-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B/jZQIjxmIxzgQSJRR8Fgo3WnxlTbxFdr0u82xegH8YtrPHTlQok5gN40iWBQfQo PxPpXKcpq/9Cdi/6BQseUg== 0000889812-96-001730.txt : 19961118 0000889812-96-001730.hdr.sgml : 19961118 ACCESSION NUMBER: 0000889812-96-001730 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUNN INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000060911 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 111581582 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-01298 FILM NUMBER: 96666256 BUSINESS ADDRESS: STREET 1: 1 GARVIES POINT RD CITY: GLEN COVE STATE: NY ZIP: 11542-2828 BUSINESS PHONE: 5166719000 MAIL ADDRESS: STREET 1: 1 GARVIES POINT RD CITY: GLEN COVE STATE: NY ZIP: 11542-2828 FORMER COMPANY: FORMER CONFORMED NAME: LUNN LAMINATES INC DATE OF NAME CHANGE: 19780425 10QSB 1 QUARTERLY REPORT 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 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 =========== 2 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 ============ 3 LUNN INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 UNAUDITED
--------------------------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, =============================================================== --------------------------------------------------------------- 1996 1995 1996 1995 --------------------------------------------------------------- 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
4 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 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 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 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 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 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 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, 11 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. 12 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 13 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 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 EX-3.1 2 RESTATED CERTIFICATE OF INCORPORATION 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 ("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: 17 (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 18 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 19 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: 20 (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 21 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 22 EX-3.2 3 BY-LAWS 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 23 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 24 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 25 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. 26 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 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 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 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 EX-10.1 4 AMENDMENT TO 1994 STOCK INCENTIVE PLAN 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 EX-27 5 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 7,281 0 3,602,575 211,379 4,768,180 8,645,579 12,261,485 4,472,297 16,987,529 3,165,740 3,357,611 0 0 113,970 10,350,208 16,987,529 13,363,484 13,363,484 10,415,876 2,114,909 (11,865) 0 374,040 470,524 0 470,524 0 0 0 470,524 .05 .05
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