
definition of "Associate" as contained in said Rule 12b-2.
(ii) An "Interested Stockholder" is a Person (as hereinafter
defined) other than the Corporation or any subsidiary who is (A) the beneficial
owner, directly or indirectly, of ten percent or more of the capital stock of
the Corporation entitled to vote generally for the election of directors
("Voting Stock"), or (B) an Affiliate of the Corporation and either (1) at any
time within a two-year period prior to the record date to vote on a Business
Combination was the beneficial owner, directly or indirectly of ten percent or
more of the Voting Stock, or (2) at the completion of the Business Combination
will be the beneficial owner of ten percent or more of the Voting Stock.
(iii) A "Person" is a natural person or a legal entity of any
kind, together with an Affiliate of such person or entity, or any person or
entity with whom such person, entity or an Affiliate has any agreement or
understanding relating to acquiring, voting, or holding Voting Stock.
(iv) A "Disinterested Director" is a member of the Board of
Directors of the Corporation (other than the Interested Stockholder) who was a
director prior to the time the Interested Stockholder became an Interested
Stockholder, or any director who was recommended for election by the
Disinterested Directors. Any action to be taken by the Disinterested Directors
shall require the affirmative vote of at least two-thirds of the Disinterested
Directors.
(v) A "Business Combination" is (A) a merger or consolidation of
the Corporation or
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any of its subsidiaries with or into an Interested Stockholder; (B) the sale,
lease, exchange, pledge, transfer or other disposition (1) by the Corporation or
any of its subsidiaries of all or a Substantial Part of the Corporation's Assets
to an Interested Stockholder, or (2) by an Interested Stockholder of any of its
assets, except in the ordinary course of business, to the Corporation or any of
its subsidiaries; (C) the issuance of stock or other securities of the
Corporation or any of its subsidiaries to an Interested Stockholder, other than
on a pro rata basis to all holders of Voting Stock of the same class held by the
Interested Stockholder pursuant to a stock split, stock dividend or distribution
of warrants or rights; (D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder; (E) any reclassification of securities,
recapitalization, merger or consolidation or other transaction which has the
effect, directly or indirectly, of increasing the proportionate share of any
Voting Stock beneficially owned by an Interested Stockholder; or (F) any
agreement, contract or other arrangement providing for any of the foregoing
transactions.
(vi) A "Substantial Part of the Corporation's Assets" shall mean
assets of the Corporation or any of its subsidiaries in an amount equal to 50
percent or more of the fair market value, as determined by the Disinterested
Directors, of the total consolidated assets of the Corporation and its
subsidiaries taken as a whole as of the end of its most recent fiscal year ended
prior to the time the determination is made.
ARTICLE XIV
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
stockholders, and may not be effected by any consent in writing by such
stockholder, unless such consent is unanimous.
IN WITNESS WHEREOF, I, the undersigned, being the Incorporator hereinabove
named, do hereby further certify that the facts hereinabove stated are truly set
forth, and accordingly I have hereunto set my hand this 17th day of March, 1987.
4. This Restated Certificate of Incorporation was duly adopted by
vote of the stockholders in accordance with Section 242 and 245 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Lunn Industries, Inc. has caused this Certificate
to be signed by Lawrence Schwartz, its Vice President and Secretary, this
Twenty-Fifth day of October, 1996.
Lunn Industries, Inc.
By: /s/Lawrence Schwartz
Vice President and Secretary
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Exhibit 3.2
BY-LAWS
OF
LUNN INDUSTRIES, INC.
(a Delaware Corporation)
ARTICLE I
Stockholders' Meetings
1. Annual Meetings. The annual meeting of the Stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other business as may properly be brought before the meeting shall be held
on the last Tuesday of April in each year at 10:00 o'clock a.m., or at such
other time and date as shall be determined by resolution of the Board of
Directors and as set forth in the notice of the meeting. Such annual meeting of
stockholders shall be held at such place, within or without the State of
Delaware, as may be fixed by the Board of Directors.
2. Special Meetings. Special meetings of the stockholders shall be held at
such place within or without the State of Delaware as may be designated in the
notice of said meeting, upon call of the Board of Directors, the Chairman of the
Board or the President. Any such call or demand shall state the purpose or
purposes of the proposed meeting. At any special meeting only such business may
be transacted which is related to the purpose or purposes set forth in the
notice thereof. A special meeting may be called and held in conjunction with an
annual meeting of the stockholders.
3. Record Date for Meetings and Other Purposes. For the purpose of
determining the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to or dissent
from any proposal without a meeting, or for the purpose of determining
stockholders entitled to receive payment of any dividend or the allotment of any
rights, or for the purpose of any other action, the Board of Directors may fix,
in advance, a date as the record date for any such determination of
stockholders. Such date 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. A determination of stockholders of record entitled to notice of or to
vote at any meeting of stockholders, shall apply to any adjournment thereof,
unless the Board of Directors fixes a new record date for the adjourned meeting.
4. Notice of Meetings. The Secretary or any Assistant Secretary shall cause
notice of the place, date and hour of each meeting of the stockholders, and, in
the case of a special meeting, the purpose or purposes for which such meeting is
called, to be given in writing either personally or by mail, at least ten but
not more than sixty days prior to the meeting, to each stockholder of record
entitled to vote at his post office address as the same appears on the books of
the Corporation at the time of such mailing. Notice of any meeting of
stockholders need not be given to any stockholder who shall sign a waiver of
such notice in writing, whether before or after the time of such meeting, or to
any stockholder who shall attend such meeting in person or by proxy, except when
the person attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of business because the meeting was
not lawfully called or convened. Notice of any adjourned meeting of the
stockholders of the Corporation need not be given, except as otherwise required
by statute.
5. List of Stockholders Entitled to Vote. The Secretary shall prepare and
make, at least ten days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for
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any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present. Upon the willful neglect or refusal of the directors to produce
such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting. The stock ledger shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list of stockholders or the books of the corporation, or to vote in
person or by proxy at any meeting of stockholders.
6. Quorum. A quorum at all meetings of stockholders shall consist of the
holders of record of a majority of the shares of stock of the Corporation,
issued and outstanding, entitled to vote at the meeting, present in person or by
proxy, except as otherwise provided by statute or the Certificate of
Incorporation. When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any stockholders.
7. Absence of Quorum. In the absence of a quorum at any meeting or any
adjournment thereof, a majority of those present in person or by proxy and
entitled to vote may adjourn such meeting from time to time. At any such
adjourned meeting at which a quorum is present any business may be transacted
which might have been transacted at the meeting as originally called.
8. Presiding Officer and Secretary. At any meeting of the stockholders, if
neither the Chairman of the Board nor the President nor Vice President nor a
person designated by the Board of Directors to preside at the meeting shall be
present, the stockholders shall appoint a presiding officer for the meeting. If
neither the Secretary nor an Assistant Secretary be present, the appointee of
the person presiding at the meeting shall act as secretary of the meeting.
9. Voting in General. Except as otherwise provided in the Certificate of
Incorporation or in the laws of the State of Delaware, at every meeting of the
stockholders, each stockholder of record of the Corporation shall have one vote
in person or by proxy for each share of stock having voting rights held by him
and registered in his name on the books of the Corporation. Any vote on shares
of stock of the Corporation may be given by the stockholder entitled thereto in
person or by his proxy appointed by an instrument in writing, subscribed by such
stockholder or by his attorney thereunto authorized, and delivered to the
secretary of the meeting. Except as otherwise required by statute, by the
Certificate of Incorporation or these By-laws, all matters coming before any
meeting of the stockholders shall be decided by a majority vote of the
stockholders of the Corporation present in person or by proxy at such meeting
and entitled to vote thereat, a quorum being present.
10. Inspectors of Election. If at any meeting of stockholders a vote by
ballot shall be taken on any question, the chairman of the meeting shall appoint
two inspectors to act with respect to the vote. Each inspector so appointed
shall first subscribe an oath faithfully to execute the duties of an inspector
at the meeting with strict impartiality and according to the best of his or her
ability. The inspectors shall decide upon the qualifications of voters and shall
report the number of shares of stock represented at the meeting and entitled to
vote on the question, shall conduct and accept the votes, and when the voting is
completed, shall ascertain and report the number of shares of stock voted
respectively for and against the question. Reports of inspectors shall be in
writing and subscribed and delivered by them to the secretary of the meeting.
The inspectors need not be stockholders of the Corporation, and any officer of
the Corporation may be an inspector on any question other than a vote for or
against his or her election to any position with the Corporation or on any other
question in which he or she may have a direct pecuniary interest.
11. Shareholder Nominations and Proposals. In order to be considered and
voted upon at an annual meeting of shareholders, any matter which a shareholder
may properly bring before such a meeting, including the nomination of a
candidate for the board of directors, must be disclosed in writing in a notice
delivered to the Secretary no later than the last date on which a shareholder
may properly submit a proposal
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to the Company pursuant to Rule 14a-8 promulgated pursuant to the Securities
Exchange Act of 1934. In order to be considered and voted upon at a special
meeting of shareholders, any matter which a shareholder may properly bring
before such a meeting, including the nomination of a candidate for the board of
directors, must be disclosed in writing in a notice delivered to the Secretary
no later than 30 days before the meeting, in the event that the shareholders are
provided with at least 40 days' notice of the meeting, and no later than 10 days
after the shareholders are provided with written notice of the meeting, in the
event that the shareholders are provided with less than 40 days' notice of the
meeting. In any event, the notice shall set forth the shareholder's name,
address and occupation, the class and number of shares he owns, his reasons for
bringing the matter before the other shareholders and any material interest that
the shareholder has in the matter.
12. Adjournment. A shareholders meeting may be adjourned for any purpose.
ARTICLE II
Board of Directors
1. General Powers. The property, affairs and business of the Corporation
shall be managed by or under the direction of its Board of Directors, which
shall consist of not less than three (3) nor more than nine (9) persons. The
exact number of directors within the maximum and minimum limitations specified
shall be fixed from time to time by resolution of the Board of Directors, except
that no decrease shall shorten the term of any incumbent director.
2. Term of Office. Each director (whether elected at an annual meeting, or
to fill a vacancy or newly created directorship or otherwise) shall hold office
until his successor shall be elected and shall qualify or until his earlier
resignation or removal. Except as may otherwise be provided herein or in the
Certificate of Incorporation, the members of the Board of Directors of the
Corporation shall be elected by a plurality of the votes cast at a meeting of
stockholders, by the holders of shares entitled to vote in the election.
3. Meetings. Meetings of the Board of Directors shall be held at such place
within or outside of the State of Delaware as may from time to time be fixed by
resolution of the Board of Directors, or as may be specified in the notice of
the meeting. Regular meetings of the Board of Directors shall be held at such
times as may from time to time be fixed by resolution of the Board of Directors,
and special meetings may be held at any time upon the call of the Chairman of
the Board or President or a majority of the directors by oral, telegraphic or
written notice duly served on or sent or mailed to each director not less than
one day before such meeting. A meeting of the Board of Directors may be held
without notice immediately after the annual meeting of stockholders. Notice need
not be given of regular meetings of the Board of Directors. Meetings may be held
at any time without notice if all the directors are present, or if at any time
before or after the meeting those present waive notice of the meeting in
writing.
4. Quorum. A majority of the entire board shall constitute a quorum for the
transaction of business, but if at any meeting of the Board of Directors there
shall be less than a quorum present, a majority of those present may adjourn the
meeting, without further notice, from time to time until a quorum shall have
been obtained.
5. Vacancies. In case one or more vacancies shall occur in the Board of
Directors by reason of death, resignation, increase in the number of directors
or otherwise except in so far as otherwise provided in these By-laws, the
remaining directors, although less than a quorum, by a majority vote, or the
stockholders at any Annual or Special Meeting, may elect a successor or
successors for the unexpired term or terms.
6. Action Without a Meeting. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board of Directors or of the committee,
as the case may be, consent thereto in writing, and such writing or writings are
filed with
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the minutes of proceedings of the Board of Directors or the committee.
7. Regulations; Manner of Acting. To the extent consistent with law, the
Certificate of Incorporation and these By-laws, the Board of Directors and any
committee thereof may adopt such rules and regulations for the conduct of
meetings of the Board or such committee and for the management of the property,
affairs and business of the Corporation as the Board may deem appropriate.
Members of the Board of Directors and any committee thereof may participate in a
meeting of the Board or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting for all purposes of these By-laws.
8. Compensation. Directors may, by resolution of the Board of Directors, be
allowed a fixed sum and expenses of attendance for attendance at regular or
special meetings of the Board of Directors; provided that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees, and others who attend pursuant to direction,
may, by vote of the Board of Directors, be allowed a like fixed sum and expenses
of attendance for attending committee meetings.
9. Executive Committee. The Board of Directors may appoint an Executive
Committee consisting of three or more members of the Board of Directors, who
shall serve at the pleasure of the Board of Directors. The Executive Committee
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, to
the extent authorized by law, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
10. Other Committees. The Board of Directors, in its discretion, may
appoint one or more committees (in addition to the Executive Committee), each
consisting of one or more directors. Each such committee shall have such powers
and duties as may be provided by resolution or resolutions of the Board of
Directors.
11. Quorum, Manner of Acting, etc. Each committee shall have quorum
requirements which are no more restrictive than those of the Board of Directors
and shall in all other respects act in the manner and follow the procedures
established for the Board of Directors.
12. Resignations. Any director may resign from his office at any time by
delivering his resignation in writing to the Corporation, and the acceptance of
such resignation, unless required by the terms thereof, shall not be necessary
to make such resignation effective.
ARTICLE III
Officers
1. General. The officers of the Corporation shall be appointed by the Board
of Directors and shall be a Chairman of the Board, a President, one or more Vice
Presidents (one of which may be designated an Executive Vice President, and one
or more of which may be designated Senior Vice Presidents by the Board of
Directors), a Secretary and a Treasurer. From time to time the Board of
Directors may appoint such Assistant Secretaries, Assistant Treasurers and such
other officers, agents and employees as it may deem proper. The officers shall
be appointed by the Board of Directors at the first meeting of the Board after
the annual meeting of the stockholders in each year. Any number of offices may
be held by the same person, except the offices of President and Secretary. The
Chairman of the Board shall be chosen from among the Directors.
2. Term. All officers shall hold their offices until their respective
successors are appointed and qualify, or until their earlier resignation or
removal. Any officer may be removed from office, either with or without cause,
at any time by the affirmative vote of a majority of the members of the Board of
Directors then in office.
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Any officer may resign at any time upon written notice to the Corporation.
ARTICLE IV
Duties of Officers
1. Chairman of the Board. The Chairman of the Board shall preside at all
meetings of the stockholders and of the Board at which he is present and shall
perform such other duties as the Board may designate. In the absence or
inability to act of the President, the Chairman of the Board shall perform the
duties and may exercise the powers of the President. The performance of any such
duty by the Chairman of the Board shall be conclusive evidence of his power to
act.
2. President. The President shall be the Chief Executive Officer of the
Corporation and shall have general charge and control of all the property,
business and affairs of the Corporation and, subject to the supervision of the
Board of Directors, he shall have general supervision over the corporation's
officers, employees and agents. He shall sign (unless a Vice President shall
have signed) certificates representing the stock of the Corporation authorized
for issuance by the Board of Directors or the Executive Committee. He may enter
into any contract or execute and deliver any instrument in the name and on
behalf of the Corporation in the ordinary course of the Corporation's business.
He shall have all powers and perform all duties incident to the office of a
chief executive officer of a corporation and such other duties as are given to
him by these ByLaws or as from time to time may be assigned to him by the Board
of Directors. The President shall, in the absence of the Chairman of the Board,
preside at meetings of the stockholders and of the Board of Directors and shall,
in case of a vacancy in the office of the Chairman of the Board, have the power
to perform the duties incident to such office.
3. Executive Vice President. The Executive Vice President (if there be one)
shall, in the absence of the President and Chairman of the Board, perform and
carry out the functions and duties of such officers and shall perform and carry
out such other executive functions as may be assigned him from time to time by
such officers or by the Board of Directors or Executive Committee.
4. Vice Presidents. Each Vice President shall have such powers and perform
such duties as may be assigned to him by the Board of Directors or the
President. At the request or in the absence or disability of the Chairman of the
Board, the President and the Executive Vice President (if there be one), the
Vice President (or if none shall have been designated, the senior of the Vice
Presidents present and able to act or such other Vice President as may be
designated by the Board of Directors) may perform all the duties of such
officers and, when so acting, shall have all the powers of and be subject to all
the restrictions upon such officers. Any Vice President may sign (unless the
Chairman of the Board, the President or another Vice President shall have
signed) certificates representing stock of the Corporation authorized for
issuance by the Board of Directors or the Executive Committee.
5. Treasurer. The Treasurer shall have the custody of all the funds and
securities of the Corporation. When necessary or proper he shall endorse on
behalf of the Corporation, for collection, checks, notes and other obligations
and shall deposit the same to the credit of the Corporation in such bank, or
banks, or depositories as may be designated by the Board of Directors, or by any
officer acting under authority conferred by the Board of Directors. He may sign
certificates representing stock of the Corporation authorized for issuance by
the Board of Directors or the Executive Committee. He shall perform, in general,
all duties incident to the office of a treasurer of a corporation and such other
duties as are given to him by these By-Laws or as from time to time may be
assigned to him by the Board of Directors or the President.
6. Assistant Treasurers. The Board of Directors may, from time to time,
designate and appoint one or more Assistant Treasurers who shall have such
powers and perform such duties as may be assigned to them by the Board of
Directors or the Treasurer. At the request or in the absence or disability of
the Treasurer, the Assistant Treasurer may perform all the duties of the
Treasurer and, when so acting, shall have all the
27
<PAGE>
powers of and be subject to all the restrictions upon the Treasurer.
7. Secretary. The Secretary shall attend to the giving and serving of all
notices of the Corporation. He shall keep or cause to be kept a record of the
proceedings of the meetings of the stockholders and of the Board of Directors in
books kept for that purpose. He shall be the custodian of the seal of the
Corporation, and cause such seal (or a facsimile thereof) to be affixed to all
certificates representing the stock of the Corporation prior to the issuance
thereof and to all instruments the execution of which on behalf of the
Corporation under its seal shall have been duly authorized in accordance with
these By-laws, and when so affixed he may attest the same. He shall keep or
cause to be kept the records of the Corporation, including the stock register
and such other books, reports, statements and other documents as the Board of
Directors may direct to be kept or as are required by law to be kept, all of
which shall at all reasonable times be open to inspection by any director. He
shall sign (unless the Treasurer, an Assistant Treasurer or an Assistant
Secretary shall sign) certificates representing stock of the Corporation
authorized for issuance by the Board of Directors or the Executive Committee. He
shall perform all duties incident to the office of a secretary of a corporation
and such other duties as are given to him by these By-Laws or as from time to
time may be assigned to him by the Board of Directors or the President.
8. Assistant Secretaries. The Board of Directors may, from time to time,
designate and appoint one or more Assistant Secretaries who shall have such
powers and perform such duties as may be assigned to them by the Board of
Directors or the Secretary. At the request or in the absence of the Secretary,
the Assistant Secretary may perform all the duties of the Secretary and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
9. Delegation by Board of Directors. In the case of absence or inability to
act of any officer of the Corporation and of any person herein authorized to act
in his place, the Board of Directors may from time to time delegate the powers
of such officer to any other officer or any director or any other person whom it
may select.
ARTICLE V
Capital Stock
1. Certificates of Stock.
(a) Every holder of stock in the Corporation shall be entitled to
have a certificate, signed by, or in the name of the Corporation by, the
Chairman of the Board, the President or any Vice President and the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary, certifying
the number of shares owned by him in the Corporation.
(b) Certificates representing shares of stock of the Corporation
shall be in such form as shall be approved by the Board of Directors.
(c) There shall be entered upon the stock ledger of the
Corporation at the time of issuance of each share the number of the certificate
issued, the name of the person owning the shares represented thereby, the number
and class of such shares, and the date of issuance thereof. Every certificate
exchanged or returned to the Corporation shall be marked "Canceled", with the
date of cancellation.
2. Transfers of Stock. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate representing shares, duly endorsed or
accompanied by an instruction to transfer originated by the appropriate person,
assignment or authority to transfer, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon its books. Subject to the provisions of the
Certificate of Incorporation and these By-laws, the Board of Directors may
prescribe such additional rules and regulations as it may deem appropriate
relating to the issue, transfer and registration of
28
<PAGE>
shares of the Corporation.
ARTICLE VI
Indemnification
1. Right to Indemnification. The corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or a witness in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal representative,
is or was a director or officer of the corporation or is or was serving at the
request of the corporation as a director, officer, fiduciary or agent of another
corporation or of a partnership, joint venture, trust, enterprise or non-profit
entity, including service with respect to employee benefit plans, against all
liability and loss suffered and expenses reasonably incurred by such person. The
corporation shall indemnify a person in connection with a proceeding initiated
by such person only if the proceeding was authorized by the Board of Directors
of the corporation.
2. Prepayment of Expenses. The corporation shall pay the expenses incurred
in defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director or officer in his
capacity as a director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the director or
officer to repay all amounts advanced if it should be ultimately determined that
the director or officer is not entitled to be indemnified under this Article VI
or otherwise.
3. Claims. If a claim for indemnification or payment of expenses under this
Article VI is not paid in full within ninety days after a written claim therefor
has been received by the corporation the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action
the corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law.
4. Non-Exclusivity of Rights. The rights conferred on any person by this
Article VI shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these By-laws, agreement, vote of stockholders or disinterested
directors or otherwise.
5. Amendment or Repeal. Any repeal or modification of the foregoing
provisions of this Article VI shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE VII
General Provisions
1. Dividends. Subject to any applicable provisions of law and the
Certificate of Incorporation, dividends upon the shares of the Corporation may
be declared by the Board of Directors at any regular or special meeting of the
Board and any such dividend may be paid in cash, property, or shares of the
Corporation.
2. Reserves. There may be set apart from time to time out of any funds of
the Corporation available for dividends such reserve or reserves as the Board of
Directors may deem appropriate, and the Board may similarly modify or abolish
any such reserve or reserves.
3. Sale, Transfer, etc., of Securities. The President or any Vice President
together with the Secretary or Treasurer or an Assistant Secretary or Assistant
Treasurer may sell, transfer, endorse, and assign any
29
<PAGE>
shares of stock, bonds or other securities owned by or held in the name of the
Corporation, other than stock of the Corporation, under its corporate seal, any
instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment.
4. Voting as Stockholder. Unless otherwise determined by resolution of the
Board of Directors, the President or any Vice President shall have full power
and authority on behalf of the Corporation to attend any meeting of stockholders
of any corporation in which the Corporation may hold stock, and to act, vote (or
execute proxies to vote), and exercise in person or by proxy all other rights,
powers and privileges incident to the ownership of such stock. Such officers
acting on behalf of the Corporation shall have full power and authority to
execute any instrument expressing consent to or dissent from any action of any
such corporation without a meeting. The Board of Directors may by resolution
from time to time confer such power and authority upon any other person or
persons.
5. Fiscal Year. Unless otherwise determined by resolution of the Board of
Directors, the fiscal year of the Corporation shall commence on the first day of
January in each calendar year and terminate on the thirty-first day of December
in the same calendar year.
6. Seal. The seal of the Corporation shall be circular in form and shall
contain the name of the Corporation, the year of incorporation and the words
"Corporate Seal Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed or reproduced, or in any other lawful manner.
7. Independent Public Accountant. The Board of Directors shall annually
appoint an independent public accountant or firm of independent public
accountants to audit the books of the Corporation for each fiscal year.
8. Additional Officers. The Board of Directors may appoint such other
officers and agents as it may deem appropriate and such other officers and
agents shall hold their offices for such terms and shall exercise such powers
and perform such duties as may be determined from time to time by the Board.
9. Security. The Board of Directors may require any officer or agent of the
Corporation to provide security for the faithful performance of his duties, in
such amount and of such character as may be determined from time to time by the
Board.
10. Reliance Upon Financial Statements. In discharging his duties, any
director, when acting in good faith, may rely upon financial statements of the
Corporation represented to him by the President or the officer of the
Corporation having charge of its books of accounts, or stated in a written
report by an independent public or certified public accountant or firm of such
accountants selected with reasonable care by the Board of Directors.
11. Transfer Agent and Registrar. The Board of Directors may appoint one or
more transfer agents and one or more registrar, and may require all certificates
representing shares to bear the signature of any such agents or registrars.
30
<PAGE>
Exhibit 10.1
Amendment to the 1994 Stock Incentive Plan
(a) To delete the present Article 4 and to substitute the following in its
place:
4. STOCK SUBJECT TO PLAN
The total number of shares of Stock reserved and available for distribution
under this Plan shall be 1.5 million. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares. If any shares of
Stock that have been optioned cease to be subject to option or if any shares
subject to any Restricted Stock or Deferred Stock award granted hereunder are
forfeited or such award otherwise terminates, those shares shall again be
available for distribution in connection with future awards under this Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in the aggregate
number of shares reserved for issuance under this Plan, in the number and option
price of shares subject to outstanding Stock Options and Director Stock Options
granted under this Plan, and in the number of shares subject to Restricted Stock
or Deferred Stock awards granted under this Plan, in such manner as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
(b) To delete the present Article 5 and to substitute the following in its
place:
5. ELIGIBILITY
5.1 Employees of the Company or its subsidiaries (but excluding members of
the Committee and any person who serves only as a director) who are responsible
for or contribute to the management, growth, and/or profitability of the
business of the Company or its Subsidiaries, are eligible to be granted Stock
Options, Restricted Stock or Deferred Stock awards. The term "employee" is
defined as any employee, employee-director, officer, consultant, or advisor,
provided that bona fide services shall be rendered by consultants or advisors
and such services must not be in connection with the offer or sale of securities
in a capital-raising transaction.
5.2 Directors of the Company (other than directors who are also officers or
employees of the Company or its Subsidiaries) are eligible to be granted
Director Stock Options pursuant to Section 7 of the Plan.
5.3 The optionees and participants under this Plan shall be selected from
time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares covered by each award or grant to an optionee or participant.
31
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