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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
B.H.I.T. Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
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NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS OF
B.H.I.T. INC.
FORMERLY BANYAN HOTEL INVESTMENT FUND
TO BE HELD FEBRUARY 29, 2000
To the Stockholders of B.H.I.T. Inc.
NOTICE IS HEREBY GIVEN that a Special Meeting in lieu of the Annual Meeting of
Stockholders of B.H.I.T. Inc. (the "Company") will be held on February 29, 2000,
at 10:00 A.M., local time, at __________________for the following purposes:
1. To elect four (4) directors to hold office until the next Annual Meeting of
Stockholders or until their respective successors have been duly elected and
qualified;
2. To consider and vote upon a proposal to amend and restate the Company's
Certificate of Incorporation;
3. To consider and vote upon a proposal to amend and restate the By-Laws of the
Company;
4. To consider and vote upon a proposal to sell the Company's 50% interest in
Metro Franchising Commissary, LLC; and
5. To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
Only stockholders of record at the close of business on January 24, 2000 are
entitled to vote at the Meeting or any adjournments thereof.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
By Order of the Board of Directors,
Celia Zisfein
Secretary
January 28, 2000
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PROXY STATEMENT
B.H.I.T. INC.
FORMERLY BANYAN HOTEL INVESTMENT FUND
SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD FEBRUARY 29, 2000
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of B.H.I.T. Inc. (the "Company") for use at the
Meeting of Stockholders to be held on February 29, 2000, at __________, New
York, New York, including any adjournment or adjournments thereof (the
"Meeting"), for the purposes set forth in the accompanying Notice of Meeting.
The Company has not had a meeting of Stockholders since 1993.
Management intends to mail this proxy statement and accompanying form of proxy
to stockholders on or about January 28, 2000.
Proxies in the accompanying form, duly executed and returned to the management
of the Company and not revoked, will be voted at the Meeting. Any proxy given
pursuant to such solicitation may be revoked by the stockholder at any time
prior to the voting of the proxy by a subsequently dated proxy, by written
notification to the Secretary of the Company, or by personally withdrawing the
proxy at the Meeting and voting in person.
The address and telephone number of the principal executive offices of the
Company are:
875 Avenue of the Americas, Suite 1808
New York, New York 10001
(212) 736-7880
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on January __, 2000 (the
"Record Date") are entitled to notice of and to vote at the Meeting. As of the
Record Date, there were issued and outstanding 12,403,565 shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), the
Company's only class of voting securities. Each share entitles the holder to one
vote on each matter submitted to a vote at the Meeting.
VOTING PROCEDURES
The Directors will be elected by the affirmative vote of a plurality of the
shares of Common Stock, present in person or represented by proxy at the
Meeting, provided a quorum exists. A quorum is present if, as of the Record
Date, at least a majority of the outstanding shares of Common Stock are present
in person or by proxy at the Meeting. The proposal to amend and restate the
Company's Certificate of Incorporation will be approved
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upon receiving the affirmative vote of the holders of a majority of the shares
of Common Stock outstanding on the Record Date. The proposal to amend and
restate the By-Laws of the Company will be approved upon receiving the
affirmative vote of a plurality of the shares of Common Stock, present in person
or represented by proxy at the Meeting. The proposal to sell the Company's 50%
interest in Metro Franchising Commissary LLC will be approved upon receiving the
affirmative vote of the holders of a majority of the shares present and voting
at the Meeting (not including the shares owned by Mr. Polly, his wife and
Sheltering Palms Foundation). All other matters at the Meeting will be decided
by the affirmative vote of the holders of a majority of shares of Common Stock
with respect thereto, provided a quorum exists. It is currently anticipated that
votes will be counted and certified by an Inspector of Election who is currently
expected to be an employee of the Company or its legal counsel. In accordance
with Delaware law, abstentions and "broker non-votes" (i.e. proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote) will be treated as present for purposes of determining the presence of a
quorum. For purposes of determining approval of a matter presented at the
Meeting, abstentions will be deemed present and entitled to vote and will,
therefore, have the same legal effect as a vote "against" a matter presented at
the Meeting. Broker non-votes will be deemed not entitled to vote on the subject
matter as to which the non-vote is indicated. Because of the requirement for an
absolute majority of the outstanding Common Stock to approve the proposal
amending and restating the Certificate of Incorporation, broker non-votes will
also have the same effect as a vote "against" the proposal amending and
restating the Certificate of Incorporation. Broker non-votes will, however, have
no legal effect on the vote on any other particular matter which requires the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the Meeting.
The enclosed proxies will be voted in accordance with the instructions thereon.
Unless otherwise stated, all shares represented by such proxy will be voted as
instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of preparing,
assembling, printing and mailing this Proxy Statement, the proxy and any
additional soliciting material furnished to stockholders will be borne by the
Company. Arrangements will be made with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy materials to the beneficial
owners of stock, and such persons may be reimbursed for their expenses by the
Company. Proxies may also be solicited by directors, officers or employees of
the Company in person or by telephone,
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telegram or other means. No additional compensation will be paid to such
individuals for these services.
ELECTION OF DIRECTORS
At this year's Meeting, four (4) directors will be elected to hold office for a
term expiring at the Annual Meeting of Stockholders to be held in the year 2000.
Each director will be elected to serve until a successor is elected and
qualified or until the director's earlier resignation or removal.
At this year's Meeting, the proxies granted by stockholders will be voted
individually for the election, as directors of the Company, of the persons
listed below, unless a Proxy specifies that it is not to be voted in favor of a
nominee for directors. In the event any of the nominees listed below shall be
unable to serve, it is intended that the Proxy will be voted for such other
nominees as are designated by the Board of Directors. Each of the persons named
below has indicated to the Board of Directors of the Company that he or she will
be available to serve.
Name Position
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Harvey Polly President, Chief Executive Officer
and Director
Morton I. Kalb Vice President, Chief Financial
Officer and Director
Willis G. Ryckman, III Director
Leo Yarfitz Director
Harvey Polly, age 71, is a Director, President and Chief Executive officer of
the Company. Mr. Polly also serves as Chief Executive Officer and a stockholder
of H/R Industries, Inc. H/R Industries, Inc. is essentially a personal holding
company which was formed in 1984 under the name Helena Rubinstein, Inc., and was
engaged from 1984 until 1988 in various aspects of the cosmetic business. In
1988, the name of the corporation was changed to Elite Industries, Ltd., and in
1990 the name was changed to H/R Industries, Inc. Mr. Polly has been involved in
the railroad business for approximately twenty five years. In 1973, he founded
and became a major stockholder in Emons Industries, Inc., which was formed on
the basis of the acquisition of the Maryland and Pennsylvania Railroad Company.
Since the founding of Emons Industries, Inc., Mr. Polly has been involved in the
railroad freight car business. Mr. Polly has been, since 1975, Chief Executive
Officer and a stockholder of Railway Freight Car Service, Inc., which is
involved in the railroad boxcar leasing business. In 1994 and 1995, Mr. Polly
was Chairman of CAGY Industries, Inc., the publicly held holding
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company for the Columbus and Greenville Railway, the Chattooga and Chicamauga
Railway and the Redmont Railway and was the largest stockholder with
approximately 40% of the outstanding shares of common stock. Mr. Polly sold his
shares and resigned from the Board effective February 16, 1995. From 1988 to
1997, he has served on the Board of Directors of the Delaware Otsego Corp.,
which was a publicly held corporation that operated the New York Susquehanna and
Western Railroad. In prior years, Mr. Polly was also a stockholder and heavily
involved in the operations of the Louisiana Midland Railroad. He is also
presently a stockholder and officer of SLF of Martin County, Inc., a real estate
development company. From 1987 to 1990, he was a principal shareholder, Chief
Executive Officer and Director of Hanover Bank of Florida, a publicly held
corporation.
Morton I. Kalb, age 66, is a Director, Vice President and Chief Financial
Officer of the Company. Mr. Kalb has served as Vice President and Chief
Financial Officer of the Company since 1995. Mr. Kalb served as Vice President
of H/R Industries, Inc. since July 1984. Mr. Kalb is also a Certified Public
Accountant.
Willis G. Ryckman, age 54, is a Director of the Company. Mr. Ryckman has served
as Chairman of the Board of Directors of Tri-Tech Labs since August 1990. From
December 1966 through August 1990, Mr. Ryckman was Senior Vice President of
Manufacturers Hanover Trust Company.
Leo Yarfitz, age 83, is a Director of the Company. Mr. Yarfitz has been a
financial consultant with Sterling Management of Florida since June 1990. From
October 1987 until October 1989, Mr. Yarfitz served as Chief Financial Officer
of Hanover Bank of Florida. From October 1989 until December 1989, Mr. Yarfitz
served as President of Hanover Bank of Florida.
Upon closing of the transactions between Mr. Polly, Sheltering Palms Foundation
and Arrowhead Holdings Corporation described herein, it is anticipated that Mr.
Yarfitz and Mr. Ryckman will resign as directors of the Corporation and that two
individuals designated by Arrowhead Holdings Corporation will be elected to
serve as two members of a four member Board of Directors of the Company for the
remainder of the term of such directors or until their successors are duly
elected.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors, and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the Company's review of the copies of such forms received by the
Company, the Company believes
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that, during the year ended December 31, 1998, all filing requirements
applicable to its officers, directors, and greater than 10% beneficial owners
were complied with, except that Form 4's covering the transfer of 635,000 shares
by Mr. Polly were not timely filed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE.
EXECUTIVE COMPENSATION
A. DIRECTOR COMPENSATION
No arrangements currently exist with respect to payments to the Directors for
their service on the Company's Board of Directors, and no fees have been paid in
1998 or 1997.
B. EXECUTIVE COMPENSATION
Harvey Polly has served as President, Chief Executive Officer and a Director of
the Company since February 1995 and has not received compensation for such
services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 1, 1999, the following persons or entities were known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock of the Company:
Amount
Name of and Nature
Beneficial of Beneficial Percent
Title of Class Owner Ownership of Class
Shares of Common Harvey Polly 2,745,983 22%
Stock, $.01 Par
Value
The following table sets forth the ownership of shares owned directly or
indirectly by the Directors and Principal Officers of the Company as of December
1, 1999:
Amount
Name of and Nature
Beneficial of Beneficial Percent
Title of Class Owner Ownership of Class
Shares of Common Harvey Polly 2,745,983(l)(2) 22%
Stock, $.01 Par Director, shares
Value President and
Chief Executive
Officer
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Shares of Common Morton I. Kalb 75,000 1%
Stock, $.01 Par Director, shares
Value Vice President and
Chief Financial
Officer
Shares of Common Leo Yarfitz 100,000 1%
Stock, $.01 Par Director shares
Value
Shares of Common All Directors 2,920,983 24%
Stock, $.01 Par and Officers of shares
Value the Company as
a group (6
persons)
(1) During 1998, Mr. Polly transferred 500,000 shares to Sheltering Palms
Foundation, a Charitable Trust of which he is President and a Director and
100,000 shares to his wife. These shares are not included in the above
figure. Mr. Polly also transferred 35,000 shares to unrelated parties which
are also not included above.
(2) Does not include the 2,650,000 Option Shares which will be acquired by Mr.
Polly and sold to Arrowhead Holdings Corporation upon conclusion of the
arrangements with Arrowhead Holdings Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Polly owns 2,745,983 shares of the Company's Common Stock and Sheltering
Palms Foundation, (the "Foundation") a not for profit charitable entity
controlled by Mr. Polly and his wife, owns 500,000 shares of the Company's
Common Stock, a total of 3,245,983 shares (the "Polly Shares.) In 1995, Mr.
Polly acquired the Polly Shares (not including 100,000 shares later transferred
to his wife) pursuant to a tender offer and an agreement with the Company made
on August 4, 1994, as amended. In May of 1998, Mr. Polly transferred 500,000 of
such shares to the Foundation.
Under the terms of his agreement with the Company, Mr. Polly has the right to
acquire an additional 2,650,000 shares of the Company's Common Stock at a
purchase price of $.22 a share (the "Option Shares").
Since Mr. Polly acquired control of the Company in 1995, the Company has pursued
various acquisition and business combinations, but has been unable to conclude
any transactions which management considered appropriate and in the best
interest of the stockholders of the Company, other than the acquisition by the
Company of its 50% interest in Metro Franchising Commissary LLC.
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Arrowhead Holdings Corporation is a diversified holding company, whose principal
holding is Vesper Corporation. Vesper Corporation is itself a diversified
manufacturing and distributing corporation owning business entities which
produce aircraft and air space ducting systems, gears, lubricating systems,
steel lockers, storage systems and high performance strainers. In addition,
Arrowhead also owns subsidiaries involved in commercial leasing and real estate
and a variety of other investments.
In order to further the interests of the stockholders of the Company, on August
___, 1999, Mr. Polly and the Foundation entered into an agreement with Arrowhead
Holdings Corporation to sell the Polly Shares and the Option Shares to Arrowhead
Holdings Corporation. Upon exercise of the right to the Option Shares, Mr. Polly
will sell 5,370,563 shares for $1,540,276 and the Foundation will sell 500,000
shares for $142,724. Upon closing of the transaction with Arrowhead Holdings
Corporation, it will own a total of 5,870,563 shares or 39% of the total of the
then outstanding shares of Common Stock of the company and will be in a position
to control the Company.
Arrowhead Holdings Corporation's obligation to conclude its arrangements to
acquire the Polly Shares and the Option Shares is conditioned upon, among other
things, approval by the stockholders of the Company to amend and restate the
certificate of incorporation of the Company presented to the Meeting, approval
to amend and restate the By-Laws of the Company and approval by the stockholders
(other than Mr. Polly, Mrs. Polly and the Foundation) of the sale of the
Company's 50% interest in Metro Franchising Commissary LLC to Mr. Polly.
APPROVAL OF THE SALE OF THE COMPANY'S 50% INTEREST IN
METRO FRANCHISING COMMISSARY LLC
The Board of Directors of the Company unanimously recommends that the
stockholders approve the proposal to sell the Company's 50% interest in Metro
Franchising Commissary LLC ("Metro") to Mr. Polly. The Company acquired its
interest for $1,005,000 in cash in May 1998. In negotiating the agreement to
acquire the Polly Shares and the Option Shares, Arrowhead Holdings Corporation
made divestiture of such interest a condition as the operations of Metro do not
meet Arrowhead Holdings Corporation's strategic business objectives.
Metro is engaged in the business of opening Dunkin Donuts Quick Service
Restaurant locations in Exxon service stations in the New York, New Jersey and
Connecticut areas. It has leased property in Long Island City where Dunkin
Donuts Products are baked for delivery to various locations. The retail
locations are selected by Metro with Dunkin Donuts and Exxon's approval. Each
retail location is renovated and equipped by Metro and operated by the station
operator. All baked products are purchased from
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Metro and the station operator pays Metro a royalty fee based on sales, a
portion of which is remitted to Dunkin Donuts. Metro's baking facility was fully
operational on December 31, 1998. The first retail location commenced operations
in December 1998 and at the present time, there are seven retail locations of a
group of sixteen locations originally anticipated.
The Metro unaudited statement of operations for the six months ended June 30,
1999 show a net loss of $58,082 and members' capital at the end of such
six-month period of $847,202. The bulk of Metro's assets are represented by
property and equipment and franchise and license fees. Present indications are
that operations of Metro will continue to be unprofitable until additional
retail locations are established and that substantial additional capital will be
required to complete the desired number of retail locations.
The Company has approached several unrelated entities with a view to the sale
and divestiture of its interest in Metro and has received only one indication of
interest for $800,000. Mr. Polly has agreed to acquire the Metro interest for
$1,000,000 in connection with the consummation of the transactions contemplated
by the agreement with Arrowhead Holdings Corporation.
The Company's agreement to the consideration to be paid by Mr. Polly for the
Company's interest in Metro is based upon an assessment of the financial value
of its interest in Metro. To insure that the Company receives fair market value,
the Company has engaged Value Management Inc. to evaluate the fairness, from a
financial point of view, to the stockholders of the consideration to be paid by
Mr. Polly. Value Management Inc. has extensive experience in undertaking
valuations and fairness opinions.
In formulating an opinion on the matter, Value Management Inc., among other
things, (1) reviewed and considered the current operations of Metro; (2)
reviewed and considered certain financial and operating data, including
financial forecasts concerning Metro and provided by the management of Metro;
and (3) held discussions with the management of Metro and the Company concerning
the past and present operations and financial condition and prospects of Metro.
In an opinion letter dated November 30, 1999, Value Management Inc. concluded
that the consideration to be paid by Mr. Polly in respect to the sale of the
Company's interest in Metro is fair, from a financial point of view, to the
stockholders of the Company.
A copy of such fairness opinion setting forth the assumptions made, the matters
considered, the scope and limitations of the review undertaken and the
procedures followed by Value Management Inc. in rendering its opinion is
attached to the proxy statement as Exhibit A.
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In accordance with the Delaware Corporation Law, Section 271, the sale of
Company's 50% interest in Metro is required by Delaware state law or the by-laws
of the Company to be submitted to a stockholder vote. Due to the related party
interest and conflict, the potential impact on the Company, the advice and
counsel and by resolution of the Board of Directors, the sale is submitted to
the Company's stockholders for approval by a majority of the shares present and
voting at the meeting (not including the Polly Shares and the shares owned by
Mr. Polly's wife and Sheltering Palms Foundation) although, under Delaware law,
only the affirmative vote of at least a majority of the total number of shares
present and voting at the meeting would be required to adopt this proposal. If
the stockholders do not approve the divestiture proposal, the agreement with
Arrowhead Holdings Corporation may be terminated at Arrowhead Holdings
Corporation's discretion and if so terminated would be of no further force and
effect.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO SELL THE COMPANY'S 50%
INTEREST IN METRO TO MR. POLLY IS IN THE BEST INTERESTS OF THE COMPANY AND
UNANIMOUSLY RECOMMENDS A VOTE FOR ITS APPROVAL.
PROPOSAL TO AMEND AND RESTATE THE COMPANY'S CERTIFICATE OF
INCORPORATION WHICH AMONG OTHER THINGS WILL LIMIT
THE NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY
OWNED BY ANY STOCKHOLDER OF THE COMPANY
The certificate of incorporation of the Company currently in effect was designed
and adopted to implement the Company's operation as a real estate investment
trust ("REIT"). The Company discontinued its REIT status in 1995 and the current
certificate of incorporation contains provisions which have no application in
light of the Company's present operations. Arrowhead Holdings Corporation and
the Company believe that it is in the best interests of the stockholders of the
Company to amend and restate the certificate of incorporation of the Company in
the manner set forth in Exhibit B. Among the changes reflected in the proposed
amendment and restatement to the Company's certificate of incorporation are
provisions to protect the Company from a possible limitation on its net
operating loss carry forwards under Section 382 of the Internal Revenue Code.
The amended and restated certificate of incorporation enables the Board of
Directors of the Company to cause the Company to refuse to recognize an
acquisition of the Common Stock of the Company by any person or entity, directly
or indirectly, which would cause such person or entity (1) to be treated as a
"5% shareholder" within the meaning of Section 382 of the Internal Revenue Code;
(2) to be treated as a holder of Common Stock of the Company in an amount that
could otherwise result in a limitation on the use of, or loss of, the Company's
net operating loss carry forwards; or (3) to be the beneficial owner (as such
term is defined in Rule 13d-3 promulgated under the Securities Act of 1934, as
amended or any successor or replacement
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rule) of more than 4.5% of the outstanding shares of the Common Stock of the
Company.
Arrowhead Holdings Corporation and the Company regard the Company's net
operating loss carry forwards as a valuable asset of the Company and believe
that it is in the best interests of the stockholders of the Company to amend and
restate the certificate of incorporation in the manner set forth in Exhibit B.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT AND RESTATEMENT OF
THE COMPANY'S CERTIFICATE OF INCORPORATION IS IN THE BEST INTERESTS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS A VOTE FOR ITS APPROVAL.
PROPOSAL TO AMEND AND RESTATE THE COMPANY'S BY-LAWS
The By-Laws of the Company currently in effect were designed and adopted to
implement the Company's operations as a real estate investment trust ("REIT").
The Company discontinued its REIT status in 1995 and the current By-Laws contain
many provisions which have no application in light of the Company's present
operations. Arrowhead Holdings Corporation and the Company believe that it is in
the best interests of the shareholders of the Company to amend and restate the
By-Laws of the Company in the manner set forth in Exhibit C.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO AMEND AND RESTATE THE
BY-LAWS OF THE COMPANY IS IN THE BEST INTERESTS OF THE COMPANY AND UNANIMOUSLY
RECOMMENDS A VOTE FOR ITS APPROVAL.
OTHER MATTERS
The Board is not aware of any matter not referred to in the enclosed form of
proxy that will be presented for action at the meeting. If any such matter
properly comes before the meeting, the proxies in the accompanying form will be
voted with respect thereto in accordance with the judgment of the person or
persons voting such proxies.
The Company's Transfer Agent is to perform certain services in connection with
the solicitation of the proxies, including tabulation of proxies and personal or
telephone inquiries to stockholders or brokers, banks or other persons acting as
custodians. For these services, the Transfer Agent will receive a fee at its
customary rate and reimbursement of certain out-of-pocket expenses. Brokers,
banks and other persons acting as custodians may be reimbursed for certain
expenses incurred by them in obtaining instructions from beneficial owners of
the Company's Common Stock. In addition to use of the mails, directors and
officers of the Company may, without compensation other than their regular
compensation, solicit proxies from stockholders by telephone or in person. All
costs of solicitation will be borne by the Company.
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STOCKHOLDER PROPOSALS
A proposal by a stockholder intended for inclusion in the Company's proxy
statement for the 2000 annual meeting must be received by the Company at the
address noted immediately above, to the attention of _______________, Secretary,
on or before April 30, 2000, in order to be eligible for such inclusion.
ANNUAL REPORT
The Company's 1998 Annual Report to Stockholders, which includes a copy of the
Company's Annual Report on Form 10-K for 1998 (including the financial
statements and schedules thereto), as filed with the Securities and Exchange
Commission ("1998 Annual Report") is being delivered concurrently with this
Proxy Statement. Stockholders are urged to review carefully the financial
information contained in the 1998 Annual Report.
Please sign the proxy and return it promptly in the enclosed envelope to which
no postage need be affixed if mailed within the United States.
New York, New York
_____________, 2000.
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EXHIBIT A
Value
Management
Inc. The Business Valuation Specialist
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November 30, 1999
B.H.I.T., Inc.
c/o: William L. Weiss
110 East 59th St.
New York, NY 10022
Re: Fairness of Sale of B.H.I.T.'s Interest in Metro Franchising Commissary, LLC
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Dear Mr. Weiss:
As you requested, we have prepared an opinion on the proposed sale of B.H.I.T.,
Inc.'s (referred to herein as "BHIT") fifty percent (50%) interest in Metro
Franchising Commissary, LLC (referred to herein as "Metro or the "Company") to
Mr. Harvey Polly. The purpose of this opinion is to establish the fairness to
BHIT's stockholders, from a financial point of view, of the proposed sale to Mr.
Polly. Mr. Polly has agreed to acquire BHIT's fifty percent (50%) interest in
Metro for one million dollars ($1,000,000). This letter will present the factors
considered and approaches utilized in making this determination. The findings of
this valuation are subject to certain limiting conditions (Exhibit 1).
DEFINITION OF FAIR MARKET VALUE
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In rendering this opinion, we considered the fair market value of Metro. The
definition of "fair market value" employed in this appraisal is the price at
which an interest in Metro would change hands between a willing buyer and
willing seller, when the former is not under any compulsion to buy and the
latter is not under any compulsion to sell, both parties having reasonable
knowledge of relevant facts.
OPINION
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In the course of preparing this opinion, we spoke with Stuart Cohen, one of the
managers of Metro, about the history and evolution of Metro, its operations,
financial performance, competition, markets and marketing efforts, and its
outlook for the future. We visited one of the Company's retail franchises
(located at 1550 Bedford Ave., Brooklyn, NY) and
113 Fox Hill Dr. o Newtown, PA 18940-3648 o 2009 Chestnut St.
Philadelphia, PA o 19103-3307 o Tel (215) 598-9310 o Fax (215) 598-0589
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contacted each of the other locations. We have been supplied with copies of:
o Compiled financial statements for Metro Franchising Commissary, LLC for the
six months ended June 30, 1999 and for the nine months ended September 30,
1999, as prepared by the certified public accounting firm of Nemiroff,
Cosmas & Company, LLP;
o A copy of an Operating Agreement for Metro Franchising Commissary, LLC
dated May 28, 1998 by and among Metro Franchising Bakery, LLC, Subex, LLC
and B.H.I.T., Inc.
o A listing by address of Metro's current seven retail locations, its baking
center and the addresses of three potential sites for new retail locations.
o Copies of several written correspondences involving Harvey Polly, President
of BHIT, including: a letter dated 2/22/99 to Don Kleila of FKB Donuts
asking if Mr. Kleila was interested in purchasing BHIT's stock in Metro; a
letter dated 2/22/99 to Paul Waltzer and Stuart Cohen asking if they were
interested in purchasing BHIT's stock in Metro; a letter dated 5/25/99 to
Paul Waltzer and Stuart Cohen asking them to provide an explanation for
the shortfall in capital and for the longer-than-planned development period
of Metro; a letter dated 6/2/99 from Paul Waltzer and Stuart Cohen to Mr.
Polly in response to his letter to them dated 5/25/99; a letter dated
6/8/99 from Mr. Polly to William Colianni of Holding Capital Corp. asking
if he would have an interest in buying the Metro stock from Mr. Polly if
Mr. Polly sold his BHIT stock; and, a letter to Mr. Polly from James W.
Donaghy, President of Subex, LLC, stating that Subex would have an interest
in purchasing BHIT's stock in Metro at book value.
Additionally, the Company furnished other data we considered relevant in the
preparation of this appraisal. We have relied upon the accuracy and the
completeness of the material furnished to us and have not independently verified
the information contained in such material.
In establishing the opinion determined herein, we have taken into consideration
IRS Revenue Ruling 59-60, which establishes guidelines for appraising stock of a
closely-held company. This revenue ruling states that no general formula is
applicable to the many different valuation situations. Various factors, both
endogenous and exogenous to the Company, must be considered. Such factors are to
include:
o An understanding of the business and its evolution over time. Knowledge of
the Company's development may shed insight as to its future performance.
o Degree and level of competition.
VMI
===
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o Book value.
o The financial condition of the business.
o The earnings and cash flow capacity of the Company.
o Transactions in the stock of the Company.
o The condition and outlook of the economy in the Company's market area.
o The condition and outlook of the industry to which the Company belongs.
o The attitude of investors toward companies which are comparative to the
subject Company.
The valuation methods considered in rendering our opinion include: the net asset
value of Metro, the present value of the Company's expected cash flows, and an
examination of the private transaction market for sales of similar companies.
Based on all factors, it is our opinion that $1,000,000 for BHIT's fifty percent
interest in Metro is not less than current fair market value. Stated otherwise,
we believe that a purchase price of $1,000,000 for BHIT's fifty percent interest
in Metro Franchising Commissary, LLC is fair to BHIT stockholders.
Respectfully submitted,
Value Management Inc.
/s/ Andrew Wilusz /s/ Edward A. Wilusz
- ------------------------ ----------------------------
Andrew Wilusz Edward A. Wilusz, ASIA, CFA
Financial Analyst President
VMI
===
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EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
B.H.I.T., INC.
The Certificate of Incorporation of B.H.I.T., Inc. is hereby amended and
restated in its entirety, in compliance with the requirements of the Delaware
General Corporation Law, to read as follows:
1. The name of the corporation (hereinafter referred to as the
"Corporation") shall continue to be B.H.I.T., Inc.
2. The address of the registered office of the Corporation in the State
of Delaware is The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801. The name of its registered agent at such address shall be The
Corporation Trust Company.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
4. The total number of shares of stock which the Corporation shall have
authority to issue is 20,000,000. All such shares are to be Common Stock, par
value of $0.01 per share and are to be of one class.
5. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors of the Corporation is
expressly authorized to make, alter and repeal the by-laws of the Corporation,
subject to the power of the stockholders of the Corporation to alter or repeal
any by-laws whether adopted by them or otherwise.
6. A director of the Corporation shall not be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, expect to the extent such exemption from liability or limitation
thereof is not permitted under the Delaware General Corporation Law as the same
exists or may hereafter be amended. Any amendment, modification or repeal of the
foregoing sentence shall not adversely affect any right or protection of a
director of the Corporation hereunder in respect of any act or omission
occurring prior to the time of such amendment, modification or repeal.
7. (a) Each holder of shares of any class of stock of the Corporation
shall upon demand disclose to the Board of Directors in writing such information
with respect to direct and indirect ownership of such shares as the Board of
Directors deems necessary to enforce the provisions of this Section 7.
(b) Whenever it is deemed by the Board of Directors to be reasonably
necessary to protect the Corporation from a possible limitation on its net
operating loss carry forwards or built in losses (collectively, "NOLS") under
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), any
regulation thereunder or any replacement or similar provision of any federal or
state tax law or regulation, the Board of Directors may require a statement or
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affidavit from each proposed transferee of shares of any class of stock of the
Corporation setting forth the number of shares of all classes of stock of the
Corporation already owned, or treated as owned under Section 382 of the Code, by
such proposed transferee in a form specified by the Board of Directors, and, in
connection therewith, if the proposed transfer may result in a limitation on the
use of, or a loss of, any NOLs, the Board of Directors shall have the right, but
not the duty, to cause the Corporation to refuse to transfer such shares to the
proposed transferee. All contracts for the sale or other transfer of shares
shall be subject to the provisions of this Section 7. For purposes of this
Section 7, the term "shares" includes any option, contingent purchase right,
warrant, convertible debt instrument, put, contract or similar interest or
instrument with respect to shares.
(c) Notwithstanding any other provision of this Amended and Restated
Certificate of Incorporation to the contrary, and subject to the provisions of
subsection 7(d), there shall be a limit on the number of shares of capital stock
of the Corporation owned by any shareholder of the Corporation as set forth in
the following sentence, such limitation herein referred to as the "Limit." No
person or entity shall at any time directly or indirectly acquire any shares of
any class of stock of the Corporation which could cause such person or entity
(1) to be treated as a "5-percent shareholder" within the meaning of Section 382
of the Code, (2) to be treated as a holder of capital stock of the Corporation
in an amount that could otherwise result in a limitation on the use of, or loss
of, the Corporation's NOLs, or (3) to be the beneficial owner (as such term is
defined in Rule l3d-3 promulgated under the Securities Exchange Act of 1934, as
amended or any successor or replacement rule) of more than 4.5% of the
outstanding shares of capital stock of the Corporation. Shares of any class of
stock of the Corporation which are proposed to be acquired by a person in excess
of the Limit at any time shall be deemed "Excess Shares."
(i) Any contract for the sale or other transfer of shares of any
class of stock of the Corporation which would, if consummated, result in a
transferee owning Excess Shares, and any transfer of shares of any class of
stock of the Corporation which would result in a transferee owning Excess Shares
shall, as to the Excess Shares, be null and void and be deemed an acquisition by
such transferee of such Excess Shares for the account of the Corporation. All
Excess Shares held by such transferee for the account of the Corporation shall
cease to be outstanding and shall cease to be entitled to dividends, voting
rights and other benefits with respect to such Excess Shares, excepting only the
holder's right to payment from the Corporation of the price determined and
payable as set forth below.
(ii) Upon receipt of notice of the existence of Excess Shares,
the Corporation, at the direction of the Board of Directors, by notice to the
holder thereof, may demand that the holder deliver the Excess Shares to the
Corporation. Upon issuance of such demand, the Excess Shares shall be deemed
cancelled and the holder shall be entitled to receive from the Corporation a
price determined and payable as hereinafter set forth. Subject to the limitation
on payment set forth below, the price of each Excess Share called for delivery
shall be the average daily per share closing sales price if the class of stock
of the Corporation comprising the Excess Share is listed on a national
securities exchange, or on the National Association of Securities Dealers Inc.
Automated Quotation system or any similar or successor system and if such class
of stock is not so listed, shall be the mean between the average
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published per share closing bid and asked prices, in each case during the thirty
day calendar period ending on the business day prior to receipt by the holder of
the notice for delivery, or if there have been no sales on a national securities
exchange or such system and no published bid and asked quotations with respect
to such class of stock of the Corporation during such thirty-day calendar
period, the price shall be the price determined by the Board of Directors in
good faith.
(iii) Unless the Board of Directors shall determine that it is in
the interest of the Corporation to make earlier payment of all of the amount
determined as the price per share in accordance with subsection 7(c)(ii), the
price shall be payable only upon the liquidation of the Corporation and shall
not exceed an amount which is the sum of the per share distributions designated
as liquidation distributions and return of capital distributions declared with
respect to other shares of the Corporation of the same class or series, and no
interest shall accrue with respect to the period subsequent to the issuance by
the Corporation of the demand to the date of such payment.
(d) The Board of Directors in their discretion may exempt from the
Limit (i) ownership of certain designated shares while owned by a person or
entity who has provided the Board of Directors with evidence and assurance
acceptable to the Board of Directors that no NOLs of the Corporation would be
lost or limited thereby, or (ii) any other ownership if the Board of Directors
determine that such exception is in the best interests of the Corporation.
(e) Nothing contained in its Amended and Restated Certificates of
Incorporation, or in this Section shall limit the authority of the Board of
Directors to take such other action as they deem necessary or advisable to
protect the value of the NOLs to the Corporation.
(f) if any provision of this Section or any application of any such
provision is determined to be invalid by an federal or state court having
jurisdiction over the issues, the validity of the remaining provisions shall not
be affected and other applications of such provisions shall be affected only to
the extent necessary to comply with the determination of such court. To the
extent this Section may be inconsistent with any other provision, this Section
shall be controlling.
8. The Corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed this ________________________day of ______________________________,
____________________.
B.H.I.T., INC.
By: _______________________________
Name:
Title:
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EXHIBIT C
AMENDED AND RESTATED
BY-LAWS
OF
B.H.I.T., INC.
EFFECTIVE _____________ __, ____
ARTICLE I - OFFICES
-------------------
Section 1.1 Registered Office. The registered office of the Corporation
shall be as stated in the Certificate of Incorporation or at such other location
within the State of Delaware to which the registered office shall be changed by
action of the Board of Directors.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may, from time to time, determine or the business of the Corporation may
require.
ARTICLE II - SHAREHOLDERS' MEETINGS
-----------------------------------
Section 2.1 Place of Shareholders' Meetings. Meetings of shareholders
shall be held at such places within or without the State of Delaware as may be
fixed from time to time by the Board of Directors.
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Section 2.2 Annual Meeting. A meeting of the shareholders of the
Corporation shall be held, on such date and at such time as the Board of
Directors may determine, or as stated in the notice of the meeting.
Section 2.3 Special Meetings. Special meetings of the shareholders may
be called at any time:
(a) By the Chairman of the Board or the President of the
Corporation; or
(b) By a majority of the Board of Directors; or
(c) By shareholders entitled to cast at least 20% of the vote
that all shareholders are entitled to cast at the meeting.
Upon the written request of any person or persons entitled to call a
special meeting, which request shall set forth the purpose for which the meeting
is desired, it shall be the duty of the Secretary to fix the date of such
meeting to be held at such time, not less than five nor more than sixty days
after the receipt of such request, as the Secretary may determine, and to give
due notice thereof. If the Secretary shall neglect or refuse to fix the date of
such meeting and to give notice thereof within five days after receipt of such
request, the person or persons calling the meeting may do so.
Section 2.4 Notices of Shareholders' Meetings. Written notice stating
the date, place and hour and, if required by law or these By-laws, the purpose,
of any meeting of the shareholders, shall be given to each shareholder of record
entitled to vote at the meeting at least five days prior to the day named for
the meeting, unless otherwise required by law. When a
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meeting is adjourned, it shall not be necessary to give any notice of the
adjourned meeting or of the business to be transacted at an adjourned meeting,
other than by announcement at the meeting at which such adjournment is taken.
Section 2.5 Quorum of and Action by Shareholders. Shareholders entitled
to cast at least a majority of the votes which all shareholders are entitled to
cast on the particular matter shall constitute a quorum for the purpose of
considering such matter, and, unless otherwise specifically provided by law, the
acts, at a duly organized meeting, of the shareholders present, in person or by
proxy, entitled to cast at least a majority of the votes which all shareholders
present are entitled to cast, shall be the acts of the shareholders. The
shareholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. If a meeting cannot be organized because a quorum has
not attended, those present may, except as otherwise provided by law, adjourn
the meeting to such time and place as they may determine, but in the case of any
meeting called for the election of Directors, those shareholders who attend any
such adjourned meeting, although less than a quorum as fixed in this Section
shall nevertheless constitute a quorum for the purpose of electing Directors.
Section 2.6 Voting. At least five days before any meeting of
shareholders, the officer or agent having charge of the transfer books of the
Corporation shall make a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order with the address of and the number
of shares held by each, which list shall be kept on file at the registered
office of the Corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the
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meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting.
At all shareholders' meetings, shareholders entitled to vote may attend
and vote either in person or by proxy. All proxies shall be in writing, executed
by the shareholder or by a duly authorized attorney in fact, and shall be filed
with the Secretary of the Corporation. A proxy, unless coupled with an interest,
shall be revocable at will, notwithstanding any other agreement or any provision
in the proxy to the contrary, but the revocation of a proxy shall not be
effective until the notice thereof has been given to the Secretary of the
Corporation. No unrevoked proxy shall be valid after eleven months from the date
of execution, unless a longer time is expressly provided therein; but in no
event shall a proxy, unless coupled with an interest, be voted on after three
years from the date of its execution.
Except as otherwise specifically provided by law, all matters coming
before the meeting shall be determined by a vote of shares. Such vote shall be
taken by voice unless a shareholder demands before the election begins that it
be taken by ballot, in which event the vote shall be taken by written ballot,
and the Judge or Judges of Election or, if none, the Secretary of the Meeting
shall tabulate and certify the results of such vote.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section 3.1 Number, Election and Term. Except as otherwise provided in the
Certificate of Incorporation, the number of directors which shall constitute the
whole Board of Directors shall be not less than three (3) nor more than nine
(9), as may be determined from time to time by resolution of the Board of
Directors. The directors shall be elected at the annual
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meeting of shareholders, except as provided in Section 3.11. Each Director shall
hold office for a term of one year or until the election and qualification of
his successor. At each Annual Meeting of Shareholders, the Shareholders shall
elect successors to the Directors, unless the number of Directors is then being
reduced. Directors may be re-elected without limit as to the number of times. A
Director shall be an individual at least 21 years of age who is not under legal
disability. Unless otherwise required by law or by action of the Directors, no
Director shall be required to give bond, surety or security in any jurisdiction
for the performance of any duties or obligations hereunder. The Directors in
their capacity as Directors shall not be required to devote their entire time or
any specified portion of their time to the business and affairs of the
Corporation. Directors need not be residents of the State of Delaware or
shareholders of the Corporation.
Section 3.2 Place of Meeting. Meetings of the Board of Directors may be
held at such place within the State of Delaware or elsewhere as a majority of
the Directors may from time to time appoint or as may be designated in the
notice calling the meeting.
Section 3.3 Regular Meetings. A regular meeting of the Board of
Directors shall be held annually, immediately following the annual meeting of
shareholders, at the place where such meeting of the shareholders is held or at
such other place, date and hour as a majority of the newly elected Directors may
designate. At such meeting, the Board of Directors shall elect officers of the
Corporation. In addition to such regular meeting, the Board of Directors shall
have the power to fix by resolution the place, date and hour of other regular
meetings of the Board.
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Section 3.4 Special Meetings. Special meetings of the Board of Directors
shall be held whenever ordered by the Chairman of the Board, President, or by a
majority of the Directors in office.
Section 3.5 Participation in Meetings by Conference Telephone. Any
Director may participate in any meeting of the Board of Directors or of any
committee (provided such Director is otherwise entitled to participate), be
counted for the purpose of determining a quorum thereof and exercise all rights
and privileges to which a Director might be entitled were the Director
personally in attendance, including the right to vote, by means of conference
telephone or other similar communications equipment by means of which all
persons participating in the meeting can hear each other.
Section 3.6 Notices of Meeting of Board of Directors.
(a) Regular Meetings. No notice shall be required to be given of
any regular meeting, unless the same is held at other than the time or place for
holding such meetings as fixed in accordance with Section 3.3 of these By-laws,
in which event one day's notice shall be given of the time and place of such
meeting.
(b) Special Meetings. Written notice stating the date, place and
hour of any special meeting of the Board of Directors shall be given at least
one day prior to the date named for the meeting.
Section 3.7 Quorum. A majority of the Directors in office shall be
necessary to constitute a quorum for the transaction of business, and the acts
of a majority of the Directors present at a meeting at which a quorum is present
shall be considered the acts of the Board of
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Directors. If there is no quorum present at a duly convened meeting of the Board
of Directors, the majority of those present may adjourn the meeting from time to
time and place to place.
Section 3.8 Informal Action by the Board of Directors. Any action which
may be taken at a meeting of the Directors may be taken without a meeting if a
consent or consents in writing, setting forth the action so taken, shall be
signed by all of the Directors and shall be filed with the Secretary of the
Corporation. Insertion in the minute book of the Corporation shall be deemed
filing with the Secretary regardless of whether the Secretary or some other
authorized person has actual possession of the minute book. Written consents by
all of the Directors executed pursuant to this Section 3.8 may be executed in
any number of counterparts and shall be deemed effective as of the date set
forth therein.
Section 3.9 Powers. The business and affairs of the Corporation shall be
managed by its Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law or by the
Certificate of Incorporation or by these By-laws directed or required to be
exercised or done by the shareholders.
Section 3.10 Removal of Directors by Shareholders. The entire Board of
Directors or any individual Director may be removed from office without
assigning any cause by the vote of shareholders entitled to cast at least a
majority of the votes which all shareholders would be entitled to cast at any
annual election of Directors or such class of Directors. In case the Board of
Directors or such class of the Board of Directors or any one or more Directors
is so removed, new Directors may be elected at the same time.
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Section 3.11 Vacancies. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of Directors, maybe filled by
a majority of the remaining members of the Board of Directors though less than a
quorum, and each person so elected shall be a Director until his successor is
duly elected by the shareholders, who may make such election at the next annual
meeting of the shareholders or at any special meeting duly called for that
purpose and held prior thereto, or until his earlier resignation or removal.
ARTICLE IV - OFFICERS
---------------------
Section 4.1 Election and Office. The Corporation shall have a Chairman
of the Board, President, a Secretary and a Treasurer who shall be elected by the
Board of Directors. The Board of Directors may elect as additional officers one
or more Executive Vice Presidents, and one or more other officers or assistant
officers. Any number of offices may be held by the same person.
Section 4.2 Term. The officers and assistant officers shall each serve
at the pleasure of the Board of Directors and until the annual meeting of the
Board of Directors following the next annual meeting of shareholders unless
removed from office by the Board of Directors during their respective tenures.
Section 4.3 The Chairman of the Board: Powers and Duties. The Chairman
of the Board shall be the Chief Executive Officer of the Corporation. The
Chairman shall preside at all meetings of the Board of Directors and all
meetings of the shareholders at which the Chairman is present. The Chairman of
the Board shall exercise general supervision of the President and shall
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have responsibility for directing and coordinating the long-range planning and
policy-making aspects of the management of the Corporation, including the
development and review of long-term strategic financial, marketing, production
and organizational plans, consistent with the aims and policies of the Board of
Directors generally. The Chairman of the Board, subject to the general authority
of the Board of Directors, shall direct other officers, employees and agents of
the Corporation in developing, implementing and carrying out such plans and
policies. In addition, the Chairman of the Board shall be an ex officio member
of any committees and may execute on behalf of the Corporation all documents and
instruments which may be executed by the President.
Unless otherwise determined by the Board of Directors, the Chairman of
the Board shall have full power and authority on behalf of the Corporation to
attend and to act and to vote at any meeting of the shareholders of any
corporation in which the Corporation may hold stock, and, at any such meeting,
shall possess and may exercise any and all the rights and powers incident to the
ownership of such stock and which, as the owner thereof, the Corporation might
have possessed and exercised.
Section 4.4 The President: Powers and Duties. The President, subject to
the control of the Board of Directors and the Chairman of the Board, shall be
the principal operating officer of the Corporation and shall have the duties of
active control and supervision of the regular day-to-day operations of the
Corporation. The President shall see that all the orders and resolutions of the
Board of Directors are carried into effect subject, however, to the right of the
directors to delegate any specific powers to any other officer or officers of
the Corporation. The President shall sign certificates of stock with the
Secretary or Assistant Secretary, and shall sign and
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execute, on behalf of the Corporation, all deeds, mortgages, bonds, contracts
and other instruments. The President shall make reports of the Corporation's
business to the Board of Directors at such times as the Board shall require. In
the absence of the Chairman, the President shall preside at all meetings of the
Board of Directors at which the President is present.
Section 4.5 Powers and Duties of the Secretary. Unless otherwise
determined by the Board of Directors, the Secretary shall be responsible for the
keeping of the minutes of all meetings of the Board of Directors, shareholders
and all committees, in books provided for that purpose, and for the giving and
serving of all notices for the Corporation. The Secretary shall have charge of
the corporate seal, the certificate books, transfer books and stock ledgers, and
such other books and papers as the Board of Directors may direct. The Secretary
shall perform all other duties ordinarily incident to the office of Secretary
and shall have such other powers and perform such other duties as may be
assigned by the Board of Directors.
Section 4.6 Powers and Duties of the Treasurer. Unless otherwise
determined by the Board of Directors, the Treasurer shall have charge of all the
funds and securities of the Corporation which may come into his hands. When
necessary or proper, unless otherwise determined by the Board of Directors, the
Treasurer shall endorse for collection on behalf of the Corporation checks,
notes, and other obligations, and shall deposit the same to the credit of the
Corporation in such banks or depositories as the Board of Directors may
designate and shall sign all receipts and vouchers for payments made to the
Corporation. The Treasurer shall supervise and oversee the signing of all checks
made by the Corporation, which checks shall be signed consistent with the manner
the Board of Directors shall direct. The Treasurer shall be responsible for the
regular entry in books of the Corporation to be kept for such purpose, full and
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accurate account of all funds and securities received and paid on account of the
Corporation. Whenever required by the Board of Directors, the Treasurer shall
render a statement of the financial condition of the Corporation. The Treasurer
shall have such other powers and shall perform such other duties as may be
assigned from time to time by the Board of Directors. The Treasurer shall give
such bond, if any, for the faithful performance of duties as shall be required
by the Board of Directors and any such bond shall remain in the custody of the
President.
Section 4.7 Powers and Duties of Vice Presidents and Assistant Officers.
Unless otherwise determined by the Board of Directors, each Vice President and
each assistant officer shall have the powers and perform the duties of his
respective superior officer. Vice Presidents and assistant officers shall have
such rank and perform such duties as may be designated by the Board of
Directors, the Chairman or the President.
Section 4.8 Vacancies. The Board of Directors shall have the power to
fill any vacancies in any office occurring from whatever reason.
ARTICLE V - Committees of Directors
-----------------------------------
Section 5.1 Committees. The Board of Directors may, by resolution passed
by a majority of the Directors, designate one or more special or standing
committees, including an Audit Committee. Each such committee shall consist of
one or more of the Directors of the Corporation. Each such committee shall have
and may exercise such of the powers of the Board of Directors in the management
of the business and affairs of the Corporation as may be provided in such
resolution, except as may be prohibited by law.
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ARTICLE VI - CAPITAL STOCK
--------------------------
Section 6.1 Share Certificates. Certificates for shares of the
Corporation shall be in such form as approved by the Board of Directors. Every
share certificate shall be signed by the Chairman of the Board or the President
and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and
sealed with the corporate seal, which may be a facsimile, engraved or printed,
but where such certificate is signed by a transfer agent or a registrar, the
signature of any corporate officer upon such certificate may be a facsimile,
engraved or printed. The share register or transfer books and blank short
certificates shall be kept by the Secretary or by any transfer agent or
registrar designated by the Board of Directors for that purpose.
Section 6.2 Transfer of Shares. Except as otherwise provided in the
Certificate of Incorporation, transfer of shares shall be made on the books of
the Corporation only upon surrender of the share certificate, duly endorsed or
with duly executed stock powers attached and otherwise in proper form for
transfer, which certificate shall be cancelled at the time of the transfer.
Section 6.3 Determination of Shareholders of Record and Closing Transfer
Books. The Board of Directors may fix a time, not more than fifty days prior to
the date of any meeting of shareholders, or the date fixed for the payment of
any dividend or distribution, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the determination of the shareholders entitled to
notice of or to vote at any such meeting, or entitled to receive payment of any
such dividend or distribution, or to receive any such allotment of rights, or to
exercise the rights in respect to any
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such change, conversion or exchange of shares or otherwise. In such case, only
such shareholders as shall be shareholders of record on the date so fixed shall
be entitled to notice of or to vote at such meeting, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the Corporation after any record date fixed as aforesaid. The Board of
Directors may close the books of the Corporation against transfers of shares
during the whole or any part of such period, and, in such case, written or
printed notice thereof shall be mailed at least ten (10) days before the closing
thereof to each shareholder of record at the address appearing on the records of
the Corporation or supplied by the shareholder to the corporation for the
purpose of notice. While the stock transfer books of the Corporation are closed,
no transfer of shares shall be made thereon. Unless a record date is fixed by
the Board of Directors for the determination of shareholders entitled to receive
notice of, or vote at, a shareholders' meeting, transferees of shares which are
transferred on the books of the Corporation within ten days next preceding the
date of such meeting shall not be entitled to notice of or to vote at such
meeting. The Corporation may treat the registered owner of each share of stock
as the person exclusively entitled to vote, to receive notifications and
otherwise to exercise all the rights and powers of the owner thereof.
Secion 6.4 Lost Share Certificates. Unless waived in whole or in part by
the Board of Directors, any person requesting the issuance of a new certificate
in lieu of an alleged lost, destroyed, mislaid or wrongfully taken certificate
shall (1) give to the Corporation bond of indemnity with an acceptable surety;
and (2) satisfy such other reasonable requirements as may be imposed by the
Corporation. Thereupon, a new share certificate shall be issued to the
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registered owner or his assigns in lieu of the alleged lost, destroyed, mislaid
or wrongfully taken certificate, provided that the request therefor and issuance
thereof have been made before the Corporation has notice that such shares have
been acquired by a bona fide purchaser.
ARTICLE VII - NOTICES; COMPUTING TIME PERIODS
---------------------------------------------
Section 7.1 Contents of Notice. Whenever any notice of a meeting is
required to be given pursuant to these By-laws or the Articles of Incorporation
or otherwise, the notice shall specify the place, day and hour of the meeting
and, in the case of a special meeting of shareholders or where otherwise
required by law, the general nature of the business to be transacted at such
meeting.
Section 7.2 Method of Notice. All notices shall be given to each person
entitled thereto, either personally or by sending a copy thereof through the
mail or by telegraph, charges prepaid, to such person's address appearing on the
books of the Corporation, or supplied by such person to the Corporation for the
purpose of notice. If notice is sent by mail or telegraph, it shall be deemed to
have been given to the person entitled thereto when deposited in the United
States Mail or with the telegraph office for transmission.
Section 7.3 Computing Time Periods. In computing the number of days for
purposes of these By-laws, all days shall be counted, including Saturdays,
Sundays or holidays; provided, however, that if the final day of any time period
falls on a Saturday, Sunday or holiday, then the final day shall be deemed to be
the next day which is not a Saturday, Sunday or holiday. In computing the number
of days for the purpose of giving notice of any meeting, the date upon which the
notice is given shall be counted but the day set for the meeting shall not be
counted.
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Notice given twenty-four hours before the time set for a meeting shall be deemed
one day's notice.
ARTICLE VIII - LIMITATION OF DIRECTORS LIABILITY AND
---------------------------------------------------
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS
--------------------------------------------------------
Section 8.1 Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding (hereinafter, a "proceeding"), whether civil, criminal,
administrative or investigative, including, without limitation, an action or
suit by or in the right of the Corporation, by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
Director or Officer of the Corporation or is or was serving at the request of
the Corporation as a Director or Officer of another Corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as Director or Officer or in any other
capacity, shall be indemnified and held harmless by the Corporation to the
fullest extent and manner authorized or permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, penalties, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification
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shall continue as to a person who has ceased to be a Director or Officer and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in Section 5 hereof, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article shall be a contract right
and each person to whom this right to indemnification applies shall be a third
party beneficiary of such right and shall be entitled to enforce against the
Corporation all indemnification and other rights granted to such person by this
Article. Such right shall include the right to be paid by the Corporation the
expenses (including attorneys' fees) incurred in any such proceeding in advance
of its final disposition; provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a Director or
Officer in advance of the final disposition of a proceeding shall be made only
upon delivery to the Corporation of an undertaking, by or on behalf of such
Director or Officer, to repay all amounts so advanced if it shall ultimately be
determined that such Director or Officer is not entitled to be indemnified under
this Article or otherwise. Such expenses (including attorneys' fees) incurred by
former Directors and Officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the Corporation deems appropriate. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees, agents or fiduciaries of the Corporation or to any person who is or
was serving at the request of the Corporation as an employee, agent or fiduciary
of another Corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to any employee benefit plan, with
the same or lesser scope and effect as set forth
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herein and in the other sections of this Article. If and to the extent that the
Delaware General Corporation Law requires that indemnification be provided in a
given instance only if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful, then termination of any
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 or she reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal proceeding, that he or she had reasonable cause to
believe that his or her conduct was unlawful. If the Delaware General
Corporation Law so requires, then any person who is otherwise entitled to
indemnification hereunder with respect to any threatened, pending or completed
proceeding by or in the right of the Corporation shall be indemnified in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the Corporation only if and only to the extent that the Court of
Chancery or the court in which such proceeding 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.
Section 8.2 Determination of Right to Indemnification. Indemnification
under Section 1 above shall be made by the Corporation only as authorized in the
specific case upon a determination, reasonably and promptly made, that
indemnification of a present or former Director or Officer is proper in the
circumstances because the person has met the applicable
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standard of conduct for indemnification under this Article and under applicable
law. Such determination shall be made, with respect to a person who is a
director or officer at the time of such determination, only (i) by the Board of
Directors by a majority vote of Directors who were not parties to such
proceeding ("Disinterested Directors"), even though less than a quorum, or (ii)
by a Committee of the Disinterested Directors designated by majority vote of the
Disinterested Directors, even though less than a quorum, or (iii) if there are
no the Disinterested Directors, or if the Disinterested Directors so direct, by
independent legal counsel in a written opinion or (iv) by the Stockholders.
Section 8.3 Expenses in Successful Defense. Notwithstanding any other
provisions of this Article, to the extent that a present or former Director or
Officer of the Corporation has been successful on the merits or otherwise in
defense of any proceeding referred to in Section 1 above or in defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.
Section 8.4 Request for Indemnification. To request indemnification, the
person seeking indemnification shall submit to the Secretary of the Corporation
a written claim or request. Such written claim or request shall contain
sufficient information to reasonably inform the Corporation about the nature and
extent of the indemnification or advance sought. The Secretary of the
Corporation shall promptly advise the Board of Directors of such request.
Section 8.5 Right of Claimant to Bring Suit. If a claim under Section 1
of this Article is not paid in full by the Corporation within thirty days after
a written claim has been received by
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the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, a Committee thereof, independent legal counsel, or its Stockholders)
to have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including its
Board of Directors, a Committee thereof, independent legal counsel, or its
Stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 8.6 Non-Exclusivity of Rights. The rights to indemnification and
the payment of expenses incurred in a proceeding in advance of its final
disposition conferred in this Article shall not be exclusive of any right which
any person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of Stockholders or
Disinterested Directors, or otherwise.
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Section 8.7 Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, Officer, employee, agent or
fiduciary of the Corporation or of another Corporation, or of a partnership,
joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
Section 8.8 Interpretation. For purposes of this Article:
(a) References to the "Corporation," in this Article VII shall, upon
written resolution of the Corporations Board of Directors, include, in addition
to the Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had the power and authority to indemnify its
Directors or Officers, so that any person who is or was a Director or Officer of
such constituent Corporation, or is or was serving at the request of such
constituent Corporation as a Director or Officer of another Corporation, shall
for purposes of this Article be deemed to hold the same position in the
Corporation as he or she held in such constituent Corporation.
(b) A person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article.
Section 8.9 Amendment or Repeal. This Article VII may hereafter be
amended or repealed; provided, however, that no amendment or repeal shall
reduce, terminate or otherwise adversely affect the right of a person who is or
was a Director or Officer to obtain indemnification or advancement of expenses
with respect to a proceeding that pertains to or
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arises out of actions or omissions that occur prior to the effective date of
such amendment or repeal, which date cannot be retroactive.
ARTICLE IX - FISCAL YEAR
------------------------
The fiscal year of the Corporation shall end December 31 each year.
ARTICLE X - AMENDMENTS
----------------------
The shareholders entitled to vote thereon shall have the power to alter,
amend, or repeal these By-laws, by the vote of shareholders entitled to cast at
least a majority of the votes which all shareholders are entitled to cast
thereon, at any regular or special meeting, duly convened after notice to the
shareholders of such purpose. The Board of Directors, by a majority vote of
those voting, shall have the power to alter, amend, and repeal these By-laws, at
any regular or special meeting duly convened after notice of such purpose,
subject always to the power of the shareholders to further alter, amend or
repeal these By-laws.
ARTICLE XI - INTERPRETATION OF BY-LAWS
--------------------------------------
All words, terms and provisions of these By-laws shall be interpreted
and defined by and in accordance with the Delaware General Corporation Law, as
amended, and as amended from time to time hereafter.
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PROXY
B.H.I.T. INC. (Formerly Banyan Hotel Investment Fund)
PROXY FOR SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS OF B.H.I.T. INC.
JANUARY __, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harvey Polly and Morton I. Kalb and each or any
one of them (with powers of substitution), proxies for the undersigned to vote
all shares of common Stock held of record on ________________, 2000 of B.H.I.T.
Inc. (the "Corporation") which the undersigned would be entitled to vote if
personally present at the Special Meeting in Lieu of Annual Meeting of
Shareholders (the "Meeting") to be held in New York, New York on ______________,
2000, and any adjournment thereof, upon the matters set forth in the Notice of
and Proxy Statement for said Meeting, copies of which have been received by the
undersigned, and in their discretion, upon all other matters which may properly
come before said meeting. Without otherwise limiting the generality of the
foregoing, said proxies are directed to vote as follows:
Please mark your votes FOR AGAINST ABSTAIN
as in this example [ ] [ ] [ ]
1. Election of Directors
For, except vote withheld from the following nominee(s):
________________________________
Nominees: Harvey Polly, Morton I. Kalb, Leo Yarfitz, Willis G. Ryckman.
2. Adoption of amended FOR AGAINST ABSTAIN
and restated [ ] [ ] [ ]
Certificate of
Incorporation
3. Adoption of Amended FOR AGAINST ABSTAIN
and Restated By-Laws [ ] [ ] [ ]
4. Approve the sale of the FOR AGAINST ABSTAIN
Corporation's 50% [ ] [ ] [ ]
ownership in Metro
Franchising, LLC to
Harvey Polly
5. In their discretion to FOR AGAINST ABSTAIN
act upon such other [ ] [ ] [ ]
matters as may properly
come before the Meeting
or any adjournment thereof
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This proxy, when properly executed, will be voted in the manner directed herein
by the shareholder. If no specification is made, this proxy will be voted for
the nominees listed for Directors and in favor of the above proposals.
Your proxy is important to assure a quorum at the Meeting whether or not you
plan to attend the Meeting in person. You may revoke this proxy at any time, and
the giving of it will not affect your right to attend the Meeting and vote in
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S)______________________ DATE _________________
NOTE: Please sign exactly as name appears. When shares are held as joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer and if a
partnership, please sign in the partnership name by authorized person.
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