-----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, IzRBSioIM5bcHdAVJA8IydIC7vfXRBCFiyPUNGohy9oTgtUUr5QORN4OkJ2wPye+ PfzR69hr3SHaTRtbXlKF5A== 0000864906-97-000001.txt : 19970222 0000864906-97-000001.hdr.sgml : 19970222 ACCESSION NUMBER: 0000864906-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970218 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUNAR CORP CENTRAL INDEX KEY: 0000864906 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 391200501 STATE OF INCORPORATION: WI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18643 FILM NUMBER: 97536593 BUSINESS ADDRESS: STREET 1: 313 W BELTLINE HIGHWAY CITY: MADISON STATE: WI ZIP: 53713 BUSINESS PHONE: 6082742663 MAIL ADDRESS: STREET 1: 313 WEST BELTLINE HIGHWAY CITY: MADISON STATE: WI ZIP: 53713 10-Q 1 QUARTERLY REPORT FOR QUARTER ENDING 12/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-18643 LUNAR CORPORATION (Exact name of registrant as specified in its charter) Wisconsin 3845 39-1200501 (State of (Primary Standard Industry (IRS Employer Incorporation) Classification Code Number) Identification No.) 313 West Beltline Highway Madison, Wisconsin 53713 608-274-2663 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 / / As of January 31, 1997, 8,677,195 shares of the registrant's Common Stock, $0.01 par value, were outstanding. LUNAR CORPORATION AND SUBSIDIARIES FORM 10-Q For the quarterly period ended December 31, 1996 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Item 1. Financial statements Consolidated Balance Sheets December 31, 1996, and June 30, 1996 . . . . . . . . . . . . . . . .3 Consolidated Statements of Income Three and Six Months Ended December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Consolidated Statements of Cash Flows Six Months Ended December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Notes to Consolidated Financial Statements . . . . . . . . . . . . .7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . .9 PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets - -------------------------------------------------------------------------------- Assets - -------------------------------------------------------------------------------- December 31, June 30, 1996 1996 (Unaudited) (Audited) - -------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $25,301,635 $ 8,001,582 Marketable securities 2,480,694 2,347,400 Accounts receivable: Trade, less allowance for doubtful accounts of $2,580,000 at December 31, 1996 and $2,235,000 at June 30, 1996 23,864,707 27,966,620 Other 201,408 328,662 - -------------------------------------------------------------------------------- 24,066,115 28,295,282 Inventories 9,835,927 8,675,487 Deferred income taxes 2,257,000 1,984,000 Other 369,977 161,829 - -------------------------------------------------------------------------------- Total current assets 64,311,348 49,465,580 Property, plant and equipment--at cost: Buildings and improvements 2,203,036 2,203,036 Furniture and fixtures 700,897 669,284 Machinery and other equipment 4,385,314 3,554,535 - -------------------------------------------------------------------------------- 7,289,247 6,426,855 Less accumulated depreciation and amortization 3,461,724 2,977,468 - -------------------------------------------------------------------------------- 3,827,523 3,449,387 Land 138,858 138,858 - -------------------------------------------------------------------------------- 3,966,381 3,588,245 Long-term trade accounts receivable 3,194,435 7,658,079 Long-term marketable securities 1,023,156 1,028,088 Patent fees and other intangibles, net of accumulated amortization of $1,009,093 at December 31, 1996 and $832,573 at June 30, 1996 882,192 990,382 Other 137,809 141,556 - -------------------------------------------------------------------------------- $73,515,321 $62,871,930 ================================================================================ See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets - -------------------------------------------------------------------------------- Liabilities and Shareholders' Equity - -------------------------------------------------------------------------------- December 31, June 30, 1996 1996 (Unaudited) (Audited) - -------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 4,180,505 $ 3,508,804 Customer advances and deferred income 578,114 565,364 Income taxes payable 1,722,472 551,852 Accrued liabilities: Commission payable 2,053,177 2,502,323 Compensation payable 334,260 205,236 Property, payroll, and other taxes 234,175 331,139 Accrued warranty and installation expenses 2,894,000 2,570,000 Other 271,280 231,809 - -------------------------------------------------------------------------------- Total current liabilities 12,267,983 10,466,527 Shareholders' equity: Common stock--authorized 25,000,000 shares of $.01 par value; issued and outstanding 8,586,865 shares at December 31, 1996 and 8,486,250 at June 30, 1996 85,869 84,863 Capital in excess of par value 24,233,890 22,802,103 - -------------------------------------------------------------------------------- 24,319,759 22,886,966 Retained earnings 36,866,764 29,420,314 Unrealized appreciation in marketable securities 15,694 29,122 Cumulative translation adjustment 45,121 69,001 - -------------------------------------------------------------------------------- 61,247,338 52,405,403 - -------------------------------------------------------------------------------- $73,515,321 $62,871,930 ================================================================================ See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (Unaudited) - -------------------------------------------------------------------------------- Three months ended Six months ended December 31, December 31, December 31, December 31, 1996 1995 1996 1995 - -------------------------------------------------------------------------------- REVENUES $20,516,096 $16,934,285 $39,430,735 $29,294,274 - -------------------------------------------------------------------------------- OPERATING EXPENSES Cost of sales 9,031,731 7,677,353 17,409,209 13,052,066 Research and development 1,424,599 1,564,806 2,584,877 2,871,432 Selling and marketing 4,405,687 3,559,406 8,374,020 6,338,899 General and administrative 1,106,264 1,380,357 2,487,763 2,881,572 - -------------------------------------------------------------------------------- 15,968,281 14,181,922 30,855,869 25,143,969 - -------------------------------------------------------------------------------- Earnings from operations 4,547,815 2,752,363 8,574,866 4,150,305 - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 365,026 385,023 707,847 784,250 Settlement of lawsuit 1,828,905 - 1,828,905 - Other 150,742 (76,815) 214,832 (87,869) - -------------------------------------------------------------------------------- 2,344,673 308,208 2,751,584 696,381 - -------------------------------------------------------------------------------- Earnings before provision for income taxes 6,892,488 3,060,571 11,326,450 4,846,686 Provision for income taxes 2,347,000 816,783 3,880,000 1,275,156 - -------------------------------------------------------------------------------- NET INCOME $ 4,545,488 $ 2,243,788 $ 7,446,450 $ 3,571,530 ================================================================================ Net income per common and common-equivalent share $0.50 $0.25 $0.82 $0.41 ================================================================================ Weighted average number of common and common-equivalent shares 9,076,316 8,841,284 9,073,781 8,783,034 ================================================================================ See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) - -------------------------------------------------------------------------------- Six months ended December 31, December 31, 1996 1995 - -------------------------------------------------------------------------------- Cash flows from operating activities: Net income $7,446,450 $3,571,530 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 667,386 754,925 Minority interest in subsidiary - 60,752 Changes in assets and liabilities: Receivables 8,696,558 (4,131,405) Inventories (1,160,440) (1,820,359) Prepaid expenses (208,148) (54,220) Deferred income taxes (273,000) (267,000) Accounts payable 647,821 610,986 Customer advances and deferred income 12,750 52,815 Accrued liabilities (53,615) 811,529 Income taxes payable 1,170,620 (672,102) - -------------------------------------------------------------------------------- Net cash provided by (used in) operating activities 16,946,382 (1,082,549) - -------------------------------------------------------------------------------- Cash flows from investing activities: Purchases of marketable securities (1,000,000) - Maturities of marketable securities 851,600 3,539,600 Additions to property, plant and equipment (862,392) (491,245) Patent fees (68,330) (168,597) - -------------------------------------------------------------------------------- Net cash provided by (used in) investing activities (1,079,122) 2,879,758 - -------------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from exercise of stock options 375,316 678,860 Income tax benefit from stock option exercises 1,057,477 1,306,133 - -------------------------------------------------------------------------------- Net cash provided by financing activities 1,432,793 1,984,993 - -------------------------------------------------------------------------------- Net increase in cash and cash equivalents 17,300,053 3,782,202 Cash and cash equivalents at beginning of period 8,001,582 2,577,655 - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $25,301,635 $ 6,359,857 ================================================================================ Supplemental disclosure of cash flow information: Income taxes paid $ 2,170,000 $ 907,450 ================================================================================ See accompanying notes to consolidated financial statements LUNAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) BASIS OF PRESENTATION The consolidated financial statements of Lunar Corporation (the "Company") presented herein, without audit except for balance sheet information at June 30, 1996, have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended June 30, 1996, included in the Company's Form 10-K as filed with the Securities and Exchange Commission on September 27, 1996. The consolidated balance sheet as of December 31, 1996, the consolidated statements of income for the three and six months ended December 31, 1996 and 1995, and the consolidated statements of cash flows for the six months ended December 31, 1996 and 1995 are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. The results of operations for the three and six months ended December 31, 1996, are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 1997. (2) INVENTORIES Inventories are stated at the lower of cost or market; cost is determined principally by the first-in, first-out method. Inventories are broken down as follows: - -------------------------------------------------------------------------------- December 31, June 30, 1996 1996 (Unaudited) (Audited) - -------------------------------------------------------------------------------- Finished goods and work in progress $4,548,115 $3,920,431 Materials and purchased parts 5,287,812 4,755,056 ---------- ---------- $9,835,927 $8,675,487 ========== ========== (3) STOCK DIVIDEND The Company distributed a 3-for-2 stock split in the form of a stock dividend on December 21, 1995. All share and per-share data has been adjusted to reflect the stock dividend. (4) TECHNOLOGY TRANSFER AND SPIN-OFF OF SUBSIDIARY In October 1995, the Company contributed its ownership of Continental Assays Corporation and certain assets with a book value of $175,867 for 1,698,674 shares of common stock of Bone Care International, Inc. ("Bone Care"), a subsidiary of the Company. In October 1995, the Company also exchanged $634,683 of loans receivable from Bone Care for 107,401 shares of Bone Care common stock. These transactions created a single vitamin D development business owned by Bone Care. On April 18, 1996, the Board of Directors of the Company declared a dividend, payable to holders of record of its common stock at the close of business on April 24, 1996 (the "record date"), of one share of Bone Care common stock for every two shares of the Company's common stock. The distribution occurred on May 8, 1996 (the "distribution date"). Prior to the distribution, the Company made a capital contribution of $10,725,000 in exchange for additional common stock of Bone Care and to pay for federal income tax benefits received from Bone Care. As a result of the distribution, the Company's 97.3% ownership of Bone Care's common stock was distributed to holders of the Company's common stock as of the record date. Bone Care's total assets as of the distribution date were approximately $12,650,000. Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Revenues increased 21% to $20,516,000 in the three months ended December 31, 1996 from $16,934,000 in the three months ended December 31, 1995. For the six months ended December 31, 1996, revenues increased 35% to $39,431,000 from $29,294,000 in the six months ended December 31, 1995. Sales by product line are summarized as follows: Revenues by Product (in thousands) Three Months Ended Six Months Ended December 31, December 31, December 31, December 31, 1996 1995 1996 1995 ---------- ---------- --------- --------- DPX $16,080 $ 8,548 $30,545 $15,842 EXPERT 822 4,052 1,642 5,709 Achilles 1,597 1,244 2,786 3,000 Artoscan 1,035 2,105 2,126 2,998 Other 982 985 2,332 1,745 ---------- ---------- --------- --------- $20,516 $16,934 $39,431 $29,294 ========== ========== ========= ========= The increase in DPX sales in the current fiscal year is primarily attributable to increased shipments in the United States, which the Company believes are related to the introduction of several new drug therapies during the last 12 months. The reduction of sales of EXPERT systems resulted from unusually high sales during the period of October 1995 to April 1996. During that period, a significant backlog was fulfilled when difficulties with a component part availability were resolved. Cost of sales as a percentage of equipment sales averaged approximately 44% in the three and six month periods ended December 31, 1996, compared to 45% and 46% in the three and six month periods ended December 31, 1995. Research and development expenditures decreased to $1,425,000 in the three months ended December 31, 1996 from $1,565,000 in the three months ended December 31, 1995, and decreased to $2,585,000 in the six months ended December 31, 1996 from $2,871,000 in the six months ended December 31, 1995. The Company spun-off Bone Care to its shareholders on May 8, 1996 in a transaction intended to qualify as a tax-free distribution. The costs of clinical trials and any other costs related to the research and development of vitamin D compounds are no longer included in the Company's consolidated net income. Vitamin D-related expenses were $259,000 and $544,000 in the three and six months ended December 31, 1995, respectively. Sales and marketing expenses were $4,406,000 in the three months ended December 31, 1996 and $3,559,000 in the three months ended December 31, 1995, representing 21% as a percentage of equipment sales for both time periods. For the six months ended December 31, 1996, sales and marketing expenses were $8,374,000 compared to $6,339,000 for the six months ended December 31, 1995, representing a decrease to 21% from 22% as a percentage of equipment sales. General and administrative expenses decreased to $1,106,000 in the three months ended December 31, 1996 from $1,380,000 in the three months ended December 31, 1995, and decreased to $2,488,000 in the six months ended December 31, 1996 from $2,882,000 in the six months ended December 31, 1995. The decreases are primarily attributable to lower legal expenses. Lunar had been involved in several patent lawsuits initiated in September 1994 with Hologic, Inc., a Massachusetts-based competitor, related to x-ray and ultrasound densitometers. These lawsuits were settled on November 22, 1995. Interest income was $365,000 and $708,000 in the three and six months ended December 31, 1996, respectively, compared to $385,000 and $784,000 in the three and six months ended December 31, 1995, respectively. These decreases are primarily the result of decreased cash balances during most of the current fiscal year partially offset by increases in the amount of financed receivables in December 1996. The Company had contributed $10,725,000 to Bone Care prior to the spinoff of Bone Care in May 1996. In December 1996, a court awarded the Company and the University of Alabama-Birmingham (the co-plaintiffs) $4,200,000 in a patent infringement case against EG&G Astrophysics (EG&G). The co-plaintiffs split the award after deducting legal expenses. The Company's resulting $1,829,000 share of the award is reflected in other income. The co-plaintiffs entered into a Settlement and License Agreement with EG&G providing for future royalty payments based on the volume of EG&G equipment sales utilizing the technology subject to the license. The effective tax rate averaged 34% in the three and six month periods ended December 31, 1996 compared to 27% and 26% in the three and six month periods ended December 31, 1995, respectively. The effective tax rate has been trending higher in the current fiscal year due to increased profits from sales within the United States, which do not benefit from the Company's foreign sales corporation, Lunar FSC, Inc., and the patent infringement settlement. The rate for the three month period ended December 30, 1995 is below the 34% federal statutory rate as a result of the tax benefit from foreign sales corporation treatment and tax-exempt interest income, but offset by the provision for state income taxes. Liquidity and Capital Resources Cash and cash equivalents increased $17,300,000 to $25,302,000 in the six months ended December 31, 1996. The Company also has a laddered portfolio of high-grade municipal bonds with various maturities not exceeding 48 months. The Company owned approximately $3,504,000 in municipal securities as of December 31, 1996, which are readily marketable. The Company's accounts receivable decreased $8,697,000 to $27,256,000 at December 31, 1996 from $35,953,000 at June 30, 1996. This decrease is attributable to the sale of approximately $7,300,000 of accounts receivable from selected customers in Latin America to a leasing company on December 31, 1996. The Company continues to have recourse of approximately 10% of the sales price in the event non-payment of the underlying accounts receivable should occur. Inventories increased 13% to $9,836,000 at December 31, 1996 from $8,675,000 at June 30, 1996. The increase in finished goods and work in progress is primarily attributable to increases in Artoscan MRI units. The increase in materials and purchased parts is primarily due to an increase in production of DPX systems. The Company does not have any pending material commitments for capital expenditures. Management believes the current level of cash and short-term investments is adequate to finance the Company's operations for the foreseeable future. PART II - OTHER INFORMATION LUNAR CORPORATION AND SUBSIDIARIES Item 1. Legal Proceedings Patent Litigation: On March 5, 1996, the Company and University of Alabama - Birmingham Research Foundation (UAB) (collectively the co-plaintiffs) sued EG&G Astrophysics (EG&G) of Long Beach, California, in the United States District Court for the Western District of Wisconsin for infringement of U.S. Patent 4,626,688 (the '688 Patent) by EG&G's dual-energy baggage scanners. A trial of the matter in December of 1996 concluded with a verdict in favor of the co-plaintiffs. The Company and UAB were awarded $4.2 million in damages which was divided between the co-plaintiffs after deducting legal expenses. The co-plaintiffs also entered into a Settlement and License Agreement with EG&G whereby EG&G was licensed under the '688 patent and a related U.S. patent. The license agreement provides for payment of royalties to the co-plaintiffs on EG&G's dual-energy baggage scanners manufactured or sold in the United States. The license agreement ends on December 2, 2003. During fiscal 1995 and part of fiscal year 1996, the Company was involved in patent litigation with Hologic, Inc., a Massachusetts-based competitor. On November 22, 1995, the Company announced the signing of a definitive agreement with Hologic settling all disputes between the parties. The agreement provides for certain continuing payments between the companies related to future sales, the net effect of which Lunar does not believe will be material to its revenues or earnings. The agreement also provides that the companies will not engage each other in patent litigation in the area of x-ray and ultrasound densitometry for a ten-year period. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders The 1995 Annual Meeting of Shareholders ("Annual Meeting") of the Company was held on November 21, 1996. The total number of shares of the Company's common stock, $.01 par value per share, outstanding as of October 11, 1996, the record date of the Annual Meeting, was 8,536,665. Management of the Company solicited proxies pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, and Regulation 14A promulgated thereunder for the Annual Meeting. Two (2) directors, John W. Brown and Reed Coleman, were elected to serve until the 1999 Annual Meeting of Shareholders. The directors were elected by a vote of 7,746,947 votes "FOR" and 3,750 votes "WITHHELD AUTHORITY." The selection of KPMG Peat Marwick LLP as the Company's independent auditors was also approved. The selection was approved by a vote of 7,747,852 votes "FOR," 1,490 votes "AGAINST," and 1,355 votes "ABSTAIN." Item 5. Other Information SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Certain statements in this filing, and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission, press releases, presentations by the Company or its management, and oral statements) constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, regulation, technical risks associated with the development of new products, regulatory policies in the United States and other countries, reimbursement policies of public and private health care payors, introduction and acceptance of new drug therapies, competition from existing products and from new products or technologies, and market and general economic factors. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits furnished: (3.2) By-laws of Registrant (10.1) Lunar Corporation Amended and Restated Stock Option Plan (11) Statement Re: Computation of Earnings Per Share (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended December 31, 1996. 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 thereunto duly authorized. LUNAR CORPORATION (Registrant) Date: February 14, 1997 /s/ Richard B. Mazess Richard B. Mazess President (Principal Executive Officer) Date: February 14, 1997 /s/ Robert A. Beckman Robert A. Beckman Vice President of Finance and Treasurer (Principal Financial and Accounting Officer) LUNAR CORPORATION AND SUBSIDIARIES Exhibit Index For the Quarterly Period Ended December 31, 1996 No. Description Page 3.2 By-Laws of Registrant . . . . . . . . . . . . . . . . . . . . 15 10.1 Lunar Corporation Amended and Restated Stock Option Plan. . . 35 11 Statement Regarding Computation of Earnings Per Share . . . . 39 27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . 40 EX-3.2 2 LUNAR CORPORATION BY-LAWS EXHIBIT 3.2 LUNAR CORPORATION AND SUBSIDIARIES BY-LAWS OF LUNAR CORPORATION (A Wisconsin Corporation) BY-LAWS OF LUNAR CORPORATION (A Wisconsin Corporation) Introduction - Variable References 0.01. Date of annual shareholders' meeting (See Section 2.01): 1:00 p.m. First Saturday February 1991 (HOUR) (WEEK) (DAY) (MONTH) (FIRST YEAR) 0.02. Required notice of shareholders' meeting (See Section 2.04): not less than 10 days. 0.03. Authorized number of Directors (see Section 3.01): 9. 0.04. Required notice of Directors' meeting (see Section 3.05): (a) Not less than 72 hours if by mail, and (b) Not less than 36 hours if by telegram or personal delivery. 0.05. Authorized number of Vice Presidents (see Section 4.01): 4. TABLE OF CONTENTS ARTICLE I. OFFICES 1.01 Principal and Business Offices. . . . . . . . . . . . . . . . . 1 1.02 Registered Office . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II. SHAREHOLDERS 2.01 Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . 1 2.02 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1 2.03 Place of Meeting. . . . . . . . . . . . . . . . . . . . . . . . 1 2.04 Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . 2 2.05 Closing of Transfer Books or Fixing of Record Date. . . . . . . 2 2.06 Voting Records. . . . . . . . . . . . . . . . . . . . . . . . . 2 2.07 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.08 Conduct of Meetings . . . . . . . . . . . . . . . . . . . . . . 3 2.09 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.10 Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . . 3 2.11 Voting of Shares by Certain Holders . . . . . . . . . . . . . . 3 (a) Other Corporations. . . . . . . . . . . . . . . . . . . . . . . 3 (b) Legal Representatives and Fiduciaries . . . . . . . . . . . . . 4 (c) Pledgees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (d) Treasury Stock and Subsidiaries . . . . . . . . . . . . . . . . 4 (e) Minors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (f) Incompetents and Spendthrifts . . . . . . . . . . . . . . . . . 4 (g) Joint Tenants . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.12 Waiver of Notice by Shareholders. . . . . . . . . . . . . . . . 5 2.13 Unanimous Consent Without Meeting . . . . . . . . . . . . . . . 5 ARTICLE III. BOARD OF DIRECTORS 3.01 General Powers and Number . . . . . . . . . . . . . . . . . . . 5 3.02 Tenure and Qualifications . . . . . . . . . . . . . . . . . . . 5 3.03 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . 6 3.04 Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . 6 3.05 Notice; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 6 3.06 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.07 Manner of Acting. . . . . . . . . . . . . . . . . . . . . . . . 6 3.08 Conduct of Meetings . . . . . . . . . . . . . . . . . . . . . . 7 3.09 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.10 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.11 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . 7 3.12 Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.13 Unanimous Consent Without Meeting . . . . . . . . . . . . . . . 8 3.14 Meetings by Telephone or by Other Communication Technology. . . 8 ARTICLE IV. OFFICERS 4.01 Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.02 Election and Term of Office . . . . . . . . . . . . . . . . . . 8 4.03 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.04 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.05 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . 9 4.06 President . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.07 The Executive Vice President. . . . . . . . . . . . . . . . . . 9 4.08 The Vice Presidents . . . . . . . . . . . . . . . . . . . . . . 9 4.09 The Secretary . . . . . . . . . . . . . . . . . . . . . . . . .10 4.10 The Treasurer . . . . . . . . . . . . . . . . . . . . . . . . .10 4.11 Assistant Secretaries and Assistant Treasurers. . . . . . . . .10 4.12 Other Assistants and Acting Officers. . . . . . . . . . . . . .10 4.13 Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . .11 ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS 5.01 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . .11 5.02 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 5.03 Checks, Drafts, etc.. . . . . . . . . . . . . . . . . . . . . .11 5.04 Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . .11 5.05 Voting of Securities Owned by this Corporation. . . . . . . . .12 ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01 Certificates for Shares . . . . . . . . . . . . . . . . . . . .12 6.02 Facsimile Signatures and Seal . . . . . . . . . . . . . . . . .12 6.03 Signature by Former Officers. . . . . . . . . . . . . . . . . .12 6.04 Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . .13 6.05 Restrictions on Transfer. . . . . . . . . . . . . . . . . . . .13 6.06 Lost, Destroyed or Stolen Certificates. . . . . . . . . . . . .13 6.07 Consideration for Shares. . . . . . . . . . . . . . . . . . . .13 6.08 Stock Regulations . . . . . . . . . . . . . . . . . . . . . . .13 ARTICLE VII. WAIVER OF NOTICE ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING ARTICLE IX. INDEMNIFICATION 9.01 Indemnification for Successful Defense. . . . . . . . . . . . .14 9.02 Other Indemnification . . . . . . . . . . . . . . . . . . . . .14 9.03 Written Request . . . . . . . . . . . . . . . . . . . . . . . .15 9.04 Nonduplication. . . . . . . . . . . . . . . . . . . . . . . . .15 9.05 Determination of Right to Indemnification . . . . . . . . . . .15 9.06 Advance Expenses. . . . . . . . . . . . . . . . . . . . . . . .16 9.07 Nonexclusivity. . . . . . . . . . . . . . . . . . . . . . . . .16 9.08 Court-Ordered Indemnification . . . . . . . . . . . . . . . . .17 9.09 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .18 9.10 Securities Law Claim. . . . . . . . . . . . . . . . . . . . . .18 9.11 Liberal Construction. . . . . . . . . . . . . . . . . . . . . .18 9.12 Definitions Applicable to This Article. . . . . . . . . . . . .18 ARTICLE X. SEAL ARTICLE XI. AMENDMENTS 11.01 By Shareholders . . . . . . . . . . . . . . . . . . . . . . . .20 11.02 By Directors. . . . . . . . . . . . . . . . . . . . . . . . . .20 11.03 Implied Amendments. . . . . . . . . . . . . . . . . . . . . . .20 ARTICLE I. OFFICES 1.01 Principal and Business Offices. The Corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the Corporation may require from time to time. 1.02 Registered Office. The registered office of the Corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the Corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS 2.01 Annual Meeting. The annual meeting of the shareholders shall be held at the date and hour in each year set forth in Section 0.01, or at such other time and date within thirty days before or after said date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing Directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. If the election of Directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. 2.02 Special Meeting. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chairman of the Board (if one be designated), or the President or the Board of Directors or by the person designated in the written request of the holders of not less than one-tenth of all shares of the Corporation entitled to vote at the meeting. 2.03 Place of Meeting. The Board of Directors may designate any place, either within or without the State of Wisconsin, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Wisconsin, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal business office of the Corporation in the State of Wisconsin or such other suitable place in the county of such principal office as may be designated by the person calling such meeting, but any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. 2.04 Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than the number of days set forth in Section 0.02 (unless a longer period is required by law or the articles of incorporation) nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board (if one be designated), or the President, or the Secretary, or other Officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock record books of the Corporation, with postage thereon prepaid. 2.05 Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case seventy days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the close of business on the date on which notice of the meeting is mailed or on the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. 2.06 Voting Record. The Officer or agent having charge of the stock transfer books for shares of the Corporation shall, before each meeting of shareholders, make a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such record or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting. 2.07 Quorum and Voting Requirements. Except as otherwise provided in the articles of incorporation or the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on a matter, represented in person or by proxy, shall constitute a quorum for action on that matter. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. If a quorum is present, action on a matter, other than the election of directors, is approved if the votes cast favoring the action exceed the votes cast opposing the action. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. In the preceding sentence, "plurality" means that the individuals with the largest number of votes are elected as directors up to the maximum number of directors to be chosen at the election. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2.08 Conduct of Meetings. The Chairman of the Board (if one be designated), or in the Chairman's absence, the President, or in the President's absence, the Executive Vice President (if one be designated), or in the Executive Vice President's absence, a Vice President in the order provided under Section 4.08, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the Corporation shall act as Secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding Officer may appoint any other person to act as Secretary of the meeting. 2.09 Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote in person or by proxy appointed in writing by the shareholder or by his or her duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting Secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his or her proxy shall not of itself constitute a revocation. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. 2.10 Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the articles of incorporation. 2.11 Voting of Shares by Certain Holders. (a) Other Corporations. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, or the designation of some other person by the Board of Directors or by the by-laws of such other corporation. (b) Legal Representatives and Fiduciaries. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his or her name, provided that there is filed with the Secretary before or at the time of meeting proper evidence of his or her incumbency and the number of shares held or her. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship. (c) Pledgees. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. (d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares held by another corporation if a majority of the shares entitled to vote for the election of Directors of such other corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this Corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares entitled to vote. (e) Minors. Shares held by a minor may be voted by such minor in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has received written notice or has actual knowledge that such shareholder is a minor. (f) Incompetents and Spendthrifts. Shares held by an incompetent or spendthrift may be voted by such incompetent or spendthrift in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has actual knowledge that such shareholder has been adjudicated an incompetent or spendthrift or actual knowledge of filing of judicial proceedings for appointment of a guardian. (g) Joint Tenants. Shares registered in the names of two or more individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (I) no other such individual or his or her legal representative is present and claims the right to participate in the voting of such shares or prior to the vote files with the Secretary of the Corporation a contrary written voting authorization or direction or written denial or authority of the individual present or signing the proxy proposed to be voted or (ii) all such other individuals are deceased and the Secretary of the Corporation has no actual knowledge that the survivor has been adjudicated not to be the successor to the interests of those deceased. 2.12 Waiver of Notice by Shareholders. Whenever any notice whatever is required to be given to any shareholder of the Corporation under the articles of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provision of the Wisconsin Business Corporation Law, shall contain the same information as would have been required to be included in such notice, except the time and place of meeting. 2.13 Unanimous Consent Without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE III. BOARD OF DIRECTORS 3.01 General Powers and Number. The business and affairs of the Corporation shall be managed by its Board of Directors. The number of Directors of the Corporation shall be as provided in Section 0.03, but shall not be less than six (6), nor more than twelve (12). The Board of Directors shall be divided into three (3) classes of not less than two (2) nor more than four (4) Directors each. The term of office of the first class of Directors shall expire at the first annual meeting after their initial election and until their successors are elected and qualified, the term of office of the second class shall expire at the second annual meeting after their initial election and until their successors are elected and qualified, and the term of office of the third class shall expire at the third annual meeting after the initial election and until their successors are elected and qualified. At each annual meeting after the initial classification of the Board of Directors, the class of Directors whose term expires at the time of such election shall be elected to hold office until the third succeeding annual meeting and until their successors are elected and qualified. 3.02 Tenure and Qualifications. Each Director shall hold office until the next annual meeting of shareholders in the year in which such Director's term expires and until his successor shall have been elected, or until his prior death, resignation or removal. A Director may be removed from office by affirmative vote of 80% of the outstanding shares entitled to vote for the election of such Director, taken at an annual meeting or a special meeting of shareholders called for that purpose, and any vacancy so created may be filled by the affirmative vote of 80% of such shares. A Director may resign at any time by filing his written resignation with the Secretary of the Corporation. Directors need not be residents of the State of Wisconsin or shareholders of the Corporation. 3.03 Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of shareholders, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution. 3.04 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, Secretary or any two Directors. The President or Secretary calling any special meeting of the Board of Directors may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed, the place of meeting shall be the principal business office of the Corporation in the State of Wisconsin. 3.05 Notice; Waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be given by written notice delivered personally or mailed or given by telegram to each Director at his or her business address or at such other address as such Director shall have designated in writing filed with the Secretary, in each case not less than that number of hours prior thereto as set forth in Section 0.04. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any Director of the Corporation under the articles of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the Director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.06 Quorum. Except as otherwise provided by law or by the articles of incorporation or these by-laws, a majority of the number of Directors as provided in Section 0.03 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, by a majority of the Directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.07 Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the articles of incorporation of these by-laws. 3.08 Conduct of Meetings. The Chairman of the Board (if one be designated), or in the Chairman's absence, the President, or in the President's absence, the Executive Vice President (if one be designated), or in the Executive Vice President's absence, a Vice President in the order provided under Section 4.06, and in their absence, any Director chosen by the Directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the Corporation shall act as Secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding Officer may appoint any Assistant Secretary or any Director or other person present to act as Secretary of the meeting. 3.09 Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of Directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the Directors then in office, though less than a quorum of the Board of Directors, provided that in case of a vacancy created by the removal of a Director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof by the affirmative vote of 80% of the outstanding shares entitled to vote for the election of such Directors. 3.10 Compensation. The Board of Directors, by affirmative vote of a majority of the Directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all Directors for services to the Corporation as Directors, Officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits of payments, to Directors, Officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such Directors, Officers and employees to the Corporation. 3.11 Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof of which he or she is a member, at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his or her dissent shall be entered in to the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. 3.12 Committees. The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of Directors as provided in Section 0.03, may designate one or more committees, each committee to consist of three or more Directors elected by the Board of Directors, which to the extent provided in said resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, shall have and may exercise, when the Board of Directors is not in session, the powers of the Board of Directors in the management of the business and affairs of the corporation, except action in respect to dividends to shareholders, election of the principal officers or the filling of vacancies in the Board of Directors or committees created pursuant to this section. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the President or upon request by the chairman of such meeting. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. 3.13 Unanimous Consent Without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors then in office. 3.14 Meetings by Telephone or by Other Communication Technology. Meetings of the Board of Directors or committees may be conducted by telephone or by other communication technology in accordance with Section 180.0820 of the Wisconsin Business Corporation Law. At any such meeting, all participating directors shall be informed that a meeting is taking place at which official business may be transacted. ARTICLE IV. OFFICERS 4.01 Number. The principal Officers of the Corporation shall be a President, the number of Vice Presidents as provided in Section 0.05, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other Officers and Assistant Officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary and the offices of President and Vice President. 4.02 Election and Term of Office. The Officers of the Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of Officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each Officer shall hold office until his or her successor shall have been duly elected or until his or her prior to death, resignation or removal. 4.03 Removal. Any Officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. 4.04 Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification, or otherwise shall be filled by the Board of Directors for the unexpired portion of the term. 4.05 Chairman of the Board. The Board of Directors may at their discretion elect a Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and Board of Directors, and shall carry out such other duties and have such responsibilities as may be specified by the Board of Directors. 4.06 President. The President shall be the Chief Executive Officer of the Corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. He or she shall, when present, preside at all meetings of the shareholders and of the Board of Directors. He or she shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. He or she shall have authority to sign, execute and acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary r proper to be executed in the course of the Corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he or she may authorize any Vice President or other Officer or agent of the Corporation to sign, execute and acknowledge such documents or instruments in his or her place and stead. In general, he or she shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. 4.07 The Executive Vice President. The Executive Vice President, if one be designated, shall assist the President in the discharge of supervisory, managerial and executive duties and functions. In the absence of the President or in the event of his or her death, inability or refusal to act, the Executive Vice President shall perform the duties of the President, and when so acting shall have all the powers and duties of the President. He or she shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors or the President. 4.08 The Vice Presidents. In the absence of the President and the Executive Vice President or in the event of their death, inability or refusal to act, or in the event for any reason it shall be impracticable for them to act personally, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the President, the Executive Vice President or by the Board of Directors. The execution of any instrument of the Corporation by any Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the President. 4.09 The Secretary. The Secretary shall: (a) keep the minutes of the meetings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep or arrange for the keeping of a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in general, perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him or her by the President or by the Board of Directors. 4.10 The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Section 5.04; and (c) in general, perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned to him or her by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.11 Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the President or a Vice President certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall, respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary of the Treasurer, respectively, or by the President or the Board of Directors. 4.12 Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint any person to act as assistant to any Officer, or as agent for the Corporation in his or her stead, or to perform the duties of such Officer whenever for any reason it is impracticable for such Officer to act personally and such assistant or acting Officer or other agent so appointed by the Board of Directors shall have the power to perform all the duties of the office to which he or she is so appointed to be assistant, or as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors. 4.13 Salaries. The salaries of the principal Officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no Officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Director of the Corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS: SPECIAL CORPORATE ACTS 5.01 Contracts. The Board of Directors may authorize any Officer or Officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined in specific instances. No contract or other transaction between the Corporation and one or more of its Directors of any other corporation, firm, association, or entity in which one or more of its Directors of Officers are financially interested, shall be either void or voidable because of such relationship or interest or because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because his, or her, or their votes are counted for such purpose, if (a) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested Directors; or (b) the fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or (c) the contract or transaction is fair and reasonable to the Corporation. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transactions. 5.02 Loans. No indebtedness for borrowed money shall be contracted on behalf of the Corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such Officer or Officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as may be selected by or under the authority of a resolution of the Board of Directors. 5.05 Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the President of this Corporation if he or she be present, or in the President's absence by the Executive Vice President (if one be designated), or in the Executive Vice President's absence, by any Vice President of this Corporation who may be present, and (b) whenever, in the judgment of the President, or in his absence, of the Executive Vice President (if one be designated), or in the Executive Vice President's absence, of any Vice President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the President, Executive Vice President or one of the Vice Presidents of this Corporation in the order as provided in clause (a) of this Section, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Corporation the same as such shares or other securities might be voted by this Corporation. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01 Certificates for Shares. Certificates representing shares of the Corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such Certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6.06. 6.02 Facsimile Signatures and Seals. The seal of the Corporation, if the Corporation has elected to have a seal, on any certificates for shares may be a facsimile. The signatures of the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the Corporation itself or an employee of the Corporation. 6.03 Signature by Former Officers. In case any Officer, who has signed or whose facsimile signature has been placed upon, any certificate for shares, shall have ceased to be such Officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such Officer at the date of its issue. 6.04 Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer, the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and powers of an owner. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. 6.05 Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares. 6.06 Lost, Destroyed or Stolen Certificates. Where the owner claims that his or her certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the Corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. 6.07 Consideration for Shares. The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Corporation. When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable by the Corporation. No certificate shall be issued for any share until such share is fully paid. 6.08 Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. ARTICLE VII. WAIVER OF NOTICE Whenever any notice whatever is required to be given under the provisions of the Wisconsin Business Corporation Law or under the provisions of the articles of incorporation or by-laws a waiver thereof in writing signed at any time, whether before or after the time of the meeting, by the person or persons entitled to such notice shall be deemed equivalent to the giving of such notice. Such waiver by a shareholder in respect of any matter of which notice is required under any provision of the Wisconsin Business Corporation Law shall contain the same information as would have been required to be included in such notice under any applicable provisions of said Law, except that the time and place of meeting need not be stated. ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING Any action required by the articles of incorporation or by-laws or any provision of the Wisconsin Business Corporation Law to be taken at a meeting or any other action which may be taken at a meeting may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the shareholders, Directors or members of a committee thereof entitled to vote with respect to the subject matter thereof and such consent shall have the same force and effect as a unanimous vote. ARTICLE IX. INDEMNIFICATION 9.01 Indemnification for Successful Defense. Within 20 days after receipt of a written request pursuant to Section 9.03, the Corporation shall indemnify a Director, Officer, Employee or Agent, to the extent he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the Director, Officer, Employee or Agent was a party because he or she is a Director, Officer, Employee or Agent of the Corporation. 9.02 Other Indemnification. (a) In cases not included under Section 9.01, the Corporation shall indemnify a Director, Officer, Employee or Agent against all liabilities and expenses incurred by the Director, Officer, Employee or Agent in a proceeding to which the Director, Officer, Employee or Agent was a party because he or she is a Director, Officer, Employee, or Agent of the Corporation, unless liability was incurred because the Director, Officer, Employee or Agent breached or failed to perform a duty he or she owes to the Corporation and the breach or failure to perform constitutes any of the following: (1) A willful failure to deal fairly with the Corporation or its shareholders in connection with a matter in which the Director, Officer, Employee or Agent has a material conflict of interest. (2) A violation of criminal law, unless the Director, Officer, Employee or Agent had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful. (3) A transaction from which the Director, Officer, Employee or Agent derived an improper personal profit. (4) Willful misconduct. (b) Determination of whether indemnification is required under this Section shall be made pursuant to Section 9.05. (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the Director, Officer, Employee or Agent is not required under this Section. 9.03 Written Request. A Director, Officer, Employee or Agent who seeks indemnification under Sections 9.01 or 9.02 shall make a written request to the Corporation. 9.04 Nonduplication. The Corporation shall not indemnify a Director, Officer, Employee or Agent under Sections 9.01 or 9.02 if the Director, Officer, Employee or Agent has previously received indemnification or allowance of expenses from any person, including the Corporation, in connection with the same proceeding. However, the Director, Officer, Employee or Agent has no affirmative duty to look to any other person for indemnification nor to first exhaust his remedies to seek indemnification from such other person. 9.05 Determination of Right to Indemnification. (a) Unless otherwise provided by the articles of incorporation or by written agreement between the Director, Officer, Employee or Agent, and the Corporation, the Director, Officer, Employee or Agent seeking indemnification under Section 9.02 shall select one of the following means for determining his or her right to indemnification: (1) By a majority vote of a quorum of the Board of Directors consisting of Directors not at the time parties to the same or related proceedings. If a quorum of disinterested Directors cannot be obtained, by majority vote of a committee duly appointed by the Board of Directors and consisting solely of 2 or more Directors not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee. (2) By independent legal counsel selected by a quorum of the Board of Directors or its committee in the manner prescribed in sub. (1) or, if unable to obtain such a quorum or committee, by a majority vote of the full Board of Directors, including Directors who are parties to the same or related proceedings. (3) By a panel of 3 arbitrators consisting of one arbitrator selected by those Directors entitled under sub. (2) to select independent legal counsel, one arbitrator selected by the Director or Officer seeking indemnification and one arbitrator selected by the 2 arbitrators previously selected. (4) By an affirmative vote of the majority of shares represented at a meeting of shareholders at which a quorum is present. Shares owned by, or voted under the control of, persons who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may not be voted in making the determination. (5) By a court under Section 9.08. (6) By any other method provided for in any additional right to indemnification permitted under Section 9.07. (b) In any determination under (a), the burden of proof is on the Corporation to prove by clear and convincing evidence that indemnification under Section 9.02 should not be allowed. (c) A written determination as to a Director, Officer, Employee or Agent's indemnification under Section 9.02 shall be submitted to both the Corporation and the Director, Officer, Employee or Agent within 60 days of the selection made under (a). (d) If it is determined that indemnification is required under Section 9.02, the Corporation shall pay all liabilities and expenses not prohibited by Section 9.04 within 10 days after receipt of the written determination under (c). The Corporation shall also pay all expenses incurred by the Director, Officer, Employee or Agent, in the determination process under (a). 9.06 Advance Expenses. Within 10 days after receipt of a written request by a Director, Officer, Employee or Agent who is a party to a proceeding, the Corporation shall pay or reimburse his or her reasonable expenses as incurred if the Director, Officer, Employee or Agent provides the Corporation with all of the following: (1) A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the Corporation. (2) A written undertaking, executed personally or on his or her behalf, to repay the allowance (together with reasonable interest thereon) to the extent that it is ultimately determined under Section 9.05 that indemnification under Section 9.02 is not required and that indemnification is not ordered by a court under Section 9.08(b)(2). The undertaking under this subsection shall be an unlimited general obligation of the Director, Officer, Employee or Agent, and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured. 9.07 Nonexclusivity. (a) Except as provided in (b), Sections 9.01, 9.02 and 9.06 do not preclude any additional right to indemnification or allowance of expenses that a Director, Officer, Employee or Agent may have under any of the following: (1) The articles of incorporation. (2) A written agreement between the Director, Officer, Employee or Agent, and the Corporation. (3) A resolution of the Board of Directors. (4) A resolution, after notice, adopted by a majority vote of all of the Corporation's voting shares then issued and outstanding. (b) Regardless of the existence of an additional right under (a), the Corporation shall not indemnify a Director, Officer, Employee or Agent, or permit a Director, Officer, Employee or Agent to retain any allowance of expenses, unless it is determined by or on behalf of the Corporation that the Director, Officer, Employee or Agent did not breach or fail to perform a duty he or she owes to the Corporation which constitutes conduct under Section 9.02(a)(1), (2), (3) or (4). A Director, Officer, Employee or Agent who is a party to the same or related proceeding for which indemnification or an allowance of expenses is sought may not participate in a determination under this subsection. (c) Sections 9.01 to 9.12 do not affect the Corporation's power to pay or reimburse expenses incurred by a Director, Officer, Employee or Agent in any of the following circumstances: (1) As a witness in a proceeding to which he or she is not a party. (2) As a plaintiff or petitioner in a proceeding because he or she is or was a Director, Officer, Employee or Agent of the Corporation. 9.08 Court-Ordered Indemnification. (a) Except as provided otherwise by written agreement between the Director, Officer, Employee, or Agent and the Corporation, a Director, Officer, Employee, or Agent who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. Application may be made for an initial determination by the court under Section 9.05(a)(5) or for review by the court of an adverse determination under Section 9.05(a) (1), (2), (3), (4) or (6). After receipt of an application, the court shall give any notice it considers necessary. (b) The court shall order indemnification if it determines any of the following: (1) That the Director, Officer, Employee or Agent is entitled to indemnification under Sections 9.01 or 9.02. (2) That the Director, Officer, Employee or Agent is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, regardless of whether indemnification is required under Section 9.02. (c) If the court determines under (b) that the Director, Officer, Employee or Agent is entitled to indemnification, the Corporation shall pay the Director, Officer, Employee or Agent's expenses incurred to obtain the court-ordered indemnification. 9.09 Insurance. The Corporation may purchase and maintain insurance on behalf of an individual who is a Director, Officer, Employee or Agent of the Corporation against liability asserted against or incurred by the individual in his or her capacity as a Director, Officer, Employee or Agent, regardless of whether the Corporation is required or authorized to indemnify or allow expenses to the individual against the same liability under Sections 9.01, 9.02, or 9.06. 9.10 Securities Law Claims. (a) Pursuant to the public policy of the State of Wisconsin, the Corporation shall provide indemnification, allowance of expenses and insurance for any liability incurred in connection with a proceeding involving securities regulation described under (b) to the extent required or permitted under Sections 9.01 to 9.09. (b) Sections 9.01 to 9.09 apply, to the extent applicable to any other proceeding, to any proceeding involving a federal or state statute, rule or regulation regulating the offer, sale or purchase of securities, securities brokers or dealers, or investment companies or investment advisers. 9.11 Liberal Construction. In order for the corporation to obtain and retain qualified Directors, Officers, Employees, and Agents, the foregoing provisions shall be liberally administered in order to afford maximum indemnification of Directors, Officers, Employees, or Agents, and accordingly, the indemnification above provided for shall be granted in all cases unless to do so would clearly contravene applicable law, controlling precedent or public policy. 9.12 Definitions Applicable to This Article. (a) "Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation. (b) "Corporation" means this Corporation and any domestic or foreign predecessor of this Corporation where the predecessor corporation's existence ceased upon the consummation of a merger or other transaction. (c) "Director, Officer, Employee or Agent" means any of the following: (1) A natural person who is or was a director, officer, employee or agent (including attorneys) of this Corporation, provided, however, that no attorney of the Corporation shall be considered an agent with respect to those actions taken by such attorney solely in his capacity as an independent contractor to the Corporation. (2) A natural person who, while a Director, Officer, Employee or Agent, of this Corporation, is or was serving at the Corporation's request as a Director, Officer, Employee, Agent, Partner, trustee, member of any governing or decision-making committee of another Corporation or foreign corporation, partnership, joint venture, trust or other enterprise. (3) A natural person who, while a Director, Officer, Employee or Agent of this Corporation, is or was serving an employee benefit plan because his or her duties to the Corporation also impose duties on, or otherwise involve services by, the person to the plan or to participants or beneficiaries of the plan. (4) Unless the context requires otherwise, the estate or personal representative of a Director, Officer, Employee or Agent. For purposes of this Article, it shall be conclusively presumed that any Director, Officer, Employee or Agent serving as a Director, Officer, Employee, Agent, partner, trustee, member of any governing or decision-making committee of an affiliate shall be so serving at the request of the Corporation. (d) "Expenses" include fees, costs, charges, disbursements, attorney fees and other expenses incurred in connection with a proceeding. (e) "Liability" includes the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, and reasonable expenses. (f) "Party" includes a natural person who was or is, or who is threatened to be made, a named defendant or respondent in a proceeding. (g) "Proceeding" means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the Corporation or by any other person. ARTICLE X. SEAL There shall be no corporate seal. ARTICLE XI. AMENDMENTS 11.01 By Shareholders. These by-laws may be altered, amended or repealed and new by-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the shares present or represented at an annual or special meeting of the shareholders at which a quorum is in attendance. 11.02. By Directors. These by-laws may also be altered, amended or repealed and new by-laws may be adopted by the board of Directors by affirmative vote of a majority of the number of Directors present at any meeting at which a quorum is in attendance, but no by-law adopted by the shareholders or subscribers shall be amended or repealed by the Board of Directors if the by-law so adopted so provides. 11.03 Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of Directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. EX-10.1 3 LUNAR CORPORATION AMENDED AND RESTATED STOCK OPTION PLAN EXHIBIT 10.1 LUNAR CORPORATION AMENDED AND RESTATED STOCK OPTION PLAN 1. Plan. To provide incentives to officers, key employees and consultants of Lunar Corporation (the "Company"), its subsidiaries, and any other entity (collectively "subsidiaries") designated by the Board of Directors of the Company (the "Board"), and members of the Board to contribute to the success and prosperity of the Company, based upon the ownership of the common stock, par value $.01, of the Company ("Common Stock"), the Committee hereinafter designated, may grant nonqualified stock options to officers, key employees, consultants and eligible members of the Board on the terms and subject to the conditions stated in this Plan. 2. Eligibility. Officers, key employees and consultants of the Company and its subsidiaries and members of the Board who are not employees of the Company ("non-employee directors") shall be eligible, upon selection by the Committee, to receive stock options as the Committee, in its discretion, shall determine. 3. Shares Issuable. The maximum number of shares of Common Stock to be issued after the effective date of this Plan pursuant to all grants of stock options hereunder shall be 1,000,000, subject to adjustment in accordance with Section 5. Shares of Common Stock subject to a stock option granted hereunder, which are not issued by reason of the expiration, cancellation or other termination of such stock option, shall again be available for future grants of stock options under this Plan. Shares of Common Stock to be issued may be authorized and unissued shares of Common Stock, treasury stock, or a combination thereof. To the extent required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the rules and regulations thereunder, the maximum number of shares of Common Stock with respect to which options may be granted during any calendar year to any person shall be 100,000, subject to adjustment as provided in Section 5. 4. Administration of the Plan. This Plan shall be administered by a committee designated by the Board (the "Committee") consisting of two or more members of the Board, each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an "outside director" within the meaning of Section 162(m) of the Code. The Committee shall, subject to the terms of this Plan, establish eligibility guidelines, select officers, key employees, consultants and non-employee directors for participation in this Plan and determine the number of shares of Common Stock subject to a stock option granted hereunder, the exercise price for such shares of Common Stock, the time and conditions of vesting or exercise and all other terms and conditions of the stock option, including, without limitation, the form of the option agreement. The Committee may establish rules and regulations for the administration of the Plan, interpret the Plan and impose, incidental to the grant of a stock option, conditions with respect to the grant or award of stock options or competitive employment or other activities not inconsistent with or conflicting with this Plan. All such rules, regulations and interpretations relating to this Plan adopted by the Committee shall be conclusive and binding on all parties. All grants of stock options under this Plan shall be evidenced by written agreements between the Company and the optionees, and no such grant shall be valid until so evidenced. 5. Changes in Capitalization. Appropriate adjustments shall be made by the Committee in the maximum number of shares to be issued under the Plan and the maximum number of shares which are subject to any stock option granted hereunder, and the exercise price therefor, to give effect to any stock splits, stock dividends and other relevant changes in the capitalization of the Company occurring after the effective date of this Plan (which shall not include the sale by the Company of shares of Common Stock or securities convertible into shares of Common Stock). 6. Effective Date and Term of Plan. This Plan shall be submitted to the shareholders of the Company for approval and, if approved, shall become effective on the date thereof. This Plan shall terminate ten years after it becomes effective unless terminated prior thereto by action of the Board. No further grants shall be made under this Plan after termination, but termination shall not affect the rights of any optionee under any grants made prior to termination. 7. Amendments. This Plan may be amended by the Board in any respect, except that no amendment may be made without shareholder approval if such amendment would (a) increase the maximum number of shares of Common Stock available for issuance under this Plan (other than as provided in Section 5) or (b) otherwise require shareholder approval. 8. Existing Stock Options. Stock options granted by the Company prior to the date of shareholder approval of this Plan shall continue in effect in accordance with their terms. 9. Grants of Stock Options. Options to purchase shares of Common Stock may be granted hereunder to such eligible officers, key employees, consultants, and non-employee directors as may be selected by the Committee. 10. Option Price. The option price per share of Common Stock purchasable upon exercise of an option granted hereunder shall be determined by the Committee; provided, however, that the option price per share of Common Stock purchasable upon exercise of an option granted under this Plan shall be 100% of the fair market value of a share of Common Stock on the date of grant of such option. For purposes hereof, "fair market value" shall be determined by the Committee. 11. Stock Option Period. Each stock option granted hereunder may be granted at any time on or after the effective date, and prior to the termination, of this Plan. The Committee shall determine whether such stock option shall become exercisable in cumulative or non-cumulative installments or in full at any time. An exercisable stock option may be exercised in whole or in part with respect to whole shares of Common Stock only. The period for the exercise of each stock option shall be determined by the Committee. 12. Exercise of Stock Options. (a) Upon exercise, the option price may be paid in cash, in shares of Common Stock having a fair market value on the date of exercise equal to the option price, or in a combination thereof. The Company may arrange or approve of a cashless option exercise procedure which complies with the provisions of Section 16 of the Exchange Act and the rules and regulations thereunder. (b) An option may be exercised during an optionee's continued employment with the Company or one of its subsidiaries, or service on the Board, as the case may be, and, except in the event of such optionee's death, within a period of 30 days following termination of such employment or service, but only to the extent exercisable and within the term of such option at the time of the termination of such employment or service; provided, however, that if employment of the optionee by the Company or one of its subsidiaries or service on the Board shall have terminated by reason of retirement after age 60, then the option may be exercised within a period not in excess of one year following such termination of employment or service on the Board, but only to the extent exercisable and within the term of such option at the time of such termination of employment or service. (c) No option shall be transferable except that in the event of the death of an optionee (i) during employment or service on the Board, as the case may be, (ii) within a period of one year after termination of employment or service on the Board, as the case may be, by reason of retirement after age 60 at a time when the option is otherwise exercisable or (iii) within 30 days after termination of employment or service on the Board, as the case may be, for any other reason, outstanding stock options may be exercised, but only to the extent exercisable and within the term of such option prior to the application of this Section 12, by the executor, administrator or personal representative of such deceased optionee within one year of the death of such optionee in the case of clauses (i) and (ii) or within 90 days of the death of such optionee in the case of clause (iii). 13. Acceleration of Options upon a Change in Control. The following provisions shall apply in the event of a "Change in Control": (a) In the event of a Change in Control, any stock options not previously exercisable in full shall become fully exercisable. (b) For purposes hereof, "Change in Control" means: (1) The acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more of the then outstanding shares of Common Stock (the "Outstanding Common Stock"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company, (B) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (C) any acquisition by an underwriter or underwriters as part of a bona fide public distribution of securities of the Company or (D) any acquisition by any Person which beneficially owned as of the effective date of this Plan, 30% or more of the outstanding Common Stock; and provided further that, for purposes of clause (A), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 50% or more of the outstanding Common Stock by reason of an acquisition by the Company and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control; (2) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided, however, that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed to have been a member of the Incumbent Board; and provided further, that no individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall be deemed to have been a member of the Incumbent Board; (3) Approval by the shareholders of the Company of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation, (i) more than 50% of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and more than 50% of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners, respectively, of the Outstanding Common Stock immediately prior to such reorganization, merger or consolidation and in substantially the same proportions relative to each other as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Common Stock, (ii) no Person (other than the Company, any employee plan (or related trust) sponsored or maintained by the Company or the corporation resulting from such reorganization, merger or consolidation (or any corporation controlled by the Company) and any Person which beneficially owned, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 30% or more of the Outstanding Common Stock) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of such corporation or 50% or more of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the Board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation; or (4) Approval by the shareholders of the Company of (i) a plan of complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, immediately after such sale or other disposition, (A) more than 50% of the then outstanding shares of common stock thereof and more than 50% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock immediately prior to such sale or other disposition and in substantially the same proportions relative to each other as their ownership, immediately prior to such sale or other disposition, of the Outstanding Common Stock, (B) no Person (other than the Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or such corporation (or any corporation controlled by the Company) and any Person which beneficially owned, immediately prior to such sale or other disposition, directly or indirectly, 30% or more of the Outstanding Company Common Stock) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock thereof or 50% or more of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors and (C) at least a majority of the members of the Board of directors thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition. EX-11 4 COMPUTATION OF PER-SHARE EARNINGS Exhibit 11 LUNAR CORPORATION AND SUBSIDIARIES Statement Regarding Computation of Earnings Per Share (Unaudited) Three months ended Six months ended December 31,December 31, December 31,December 31, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Net income $4,545,488 $2,243,788 $7,446,450 $3,571,530 ========== ========== ========== ========== Weighted average shares outstanding 8,555,430 8,093,978 8,534,661 8,046,246 Stock options calculated according to the treasury stock method 520,886 747,306 539,120 736,788 ---------- ---------- ---------- ---------- Weighted average number of common and common-equivalent shares outstanding 9,076,316 8,841,284 9,073,781 8,783,034 ========== ========== ========== ========== Net income per common and common-equivalent shares $0.50 $0.25 $0.82 $0.41 ===== ===== ===== ===== EX-27 5 ART.5 FDS FOR 2ND QUARTER 10-Q
5 This schedule contains summary financial information extracted from Form 10-Q for the three months ended December 31, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JUN-30-1997 DEC-31-1996 25,302 3,504 29,836 2,580 9,836 64,311 7,428 3,462 73,515 12,268 0 86 0 0 61,161 73,515 39,431 39,431 17,409 30,856 0 0 0 11,326 3,880 7,446 0 0 0 7,446 .82 .82
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