SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-9040
DRYCLEAN USA, Inc.
(Exact name of small business issuer as specified in its charter)
DELAWARE 11-2014231
(State of other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
290 N.E. 68 Street, Miami, Florida 33138
(Address of principal executive offices)
(305) 754-4551
(Issuer's telephone number)
METRO-TEL CORP.
(Former name)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date: Common Stock, $.025 par
value per share - 6,925,000 shares outstanding as of November 9, 1999.
<PAGE>
<TABLE>
<CAPTION>
DRYCLEAN USA, INC.
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------
For the three months ended
September 30,
1999 1998
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $4,559,810 $3,494,414
Management and franchise fees,
commissions and other income 174,958 52,216
- --------------------------------------------------------------------------------------
Total revenues 4,734,768 3,546,630
Cost of goods sold 3,315,946 2,620,195
Selling, general and
administrative expenses 1,010,419 810,288
Research and development 62,411
- --------------------------------------------------------------------------------------
4,388,776 3,430,483
Operating Income 345,992 116,147
Interest income 9,378 13,861
Interest expense (42,643) (24,251)
- --------------------------------------------------------------------------------------
Earnings before provision for income taxes 312,727 105,757
Provision for income taxes (Note 4) 125,091
- --------------------------------------------------------------------------------------
Net earnings $ 187,636 $ 105,757
======================================================================================
Basic earnings per share (Note 3) $ .03 $ .02
Diluted earnings per share (Note 3) $ .03 .02
======================================================================================
Weighted average number of shares (Note 3)
Basic 6,925,000 4,720,954
Diluted 7,308,768 4,720,954
=======================================================================================
</TABLE>
-2-
<PAGE>
For the three months ended
September 30,
1999 1998
(Unaudited)
- --------------------------------------------------------------------------------
PRO FORMA AMOUNTS
Earnings before taxes (Note 4) $ 105,757
Provision for income taxes 42,303
- --------------------------------------------------------------------------------
Pro forma net earnings 63,454
Pro forma basic earnings per share $ .01
Weighted average number of shares
of common stock outstanding 4,720,954
-3-
<PAGE>
DRYCLEAN USA, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, June 30,
1999 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 580,778 $ 964,768
Accounts receivable, net 1,531,492 1,741,698
Inventories 4,219,315 4,243,348
Lease receivables 90,425 116,927
Deferred income taxes 43,141 43,141
Prepaid expenses and other 112,262 143,885
- --------------------------------------------------------------------------------
Total current assets 6,577,413 7,253,767
Lease receivables, due after one year 64,838 90,882
Equipment and improvements - at cost 940,116 924,116
Less accumulated depreciation 606,398 590,411
- --------------------------------------------------------------------------------
333,718 333,705
Franchise, trademarks and other
intangible assets, net 593,057
Deferred tax asset 22,884 22,884
- --------------------------------------------------------------------------------
$ 7,591,910 $ 7,701,238
================================================================================
-4-
<PAGE>
DRYCLEAN USA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------
September 30, June 30,
1999 1999
(Unaudited)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Accounts payable and
accrued expenses $ 904,027 $1,266,838
Line of credit 27,451
Income taxes payable 119,340 80,674
Customer deposits 397,738 278,008
Current portion of long term debt 480,000 440,000
- ----------------------------------------------------------------------------------------
Total current liabilities 1,928,556 2,065,520
Term loan, less current portion 1,520,000 1,680,000
- ----------------------------------------------------------------------------------------
Total liabilities 3,448,556 3,745,520
Stockholders' Equity
Common stock, $.025 par value,
15,000,000 shares authorized; 6,951,250
shares issued, including
26,250 shares held in treasury and
6,925,000 shares outstanding 173,781 173,781
Additional paid-in capital 1,974,227 1,974,227
Retained earnings 1,995,346 1,807,710
- ----------------------------------------------------------------------------------------
Total shareholder's equity 4,143,354 3,955,718
- ----------------------------------------------------------------------------------------
$7,591,910 $7,701,238
========================================================================================
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
DRYCLEAN USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------
For the three months ended
September 30,
1999 1998
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net earnings $ 187,636 $ 105,757
Adjustments to reconcile net earnings
to cash provided (used) by operating activities
Depreciation and amortization 34,846 7,812
Bad debts 1,383 1,048
(Increase) decrease in operating assets:
Accounts and lease receivables 261,369 (125,571)
Inventories 24,033 (272,896)
Prepaid expenses and other 31,569 11,867
Increase (decrease) in operating liabilities:
Accounts payable and accrued
expenses (362,811) 107,355
Income taxes payable 38,666
Customer deposits 119,730 69,668
- ------------------------------------------------------------------------------------------
Net cash provided (used) by
operating activities 336,421 (94,960)
- ------------------------------------------------------------------------------------------
Investing activities:
Capital expenditures (627,862) (53,332)
- ------------------------------------------------------------------------------------------
Financing activities:
(Repayments) borrowings under
line of credit 27,451 (250,000)
Payments on term loan (120,000) (50,000)
- ------------------------------------------------------------------------------------------
Net cash used by financing activities (92,549) (300,000)
- ------------------------------------------------------------------------------------------
Net (decrease) in cash
and cash equivalents (383,990) (448,292)
Cash and cash equivalents at beginning of period 964,768 828,390
- ------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 580,778 $ 380,098
==========================================================================================
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Supplemental disclosures of cash flow
information
Cash paid during the period for
<S> <C> <C>
Interest $ 42,643 $ 24,251
Income taxes 117,225
</TABLE>
-7-
<PAGE>
DRYCLEAN USA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE (1) - GENERAL: The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and the instructions to Form 10-QSB related to interim
period financial statements. Accordingly, these financial statements do not
include certain information and footnotes required by generally accepted
accounting principles for complete financial statements. However, the
accompanying unaudited financial statements contain all adjustments (consisting
only of normal recurring accruals) which, in the opinion of management, are
necessary in order to make the financial statements not misleading. The results
of operations for interim periods are not necessarily indicative of the results
to be expected for the full year. For further information, refer to the
Company's financial statements and footnotes thereto in the Company's Annual
Report on Form 10-KSB for the year ended June 30, 1999. The June 30, 1999
balance sheet was derived from audited financial statements as of that date.
NOTE (2) - BASIS OF PRESENTATION: On November 1, 1998, Steiner-Atlantic Corp.
("Steiner") was merged ("the Merger") with and into, and became a wholly-owned
subsidiary of, Metro Tel Corp. ("Metro Tel" and collectively with Steiner, the
"Company"). As a result of the Merger, the Company added Steiner's operations as
a supplier of dry cleaning, industrial laundry equipment and steam boilers to
Metro Tel's telecommunications operations as a manufacturer and seller of
telephone test sets and customer premise equipment.
The Company's Quarterly Report on Form 10-QSB for the three months ended
September 30, 1998, heretofore filed by the Company with the Securities and
Exchange Commission, reflected only the business and financial statements of
Metro Tel Corp. on a stand-alone basis.
For financial accounting (but not corporate law) purposes, the Merger is treated
as a "reverse" acquisition of Metro Tel by Steiner utilizing the "purchase"
method of accounting. As a result, all financial statements of the Company
included in this Report covering periods prior to November 1, 1998 reflect only
the results of operations, financial position and cash flows of Steiner on a
stand-alone basis. Accordingly, the results of operations for the three month
period of 1998 do not reflect the results of the telecommunications operations
of Metro-Tel. The results for the three month period ended September 30, 1999
reflect the operations for both Steiner and Metro Tel.
Steiner's outstanding shares (339,500) at the date of the Merger are deemed to
have been recapitalized to 4,720,954 (the number of shares of the Company's
Common Stock issued in respect of Steiner's outstanding Common Stock in the
Merger). The attached financial statements give effect to this recapitalization.
-8-
<PAGE>
NOTE (3) - EARNINGS PER COMMON SHARE: In 1997, the FASB issued Statement No.
128, "Earnings Per Share". Statement 128 replaces the calculation of primary and
fully diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of stock options. Dilutive
earnings per share is similar to the previously reported fully diluted earnings
per share. All earnings per share amounts for all periods have been presented to
conform to the Statement No. 128 requirements. Steiner had no stock options
outstanding during the three months ended September 30, 1998.
NOTE (4) - PROFORMA INCOME TAX: Prior to November 1, 1998, Steiner was a
Subchapter S corporation under the Internal Revenue Code of 1986, as amended,
and, accordingly, its shareholders, rather than it, were subject to income
taxation on Steiner's earnings. The proforma provision for income taxes
represents the provision for income taxes that would have been recorded had
Steiner been taxed under Subchapter C of the Code for the period shown.
NOTE (5) - SEGMENT INFORMATION: The Company's reportable segments are strategic
businesses that offer different products and services. They are managed
separately because each business requires different technology and marketing
strategies. The Company primarily evaluates the operating performance of its
segments based on the categories noted in the table below. The Company has no
sales between segments.
-9-
<PAGE>
NOTE (5) CONTINUED -
Financial information for the Company's business segments is as follows:
For the three months ended
September 30,
1999 1998
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------
Revenues:
Commercial and industrial laundry and
drycleaning $3,979,975 $3,546,630
Manufacturing and sales of telephone
test equipment 754,793
- --------------------------------------------------------------------------------
Total revenues $4,734,768 $3,546,630
================================================================================
Operating income (loss)
Commercial and industrial laundry and
drycleaning $ 376,851 $ 116,147
Manufacturing and sales of telephone
test equipment (30,859)
- --------------------------------------------------------------------------------
Total operating income (loss) $ 345,992 $ 116,147
================================================================================
September 30, June 30,
1999 1999
(Unaudited)
Identifiable assets:
Commercial and industrial laundry and
drycleaning $ 5,911,608 $6,016,193
Manufacturing and sales of telephone
test equipment 1,680,302 1,685,045
- --------------------------------------------------------------------------------
Total assets $ 7,591,910 $7,701,238
================================================================================
NOTE (6) - ACQUISITION OF DRYCLEAN USA ASSETS: On July 9, 1999, the Company
acquired the worldwide rights to the name DRYCLEAN USA, along with existing
franchise and license agreements, from Dryclean USA Franchising Company for
$550,000.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
For the three month period ended September 30, 1999, cash decreased by $383,990.
Operating activities generated $336,421 of cash, with $187,636 provided by net
income and $34,846 and $1,383 derived from non-cash expenses for depreciation
and amortization and from bad debts, respectively. Additional cash was provided
by decreases in accounts and lease receivables ($261,369), inventories ($24,033)
and pre-paid expenses and other assets ($31,569). Cash was also provided by
increases in customer deposits ($119,730) and income taxes payable ($38,666). A
decrease in accounts payable and accrued expenses used $362,811 of cash.
Investing activities used cash of $627,862, principally to fund the acquisition
by Steiner of the worldwide rights to the name DRYCLEAN USA, along with existing
franchise and license agreements, for $550,000 and to purchase other capital
assets. Financing activities used cash of $92,549 to make required monthly
installments of principal under the Company's term loan ($120,000), partially
offset by borrowing $27,451 under the Company's line of credit. The Company
believes that its present cash, cash it expects to generate from operations and
cash available against its $2,250,000 line of credit, will be sufficient to meet
its operational needs.
RESULTS OF OPERATIONS
- ---------------------
The results for the three month period ended September 30, 1999 (in
fiscal 2000), reflect the consolidated results of Steiner's drycleaning and
laundry operations and Metro-Tel's telecommunications operations. Results for
the three month period of fiscal 1999 reflect only the results of Steiner.
Net sales increased by $1,065,396 (30.5%) in the first quarter of
fiscal 2000 from the same period of fiscal 1999 due to the inclusion of $754,793
of telecommunication sales and increased sales of laundry equipment, steam
boiler and spare parts, partially offset by a reduction in dry cleaning
equipment sales. Price increases were immaterial.
Management and franchise fees, commissions and other income increased
by $122,742 (235.1%) for the first three months of fiscal 2000 from the
comparable period of fiscal 1999. The increase was due to increased management
fees from an affiliated company resulting from increased turn-key operations
sales, along with the inclusion of commissions and franchise and license fees
derived from the Company's new subsidiaries, Steiner-Atlantic Brokerage Corp.
and Dryclean USA License Corp., respectively.
The combination of increased sales and fees, increased total revenues
by $1,188,138 (33.5%) for the quarter when compared to the same period of a year
ago.
-11-
<PAGE>
Costs of goods sold, expressed as a percentage of net sales, improved
to 72.7% in the first quarter of 2000 from 75.0% in the first quarter of fiscal
1999. The improvement was mainly due to the inclusion of telecommunications
sales, which historically have a higher margin. Steiner's gross profit margin
improved principally due to decreased incoming freight and service charges.
For the first quarter of fiscal 2000, selling, general and
administrative expenses increased by $200,131 (24.7%) over the same period of
fiscal 1999. The increase was attributable to the inclusion of $252,831 in
telecommunication expenses and $43,800 for Steiner- Atlantic Brokerage Corp. and
Dryclean USA License Corp., which partially offset a decrease in this category
of expenses for Steiner ($95,220 or 11.8%) due principally to a reduction in
executive compensation as a result of the Merger. However, expressed as a
percentage of revenues, selling, general and administrative expenses declined
from 23.2% of total revenues for the first quater of fiscal 1999 to 21.3% of
total revenues in the first quarter of 2000. The percentage improvements
resulted from spreading such costs over the higher revenue base.
Research and development expenses relate solely to the
telecommunications operation included following the Merger on November 1, 1998.
As a result of the foregoing, operating income increased by $229,845
(197.9%) for the first quarter of fiscal 2000 over the comparable period of
fiscal 1999, and as a percentage of total revenues increased to 7.3% from 3.3%,
respectively.
Interest income decreased by $4,483 (32.3%) during the first quarter of fiscal
2000 as a result of fewer customer equipment leases (which qualify as sales-type
leases) being outstanding. Interest expense increased by $18,392 (75.8%) for the
same period, primarily due to a higher level of borrowings following the Merger.
A provision for income taxes is reflected only for the first quarter of fiscal
2000. Prior to the Merger, Steiner was a Subchapter S Corporation under the
Internal Revenue Code of 1986, as amended, and accordingly its shareholders,
rather than it, were subject to income taxation on Steiner's earnings. (See Note
4.)
YEAR 2000 COMPLIANCE
- --------------------
The Company believes that its internal management information systems, billing,
payroll and other information services are Year 2000 compliant. The Company has
already upgraded its software programs at a cost of less than $2,000 and tested
its accounts receivable and accounts payable files which are date sensitive and
found all systems to operate properly. The Company is not linked by computer
with any of its customers or vendors. Orders are received and purchase orders
are sent by telecopy, telephone, in person or by mail. None of these methods are
date sensitive.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securityholders.
At the Company's 1999 Annual Meeting of Stockholders held on November
5, 1999, the Company's stockholders:
(a) Reelected the Company's then existing Board of Directors by the
following votes:
Votes
--------------------------
For Withheld
--- --------
Michael S. Steiner 6,568,345 3,812
William K. Steiner 6,568,345 3,812
Venerando J. Indelicato 6,568,057 4,100
David Blyer 6,567,314 4,843
Lloyd Frank 6,566,845 5,312
Alan Grunspan 6,568,345 3,812
Stuart Wagner 6,568,345 3,812
(b) Authorized an amendment to the Company's Certificate of
Incorporation to change the name of the Company from Metro-Tel Corp. to DRYCLEAN
USA, Inc. by a vote of 6,407,245 shares in favor and 164,039 shares against,
with 873 shares abstaining. There were no broker non-votes.
Item 5. Other Information.
(a) On November 5, 1999, the Company filed an Amendment to its
Certificate of Incorporation pursuant to which, effective November 7, 1999, the
Company's name was changed from Metro-Tel Corp. to DRYCLEAN USA, Inc.
(b) On November 10, 1999, the Company's common stock commenced trading
on the American Stock Exchange under the symbol DCU. The Company's common stock
continues to trade on the Chicago Stock Exchange, where its symbol changed from
MTF to DCU. The Company's common stock no longer trades on the Nasdaq Electronic
Bulletin Board.
-13-
<PAGE>
Item 7. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 Certificate of Amendment to the Company's Certificate of
Incorporation, as filed with the Secretary of State of the
State of Delaware on November 5, 1999.
4.2 By-Laws of the Company
27. Financial Data Schedule
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the Company during the
period covered by this report.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DRYCLEAN USA, INC.
Dated: November 10, 1999 By: /s/ Michael S. Steiner
---------------------------------------
Michael S. Steiner, President
and Chief Executive Officer
Date: November 10, 1999 By: /s/ Venerando J. Indelicato
---------------------------------------
Venerando J. Indelicato
Treasurer and
Chief Financial Officer
-14-
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
4.1 Certificate of Amendment to the Company's Certificate of
Incorporation, as filed with the Secretary of State of
the State of Delaware on November 5, 1999
4.2 By-Laws of the Company
27 Financial Data Schedule
-15-
<PAGE>
Exhibit 4.1
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
METRO-TEL CORP.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is METRO- TEL CORP.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FIRST thereof and by substituting in lieu of
said Article the following new Article:
"FIRST: The name of this corporation is: DRYCLEAN
USA, Inc."
3. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
4. The effective time of the amendment herein certified shall be
November 7, 1999.
Signed on November 5, 1999.
/s/ Michael S. Steiner
---------------------------------------------
Michael S. Steiner, President
<PAGE>
Exhibit 4.2
BY-LAWS
-of-
DRYCLEAN USA, INC.
(A Delaware Corporation)
(As Amended Through November 5, 1999)
----------------------
ARTICLE I
---------
OFFICES
-------
SECTION 1. Registered Office. The Corporation's registered office shall
be at 306 South State Street, in the City of Dover, County of Kent, State of
Delaware, and the name of the registered agent in charge thereof shall be
Registrar and Transfer Company.
SECTION 2. Other Offices. The Corporation may also have an office or
offices at such other place or places, within or without the State of Delaware
as the Board of Directors may from time to time designate or the business of the
Corporation require.
ARTICLE II
----------
STOCKHOLDERS' MEETINGS
----------------------
SECTION 1. Annual Meetings. The annual meeting of stockholders of the
Corporation, commencing with the calendar year 1980, shall be held each year at
such time on a business day in the fourth month following the close of the
Corporation's fiscal year as shall be designated by the Board of Directors, or
if no designation is made, at 10:00 A.M. on the last Friday of the fourth month
following the close of the Corporation's fiscal year (or if that is a legal
holiday then on the next succeeding business day). Such meeting shall be held at
the registered office of the Corporation in the State of Delaware, or at such
other place within or without the State of Delaware as may be determined by the
Board of Directors and as shall be designated in the notice of said meetings.
Such annual meeting shall be for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting.
If the election of directors shall not be held on the date designated
herein for any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as convenient. At such
<PAGE>
meeting the stockholders may elect the directors and transact other business
with the same force and effect as at an annual meeting duly called and held.
SECTION 2. Special Meetings. Special meetings of the stockholders shall
be held at the registered office of the Corporation in the State of Delaware, or
at such other place within or without the State of Delaware as may be designated
in the notice of said meeting, upon call of the Board of Directors, the Chairman
of the Board or the President, and shall be called by the Chairman of the Board,
the President, any Vice President or the Secretary at the request in writing of
stockholders owning a majority of the issued and outstanding capital stock of
the Corporation then entitled to vote thereat.
SECTION 3. Notice and Purpose of Meetings. Notice of the date, hour and
place within or without the State of Delaware of every meeting of stockholders
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be given by the Chairman of the Board, the President,
or a Vice President, the Secretary or any Assistant Secretary either personally
or by mail or by telegraph or by any other lawful means of communication not
less than 10 nor more than 60 days before the meeting, to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to have
been given when deposited in the United States mail, postage prepaid, directed
to the stockholder at his address as it appears on the records of the
Corporation. Whenever notice is required to be given, a written waiver thereof,
signed by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, need be
specified in any written waiver of notice.
SECTION 4. Adjourned Meetings. No notice need be given of any adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At any adjourned meeting the Corporation may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than 30 days or if a new record date is fixed for the
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
SECTION 5. Quorum. A quorum at all meetings of stockholders shall
consist of a majority of the shares of capital stock of the Corporation
outstanding and entitled to vote at the meeting, present in person or
represented by proxy, except as otherwise provided by statute or Certificate of
Incorporation in respect of the vote that shall be required for a specified
action. In the absence of a quorum at any meeting or any adjournment thereof, a
majority of the shares of capital stock of the Corporation present in person or
represented by proxy and entitled to vote may adjourn such meeting to another
time or times. At any such adjourned meeting at which a
-2-
<PAGE>
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
SECTION 6. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, or in his absence, by the President, or in
both of their absences, by a chairman to be chosen by a majority of the
stockholders entitled to vote who are present in person or represented by proxy
at the meeting. The Secretary of the Corporation or, in his absence, an
Assistant Secretary shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, a majority of the stockholders
present in person or represented by proxy and entitled to vote at the meeting
shall choose a person to act as secretary of the meeting.
SECTION 7. Voting. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of capital stock
of the Corporation having voting rights shall be entitled at each meeting of
stockholders to one vote for each share of capital stock of the Corporation
standing in his name on the records of the Corporation on the date fixed as the
record date for the determination of stockholders entitled to notice of and to
vote at such meeting. Except as otherwise provided by statute or the Certificate
of Incorporation, any corporate action, other than the election of directors, to
be taken by vote of the stockholders shall be authorized at a meeting of
stockholders by a vote of the majority of the shares of capital stock present in
person or represented by proxy and then entitled to vote on such action. Except
as otherwise permitted by statute or the Certificate of Incorporation, directors
shall be elected by a plurality of the votes cast at a meeting of stockholders
by the holders of shares of capital stock of the Corporation present in person
or represented by proxy and entitled to vote thereon.
SECTION 8. Proxy Representation. Every stockholder entitled to vote at
a meeting stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and, if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
SECTION 9. List of Stockholders. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be prepared by the Secretary or such
other officer of the Corporation having charge of the stock ledger. 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, town or village where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during
-3-
<PAGE>
the whole time thereof, and may be inspected by any stockholder who is present,
for any purpose germane to the meeting.
SECTION 10. Inspectors of Election. At all elections of directors, and
in all other matters in which a vote is to be taken, the chairman of the meeting
may appoint two inspectors of election. If so appointed, the inspectors of
election shall take and subscribe an oath faithfully to execute the duties of
inspectors at such meeting with strict impartiality and according to the best of
their ability, and shall take charge of the polls and after the vote shall have
been taken on all matters on which the inspectors are to so act shall make a
certificate of the results thereof.
SECTION 11. Written Consent of Stockholders without a Meeting. Whenever
stockholders are required or permitted to take any action by vote, such action
may be taken without a meeting, without prior notice and without a vote, on
written consent, setting forth the action so taken, signed by stockholders
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. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 1. Powers, Number, Qualification and Term. The property,
affairs and business of the Corporation shall be managed by its Board of
Directors, which shall consist of not less than three (3) nor more than nine (9)
members. The exact number of directors shall be fixed from time to time by
resolution of the Board of Directors. Each director shall serve until the next
annual meeting of stockholders and until his successor shall be elected and
shall qualify or until his earlier resignation or removal. The directors shall
have the power, from time to time and at any time, when the stockholders are not
assembled at a meeting, to increase or decrease their own number by resolution
adopted by the Board of Directors. If the number of directors be increased, all
of the additional directors may be elected by a majority of the directors in
office at the time of the increase, or, if not so elected prior to the next
annual meeting of stockholders, they shall be elected by plurality vote by the
stockholders at such annual meeting to serve until the next annual meeting of
stockholders and until their respective successors shall be elected and shall
qualify. Directors need not be stockholders.
SECTION 2. Committees. An Executive Committee of three (3) or more
directors may be designated by resolution passed by a majority of the whole
Board of Directors. Whenever the Board of Directors is not in session or
whenever a quorum of the Board of Directors fails to attend any regular or
special meeting of the Board, said Committee shall advise with, and aid, the
officers of the Corporation in all matters concerning its interests and the
-5-
<PAGE>
management of its business and affairs, and generally perform such duties and
exercise such powers as may be performed and exercised by the Board of Directors
from time to time, and the Executive Committee shall have the power to authorize
the seal of the Corporation to be affixed to all papers which may require it
and, insofar as may be permitted by law, exercise the powers and perform the
obligations of the Board of Directors. The Board of Directors may also designate
one or more committees in addition to the Executive Committee by resolution or
resolutions passed by a majority of the whole Board of Directors; such committee
or committees to consist of three (3) or more directors of the Corporation and,
to the extent provided in the resolution or resolutions designating them, shall
have or may exercise the specific powers of the Board of Directors in the
management of the business and affairs of the Corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified members at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting whether or not they constituted a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors.
SECTION 3. Meetings. Meetings of the Board of Directors or any
committee thereof, shall be held at such place within or outside the State of
Delaware as may from time to time be fixed by resolution of the Board of
Directors or committee, as the case may be, or as may be specified in the notice
of the meeting. Regular meetings of the Board of Directors, or any committee
thereof, shall be held at such times as may from time to time be fixed by
resolution of the Board of Directors or committee as the case may be, and
special meetings may be held at any time upon the call of the Chairman of the
Board, the President or a majority of the directors or committee as the case may
be, by oral, telegraphic or written notice duly served on or sent or mailed to
each director (or in the case of a committee, each member of such committee) not
less than one (1) day before the meeting. Notice need not be given of regular
meetings of the Board of Directors or any committee thereof. The organizational
meeting of the Board of Directors may be held without notice immediately after
the annual meeting of stockholders in each year. Any meeting of directors or any
committee thereof may be held at any time without notice if all the directors
(or in the case of a committee, all the members of such committee) are present,
or if at any time before or after the meeting those not present waive notice of
the meeting in writing. Whenever notice is required to be given, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the directors or a
committee of directors, need be specified in any written waiver of notice.
-5-
<PAGE>
SECTION 4. Organization. The Chairman of the Board shall preside at all
meetings of the Board of Directors. In his absence, the President, if present
and acting, or in his absence any director chosen by the Board, shall preside.
Meetings of any committee of the Board of Directors shall be presided over by
such member thereof as may be chosen by such committee.
SECTION 5. Quorum. Except as otherwise provided by statute or the
Certificate of Incorporation, the number of directors which shall constitute a
quorum of the Board of Directors or committee thereof shall be a majority of the
total number of directors comprising the Board of Directors or such committee,
but in no case less than two directors. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors or committee thereof, as the case may be. At any meeting
at which there shall not be a quorum present, a majority of the directors
present, although less than a quorum, may adjourn the meeting without further
notice from time to time until a quorum shall be present.
SECTION 6. Resignation and Removal of Directors. Any director may
resign at any time upon written notice to the Corporation. At any special
meeting of stockholders duly called as provided in these By-Laws, any director
or directors may, by the affirmative vote of the holders of a majority of all
the shares of capital stock outstanding and then entitled to vote for the
election of directors, be removed from office, either with or without cause, and
his successor or their successors may be elected at such meeting or the
remaining directors may, to the extent vacancies are not filled by such
election, fill any vacancy or vacancies created by such removal.
SECTION 7. Vacancies. In case one or more vacancies shall occur in the
Board of Directors by reason of death, resignation, increase in number, or
otherwise, except insofar as otherwise provided in these By-Laws, the remaining
directors, although less than a quorum, may by majority vote elect a successor
or successors to fill such vacancies for the unexpired term or terms. When one
or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective.
SECTION 8. Informal Action. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if prior to such action a written consent thereto is
signed by all members of the Board or of the committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board or
the committee.
SECTION 9. Participation by Telephone. Any member or members of the
Board of Directors or of any committee designated by the Board may participate
in a meeting of the Board, or any such committee, as the case may be, 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 pursuant to this Section shall constitute presence in person at
such meeting.
-6-
<PAGE>
SECTION 10. Compensation of Directors. Directors may, by resolution of
the Board of Directors, be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
ARTICLE IV
----------
OFFICERS
--------
SECTION 1. Number. The Board of Directors, as soon as may be after the
election thereof held in each year, shall elect a President, a Treasurer and a
Secretary, and from time to time may elect a Chairman of the Board of Directors
(who must be a director) and one or more Vice-Presidents, Assistant Secretaries,
Assistant Treasurers and such other officers, agents and employees as it may
deem proper. Any two or more offices may be held by the same person.
SECTION 2. Term, Resignation and Removal. The term of office of all
officers shall be one year and until their respective successors are elected and
qualified, but any officer may resign at any time upon written notice to the
Corporation or may be removed from office, either with or without cause, at any
time by the affirmative vote of a majority of the members of the Board of
Directors then in office. A vacancy in any office arising from any cause may be
filled for the unexpired portion of the term by the Board of Directors.
SECTION 3. Compensation of Officers. The compensation of the officers
of the Corporation for their services as such officers shall be fixed from time
to time by the Board of Directors, provided that the Board may delegate to the
Chairman of the Board or President the power to fix the compensation of officers
and agents appointed by him.
SECTION 4. Voting Corporation's Securities. Unless otherwise ordered by
the Board of Directors, the Chairman of the Board, or, in the event of his
inability to act, the President shall have full power and authority on behalf of
the Corporation to execute powers of attorney, proxies, waivers of notice of
meetings, consents and other instruments relating to securities owned by the
Corporation and to attend and to act and to vote at any meeting of security
holders of corporations in which the Corporation may hold securities, and at
such meetings shall possess and may exercise any and all rights and powers
incident to the ownership of such securities, and which as the owner thereof the
Corporation might have possessed and exercised if present. The Board of
Directors by resolution from time to time may confer like powers upon any other
person or persons.
-7-
<PAGE>
ARTICLE V
---------
DUTIES OF OFFICERS
------------------
SECTION 1. Chairman of the Board. The Chairman of the Board, if one has
been elected, shall preside at all meetings of the Board of Directors and
stockholders. He shall have such other duties as may be assigned to him from
time to time by the Board of Directors. During the absence or disability of the
President, he shall exercise all the powers and discharge all the duties of the
President.
SECTION 2. President. The President shall be the Chief Executive
Officer of the Corporation, and he shall have general supervision over the
business and affairs of the Corporation. He shall, in the absence of the
Chairman of the Board, preside at all meetings of the Board of Directors and
stockholders. He shall have the power to execute contracts and other instruments
of the Corporation, and such other duties and powers as may be assigned to him
from time to time by the Board of Directors.
SECTION 3. Vice Presidents. The Board of Directors may appoint one or
more Vice Presidents, each of whom shall have such powers and discharge such
duties as may be assigned to him from time to time by the Board of Directors.
During the absence or disability of the Chairman of the Board and the President,
the Vice Presidents, in the order designated by the Board of Directors, shall
exercise all the functions of the President.
SECTION 4. Treasurer. The Treasurer shall cause to be entered regularly
in books to be kept for the purpose, a full and accurate account of all moneys
received and paid by him on account of the Corporation. Whenever required by the
Board of Directors, he shall render an account of all his transactions as
Treasurer and of the financial condition of the Corporation. He shall at all
reasonable times exhibit his books and accounts to any director of the
Corporation upon application at the office of the Corporation during business
hours and he shall perform all duties incident to the position of Treasurer,
subject to the control of the Board of Directors. He shall give bond for the
faithful discharge of his duties if the Board of Directors so requires. He shall
do and perform such other duties as may be assigned to him from time to time by
the Board of Directors.
SECTION 5. Assistant Treasurers. The Board of Directors may appoint one
or more Assistant Treasurers who, in the order of their seniority, shall, in the
absence of or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as the Board of
Directors shall prescribe.
SECTION 6. Secretary. The Secretary shall attend all meetings of the
stockholders and all meetings of the Board of Directors and record all
proceedings in a book to be kept for that purpose and shall perform like duties
for other committees when so required. He shall give or cause to be given notice
of all meetings of stockholders and of the Board of
-8-
<PAGE>
Directors and of committees and shall perform such other duties as may be
prescribed by the Board of Directors. He shall keep in safe custody the seal of
the Corporation and affix the same to any instrument whose execution has been
authorized, and when so affixed, it may be attested by the signature of the
Secretary. The Board of Directors may give general authority to any officer to
affix the seal of the Corporation or to attest the affixing by his signature.
The Secretary shall do and perform such other duties as may be assigned to him
from time to time by the Board of Directors.
SECTION 7. Assistant Secretaries. The Board of Directors may appoint
one or more Assistant Secretaries who, in the order of their seniority, shall,
in the absence of or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other duties as the
Board of Directors shall prescribe.
SECTION 8. Inability to act. In the case of absence or inability to act
of any officer of the Corporation and of any person herein authorized to act in
his place, the Board of Directors may from time to time delegate the powers and
duties of such officer to any other officer or any director or any other person
whom it may select.
ARTICLE VI
----------
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
------------------------------------------------------------
SECTION 1. General Right to Indemnification. 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 or
investigative (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, shall be indemnified by the Corporation
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably 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 proceedings, 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 2. Indemnification in Derivative Actions. 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
-9-
<PAGE>
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 shall be indemnified by the Corporation 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 and except that no indemnification shall be made in respect of
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 Delaware
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 Delaware Court of Chancery or
such other court shall deem proper.
SECTION 3. Determination of Right to Indemnification. Any
indemnification under Sections 1 and 2 of this Article VI (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 Sections 1 and 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 a majority
vote of a quorum of the stockholders. Anything hereinabove set forth to the
contrary notwithstanding, 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 Sections 1 and 2, or in
defense of any claim, issue or matter therein, he shall in any event be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith
SECTION 4. Authority to Advance Expenses. 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 an undertaking by or on behalf of the director,
officer, employee or agent to be indemnified 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 5. Provisions Non-Exclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, 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.
-10-
<PAGE>
SECTION 6. Authority to Insure. The Corporation is authorized 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 7. Continuation of Right. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Article VI 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 a person.
SECTION 8. Savings Clause. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify, and advance expenses to, each
director, officer, employee and agent of the Corporation to the full extent
permitted by any applicable portion of this Article VI that shall not have been
invalidated and to the full extent permitted by applicable law.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 1. Form and Transfers. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock, certifying
the number of shares represented thereby and in such form not inconsistent with
applicable statutes and the Certificate of Incorporation as the Board of
Directors may from time to time prescribe.
Transfers of shares of the capital stock of the Corporation shall be
made only on the books of the Corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Corporation, or with a transfer clerk or a
transfer agent appointed as in Section 5 of this Article provided, and on
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon. The Board may, from time to time, make
such additional rules and regulations as it may deem expedient, not inconsistent
with these By-Laws, concerning the issue, transfer and registration of
certificates for shares of the capital stock of the Corporation.
The certificates of stock shall be signed by the Chairman of the Board,
the President or any Vice President and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, and sealed with the seal of
the Corporation. Such seal may be a facsimile, engraved or printed. Where any
such certificate is signed by a transfer agent or registered by a
-11-
<PAGE>
registrar, the signatures of the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer upon such certificate may be facsimiles, engraved or
printed. In case any such officer who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer at the time of its issue.
SECTION 2. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
SECTION 3. Fixing Date for Determination of Stockholders of Record. 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 not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. If no record date is so fixed, such record date shall
be determined in accordance with statute.
SECTION 4. Lost, Stolen, Destroyed or Mutilated Certificates. No
certificate for shares of stock of the Corporation shall be issued in place of
any mutilated certificate or of any certificate alleged to have been lost,
destroyed or stolen, except on production of such mutilated certificate or on
production of such evidence of such loss, destruction or theft as the Board of
Directors may require, and on delivery to the Corporation, if the Board of
Directors shall so require, of a bond of indemnity in such amount, upon such
terms and secured by such surety as the Board of Directors may in its discretion
deem sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
SECTION 5. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may require
all certificates of stock to bear the signature or signatures of any of them.
-12-
<PAGE>
ARTICLE VIII
------------
CORPORATE RECORDS
-----------------
SECTION 1. Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device; provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
SECTION 2. Examination of Books by Stockholders. The books, accounts
and records of the Corporation, except as may otherwise be required by statute,
may be kept outside of the State of Delaware at such place or places as the
Board of Directors may from time to time determine. The Board of Directors shall
determine whether and to what extent the books, accounts and records of the
Corporation, or any of them, other than the stock ledger, shall be open to the
inspection of stockholders, and no stockholder shall have any right to inspect
any book, account or record of the Corporation except as conferred by statute or
by resolution of the Board of Directors.
ARTICLE IX
----------
CORPORATE SEAL
--------------
The corporate seal shall consist of a die bearing the name of the
corporation and the inscription, "Corporate Seal-Delaware 1963." Said seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE X
---------
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be July 1 to June 30 or such
other fiscal year as the Board of Directors shall fix.
-13-
<PAGE>
ARTICLE XI
----------
AMENDMENTS
----------
The By-Laws of the Corporation shall be subject to alteration,
amendment or repeal, and new By-Laws not inconsistent with any provision of the
Certificate of Incorporation or statute may be made by the affirmative vote of a
majority of the whole Board of Directors or the affirmative vote of the holders
of a majority of the stock issued and outstanding and entitled to vote thereat,
at any regular or special meeting of the stockholders or by the written consent
of the holders of a majority of such stock.
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<NAME> DRYCLEAN USA, INC.
<CIK> 0000065312
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 580,778
<SECURITIES> 0
<RECEIVABLES> 1,531,492
<ALLOWANCES> 25,000
<INVENTORY> 4,219,315
<CURRENT-ASSETS> 6,577,413
<PP&E> 940,116
<DEPRECIATION> 606,398
<TOTAL-ASSETS> 7,591,910
<CURRENT-LIABILITIES> 1,928,556
<BONDS> 0
<COMMON> 173,781
0
0
<OTHER-SE> 5,489,573
<TOTAL-LIABILITY-AND-EQUITY> 7,591,910
<SALES> 4,559,810
<TOTAL-REVENUES> 4,734,768
<CGS> 3,315,946
<TOTAL-COSTS> 4,388,776
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,643
<INCOME-PRETAX> 312,727
<INCOME-TAX> 125,091
<INCOME-CONTINUING> 187,636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187,636
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
