<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the quarterly period ended March 31, 1997 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the transition period from ________ to _____________
Commission file number 1-9822
BUFFTON CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 75-1732794
- ------------------------------- ---------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107
-----------------------------------------------------
(Address and zip code of principal executive offices)
(817) 332-4761
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares outstanding at:
Class April 14, 1997
- ---------------------------- --------------------------------
Common stock, $.05 par value 7,713,928
1
<PAGE>
BUFFTON CORPORATION
Index
-----
Page
----
Part I - Financial Information............................................ 3
Item 1 - Financial Statements............................................. 3
Consolidated Condensed Balance Sheets March 31, 1997 (Unaudited)
and September 30, 1996.................................................. 3
Consolidated Condensed Statements of Operations (Unaudited)
Three Months Ended March 31, 1997 and 1996.............................. 4
Consolidated Condensed Statements of Operations (Unaudited)
Six Months Ended March 31, 1997 and 1996................................ 5
Consolidated Condensed Statements of Cash Flow (Unaudited)
Six Months Ended March 31, 1997 and 1996................................ 6
Supplemental Disclosures of Cash Flow Information (Unaudited)............. 6
Notes to Consolidated Condensed Financial Statements (Unaudited).......... 7
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 11
Part II - Other Information............................................... 15
Signatures................................................................ 16
2
<PAGE>
BUFFTON CORPORATION
Consolidated Condensed Balance Sheets
-------------------------------------
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
----------- --------------
(Unaudited)
(In thousands)
<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 1,672 $ 1,659
Accounts receivable, net of allowance for
doubtful accounts of $29,000 and $35,000,
respectively.................................................... 2,867 3,370
Inventories....................................................... 1,518 1,396
Prepaid and other current assets.................................. 987 492
------- -------
Total current assets............................................ 7,044 6,917
------- -------
Property, plant and equipment, at cost:
Land, building and improvements................................... 12,834 12,257
Less: Accumulated depreciation and amortization.................. (3,026) (2,626)
------- -------
Net property, plant and equipment................................ 9,808 9,631
------- -------
Patents, net of accumulated amortization of
$1,609,000 and $1,529,000, respectively.......................... 1,371 1,451
Goodwill, net of amortization of $1,025,000 and
$845,000, respectively........................................... 3,939 4,120
Long-term note receivable........................................... 430 540
Other assets........................................................ 1,132 505
------- -------
$23,724 $23,164
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt................................. $ 187 $ 187
Accounts payable.................................................. 956 1,152
Accrued liabilities............................................... 1,074 1,524
Income taxes...................................................... 638 311
------- -------
Total current liabilities........................................ 2,855 3,174
Long - term debt.................................................... 2,400 2,493
Deferred income taxes............................................... 4 4
------- -------
Total liabilities................................................ 5,259 5,671
------- -------
Stockholders' equity:
Preferred stock $.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding.................... - -
Common stock $.05 par value; 30,000,000 shares authorized;
6,726,878 shares outstanding..................................... 337 337
Additional paid-in capital........................................ 14,365 14,354
Retained earnings................................................. 3,872 3,158
Treasury stock, at cost, 54,550 and 183,350, shares respectively.. (109) (356)
------- -------
Total stockholders' equity....................................... 18,465 17,493
------- -------
$23,724 $23,164
======= =======
</TABLE>
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
3
<PAGE>
BUFFTON CORPORATION
Consolidated Condensed Statements of Operations (Unaudited)
-----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------
1997 1996
------ ------
(In thousands, except
per share amounts)
<S> <C> <C>
Net revenues..................................... $7,326 $5,972
------ ------
Costs and expenses:
Cost of goods sold (exclusive of depreciation).. 2,395 2,018
Selling, general and administrative............. 3,532 3,227
Depreciation and amortization................... 341 378
Interest........................................ 56 60
------ ------
Total costs and expenses....................... 6,324 5,683
------ ------
Income before income taxes....................... 1,002 289
Income tax provision............................. 401 80
------ ------
Net income....................................... $ 601 $ 209
====== ======
Primary income per average common share.......... $ .09 $ .03
====== ======
Weighted average common shares outstanding....... 6,679 6,675
====== ======
Fully diluted income per common share............ $ .09 $ .03
====== ======
Fully diluted shares outstanding................. 6,679 6,675
====== ======
</TABLE>
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
4
<PAGE>
BUFFTON CORPORATION
Consolidated Condensed Statements of Operations (Unaudited)
-----------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended March 31,
---------------------
1997 1996
------- -------
(In thousands, except
per share amounts)
<S> <C> <C>
Net revenues..................................... $13,295 $11,308
------- -------
Costs and expenses:
Cost of goods sold (exclusive of depreciation).. 4,375 3,907
Selling, general and administrative............. 6,947 5,920
Depreciation and amortization................... 672 655
Interest........................................ 111 95
------- -------
Total costs and expenses....................... 12,105 10,577
------- -------
Income before income taxes....................... 1,190 731
Income tax provision............................. 476 205
------- -------
Net income....................................... $ 714 $ 526
======= =======
Primary income per average common share.......... $ .11 $ .09
======= =======
Weighted average common shares outstanding....... 6,635 6,178
======= =======
Fully diluted income per common share............ $ .10 $ .09
======= =======
Fully diluted shares outstanding................. 6,999 6,178
======= =======
</TABLE>
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
5
<PAGE>
BUFFTON CORPORATION
-------------------
Consolidated Condensed Statements of Cash Flow (Unaudited)
----------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended March 31,
--------------------
1997 1996
------ ------
(In thousands)
<S> <C> <C>
Net cash provided by operating activities..... $1,052 $ 621
------ -------
Cash flows from investing activities:
Additions to property, plant and equipment.. (577) (683)
Additions to other assets................... (354) (19)
Acquisitions, net of cash acquired.......... - (1,007)
------ -------
Net cash provided by investing activities..... (931) (1,709)
------ -------
Cash flows from financing activities:
Additions to long-term debt................. - 1,200
Repayments of long-term debt................ (93) (26)
Treasury stock purchases.................... (15) -
------ -------
Net cash provided by financing activities..... (108) 1,174
------ -------
Net increase in cash.......................... 13 86
Cash and cash equivalents at beginning
of period................................... 1,659 7
------ -------
Cash and cash equivalents at end of period.... $1,672 $ 93
====== =======
</TABLE>
Supplemental Disclosures of Cash Flow Information
-------------------------------------------------
<TABLE>
<CAPTION>
Supplemental cash flow information (unaudited):
Six Months
Ended March 31,
--------------------
1997 1996
------ ------
(In thousands)
<S> <C> <C>
Cash paid for:
Interest................................... $ 56 $ 40
Income taxes............................... 164 5
Noncash investing and financing activities:
Fair value of assets acquired.............. $4,660
Liabilities assumed........................ 1,754
Stock issued............................... 1,804
------
Cash paid.................................. 1,102
Less: Cash acquired....................... 95
------
Net cash paid for acquisitions............. $1,007
======
</TABLE>
See accompanying notes to unaudited Consolidated Condensed Financial Statements.
6
<PAGE>
BUFFTON CORPORATION
Notes to Consolidated Condensed Financial Statements (Unaudited)
----------------------------------------------------------------
Note A
- ------
In the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of
Buffton Corporation (the Company), as of March 31, 1997, the results of its
operations for the three and six month periods ended March 31, 1997 and 1996 and
its cash flows for the six month periods ended March 31, 1997 and 1996.
The accounting policies followed by the Company are set forth in Note
1 to the Company's financial statements in the 1996 Buffton Corporation Annual
Report on Form 10-K/A.
Note B
- ------
The results of operations for the three and six month periods ended
March 31, 1997 are not necessarily indicative of the results to be expected for
the full year.
Note C
- ------
Net income per share has been computed on the basis of the weighted
average number of common shares outstanding.
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Financial Accounting Standard No. 128, Earnings per Share ("FAS 128"),
which is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. Effective December 31, 1997, the
Company will adopt FAS 128, which establishes standards for computing and
presenting earnings per share ("EPS"). The statement requires dual presentations
of basic and diluted EPS on the face of the income statement for entities with
complex capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS calculation to the numerator and denominator of the
dilutited EPS calculation. Basic EPS excludes the effect of potentially
dilutive securities while diluted EPS reflects the potential dilution that would
have occured if securities or other contracts to issue common stock had been
exercised, converted or resulted in the issuance of common stock that would have
then shared in the earnings of the entity. Had the Company already adopted the
provision of this statement, there would have been no impact on the EPS amounts
presented.
7
<PAGE>
Note D
- ------
Inventories are as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------- -------------
(In thousands)
<S> <C> <C>
Raw materials $ 917 $1,140
Work in process 321 86
Finished goods 280 170
------ ------
$1,518 $1,396
====== ======
</TABLE>
Note E
- ------
Effective January 1, 1996, the Company entered into an agreement to
purchase the assets of Cabo Tacobar One, Ltd., a Mexican restaurant concept with
Central and South American influences located in Houston, Texas, for $589,000 in
cash, 375,000 shares of the Company's common stock (with an estimated fair
market value of $656,000), and a one year option to purchase an additional
150,000 shares of the Company's common stock at a price of $2.00 per share.
Additionally, the Company issued 76,500 shares of its common stock for
commissions incurred in connection with the acquisition which resulted in
increased acquisition costs of $153,000. Excess of purchase price over fair
value of net tangible assets acquired, recorded as Goodwill, approximates
$1,300,000 and is being amortized on a straight line basis over 15 years.
Effective January 1, 1996, the Company also entered into an agreement to
purchase the assets and assume certain liabilities of the Stockyards Hotel,
located in Fort Worth, Texas, for $500,000 in cash, 450,000 shares of the
Company's common stock (with an estimated fair market value of $788,000) and the
refinancing of a $1,600,000 bank term loan. Under this agreement, the Company
guaranteed, until March 15, 1997, a sales price of $2.05 per share for any of
this stock that may be sold. No liability was incurred under the guarantee
agreement. These acquisitions were accounted for under purchase accounting and
are included in the Company's results of operations beginning on the
acquisitions' effective date of January 1, 1996.
Unaudited proforma results from continuing operations, as if the
acquisitions had occurred at the beginning of fiscal 1996 are as follows:
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1996
------------------
<S> <C>
Revenues................................. $12,106
Net income from operations............... 569
Primary income per average common share.. .09
</TABLE>
8
<PAGE>
Note F
- ------
During March 1992, the United States Environmental Protection Agency (EPA),
issued a Record of Decision (ROD) with respect to the Company's Superfund Site
in Vestal, New York. An Administrative Order for Remedial Design and Remedial
Action was issued on October 1, 1992. The ROD requires the Company to construct
a water treatment facility at the site and to pump contaminated ground water
from bedrock and overburden extraction wells for 15 to 30 years until
remediation goals were met. In December 1992, the Company's environmental
consultants prepared and submitted a Remedial Design Work Plan (RDWP) to the
EPA. The EPA issued comments on the RDWP on October 1, 1993, and a revised RDWP
was submitted to the EPA on October 21, 1993. During February 1994, the Company
received comments from the EPA with respect to the revised RDWP and the
Company's environmental consultants submitted a response. The EPA approved the
revised RDWP in October 1994. On November 14, 1994, engineering design and
related fieldwork was begun in order to meet the specifications of the revised
RDWP.
During the six months ended March 31, 1997 and 1996, $199,000 and $229,000,
respectively, were incurred for work related to the engineering design. These
costs were capitalized when incurred because the remedy would prevent further
environmental contamination with respect to the contaminated ground water being
pumped from the extraction wells and improve the property compared with its
condition when acquired by the Company. Due to concerns about the correctness
of the remedy provided for in the ROD, additional fieldwork was performed and in
June 1995, an RDWP Addendum was prepared and submitted to the EPA. The Company
received comments from the EPA regarding this Addendum, and the Company's
environmental consultants submitted a response shortly thereafter.
On August 24, 1995, the Company and its legal and environmental consultants
met with officials of the EPA and agreed on additional fieldwork deemed
necessary by the EPA to support the Company's position regarding the RDWP
Addendum. At this meeting, officials of the EPA agreed the remedy needed to be
modified and that certain requirements under the existing ROD needed to be
eliminated or reduced in scope.
Additional fieldwork provided for in the RDWP Addendum was conducted at the
site and resulted in the formulation of a revised remedy. On December 19, 1995,
the Company and its legal and environmental consultants presented to the EPA the
RDWP Addendum and the recommended changes to the ROD in the form of a revised
remedy. On July 16, 1996, the Company and its legal and environmental
representatives met with the EPA to review the EPA's written response to this
revised remedy. The revised remedy would eliminate certain requirements of the
existing ROD and would primarily include removing and treating contaminated
soil, significantly reducing the time period for remediation.
In April 1997, the EPA issued a proposed plan setting forth the expedited
remedy discussed above. The proposed plan allows 30 days for public comment.
If the EPA issues an amended ROD that is consistent with the proposed plan, the
Company would, at the date of amendment, expense approximately $3,000,000, the
estimated net present value of the future costs of implementing this
alternative. Additionally, all prior costs incurred, approximating $870,000
through March 31, 1997, associated with the implementation of the original ROD
would be expensed. As a result, the Company expects to expense $3,870,000 during
the quarter ending June 30, 1997.
9
<PAGE>
Note G
- ------
The Company is a party to various legal actions which are in the aggregate
immaterial, and due to the nature of the Company's business, it could be a party
in other legal or administrative proceedings arising in the ordinary course of
business. While occasional adverse settlements or resolutions may occur and
negatively impact earnings in the year of settlement, it is the opinion of
management that their ultimate resolution will not have a material adverse
effect on the Company's financial position.
Note H
- ------
One of the Company's subsidiaries has a financing agreement with a bank
which consists of a $2,000,000 revolving line of credit, all of which was
available for borrowing at March 31, 1997, and is secured by the accounts
receivable and inventory of the subsidiary. The terms of the finance agreement
provide for interest to be paid monthly at a floating rate equal to the
established prime rate. The agreement also provides for a commitment fee of
0.25% per annum of the unused portion of the facility.
Note I
- ------
In April 1997, the Company acquired all of the outstanding stock of Hotels
of Distinction (HOD), a hotel management company, from Alan Tremain, O.B.E. and
Jean-Claude Mathot in exchange for 300,000 shares of the Company's common stock.
In addition, Mr. Tremain will become Chairman of the Board of the Company and
Jean-Claude Mathot will become President and Chief Operating Officer of the
Company. Because HOD has no assets or management contracts at the date of
purchase, the transaction, in substance, represents payment for employment
services. As a result, the Company will expense $875,000, the estimated fair
market value of the stock, during the quarter ending June 30, 1997.
10
<PAGE>
BUFFTON CORPORATION
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL INFORMATION
At March 31, 1997, the Company consists of operations in two principal
segments, electrical products and hospitality group. During the year ended
September 30, 1996 and the six months ended March 31, 1997, the Company entered
into the following acquisition and disposition transactions.
Effective January 1, 1996, the Company entered into agreements to purchase
the assets of Cabo Tacobar One, Ltd. (Cabo), located in Houston, Texas and to
purchase the assets and assume certain liabilities related to the Stockyards
Hotel (SYH), located in Fort Worth, Texas. See Note E of Notes to Consolidated
Condensed Financial Statements for details of the acquisitions.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain matters discussed herein are forward-looking statements about the
business, financial condition and prospects of the Company. The actual results
could differ materially from those indicated by such forward-looking statements
because of various risks and uncertainties. Such risks and uncertainties may
include, but are not limited to regional and national economic conditions,
changes in customer demand for products offered by the Company, and other
matters that may adversely affect the availability of products and pricing,
state and federal regulatory environment, possible future acquisitions or
dispositions, amendments to the Record of Decision issued by the Environmental
Protection Agency (see Liquidity and Capital Resources) and other risks
indicated in the Company's previous filings with the Securities and Exchange
Commission. The Company cannot control these risks and uncertainties, and in
many cases, cannot predict the risks and uncertainties that could cause its
actual results to differ materially from those indicated by the forward-looking
statements.
RESULTS OF OPERATIONS
Consolidated net revenues in the 1997 three and six month periods increased
23% and 18%, respectively, compared to 1996. Electrical products revenues for
the 1997 three and six month periods increased 36% and 14%, respectively, due to
increased shipments made under contract, of power distribution modules
incorporating surge suppression for integration into a customer's sorter
equipment and to a new product introduction in its power siftor line.
Hospitality revenues for the 1997 three month period increased 7% compared to
1996 due to increased revenues at Cat's Meow (primarily due to increased major
tourist events in New Orleans and higher sales during Mardi Gras, as well as a
menu price increase of approximately 6%) and Cabo (due to expansion in May 1996)
offset by reduction in revenues by sale of River Rat's in July 1996.
Hospitality Division revenues for the 1997 six month period increased 23%, due
to the inclusion of the results of operations of Cabo and SYH effective January
1, 1996.
11
<PAGE>
Consolidated total costs and expenses during the 1997 three and six month
periods increased 11% and 14%, respectively, compared to 1996. Consolidated
costs of sales increased 19% and 12% during the 1997 three and six month periods
versus 1996. As a percent of related revenue, these costs were 33% during the
1997 three month period versus 34% a year earlier and were 33% during the 1997
six month period versus 35% a year earlier. Electrical products cost of sales
during the 1997 three and six month periods increased 26% and 11% compared to
1996. These costs as a percent of revenue were 41% in the 1997 three month
period compared to 44% in 1996 and 41% in the 1997 six month period compared to
42% in 1996. The increase in absolute dollars was due to increased sales and
the decrease in costs as a percent of revenue is due to increased manufacturing
efficiencies. Cost of sales related to the Hospitality Division during the 1997
three and six month periods increased 1% and 16%, respectively. This increase
is due to the increase in sales as previously discussed. Cost of sales as a
percentage of revenue approximated prior year amounts.
Consolidated selling, general and administrative expenses for the 1997
three and six month periods increased 9% and 17%, respectively, compared to
1996. The absolute dollar increase in these expenses is due to increased sales
levels incurred during 1997. As a percent of revenue, these expenses were 48%
for the 1997 three month period versus 54% in 1996 and were 52% for the 1997 and
1996 six month periods. Electrical products selling, general and administrative
expenses increased 12% and 11% for the 1997 three and six month periods,
respectively, versus 1996. The increases associated with the electrical
products segment are due to the 1996 results including the reversal of reserves
in the amount of $146,000 related to favorable developments of certain state
sales tax claims and to higher salaries and commissions incurred as a result of
increased sales. The expenses associated with the Hospitality Division for the
1997 three month period approximated the 1996 amount. The expenses associated
with the Hospitality Division for the 1997 six month period increased 7% ,
compared to 1996. This increase is due to the inclusion of the results of
operations of Cabo and SYH effective January 1, 1996.
The increase in interest expense to $111,000 for the 1997 six month period
from $95,000 in 1996 is primarily due to the refinancing of a $1,600,000 bank
term loan assumed in connection with the acquisition of SYH offset by the
reduction of debt outstanding under a line of credit with a bank. Interest
expense for the 1997 three month period approximated the 1996 amount.
During the three months ended March 31, 1997, the Company reported income
from continuing operations before income taxes of $1,002,000 versus $289,000 in
1996. This increase is due to increased operating income at the electrical
products division and hospitality division of approximately $650,000 and
$350,000, respectively, offset in part by increased corporate expenses related
to concept development and additional management salaries incurred to develop
the hospitality operations for future growth. During the six months ended March
31, 1997, the Company reported income from continuing operations before income
taxes of $1,190,000 versus $731,000 in 1996. This increase is due to increased
operating income at the electrical products division and hospitality division of
approximately $450,000 and $580,000, respectively, offset in part by increased
corporate expenses related to concept development and additional management
salaries incurred to develop the hospitality operations for future growth.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During March 1992, the United States Environmental Protection Agency (EPA),
issued a Record of Decision (ROD) with respect to the Company's Superfund Site
in Vestal, New York. An Administrative Order for Remedial Design and Remedial
Action was issued on October 1, 1992. The ROD requires the Company to construct
a water treatment facility at the site and to pump contaminated ground water
from bedrock and overburden extraction wells for 15 to 30 years until
remediation goals were met. In December 1992, the Company's environmental
consultants prepared and submitted a Remedial Design Work Plan (RDWP) to the
EPA. The EPA issued comments on the RDWP on October 1, 1993, and a revised RDWP
was submitted to the EPA on October 21, 1993. During February 1994, the Company
received comments from the EPA with respect to the revised RDWP and the
Company's environmental consultants submitted a response. The EPA approved the
revised RDWP in October 1994. On November 14, 1994, engineering design and
related fieldwork was begun in order to meet the specifications of the revised
RDWP.
During the six months ended March 31, 1997 and 1996, $199,000 and $229,000,
respectively, were incurred for work related to the engineering design. These
costs were capitalized when incurred because the remedy would prevent further
environmental contamination with respect to the contaminated ground water being
pumped from the extraction wells and improve the property compared with its
condition when acquired by the Company. Due to concerns about the correctness
of the remedy provided for in the ROD, additional fieldwork was performed and in
June 1995, an RDWP Addendum was prepared and submitted to the EPA. The Company
received comments from the EPA regarding this Addendum, and the Company's
environmental consultants submitted a response shortly thereafter.
On August 24, 1995, the Company and its legal and environmental consultants
met with officials of the EPA and agreed on additional fieldwork deemed
necessary by the EPA to support the Company's position regarding the RDWP
Addendum. At this meeting, officials of the EPA agreed the remedy needed to be
modified and that certain requirements under the existing ROD needed to be
eliminated or reduced in scope.
Additional fieldwork provided for in the RDWP Addendum was conducted at the
site and resulted in the formulation of a revised remedy. On December 19, 1995,
the Company and its legal and environmental consultants presented to the EPA the
RDWP Addendum and the recommended changes to the ROD in the form of a revised
remedy. On July 16, 1996, the Company and its legal and environmental
representatives met with the EPA to review the EPA's written response to this
revised remedy. The revised remedy would eliminate certain requirements of the
existing ROD and would primarily include removing and treating contaminated
soil, significantly reducing the time period for remediation.
In April 1997, the EPA issued a proposed plan setting forth the expedited
remedy discussed above. The proposed plan allows 30 days for public comment.
If the EPA issues an amended ROD that is consistent with the proposed plan, the
Company would, at the date of amendment, expense approximately $3,000,000, the
estimated net present value of the future costs of implementing this
alternative. Additionally, all prior costs incurred, approximating $870,000
through March 31, 1997, associated with the implementation of the original ROD
would be expensed. As a result, the Company expects to expense $3,870,000 during
the quarter ending June 30, 1997.
In April 1997, the Company acquired all of the outstanding stock of Hotels
of Distinction (HOD), a hotel management company, from Alan Tremain, O.B.E. and
Jean-Claude Mathot in exchange for 300,000 shares of the Company's common stock.
In addition, Mr. Tremain will become Chairman of the Board of the Company and
Jean-Claude Mathot will become President and Chief Operating Officer of the
Company. Because HOD has no assets or management contracts at the date of
purchase, the transaction, in substance, represents payment for employment
services. As a result, the Company will expense $875,000, the estimated fair
market value of the stock, during the quarter ending June 30, 1997.
13
<PAGE>
In February 1997, the Company began construction on a second Cabo unit to
be located in the historical district of downtown Houston, Texas. The unit is
expected to open during the fourth quarter of fiscal 1997. Plans for a new
restaurant are being finalized and it is expected to open during the fourth
quarter of fiscal 1997. Capital expenditures for these two projects are
expected to approximate $1,750,000 and are expected to be funded from existing
cash and operating cash flow.
14
<PAGE>
BUFFTON CORPORATION
PART II - OTHER INFORMATION
- ---------------------------
Item 1. - Legal Proceedings
None
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Asset Purchase Agreement dated February 14, 1997 incorporated
herein by reference to the Definitive Proxy Statement dated
April 23, 1997.
3.1 Restated by-laws of Buffton Corporation dated April 7, 1997
(b) Reports on Form 8-K
Report dated February 21, 1997 reporting Asset Purchase
Agreement of Current Technology, Inc.
15
<PAGE>
BUFFTON CORPORATION
SIGNATURES
----------
Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
BUFFTON CORPORATION
(Registrant)
By: /s/ Robert H. McLean
-------------------------------------
Chairman of the Board
and President
May 14, 1997
- ------------
By: /s/ Robert Korman
-------------------------------------
Vice President and
Chief Financial Officer
May 14, 1997
- ------------
16
<PAGE>
EXHIBIT 3.1
RESTATED
BYLAWS
OF
BUFFTON CORPORATION
APRIL 7, 1997
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ARTICLE I
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MEETINGS OF STOCKHOLDERS
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Section 1.1 Annual Meetings.
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(a) The annual meeting of stockholders shall be held for the election
of directors and for the transaction of such other business as properly may come
before such meeting at such date, time and place, within or without the State of
Delaware, as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting.
(b) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be transacted by the
stockholders may be made at an annual meeting of stockholders (i) pursuant to
the Corporation's notice with respect to such meeting, (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the notice
provided for in this Section 1.1, who is entitled to vote at the meeting and who
has complied with the notice procedures set forth in this Section 1.1.
(c) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (iii) of Section 1.1(b),
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation and such business must be a proper matter for
stockholder action under the General Corporation Law of the State of Delaware.
To be timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 120 days nor more
than 180 days prior to the first anniversary of the date of the Corporation's
proxy statement released to stockholders in connection with the previous year's
annual meeting of stockholders or as otherwise provided in such proxy statement;
provided, however, that in the event that the date of the annual meeting is more
than 30 days prior to or more than 60 days after the anniversary date of the
preceding year's annual meeting of stockholders, notice by the stockholder to be
timely must be so delivered a reasonable time before the proxy materials are
prepared and distributed to stockholders. Such stockholder's notice shall set
forth (i) as to each person whom the stockholder proposes to nominate for
election or reelection as
<PAGE>
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of such business, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made (A) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (B) the class and number
of shares of the Corporation that are owned beneficially and of record by such
stockholder and such beneficial owner.
(d) Only persons nominated in accordance with the procedures set
forth in this Section 1.1 shall be eligible to serve as directors and only such
business shall be conducted at an annual meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Section 1.1. The chairman of the meeting shall determine whether a
nomination or any business proposed to be transacted by the stockholders has
been properly brought before the meeting and, if any proposed nomination or
business has not been properly brought before the meeting, the chairman shall
declare that such proposed business or nomination shall not be presented for
stockholder action at the meeting.
(e) Nothing in this Section 1.1 shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
Section 1.2 Special Meetings. Special meetings of the stockholders of
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the Corporation may be called only by the Chairman of the Board of Directors or
the President or the Board of Directors pursuant to a resolution adopted by the
entire Board of Directors. Notwithstanding any other provision of the
Corporation's Certificate of Incorporation, Bylaws or any provision of law which
might otherwise permit a lesser vote or no vote, the affirmative vote of the
holders of at least 80% of the then outstanding shares of each class of stock of
the Corporation having voting power for the election of directors shall be
required to alter, amend or repeal this Section 1.2.
Section 1.3 Notice of Meeting. Written notice, signed by the Chairman
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of the Board, the President, any Vice President, the Secretary or any Assistant
Secretary, of every meeting of stockholders stating the purpose or purposes for
which the meeting is called, and the date and time when, and the place where, it
is to be held shall be delivered either personally or by mail, to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the meeting, except as otherwise provided by
statute. If mailed, such notice shall be directed to a stockholder at his
address as it shall appear on the stock books of the Corporation, unless he
shall have filed with the Secretary a written request that notices intended for
him be mailed to some other address, in which case it shall be mailed to the
address designated in such request.
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Section 1.4 Quorum. The presence at any meeting, in person or by proxy,
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of the holders of record of a majority of the shares then issued and outstanding
and entitled to vote shall be necessary and sufficient to constitute a quorum
for the transaction of business, except where provided otherwise by statute.
Section 1.5 Adjournments. In the absence of a quorum, a majority in
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interest of the stockholders entitled to vote, present in person or by proxy,
or, if no stockholder entitled to vote is present in person or by proxy, any
officer entitled to preside or act as secretary of such meeting, may adjourn the
meeting from time to time until a quorum shall be present.
Section 1.6 Voting. Directors shall be chosen by a plurality of the
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votes cast at the election, and, except where otherwise provided by statute, all
other questions shall be determined by a majority of the votes cast on such
question.
Section 1.7 Proxies. Any stockholder entitled to vote may vote by
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proxy, provided that the instrument authorizing such proxy to act shall have
been executed in writing (which shall include telegraphing or cabling) by the
stockholder himself or by his duly authorized attorney.
Section 1.8 Judges of Election. The Board of Directors may appoint
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judges of election to serve at any election of directors and at balloting on any
other matter that may properly come before a meeting of stockholders. If no such
appointment shall be made, or if any of the judges so appointed shall fail to
attend, or refuse or be unable to serve, then such appointment may be made by
the presiding officer at the meeting.
Section 1.9 Stock List. The officer who has charge of the stock ledger
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of the Corporation shall prepare and make, at least 10 days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
Section 1.10 Stockholder Action Without Meeting. Any action required by
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the Delaware General Corporation Law to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which may be taken at
any annual or special meeting of stockholders of the Corporation, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Notice of any such action shall
be given in accordance with the requirements of the Delaware General Corporation
Law.
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In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. Any
stockholder of record seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to the Secretary,
request the Board of Directors to fix a record date. The Board of Directors
shall within ten (10) days after the date on which such a request is received,
adopt a resolution fixing the record date. If no record date has been fixed by
the Board of Directors within ten (10) days of the date on which such a request
is received, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of stockholders
meetings are recorded, to the attention of the Secretary of the Corporation.
Delivery shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by applicable law, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
In the event of the delivery of a written consent or consents purporting to
authorize or take corporate action and/or related revocations (each such written
consent and related revocation is referred to in this Section 1.10 as a
"Consent"), the Secretary shall provide for the safekeeping of such Consent and
shall immediately appoint duly qualified and objective inspectors to conduct, as
promptly as practical, such reasonable ministerial review as the Corporation
shall deem necessary or appropriate for the purpose of ascertaining the
sufficiency and validity of such Consent and all matters incident thereto,
including, without limitation, whether holders of shares having the requisite
voting power to authorize or take the action specified in the Consent have given
consent. If after such investigation the Secretary shall determine that the
Consent is valid, that fact shall be certified on the records of the corporation
kept for the purpose of recording the proceedings of meetings of stockholders,
and the consent shall be filed in such records, at which time the Consent shall
become effective as stockholder action.
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ARTICLE II
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BOARD OF DIRECTORS
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Section 2.1 Number. The number of directors shall not be less than
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three. The number of directors shall be fixed from time to time exclusively by a
vote of a majority of the Board of Directors, except as otherwise fixed by or
pursuant to the provisions of Article IV of the Certificate of Incorporation
relating to the rights of the holders of the Preferred Stock.
Section 2.2 Election and Term of Office. The Board of Directors shall be
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divided into three classes, Class I, Class II and Class III, which shall be as
nearly equal in number as possible. At the annual meeting of stockholders to be
held in 1989, Class I directors shall be elected for a term expiring at the
annual meeting of stockholders to be held in 1990, Class II directors shall be
elected for a term expiring at the annual meeting of stockholders to be held in
1991, and Class III directors shall be elected for a term expiring at the annual
meeting of stockholders to be held in 1992, with each director to hold office
until his successor is elected and qualified. At each annual meeting of
stockholders subsequent to 1989, the successors of the class of directors whose
term expires at that annual meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders to be held in the third year
following the year of their election. The election of directors need not be by
written ballot unless so provided elsewhere by these Bylaws. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director. Any newly created or eliminated directorship
resulting from an increase or decrease in the Board of Directors shall be
apportioned by the Board of Directors among the three classes of directors so as
to maintain such classes as nearly equal as possible.
Section 2.3 Vacancies and Additional Directorships. Except as otherwise
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provided for or fixed by or pursuant to the provisions of Article IV of the
Corporation's Certificate of Incorporation relating to the rights of the holders
of the Preferred Stock, newly created directorships resulting from any increase
in the number of directors and any vacancies on the Board of Directors resulting
from death, resignation, removal or other cause shall be filled only by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors, or by a sole remaining
director. Any director elected in accordance with the preceding sentence of
this Section 2.3 shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
Section 2.4 Removal. Except as otherwise provided for or fixed by or
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pursuant to the provisions of Article IV of the Corporation's Certificate of
Incorporation relating to the rights of the holders of the Preferred Stock, any
director may be removed from office only for cause and only by the affirmative
vote of the holders of 80% of the then outstanding shares of each class of stock
of the Corporation having voting power for the election of directors.
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Section 2.5 Amendment or Repeal. Notwithstanding any provisions of the
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Corporation's Certificate of Incorporation, Bylaws or any other provision of law
which might otherwise permit a lesser vote or no vote, the affirmative vote of
the holders of at least 80% of the then outstanding shares of each class of
stock of the Corporation having voting power for the election of directors shall
be required to alter, amend or repeal Sections 2.1, 2.2, 2.3 and 2.4 hereof,
except as otherwise provided for or fixed by or pursuant to the provisions of
Article IV of the Corporation's Certificate of Incorporation relating to the
rights of the holders of the Preferred Stock.
Section 2.6 Meetings. A meeting of the Board of Directors shall be
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held for organization, for the election of officers and for the transaction of
such other business as may prop erly come before the meeting, within thirty
(30) days after each annual election of directors.
The Board of Directors by resolution may provide for the holding of regular
meetings and may fix the times and places at which such meetings shall be held.
Notice of regular meetings shall not be required to be given, provided that
whenever the time or place of regular meetings shall be fixed or changed, notice
of such action shall be mailed promptly to each director who shall not have been
present at the meeting at which such action was taken, addressed to him at his
residence or usual place of business.
Special meetings of the Board of Directors may be called by one-third (1/3)
of the directors then in office or by the Chairman of the Board or the
President. Except as otherwise required by statute, notice of each special
meeting shall be mailed to each director, addressed to him at his residence or
usual place of business, or shall be sent to him at such place by telegram,
radio or cable, or telephoned or delivered to him personally, not later than two
(2) days before the day on which the meeting is to be held. Such notice shall
state the time and place of such meeting, but unless otherwise required by
statute, the Certificate of Incorporation of the Corporation or these Bylaws,
need not state the purposes thereof.
Notice of any meeting need not be given to any director who shall attend
such meeting in person or who shall waive notice thereof, before or after such
meeting, in writing or by telegram, radio or cable.
Section 2.7 Quorum. A majority of the total number of members of the
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Board of Directors as constituted from time to time, but not less than two,
shall be necessary and sufficient to constitute a quorum for the transaction of
business, except that when the Board consists of one director pursuant to
Section 2.1, then the one director shall constitute a quorum. In the absence of
a quorum, a majority of those present at the time and place of any meeting may
adjourn the meeting from time to time until a quorum shall be present and the
meeting may be held as adjourned without further notice or waiver. A majority
of those present at any meeting at which a quorum is present may decide any
question brought before such meeting, except as otherwise provided by law, the
Certificate of Incorporation or by these Bylaws.
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Section 2.8 Resignation of Directors. Any director may resign at any
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time by giving written notice of such resignation to the Board of Directors, the
Chairman of the Board, the President, any Vice President or the Secretary. Any
such resignation shall take effect at the time specified therein or, if no time
be specified, upon receipt thereof by the Board of Directors or one of the above
named officers; and, unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.9 Participation in Meeting. At any meeting of the Board of
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Directors, or of any Committee designated by the Board of Directors, a director
or committee member may participate in a meeting of such board or committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting in this manner shall constitute presence in person at
such meeting.
Section 2.10 Compensation of Directors. Directors shall receive such
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reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE III
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COMMITTEES OF THE BOARD
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Section 3.1 Designation, Power. Alternate Members and Term of Office.
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The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of two or
more of the directors of the Corporation. Any such committee, to the extent
provided in such resolution, shall have and may exercise the power of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. The Board may designate one or more directors as alternate
members of any committee, who, in the order specified by the Board, may replace
any absent or disqualified member at any meeting of the committee. If at a
meeting of any committee one or more of the members thereof should be absent or
disqualified, and if either the Board of Directors has not so designated any
alternate member or members, or the number of absent or disqualified members
exceeds the number of alternate members who are present at such meeting, then
the member or members of such committee (including alternates) present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another director to act at the meeting in the
place of any such absent or disqualified member. The term of office of the
members of each committee shall be fixed from time to time by the Board, subject
to these Bylaws; provided, however, that any committee member who ceases to be a
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member of the Board shall ipso facto cease to be a committee member. Each
committee shall appoint a secretary, who may be the Secretary of the Corporation
or any Assistant Secretary thereof.
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Section 3.2 Meetings, Notices and Records. Each committee may provide
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for the holding of regular meetings, with or without notice, and may fix the
time and place at which such meetings shall be held. Special meetings of each
committee shall be held upon call by or at the direction of its chairman, or, if
there is no chairman, by or at the direction of any two of its members, at the
time and place specified in the respective notices or waivers of notice thereof.
Notice of each special meeting of a committee shall be mailed to each member of
such committee, addressed to him at his residence or usual place of business, at
least two days before the day on which the meeting is to be held, or shall be
sent by telegram, radio or cable, addressed to him at such place, or telephoned
or delivered to him personally, not later than the day before the day on which
the meeting is to be held. Notice of any meeting of a committee need not be
given to any member thereof who shall attend the meeting in person or who shall
waive notice thereof by telegram, radio, cable or other writing. Notice of any
adjourned meeting need not be given. Each committee shall keep a record of its
proceedings.
Section 3.3 Quorum and Manner of Acting. At each meeting of any
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committee the presence of a majority, but not less than two, of its members then
in office shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the members present at any
meeting at which a quorum is present shall be the act of such committee; in the
absence of a quorum, a majority of the members present at the time and place of
any meeting may adjourn the meeting from time to time until a quorum is present.
Subject to the foregoing and other provisions of these Bylaws and except as
otherwise determined by the Board of Directors, each committee may make rules
for the conduct of its business. Any determination made in writing and signed
by all the members of such committee shall be as effective as if made by such
committee at a meeting.
Section 3.4 Resignations. Any member of a committee may resign at any
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time by giving written notice of such resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary of the Corporation.
Unless otherwise specified in such notice, such resignation shall take effect
upon receipt thereof by the Board or any such officer.
Section 3.5 Removal. Any member of any committee may be removed at any
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time by the Board of Directors with or without cause.
Section 3.6 Vacancies. If any vacancy shall occur in any committee by
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reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to act until such vacancy is filled by the Board of Directors.
Section 3.7 Compensation. Committee members shall receive such
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reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance
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at meetings, with expenses, if any, as the Board of Directors may from time to
time determine. Nothing herein contained shall be construed to preclude any
committee member from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE IV
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OFFICERS
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Section 4.1 Number. The officers of the Corporation shall be a
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President, one or more Vice Presidents, a Secretary, a Treasurer and, if the
Board of Directors so determines, a Chairman of the Board, and such other
officers as may be appointed in accordance with the provisions of Section 4.3.
Section 4.2 Election, Term of Office and Qualifications. Each officer
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(except such officers as may be appointed in accordance with the provisions of
Section 4.3) shall be elected by the Board of Directors. Each officer (whether
elected at the first meeting of the Board of Directors after the annual meeting
of stockholders or to fill a vacancy or otherwise) shall hold his office until
the first meeting of the Board of Directors after the next annual meeting of
stockholders and until his successor shall have been elected, or until his
death, or until he shall have resigned in the manner provided in Section 4.4 or
shall have been removed in the manner provided in Section 4.5.
Section 4.3 Subordinate Officers and Agents. The Board of Directors
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from time to time may appoint other officers or agents (including one or more
Assistant Vice Presidents, one or more Assistant Secretaries and one or more
Assistant Treasurers), to hold office for such period, have such authority and
perform such duties as are provided in these Bylaws or as may be provided in the
resolutions appointing them. The Board of Directors may delegate to any officer
or agent the power to appoint any such subordinate officers or agents and to
prescribe their respective terms of office, authorities and duties.
Section 4.4 Resignations. Any officers may resign at any time by giving
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written notice of such resignation to the Board of Directors, the President, a
Vice President or the Secretary. Unless otherwise specified in such written
notice, such resignation shall take effect upon receipt thereof by the Board of
Directors or any such officer.
Section 4.5 Removal. Any officer specifically designated in Section 4.1
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may be removed at any time, either with or without cause, at any meeting of the
Board of Directors by the vote of a majority of all the directors then in
office. Any officer or agent appointed in accordance with the provisions of
Section 4.3 may be removed, either with or without cause, by the Board of
Directors at any meeting, by the vote of a majority of the directors at such
meeting, or by any superior officer or agent upon whom such power of removal
shall have been conferred by the Board of Directors.
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Section 4.6 Vacancies. A vacancy in any office by reason of death,
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resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these Bylaws for
regular election or appointment to such office.
Section 4.7 Chief Executive Officer. The Chief Executive Officer of the
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Corporation must be a member of the Board of Directors, and subject to the
direction of the Board of Directors, shall have general charge of business,
affairs and property of the Corporation and general supervision over its
officers and agents. As such Chief Executive Officer, if present, he shall
preside at all meetings of stockholders and directors and he shall see that all
orders and resolutions of the Board of Directors are carried into effect. He
may sign, with any other officer thereunto duly authorized, certificates of
stock of the Corporation, the issuance of which shall have been duly authorized
(the signature to which may be a facsimile signature), and may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts, agreements or
other instruments duly authorized by the Board of Directors except in cases
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent. From time to time he shall
report to the Board of Directors all matters within his knowledge which the
interest of the Corporation may require to be brought to their attention. He
shall also perform such other duties as are given to him by these Bylaws or as
from time to time may be assigned to him by the Board of Directors. The Chief
Executive Officer shall be a member, ex officio, of all committees appointed by
the Board.
Section 4.8 The Chairman of the Board. The Chairman of the Board, if
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one is appointed, shall have such powers and duties as shall be prescribed by
the Board of Directors. The Chairman of the Board shall be a member, ex
officio, of all committees appointed by the Board.
Section 4.9 The President. The President shall have such power as may
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be by statute exclusively conferred upon the President and he shall have such
other powers and duties as shall be prescribed by the Board of Directors.
Section 4.10 The Vice Presidents. At the request of the President or in
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his absence or disability, the Vice President designated by the President (or in
the absence of such designation, the Vice President designated by the Board of
Directors) shall perform all duties of the President and, when so acting, shall
have all the powers of and be subject to all restrictions upon the President.
Any Vice President may also sign, with any other officer thereunto duly
authorized, certificates of stock of the Corporation, the issuance of which
shall have been duly authorized (the signature to which may be a facsimile
signature), and may sign and execute in the name of the Corporation deeds,
mortgages, bonds and other instruments duly authorized by the Board of
Directors, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent.
Each Vice President shall perform such other duties as are given to him by these
Bylaws or as from time to time may be assigned to him by the Board of Directors
or the Chief Executive Officer.
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Section 4.11 The Secretary. The Secretary shall
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(a) record all the proceedings of the meetings of the stockholders,
the Board of Directors, and any committees in a book or books to be kept
for that purpose;
(b) cause all notices to be duly given in accordance with the
provisions of these Bylaws and as required by statute;
(c) whenever any committee shall be appointed in pursuance of a
resolution of the Board of Directors, furnish the chairman of such
committee with a copy of such resolution;
(d) be custodian of the records and of the seal of the Corporation,
and cause such seal to be affixed to all certificates representing stock of
the Corporation prior to the issuance thereof and to all instruments, the
execution of which on behalf of the Corporation under its seal shall have
been duly authorized;
(e) see that the lists, books, reports, statements, certificates and
other documents and records required by statute are properly kept and
filed;
(f) have charge of the stock and transfer books of the Corporation,
and exhibit such stock book at all reasonable times to such persons as are
entitled by statute to have access thereto;
(g) sign (unless the Treasurer or an Assistant Secretary or an
Assistant Treasurer shall sign) certificates representing stock of the
Corporation, the issuance of which shall have been duly authorized (the
signature to which may be a facsimile signature); and
(h) in general, perform all duties incident to the office of
Secretary and such other duties as are given to him by these Bylaws or as
from time to time may be assigned to him by the Board of Directors or the
Chief Executive Officer.
Section 4.12 Assistant Secretaries. At the request of the Secretary or
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in his absence or disability, the Assistant Secretary designated by him (or in
the absence of such designation, the Assistant Secretary designated by the Board
of Directors or the Chief Executive Officer) shall perform all the duties of the
Secretary, and, when so acting, shall have all the powers of and be subject to
all restrictions upon the Secretary. The Assistant Secretaries shall perform
such other duties as from time to time may be assigned to them respectively by
the Board of Directors, the Chief Executive Officer or the Secretary.
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Section 4.13 The Treasurer. The Treasurer shall
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(a) have charge of and supervision over and be responsible for the
funds, securities, receipts and disbursements of the Corporation;
(b) cause the moneys and other valuable effects of the Corporation to
be deposited in the name and to the credit of the Corporation in such banks
or trust companies or with such bankers or other depositaries as shall be
selected in accor dance with Section 5.3 of these Bylaws or to be
otherwise dealt with in such manner as the Board of Directors may direct;
(c) cause the funds of the Corporation to be disbursed by checks or
drafts upon the authorized depositaries of the Corporation, and cause to be
taken and preserved proper vouchers for all moneys disbursed;
(d) render to the Board of Directors or the Chief Executive Officer,
whenever requested, a statement of the financial condition of the
Corporation and of all his transactions as Treasurer;
(e) cause to be kept at the Corporation's principal office correct
books of account of all its business and transactions and such duplicate
books of account as he shall determine and upon application cause such
books or duplicates thereof to be exhibited to any director;
(f) be empowered, from time to time, to require from the officers or
agents of the Corporation reports or statements giving such information as
he may desire with respect to any and all financial transactions of the
Corporation;
(g) sign (unless the Secretary or an Assistant Secretary or an
Assistant Treasurer shall sign) certificates representing stock of the
Corporation the issuance of which shall have been duly authorized (the
signature to which may be a facsimile signature); and
(h) in general, perform all duties incident to the office of
Treasurer and such other duties as are given to him by these Bylaws or as
from time to time may be assigned to him by the Board of Directors or the
Chief Executive Officer.
Section 4.14 Assistant Treasurers. At the request of the Treasurer or in
--------------------
his absence or disability, the Assistant Treasurer designated by him (or in the
absence of such designation, the Assistant Treasurer designated by the Board of
Directors or the Chief Executive Officer) shall perform all the duties of the
Treasurer, and, when so acting, shall have all the powers and be subject to all
restrictions upon the Treasurer. The Assistant Treasurers shall perform such
other duties as from time to time may be assigned to them respectively by the
Board of Directors, the Chief Executive Officer or the Treasurer.
- 12 -
<PAGE>
Section 4.15 Salaries. The salaries of the officers of the Corporation
--------
shall be fixed from time to time by the Board of Directors, except that the
Board of Directors may delegate to any person the power to fix the salaries or
other compensation of any officers or agents appointed in accordance with the
provisions of Section 4.3. No officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the Corporation.
Section 4.16 Surety Bonds. If the Board of Directors shall so require,
------------
any officer or agent of the Corporation shall execute to the Corporation a bond
in such sum and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful discharge of his duties, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
ARTICLE V
---------
EXECUTION OF INSTRUMENT AND
DEPOSIT OF CORPORATE FUNDS
--------------------------
Section 5.1 Execution of Instruments Generally. The Chief Executive
----------------------------------
Officer, Chairman of the Board, President, any Vice President, the Secretary or
the Treasure, subject to the approval of the Board of Directors, may enter into
any contract or execute and deliver any instrument in the name and on behalf of
the Corporation. The Board of Directors may authorize any officer or officers,
or agent or agents, to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation, and such authorization
may be general or confined to specific instances.
Section 5.2 Borrowing. No loans or advances shall be obtained by or
---------
contracted for, by or on behalf of the Corporation and no negotiate paper shall
be issued in its name, unless and except as authorized by the Board of
Directors. Such authorization may be general or confined to specific instances.
Any officer or agent of the Corporation thereunto so authorized may obtain loans
and advances for the Corporation, and for such loans and advances may make,
execute and deliver promissory notes, bonds or other evidences of indebtedness
of the Corporation. Any officer or agent of the Corporation thereunto so
authorized may pledge, hypothecate or transfer as security for the payment of
any and all loans, advances, indebtedness and liabilities of the Corporation,
any and all stocks, bonds, other securities and other personal property at any
time held by the Corporation, and to that end may endorse, assign and deliver
the same and do every act and thing necessary or proper in connection therewith.
Section 5.3 Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositaries as the Board of
Directors may select, and as may be selected by any officer or officers or agent
or agents authorized so to do by the Board of Directors. Endorsements for
deposit to the Corporation in any of its duly authorized depositaries shall be
made in such manner as the Board of Directors from time to time may determine.
- 13 -
<PAGE>
Section 5.4 Checks. Drafts. etc. All checks, drafts or other orders for
-------------------
the payment of money, and all notes or other evidences of indebtedness issued in
the name of the Corporation, shall be signed by such officer or officers or
agent or agents of the Corporation, and in such manner, as from time to time
shall be determined by the Board of Directors.
Section 5.5 Proxies. Proxies to vote with respect to shares of stock of
-------
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
Chief Executive Officer or by any other person or persons thereunto authorized
by the Board of Directors.
ARTICLE VI
----------
RECORD DATES
------------
Section 6.1 In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall be not more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. Only those
stockholders of record on the date so fixed shall be entitled to any of the
foregoing rights, notwithstanding the transfer of any such stock on the books of
the Corporation after any such record date fixed by the Board of Directors.
ARTICLE VII
-----------
CORPORATE SEAL
--------------
Section 7.1 The corporate seal shall be circular in form and shall bear
the name of the Corporation and words and figures denoting its organization
under the laws of the State of Delaware and the year thereof and otherwise shall
be in such form as shall be approved from time to time by the Board of
Directors.
- 14 -
<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
Section 8.1 Except as otherwise provided in Sections 1.2 and 2.5 hereof,
the Bylaws of the Corporation may be amended, altered or repealed, and new
Bylaws may be made by the affirma tive vote of the holders of record of a
majority of the outstanding shares of stock of the Corporation entitled to vote
cast at any annual or special meeting, or by the affirmative vote of a majority
of the directors cast at any regular or special meeting at which a quorum is
present.
ARTICLE IX
----------
INDEMNIFICATION
---------------
Section 9.1 The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 9.2 The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation except that no indemnification shall be made
in respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
- 15 -
<PAGE>
Section 9.3 To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 9.1 or 9.2 or in defense
of any claim, issue or matter therein, he shall be indemnified against expense
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 9.4 Any indemnification under subsections 9.1 or 9.2 (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections 9.1 and 9.2. Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by stockholders.
Section 9.5 Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of any undertaking
by or on behalf of the director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized in this Article.
Section 9.6 The indemnification and advancement of expenses provided by
or granted pursuant to the other subsections of this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 9.7 The Corporation shall have power but may not be required to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article.
Section 9.8 The indemnification and advancement of expenses provided by
or granted pursuant to this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
- 16 -
<PAGE>
ARTICLE X
---------
BUSINESS OPPORTUNITY
--------------------
Section 10.1 All business opportunities within areas of interest
determined from time to time by the Board of Directors, as evidenced by
resolutions appearing in the Corporation's minutes, which come to the attention
of the officers, directors and other members of management of the Corporation,
either individually or in their corporate capacity, shall be disclosed promptly
to the Corporation and made available to it. The Board of Directors may accept
or reject any business opportunity. Until such time as the Board of Directors
has designated an area of interest by resolution appearing in the Corporation's
minutes, the officers, directors and other members of management of the
Corporation are free to engage in any undesignated areas of interest on their
own and shall be free to continue a business existing prior to the time that
such area of interest is designated by the Corporation.
ARTICLE XI
----------
FISCAL YEAR
-----------
Section 11.1 The fiscal year may be changed from time to time by
resolution of the Board of Directors. Until a resolution of the directors is
adopted fixing the fiscal year, the fiscal year of the Corporation shall end on
September 30 of each year.
ATTEST:
/s/Robert Korman
- ----------------------------------------
Secretary
- 17 -
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