<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BUFFTON CORPORATION
---------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.05 par value
---------------------------------------------------------
(Title of Class of Securities)
119885200
---------------------------------------------------------
(CUSIP Number)
Andrew C. Culbert, Esquire
Masterman, Culbert & Tully
One Lewis Wharf
Boston, MA 02110
(617) 227-8010
---------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 11, 1997
----------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the
statement [_].
1
<PAGE>
SCHEDULE 13-D
1. Names of Reporting persons:
Alan Tremain - SS No. or IRS Identification No. of above persons
--------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) ________
(b) X *
--------
* Messrs Tremain and Mathot are filing jointly solely because each
entered into an agreement with Issuer, following joint negotiations
with the Issuer, which resulted in the acquisition of the Common
Stock which is the subject of this filing.
--------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------
4. Source of Funds
SC
--------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
______
--------------------------------------------------------------
6. Citizenship of Place of Organization
Mr. Tremain is a citizen of the United Kingdom.
--------------------------------------------------------------
7. Sole Voting Power
Number of
Shares 430,000
Owned --------------------------------------------------------------
By Each 8. Shared Voting Power
Reporting
Person -0-
With --------------------------------------------------------------
9. Sole Dispositive Power
2
<PAGE>
430,000
-----------------------------------------------------------
10. Shared Dispositive Power
-0-
-----------------------------------------------------------
11. Aggregate Amount Beneficially owned by Reporting Persons
180,000 Actual Ownership
250,000 Stock Option
--------
430,000
-----------------------------------------------------------
12. Check Box if the Aggregate Amount of (11) Excludes ______ Certain
Shares
-----------------------------------------------------------
13. Percent of Class Represented by Amount of Row (11)
5.4% (fully diluted), based on 7,713,928 Shares outstanding as of
April 11, 1997, plus the 250,000 shares represented by the Stock
Option currently exercisable by Mr. Tremain.
-----------------------------------------------------------
14. Type of Reporting Person
IN
3
<PAGE>
SCHEDULE 13-D
1. Name of Reporting persons:
Jean-Claude Mathot - SS No. or IRS Identification No. of above person.
--------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) ________
(b) X *
--------
* Messrs Tremain and Mathot are filing jointly solely because each
entered into an agreement with Issuer, following joint negotiations
with the Issuer, which resulted in the acquisition of the Common
Stock which is the subject of this filing.
--------------------------------------------------------------
3. SEC Use Only
--------------------------------------------------------------
4. Source of Funds
SC
--------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
______
--------------------------------------------------------------
6. Citizenship of Place of Organization
Mr. Mathot is a citizen of the United States of America.
--------------------------------------------------------------
7. Sole Voting Power
Number of
Shares 385,000
Owned --------------------------------------------------------------
By Each 8. Shared Voting Power
Reporting
Person -0-
With
--------------------------------------------------------------
9. Sole Dispositive Power
4
<PAGE>
385,000
--------------------------------------------------------------
10. Shared Dispositive Power
-0-
--------------------------------------------------------------
11. Aggregate Amount Beneficially owned by Reporting Persons
135,000 Actual Ownership
250,000 Stock Option
-------
385,000
--------------------------------------------------------------
12. Check Box if the Aggregate Amount of (11) Excludes ______ Certain
Shares
--------------------------------------------------------------
13. Percent of Class Represented by Amount of Row (11)
4.83% (fully diluted), based on 7,713,928 Shares outstanding as
of April 11, 1997, plus the 250,000 shares represented by the
Stock Option currently exercisable by Mr. Mathot.
--------------------------------------------------------------
14. Type of Reporting Person
IN
CUSIP No. 119885200
STATEMENT FOR SCHEDULE 13D
--------------------------
5
<PAGE>
Item 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement relates is the
common stock, $.05 par value (the "Common Stock"), of Buffton Corporation, a
Delaware corporation (the "Issuer"), whose principal executive office is located
at 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The reporting persons are Alan Tremain and Jean-Claude Mathot.
(b) Mr. Tremain's and Mr Mathot's business address is 380 South County
Road, Suite 200, Palm Beach, Florida 33480.
(c) Mr. Tremain is employed as Chairman of the Board of the Issuer. Mr
Mathot is employed as President and Chief Operating Officer of the Issuer. The
Issuer's address is 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107.
(d) Neither Mr. Tremain nor Mr. Mathot have, during the last five years,
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
6
<PAGE>
(e) Neither Mr. Tremain nor Mr. Mathot have, during the last five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction, which proceeding resulted in a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Mr. Tremain is a citizen of the United Kingdom. Mr. Mathot is a
citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On April 11, 1997, Mr. Tremain and Mr. Mathot received 180,000 shares
and 120,000 shares, respectively, of the Issuer's Common Stock from the Issuer
in connection with its acquisition of all of the outstanding stock of Hotels of
Distinction, Inc. a Florida corporation, pursuant to the terms of a certain
Stock Exchange Agreement among the Issuer and Messrs. Tremain and Mathot dated
April 11, 1997 (the "Stock Agreement"), a copy of which is attached to this
filing as Exhibit 1. In addition, pursuant to Non-Qualified Stock Option
Agreements (the " Stock Option Agreement or Agreements") entered into by the
Issuer and each of Messrs. Tremain and Mathot dated April 11, 1997, a copy of
each of which is attached to this filing as Exhibits 2A and 2B, respectively,
Messrs. Tremain and Mathot each received an option to acquire 250,000 shares of
the Issuer's Common Stock. These stock options, (the "Stock Options"), issued in
connection with the employment by Issuer of Messrs. Tremain and Mathot, are
immediately exercisable, in whole or in part, at $3.00 per
7
<PAGE>
share, $.25 higher than the market price quoted at the close on the American
Stock Exchange on the date of grant, and expire in five years.
ITEM 4. PURPOSE OF TRANSACTION.
The acquisitions of the Common Stock of the Issuer by Mr. Tremain and Mr.
Mathot are for investment purposes of each.
(a) The Stock Agreement requires each of Messrs Tremain and Mathot to
acquire an additional 100,000 shares of the Issuer's Common Stock (85,000 in
fact for Mathot as he previously had acquired 15,000) in the market within 120
days of the consummation of the sale of the assets of Current Technology, Inc.,
the Issuer's power quality products business, to Danaher Corporation previously
announced by Issuer and reported by it on Current Report on Form 8-K/A filed on
April 14, 1997, provided that Messrs. Tremain and Mathot are able to purchase
such shares at a market price of $3.00 per share or less. Although Messrs
Tremain and Mathot have no specific plan or proposal to acquire any additional
securities of the Issuer (except as required by the Stock Agreement), or dispose
of any securities of the Issuer, either of them may acquire additional
securities of the Issuer, or dispose of additional securities of the Issuer,
depending upon then existing market conditions and usual and customary
investment considerations and decisions.
8
<PAGE>
(b)-(j) Messrs. Tremain and Mathot are not considering any plans or
proposals which would relate to or result in any of the matters set forth in
subparagraph (b) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Persons beneficially own in the aggregate a total of 315,000
shares of the Common Stock of the Issuer, or approximately 4.08% of all the
issued and outstanding shares of Common Stock of the Issuer as of April 11,
1997. The Reporting Persons have immediately exercisable Stock Options,
exercisable for up to 500,000 shares of Common Stock in the aggregate for five
years at an exercise price of $3.00 per share, so that on a fully diluted basis,
the Reporting Persons own or have the right to own in the aggregate 815,000
shares of the Common Stock, or approximately 9.92% of the issued and outstanding
shares of the Common Stock of the Issuer as of April 11, 1997 plus the 500,000
shares which would have been issued on exercise of their Stock Options. As of
April 21, the market price of the Common Stock at the close on the American
Stock Exchange was $2.69.
(b) Mr. Tremain has the sole power to vote or direct the vote of 180,000 shares
of the issuer's Common Stock or, on a fully diluted basis on exercise of his
Stock Option, 430,000 shares of the Issuer's Common Stock, and the sole power to
dispose or direct the disposition of 430,000 shares of such Common Stock on a
fully diluted basis, subject, however, to the terms of the following Agreements.
The Stock Option Agreement provides that Mr. Tremain's Stock Option terminates
upon resignation from employment by Mr. Tremain or upon termination by the
Issuer of employment of Mr. Tremain for cause. Additionally, the Stock Option
Agreement does not permit transfer of the Stock Option by will or by the laws of
descent and distribution. It does permit
9
<PAGE>
exercise of the Stock Option by his estate for 180 days following his death.
Finally, certain provisions contained in an Employment Agreement dated as of
April 11, 1997 between Mr. Tremain and the Issuer (the "Tremain Employment
Agreement"), attached as Exhibit 3A and incorporated herein by reference,
requires that Mr. Tremain sell to the Issuer, in the event he should resign
prior to the first anniversary of his employment by the Issuer, the 180,000
shares of Common Stock which he acquired as consideration for his stock in
Hotels of Distinction, Inc. ("Hotels") at 50% of the then market value of the
Common Stock, any shares of Common Stock obtained by Mr. Tremain upon exercise
of any of his Stock Option and those shares of Common Stock required to be
purchased by him under the Stock Agreement, all as more specifically described
in the second paragraph of Section 7.E. of the Tremain Employment Agreement,
Exhibit 3A, which paragraph is incorporated herein by reference. Upon
termination of the Tremain Employment Agreement by the Issuer without cause, the
Tremain Employment Agreement provides that Mr. Tremain may require the Issuer to
purchase certain of the shares of Common Stock beneficially owned by him as
described more specifically in Section 7.A. of the Tremain Employment Agreement,
Exhibit 3A, which Section is incorporated herein by reference.
Mr. Mathot has the sole power to vote or direct the vote of 135,000 shares
of the Issuer's Common Stock, or 385,000 shares on a fully diluted basis upon
his exercise of his Stock Option, and the sole power to dispose or direct the
disposition of 385,000 shares of the Issuer's Common Stock on a fully diluted
basis, subject to the Stock Option Agreement, Exhibit 3B, on the same terms as
those applicable to Mr. Tremain and as further limited by an Employment
Agreement dated as of April 11, 1997 entered into by Mr. Mathot and the Issuer
(the "Mathot Employment Agreement"), attached as Exhibit 3B and incorporated
herein by reference. The same restrictions and terms with respect to his
interest in the Common Stock are contained in the same paragraph and/or Sections
in the Mathot Employment Agreement as are contained in the Tremain Employment
Agreement.
10
<PAGE>
(c) During the sixty (60) days preceding the date hereof, Messrs.. Tremain
and Mathot or their affiliate, Hotels of Distinction, Inc.,
("Hotels"), entered into the following transactions on behalf of
themselves or their affiliate as indicated:
02/21/97 Hotels sold 10,000 shares at $2.6875
02/21/97 Hotels sold 40,000 shares at $2.625
02/21/97 Mr. Tremain sold 2,000 shares at $2.875
03/31/97 Mr. Mathot purchased 20,000 shares at $2.75
04/09/97 Mr. Mathot sold 5,000 shares at $2.625
(d) None.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Reporting Persons entered into the Stock Agreement (Exhibit 1) with the
Issuer by which they acquired, in the aggregate, 300,000 shares of the Issuer's
Common Stock. The Stock Agreement obligates the Reporting Persons to acquire an
additional 200,000 shares (100,000 each) of Common Stock within 120 days
following consummation of the sale of Current Technology, Inc. referred to in
Item 4(a) above, provided that the market price does not exceed $3.00 per share
(less any shares which either of the Reporting Persons may have acquired in the
market prior to such time).
11
<PAGE>
The Stock Agreement grants the Reporting Persons certain registration
rights with respect to the shares of Common Stock which are owned or may be
owned by them. The Reporting Persons together are entitled to one demand
registration right at the Issuer's expense for no fewer than 100,000 shares and
each Reporting Person has unlimited "piggy-back" registration rights at the
Issuer's expense, in any case for any and all shares of Common Stock of the
Issuer held by either of the Reporting Persons at the time of such registration.
The specific terms and conditions of such registration rights are contained in
the Stock Agreement (Exhibit 1) at Section 8 which Section is incorporated
herein by reference.
Messrs. Tremain and Mathot have each entered into an Employment Agreement
with the Issuer (Exhibits 3A and 3B, respectively), and into a Stock Option
Agreement with the Issuer (Exhibits 2A and 2B, respectively), which contain
contractual rights and obligations relating to the Common Stock of the Issuer as
set forth in the Items above. Such Agreements are herein incorporated by
reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Exhibit 1 - Stock Exchange Agreement dated April 11, 1997.
(b) Exhibit 2A - Non-Qualified Stock Option Agreement dated April 11, 1997
(Tremain).
12
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(c) Exhibit 2B - Non-Qualified Stock Option Agreement dated April 11, 1997
(Mathot).
(d) Exhibit 3A - Employment Agreement dated April 11, 1997 (Tremain).
(e) Exhibit 3B - Employment Agreement dated April 11, 1997 (Mathot).
(c) Exhibit 4 - Joint Filing Agreement.
SIGNATURES
----------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 23, 1997
/S/ Alan Tremain
----------------------------
ALAN TREMAIN
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 23, 1997
13
<PAGE>
/S/ Jean-Claude Mathtot
-----------------------------------
JEAN-CLAUDE MATHOT
14
<PAGE>
EXHIBIT 1
STOCK EXCHANGE AGREEMENT
By and Among
BUFFTON CORPORATION,
and
ALAN TREMAIN
and
JEAN-CLAUDE MATHOT
and
HOTELS OF DISTINCTION, INC.
Dated as of April 11, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TABLE OF CONTENTS........................................................... i
TABLE OF DEFINED TERMS...................................................... iii
</TABLE>
================================================================================
TABLE OF CONTENTS
=================
<TABLE>
<CAPTION>
<S> <C> <C>
1. Exchange of Stock...................................................................... 1
-----------------
2. Closing........................................................................... 1
-------
3. Certain Definitions............................................................... 1
-------------------
4. Representations and Warranties of Buffton......................................... 3
-----------------------------------------
a. Organization................................................................. 3
------------
b. Capitalization............................................................... 3
--------------
c. Authorization and Validity of Agreement...................................... 3
---------------------------------------
d. No Approvals or Notices Required; No Conflict with Instruments to which Buffton
-------------------------------------------------------------------------------
is a Party.................................................................. 4
----------
e. SEC Filings; Financial Statements........................................... 4
---------------------------------
f. Litigation.................................................................. 4
----------
g. Voting Requirements......................................................... 5
-------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
5. Representations and Warranties of Tremain and Mathot................................ 5
----------------------------------------------------
a. Organization and Compliance with Law........................................... 5
------------------------------------
b. Capitalization................................................................. 5
--------------
c. Authorization and Validity of Agreement........................................ 5
---------------------------------------
d. No Approvals or Notices Required; No Conflict with Instruments to which Hotels
------------------------------------------------------------------------------
is a Party..................................................................... 6
----------
e. Financial Statements; Material Contracts; Liabilities.......................... 6
-----------------------------------------------------
f. Conduct of Business in the Ordinary Course; Absence of Certain Changes and
--------------------------------------------------------------------------
Events......................................................................... 6
------
g. Certain Fees................................................................... 7
------------
h. Litigation..................................................................... 7
----------
i. Employee Liabilities........................................................... 7
--------------------
j. Taxes.......................................................................... 7
-----
k. Environmental.................................................................. 7
-------------
l. No Severance Payments.......................................................... 8
---------------------
m. Insurance..................................................................... 8
---------
n. Title to Property............................................................. 8
-----------------
6. Investment and Other Representations by Tremain and Mathot......................... 8
----------------------------------------------------------
7. Tax Treatment...................................................................... 10
-------------
8. Registration Rights................................................................ 10
-------------------
a. Demand Registration Right (Registration of Buffton Common Stock on Request)
---------------------------------------------------------------------------
.............................................................................. 10
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
b. Piggyback Registration Rights................................................. 12
-----------------------------
c. Registration Procedures....................................................... 12
-----------------------
d. Seller's Information.......................................................... 13
--------------------
e. Preparation; Reasonable Investigation......................................... 13
-------------------------------------
9. Release of Claims by Tremain and Mathot............................................ 13
---------------------------------------
10. Sale of Current Technology; Buffton Name Change.................................... 13
-----------------------------------------------
11. Purchase of Buffton Common Stock by Tremain and Mathot............................. 13
------------------------------------------------------
12. Cooperation in Litigation.......................................................... 13
-------------------------
13. Expenses........................................................................... 13
--------
14. Further Assurances................................................................. 14
------------------
15. Public Announcements............................................................... 14
--------------------
16. Survival of Representations and Warranties......................................... 14
------------------------------------------
17. Amendments......................................................................... 14
----------
18. Entire Agreement................................................................... 14
----------------
19. Notices............................................................................ 14
-------
20. Counterparts....................................................................... 15
------------
21. Governing Law...................................................................... 15
-------------
22. Severability....................................................................... 15
------------
23. Headings 15
--------
24. Entire Agreement; Third Party Beneficiaries........................................ 15
-------------------------------------------
SIGNATURE PAGE.......................................................................... 16
</TABLE>
iii
<PAGE>
TABLE OF DEFINED TERMS
----------------------
<TABLE>
<CAPTION>
DEFINED TERM PAGE
- ------------ ----
<S> <C>
Agreement................................................................ 1
Buffton.................................................................. 1
Buffton Common Stock..................................................... 1
Buffton SEC Filings...................................................... 4
Buffton Subsidiaries..................................................... 3
CERCLA................................................................... 2
Closing.................................................................. 1
Disadvantageous Condition................................................ 1
Hotels................................................................... 1
Entity................................................................... 1
Environmental Laws....................................................... 2
Exchange Act............................................................. 2
Existing Stockholders Agreement.......................................... 5
Governmental Authority................................................... 2
Hotels Financial Statements.............................................. 6
Hotels Disclosure Letter................................................. 5
Hotels Stock............................................................. 1
Knowledge................................................................ 2
</TABLE>
v
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<TABLE>
<S> <C>
Laws..................................................................... 2
Material Adverse Change.................................................. 2
Material Adverse Effect.................................................. 2
Mathot................................................................... 1
Permitted Liens.......................................................... 2
Registrable Securities................................................... 2
Registration Expenses.................................................... 2
Registration Rights Holders.............................................. 10
Requesting Holder........................................................ 10
SEC...................................................................... 4
Securities Act........................................................... 3
Stock Exchange........................................................... 1
Tax or Taxes............................................................. 3
Tax Return............................................................... 3
Tremain.................................................................. 1
</TABLE>
vi
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STOCK EXCHANGE AGREEMENT
- --------------------------------------------------------------------------------
THIS STOCK EXCHANGE AGREEMENT (this "Agreement"), dated as of April 11,
---------
1997, is entered into by and among Alan Tremain ("Tremain"), Jean-Claude Mathot
-------
("Mathot"), Hotels of Distinction, Inc., a Florida corporation ("Hotels"), and
------ ------
Buffton Corporation, a Delaware corporation ("Buffton").
-------
W I T N E S S E T H :
---------------------
WHEREAS, Tremain and Mathot own 100 shares of the Common Stock, par value
$1.00 per share, of Hotels (the "Hotels Stock"), being all of the issued and
------------
outstanding capital stock of Hotels; and
WHEREAS, Buffton desires to acquire from Tremain and Mathot, all of the
Hotels Stock, solely in exchange for 300,000 shares of newly issued Common
Stock, par value $.05 per share, of Buffton (the "Buffton Common Stock");
--------------------
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
upon the terms and subject to the conditions contained herein, the parties
hereto agree as follows:
STOCK EXCHANGE AGREEMENT
<PAGE>
1. Exchange of Stock. Upon and subject to the terms and conditions of
-----------------
this Agreement, contemporaneously with the execution of this Agreement, (a)
Tremain and Mathot shall assign, transfer and deliver to Buffton all of the
Hotels Stock free and clear of any and all liens, equities, claims, prior
assignments, mortgages, charges, security interests, pledges, restrictions or
encumbrances whatsoever, and, (b) in exchange therefor, Buffton shall assign,
transfer and deliver to Tremain 180,000 shares of Buffton Common Stock and to
Mathot 120,000 shares of Buffton Common Stock, free and clear of any and all
liens, equities, claims, prior assignments, mortgages, charges, security
interests, pledges, restrictions or encumbrances whatsoever (the foregoing being
herein called the "Stock Exchange").
--------------
2. Closing. At or prior to the closing of the Stock Exchange (the
-------
"Closing"):
-------
a. Buffton has delivered to Tremain and Mathot the items and
documents listed on Schedule 2.a hereto, including the employment
------------
agreements and stock options described therein and certificates
representing the shares of Buffton Common Stock issued to Tremain and
Mathot.
b. Tremain, Mathot and Hotels have delivered to Buffton the items and
documents listed on Schedule 2.b hereto, including stock powers executed by
------------
Tremain and Mathot transferring to Buffton the certificates representing
all of the shares of issued and outstanding Hotels Stock, and Tremain and
Mathot will hold such certificates in trust for Buffton and will deliver
them to Buffton at or promptly after the Closing.
STOCK EXCHANGE AGREEMENT
PAGE 2
<PAGE>
3. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the meanings ascribed to them below:
a. A "Disadvantageous Condition" shall exist for purposes of this
-------------------------
Agreement if Buffton shall furnish to the Requesting Holders a certified
resolution of Buffton's Board of Directors stating that in the good faith
judgment of such Board of Directors it would (because of the existence of,
or in anticipation of, any acquisition or financing activity, or the
inability for reasons beyond Buffton's control to provide any required
financial statements, or any other event or condition of similar
significance to Buffton) be significantly disadvantageous to Buffton for a
registration statement to be maintained effective, or to be filed and
become effective.
b. "Entity" means a corporation, limited liability company,
------
association, partnership of any kind, organization, trust, joint venture or
other legal entity.
c. "Environmental Laws" shall mean all Laws relating to (i) the
------------------
control of any potential pollutant or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (iii) exposure to hazardous, toxic
or other substances alleged to be harmful. The term "Environmental Laws"
------------------
shall include, but not be limited to, the Clean Air Act, 42 U.S.C. (S) 7401
et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq., the Toxic
Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Safe Drinking Water
Act, 42 U.S.C. (S) 300f et seq. and
STOCK EXCHANGE AGREEMENT
PAGE 3
<PAGE>
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. (S) 9601 et seq.
------
d. "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended (the "Exchange Act").
------------
e. "Governmental Authority" means any federal, state, local or
----------------------
foreign government or governmental entity or municipality or subdivision
thereof or any authority, department, commission, panel, board, bureau,
agency, court or instrumentality.
f. "Knowledge" of any party shall mean the collective knowledge of
---------
such party's officers, directors and employees who in the normal scope of
their employment would know, or would reasonably be expected to have
knowledge of, the matters in question.
g. "Laws" means all applicable codes, statutes, laws, permits, rules,
----
regulations, ordinances, orders, policies, determinations, judgments,
writs, injunctions, decrees and common law and equitable rules, causes of
action, remedies and principles of any applicable state, commonwealth,
nation, territory, possession, province, county, parish, town, township,
village, municipality, court, judicial body, administrative agency, or
other Governmental Authority, as may be amended, modified, supplemented or
superseded from time to time.
STOCK EXCHANGE AGREEMENT
PAGE 4
<PAGE>
h. "Material Adverse Change" with respect to any party shall mean a
-----------------------
material adverse change in the business, financial condition or results of
operations of such party and its subsidiaries, taken as a whole; provided,
however, that in no event shall the term "Material Adverse Change" be
-----------------------
deemed to include (a) changes in national economic conditions or industry
conditions generally, (b) changes, or possible changes, in federal, state
or local statutes and regulations applicable to both Buffton and Hotels, or
(c) with respect to Hotels, the loss of employees, customers or suppliers
by Hotels as a direct or indirect consequence of any announcement relating
to the Stock Exchange.
i. "Material Adverse Effect" on any Entity or person shall mean any
-----------------------
material adverse effect on the business, financial condition or results of
operations of such person or Entity and its subsidiaries, taken as a whole;
j. "Permitted Liens" shall mean (A) liens for taxes not due and
---------------
payable or which are being contested in good faith, (B) mechanics',
warehousemen's and other statutory liens incurred in the ordinary course of
business, and (C) defects and irregularities in title and encumbrances
which are not substantial in character or amount and do not materially
impair the use of the property or asset in question.
k. "Registrable Securities" means the Buffton Common Stock received
----------------------
by Tremain and Mathot pursuant hereto. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when
(a) a registration statement with respect to the sale of such securities
STOCK EXCHANGE AGREEMENT
PAGE 5
<PAGE>
shall have become effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement,
(b) such securities have been transferred pursuant to Rule 144 or Rule 144A
(or any successor provisions) under the Securities Act, or (c) such
securities have ceased to be outstanding.
l. "Registration Expenses" means all expenses incident to Buffton's
---------------------
performance of or compliance with Section 8 including (without limitation)
---------
all registration, filing and American Stock Exchange fees, all fees and
expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the reasonable fees and disbursements of counsel for Buffton and
of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the Registrable
Securities being registered.
m. "Securities Act" means the Securities Act of 1933, as amended.
--------------
n. "Tax" or "Taxes" means any and all federal, state, local or
--- -----
foreign taxes of any kind or character whatever imposed under any Law or by
any Governmental Authority, including without limitation franchise, income,
sales, withholding, property and other taxes.
STOCK EXCHANGE AGREEMENT
PAGE 6
<PAGE>
o. "Tax Return" means a Tax return, declaration, report, claim for
----------
refund, information statement or other form required to be filed pursuant
to any Law or by any Governmental Authority.
4. Representations and Warranties of Buffton. Buffton represents and
-----------------------------------------
warrants to Tremain and Mathot that on the date hereof and as of the Closing
Date:
a. Organization. Buffton and each of its corporate subsidiaries (the
------------
"Buffton Subsidiaries") is a corporation duly organized, validly existing
--------------------
and in good standing under the Laws of the jurisdiction in which it is
organized and has all requisite corporate power and authority and all
necessary permits, licenses, consents, and authorizations from Governmental
Authorities to own, lease and operate all of its properties and assets and
to carry on its business as now being conducted, except where the failure
to have such Governmental Authority would not, either individually or in
the aggregate, have a Material Adverse Effect. Buffton and each Buffton
Subsidiary is in compliance with all applicable Laws, except where failure
to be in such compliance would not, either individually or in the
aggregate, have a Material Adverse Effect. Buffton has heretofore
delivered to Hotels true and complete copies of the Articles of
Incorporation and Bylaws, as in existence on the date hereof, of Buffton.
b. Capitalization. The authorized capital stock of Buffton consists
--------------
of 30,000,000 shares of Buffton Common Stock, par value $.05 per share, and
5,000,000 shares of preferred stock, par value $.01 per share. As of March
31, 1997, there were issued and outstanding
STOCK EXCHANGE AGREEMENT
PAGE 7
<PAGE>
6,672,328 shares of Buffton Common Stock and no shares of preferred stock,
and 54,550 shares of Buffton Common Stock were held as treasury shares. All
issued shares of Buffton Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive rights. All
shares of Buffton Common Stock issued pursuant to this Agreement are
validly issued, fully paid and nonassessable and do not violate the
preemptive rights of any Entity or person.
c. Authorization and Validity of Agreement. Buffton has all
---------------------------------------
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery by Buffton
of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by Buffton and
is the valid and binding obligation of Buffton, enforceable against Buffton
in accordance with its terms, except as such enforceability may be limited
or affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and
other similar Laws (including court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or providing
for the relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities or
other Laws.
STOCK EXCHANGE AGREEMENT
PAGE 8
<PAGE>
d. No Approvals or Notices Required; No Conflict with Instruments to
-----------------------------------------------------------------
which Buffton is a Party. Neither the execution and delivery of this
------------------------
Agreement nor the performance by Buffton of its obligations hereunder, nor
the consummation of the transactions contemplated hereby by Buffton, will
(i) conflict with the Articles of Incorporation or Bylaws of Buffton; (ii)
assuming satisfaction of the requirements set forth in clause (iii) below,
violate any provision of Law applicable to Buffton; (iii) except for (A)
requirements of federal and state securities Law, and (B) requirements of
notice filings in such foreign jurisdictions as may be applicable, require
any consent or approval of, or filing with or notice to, any Governmental
Authority under any provision of Law applicable to Buffton; or (iv) require
any consent, approval or notice under, or violate, breach, be in conflict
with or constitute a default (or an event that, with notice or lapse of
time or both, would constitute a default) under, or permit the termination
of any provision of, or result in the creation or imposition of any lien
upon any properties, assets or business of Buffton under, any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment or any order, judgment or decree to which Buffton is a party or
by which Buffton or any of its assets or properties is bound or encumbered,
except those that have already been given, obtained or filed and except in
any of the cases enumerated in clauses (ii) through (iv), those that, in
the aggregate, would not have a Material Adverse Effect.
e. SEC Filings; Financial Statements. Buffton and each Buffton
---------------------------------
Subsidiary have filed all reports, registration statements, proxy
statements and other filings, together with any amendments required to be
made with respect thereto, that they have been required to file with the
STOCK EXCHANGE AGREEMENT
PAGE 9
<PAGE>
Securities and Exchange Commission (the "SEC") under the Securities Act and
---
the Exchange Act, except where failure to file will not have a Material
Adverse Effect. All reports, registration statements, proxy statements and
other filings (including all notes, exhibits and schedules thereto and
documents incorporated by reference therein) filed by Buffton with the SEC
since January 1, 1996 through the date of this Agreement, together with any
amendments thereto, including those filings listed on Schedule 2.a hereof,
------------
are sometimes collectively referred to as the "Buffton SEC Filings".
-------------------
Buffton has heretofore delivered to Tremain and Mathot copies of the
Buffton SEC Filings. As of the respective dates of its filing with the
SEC, the Buffton SEC Filings complied in all material respects with the
Securities Act, the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Buffton SEC Filings was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or
schedules thereto), and fairly present, in all material respects, the
consolidated financial position of Buffton and the Buffton Subsidiaries as
of the dates thereof and the statements of income for the periods then
ended (subject, in the case of the unaudited interim financial statements,
to normal year-end audit adjustments on a basis comparable with past
periods).
STOCK EXCHANGE AGREEMENT
PAGE 10
<PAGE>
There has been no Material Adverse Change in the consolidated
financial condition of Buffton and the Buffton Subsidiaries, or any
material event which is likely to result in such a Material Adverse Change,
since the date of the last financial statements included in the Buffton SEC
Filings.
f. Litigation. Except as disclosed in the Buffton SEC Filings,
----------
there are no claims, actions, suits, investigations or proceedings pending
or, to the Knowledge of Buffton, threatened against or affecting Buffton or
any of the Buffton Subsidiaries or any of its or their respective
properties at law or in equity, or any of its or their respective employee
benefit plans or fiduciaries of such plans, or before or by any
Governmental Authority, wherever located, that individually or in the
aggregate if adversely determined would have a Material Adverse Effect, or
that involve the risk of criminal liability.
g. Voting Requirements. No vote of the holders of any class or
-------------------
series of the capital stock of Buffton is necessary to approve this
Agreement and the Stock Exchange.
5. Representations and Warranties of Hotels. Hotels represents and
----------------------------------------
warrants to Buffton that, except as set forth in the disclosure letter delivered
by Hotels to Buffton on the date hereof (the "Hotels Disclosure Letter"):
------------------------
a. Organization and Compliance with Law. Hotels is a corporation
------------------------------------
duly organized, validly existing and in good standing under the Laws of the
jurisdiction in which it is organized and
STOCK EXCHANGE AGREEMENT
PAGE 11
<PAGE>
has all requisite corporate power and authority and all necessary permits,
licenses, consents, and authorizations from Governmental Authorities to
own, lease and operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to have such
Governmental Authority would not, either individually or in the aggregate,
have a Material Adverse Effect. Hotels is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified does not and would
not, either individually or in the aggregate, have a Material Adverse
Effect. Hotels is in compliance with all applicable Laws, except where
failure to be in such compliance would not, either individually or in the
aggregate, have a Material Adverse Effect and has all necessary permits,
licenses, consents and authorizations from Governmental Authorities which
are necessary to operate its business. Hotels has heretofore delivered to
Buffton true and complete copies of the Articles of Incorporation and
Bylaws, as in existence on the date hereof, of Hotels.
b. Capitalization.
--------------
(1) The authorized capital stock of Hotels consists of 1,000
shares of Hotels Common Stock, par value $1.00 per share. As of the
date of execution of this Agreement, there were issued and outstanding
100 shares of Hotels Common Stock (60 shares held by Tremain and 40
shares held by Mathot), and no shares of Hotels Common Stock were held
as treasury shares. All issued shares of Hotels Common Stock are
validly issued, fully paid
STOCK EXCHANGE AGREEMENT
PAGE 12
<PAGE>
and nonassessable, and no holder thereof is entitled to, or has
waived, preemptive rights. Except for that certain Stockholders'
Agreement dated as of June 30, 1990, among Hotels, Tremain and Mathot
(the "Existing Stockholders Agreement"), Hotels is not a party to, and
-------------------------------
has no Knowledge of, any voting agreement, voting trust or similar
agreement or arrangement relating to any class or series of its
capital stock, or any agreement or arrangement providing for
registration rights with respect to any capital stock or other
securities of Hotels. The Existing Stockholders Agreement is being
cancelled and terminated hereby, without continuing liability of
Hotels.
(2) There are (A) no shares of capital stock or other equity
securities of Hotels outstanding (other than the 100 shares
outstanding as stated in Section 5(b)(i)) and (B) no outstanding
options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any class of
capital stock of Hotels, or contracts, understandings or arrangements
to which Hotels or any Hotels stockholder is a party, or by which it
is or may be bound, to issue additional shares of its capital stock or
options, warrants, scrip or rights to subscribe for, or securities or
rights convertible into or exchangeable for, any additional shares of
capital stock of Hotels.
(3) Hotels does not own any stock, partnership, equity or other
interest in any Entity.
STOCK EXCHANGE AGREEMENT
PAGE 13
<PAGE>
c. Authorization and Validity of Agreement. Hotels has all
---------------------------------------
requisite corporate power and authority to enter into this Agreement, to
make the representations made herein and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Hotels
and is the valid and binding obligation of Hotels, enforceable against it
in accordance with its terms, except as such enforceability may be limited
or affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and
other similar Laws (including court decisions) now or hereafter in effect
and affecting the rights and remedies of creditors generally or providing
for the relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities or
other Laws.
d. No Approvals or Notices Required; No Conflict with Instruments to
-----------------------------------------------------------------
which Hotels is a Party. Neither the execution and delivery of this
-----------------------
Agreement nor the performance by Tremain and Mathot of their obligations
hereunder, nor the consummation of the transactions contemplated hereby by
Tremain and Mathot, will (i) conflict with the Articles of Incorporation or
Bylaws of Hotels; (ii) assuming satisfaction of the requirements set forth
in clause (iii) below, violate any provision of Law applicable to Hotels,
Tremain or Mathot; (iii) except for (A) requirements of federal and state
securities Law, and (B) requirements of notice filings in such foreign
jurisdictions as may be applicable, require any consent or approval of, or
filing with or notice to, any
STOCK EXCHANGE COMMISSION
PAGE 14
<PAGE>
Governmental Authority, under any provision of Law applicable to Hotels,
Tremain or Mathot; or (iv) require any consent, approval or notice under,
or violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or result in any loss of any material benefit under, or
permit the termination of any provision of, or result in the creation or
imposition of any lien upon any properties, assets or business of Hotels
under, any note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument or other
agreement or commitment or any order, judgment or decree to which Hotels is
a party or by which Hotels or any of its assets or properties is bound or
encumbered, except those that have already been given, obtained or filed
and except in any of the cases enumerated in clauses (ii) through (iv),
those that, in the aggregate, would not have a Material Adverse Effect.
e. Financial Statements; Material Contracts; Liabilities. Hotels
-----------------------------------------------------
has no written or verbal contracts, obligations, agreements or
understandings enforceable against it or any of its assets other than those
described in the Hotels Disclosure Letter.
The December 31, 1996 financial statements and all other financial
statements of Hotels (including any related notes or schedules) provided by
or at the direction of Tremain and/or Mathot to Buffton (the "Hotels
------
Financial Statements") fairly and accurately present in all material
--------------------
respects the financial position of Hotels as of the dates thereof and the
statements of income and cash flows for the periods then ended. As of the
date hereof, Hotels has no material liabilities, absolute or
STOCK EXCHANGE AGREEMENT
PAGE 15
<PAGE>
contingent, which are not reflected in the Hotels Disclosure Letter or the
Hotels Financial Statements.
Hotels has records that accurately and validly reflect its
transactions and accounting controls sufficient to insure that such
transactions are accurately recorded and, with respect to accounting and
financial matters, recorded in conformity with generally accepted
accounting principles.
f. Conduct of Business in the Ordinary Course; Absence of Certain
--------------------------------------------------------------
Changes and Events. Since January 1, 1997, except as contemplated by this
------------------
Agreement or disclosed in the Hotels Disclosure Letter, Hotels has
conducted its business only in the ordinary and usual course, and there has
not been (i) any Material Adverse Change in Hotels or any condition, event
or development that reasonably may be expected to result in any such
Material Adverse Change; (ii) any change by Hotels in its accounting
methods, principles or practices; (iii) any revaluation by Hotels of any of
its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (iv) any entry by Hotels into any commitment
or transaction material to Hotels, taken as a whole; (v) any declaration,
setting aside or payment of any dividends or distributions in respect of
the Hotels Common Stock; (vi) any damage, destruction or loss (whether or
not covered by insurance) adversely affecting the properties or business of
Hotels, taken as a whole; (vii) any increase in excess of $5,000 in
indebtedness for borrowed money; (viii) any granting of a security interest
or lien on any property or assets of Hotels, taken as a whole, other than
Permitted Liens; or (ix) any
STOCK EXCHANGE AGREEMENT
PAGE 16
<PAGE>
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or
other employee benefit plan or any other increase in the compensation
payable or to become payable to any officers or key employees of Hotels.
g. Certain Fees. Neither Hotels nor any of its officers, directors
------------
or employees, on behalf of Hotels or its Board of Directors (or any
committee thereof), has employed any financial advisor, broker or finder or
incurred any liability for any financial advisory, brokerage or finders'
fees or commissions in connection with the transactions contemplated
hereby.
h. Litigation. Except as disclosed in the Hotels Disclosure Letter,
----------
there are no claims, actions, suits, investigations or proceedings pending
or, to the Knowledge of Hotels, threatened against or affecting Hotels or
any of its respective properties at law or in equity, or any of its
employee benefit plans or fiduciaries of such plans, or before or by any
Governmental Authority, wherever located.
i. Employee Liability. To its Knowledge, Hotels has no material
------------------
undisclosed liability to any present or former employee, any Governmental
Authority or any other person or Entity under ERISA or any other Laws
involving the rights and/or remedies of employees.
STOCK EXCHANGE AGREEMENT
PAGE 17
<PAGE>
j. Taxes. All Tax Returns of or relating to any Taxes that are
-----
required to be filed on or before the date hereof by or with respect to
Hotels, or any other corporation that is or was a member of an affiliated
group (within the meaning of Section 1504(a) of the Code) of corporations
of which Hotels was a member for any period ending on or prior to the date
hereof, have been duly and timely filed, and all Taxes, including interest
and penalties, due and payable pursuant to such Tax Returns have been paid
or adequately provided for in reserves established by Hotels. All Tax
Returns of or with respect to Hotels have been audited by the applicable
Governmental Authority, or the applicable statute of limitations has
expired, for all periods up to and including the tax year ended December
31, 19___. There is no material claim against Hotels with respect to any
Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
Hotels that has not been adequately provided for in reserves established by
Hotels. The total amounts set up as liabilities for current and deferred
Taxes in the Hotels Financial Statements have been established in
accordance with generally accepted accounting principles and are sufficient
to cover the payment of all Taxes, including any penalties or interest
thereon and whether or not assessed or disputed, that are, or are hereafter
found to be, or to have been, due with respect to the operations of Hotels
through the periods covered thereby.
k. Environmental. Except as disclosed in the Hotels Disclosure
-------------
Letter, to the Knowledge of Hotels:
(1) Hotels has not caused or permitted the release or disposal
of Hazardous Materials onto, at or near any property owned, managed,
leased or operated by Hotels.
STOCK EXCHANGE AGREEMENT
PAGE 18
<PAGE>
(2) Hotels has not caused or allowed the generation, use,
treatment, storage or disposal of Hazardous Materials in connection
with any business or other operations managed or conducted by Hotels
except in accordance with all applicable Environmental Laws.
(3) Hotels has filed all reports required by Environmental Laws.
(4) There are no facts, conditions or circumstances that could
cause Hotels to incur any loss, liability, damage, costs or expenses,
with respect to any individual event, in excess of $25,000, for (A)
violations of Environmental Laws, (B) failure to obtain an
Environmental Permit, (C) response or remedial costs under any
Environmental Law or (D) personal injury or property damage resulting
from exposure to or releases of Hazardous Materials.
(5) Hotels has not received any inquiry or notice, nor does
Hotels have any reason to suspect or believe any of them will receive
any inquiry or notice, of any actual or potential proceeding, claim,
lawsuit or loss that arises under or relates to any Environmental Law.
(6) No underground storage tanks are present on the properties
owned or operated by Hotels, and any underground storage tanks
previously removed from any
STOCK EXCHANGE AGREEMENT
PAGE 19
<PAGE>
properties owned, managed, leased or operated by Hotels were removed
in accordance with applicable Environmental Laws.
(7) The business or any other current or prior operations
conducted or managed by Hotels have been conducted in compliance with
all applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under
applicable Environmental Laws, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect.
l. No Severance Payments. Hotels will not owe a severance payment
---------------------
or similar obligation to any of its employees, officers or directors as a
result of the Stock Exchange or the transactions contemplated by this
Agreement, nor will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the Stock Exchange or
the transactions contemplated by this Agreement in the event of the
subsequent termination of their employment.
m. Insurance. The Hotels Disclosure Letter sets forth all policies
---------
of insurance currently in effect relating to the business or operations of
Hotels, and such insurance is adequate.
n. Title to Property. Except as set forth in the Hotels Disclosure
-----------------
Letter, Hotels has good and indefeasible title to all of its assets, free
and clear of all mortgages, liens, charges and encumbrances other than
Permitted Liens.
STOCK EXCHANGE AGREEMENT
PAGE 20
<PAGE>
6. Investment and Other Representations by Tremain and Mathot. Tremain
----------------------------------------------------------
and Mathot jointly and severally represent and warrant to Buffton that:
a. Each of Tremain and Mathot has such knowledge of finance,
securities and investments generally and such experience and skill in
investments based on actual participation that each is capable of
evaluating the merits and risks of an investment in Buffton and the
suitability of the Buffton Common Stock acquired hereunder as an investment
for each of Tremain and Mathot.
b. The Buffton Common Stock being acquired by Tremain and Mathot will
be acquired by each of Tremain and Mathot for his own account for
investment and not for the benefit of any other Entity or person or with a
view towards resale or distribution, and neither Tremain nor Mathot
presently has any reason to anticipate any change in either of their
circumstances or other particular occasion or event that would cause either
Tremain or Mathot to sell his Buffton Common Stock.
c. Each of Tremain and Mathot has been furnished by Buffton with all
information (or access to all information) regarding Buffton's business,
operations and financial condition, the attributes of the Buffton Stock and
the merits and risks of an investment in the Buffton Stock, that each of
Tremain and Mathot deems appropriate and necessary for each of Tremain and
Mathot's analysis of an investment in the Buffton Stock.
STOCK EXCHANGE AGREEMENT
PAGE 21
<PAGE>
d. Each of Tremain and Mathot has had an opportunity to obtain any
information from and ask questions of Buffton concerning any and all
information that each of Tremain and Mathot believed was or might be
material to an evaluation of the terms, conditions, merits and risks of an
investment in the Buffton Common Stock, and all such questions have been
satisfactorily answered, and all such information provided, to each of
Tremain and Mathot's full and complete satisfaction.
e. Each of Tremain and Mathot has adequate net worth and means of
providing for each of Tremain and Mathot's current needs and all possible
contingencies, and each of Tremain and Mathot has no need, and anticipates
no need in the foreseeable future, to sell the Buffton Common Stock.
f. Each of Tremain and Mathot is able to bear all of the economic
risks of an investment in the Buffton Stock and, consequently, without
limiting the generality of the foregoing, each of Tremain and Mathot is
able to hold each of Tremain's and Mathot's Buffton Common Stock for an
indefinite period of time and has a sufficient net worth to sustain a loss
of each of Tremain's and Mathot's entire investment in the Buffton Common
Stock in the event such loss should occur.
g. Each of Tremain and Mathot understands that (i) his investment in
the Buffton Common Stock is speculative and involves a high degree of risk
of loss by him of his entire investment and that he must bear the economic
risk of such investment for an indefinite period of time; and (ii) no
assurances, representations or warranties, direct or indirect of any nature
STOCK EXCHANGE AGREEMENT
PAGE 22
<PAGE>
whatsoever, have been made regarding (A) any economic advantages (including
Tax) that may inure to the benefit of each of Tremain and Mathot, (B) the
approximate length of time that each of Tremain and Mathot will be required
to own each of Tremain's and Mathot's Buffton Stock or (C) any
distributions of cash or property to the stockholders of Buffton.
h. Except as provided herein or in the Employment Agreements and
Nonqualified Stock Option Agreements referred to on Schedule 2.a hereto,
------------
neither Tremain nor Mathot has received any representation or warranty from
Buffton or any stockholder or any director, officer, employee or agent, as
applicable, of Buffton or any stockholder, in making their investment
decision.
i. All information made available to each of Tremain's and Mathot and
each of Tremain and Mathot's personal advisors and representatives, if any,
in connection with their investment in the Buffton Common Stock is
confidential, shall be held in strict confidence in all respects and may
not be reproduced, distributed in whole or in part, or otherwise divulged,
or used for any other purpose, without the prior written consent of
Buffton.
j. Each of Tremain and Mathot is aware that there are substantial
restrictions on the transferability of the Buffton Common Stock and that
since the Buffton Common Stock may not be, and each of Tremain and Mathot
has no right to require that it be, registered (except pursuant to the
registration rights hereafter provided) under the Securities Act or any
applicable state securities laws, the Buffton Common Stock may not be, and
each of Tremain and Mathot agrees
STOCK EXCHANGE AGREEMENT
PAGE 23
<PAGE>
that it shall not be, sold unless first registered thereunder or unless
such sale is exempt from such registration under said Act and such laws.
Each of Tremain and Mathot also acknowledges that he is responsible for
compliance with all conditions on transfer imposed by any federal or state
securities law or regulation and for any expenses incurred by Buffton for
legal or accounting services in connection with reviewing any such proposed
transfer except as provided in Section 8 hereof.
k. Each of Tremain and Mathot is an "Accredited Investor" within the
meaning of Regulation D of the General Rules and Regulations under the
Securities Act.
l. Each of Tremain and Mathot understands and agrees that a legend
may be placed on each certificate evidencing the Buffton Common Stock in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD, OR
TRANSFERRED, EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY
TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH
SALE OR TRANSFER.
STOCK EXCHANGE AGREEMENT
PAGE 24
<PAGE>
m. To their Knowledge, there are no material misstatements, errors,
misrepresentations or omissions in any Tax Return filed by Hotels.
n. Except as disclosed in the Hotels Disclosure Letter, there are no
claims, actions, suits, investigations or proceedings pending or, to the
Knowledge of Tremain or Mathot, threatened against or affecting Hotels
before or by any Governmental Authority or arbitrator, wherever located.
o. Tremain and Mathot have all requisite capacity and authority to
enter into this Agreement, to make the representations made herein and to
perform their obligations hereunder. This Agreement has been duly executed
and delivered by Tremain and Mathot and is the valid and binding obligation
of Tremain and Mathot, enforceable against them in accordance with its
terms, except as such enforceability may be limited or affected by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation,
arrangement, fraudulent transfer, fraudulent conveyance and other similar
Laws (including court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the relief
of debtors, (ii) the refusal of a particular court to grant equitable
remedies, including, without limitation, specific performance and
injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law) and
except as the enforceability of any indemnification provision contained in
this Agreement may be limited by applicable federal or state securities or
other Laws.
STOCK EXCHANGE AGREEMENT
PAGE 25
<PAGE>
7. Tax Treatment. Tremain and Mathot each acknowledge that neither
-------------
Buffton nor any of its officers, directors, employees, attorneys, accountants or
agents has made any representations or warranties of any nature whatsoever with
respect to the consequences of the Stock Exchange or any of the other
transactions contemplated hereby to either Tremain or Mathot under any Tax Law.
8. Registration Rights.
-------------------
a. Demand Registration Right (Registration of Buffton Common
---------------------------------------------------------
Stock on Request).
-----------------
(1) Request. Upon the written request of either Tremain or
-------
Mathot (the "Requesting Holder") that Buffton effect the registration
-----------------
under the Securities Act of all of such Requesting Holder's
Registrable Securities, Buffton shall promptly give written notice of
such requested registration to the other if Tremain or Mathot and to
any other person or Entity with demand or incidental registration
rights granted by Buffton (the Requesting Holder, the other of Tremain
or Mathot and all such other persons and Entities being herein called
"Registration Rights Holders") and shall use Buffton's best efforts to
---------------------------
effect, as expeditiously as possible, the registration under the
Securities Act of:
i) the Registrable Securities that Buffton has been so
requested to register by such Requesting Holder;
STOCK EXCHANGE AGREEMENT
PAGE 26
<PAGE>
ii) all other Registrable Securities that Buffton has been
requested to register in such registration by the other of
Tremain or Mathot who is not the Requesting Holder by written
request to Buffton received within 15 days after the other of
Tremain or Mathot receives notice of such pending registration;
and
iii) all other Buffton Common Stock which any other
Registration Rights Holders may have requested be included in
such pending registration.
(2) Certain Limitations. The foregoing notwithstanding, Buffton
-------------------
shall not be obligated to file or cause to become effective any
registration statement pertaining to Registrable Securities of a
Requesting Holder, (i) if less than 100,000 shares will be included in
such registration statement or (ii) at any time during the existence
of a Disadvantageous Condition. Except as provided in Section 2.7,
-----------
Tremain and Mathot together may only require one demand registration
pursuant to this Section 8.a. (i.e., if Tremain is a Requesting Holder
----------- ----
and Mathot does not elect to participate in such registration, Mathot
shall have no further right to request registration pursuant to this
Section 8.a.
-----------
(3) Registration Statement Form. Registrations under this
---------------------------
Section 8.a shall be on such appropriate registration form of the SEC
-----------
as shall be selected by Buffton.
STOCK EXCHANGE AGREEMENT
PAGE 27
<PAGE>
(4) Expenses. Buffton shall pay all Registration Expenses in
--------
connection with the one registration which becomes effective pursuant
to this Section 8.a.
-----------
(5) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 8.a shall not be deemed to have been effected
-----------
unless a registration statement relating thereto has become effective
under the Securities Act and the registration statement has remained
effective for a period of at least 90 days (or such shorter period in
which all Registrable Securities included in such registration have
actually been sold thereunder). Buffton may discontinue any effective
registration statement requested if and so long as a Disadvantageous
Condition shall exist.
(6) Underwriters. Tremain and Mathot shall have no right to
------------
require an underwritten public offering, but if any registration
effected pursuant to this Section 8.a is an underwritten public
-----------
offering, the managing underwriter or underwriters thereof and the
price, terms and provisions of the offering shall be determined by the
holders of 60% or more of the Registrable Securities and other Buffton
Common Stock included in such registration, but any such underwriter
must be reasonably acceptable to Buffton and may be selected by
Buffton if the required 60% concurrence cannot be achieved.
(7) Apportionment in Registrations Requested. If a registration
----------------------------------------
requested pursuant to this Section 8.a or pursuant to Section 8.b is
----------- -----------
an underwritten offering and the managing underwriter advises Buffton
in writing (with a copy to the Requesting Holder and
STOCK EXCHANGE AGREEMENT
PAGE 28
<PAGE>
any other stockholders who requested inclusion of Registrable
Securities or other Buffton Common Stock in the registration) that, in
its opinion, the number of Registrable Securities requested to be
included in such registration exceeds the number that can be sold in
such offering or would in any other manner adversely effect such
offering, Buffton shall include in such registration all of such
Registrable Securities that Buffton is advised can be sold in such
offering. To the extent that such number is less than the total number
of Registrable Securities and other Buffton Common Stock requested to
be included in such registration, the number of Registrable Securities
to be so included shall be reduced on a pro rata basis among all
holders, whose Buffton Common Stock are included in such registration
such that each holder whose Buffton Common Stock is so included shall
be entitled to include such number of shares of Buffton Common Stock
included in such offering, determined by multiplying the number of
shares of Buffton Common Stock requested to be included by the
Registration Rights Holders by a fraction the numerator of which is
equal to the sum of the number of shares of Buffton Common Stock that
such managing underwriter has advised may be included in such
registration, and the denominator of which is the total number of
shares of Buffton Common Stock requested to be included in such
registration by all holders. Subject to the limitations on number of
shares stated in Section 7.a.(2), in the event of any such reduction
at the request of an underwriter, either pursuant to the initial
demand registration by Tremain and/or Mathot or a subsequent one
pursuant to this sentence, Tremain and Mathot, and if there is no
other registration within the next 12 months pursuant to which the
shares unsold because of such reduction can be sold
STOCK EXCHANGE AGREEMENT
PAGE 29
<PAGE>
pursuant to Section 8.b, Tremain and Mathot shall be entitled to
exercise one additional demand right pursuant to this Section 8.a in
order to sell such unsold shares.
b. Piggyback Registration Rights. If Buffton at any time proposes to
-----------------------------
register any of its Common Stock under the Securities Act (other than a
registration on Form S-4, Form S-8 or any successor or similar form, or in
connection with a tender offer, merger or other acquisition), for sale for
its own account in an underwritten offering or for sale pursuant to a
registration for others, it shall each such time give prompt written notice
to Tremain and Mathot of its intention to do so. Upon the written request
of either Tremain or Mathot made within 15 days after the date of receipt
of such notice, Buffton shall use its best efforts to effect the
registration under the Securities Act of all Registrable Securities that
Buffton has been so requested to register by Tremain and/or Mathot, to the
extent requisite to permit the disposition of such Registrable Securities
so to be registered, provided, that if, at any time after giving written
notice of its intention to register any Buffton Common Stock and prior to
the effective date of the registration statement filed in connection with
such registration, Buffton shall determine for any reason not to register
or to delay registration of such Buffton Common Stock, Buffton may, at its
election, give written notice of such determination to Tremain and Mathot
and, thereupon, (a) in the case of a determination not to register, Buffton
shall be relieved of its obligation to register any Registrable Securities
in connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), without prejudice.
Buffton shall pay all Registration Expenses in connection with each
registration of Registrable Securities pursuant to this Section 8.b.
-----------
STOCK EXCHANGE AGREEMENT
PAGE 30
<PAGE>
c. Registration Procedures.
-----------------------
(1) Procedures. If and whenever Buffton is required to use its
----------
best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Articles II and III, Buffton
----------- ---
shall as expeditiously as possible:
i) prepare and as soon thereafter as is reasonably
practicable file with the SEC the requisite registration
statement to effect such registration and thereafter use
commercially reasonable efforts to cause such registration
statement to become effective;
ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until
such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or 90
days after the effective date of the registration statement,
whichever is shorter;
STOCK EXCHANGE AGREEMENT
PAGE 31
<PAGE>
iii) furnish without charge to each seller of Registrable
Securities covered by such registration statement such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto, such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 or Rule 430A under the
Securities Act, conforming with the requirements of the
Securities Act and such other documents as such seller may
reasonably request;
iv) use commercially reasonable efforts to register or
qualify all securities under such other securities or blue sky
laws of such jurisdictions in the United States as each seller
thereof shall reasonably request, keep such registration or
qualification in effect for so long as such registration
statement remains in effect and take any other action that may be
reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the
securities owned by such seller, except that Buffton shall not
for any such purpose be required to qualify generally to do
business as a foreign entity in any jurisdiction wherein it would
not but for the requirements of this Section 8.c be obligated to
-----------
be so qualified or to consent to general service of process in
any such jurisdiction; and
STOCK EXCHANGE AGREEMENT
PAGE 32
<PAGE>
v) cause any shares registered pursuant hereto to be listed
for trading on the American Stock Exchange.
d. Seller's Information. Buffton may require each proposed seller of
--------------------
Registrable Securities as to which any registration is being effected to
promptly furnish Buffton, as a condition precedent to including such
seller's Registrable Securities in any registration, such information
regarding such seller and the intended method of distribution of such
Registrable Securities by such seller as Buffton may from time to time
reasonably request in writing.
e. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, Buffton shall give the sellers of
Registrable Securities, their underwriters, if any, and their respective
counsel, a reasonable period of time prior to the filing thereof to review
and comment upon such registration statement, each prospectus included
therein, and each amendment thereof or supplement thereto, and shall give
each of them such opportunities to discuss the business of Buffton with its
officers and the independent public accountant who has certified its
financial statements as shall be necessary, in the opinion of each such
seller's and each such underwriter's respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
9. Release of Claims by Tremain and Mathot. Tremain and Mathot, jointly
---------------------------------------
and severally, hereby waive, release, cancel and discharge any and all
contractual, legal and other claims and rights of every kind or nature
whatsoever which they or either of them may have against Hotels as an officer,
STOCK EXCHANGE AGREEMENT
PAGE 33
<PAGE>
director, shareholder, employee or otherwise and agree to, and do hereby, cancel
and terminate the Existing Stockholders Agreement.
10. Sale of Current Technology; Buffton Name Change. Buffton has provided
-----------------------------------------------
to Tremain and Mathot a copy of the draft proxy statement filed with the SEC
describing the proposed sale of substantially all of the assets of Current
Technology, Inc. ("CTI"), a subsidiary of Buffton, to a subsidiary of Danaher
---
Corporation, pursuant to a February 17, 1997 Asset Purchase Agreement, subject
to shareholder approval and the satisfaction of the conditions stated in such
Asset Purchase Agreement (the "CTI Sale"). Buffton agrees that it will use
--------
commercially reasonable best efforts to consummate the CTI Sale, and, after such
consummation, change the name of Buffton to BFX Hospitality Group, Inc. In the
event Buffton is successful in consummating the CTI sale, it agrees to redeploy
the proceeds from the CTI Sale together with other cash and assets of Buffton
and the Buffton Subsidiaries into the hospitality industry, in implementation of
a business plan approved by the Buffton board of directors.
11. Purchase of Buffton Common Stock by Tremain and Mathot. Tremain and
------------------------------------------------------
Mathot severally agree that each of them will, within 120 days after the closing
of the CTI Sale, purchase 100,000 shares of Buffton Common Stock in the open
market at market prices so long as they are able to make such purchases at a
price of $3.00 per share or less.
12. Cooperation in Litigation. In the event that a claim is asserted
-------------------------
against Buffton, or any of its direct or indirect subsidiaries, relating to,
based in whole or in part on events or conditions occurring
STOCK EXCHANGE AGREEMENT
PAGE 34
<PAGE>
or existing in connection with, or arising out of, Hotels or its business or
operations, each of Tremain and Mathot agrees to cooperate with Buffton in the
defense of any such claim at Buffton's expense.
13. Expenses. Each party hereto shall bear the legal, accounting and
--------
other expenses incurred by such party in connection with the Stock Exchange and
this Agreement, and the other agreements and transactions contemplated hereby.
14. Preparation of Pre-Closing Tax Returns. With respect to each Tax
--------------------------------------
Return covering a taxable period ending on or before the date hereof that is
required to be filed after the date hereof for, by or with respect to Hotels,
Tremain and Mathot shall cause such Tax Return to be prepared, shall cause to be
included in such Tax Return allitems of income, gain, loss, deduction and credit
or other items required to be included therein, and shall deliver the original
of each such Tax Return to Buffton at least 30 days prior to the due date
(including extensions) of such Tax Return. If the amount of Tax shown due on
any such Tax Return exceeds the amount reflected as a current liability for such
Tax on the Hotels Financial Statements, Tremain and Mathot shall pay to Buffton
the amount of such excess not less than five (5) days prior to the due date of
such Tax Return. Buffton shall grant to Tremain and Mathot (or their designees)
access at all reasonable times to all the information, books and records
relating to Hotels within the possession of Hotels or Buffton to the extent
reasonably necessary to permit Tremain and Mathot (or their designees) to
prepare the Tax Return described in this Section 13.
15. Further Assurances. From time to time after the closing, upon request
-------------------
of Buffton and without further consideration, Tremain and Mathot agree to
execute, acknowledge and deliver all such
STOCK EXCHANGE AGREEMENT
PAGE 35
<PAGE>
other instruments of sale, assignment, conveyance and transfer and shall take
all such other commercially reasonable action required to effectively transfer
to and vest in Buffton, and to put Buffton in possession of, all of the Hotels
Stock and any assets of Hotels.
16. Public Announcements. Except for public statements or press releases
---------------------
which the management or board of directors of Buffton in good faith believe to
be required by law, Buffton, Tremain and Mathot will not make, or permit any
agent or affiliate to make, any public statement or press release, with respect
to the Stock Exchange or this Agreement without the prior written consent of the
other parties hereto, which shall not be unreasonably withheld, conditioned or
delayed.
17. Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of the parties hereto made herein shall not be affected by any
information furnished to, or any investigation conducted by, any of them or its
representatives in connection with the subject matter of this Agreement, and
such representations and warranties shall survive the Closing.
18. Amendments. This Agreement may be amended only by a writing executed
----------
by all of the parties hereto.
19. Entire Agreement. This Agreement and the other agreements expressly
----------------
provided for herein set forth the entire understanding of the parties hereto and
supersede all prior contracts, agreements, arrangements, communications,
discussions, representations and warranties, whether oral or written,
STOCK EXCHANGE AGREEMENT
PAGE 36
<PAGE>
between the parties. Hotels is executing this Agreement solely for the purpose
of making the representations and warranties in Section 5.
20. Notices. Any notice, request or other communication required or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given (a) upon receipt if personally delivered or by overnight courier, (b) on
the date sent if made by facsimile transmission to the party to whom such notice
or communication is directed to the facsimile number of such person stated below
(or as otherwise provided to or obtained by the sending party) and if followed
by a telephone call to such person at the same time to the telephone number
stated below (or otherwise provided to or obtained by the sending party)
advising such person (or leaving a voice mail for such person) that the
facsimile transmission has been sent and a general statement about the contents
thereof, or (c) on the fifth business day after being sent by registered or
certified mail, return receipt requested, postage prepaid, to the parties at its
respective addresses set forth below.
if to Hotels: Hotel of Distinction, Inc.
380 South County Road
Palm Beach, Florida 33480
Attention: Alan Tremain
Telephone: (407) 835-9500
Facsimile: (407) 835-9558
STOCK EXCHANGE AGREEMENT
PAGE 37
<PAGE>
with a copy to: Jean-Claude Mathot at the same address
and a copy to: Andrew Culbert
Masterman, Culbert & Tully LLP
One Lewis Wharf
Boston, Massachusetts 02110
Telephone: (617) 227-8010
Facsimile: (617) 227-2630
if to Buffton: Buffton Corporation
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107-1220
Attention: Robert H. McLean
Telephone: (817) 332-2461
Facsimile: (817) 877-0420
with a copy to: Fulbright & Jaworski L.L.P.
2200 Ross Avenue, Suite 2800
Dallas, Texas 75201
Attention: Linton E. Barbee
Telephone: (214) 855-8119
STOCK EXCHANGE AGREEMENT
PAGE 38
<PAGE>
Facsimile: (214) 855-8200
Any party by written notice to the other may change the address or the persons
to whom notices or copies thereof shall be directed.
21. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
22. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the substantive Laws of the State of Texas without giving effect
to the principles of conflicts of law thereof.
23. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
24. Headings. The Section heading herein are for convenience only and
--------
shall not affect the construction hereof.
STOCK EXCHANGE AGREEMENT
PAGE 39
<PAGE>
25. Entire Agreement; Third Party Beneficiaries. This Agreement
-------------------------------------------
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof and neither this nor any documents
delivered in connection with this Agreement confers upon any Governmental
Authority, Entity or person not a party hereto any rights or remedies hereunder.
26. Election to Board of Directors. The Board of Directors of Buffton
------------------------------
have approved the election of Tremain and Mathot as members of such Board of
Directors promptly after the Stock Exchange has been completed.
STOCK EXCHANGE AGREEMENT
PAGE 40
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
BUFFTON CORPORATION
By /S/ Robert H. McLean
----------------------------------
Robert H. McLean
Chairman of the Board, President
and Chief Executive Officer
/S/ Alan Tremain /S/ Jean-Claude Mathot
- --------------------------------------- --------------------------------------
ALAN TREMAIN JEAN-CLAUDE MATHOT
HOTELS OF DISTINCTION, INC.
By /S/Alan Tremain
-------------------------------------
Alan Tremain, Chief Executive Officer
<PAGE>
SCHEDULE 2.a
ITEMS AND DOCUMENTS DELIVERED BY BUFFTON AT OR BEFORE CLOSING
-------------------------------------------------------------
Form of Employment Agreement to be entered into between Buffton and Tremain.
Form of Employment Agreement to be entered into between Buffton and Mathot.
Form of Non Qualified Stock Option Agreement to be entered into between Buffton
and Tremain.
Form of Non Qualified Stock Option Agreement to be entered into between Buffton
and Mathot.
Buffton Annual Reports for 1994, 1995 and 1996.
Buffton form 10-Q for first quarter ending December 31, 1996.
Buffton proxy statement for 1996.
Buffton draft proxy statement filed with the SEC describing the proposed sale of
substantially all of the assets of Current Technology, Inc., a subsidiary of
Buffton, to a subsidiary of Danaher Corporation, pursuant to a February 17, 1997
Asset Purchase Agreement.
Buffton press releases for the period October 1, 1995 through April 7, 1997.
Projected balance sheet for Buffton at September 30, 1997, assuming the sale of
Current Technology has been completed.
Business Plan Summary as prepared by Tremain and reviewed by Robert McLean.
Stock Certificate issued by Buffton to Tremain for 180,000 shares of Buffton
Common Stock.
Stock Certificate issued by Buffton to Mathot for 120,000 shares of Buffton
Common Stock.
<PAGE>
SCHEDULE 2.b
ITEMS AND DOCUMENTS DELIVERED BY TREMAIN AND MATHOT AT OR BEFORE CLOSING
------------------------------------------------------------------------
<PAGE>
EXHIBIT 2A
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
This Option Agreement (the "Agreement") made and effective as of the 11th
day of April, 1997, between BUFFTON CORPORATION, a Delaware corporation (the
"Corporation"), and ALAN TREMAIN, an employee of the Corporation or one or more
of its Subsidiaries (the "Employee").
WHEREAS, pursuant to Employee becoming employed by Corporation as the
Corporation's Chairman of the Board pursuant to that certain Employment
Agreement between Corporation and Employee of even date herewith (the
"Employment Agreement"), the Corporation desires to afford Employee the
opportunity to purchase shares of Corporation's $.05 par value common stock as
an incentive for future performance to the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Employee the
----------------
right and option (the "Option") to purchase an aggregate of 250,000 shares of
Corporation's $.05 par value common stock (the "Shares"), such Shares being
subject to adjustment as provided in paragraph 7 hereof, and on the terms and
conditions herein set forth.
2. Purchase Price. The purchase price of the Shares covered by the
---------------
Option shall be $3.00 per Share.
<PAGE>
3. Term of Option. The term of the Option shall be for a period of five
---------------
(5) years from the date hereof subject to earlier termination pursuant to
paragraph 5 hereof.
4. Exercise of Option. From and after the date hereof, the Option shall
-------------------
be fully exercisable, in whole or in part, for the remaining term of the Option.
The Option granted herein shall be exercisable only by the Employee, the
Administrator or Executor of the Estate of the Employee, the heirs of the
Employee taking title to the Option pursuant to the Employee's Will or the laws
of descent and distribution, a court appointed guardian of the Employee, or by
power of attorney duly appointed by the Employee.
5. Termination of Employment. In the event Employee's employment with
-------------------------
the Corporation (which term includes subsidiaries of the Corporation) is
terminated "for cause', as hereinafter defined, by the Corporation or terminated
for any reason by Employee (except if terminated by Employee for failure of the
sale of substantially all of the assets of Corporation's wholly owned subsidiary
Current Technology, Inc., to close prior to August 31, 1997) then the Option
granted under this Agreement, or any unexercised portion thereof, shall
terminate and be unexercisable as of the effective date of such termination of
employment if by Corporation or the date notice of termination is given, if by
Employee. For purposes of this provision, the term "for cause" shall mean (a)
the failure or refusal to perform diligently the duties of Employee's employment
after written notice of such failure or refusal and a reasonable opportunity to
remedy such has been provided, (b) the conviction of an offense involving moral
turpitude which, in the judgment of the Board of Directors of EMPLOYER might
bring discredit on EMPLOYER. In addition, if Employee violates any noncompete,
nondisclosure, or nonsolicitation of Corporation's employees
<PAGE>
covenants in any written employment agreement with Corporation, or any
subsidiary or affiliate of Corporation, then this Option shall terminate upon
date of such breach. The determination of whether or not Employee has breached
any noncompete, nondisclosure, or nonsolicitation of Corporation's employees
covenants and the date of such breach shall be made by Corporation and such
determination shall be binding upon Employee unless, within thirty (30) days
after the Corporation notifies Employee of such determination, Employee invokes
the mandatory arbitration provisions in Section 12 hereof, in which case, the
decision of the arbitrator shall control. Employee shall not exercise any
options hereunder between the date Employee is notified of termination and the
date, if any, on which Employee invokes the arbitration provisions. If Employee
invokes the arbitration provisions, and if Employee exercises any options
hereunder after such invocation, Employee will deliver the stock (or proceeds
from the sale of the stock) to the arbitrator to be held in escrow pending a
final decision by the arbitrator, with the stock and proceeds to be delivered to
Corporation by the arbitrator if the arbitrator makes the determination that the
termination by Corporation was proper.
6. Transferability of Option. This Option may not be transferred by
--------------------------
Employee by Will, by the laws of descent and distribution, or otherwise. Upon
the death of Employee, Employee's estate shall have 180 days from the date of
Employee's death to exercise the Option. If Employee's estate fails to exercise
the Option within this time period, the Option shall terminate.
7. Anti-Dilution Provisions.
-------------------------
(a) In case at any time or from time to time after the date of this
Option, the holders of common stock of the Corporation shall have received or
shall have become legally entitled to receive,
(i) other or additional stock or other securities or property (other
than cash) by way of a dividend or other distribution, or
(ii) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar corporate rearrangements,
then and in each such case the holder of this Option, upon the exercise hereof
as provided
<PAGE>
herein, shall be entitled to receive, in lieu of (or in addition to, as the case
may be) the Shares theretofore receivable upon the exercise of this Option, the
amount of stock and other securities and property (including cash in the case
referred to in clause (ii) above) which such holder would have held on the date
of such exercise if on the date such dividend, distribution, corporate
rearrangement or such other event as described in clause (ii) above such holder
had been the holder of record of the number of Shares receivable upon the
exercise of this Option and had thereafter, during the period from the date
thereof to and including the date of such exercise, obtained such Shares and all
other or additional (or less) stock and other securities and property (including
cash in the case referred to in clause (ii) above) receivable by him as
aforesaid during such period, giving effect to all adjustments called for during
such period by the following subparagraph.
(b) In case of any reorganization of the Corporation (or any other
corporation the stock or other securities of which are at the time receivable on
the exercise of this Option) after the date hereof, or in case, after such date,
the Corporation (or any such other corporation) shall consolidate, amalgamate or
merge with or into or enter into a mandatory share exchange with another entity,
then and in each such case the holder of this Option, upon the exercise hereof
as provided herein at any time after the consummation of such reorganization,
consolidation, amalgamation, merger, mandatory share exchange, or conveyance,
shall be entitled to receive, and any third parties participating in such
transaction shall acknowledge in writing that the holder is entitled to receive,
in lieu of the Shares, stock or other securities and property receivable upon
the exercise of this Option prior to such consummation, the stock or other
securities or property to which such holder would have been entitled upon such
consummation if such holder had exercised this Option immediately prior thereto,
all subject to further adjustment as provided in the preceding subparagraph (a).
<PAGE>
(c) So long as this Option shall be outstanding and unexercised, if the
Corporation shall enter into any transactions referred to in this Section 7,
which effects a change in the securities, other property or cash distribution to
which the holder is entitled upon exercise of this Option, then, in any such
case, the Corporation shall cause to be sent to the holder a brief statement of
the event giving rise to such effect, and a description thereof, together with
advance notice of the record date relevant to any such transaction.
8. Rights as a Shareholder. The Employee or Employee's permitted
------------------------
transferee shall have no rights as a stockholder with respect to any Shares
covered by the Option until the date of issuance of a stock certificate for such
Shares. No adjustments, other than as provided in paragraph 6 above, shall be
made for dividends (ordinary or extraordinary, whether in cash, securities, or
other property) or distributions for which the record date is prior to the date
such stock certificate is issued.
9. Conditions to Issue. The Option granted herein is subject to the
--------------------
requirement that, if at any time the listing, registration, or qualification of
Shares issuable upon exercise of the Option is required by any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary as a condition of, or in connection
with the issuance of any Shares, no Shares shall be issued in whole or in part,
unless such listing, registration, qualification, consent or approval has been
obtained. The Corporation agrees, at its own expense, to take all action
necessary to obtain such listing, registration, qualification, consent or
approval so the Corporation can perform its contractual obligation to issue the
Shares covered by this Option.
10. Method of Exercising Option. Subject to the terms and conditions of
----------------------------
this Agreement, the Option may be exercised by written notice delivered in
person or by first class mail to the Secretary of the Corporation at its offices
which are presently located at 226 Bailey Avenue, Suite 101, Fort Worth, Texas
76107. Such notice shall state the election to exercise the Option and the
number of Shares in respect of
<PAGE>
which it is being exercised, and shall be signed by the person or persons so
exercising the Option. Such notice shall be accompanied by payment of the full
purchase price of such Shares, in which event the Corporation shall deliver a
certificate or certificates representing such Shares as soon as practicable
after the notice shall be received.
Payment of such purchase price shall, in either case, be made in cash or
cashier's, certified or personal check payable to the order of the Corporation.
The certificate or certificates for the Shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option; or if the Option shall be exercised by the Employee, and
if the Employee shall so request in the notice exercising the Option, such
Option shall be registered in the name of the Employee and another person, as
joint tenants with right of survivorship, and shall be delivered as provided
above to or upon the written order of the person or persons other than the
Employee, such notice shall be accompanied by appropriate proof satisfactory to
the Corporation of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable. Upon the exercise of less than
all of the Options hereunder, the Corporation shall promptly execute and deliver
a new Option Agreement in the form hereof covering the balance of unexercised
Options. The Corporation shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of such new Option Agreements.
11. Non-Qualified Options. The Options granted hereunder are not part of
----------------------
or authorized pursuant to any plan or arrangement which is qualified or created
incident to any provision of the Internal Revenue Code of 1986, as amended.
12. Arbitration. In the event of a dispute arising out of or relating to
------------
this Agreement, or relating to any claim or cause of action which may arise or
be asserted under any federal, state or local statutory,
<PAGE>
regulatory or common law, including, without limitation, claims of
discrimination, breach of contract or tort, such as intentional infliction of
emotional distress, then, upon notice by any party to the other party (an
"Arbitration Notice") and to American Arbitration Association ("AAA"), 140 West
51st Street, New York, New York 10020-1203 [telephone (212) 484-3266; fax (212)
307-4387], the controversy or dispute shall be submitted to a sole arbitrator
who is independent and impartial, for binding arbitration in Fort Worth, Texas,
in accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties
agree that they will faithfully observe this agreement and the Rules and that
they will abide by and perform any award rendered by the arbitrator. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section
1-16 (or by the same principles enunciated by such Act in the event it may not
be technically applicable). The award or judgment of the arbitrator shall be
final and binding on all parties and enforced by any court having jurisdiction.
If any party becomes the subject of a bankruptcy, receivership or other similar
proceeding under the laws of the United States of America, any state or
commonwealth or any other nation or political subdivision thereof, then, to the
extent permitted or not prohibited by applicable law, any factual or substantive
legal issues arising in or during the pendency of any such proceeding shall be
subject to all of the foregoing mandatory arbitration provisions and shall be
resolved in accordance therewith. The agreements contained herein have been
given for valuable consideration, are coupled with an interest and are not
intended to be executory contracts. The fees and expenses of the arbitrator will
be shared equitably and ratably (as determined by the arbitrator) by all parties
engaged in the dispute or controversy.
Promptly after the Arbitration Notice is given, AAA will select five
possible arbitrators, to whom AAA will give the identities of the parties and
the general nature of the controversy. If any of those arbitrators disqualifies
himself or declines to serve, AAA shall continue to designate potential
arbitrators
<PAGE>
until the parties have five to select from. After the panel of five potential
arbitrators has been completed, a two page summary of each of the potential
arbitrators will be given to each of the parties, and the parties will have a
period of 10 days after receiving the summaries in which to attempt to agree
upon the arbitrator to conduct the arbitration. If the parties are unable to
agree upon an arbitrator, then one of the parties shall notify AAA, and AAA
shall select the arbitrator from one of the five. The decision of AAA with
respect to the selection of the arbitrator will be final and binding.
Within 10 days after the selection of the arbitrator, the parties and their
council will appear before the arbitrator at a price an time designated by the
arbitrator for the purpose of each party making a one hour or less presentation
and summary of the case. Thereafter, the arbitrator will set dates and times
for additional hearings until the proceeding is concluded. The desire and goal
of the parties is, and the arbitrator will be advised that his goal should be,
to conduct and conclude the arbitration proceeding as expeditiously as possible.
If any party or his council fails to appear at any hearing, the arbitrator shall
be entitled to reach a decision based on the evidence which has been presented
to him by the parties who did appear.
13. Subsidiary. As used herein, the term "Subsidiary" shall mean any
-----------
present or future corporation in which the Corporation shall own 50% or more of
its accrued voting stock.
14. Severability. Each provision of this Agreement is intended to be
------------
severable from the others so that if any provision or term hereof is illegal or
invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall
not affect the validity of the remaining provisions and terms hereof.
15. Binding Effect. This Agreement shall be binding upon and inure to the
---------------
benefit of the respective heirs, executors, administrators and successors of the
parties hereto.
<PAGE>
16. Governing Law. This Agreement shall be construed and interpreted in
--------------
accordance with the laws of the State of Delaware.
17. Headings. Headings are for the convenience of the parties and are not
---------
deemed to be part of this Agreement.
EXECUTED as of the day and year first written above.
EMPLOYER: BUFFTON CORPORATION:
By: /S/Robert McLean
---------------------------------------------
Chairman of the Board and
President
EMPLOYEE:
/S/Alan Tremain
--------------------------------------------
ALAN TREMAIN, Individually
<PAGE>
EXHIBIT 2B
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
This Option Agreement (the "Agreement") made and effective as of the 11th
day of April, 1997, between BUFFTON CORPORATION, a Delaware corporation (the
"Corporation"), and JEAN-CLAUDE MATHOT, an employee of the Corporation or one
or more of its Subsidiaries (the "Employee").
WHEREAS, pursuant to Employee becoming employed by Corporation as the
Corporation's President and Chief Operating Officer pursuant to that certain
Employment Agreement between Corporation and Employee of even date herewith (the
"Employment Agreement"), the Corporation desires to afford Employee the
opportunity to purchase shares of Corporation's $.05 par value common stock as
an incentive for future performance to the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Employee the
----------------
right and option (the "Option") to purchase an aggregate of 250,000 shares of
Corporation's $.05 par value common stock (the "Shares"), such Shares being
subject to adjustment as provided in paragraph 7 hereof, and on the terms and
conditions herein set forth.
2. Purchase Price. The purchase price of the Shares covered by the
---------------
Option shall be $3.00 per Share.
<PAGE>
3. Term of Option. The term of the Option shall be for a period of five
---------------
(5) years from the date hereof subject to earlier termination pursuant to
paragraph 5 hereof.
4. Exercise of Option. From and after the date hereof, the Option shall
-------------------
be fully exercisable, in whole or in part, for the remaining term of the Option.
The Option granted herein shall be exercisable only by the Employee, the
Administrator or Executor of the Estate of the Employee, the heirs of the
Employee taking title to the Option pursuant to the Employee's Will or the laws
of descent and distribution, a court appointed guardian of the Employee, or by
power of attorney duly appointed by the Employee.
5. Termination of Employment. In the event Employee's employment with
-------------------------
the Corporation (which term includes subsidiaries of the Corporation) is
terminated "for cause', as hereinafter defined, by the Corporation or is
terminated for any reason by Employee (except if terminated by Employee for
failure of the sale of substantially all of the assets of Corporation's wholly
owned subsidiary Current Technology, Inc., to close prior to August 31, 1997)
then the Option granted under this Agreement, or any unexercised portion
thereof, shall terminate and be unexercisable as of the effective date of such
termination of employment if by Corporation or the date notice of termination is
given, if by Employee. For purposes of this provision, the term "for cause"
shall mean (a) the failure or refusal to perform diligently the duties of
Employee's employment after written notice of such failure or refusal and a
reasonable opportunity to remedy such has been provided, (b) the conviction of
an offense involving moral turpitude which, in the judgment of the Board of
Directors of EMPLOYER might bring discredit on EMPLOYER. In addition, if
Employee violates any noncompete, nondisclosure, or nonsolicitation of
Corporation's employees
<PAGE>
covenants in any written employment agreement with Corporation, or any
subsidiary or affiliate of Corporation, then this Option shall terminate upon
date of such breach. The determination of whether or not Employee has breached
any noncompete, nondisclosure, or nonsolicitation of Corporation's employees
covenants and the date of such breach shall be made by Corporation and such
determination shall be binding upon Employee unless, within thirty (30) days
after the Corporation notifies Employee of such determination, Employee invokes
the mandatory arbitration provisions in Section 12 hereof, in which case, the
decision of the arbitrator shall control. Employee shall not exercise any
options hereunder between the date Employee is notified of termination and the
date, if any, on which Employee invokes the arbitration provisions. If Employee
invokes the arbitration provisions, and if Employee exercises any options
hereunder after such invocation, Employee will deliver the stock (or proceeds
from the sale of the stock) to the arbitrator to be held in escrow pending a
final decision by the arbitrator, with the stock and proceeds to be delivered to
Corporation by the arbitrator if the arbitrator makes the determination that the
termination by Corporation was proper.
6. Transferability of Option. This Option may not be transferred by
--------------------------
Employee by Will, by the laws of descent and distribution, or otherwise. Upon
the death of Employee, Employee's estate shall have 180 days from the date of
Employee's death to exercise the Option. If Employee's estate fails to exercise
the Option within this time period, the Option shall terminate.
7. Anti-Dilution Provisions.
-------------------------
(a) In case at any time or from time to time after the date of this
Option, the holders of common stock of the Corporation shall have received or
shall have become legally entitled to receive,
(i) other or additional stock or other securities or property (other
than cash) by way of a dividend or other distribution, or
(ii) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar corporate rearrangements,
then and in each such case the holder of this Option, upon the exercise hereof
as provided
<PAGE>
herein, shall be entitled to receive, in lieu of (or in addition to, as the case
may be) the Shares theretofore receivable upon the exercise of this Option, the
amount of stock and other securities and property (including cash in the case
referred to in clause (ii) above) which such holder would have held on the date
of such exercise if on the date such dividend, distribution, corporate
rearrangement or such other event as described in clause (ii) above such holder
had been the holder of record of the number of Shares receivable upon the
exercise of this Option and had thereafter, during the period from the date
thereof to and including the date of such exercise, obtained such Shares and all
other or additional (or less) stock and other securities and property (including
cash in the case referred to in clause (ii) above) receivable by him as
aforesaid during such period, giving effect to all adjustments called for during
such period by the following subparagraph.
(b) In case of any reorganization of the Corporation (or any other
corporation the stock or other securities of which are at the time receivable on
the exercise of this Option) after the date hereof, or in case, after such date,
the Corporation (or any such other corporation) shall consolidate, amalgamate or
merge with or into or enter into a mandatory share exchange with another entity,
then and in each such case the holder of this Option, upon the exercise hereof
as provided herein at any time after the consummation of such reorganization,
consolidation, amalgamation, merger, mandatory share exchange, or conveyance,
shall be entitled to receive, and any third parties participating in such
transaction shall acknowledge in writing that the holder is entitled to receive,
in lieu of the Shares, stock or other securities and property receivable upon
the exercise of this Option prior to such consummation, the stock or other
securities or property to which such holder would have been entitled upon such
consummation if such holder had exercised this Option immediately prior thereto,
all subject to further adjustment as provided in the preceding subparagraph (a).
<PAGE>
(c) So long as this Option shall be outstanding and unexercised, if the
Corporation shall enter into any transactions referred to in this Section 7,
which effects a change in the securities, other property or any cash
distribution to which the holder is entitled upon exercise of this Option, then,
in any such case, the Corporation shall cause to be sent to the holder a brief
statement of the event giving rise to such effect, and a description thereof,
together with advance notice of the record date relevant to any such
transaction.
8. Rights as a Shareholder. The Employee or Employee's permitted
------------------------
transferee shall have no rights as a stockholder with respect to any Shares
covered by the Option until the date of issuance of a stock certificate for such
Shares. No adjustments, other than as provided in paragraph 6 above, shall be
made for dividends (ordinary or extraordinary, whether in cash, securities, or
other property) or distributions for which the record date is prior to the date
such stock certificate is issued.
9. Conditions to Issue. The Option granted herein is subject to the
--------------------
requirement that, if at any time the listing, registration, or qualification of
Shares issuable upon exercise of the Option is required by any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary as a condition of, or in connection
with the issuance of any Shares, no Shares shall be issued in whole or in part,
unless such listing, registration, qualification, consent or approval has been
obtained. The Corporation agrees, at its own expense, to take all action
necessary to obtain such listing, registration, qualification, consent or
approval so the Corporation can perform its contractual obligation to issue the
Shares covered by this Option.
10. Method of Exercising Option. Subject to the terms and conditions of
----------------------------
this Agreement, the Option may be exercised by written notice delivered in
person or by first class mail to the Secretary of the Corporation at its offices
which are presently located at 226 Bailey Avenue, Suite 101, Fort Worth, Texas
76107. Such notice shall state the election to exercise the Option and the
number of Shares in respect of
<PAGE>
which it is being exercised, and shall be signed by the person or persons so
exercising the Option. Such notice shall be accompanied by payment of the full
purchase price of such Shares, in which event the Corporation shall deliver a
certificate or certificates representing such Shares as soon as practicable
after the notice shall be received.
Payment of such purchase price shall, in either case, be made in cash or
cashier's, certified or personal check payable to the order of the Corporation.
The certificate or certificates for the Shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option; or if the Option shall be exercised by the Employee, and
if the Employee shall so request in the notice exercising the Option, such
Option shall be registered in the name of the Employee and another person, as
joint tenants with right of survivorship, and shall be delivered as provided
above to or upon the written order of the person or persons other than the
Employee, such notice shall be accompanied by appropriate proof satisfactory to
the Corporation of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable. Upon the exercise of less than
all of the Options hereunder, the Corporation shall promptly execute and deliver
a new Option Agreement in the form hereof covering the balance of unexercised
Options. The Corporation shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of such new Option Agreements.
11. Non-Qualified Options. The Options granted hereunder are not part of
----------------------
or authorized pursuant to any plan or arrangement which is qualified or created
incident to any provision of the Internal Revenue Code of 1986, as amended.
12. Arbitration. In the event of a dispute arising out of or relating to
------------
this Agreement, or relating to any claim or cause of action which may arise or
be asserted under any federal, state or local statutory,
<PAGE>
regulatory or common law, including, without limitation, claims of
discrimination, breach of contract or tort, such as intentional infliction of
emotional distress, then, upon notice by any party to the other party (an
"Arbitration Notice") and to American Arbitration Association ("AAA"), 140 West
51st Street, New York, New York 10020-1203 [telephone (212) 484-3266; fax (212)
307-4387], the controversy or dispute shall be submitted to a sole arbitrator
who is independent and impartial, for binding arbitration in Fort Worth, Texas,
in accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties
agree that they will faithfully observe this agreement and the Rules and that
they will abide by and perform any award rendered by the arbitrator. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section
1-16 (or by the same principles enunciated by such Act in the event it may not
be technically applicable). The award or judgment of the arbitrator shall be
final and binding on all parties and enforced by any court having jurisdiction.
If any party becomes the subject of a bankruptcy, receivership or other similar
proceeding under the laws of the United States of America, any state or
commonwealth or any other nation or political subdivision thereof, then, to the
extent permitted or not prohibited by applicable law, any factual or substantive
legal issues arising in or during the pendency of any such proceeding shall be
subject to all of the foregoing mandatory arbitration provisions and shall be
resolved in accordance therewith. The agreements contained herein have been
given for valuable consideration, are coupled with an interest and are not
intended to be executory contracts. The fees and expenses of the arbitrator will
be shared equitably and ratably (as determined by the arbitrator) by all parties
engaged in the dispute or controversy.
Promptly after the Arbitration Notice is given, AAA will select five
possible arbitrators, to whom AAA will give the identities of the parties and
the general nature of the controversy. If any of those arbitrators disqualifies
himself or declines to serve, AAA shall continue to designate potential
arbitrators
<PAGE>
until the parties have five to select from. After the panel of five potential
arbitrators has been completed, a two page summary of each of the potential
arbitrators will be given to each of the parties, and the parties will have a
period of 10 days after receiving the summaries in which to attempt to agree
upon the arbitrator to conduct the arbitration. If the parties are unable to
agree upon an arbitrator, then one of the parties shall notify AAA, and AAA
shall select the arbitrator from one of the five. The decision of AAA with
respect to the selection of the arbitrator will be final and binding.
Within 10 days after the selection of the arbitrator, the parties and their
council will appear before the arbitrator at a price an time designated by the
arbitrator for the purpose of each party making a one hour or less presentation
and summary of the case. Thereafter, the arbitrator will set dates and times
for additional hearings until the proceeding is concluded. The desire and goal
of the parties is, and the arbitrator will be advised that his goal should be,
to conduct and conclude the arbitration proceeding as expeditiously as possible.
If any party or his council fails to appear at any hearing, the arbitrator shall
be entitled to reach a decision based on the evidence which has been presented
to him by the parties who did appear.
13. Subsidiary. As used herein, the term "Subsidiary" shall mean any
-----------
present or future corporation in which the Corporation shall own 50% or more of
its accrued voting stock.
14. Severability. Each provision of this Agreement is intended to be
------------
severable from the others so that if any provision or term hereof is illegal or
invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall
not affect the validity of the remaining provisions and terms hereof.
15. Binding Effect. This Agreement shall be binding upon and inure to the
---------------
benefit of the respective heirs, executors, administrators and successors of the
parties hereto.
<PAGE>
16. Governing Law. This Agreement shall be construed and interpreted in
--------------
accordance with the laws of the State of Delaware.
17. Headings. Headings are for the convenience of the parties and are not
---------
deemed to be part of this Agreement.
EXECUTED as of the day and year first written above.
EMPLOYER: BUFFTON CORPORATION:
By: /S/ Robert McLean
--------------------------------------------
Chairman of the Board and
President
EMPLOYEE:
/S/Jean-Claude Mathot
----------------------------------------------
JEAN-CLAUDE MATHOT, Individually
<PAGE>
EXHIBIT 3A
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 11th day of April, 1997, by and between
BUFFTON CORPORATION, a Delaware corporation (EMPLOYER"), and ALAN TREMAIN
(hereinafter called the "EMPLOYEE").
W I T N E S W E T H :
-------------------
WHEREAS, the EMPLOYER wishes to employ EMPLOYEE, and EMPLOYEE wishes to
accept such employment on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment. The EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby
----------
accepts employment with EMPLOYER on the terms and conditions herein contained.
EMPLOYEE shall initially report to the Chief Executive Officer and Board of
Directors of EMPLOYER. The titles, powers and the person to whom EMPLOYEE
reports may be, from time to time, changed and/or determined by the Board of
Directors or Chief Executive Officer of EMPLOYER. EMPLOYEE will have the title
of "Chairman of the Board" and agrees to fully and faithfully perform the duties
and responsibilities as might be assigned and delegated to EMPLOYEE from time to
time by the Chief Executive Officer or Board of Directors of EMPLOYER, for so
long as this Agreement is in effect.
2. Term of Employment Agreement. The term of this Agreement shall be for
----------------------------
an indefinite period beginning April 11, 1997 (the "Employment Agreement Term").
3. Compensation.
------------
<PAGE>
A. Salary. For all services rendered by EMPLOYEE under this
------
Agreement, EMPLOYER shall pay to EMPLOYEE a fixed annual gross salary of One
Hundred Thousand and No/100 Dollars ($100,000.00), subject to deductions and
withholding mandated by law, payable in installments according to the then
prevailing payroll practices of the EMPLOYER with respect to its employees. The
Board of Directors of EMPLOYER may from time to time grant EMPLOYEE compensation
in excess of the salary set forth hereinabove; provided, however, EMPLOYER'S
contractual obligation to pay salary to EMPLOYEE under this Agreement shall be
the fixed annual gross salary specified in this Paragraph 3.A, plus any such
approved increases in salary.
B. Benefits. EMPLOYEE, through the effective date of a termination
--------
of this Agreement, shall be entitled to participate in all present and future
employee benefit plans, policies and programs that are available generally to
EMPLOYER'S full-time employees and senior executives.
C. Bonus. EMPLOYER shall adopt a bonus plan for each fiscal year
-----
during the Employment Agreement Term covering EMPLOYER'S employees, and EMPLOYEE
shall be paid on or before December 31, of each year during the Employment
Agreement Term the bonuses established for EMPLOYEE in such bonus plan.
D. Restricted Stock Grants. The Board of Directors of EMPLOYER may,
-----------------------
in its sole discretion, grant restricted stock bonuses to EMPLOYEE from time to
time, in such amounts as the Board of Directors may determine.
4. Reimbursement for Expenses. EMPLOYER shall reimburse EMPLOYEE for all
--------------------------
reasonable and necessary expenses incurred by EMPLOYEE in the performance of
EMPLOYEE'S duties contemplated hereby.
<PAGE>
5. Vacations. For so long as this Agreement is in effect, EMPLOYEE shall
---------
receive twenty business days paid vacation each fiscal year beginning with the
October 1, 1997. Such twenty business days paid vacation shall be deemed earned
for a given fiscal year on October 1 of each year. Any earned vacation not taken
by EMPLOYEE prior to September 30 of each fiscal year shall lapse. Upon a
termination of this Agreement for any reason, except for cause (other than for
cause following a Change in Control as hereinafter defined), EMPLOYEE shall be
entitled to receive the sum of $ 273.97 for each business day of earned but
untaken vacation days remaining for the then current fiscal year of termination
of this Agreement, payable in accordance with the terms of this Agreement.
6. Location of Services. It is understood that the EMPLOYER presently
--------------------
expects to maintain its principal place of business in the Dallas/Fort Worth
Metroplex area, but that EMPLOYEE is not required to locate in this area.
7. Termination.
-----------
A. Without Cause. Notwithstanding the Employment Agreement Term,
-------------
EMPLOYER shall have the right to terminate this Agreement without cause upon
sixty (60) days written notice to EMPLOYEE to such effect, with such termination
to be effective upon the expiration of such sixty (60) day notice period. Upon a
termination of this Agreement without cause pursuant to this provision, the
noncompetition provisions set forth in Section 8 hereof shall terminate, and
EMPLOYEE shall be entitled to receive (i) any bonuses accrued through the
effective date of a termination of the Agreement by EMPLOYEE pursuant to the
terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but
untaken vacation under the terms and conditions of Paragraph 5 hereof, and (iii)
$100,000, which amount shall be paid in one lump sum (with both such bonuses,
salary and vacation being payable in full on the effective date of such
termination of this Agreement). Upon a termination by EMPLOYER without
<PAGE>
cause, EMPLOYER agrees to purchase from EMPLOYEE, at the request of EMPLOYEE,
any and all shares of stock of EMPLOYER owned by EMPLOYEE as of the date of the
termination, with the purchase price to be equal to the greater of EMPLOYEE'S
cost of said shares or the fair market value of said shares as reported in the
Wall Street Journal on the date of termination. EMPLOYEE shall notify EMPLOYER
of EMPLOYEE'S desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within
thirty (30) days of the effective date of termination without cause by
delivering written notice to EMPLOYER to such effect. Said notice must be
received by EMPLOYER and such receipt acknowledged by EMPLOYER. If EMPLOYEE
fails to deliver said notice to EMPLOYER, EMPLOYER shall have no obligation to
purchase any of its shares from EMPLOYEE. EMPLOYEE shall have no duty to
mitigate, nor shall any sums earned by EMPLOYEE from other sources after a
termination of this Agreement pursuant to this provision be credited or offset
against any sums due to EMPLOYEE.
B. With Cause. EMPLOYER shall have the right to terminate this
----------
Agreement at any time for cause, upon written notice to EMPLOYEE to such effect,
with such termination to be effective upon delivery of such notice to EMPLOYEE.
Upon a termination of this Agreement pursuant to this provision, EMPLOYEE shall
be entitled to receive only such salary payable through the effective date of
termination, payable in full on the effective date of such termination of this
Agreement. For purposes of this provision, the term "for cause" shall mean (a)
the failure or refusal to perform diligently the duties of EMPLOYEE's employment
after written notice of such failure or refusal and a reasonable opportunity to
remedy such has been provided, (b) the conviction of an offense involving moral
turpitude which, in the judgment of the Board of Directors of EMPLOYER might
bring discredit on EMPLOYER.
C. Disability. If, as a result of EMPLOYEE'S incapacity due to
----------
physical or mental illness, EMPLOYEE shall have been absent from his duties
hereunder on a full-time basis for the entire
<PAGE>
period of six consecutive months, and within thirty (30) days after written
notice of intention to termination of this Agreement is given by EMPLOYER (which
may occur thirty days before or at any time after the end of such six month
period) EMPLOYEE shall not have returned to the performance of his duties
hereunder on a full-time basis, this Agreement shall terminate effective upon
the expiration of the thirty (30) day notice period. Upon a termination of this
Agreement pursuant to this provision, EMPLOYEE shall be entitled to receive (i)
any bonuses accrued through the effective date of a termination of the Agreement
by EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C.
hereof, (ii) any earned but untaken vacation under the terms and conditions of
Paragraph 5 hereof, and (iii) $100,000, which amount shall be paid in one lump
sum (with both such bonuses, salary and vacation being payable in full on the
effective date of such termination of this Agreement). If EMPLOYEE shall receive
any disability payments from any insurance policies provided by EMPLOYER, the
payments by EMPLOYER to EMPLOYEE during any period of disability shall be
reduced by the amount of disability payments received by EMPLOYEE under any such
insurance policy or policies.
D. Death. In the event of the death of EMPLOYEE, this Agreement
-----
shall terminate effective upon the date of death, and EMPLOYEE'S estate shall be
entitled to receive (i) any bonuses accrued through the effective date of a
termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan
referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under
the terms and conditions of Paragraph 5 hereof, and (iii) $100,000, which
amount shall be paid in one lump sum (with both such bonuses, salary and
vacation being payable in full on the effective date of such termination of this
Agreement).
E. By EMPLOYEE. EMPLOYEE shall have the right to terminate this
-----------
Agreement upon sixty (60) days written notice to EMPLOYER to such effect, with
such termination to be effective
<PAGE>
upon the expiration of such sixty (60) day notice period. Upon a termination of
this Agreement by EMPLOYEE pursuant to this provision, EMPLOYEE shall be
entitled to receive (i) any bonuses accrued by EMPLOYEE pursuant to the terms of
the bonus plan referenced in Paragraph 3.C. hereof through the effective date of
a termination of this Agreement, (ii) any earned but untaken vacation under the
terms and conditions of Paragraph 5 hereof, and (iii) such salary payable
through the effective date of such termination, all payable in full on the
effective date of such termination of this Agreement, unless such termination
occurs within twenty-four (24) months following a Change in Control as defined
in Paragraph 7.F. hereof, and then EMPLOYEE shall additionally be entitled to
receive the compensation described in Paragraph 7.F. hereof and any earned but
untaken vacation pursuant to Paragraph 5 hereof.
If EMPLOYEE terminates this Agreement prior to the first annual
anniversary hereof, EMPLOYER shall be entitled to purchase from EMPLOYEE (a) all
of the Buffton Common Stock (the "Section 11 Stock") purchased by EMPLOYEE
pursuant to Section 11 of the Stock Exchange Agreement dated as of April 11,
1997 between EMPLOYER, EMPLOYEE and the other stockholder of Hotels of
Distinction, Inc., a Florida corporation, (the "Stock Exchange Agreement") and
still owned by EMPLOYEE on the termination date, (b) EMPLOYEE's 120,000 shares
of Buffton Common Stock (the "Exchange Stock") which EMPLOYEE received for his
Hotels of Distinction, Inc. Common Stock pursuant to Section 1 of the Stock
Exchange Agreement and still owned by Employee on the termination date, (c) the
Non Qualified Stock Option Agreement of even date herewith between EMPLOYER and
EMPLOYEE pursuant to which EMPLOYER granted EMPLOYEE an option to purchase
250,000 shares of Buffton Common Stock, and all rights and benefits of EMPLOYEE
thereunder (the "Stock Options") and (d) all Buffton Common Stock purchased by
EMPLOYEE by exercise of all or a part of the Stock Options (the "Exercised
Option Stock") and still owned by EMPLOYEE on the termination date. The
<PAGE>
aggregate purchase price payable by EMPLOYER for the Section 11 Stock, the
Exchange Stock, the Stock Options and the Exercised Option Stock purchased
pursuant to the foregoing sentence will be the sum of (1) the average price per
share paid by EMPLOYEE for the Section 11 Stock times the number of shares of
Section 11 Stock sold to EMPLOYER pursuant to the foregoing, (2) 50% of the
market value of a freely tradeable share of Buffton Common Stock on the
termination date times the number of shares of Exchange Stock sold to EMPLOYER
pursuant to the foregoing and (3) the price paid by EMPLOYEE for the Exercised
Option Stock sold to EMPLOYER pursuant to the foregoing.
F. Termination Following a Change in Control. If within twenty-four
-----------------------------------------
(24) months after a Change in Control (as hereinafter defined), EMPLOYEE shall
voluntarily terminate this Agreement, or this Agreement is terminated by
EMPLOYER without cause, EMPLOYEE shall be entitled to receive (i) any earned but
untaken vacation pursuant to the terms and conditions of Paragraph 5 hereof; and
(ii) $300,000..
Upon a termination by EMPLOYER within twenty-four months after a Change in
Control (as hereinafter defined), EMPLOYER agrees to purchase from EMPLOYEE, at
the request of EMPLOYEE, any and all shares of stock of EMPLOYER owned by
EMPLOYEE as of the date of the termination, with the purchase price to be equal
to the greater of EMPLOYEE'S cost of said shares or the fair market value of
said shares as reported in the Wall Street Journal on the date of the Change in
Control (as hereinafter defined). EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S
desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days
of the effective date of termination without cause by delivering written notice
to EMPLOYER to such effect. Said notice must be received by EMPLOYER
<PAGE>
and such receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said
notice to EMPLOYER, EMPLOYER shall have no obligation to purchase any of its
shares from EMPLOYEE.
EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by
EMPLOYEE from other sources after a termination of this Agreement pursuant to
this provision be credited or offset against any sums due to EMPLOYEE.
It is the intention of EMPLOYER and EMPLOYEE that EMPLOYEE not be paid an
amount which would be deemed an "excess parachute payment" under Section 280G of
the Code, and accordingly, the amounts payable pursuant to this provision shall
be reduced in an amount necessary to eliminate the payment of any excess
parachute payment. The amounts payable pursuant to this provision shall be paid
in a lump sum within fifteen (15) days following the effective date of
termination of employment. If within twenty-four (24) months after a Change in
Control (as hereinafter defined) EMPLOYER terminates this Agreement without
cause, EMPLOYEE'S duties, obligations, covenants, and promises contained in
Paragraphs 8, 9, and 10 hereof shall terminate and have no further effect.
For the purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred upon any of the following events:
(i) the acquisition directly or indirectly, by any person (as
such terms are used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), other than EMPLOYER or any of its
subsidiaries or any employee benefit plan maintained by EMPLOYER or
any such subsidiary, of beneficial ownership of securities of EMPLOYER
representing fifteen percent (15%) or more of the combined voting
power of EMPLOYER'S then outstanding securities (with the terms used
herein and in Sections 13(d) and/or 14(d) of the Securities Exchange
Act of 1934, as amended, having the meanings of such terms in such
Sections);
(ii) if the stockholders of EMPLOYER approve a merger or
consolidation, a sale or disposition of all or substantially all of
EMPLOYER'S assets or a plan of liquidation or dissolution of EMPLOYER;
<PAGE>
(iii) the election during any period of twenty-four (24) months
or less of a member or members of EMPLOYER'S Board of Directors
without the approval of the election or nomination for election of
such new member or members by a majority of the members of the Board
who were members at the beginning of the period, or members of the
Board thereafter recommended to succeed such original members (or
their successors hereunder) by a majority of the members of the Board
who were members at the beginning of the period (or their successors
hereunder); or
(iv) any person (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) other than
EMPLOYER, any of its subsidiaries or any employee benefit plan
maintained by EMPLOYER or any such subsidiary, makes a tender or
exchange offer for any shares of EMPLOYER'S outstanding voting
securities at any point in time, pursuant to which any such shares are
purchased.
Unless the Continuing Board of Directors of EMPLOYER (as hereinafter
defined) determines that the happening of any of the foregoing events in a
particular case should not be deemed a Change in Control. The "Continuing Board
of Directors of EMPLOYER" shall mean (i) the members of EMPLOYER'S Board of
Directors in office immediately prior to the Change in Control, excluding any
who initiate a Change in Control or are affiliated with one who initiates a
Change in Control, and (ii) any subsequent directors who may be selected,
nominated or approved by a majority of the other Continuing Board of Directors
of EMPLOYER.
It is specifically agreed by EMPLOYER and EMPLOYEE that a sale of all
or a part of the stock or assets of EMPLOYER, that has been approved by the
Continuing Board of Directors of EMPLOYER, shall not be deemed a Change in
Control for purposes of this Agreement.
G. Failure to Close on Sale of Current Technology. EMPLOYER has
----------------------------------------------
contracted to sell substantially all of the assets of one of its wholly owned
subsidiary, Current Technology, Inc, a Delaware corporation, . In the event
this sale does not close by August 31, 1997, EMPLOYEE shall have a right to
terminate this Agreement effective upon delivery of written notice to EMPLOYER
to such effect. In the event EMPLOYEE terminates this Agreement pursuant to the
provisions of this Paragraph 7.G.,
<PAGE>
EMPLOYEE'S duties, obligations, covenants, and promises contained in Paragraph 8
hereof shall terminate and EMPLOYER shall have the option to purchase at the
fair market value any and all shares of EMPLOYER owned by EMPLOYEE as of the
effective date of the termination by EMPLOYEE pursuant this Paragraph 7.G. Upon
a termination of this Agreement pursuant to this provision, EMPLOYEE shall be
entitled to receive (i) any bonuses accrued by EMPLOYEE pursuant to the terms of
the Bonus Plan referenced in Paragraph 3.C. hereof to the effective date of the
termination of this Agreement, (ii) any earned by untaken vacation under the
terms and conditions of Paragraph 5 hereof, and (iii) such salary payable
pursuant to Paragraph 3.A. hereof accrued to the effective date of the
termination of this Agreement.
H. Provisions Surviving Termination. Except as set forth above,
--------------------------------
notwithstanding a termination of this Agreement, EMPLOYER's obligations to
EMPLOYEE pursuant to this Paragraph 7 shall remain in full force and effect, and
EMPLOYEE's duties, obligations, covenants and promises contained in Paragraphs
8, 9, 10 and 11 hereof shall remain in full force and effect; and such
Paragraphs shall survive a termination of this Agreement and remain fully
enforceable by EMPLOYER or EMPLOYEE, as applicable.
8. Noncompetition.
--------------
A. EMPLOYEE acknowledges that EMPLOYER has agreed to provide him,
and he shall receive from the EMPLOYER, special training and knowledge specific
to EMPLOYER's business. EMPLOYEE acknowledges that included in the special
knowledge received is confidential and proprietary information including the
Confidential Information defined in Paragraph 9 below which EMPLOYER invested
extensive time and resources in developing and creating . EMPLOYEE acknowledges
that this Confidential Information is valuable to EMPLOYER, and therefore, its
protection and maintenance
<PAGE>
constitutes a legitimate interest to be protected by EMPLOYER by the enforcement
of this covenant not to compete. Therefore, as an inducement to EMPLOYER to
enter into this agreement, to invest time in training and educating EMPLOYEE and
to disclose to EMPLOYEE confidential and proprietary information, EMPLOYEE
agrees that prior to a termination of this Agreement and for a period of thirty-
six months following the effective date of a termination of this Agreement
(specifically excluding a termination of this Agreement by EMPLOYER without
cause pursuant to Paragraph 7.A. hereof and specifically excluding a termination
of this Agreement by EMPLOYEE following a Change in Control, as defined in
Paragraph 7.F. hereof), EMPLOYEE will not, directly as a principal (whether
individually or in any form of entity) or as an employee or consultant, engage
in, consult with or participate in or with, any business reasonably competitive
with and within a five mile radius of any hotel or restaurant owned, operated,
managed or under construction by EMPLOYER, or any "affiliate", as hereinafter
defined, of EMPLOYER, during the Employment Agreement Term or at the time this
Agreement is terminated. For purposes of this Agreement, "affiliates" means any
person or entity that is directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
EMPLOYER.
EMPLOYEE represents to EMPLOYER that the enforcement of the
restriction contained in this Paragraph 8.A. would not be unduly burdensome to
EMPLOYEE and that in order to induce EMPLOYER to pay EMPLOYEE'S compensation
during the Employment Agreement Term, to train EMPLOYEE and to divulge
Confidential Information to EMPLOYEE, EMPLOYEE further represents and
acknowledges that EMPLOYEE is willing and able to compete in other geographical
areas not prohibited by this Section 8.A.
B. EMPLOYEE agrees that a breach or violation by EMPLOYEE of the
covenants contained in this Paragraph 8 shall entitle EMPLOYER, as a matter of
right, to an injunction issued by any
<PAGE>
court of competent jurisdiction, restraining any further or continued breach or
violation of this covenant. Such right to an injunction shall be cumulative and
in addition to, and not in lieu of, any other remedies to which the EMPLOYER may
show itself justly entitled including without limitation EMPLOYEE'S forfeiture
of any sums then owed to EMPLOYEE pursuant to Paragraph 7 hereof and/or the
obligation by EMPLOYEE to repay EMPLOYER for any sums previously paid to
EMPLOYEE pursuant to Paragraph 7 hereof.
C. The representations and covenants contained in this Paragraph 8
on the part of EMPLOYEE will be construed as ancillary to and independent of any
other provision of this agreement and the existence of any claim or cause of
action of EMPLOYEE against EMPLOYER or any officer or director of EMPLOYER,
whether predicated on a disagreement or otherwise, shall not constitute a
defense to the enforcement by EMPLOYER of the covenants of EMPLOYEE contained in
this Paragraph 8.
D. The parties to this agreement agree that the limitations
contained in this Paragraph 8 with respect to geographic area, duration and
scope of activity are reasonable. However, if any court shall determine that the
geographic area, duration or scope of activity of any restriction contained in
this Paragraph 8 is unenforceable, it is the intention of the parties that such
restrictive covenant set forth herein shall not thereby be terminated but shall
be deemed amended to the extent required to render it valid and enforceable.
9. Disclosure of Confidential Information.
--------------------------------------
A. EMPLOYEE will disclose to the EMPLOYER all ideas and business
plans developed by EMPLOYEE through the effective date of a termination of this
Agreement that relate directly to the business of the EMPLOYER.
<PAGE>
B. The EMPLOYEE recognizes and acknowledges that by virtue of
EMPLOYEE'S position with EMPLOYER that EMPLOYER will provide EMPLOYEE with
access to certain Confidential Information (as hereinafter defined) of the
EMPLOYER, and that all such information constitutes valuable, special and unique
property of the EMPLOYER that is not generally known or readily ascertainable by
independent investigation. The EMPLOYEE agrees that, prior to a termination of
this Agreement, and for a period of thirty-six (36) months after the effective
date of a termination of this Agreement, EMPLOYEE will not, without the prior
written consent of the EMPLOYER, disclose or authorize disclosure or permit
anyone under his direction to disclose to anyone not properly entitled thereto
any of such Confidential Information. For purposes of this immediately preceding
sentence, persons properly entitled to such information shall be the Board of
Directors of the EMPLOYER and such officers, employees and agents of the
EMPLOYER or any affiliate thereof to whom such information is furnished in the
normal course of business under established policies approved by the EMPLOYER.
For purpose of this Agreement, the term "Confidential Information" shall mean
such information which has been clearly marked or identified as Confidential by
EMPLOYER, or any affiliate of EMPLOYER, any documents, contracts, written
information, procedural or technical manuals, training manuals, customer lists,
customer account analysis, price books, computer files, operating manuals, raw
material costing information, product cost information, food recipes, recipe
books, concept profiles, accounting papers, work papers, corporate records and
any other information which is understood to be of a confidential character and
which has not been published or otherwise become a matter of general public
knowledge through no fault of EMPLOYEE, all of which is owned or possessed by or
relates to the business of EMPLOYER or any affiliate of EMPLOYER. The
restrictions on EMPLOYEE set forth herein shall not limit or restrict the
protection of any Confidential Information provided to EMPLOYER pursuant to law,
but are cumulative to those rights. Further, the
<PAGE>
restrictions set forth herein shall not be interpreted to grant to EMPLOYEE any
right at the expiration of the thirty-six (36) month period to use, disclose or
authorize a third party to use any Confidential Information.
C. The EMPLOYEE further agrees that (i) at all times prior to a
termination of this Agreement, and (ii) upon the termination of this Agreement,
he will not copy, remove from EMPLOYER'S or any affiliate of EMPLOYER'S
premises, take with him or retain, without the prior written authorization of
the EMPLOYER, any Confidential Information or any documents or copies thereof
belonging to the EMPLOYER or any affiliate of EMPLOYER, or any other information
of any kind belonging to the EMPLOYER (collectively "EMPLOYER'S Information).
EMPLOYEE represents and warrants that prior to the execution of this Agreement
he has returned to EMPLOYER any and all EMPLOYER'S Information which may
previously have come into his possession except for EMPLOYER'S Information with
respect to which EMPLOYER has consented to EMPLOYEE'S possession thereof. In the
event of a breach or threatened breach by the EMPLOYEE of the provisions of this
Paragraph 9, the EMPLOYER and the EMPLOYEE agree that the remedy at law
available to the EMPLOYER would be inadequate and that the EMPLOYER shall be
entitled to an injunction, without the necessity of posting bond therefor,
restraining the EMPLOYEE from disclosing, in whole or in part, the Confidential
Information. Nothing herein shall be construed as prohibiting the EMPLOYER from
pursuing any other remedies, in addition to the injunctive relief available
under this Paragraph 9, for such breach or threatened breach, including the
recovery of damages from the EMPLOYEE.
10. Intellectual Property. EMPLOYEE hereby assigns to EMPLOYER all of
---------------------
EMPLOYEE'S right, titles and interest in and to all patents, formulae,
inventions, processes, copyrights, proprietary information, trademarks or trade
names, or future improvements to patents, formulae, inventions,
<PAGE>
processes, copyrights, proprietary information, trademarks or trade names,
developed or completed by the EMPLOYEE, which relate to the business of
EMPLOYER, at any time prior to a termination of this Agreement (collectively the
"Items); and the Items shall be promptly disclosed to the EMPLOYER, and the
EMPLOYEE shall execute such instruments of assignment of the Items to the
EMPLOYER as the EMPLOYER shall request. The EMPLOYEE acknowledges that a remedy
at law for any breach by him of the provisions in this Paragraph 10 would be
inadequate, and the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled
to injunctive relief in case of any such breach.
11. Non-Solicitation of Employees. The EMPLOYEE agrees that prior to a
-----------------------------
termination of this Agreement, and for a period of thirty-six (36) months after
the effective date of a termination of this Agreement, Employee shall not,
directly or indirectly, hire, offer to hire, entice, solicit or in any other
manner persuade or attempt to persuade any employee of EMPLOYER, or any
affiliate of EMPLOYER, to discontinue or alter such employee's employment
relationship with EMPLOYER, or any affiliate of EMPLOYER. The EMPLOYEE
acknowledges that a remedy at law for any breach by him of the provisions in
this Paragraph 11 would be inadequate, and the EMPLOYEE hereby agrees that the
EMPLOYER shall be entitled to injunctive relief in case of any such breach.
12. Assignment. The services to be rendered and obligations to be
----------
performed by EMPLOYEE hereunder are special and unique, and all such services
and obligations and all of EMPLOYEE'S rights hereunder are personal to EMPLOYEE
and shall not be assignable by EMPLOYEE and any purported assignment thereof by
EMPLOYEE shall not be valid or binding upon the EMPLOYER. However, in the event
of EMPLOYEE'S death during the term of this Agreement, EMPLOYEE'S personal
representative shall be entitled to the rights as specified in Paragraph 7.D. of
this Agreement and shall be obligated to execute any documents and perform any
other acts necessary to carry out and give effect to the terms and
<PAGE>
provisions of this Agreement. EMPLOYER may assign this Agreement and all of its
rights hereunder to any person, firm or corporation succeeding to the business
of the EMPLOYER, provided said company shall assume (by contract or operation of
law) the EMPLOYER'S obligations hereunder. In the event this Agreement is
assumed by any person, firm or corporation succeeding to the business of
EMPLOYER, then EMPLOYER shall be released and discharged from any and all
obligations to EMPLOYEE under this Agreement.
13. Arbitration. In the event of a dispute arising out of or relating to
------------
this Agreement, or relating to any claim or cause of action which may arise or
be asserted under any federal, state or local statutory, regulatory or common
law, including, without limitation, claims of discrimination, breach of contract
or tort, such as intentional infliction of emotional distress, then, upon notice
by any party to the other party (an "Arbitration Notice") and to American
Arbitration Association ("AAA"), 140 West 51st Street, New York, New York 10020-
1203 [telephone (212) 484-3266; fax (212) 307-4387], the controversy or dispute
shall be submitted to a sole arbitrator who is independent and impartial, for
binding arbitration in Fort Worth, Texas, in accordance with AAA's Commercial
Arbitration Rules (the "Rules"). The parties agree that they will faithfully
observe this agreement and the Rules and that they will abide by and perform any
award rendered by the arbitrator. The arbitration shall be governed by the
Federal Arbitration Act, 9 U.S.C. Section 1-16 (or by the same principles
enunciated by such Act in the event it may not be technically applicable). The
award or judgment of the arbitrator shall be final and binding on all parties
and enforced by any court having jurisdiction. If any party becomes the subject
of a bankruptcy, receivership or other similar proceeding under the laws of the
United States of America, any state or commonwealth or any other nation or
political subdivision thereof, then, to the extent permitted or not prohibited
by applicable law, any factual or substantive legal issues arising in or during
the pendency of
<PAGE>
any such proceeding shall be subject to all of the foregoing mandatory
arbitration provisions and shall be resolved in accordance therewith. The
agreements contained herein have been given for valuable consideration, are
coupled with an interest and are not intended to be executory contracts. The
fees and expenses of the arbitrator will be shared equitably and ratably (as
determined by the arbitrator) by all parties engaged in the dispute or
controversy.
Promptly after the Arbitration Notice is given, AAA will select five
possible arbitrators, to whom AAA will give the identities of the parties and
the general nature of the controversy. If any of those arbitrators disqualifies
himself or declines to serve, AAA shall continue to designate potential
arbitrators until the parties have five to select from. After the panel of five
potential arbitrators has been completed, a two page summary of each of the
potential arbitrators will be given to each of the parties, and the parties will
have a period of 10 days after receiving the summaries in which to attempt to
agree upon the arbitrator to conduct the arbitration. If the parties are unable
to agree upon an arbitrator, then one of the parties shall notify AAA, and AAA
shall select the arbitrator from one of the five. The decision of AAA with
respect to the selection of the arbitrator will be final and binding.
Within 10 days after the selection of the arbitrator, the parties and their
council will appear before the arbitrator at a price an time designated by the
arbitrator for the purpose of each party making a one hour or less presentation
and summary of the case. Thereafter, the arbitrator will set dates and times
for additional hearings until the proceeding is concluded. The desire and goal
of the parties is, and the arbitrator will be advised that his goal should be,
to conduct and conclude the arbitration proceeding as expeditiously as possible.
If any party or his council fails to appear at any hearing, the arbitrator shall
be entitled to reach a decision based on the evidence which has been presented
to him by the parties who did appear.
<PAGE>
14. Entire Agreement. This Agreement constitutes the whole agreement
----------------
between the parties hereto and there are no terms other than those contained
herein. This Agreement supersedes any prior contract or understanding relating
to employment of EMPLOYEE by EMPLOYER.
15. Amendment. No variation hereof shall be deemed valid unless in
---------
writing and signed by the parties hereto, and no discharge of the terms hereof
shall be deemed valid unless by full performance by the parties hereto or by a
writing signed by the parties hereto.
16. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of Texas.
17. Severability. Each provision of this Agreement is intended to be
------------
severable from the others so that if any provision or term hereof is illegal or
invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall
not affect the validity of the remaining provisions and terms hereof.
18. Captions. Captions used in this Agreement are used for convenience
--------
only and are not intended to, nor are they to be construed to, have any
substantive meaning or control in the construction of this Agreement.
19. Notice. Any notice hereunder to the parties hereto shall be in
------
writing and shall be sufficient in all respects if personally delivered or
mailed by registered or certified United States mail, postage prepaid, and
addressed to such party at the address shown below, or at such other address as
such party may, by written notice received by the other party to this Agreement,
have designated as the address of such party for such purpose. Any notice
required under this Agreement shall be effective on receipt.
EMPLOYER: BUFFTON CORPORATION
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107
<PAGE>
EMPLOYEE: ALAN TREMAIN
______________________________
______________________________
20. No Third Party Benefits. Except as otherwise provided by law,
-----------------------
EMPLOYEE shall not have any power in any manner to alienate, anticipate, charge
or encumber any payments contemplated by this Agreement, and all rights and
benefits of EMPLOYEE shall be for the sole personal benefit of EMPLOYEE, and no
other person shall acquire any right, title or interest hereunder by reason of
any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against EMPLOYEE.
EXECUTED as of the day and year first written above.
EMPLOYER:
BUFFTON CORPORATION
By:/S/Robert McLean
----------------------------
Name: Robert McLean
--------------------------
Title:CEO
-------------------------
EMPLOYEE
/S/ Alan Tremain
-------------------------------
ALAN TREMAIN
<PAGE>
EXHIBIT 3B
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 11th day of April, 1997, by and between
BUFFTON CORPORATION, a Delaware corporation (EMPLOYER"), and JEAN-CLAUDE MATHOT
(hereinafter called the "EMPLOYEE").
W I T N E S S E T H :
-------------------
WHEREAS, the EMPLOYER wishes to employ EMPLOYEE, and EMPLOYEE wishes to
accept such employment on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment. The EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby
----------
accepts employment with EMPLOYER currently as President and Chief Operating
Officer of EMPLOYER, on the terms and conditions herein contained. EMPLOYEE
shall initially report to the Chief Executive Officer of EMPLOYER. The titles,
powers and the person to whom EMPLOYEE reports may be, from time to time,
changed and/or determined by the Board of Directors or Chief Executive Officer
of EMPLOYER; provided, however, EMPLOYEE'S duties and responsibilities shall at
all times include those customarily performed by a President and Chief Operating
Officer of a company comparable to EMPLOYER (the "Specific Duties"). EMPLOYEE
agrees to fully and faithfully perform the Specific Duties and such additional
duties and responsibilities as might be assigned and delegated to EMPLOYEE
<PAGE>
from time to time by the Chief Executive Officer or Board of Directors of
EMPLOYER, for so long as this Agreement is in effect.
2. Term of Employment Agreement. The term of this Agreement shall be for
----------------------------
an indefinite period beginning April 11, 1997 (the "Employment Agreement
Term").
3. Compensation.
------------
A. Salary. For all services rendered by EMPLOYEE under this
------
Agreement, EMPLOYER shall pay to EMPLOYEE a fixed annual gross salary of One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00), subject to deductions
and withholding mandated by law, payable in installments according to the then
prevailing payroll practices of the EMPLOYER with respect to its employees. The
Board of Directors of EMPLOYER may from time to time grant EMPLOYEE compensation
in excess of the salary set forth hereinabove; provided, however, EMPLOYER'S
contractual obligation to pay salary to EMPLOYEE under this Agreement shall be
the fixed annual gross salary specified in this Paragraph 3.A, plus any such
approved increases in salary.
B. Benefits. EMPLOYEE, through the effective date of a termination
--------
of this Agreement, shall be entitled to participate in all present and future
employee benefit plans, policies and programs that are available generally to
EMPLOYER'S full-time employees and senior executives.
C. Bonus. EMPLOYER shall adopt a bonus plan for each fiscal year
-----
during the Employment Agreement Term covering EMPLOYER'S employees, and EMPLOYEE
shall be paid on or before December 31, of each year during the Employment
Agreement Term the bonuses established for EMPLOYEE in such bonus plan.
<PAGE>
D. Restricted Stock Grants. The Board of Directors of EMPLOYER may,
-----------------------
in its sole discretion, grant restricted stock bonuses to EMPLOYEE from time to
time, in such amounts as the Board of Directors may determine.
4. Reimbursement for Expenses. EMPLOYER shall reimburse EMPLOYEE for all
--------------------------
reasonable and necessary expenses incurred by EMPLOYEE in the performance of
EMPLOYEE'S duties contemplated hereby.
5. Vacations. For so long as this Agreement is in effect, EMPLOYEE shall
---------
receive twenty business days paid vacation each fiscal year beginning with
October 1, 1997. Such twenty business days paid vacation shall be deemed earned
for a given fiscal year on October 1 of each year. Any earned vacation not taken
by EMPLOYEE prior to September 30 of each fiscal year shall lapse. Upon a
termination of this Agreement for any reason, except for cause (other than for
cause following a Change in Control as hereinafter defined), EMPLOYEE shall be
entitled to receive the sum of $ 410.96 for each business day of earned but
untaken vacation days remaining for the then current fiscal year of termination
of this Agreement, payable in accordance with the terms of this Agreement.
6. Location of Services. It is understood that the EMPLOYER presently
--------------------
expects to maintain its principal place of business in the Dallas/Fort Worth
Metroplex area, but that EMPLOYEE is not required to locate in this area.
EMPLOYEE will spend as much time at the principal place of business as may be
requested by the Chief Executive Officer, which requests will not be for an
amount of time in excess of three weeks per month.
7. Termination.
-----------
A. Without Cause. Notwithstanding the Employment Agreement Term,
-------------
EMPLOYER shall have the right to terminate this Agreement without cause upon
sixty (60) days written notice to
<PAGE>
EMPLOYEE to such effect, with such termination to be effective upon the
expiration of such sixty (60) day notice period. Upon a termination of this
Agreement without cause pursuant to this provision, the noncompetition
provisions set forth in Section 8 hereof shall terminate, and EMPLOYEE shall be
entitled to receive (i) any bonuses accrued through the effective date of a
termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan
referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under
the terms and conditions of Paragraph 5 hereof, and (iii) $150,000 which amount
shall be paid to EMPLOYEE in one lump sum (with both such bonuses, salary and
vacation being payable in full on the effective date of such termination of this
Agreement). Upon a termination by EMPLOYER without cause, EMPLOYER agrees to
purchase from EMPLOYEE, at the request of EMPLOYEE, any and all shares of stock
of EMPLOYER owned by EMPLOYEE as of the date of the termination, with the
purchase price to be equal to the greater of EMPLOYEE'S cost of said shares or
the fair market value of said shares as reported in the Wall Street Journal on
the date of termination. EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S desire to
sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days of the
effective date of termination without cause by delivering written notice to
EMPLOYER to such effect. Said notice must be received by EMPLOYER and such
receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said notice to
EMPLOYER, EMPLOYER shall have no obligation to purchase any of its shares from
EMPLOYEE. EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by
EMPLOYEE from other sources after a termination of this Agreement pursuant to
this provision be credited or offset against any sums due to EMPLOYEE.
B. With Cause. EMPLOYER shall have the right to terminate this
----------
Agreement at any time for cause, upon written notice to EMPLOYEE to such effect,
with such termination to be effective upon delivery of such notice to EMPLOYEE.
Upon a termination of this Agreement pursuant to this
<PAGE>
provision, EMPLOYEE shall be entitled to receive only such salary payable
through the effective date of termination, payable in full on the effective date
of such termination of this Agreement. For purposes of this provision, the term
"for cause" shall mean (a) the failure or refusal to perform diligently the
duties of EMPLOYEE's employment after written notice of such failure or refusal
and a reasonable opportunity to remedy such has been provided, (b) the
conviction of an offense involving moral turpitude which, in the judgment of the
Board of Directors of EMPLOYER might bring discredit on EMPLOYER.
C. Disability. If, as a result of EMPLOYEE'S incapacity due to
----------
physical or mental illness, EMPLOYEE shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of intention to termination of
this Agreement is given by EMPLOYER (which may occur thirty days before or at
any time after the end of such six month period) EMPLOYEE shall not have
returned to the performance of his duties hereunder on a full-time basis, this
Agreement shall terminate effective upon the expiration of the thirty (30) day
notice period. Upon a termination of this Agreement pursuant to this provision,
EMPLOYEE shall be entitled to receive (i) any bonuses accrued through the
effective date of a termination of the Agreement by EMPLOYEE pursuant to the
terms of the bonus plan referenced in Paragraph 3.C. hereof, (ii) any earned but
untaken vacation under the terms and conditions of Paragraph 5 hereof, and
(iii) $150,000 which amount shall be paid to EMPLOYEE in one lump sum (with both
such bonuses, salary and vacation being payable in full on the effective date of
such termination of this Agreement). If EMPLOYEE shall receive any disability
payments from any insurance policies provided by EMPLOYER, the payments by
EMPLOYER to EMPLOYEE during any period of disability shall be reduced by the
amount of disability payments received by EMPLOYEE under any such insurance
policy or policies.
<PAGE>
D. Death. In the event of the death of EMPLOYEE, this Agreement
-----
shall terminate effective upon the date of death, and EMPLOYEE'S estate shall be
entitled to receive (i) any bonuses accrued through the effective date of a
termination of the Agreement by EMPLOYEE pursuant to the terms of the bonus plan
referenced in Paragraph 3.C. hereof, (ii) any earned but untaken vacation under
the terms and conditions of Paragraph 5 hereof, and (iii) $150,000 which amount
shall be paid to EMPLOYEE in one lump sum (with both such bonuses, salary and
vacation being payable in full on the effective date of such termination of this
Agreement).
E. By EMPLOYEE. EMPLOYEE shall have the right to terminate this
-----------
Agreement upon sixty (60) days written notice to EMPLOYER to such effect, with
such termination to be effective upon the expiration of such sixty (60) day
notice period. Upon a termination of this Agreement by EMPLOYEE pursuant to this
provision, EMPLOYEE shall be entitled to receive (i) any bonuses accrued by
EMPLOYEE pursuant to the terms of the bonus plan referenced in Paragraph 3.C.
hereof through the effective date of a termination of this Agreement, (ii) any
earned but untaken vacation under the terms and conditions of Paragraph 5
hereof, and (iii) such salary payable through the effective date of such
termination, all payable in full on the effective date of such termination of
this Agreement, unless such termination occurs within twenty-four (24) months
following a Change in Control as defined in Paragraph 7.F. hereof, and then
EMPLOYEE shall additionally be entitled to receive the compensation described in
Paragraph 7.F. hereof and any earned but untaken vacation pursuant to Paragraph
5 hereof.
If EMPLOYEE terminates this Agreement prior to the first annual
anniversary hereof, EMPLOYER shall be entitled to purchase from EMPLOYEE (a) all
of the Buffton Common Stock (the "Section 11 Stock") purchased by EMPLOYEE
pursuant to Section 11 of the Stock Exchange Agreement dated as of April 11,
1997 between EMPLOYER, EMPLOYEE and the other stockholder of Hotels of
<PAGE>
Distinction, Inc., a Florida corporation, (the "Stock Exchange Agreement") and
still owned by EMPLOYEE on the termination date, (b) EMPLOYEE's 120,000 shares
of Buffton Common Stock (the "Exchange Stock") which EMPLOYEE received for his
Hotels of Distinction, Inc. Common Stock pursuant to Section 1 of the Stock
Exchange Agreement and still owned by Employee on the termination date, (c) the
Non Qualified Stock Option Agreement of even date herewith between EMPLOYER and
EMPLOYEE pursuant to which EMPLOYER granted EMPLOYEE an option to purchase
250,000 shares of Buffton Common Stock, and all rights and benefits of EMPLOYEE
thereunder (the "Stock Options") and (d) all Buffton Common Stock purchased by
EMPLOYEE by exercise of all or a part of the Stock Options (the "Exercised
Option Stock") and still owned by EMPLOYEE on the termination date. The
aggregate purchase price payable by EMPLOYER for the Section 11 Stock, the
Exchange Stock, the Stock Options and the Exercised Option Stock purchased
pursuant to the foregoing sentence will be the sum of (1) the average price per
share paid by EMPLOYEE for the Section 11 Stock times the number of shares of
Section 11 Stock sold to EMPLOYER pursuant to the foregoing, (2) 50% of the
market value of a freely tradeable share of Buffton Common Stock on the
termination date times the number of shares of Exchange Stock sold to EMPLOYER
pursuant to the foregoing and (3) the price paid by EMPLOYEE for the Exercised
Option Stock sold to EMPLOYER pursuant to the foregoing.
F. Termination Following a Change in Control. If within twenty-four
-----------------------------------------
(24) months after a Change in Control (as hereinafter defined), EMPLOYEE shall
voluntarily terminate this Agreement, or this Agreement is terminated by
EMPLOYER without cause, EMPLOYEE shall be entitled to receive (i) any earned but
untaken vacation pursuant to the terms and conditions of Paragraph 5 hereof; and
(ii) $450,000.
<PAGE>
Upon a termination by EMPLOYER within twenty-four months after a Change in
Control (as hereinafter defined), EMPLOYER agrees to purchase from EMPLOYEE, at
the request of EMPLOYEE, any and all shares of stock of EMPLOYER owned by
EMPLOYEE as of the date of the termination, with the purchase price to be equal
to the greater of EMPLOYEE'S cost of said shares or the fair market value of
said shares as reported in the Wall Street Journal on the date of the Change in
Control (as hereinafter defined). EMPLOYEE shall notify EMPLOYER of EMPLOYEE'S
desire to sell EMPLOYEE'S shares of EMPLOYER to EMPLOYER within thirty (30) days
of the effective date of termination without cause by delivering written notice
to EMPLOYER to such effect. Said notice must be received by EMPLOYER and such
receipt acknowledged by EMPLOYER. If EMPLOYEE fails to deliver said notice to
EMPLOYER, EMPLOYER shall have no obligation to purchase any of its shares from
EMPLOYEE.
EMPLOYEE shall have no duty to mitigate, nor shall any sums earned by
EMPLOYEE from other sources after a termination of this Agreement pursuant to
this provision be credited or offset against any sums due to EMPLOYEE.
It is the intention of EMPLOYER and EMPLOYEE that EMPLOYEE not be paid an
amount which would be deemed an "excess parachute payment" under Section 280G of
the Code, and accordingly, the amounts payable pursuant to this provision shall
be reduced in an amount necessary to eliminate the payment of any excess
parachute payment. The amounts payable pursuant to this provision shall be paid
in a lump sum within fifteen (15) days following the effective date of
termination of employment. If within twenty-four (24) months after a Change in
Control (as hereinafter defined) EMPLOYER terminates this Agreement without
cause, EMPLOYEE'S duties, obligations, covenants, and promises contained in
Paragraphs 8, 9, and 10 hereof shall terminate and have no further effect.
<PAGE>
For the purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred upon any of the following events:
(i) the acquisition directly or indirectly, by any person (as
such terms are used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), other than EMPLOYER or any of its
subsidiaries or any employee benefit plan maintained by EMPLOYER or
any such subsidiary, of beneficial ownership of securities of EMPLOYER
representing fifteen percent (15%) or more of the combined voting
power of EMPLOYER'S then outstanding securities (with the terms used
herein and in Sections 13(d) and/or 14(d) of the Securities Exchange
Act of 1934, as amended, having the meanings of such terms in such
Sections);
(ii) if the stockholders of EMPLOYER approve a merger or
consolidation, a sale or disposition of all or substantially all of
EMPLOYER'S assets or a plan of liquidation or dissolution of EMPLOYER;
(iii) the election during any period of twenty-four (24) months
or less of a member or members of EMPLOYER'S Board of Directors
without the approval of the election or nomination for election of
such new member or members by a majority of the members of the Board
who were members at the beginning of the period, or members of the
Board thereafter recommended to succeed such original members (or
their successors hereunder) by a majority of the members of the Board
who were members at the beginning of the period (or their successors
hereunder); or
(iv) any person (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) other than
EMPLOYER, any of its subsidiaries or any employee benefit plan
maintained by EMPLOYER or any such subsidiary, makes a tender or
exchange offer for any shares of EMPLOYER'S outstanding voting
securities at any point in time, pursuant to which any such shares are
purchased.
Unless the Continuing Board of Directors of EMPLOYER (as hereinafter
defined) determines that the happening of any of the foregoing events in a
particular case should not be deemed a Change in Control. The "Continuing Board
of Directors of EMPLOYER" shall mean (i) the members of EMPLOYER'S Board of
Directors in office immediately prior to the Change in Control, excluding any
who initiate a Change in Control or are affiliated with one who initiates a
Change in Control, and (ii) any subsequent directors who may be selected,
nominated or approved by a majority of the other Continuing Board of Directors
of EMPLOYER.
<PAGE>
It is specifically agreed by EMPLOYER and EMPLOYEE that a sale of all
or a part of the stock or assets of EMPLOYER, that has been approved by the
Continuing Board of Directors of EMPLOYER, shall not be deemed a Change in
Control for purposes of this Agreement.
G. Failure to Close on Sale of Current Technology. EMPLOYER has
----------------------------------------------
contracted to sell substantially all of the assets of one of its wholly owned
subsidiary, Current Technology, Inc, a Delaware corporation, . In the event this
sale does not close by August 31, 1997, EMPLOYEE shall have a right to terminate
this Agreement effective upon delivery of written notice to EMPLOYER to such
effect. In the event EMPLOYEE terminates this Agreement pursuant to the
provisions of this Paragraph 7.G., EMPLOYEE'S duties, obligations, covenants,
and promises contained in Paragraph 8 hereof shall terminate and EMPLOYER shall
havethe option to purchase at the fair market value any and all shares of
EMPLOYER owned by EMPLOYEE as of the effective date of the termination by
EMPLOYEE pursuant this Paragraph 7.G. Upon a termination of this Agreement
pursuant to this provision, EMPLOYEE shall be entitled to receive (i) any
bonuses accrued by EMPLOYEE pursuant to the terms of the Bonus Plan referenced
in Paragraph 3.C. hereof to the effective date of the termination of this
Agreement, (ii) any earned by untaken vacation under the terms and conditions of
Paragraph 5 hereof, and (iii) such salary payable pursuant to Paragraph 3.A.
hereof accrued to the effective date of the termination of this Agreement.
H. Provisions Surviving Termination. Except as set forth above,
--------------------------------
notwithstanding a termination of this Agreement, EMPLOYER's obligations to
EMPLOYEE pursuant to this Paragraph 7 shall remain in full force and effect, and
EMPLOYEE's duties, obligations, covenants and promises contained in Paragraphs
8, 9, 10 and 11 hereof shall remain in full force and effect; and such
Paragraphs
<PAGE>
shall survive a termination of this Agreement and remain fully enforceable by
EMPLOYER or EMPLOYEE, as applicable.
8. Noncompetition.
--------------
A. EMPLOYEE acknowledges that EMPLOYER has agreed to provide him,
and he shall receive from the EMPLOYER, special training and knowledge specific
to EMPLOYER's business. EMPLOYEE acknowledges that included in the special
knowledge received is confidential and proprietary information including the
Confidential Information defined in Paragraph 9 below which EMPLOYER invested
extensive time and resources in developing and creating . EMPLOYEE acknowledges
that this Confidential Information is valuable to EMPLOYER, and therefore, its
protection and maintenance constitutes a legitimate interest to be protected by
EMPLOYER by the enforcement of this covenant not to compete. Therefore, as an
inducement to EMPLOYER to enter into this agreement, to invest time in training
and educating EMPLOYEE and to disclose to EMPLOYEE confidential and proprietary
information, EMPLOYEE agrees that prior to a termination of this Agreement and
for a period of thirty-six months following the effective date of a termination
of this Agreement (specifically excluding a termination of this Agreement by
EMPLOYER without cause pursuant to Paragraph 7.A. hereof and specifically
excluding a termination of this Agreement by EMPLOYEE following a Change in
Control, as defined in Paragraph 7.F. hereof), EMPLOYEE will not, directly as a
principal (whether individually or in any form of entity) or as an employee or
consultant, engage in, consult with or participate in or with, any business
reasonably competitive with and within a five mile radius of any hotel or
restaurant owned, operated, managed or under construction by EMPLOYER, or any
"affiliate", as hereinafter defined, of EMPLOYER, during the Employment
Agreement Term or at the time this Agreement is terminated. For
<PAGE>
purposes of this Agreement, "affiliates" means any person or entity that is
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, EMPLOYER.
EMPLOYEE represents to EMPLOYER that the enforcement of the
restriction contained in this Paragraph 8.A. would not be unduly burdensome to
EMPLOYEE and that in order to induce EMPLOYER to pay EMPLOYEE'S compensation
during the Employment Agreement Term, to train EMPLOYEE and to divulge
Confidential Information to EMPLOYEE, EMPLOYEE further represents and
acknowledges that EMPLOYEE is willing and able to compete in other geographical
areas not prohibited by this Section 8.A.
B. EMPLOYEE agrees that a breach or violation by EMPLOYEE of the
covenants contained in this Paragraph 8 shall entitle EMPLOYER, as a matter of
right, to an injunction issued by any court of competent jurisdiction,
restraining any further or continued breach or violation of this covenant. Such
right to an injunction shall be cumulative and in addition to, and not in lieu
of, any other remedies to which the EMPLOYER may show itself justly entitled
including without limitation EMPLOYEE'S forfeiture of any sums then owed to
EMPLOYEE pursuant to Paragraph 7 hereof and/or the obligation by EMPLOYEE to
repay EMPLOYER for any sums previously paid to EMPLOYEE pursuant to Paragraph 7
hereof.
C. The representations and covenants contained in this Paragraph 8
on the part of EMPLOYEE will be construed as ancillary to and independent of any
other provision of this agreement and the existence of any claim or cause of
action of EMPLOYEE against EMPLOYER or any officer or director of EMPLOYER,
whether predicated on a disagreement or otherwise, shall not constitute a
defense to the enforcement by EMPLOYER of the covenants of EMPLOYEE contained in
this Paragraph 8.
<PAGE>
D. The parties to this agreement agree that the limitations
contained in this Paragraph 8 with respect to geographic area, duration and
scope of activity are reasonable. However, if any court shall determine that the
geographic area, duration or scope of activity of any restriction contained in
this Paragraph 8 is unenforceable, it is the intention of the parties that such
restrictive covenant set forth herein shall not thereby be terminated but shall
be deemed amended to the extent required to render it valid and enforceable.
9. Disclosure of Confidential Information.
--------------------------------------
A. EMPLOYEE will disclose to the EMPLOYER all ideas and business
plans developed by EMPLOYEE through the effective date of a termination of this
Agreement that relate directly to the business of the EMPLOYER.
B. The EMPLOYEE recognizes and acknowledges that by virtue of
EMPLOYEE'S position with EMPLOYER that EMPLOYER will provide EMPLOYEE with
access to certain Confidential Information (as hereinafter defined) of the
EMPLOYER, and that all such information constitutes valuable, special and unique
property of the EMPLOYER that is not generally known or readily ascertainable by
independent investigation. The EMPLOYEE agrees that, prior to a termination of
this Agreement, and for a period of thirty-six (36) months after the effective
date of a termination of this Agreement, EMPLOYEE will not, without the prior
written consent of the EMPLOYER, disclose or authorize disclosure or permit
anyone under his direction to disclose to anyone not properly entitled thereto
any of such Confidential Information. For purposes of this immediately preceding
sentence, persons properly entitled to such information shall be the Board of
Directors of the EMPLOYER and such officers, employees and agents of the
EMPLOYER or any affiliate thereof to whom such information is furnished in the
normal course of business under established policies approved by the EMPLOYER.
For purpose of this Agreement, the
<PAGE>
term "Confidential Information" shall mean such information which has been
clearly marked or identified as Confidential by EMPLOYER, or any affiliate of
EMPLOYER, any documents, contracts, written information, procedural or technical
manuals, training manuals, customer lists, customer account analysis, price
books, computer files, operating manuals, raw material costing information,
product cost information, food recipes, recipe books, concept profiles,
accounting papers, work papers, corporate records and any other information
which is understood to be of a confidential character and which has not been
published or otherwise become a matter of general public knowledge through no
fault of EMPLOYEE, all of which is owned or possessed by or relates to the
business of EMPLOYER or any affiliate of EMPLOYER. The restrictions on EMPLOYEE
set forth herein shall not limit or restrict the protection of any Confidential
Information provided to EMPLOYER pursuant to law, but are cumulative to those
rights. Further, the restrictions set forth herein shall not be interpreted to
grant to EMPLOYEE any right at the expiration of the thirty-six (36) month
period to use, disclose or authorize a third party to use any Confidential
Information.
C. The EMPLOYEE further agrees that (i) at all times prior to a
termination of this Agreement, and (ii) upon the termination of this Agreement,
he will not copy, remove from EMPLOYER'S or any affiliate of EMPLOYER'S
premises, take with him or retain, without the prior written authorization of
the EMPLOYER, any Confidential Information or any documents or copies thereof
belonging to the EMPLOYER or any affiliate of EMPLOYER, or any other information
of any kind belonging to the EMPLOYER (collectively "EMPLOYER'S Information).
EMPLOYEE represents and warrants that prior to the execution of this Agreement
he has returned to EMPLOYER any and all EMPLOYER'S Information which may
previously have come into his possession except for EMPLOYER'S Information with
respect to which EMPLOYER has consented to EMPLOYEE'S possession thereof. In the
event of a breach or
<PAGE>
threatened breach by the EMPLOYEE of the provisions of this Paragraph 9, the
EMPLOYER and the EMPLOYEE agree that the remedy at law available to the EMPLOYER
would be inadequate and that the EMPLOYER shall be entitled to an injunction,
without the necessity of posting bond therefor, restraining the EMPLOYEE from
disclosing, in whole or in part, the Confidential Information. Nothing herein
shall be construed as prohibiting the EMPLOYER from pursuing any other remedies,
in addition to the injunctive relief available under this Paragraph 9, for such
breach or threatened breach, including the recovery of damages from the
EMPLOYEE.
10. Intellectual Property. EMPLOYEE hereby assigns to EMPLOYER all of
---------------------
EMPLOYEE'S right, titles and interest in and to all patents, formulae,
inventions, processes, copyrights, recipes, concepts and concept profiles,
proprietary information, trademarks or trade names, or future improvements to
patents, formulae, inventions, processes, copyrights, recipes, concepts and
concept profiles, proprietary information, trademarks or trade names, developed
or completed by the EMPLOYEE, which relate to the business of EMPLOYER, at any
time prior to a termination of this Agreement (collectively the "Items); and the
Items shall be promptly disclosed to the EMPLOYER, and the EMPLOYEE shall
execute such instruments of assignment of the Items to the EMPLOYER as the
EMPLOYER shall request. The EMPLOYEE acknowledges that a remedy at law for any
breach by him of the provisions in this Paragraph 10 would be inadequate, and
the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled to injunctive
relief in case of any such breach.
11. Non-Solicitation of Employees. The EMPLOYEE agrees that prior to a
-----------------------------
termination of this Agreement, and for a period of thirty-six (36) months after
the effective date of a termination of this Agreement, Employee shall not,
directly or indirectly, hire, offer to hire, entice, solicit or in any other
manner persuade or attempt to persuade any employee of EMPLOYER, or any
affiliate of EMPLOYER,
<PAGE>
to discontinue or alter such employee's employment relationship with EMPLOYER,
or any affiliate of EMPLOYER. The EMPLOYEE acknowledges that a remedy at law for
any breach by him of the provisions in this Paragraph 11 would be inadequate,
and the EMPLOYEE hereby agrees that the EMPLOYER shall be entitled to injunctive
relief in case of any such breach.
12. Assignment. The services to be rendered and obligations to be
----------
performed by EMPLOYEE hereunder are special and unique, and all such services
and obligations and all of EMPLOYEE'S rights hereunder are personal to EMPLOYEE
and shall not be assignable by EMPLOYEE and any purported assignment thereof by
EMPLOYEE shall not be valid or binding upon the EMPLOYER. However, in the event
of EMPLOYEE'S death during the term of this Agreement, EMPLOYEE'S personal
representative shall be entitled to the rights as specified in Paragraph 7.D. of
this Agreement and shall be obligated to execute any documents and perform any
other acts necessary to carry out and give effect to the terms and provisions of
this Agreement. EMPLOYER may assign this Agreement and all of its rights
hereunder to any person, firm or corporation succeeding to the business of the
EMPLOYER, provided said company shall assume (by contract or operation of law)
the EMPLOYER'S obligations hereunder. In the event this Agreement is assumed by
any person, firm or corporation succeeding to the business of EMPLOYER, then
EMPLOYER shall be released and discharged from any and all obligations to
EMPLOYEE under this Agreement.
13. Arbitration. In the event of a dispute arising out of or relating to
-----------
this Agreement, or relating to any claim or cause of action which may arise or
be asserted under any federal, state or local statutory, regulatory or common
law, including, without limitation, claims of discrimination, breach of contract
or tort, such as intentional infliction of emotional distress, then, upon notice
by any party to the other party (an "Arbitration Notice") and to American
Arbitration Association ("AAA"), 140 West 51st Street, New
<PAGE>
York, New York 10020-1203 [telephone (212) 484-3266; fax (212) 307-4387], the
controversy or dispute shall be submitted to a sole arbitrator who is
independent and impartial, for binding arbitration in Fort Worth, Texas, in
accordance with AAA's Commercial Arbitration Rules (the "Rules"). The parties
agree that they will faithfully observe this agreement and the Rules and that
they will abide by and perform any award rendered by the arbitrator. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section
1-16 (or by the same principles enunciated by such Act in the event it may not
be technically applicable). The award or judgment of the arbitrator shall be
final and binding on all parties and enforced by any court having jurisdiction.
If any party becomes the subject of a bankruptcy, receivership or other similar
proceeding under the laws of the United States of America, any state or
commonwealth or any other nation or political subdivision thereof, then, to the
extent permitted or not prohibited by applicable law, any factual or substantive
legal issues arising in or during the pendency of any such proceeding shall be
subject to all of the foregoing mandatory arbitration provisions and shall be
resolved in accordance therewith. The agreements contained herein have been
given for valuable consideration, are coupled with an interest and are not
intended to be executory contracts. The fees and expenses of the arbitrator will
be shared equitably and ratably (as determined by the arbitrator) by all parties
engaged in the dispute or controversy.
Promptly after the Arbitration Notice is given, AAA will select five
possible arbitrators, to whom AAA will give the identities of the parties and
the general nature of the controversy. If any of those arbitrators disqualifies
himself or declines to serve, AAA shall continue to designate potential
arbitrators until the parties have five to select from. After the panel of five
potential arbitrators has been completed, a two page summary of each of the
potential arbitrators will be given to each of the parties, and the parties will
have a period of 10 days after receiving the summaries in which to attempt to
agree upon the arbitrator
<PAGE>
to conduct the arbitration. If the parties are unable to agree upon an
arbitrator, then one of the parties shall notify AAA, and AAA shall select the
arbitrator from one of the five. The decision of AAA with respect to the
selection of the arbitrator will be final and binding.
Within 10 days after the selection of the arbitrator, the parties and their
council will appear before the arbitrator at a price an time designated by the
arbitrator for the purpose of each party making a one hour or less presentation
and summary of the case. Thereafter, the arbitrator will set dates and times
for additional hearings until the proceeding is concluded. The desire and goal
of the parties is, and the arbitrator will be advised that his goal should be,
to conduct and conclude the arbitration proceeding as expeditiously as possible.
If any party or his council fails to appear at any hearing, the arbitrator shall
be entitled to reach a decision based on the evidence which has been presented
to him by the parties who did appear.
14. Entire Agreement. This Agreement constitutes the whole agreement
----------------
between the parties hereto and there are no terms other than those contained
herein. This Agreement supersedes any prior contract or understanding relating
to employment of EMPLOYEE by EMPLOYER.
15. Amendment. No variation hereof shall be deemed valid unless in
---------
writing and signed by the parties hereto, and no discharge of the terms hereof
shall be deemed valid unless by full performance by the parties hereto or by a
writing signed by the parties hereto.
16. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of Texas.
17. Severability. Each provision of this Agreement is intended to be
------------
severable from the others so that if any provision or term hereof is illegal or
invalid (Pounds)or any reason whatsoever, such illegality or invalidity shall
not affect the validity of the remaining provisions and terms hereof.
<PAGE>
18. Captions. Captions used in this Agreement are used for convenience
--------
only and are not intended to, nor are they to be construed to, have any
substantive meaning or control in the construction of this Agreement.
19. Notice. Any notice hereunder to the parties hereto shall be in
------
writing and shall be sufficient in all respects if personally delivered or
mailed by registered or certified United States mail, postage prepaid, and
addressed to such party at the address shown below, or at such other address as
such party may, by written notice received by the other party to this Agreement,
have designated as the address of such party for such purpose. Any notice
required under this Agreement shall be effective on receipt.
EMPLOYER: BUFFTON CORPORATION
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107
EMPLOYEE: JEAN-CLAUDE MATHOT
_____________________________
_____________________________
20. No Third Party Benefits. Except as otherwise provided by law,
-----------------------
EMPLOYEE shall not have any power in any manner to alienate, anticipate, charge
or encumber any payments contemplated by this Agreement, and all rights and
benefits of EMPLOYEE shall be for the sole personal benefit of EMPLOYEE, and no
other person shall acquire any right, title or interest hereunder by reason of
any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against EMPLOYEE.
EXECUTED as of the day and year first written above.
EMPLOYER:
BUFFTON CORPORATION
By: /S/ Robert McLean
-------------------------------------
<PAGE>
Name: Robert McLean
--------------------------
Title: CEO
--------------------------
EMPLOYEE
/S/Jean-Claude Mathot
---------------------------------
JEAN-CLAUDE MATHOT
<PAGE>
EXHIBIT 4
JOINT FILING AGREEMENT
----------------------
In accordance with Rule 13d-1(f) promulgated under the Securities Exchange
Act of 1934, as amended, the undersigned hereby agree to the joint filing with
all other Reporting Persons (as such term as defined in the Schedule 13D
referred to below) on behalf of each of them of a Statement on Schedule 13D
(including any amendments thereto) with respect to the common stock, par value
$.05 per share, of Buffton Corporation, a Delaware corporation. The undersigned
further consent and agree to the inclusion of this Agreement as an Exhibit to
such Schedule 13D. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
23rd day of April, 1997.
/s/ ALAN TREMAIN
Alan Tremain
/s/ JEAN-CLAUDE MATHOT
Jean-Claude Mathot
13891
