UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File Number: 0-1665
EXTECH CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 36-2476480
(State or other jurisdiction (I.R.S Employer
of incorporation or organization) Identification No.)
90 Merrick Avenue, East Meadow, New York 11554
(Address of principal executive offices) (Zip Code)
(516) 794-6300
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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. (X) Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. ( )Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 5,591,367 shares as of April 30, 1998
<PAGE>
INDEX
EXTECH CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - March 31, 1998
(Unaudited)
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1998 and 1997 (Unaudited)
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1998 and 1997 (Unaudited)
Notes to Condensed Consolidated Financial Statements Three months
ended March 31, 1998 and 1997 (Unaudited)
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31, 1998
--------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 876,208
Accounts receivable 62,104
Notes and other receivables 477,442
Inventories 6,308
Prepaid expenses and
other current assets 5,820
---------
Total current assets 1,427,882
---------
PROPERTY AND EQUIPMENT, net 114,046
-------
OTHER ASSETS:
Operating equipment, net 7,244
Deposits 5,000
Restricted certificate of deposit 40,000
----------
Total other assets 52,244
------
$1,594,172
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,182
Accrued expenses 103,215
Debentures payable 154,200
Accrued taxes payable 17,375
----------
Total current liabilities 276,972
-------
MINORITY INTEREST 560
---
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value;
authorized, 10,000,000 shares;
issued and outstanding,
5,591,367 shares 55,914
Capital in excess of par 5,264,950
Deficit (4,004,224)
----------
1,316,640
---------
$1,594,172
==========
See notes to condensed consolidated financial statements.
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EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
March 31,
1998 1997
---- ----
Revenues:
Rooms $ 262,321 $ 307,471
Other 4,437 5,138
Interest 17,951 13,260
--------- ---------
Total revenues 284,709 325,869
--------- ---------
Costs and expenses:
General, administrative
and sundry 127,230 114,475
Departmental 79,101 80,334
Depreciation and amortization 9,830 12,820
Energy costs 5,480 4,907
Lease rentals 52,563 61,731
Marketing 5,672 7,198
Property operation
and maintenance 5,912 5,841
Provision for bad debt 500 300
--------- ---------
286,288 287,606
------- -------
Net (loss) income $ (1,579) $ 38,263
========== =========
Basic (loss) income per common share:
Net income $ 0 $ .01
========== =========
Weighted average number of common
shares outstanding 5,591,367 5,591,367
========== ==========
See notes to condensed consolidated financial statements.
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EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended
March 31,
1998 1997
---- ----
Cash flows from operating activities:
Net (loss) income $ (1,579) $ 38,263
Adjustments to reconcile net (loss)
income to net cash (used in) provided
by operating activities:
Depreciation and amortization 9,830 12,820
Provision for bad debts 500 300
Decrease (increase) in assets:
Accounts receivable (24,366) (2,563)
Inventories (186) 303
Prepaid expenses and other
current assets 5,138 77,652
Notes receivable (123,864) 28,735
Other assets 1,947 1,689
Deposits -0- (5,000)
Increase (decrease) in liabilities:
Accounts payable 695 3,431
Accrued expenses ( 44,651) (68,170)
Accrued taxes payable 17,375 18,174
Other Long Term Liabilities -0- 59,883
-------- ---------
Net cash (used in) provided by
operating activities (159,161) 165,517
---------- ---------
Cash flows from investing activities:
Purchases of property and equipment ( 5,020) (2,002)
---------- ----------
Net cash (used in)
investing activities: ( 5,020) (2,002)
---------- ----------
Net (decrease) increase in cash and
cash equivalents (164,181) 163,515
Cash, beginning of period 1,040,389 1,318,121
----------- ----------
Cash, end of period $ 876,208 $1,481,636
=========== ==========
See notes to condensed consolidated financial statements.
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EXTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
1. The Condensed Consolidated Balance Sheet as of March 31, 1998, the
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1998 and 1997 and the Condensed Consolidated Statements of Cash
Flows for the three months ended March 31, 1998 and 1997 have been prepared
by the Company without audit. In the opinion of the Company, the
accompanying unaudited condensed consolidated financial statements contain
all adjustments necessary to present fairly its financial position as of
March 31, 1998, results of operations for the three months ended March 31,
1998 and 1997 and cash flows for the three months ended March 31, 1998 and
1997. This report should be read in conjunction with the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
2. The results of operations and cash flows for the three months ended March
31, 1998 are not necessarily indicative of the results to be expected for
the full year.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Results of Operations:
The Company's net loss for the three months ended March 31, 1998 was $1,579
as compared to a net income of $38,263 for the three months ended March 31,
1997. The loss for the three months ended March 31, 1998 was caused by lower
room occupancies of $45,150 and increased general and administrative expenses of
$12,755 as compared to the three months ended March 31, 1997. The foregoing was
partially offset by increased interest income of $4,691 as a result of a loan
made in November 1997 to Dealers Choice Automotive Planning Inc. ("DCAP
Insurance") which bears interest at the rate of 10% per annum (see "Prospects"
below) and lower lease rental expense of $9,168.
Liquidity and Capital Resources:
As of March 31, 1998, the Company had $876,208 in cash and cash equivalents
and a working capital surplus of $1,150,910. As of December 31, 1997, the
Company had $1,040,389 in cash and cash equivalents and a working capital
surplus of $1,150,732. The reduction in cash was due primarily to a $114,000
loan made to DCAP Insurance in March 1998.
Except as described below under "Prospects," the Company did not have any
material commitments for capital expenditures as of March 31, 1998.
Prospects:
On May 8, 1998, the Company entered into an agreement with respect to the
acquisition of all of the issued and outstanding Common Shares of DCAP Insurance
as well as interests in certain entities affiliated with DCAP Insurance. DCAP
Insurance and such affiliates are privately-held and offer, as brokers,
primarily retail automotive, motorcycle, and various other property and casualty
insurance products. DCAP Insurance has an aggregate of approximately 54
wholly-owned, joint venture and franchise locations in the New York metropolitan
area.
The agreement provides that, in consideration for the shares of DCAP
Insurance and interests in such affiliates, the Company will issue 3,300,000
shares of its Common Stock. In addition, the agreement contemplates that
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management of DCAP Insurance, together with Morton L. Certilman, President of
the Company, and Jay M. Haft, Chairman of the Board of the Company, will
purchase, in the aggregate, the 1,800,000 shares of Common Stock of the Company
beneficially owned by Sterling Foster Holding Corp. ("Sterling Foster") as well
as an aggregate of 1,402,000 other shares of Common Stock from the Company. As a
result of the foregoing, the shareholders of DCAP Insurance would own
approximately one-half of the outstanding shares of Common Stock of the Company.
The agreement provides that the purchases by the DCAP Insurance shareholders
will be made following loans of funds by the Company for such purpose (with
respect to the purchases from Sterling Foster) or by the delivery of promissory
notes as part of the purchase price (with regard to the additional shares to be
acquired from the Company).
Simultaneously with the signing of the agreement, the Company advanced
$311,000 to DCAP Insurance (increasing its aggregate advances to DCAP Insurance
to $750,000). The outstanding advances, together with interest at the rate of
10% per annum, are payable on September 30, 1998.
The consummation of the transaction is subject to the satisfaction of a
number of conditions, including certain third party and governmental approvals.
No assurances can be given that the acquisition will take place upon the terms
described above or otherwise.
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PART II. OTHER INFORMATION
- ---------------------------
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
Reference is made to Part I, Item 2 hereof for a discussion of an
agreement entered into by the Company with respect to the acquisition
of DCAP Insurance. The acquisition agreement provides that, following
the closing, the Board of Directors of the Company will consist of
four members - Messrs. Certilman and Haft, and Kevin Lang and Abraham
Weinzimer, the principals of DCAP Insurance. The agreement also
provides that, following the closing, Messrs. Certilman and Haft will
serve as the Company's Chairman and Vice Chairman of the Board,
respectively, while Messrs. Lang and Weinzimer will serve as the
Company's President and Executive Vice President, respectively.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(a) Certificate of Incorporation, as amended 1
3(b) By-laws, as amended
- --------
1 Denotes document filed as an exhibit to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1993 and incorporated herein by
reference.
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27 Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EXTECH CORPORATION
Dated: May 15, 1998 By:/s/ Morton L. Certilman
-----------------------
MORTON L. CERTILMAN
President (Chief
Operating Officer and
Principal Financial
Officer)
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EXTECH CORPORATION
BY-LAWS
ARTICLE I
OFFICES
Section 1. The principal office of the corporation in the State of Delaware
shall be in the City of Wilmington, County of New Castle.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at such time and
place as may be fixed from time to time by the board of directors of the
corporation.
Section 2. Annual meetings of stockholders shall be held for the election
of directors of the corporation. At such annual meeting, the stockholders shall
elect a board of directors by a plurality vote (as provided in Section 10 of
this Article II), and shall transact such other business as may properly be
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by, at the direction of or upon authority granted by the board of
directors, (b) otherwise brought before the meeting by, at the direction of or
upon authority granted by the board of directors, or (c) subject to Section 12
hereof, otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the corporation. To be timely, a stockholder's notice must be received at the
principal executive offices of the corporation not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that, in the event that
less than 70 days' notice of the date of the meeting is given to stockholders
and public disclosure of the meeting date, pursuant to a press release, is
either not made or is made less than 70 days prior to the meeting date, then
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the earlier of (a) the day on which
such notice of the date of the annual meeting was mailed to stockholders or (b)
the day on which any such public disclosure was made.
A stockholder's notice to the secretary must set forth as to each matter
the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting, and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the corporation which are
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beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-Laws to the
contrary, but subject to Section 12 hereof, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section 2. The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 2, and, if
he should so determine, he shall so declare to the meeting, and any such
business not properly brought before the meeting shall not be transacted.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat not less than ten nor more than sixty days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address and number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, during ordinary business hours, for a period
of at least ten days prior to the election, either at a place within the city,
town or village where the election is to be held and which place shall be
specified in the notice of the meeting, or, if not specified, at the place where
said meeting is to be held, and the list shall be produced and kept at the time
and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, shall be called by the secretary of the corporation at the
request in writing of a majority of the entire board of directors. Such request
shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting of stockholders, stating the
time, place and purposes thereof, shall be given to each stockholder entitled to
vote thereat, not less ten nor more than sixty days before the date fixed for
the meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. 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.
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Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of a statute, the by-laws or
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Except as provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period. At all elections of
directors of the corporation, each stockholder having voting power shall be
entitled to exercise the right of cumulative voting as provided in the
certificate of incorporation.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provisions of the statutes or of the certificate of incorporation, the meeting
and vote of stockholders may be dispensed with, if all the stockholders who
would have been entitled to vote upon the action if such meeting were held shall
consent in writing to such corporate action being taken unless such action has
been authorized by the board of directors, in which event such action may be
taken by the written consent of the holders of not less than a majority of the
shares of capital stock entitled to vote upon such action.
Section 12. Only persons who are nominated in accordance with the
procedures set forth in this Section 12 shall be qualified for election as
directors. Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the board of directors or by any stockholder of the corporation entitled to vote
for the election of directors at the meeting who complies with the procedures
set forth in this Section 12. In order for persons nominated to the board of
directors, other than those persons nominated by or at the direction of the
board of directors, to be qualified to serve on the board of directors, such
nomination shall be made pursuant to timely notice in writing to the secretary
of the corporation. To be timely, a stockholder's notice must be received at the
principal executive offices of the corporation not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that, in the event that
less than 70 days' notice of the date of the meeting is given to stockholders
and public disclosure of the meeting date, pursuant to a press release, is
either not made or is made less than 70 days prior to the meeting date, then
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the earlier of (a) the day on which
such notice of the date of the meeting was mailed to stockholders or (b) the day
on which such public disclosure was made.
A stockholder's notice to the secretary must set forth (a) as to each
person whom the stockholder proposes to nominate for election or re-election as
a director (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the corporation which are beneficially owned by
such person and (iv) any other information relating to such person that is
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required to be disclosed in solicitation of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended from time to time
(including, without limitation, such documentation as is required by Regulation
14A to confirm that such person is a bona fide nominee); and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
corporation's books, of such stockholder and (ii) the class and number of shares
of the corporation which are beneficially owned by such stockholder. At the
request of the board of directors, any person nominated by the board of
directors for election as a director shall furnish to the secretary of the
corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be qualified for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this Section 12. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with procedures prescribed by the By-Laws, and, if he
should so determine, he shall so declare to the meeting, and the defective
nomination shall be disregarded.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be fixed from time to time by the board of directors of the corporation.
The directors shall be elected at the annual meeting of the stockholders, except
as provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until the next annual election and until their
successors are duly elected and shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held immediately following the close of the annual meeting of stockholders at
the place of the holding of said annual meeting. No notice of any such meeting
shall be necessary to the newly elected
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directors in order legally to constitute the meeting, provided a quorum shall be
present. In the event such meeting is not held at such time and place, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board of directors may be called by the
chairman of the board or the president on one (1) day's notice to each director,
either personally, by overnight mail, by telegram, by telecopier or by
telephone. For purposes hereof, one (1) day's notice shall be satisfied by the
delivery of such notice as shall result in the director receiving notice by 5:00
p.m., New York City time, on the day immediately preceding the date of the
meeting (provided that the time of the meeting is no earlier than 8:00 a.m., New
York City time).
Section 8. At all meetings of the board, a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by all
members of the board or such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors, by resolution adopted by a majority of
the entire board, may designate from among its members an executive committee
and other committees, which committees shall serve at the pleasure of the board
of directors. The board of directors may designate one or more directors as
alternate members of any such committee, who may replace any absent member or
members of such committee. The board of directors, by resolution adopted by a
majority of the entire board, may remove a member of any such committee with or
without cause. To the extent provided in said resolution and to the extent
permitted by the laws of the State of Delaware, each such committee shall have
and may exercise the powers of the board of directors.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
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COMPENSATION OF DIRECTORS
Section 12. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors and such salary or other
compensation as directors, as the board by resolution may determine. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated herein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a chairman of the board, a vice-chairman of the board, a
president, an executive vice-president, a secretary and a treasurer. The board
of directors may also choose one or more vice-presidents, assistant secretaries
and assistant treasurers. Two or more offices may be held by the same person.
Section 2. The board of directors, at its first meeting after each annual
meeting of stockholders, shall choose a chairman of the board, a vice-chairman
of the board, a president, an executive vice-president, a secretary and a
treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen
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and qualify. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the entire board of
directors. Any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board of directors shall have general
supervision and control over the finances of the corporation, subject to the
control of the board of directors; shall preside at all meetings of the board of
directors and stockholders; shall be ex-officio a member of all standing
committees; and shall perform such other duties as from time to time may be
assigned to him by the board of directors.
VICE-CHAIRMAN OF THE BOARD
Section 7. The vice-chairman of the board shall, in the absence or
disability of the chairman of the board, perform the duties and exercise the
powers of the chairman of the board, and shall generally assist the chairman of
the board and perform such other duties as the board or the chairman of the
board shall prescribe.
PRESIDENT
Section 8. The president shall have general supervision and control over
the day-to-day business and management of the corporation, subject to the
control of the board of directors, and shall see that all orders and resolutions
of the board are carried into effect.
EXECUTIVE VICE-PRESIDENT
Section 9. The executive vice-president shall generally assist the
president in the management of the day-to-day business and affairs of the
corporation and, in the absence or disability of the president, shall perform
the duties and exercise the powers of the president, and shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
VICE-PRESIDENTS
Section 10. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the executive vice-president, perform the duties and
exercise the powers of the executive vice-president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
7
<PAGE>
SECRETARY AND ASSISTANT SECRETARIES
Section 11. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors, under
whose supervision he shall be. He shall keep in safe custody the seal of the
corporation and, when authorized by the board of directors, affix the same to
any instrument requiring it and, when so affixed, it shall be attested by his
signature or by the signature of an assistant secretary.
Section 12. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books and belongings to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of directors.
Section 14. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 15. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 16. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may form time to time
prescribe.
8
<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman of the board, the vice-chairman of the board, the president, the
executive vice-president or a vice-president and by the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is signed (a) by a transfer agent or an
assistant transfer agent or (b) by a transfer clerk acting on behalf of the
corporation and a registrar, the signature of any such chairman of the board,
vice-chairman of the board, president, executive vice-president, vice-president,
treasurer, assistant treasurer, secretary or assistant secretary may be
facsimile. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the corporation, whether because
of death, resignation or otherwise, before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be adopted by the corporation and be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
9
<PAGE>
CLOSING OF TRANSFER BOOKS
Section 5. The board of directors may close the stock transfer books of the
corporation for a period not exceeding fifty days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding fifty days
in connection with obtaining the consent of stockholders for any purpose. In
lieu of closing the stock transfer books as aforesaid, the board of directors
may fix in advance a date, which date shall not be more than sixty nor less than
ten days preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their
10
<PAGE>
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interest of the corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demand for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended from time to time,
indemnify all persons whom it may indemnify pursuant thereto. The
indemnifications authorized hereby shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under or through
any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in the official capacity of those seeking indemnification and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such
persons. The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of Section 145.
11
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed (a) at any regular
meeting of the stockholders or of the board of directors, (b) at any special
meeting of the stockholders or of the board of directors if notice of such
alteration or repeal be contained in the notice of such special meeting or (c)
by unanimous written consent of the stockholders or board of directors.
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the
statements and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 876,208
<SECURITIES> 0
<RECEIVABLES> 576,784
<ALLOWANCES> 37,238
<INVENTORY> 6,308
<CURRENT-ASSETS> 1,427,882
<PP&E> 391,642
<DEPRECIATION> 277,596
<TOTAL-ASSETS> 1,594,172
<CURRENT-LIABILITIES> 276,972
<BONDS> 0
0
0
<COMMON> 55,914
<OTHER-SE> 1,260,726
<TOTAL-LIABILITY-AND-EQUITY> 1,594,172
<SALES> 0
<TOTAL-REVENUES> 284,709
<CGS> 0
<TOTAL-COSTS> 286,288
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,579)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,579)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,579)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
