U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Quarterly Period Ended September 30, 1999
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from ____________ to _____________
Commission file number: 0-19503
BENTLEY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MEGACARDS, INC.
(Former name of registrant)
Missouri 43-1325291
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
9719 Conway Road 63124
St. Louis, Missouri (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (314) 569-1659
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [x] No [ ] .
On November 5, 1999 the registrant had 3,083,285 outstanding shares of Common
Stock, $.18 par value.
Transitional Small Business Disclosure Format (Mark one): Yes [ ] No [x].
<PAGE>
BENTLEY INTERNATIONAL, INC.
FORM 10-QSB
INDEX
Page
PART I -- CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements ............................... 1
Consolidated Balance Sheets -- September 30, 1999
and December 31, 1998 ............................................ 2
Consolidated Statements of Operations -- Three Months
Ended September 30, 1999 and 1998 and Nine Months
Ended September 30, 1999 and 1998 ............................... 3
Consolidated Statements of Cash Flows -- Three Months
Ended September 30, 1999 and 1998 and Nine Months
Ended September 30, 1999 and 1998 ................................ 4
Notes to Consolidated Financial Statements ........................5
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation ..........................................8
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings .................................................10
ITEM 2. Changes in Securities and Use of Proceeds .........................11
ITEM 4. Submission of Matters to a Vote of Security Holders ...............11
ITEM 6. Exhibits and Reports on Form 8-K ..................................12
SIGNATURE ..................................................................15
<PAGE>
Note: This report contains certain forward looking statements of the type
described in the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995 ("PSLR Act of 1995"), such as the
liquidation of the Corporation and a possible reverse merger or similar
transaction. The results of management's plans are beyond the ability
of the Company to control. Economic conditions, merger opportunities,
the resolution of litigation and other factors could cause materially
different results from those planned by management. Additional
discussions of certain forward looking statements can be found at the
end of Item 2 of Part I.
PART I
Item 1. Financial Statements
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<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
Assets
<CAPTION>
September 30,
1999 December 31,
(Unaudited) 1998
<S> <C> <C>
Current Assets
Cash and cash equivalents $5,886,134 $ 6,579,516
Miscellaneous receivable 6,392 18,000
Note receivable 54,200 --
Prepaid taxes 53,733 38,817
Net assets from discontinued segment (Note 3) -- 628,324
Total Current Assets 6,000,459 7,264,657
Note Receivable 108,300 --
Other Assets 69,800 69,800
$6,178,559 $ 7,334,457
Liabilities And Shareholders' Equity
Current Liabilities
Accounts payable and accrued expenses $ 104,507 $ 647,076
Shareholders' Equity
Preferred stock, $0.01 par value; 1,000,000
shares authorized, none issued or
outstanding -- --
Common stock, $0.18 par value; 10,000,000
shares authorized, 3,083,285 shares issued
and outstanding at June 30, 1999 and
December 31, 1998 554,991 554,991
Additional paid-in capital 2,656,578 2,656,578
Retained earnings 2,870,385 3,475,812
Treasury stock, at cost (7,902) --
Total Shareholders' Equity 6,074,052 6,687,381
$6,178,559 $ 7,334,457
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net Sales $ -- $ 20,995 $ -- $ 26,857
Cost Of Sales -- -- -- --
Gross Margin -- 20,995 -- 26,857
Selling, General And
Administrative Expenses 58,131 283,206 268,988 432,503
Operating Loss (58,131) (262,211) (268,988) (405,646)
Interest Income (Expense) 12,961 (2,449) 143,449 (10,906)
Other Income 37,819 103,776 146,766 235,167
Income (Loss) From
Continuing Operations (7,351) (160,884) 21,227 (181,385)
Income (Loss) From
Discontinued Operations
Income (loss) from
discontinued operations -- 241,076 (123,170) 1,121,688
Gain (loss) on sale
of discontinued
operations (net of tax
of $818,500 in 1998) (195,879) 2,300,196 (503,484) 2,300,196
Total Income (Loss)
From Discontinued
Operations (195,879) 2,541,272 (626,654) 3,421,884
Net Income (Loss) $(203,230) $2,380,388 $(605,427) $ 3,240,499
Earnings (Loss) Per Common
Share - Basic
Continuing operations $ -- $ (0.05) $ 0.01 $ (0.06)
Discontinued operations (0.06) 0.87 (0.20) 1.17
$ (0.06) $ 0.81 $ (0.19) $ 1.10
Earnings (Loss) Per Common
Share - Assuming Dilution
Continuing operations $ -- $ (0.05) $ 0.01 $ (0.06)
Discontinued operations (0.06) 0.83 (0.20) 1.12
$ (0.06) $ 0.78 $ (0.19) $ 1.06
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH
FLOWS
(UNAUDITED)
<CAPTION>
For The Nine Months
Ended September 30,
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (605,423) $ 3,240,499
Adjustments to reconcile net income (loss) to net
cash used in operating activities of continuing
operations:
Loss (income) from discontinued operations 123,170 (1,121,688)
Loss (gain) on sale of discontinued segment 503,484 (2,300,196)
Depreciation and amortization -- 5,959
Net change in assets and liabilities:
(Increase) decrease in accounts
receivable 11,608 (8,079)
Increase in prepaid taxes (14,916) --
Increase in other assets -- (43,867)
Decrease in accounts payable and
other liabilities (542,569) (53,808)
Net Cash Used In Operating Activities Of Continuing
Operations (524,646) (281,180)
Net cash provided by (used in) discontinued
operations (168,544) 503,264
Net Cash Provided By (Used In) Operating Activities (693,190) 222,084
Cash Flows From Investing Activities
Proceeds from sale of discontinued segment 237,000 4,946,000
Increase in note receivable (162,500) --
Net cash used in investing activities of
discontinued operations (66,790) (114,545)
Capital expenditures -- (13,511)
Acquisition of subsidiary -- (80,772)
Net Cash Provided By Investing Activities 7,710 4,737,172
Cash Flows From Financing Activities
Net proceeds from line of credit -
discontinued operations -- 269,535
Payments on notes payable -- (320,005)
Purchase of treasury stock (7,902) --
Net Cash Used In Financing Activities (7,902) (50,470)
Net Increase (Decrease) In Cash (693,382) 4,908,786
Cash - Beginning Of Period 6,579,516 9,332
Cash - End Of Period $5,886,134 $ 4,918,118
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
The accompanying interim financial statements are unaudited, but, in the opinion
of management, reflect all adjustments (consisting only of normal recurring
accruals) necessary for this presentation. Reference is hereby made to the
consolidated financial statements, including the notes thereto, contained in the
Company's annual Report on Form 10-KSB/A for the year ended December 31, 1998.
The results of operations for the nine-month period ended September 30, 1999 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1999.
1. Basis Of Consolidation
The consolidated financial statements include the accounts of Bentley
International, Inc. (the "Company") and its wholly-owned subsidiaries,
Windsor Art, Inc. ("Windsor") and Residential Mortgage Credit Reporting,
Inc. ("RMCR") (see Note 3). All significant intercompany transactions have
been eliminated from the consolidated financial statements.
2. Operations
Nature Of Operations:
Bentley International, Inc. ("Bentley"), formerly Megacards, Inc.,
designed, repackaged and marketed sports picture cards produced by
major sports picture card manufacturers and marketed sports picture
card accessories. Megacards, Inc. became Bentley in June 1996 as the
Board of Directors believed that the change of the Corporate name
would better reflect the broadening of the scope of the business of
the Company.
Windsor manufactured and distributed decorative mirrors and framed
prints to furniture stores, mass merchants, hotels and designers
throughout the United States. During 1996, Bentley discontinued its
Janco product line of framed prints and mirrors and sold its sports
picture card business segment in order to reduce costs and to improve
its liquidity position. On July 30, 1998, the Company sold all of the
outstanding shares of stock of Windsor Art, Inc. (see Note 3).
During 1998, the Company acquired subsidiaries operated under the name
of RMCR which operated a credit reporting service providing mortgage
lenders with consolidated credit reports drawn from reports generated
by several single-source credit reporting bureaus. The Company sold all
the assets of RMCR effective on September 1, 1999 (see Note 3).
Business Combinations:
Pursuant to an agreement dated May 28, 1998, the Company purchased
certain assets of a credit reporting company for $75,000 and formed
Bentley Information Services, Inc. ("BIS"). The acquisition was
accounted for as a purchase.
Pursuant to an agreement dated November 12, 1998, the Company acquired
all the outstanding shares of Residential Mortgage Credit Reporting,
Inc., a credit reporting company, for $300,000 in cash plus 120,000
shares of Bentley's common stock. On November 12, 1999, the seller
exercised a right to exchange the shares transferred for an additional
$300,000, which had been held in escrow. The acquisition was accounted
for as a purchase. In 1999, BIS and RMCR merged. BIS became the
surviving corporation and changed its name to RMCR.
Pursuant to an agreement dated February 23, 1999, RMCR acquired
substantially all of the assets of Mortgage Credit Service ("M.C.S.") a
credit reporting company for $76,000. RMCR signed a promissory note for
$36,000 to be paid at the rate of 10% per month of the collected
monthly billings from existing customers of M.C.S. The remainder of the
purchase price was paid in cash.
<PAGE>
3. Discontinued Operations
On July 30, 1998, the Company sold its Windsor subsidiary to Interiors,
Inc. ("Interiors"). Accordingly, Windsor's decorative mirror and framed
art business segment are accounted for as discontinued operations in
the accompanying consolidated financial statements.
Windsor revenues were $1,321,689 and for the three months ended
September 30, 1998 and $8,262,934 for the nine months ended September
30, 1998.
Originally, the consideration for the stock of Windsor was: a)
$1,700,000 in cash, b) a $2,000,000 secured promissory note payable
over four years with interest at 8% per annum, and a discount of
$500,000 if paid by September 30, 1998, and c) a $3,300,000 secured,
short-term promissory note, due September 30, 1998 with interest at 8%
per annum. The short-term note required a $300,000 payment on July 30,
1998. The short-term note was repaid as scheduled on September 30,
1998.
In connection with the purchase of Windsor, Interiors also purchased
150,000 shares of common stock of the Company for 750,000 shares of its
common stock and purchased a warrant to purchase 300,000 shares of
common stock of the Company for an additional 750,000 shares of its
common stock. If certain events occurred prior to December 31, 1998,
Interiors had the option, but not the obligation, to reacquire its
shares from the Company for $1,625,000 by December 31, 1998. In
addition, if prior to December 31, 1998, Interiors consummated an
underwritten public offering of Interiors stock pursuant to a
registration statement declared effective under the Securities Act of
1933, as amended, in which the aggregate gross proceeds (before
underwriting fees, commissions and discounts) were at least
$15,000,000, then Interiors had the obligation, and not the option, to
repurchase the shares of Interiors for $1,625,000.
On December 1, 1998, the Company, Interiors, Windsor, Lloyd R. Abrams,
President of Bentley (`Mr. Abrams") and Max Munn, President of
Interiors ("Mr. Munn") entered into a Repurchase Agreement and Mutual
General Release (the "Repurchase Agreement") with respect to (i)
certain rights and obligations arising under the Stock Purchase
Agreement dated July 7, 1998 between Bentley and Interiors, (the "Stock
Purchase Agreement") and all related documents executed in connection
with the sale of Windsor by Bentley to Interiors and (ii) rights and
obligations pertaining to stock of Bentley and of Interiors pursuant to
a Securities Purchase and Registration Rights Agreement dated July 30,
1998 (the "Securities Purchase Agreement"). Pursuant to the Repurchase
Agreement, Interiors, Windsor and Mr. Munn released Bentley and Mr.
Abrams; and Bentley and Mr. Abrams released Interiors, Windsor and Mr.
Munn from any claims other than with respect to the rights and
obligations arising under the Repurchase Agreement.
<PAGE>
Pursuant to the Repurchase Agreement, Bentley released from a voting
trust and pledge agreement all of the capital stock of Windsor to
Interiors, canceled and delivered to Interiors the $2,000,000 note made
by Interiors in favor of Bentley on July 30, 1998 (the `Note"), paid
Windsor $100 in connection with the purchase by Bentley from Windsor of
certain furnishings and furniture and transferred to Windsor 1,500,000
share of Interiors Class A Common Stock (the "Interiors Shares")
previously acquired from Interiors pursuant to the Securities Purchase
Agreement, which shares had been subject to an escrow agreement among
Interiors, Bentley and U.S. Bank Trust dated July 30, 1998 (the "Escrow
Agreement") to secure certain warranties and representations Bentley
had made to Interiors in connection with the sale of Windsor. In
exchange, Interiors paid to Bentley $2,440,000 in cash plus interest
from November 29, 1998 at 13% per annum, agreed to transfer 110,000
shares of Bentley Common Stock to the President of Windsor and
unconditionally assumed the obligation of Bentley to convey 100,00
shares of Interiors Class A Common Stock to the President of Windsor in
satisfaction of certain obligations Bentley had incurred to the
President of Windsor pursuant to a bonus agreement.
Pursuant to the Repurchase Agreement, Mr. Abrams also agreed to cancel
his future rights and was released from his obligations under a
Consulting Agreement which Mr. Abrams had entered into with Windsor and
Interiors. In exchange for the cancellation and release, Mr. Abrams
received from Interiors $125,000 in cash plus interest from November
29, 1998 at 13% per annum, 40,000 shares of Bentley Common Stock and
the warrant for up to 300,000 shares of Bentley Common Stock. Interiors
had purchased the warrant from Bentley pursuant to the Securities
Purchase Agreement.
The Company sold RMCR pursuant to an asset purchase agreement,
effective on September 1, 1999. Accordingly, RMCR (the credit reporting
services segment) is accounted for as discontinued operations in the
accompanying consolidated financial statements.
RMCR revenues were $127,704 for the three months ended September 30,
1999, and $713,633 for the nine months ended September 30, 1999.
The consideration received for the assets of RMCR was: a) $236,500 in
cash, and b) a $162,500 promissory note payable in twelve quarterly
installments with interest at 8% per annum.
<PAGE>
4. Plan Of Liquidation
On September 27, 1999, the shareholders of the Company approved the
liquidation and dissolution of the Company. The Plan of Liquidation
authorized the Board of Directors to take any and all actions necessary
to effect such liquidation and dissolution. On October 12, 1999, the
Board of Directors authorized the Officers of the Corporation to file
Articles of Dissolution with the Secretary of State of Missouri with an
effective date of November 5, 1999. The Articles of Dissolution were
filed pursuant to this authorization. Pursuant to Missouri law, and the
shareholders' authorization, for 120 days after the effective date of
the dissolution, the Board of Directors may revoke the dissolution.
[Remainder of page intentionally left blank.]
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
OVERVIEW
Bentley aggressively pursued a transition from the framed art and
mirror business to the marketing and information services businesses, of which
the credit reporting business is one. The Company continues to be in a strong
liquidity position, with no debt, other than trade credit, and no preferred
stock outstanding.
Bentley planned to expand nationwide the consolidated, residential
mortgage credit reporting business of its operating subsidiary, RMCR. In
December 1998 RMCR replaced its old computer hardware and software with new
hardware and software. In March 1999, RMCR acquired substantially all of the
assets of another credit reporting business located in Arizona. RMCR had three
sales representatives covering Arizona, California, Illinois, Missouri and
Florida, and one individual directing RMCR's direct marketing program. The
direct marketing program proved to be more cost effective, so the three field
sales representatives were dismissed.
Due to rapid changes in the mortgage industry and a significant decline
in the number of mortgage refinancings resulting from increased interest rates,
the Company decided to divest itself of the mortgage credit reporting
subsidiary. Effective on September 1, 1999, the Company sold all of the assets
of RMCR, Inc. to Factual Data Corp. for approximately $399,000, subject to
adjustment pending the post-closing accounting. Due to investment in new
computer hardware and software, as well as extensive marketing expenses, the
Company has taken a total loss of $626,654 in connection with the disposition of
the mortgage credit reporting subsidiary.
On July 30, 1998, the Company sold its framed art and mirror business,
Windsor Art, Inc. ("Windsor"), which represented substantially all of its
assets, to Interiors, Inc. ("Interiors"). On December 1, 1998, Bentley entered
into a Repurchase Agreement and Mutual General Release with Interiors, Inc.,
Windsor Art, Inc., Lloyd R. Abrams and Max Munn, which is attached as Exhibit 2
to Bentley's Form 8-K dated December 1, 1998. The transactions between Interiors
and Bentley are more fully described in the following prior securities filings
of Bentley and the portions of the following documents that pertain to the
transactions with Interiors, Inc. are hereby incorporated by reference: Form 8-K
dated December 1, 1998, Form 10-QSB dated September 30, 1998, Form 8-K dated
July 30, 1998 and Form 10-QSB dated June 30, 1998.
The Board of Directors of Bentley approved a repurchase program with
respect to the Company's common stock. The repurchase program allowed the
repurchase of no more than 100,000 shares in the open market over a period of no
more than twelve months, subject to the further limitation that the number of
shareholders will not be decreased below 300. The price for the common stock was
$1 1/8 per share as of November 5, 1999, as quoted on the OTC Bulletin Board.
The book value of such stock as of September 30, 1999, was approximately $1.97
per share.
<PAGE>
Over the past twelve months, the Company's management has been
investigating the acquisition of specialty marketing and information companies.
None of the opportunities presented to the Company were deemed to be attractive
to management, considering price, risk, growth potential and management
personnel. Management has concluded that companies Bentley could afford to
purchase without borrowing substantial additional funds do not have the depth of
management personnel that would be desirable, and Bentley's management is not
comfortable pursuing larger acquisitions that would require substantial
leverage, and the accompanying risk.
Considering the factors mentioned above, the Company's board of
directors attempted to create shareholder value in excess of the Company's
tangible book value by investigating opportunities to effect a reverse merger
with a larger established company interested in going public through the
"reverse merger" process. A "reverse merger" is the acquisition by Bentley of
another company whereby the shareholders of the acquired business receive shares
in Bentley constituting a controlling interest in Bentley, and thus assume
management responsibility of Bentley. Management is still considering possible
reverse merger transactions with certain parties. Such a reverse merger
candidate might be one that possesses rapid growth potential, and needs the
financial resources of Bentley, or a business that desires a public vehicle to
enhance shareholder value, create liquidity for its multiple owners, or a
business that desires to acquire other similar businesses within its industry by
using Bentley's stock as currency. Management has not been able to find and
reach agreement with a suitable reverse merger candidate and believes that a
reverse merger or similar transaction is unlikely at this point.
Due to the difficulty in finding a suitable reverse merger candidate,
pursuant to the authority granted to the Board of Directors by the shareholders
of the Company at the Annual Meeting of Shareholders, discussed below in Part
II, Items 2 and 4, Bentley's Board of Directors directed the officers of the
Company to file Articles of Dissolution with the Secretary of State of Missouri.
Pursuant to such direction, the Articles of Dissolution have been filed and have
an effective date of November 5, 1999. The Company also instructed its transfer
agent to close the stock transfer records as of such date. Under Missouri law,
the Articles of Dissolution may be revoked by the Board of Directors for 120
days after the effective date of the dissolution. If the Articles of Dissolution
were revoked, the revocation would relate back to the effective date of the
dissolution and the Company would resume carrying on its business as if
dissolution had never occurred. The foregoing statement is not intended to
constitute a binding obligation of management to liquidate the Company. The
statement is intended only to disclose to existing shareholders and potential
purchasers of shares of the Company the current plans of the Company's Board of
Directors, and the Company's desire to create value for its shareholders at
least equal to the book value of the Company.
<PAGE>
On September 29, 1998, Bentley was sued by three shareholders. The
lawsuits are described below in Part II, Item 1. It is currently not possible to
give a reasonable estimate of the Company's exposure in these lawsuits. The
Company anticipates that any judgment against it regarding the shareholder
litigation will be satisfied out of a non-material portion of the proceeds of
the sale of Windsor. Management does not believe that the litigation will
significantly interfere with its liquidity.
Results of Operations
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods covered by the accompanying consolidated
financial statements.
On July 30, 1998 the Company sold its main operating subsidiary,
Windsor Art, Inc., which represented substantially all of the operations of the
Company, for an amount of cash ultimately generated of $6,481,000. All of
Windsor's operations have been presented as discontinued operations for all
applicable periods presented in the accompanying consolidated financial
statements.
Two subsidiaries of the Company merged during the first quarter 1999.
These subsidiaries were RMCR under its former name, Bentley Information
Services, Inc., a Missouri corporation, and an Arizona corporation named
Residential Mortgage Credit Reporting, Inc which merged into RMCR. RMCR (
Missouri) was acquired May 27, 1998. Residential Mortgage Credit Reporting,
Inc., an Arizona corporation, was acquired October 31, 1998. The subsidiaries
did not have any significant activity in the first nine months of 1998.
Effective September 1, 1999, the Company sold RMCR, which represented
the Company's remaining revenue producing operations. All of RMCR's activities
have been presented as discontinued operations for all applicable periods
presented in the accompanying consolidated financial statements.
Continuing Operations
Continuing operations consists only of the investment income and
administrative expenses of the parent company.
Investment income increased for the three months and nine months ended
September 30, 1999 as compared to the same period in 1998 due to investment
earnings from the proceeds of the sale of Windsor.
<PAGE>
Discontinued Operations
Discontinued operations in 1998 consisted of the activities of Windsor,
the decorative mirror segment which was sold on July 30 1998. Income from
discontinued operations was $241,076 for the three months ended September 30,
1998 and was $1,121,688 for the nine months ended September 30, 1998. The
discontinued operations in the comparable periods in 1999 consists only of the
activities of RMCR, the credit reporting segment which experienced a loss from
operations of $0 and $123,170 for the three and nine months ended September 30,
1999, respectively. In addition the Company had a loss on the disposal of RMCR
of $503,484.
Liquidity and Capital Resources
As a result of the sale of Windsor and RMCR, the Company's cash and
cash equivalents at September 30, 1999 was $5,886,134. Aggregate cash ultimately
generated from the sale of Windsor was $6,481,000. In addition, cash used in
operating activities of continuing operations increased from $53,808 to $542,569
for the nine months ended September 30, 1999 as compared to the same period in
1998. This increase was caused by the payment of accrued bonuses related to the
sale of Windsor. The Company's discontinued operations for the nine months ended
September 30, 1999 used $168,544 compared to generating cash of $503,264 in the
same period in 1998.
Derivatives
The Company does not invest in any derivative securities.
Year 2000
Bentley does not anticipate any "Year 2000 Problem," because it no
longer has any operating divisions. The "Year 2000 Problem" refers to any
inability of computer software and hardware to use four digits to refer to a
year, which could result in applications failures or erroneous results.
Management believes that the Company's computer system is able to process
four-digit years and that even if there were an interruption in computer
service, the interruption would not cause a material problem. Management does
not expect to incur any costs associated with the "Year 2000 Problem."
Forward Looking Statements
Certain of the foregoing statements in this Part I, Item 2 make
references to plans, beliefs and expectations of management, including, without
limitation, that a merger partner may be found and that the Company may be
liquidated if no merger partner is found. These statements are forward looking
statements of the type governed by the PSLR Act of 1995. There can be no
assurance that results will be what management plans, believes or expects. The
ability to merge with another business on acceptable terms depends on economic
conditions, competitive conditions generally in the markets for acquisitions and
mergers and other factors which could produce results materially different from
those expected by management.
<PAGE>
With regard to the shareholder litigation, management beliefs and
expectations are also forward looking statements of the type described in the
PSLR Act of 1995. The ultimate resolutions of the lawsuits, however, are not
within the Company's control. The court's decision with regard to the validity
of the claims made by the three shareholders and the valuation of their claims
could cause materially different results from those believed likely by
management.
Certain of the foregoing statements in the discussion of the Year 2000
Problem make references to plans, beliefs and expectations of management,
including, without limitation, that Bentley will have no Year 2000 Problem.
These statements are forward looking statements of the type governed by the PSLR
Act of 1995. There can be no assurance that results will be what management
plans, believes or expects. Any delays in processing data or managing assets
could be longer and more costly than management expects and could produce
results materially different from those expected by management.
PART II
Item 1. Legal Proceedings
The Company has previously reported litigation brought by three
shareholders of the Company, Messrs. Leo M. Rodgers, III, Andrew Wolfson and
Stephen Juskewycz, most recently in its June 30, 1999 Form 10-QSB. In August,
1999, Leo M. Rodgers, III filed an amended petition in which he alleged
virtually identical derivative claims against the Company, Lloyd R. Abrams,
Janet L. Salk, Ramakant Agarwal, and others as previously alleged by Messrs.
Wolfson and Juskewycz. The Company believes that all of the claims of Messrs.
Wolfson and Juskewycz are without merit, as previously described in the
Company's Form 10-QSB for June 30, 1999. Additionally, Rodgers seeks to recover
the "fair value" of his shares of the Company's stock held in a voting trust,
under an agreement dated July 17, 1995 of which Lloyd R. Abrams is the trustee
(the "Voting Trust"). The Company believes that Rodgers is not entitled to the
"fair value" of his shares in the Voting Trust because the trustee had and has
discretion to vote all shares of stock in the trust as a block. The shares were
voted in favor of the sale of Windsor. As discussed in the June 30, 1999 Form
10-QSB, Mr. Rodgers has also brought a claim for the "fair value" of 30,420
shares allegedly owned in his own name.
In September, 1999, Rodgers, Wolfson and Juskewycz filed a Request for
a Temporary Restraining Order against the Company to prohibit the shareholders'
vote regarding possible dissolution and termination of the Company and to
prohibit the shareholders' vote regarding a stock option plan. Both of these
proposals were described in the Information Statement of the Company sent to the
Shareholders for the September 27, 1999 shareholders' meeting. The Circuit Court
of St. Louis County denied the request for the temporary restraining order. The
Court, however, set for hearing on November 30, 1999 a request to have a
receiver appointed to take control of the remaining assets of the Company. The
Company believes that this action is without merit because sufficient safeguards
have been taken by the Company to protect the orderly liquidation of the Company
and sufficient funds have been reserved for payment of any claims of "fair
value" of Rodgers, Wolfson and Juskewycz.
<PAGE>
The Company will continue to defend vigorously its position in Court.
The Board of Directors, however, may, in the best interest of the Company,
pursue settlement of any and all claims.
Item 2. Changes in Securities and Use of Proceeds
Pursuant to the authority granted to the Board of Directors by the
shareholders of the Company at the Annual Meeting of Shareholders, discussed
below in Part II, Item 4, Bentley's Board of Directors directed the officers of
the Company to file Articles of Dissolution with the Secretary of State of
Missouri. The Articles of Dissolution were effective as of November 5, 1999. The
Company also instructed its transfer agent to close the stock transfer records
as of November 5, 1999. Under Missouri law, the Articles of Dissolution may be
revoked by the Board of Directors for 120 days after the effective date of the
dissolution. If the Articles of Dissolution were revoked, the revocation would
relate back to the effective date of the dissolution and the Company would
resume carrying on its business as if dissolution had never occurred.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of the Company was held on September
27, 1999. Lloyd R. Abrams was elected director. Janet L. Salk and Ramakant
Agarwal continued as directors. Mr. Agarwal resigned effective October 6, 1999
pursuant to a letter in which he stated that his resignation was not based on
any disagreement with Bentley on any matter relating to Bentley's operations,
policies or practices. In connection with this resignation, Mr. Agarwal also
resigned from all officer positions, including that of Chief Financial Officer.
On the record date, 3,083,285 shares of Bentley common stock were outstanding
and the holders of 2,170,730 shares, seventy percent (70%) of the shares of
Bentley common stock voted in person or by proxy, constituting a quorum. There
were no broker non-votes, votes withheld or abstentions. The matters voted on at
the meeting and the number of votes cast for and against each proposition were
as indicated in the table below:
[Remainder of page intentionally left blank.]
<PAGE>
FOR AGAINST
2,170,730 0 The election as director of Lloyd R. Abrams, to serve until
the 2000 Annual Meeting and until his successor is elected
and qualified.
2,170,730 0 To ratify the appointment of Rubin, Brown, Gornstein & Co.
LLP as the Company's independent public accountants for
1999-2000.
0 2,170,730 To approve the Bentley International, Inc. 1999 Stock Option
Plan.
2,170,730 0 To amend Article Six of the Articles of Incorporation of the
Company to provide that the number of directors to constitute
the Board of Directors shall not be less than one (1) nor
more than eleven (11), and shall be fixed by, or in the
manner provided in, the By-Laws of the corporation.
2,170,730 0 To authorize the Board of Directors, in its complete
discretion, to take any and all actions necessary to effect
all of the following actions, upon such terms and conditions
as the Board of Directors shall deem appropriate and pursuant
to the General Business Corporations Law of Missouri: (i)
to pay off or establish a reserve to pay off all legally
enforceable liabilities of the Corporation and to use
those assets remaining after making such payments to
distribute assets to the shareholders in complete or
partial liquidation of all of the assets of the Company and
to redeem and cancel all of the outstanding shares of
common stock of the Company or, in the alternative, (ii)
to dissolve and terminate the corporate existence of the
Company, as well as to liquidate all of the assets of the
Company as described in (i) above, and, in addition,
(iii) to revoke any decision of the Board of Directors to
take any of the foregoing actions pursuant to clause (i)
or (ii).
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Ex. No. Description
2.1 Stock Purchase Agreement between Bentley International, Inc. and
Interiors, Inc. dated July 7, 1998, incorporated herein by this
reference from Exhibit 10.1 to Form 8-K of the Registrant dated
effective July 30, 1998.
2.2 Securities Purchase and Registration Rights Agreement between Bentley
International, Inc. and Interiors, Inc. dated July 30, 1998,
incorporated herein by this reference from Exhibit 10.2 to Form 8-K of
the Registrant dated effective July 30, 1998.
2.3 Repurchase Agreementand Mutual General Release between the Registrant,
Interiors, Inc., Windsor Art, Inc., Lloyd R. Abrams and Max Munn dated
December 1, 1998 is incorporated herein by this reference from Exhibit
2 to Form 8-K of the Registrant dated effective December 1, 1998.
2.4 Asset Purchase Agreement by and between Factual Data Corp. and
Residential Mortgage Credit Reporting, Inc.,dated as of September 3,
1999 is incorporated herein by this reference from Exhibit 2 to Form
8-K of the Registrant dated effective September 9, 1999.
2.5 Resolution of the Shareholders of the Corporation adopting a Plan of
Liquidation, dated September 27, 1999, is incorporated herein by this
reference from Exhibit 2.1 to Form 8-K of the Registrant dated
effective October 12, 1999.
3.1 Restated Articles of Incorporation of Registrant filed as Exhibit No.
3.1 to Registrant's Registration Statement on Form S-18 (Reg. No.
33-42393C) are incorporated herein by this reference.
3.2 Amended and Restated By-laws of Registrant as currently in effect
filed as Exhibit No. 3.2 hereto.
3.3 Amendment to Restated Articles of Incorporation filed as Exhibit 3.3 to
Registrant's Form 10-K for the year ended December 31, 1995 is
incorporated herein by this reference.
<PAGE>
9.1 Voting Trust Agreement, dated July 17, 1995, by and among Lloyd Abrams,
as Voting Trustee, Richard B. Rothman, Lloyd R. Abrams as Trustee of
each of the Abrams Family Trust, The Stacey Kevin and Meredith Trust
dated 12/1/91 and The Janet L. Salk Children's Trust filed as Exhibit
9.1 to Registrant's Form 10-K for the year ended December 31, 1995 is
incorporated herein by this reference.
10.1 Megacards Stock Option Plan filed as Exhibit No. 10 to Registrant's
Form 10-K for the year ended December 31, 1991 is incorporated herein
by this reference.
10.2 Agreement to Form Joint Venture Dated September 13, 1996, by and among
Excell Recycling, Inc.; Quality Baseball Cards, Inc. and Bentley
International, Inc. filed as Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated September 27, 1996 is incorporated by this
reference.
10.3 Limited Partnership Agreement Legends, LP dated September 12, 1996, by
and among Excell Recycling, Inc.; Quality Baseball Cards, Inc. and
Bentley International, Inc. filed as Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated September 27, 1996 is incorporated by
this reference.
10.4 Tenth Amendment to Revolving Credit Loan Agreement, dated as of
September 13, 1997, by and between Registrant and Mark Twain Bank filed
as Exhibit 10.35 to the Registrant's Annual Report on Form 10-KSB for
the year ended December 31, 1996 is incorporated by this reference.
10.5 Megacards, Inc. 1995 Stock Option Plan filed as Exhibit 10.37 to the
Registrant's Form 10-KSB for 1997 is incorporated herein by this
reference.
10.6 Annexes A-1 through P below are contracts or addenda to contracts dated
July 30, 1998, to the Stock Purchase Agreement between Bentley
International, Inc. and Interiors, Inc., which were listed on the Form
8-K of Bentley dated effective July 30, 1998, and are incorporated by
reference from Exhibits 10.1 through 10.11 of the Form 10-QSB of
Bentley International, Inc. dated June 30, 1998. Certificates of
Authority from officers of Bentley and Interiors which were also
addenda to the Stock Purchase Agreement are omitted. Annexes A-1
through P listed below are contracts between Bentley International,
Inc. and Interiors, Inc. except where noted:
<PAGE>
Annex A-1 -- $2,000,000 Promissory Note
Annex A-2 -- $3,300,000 Promissory Note
Annex B -- Escrow Agreement between U.S. Bank Trust, Bentley
International, Inc. and Interiors, Inc.
Annex F -- Non-Competition Agreement between Windsor Art, Inc.
and Lloyd R. Abrams
Annex I -- Consulting Agreement between Windsor Art, Inc.,
Interiors, Inc. and Lloyd R. Abrams
Annex J -- Pledge Agreement
Annex K -- Continuing Guaranty between Max and Laurie Munn and
Bentley International, Inc.
Annex M -- Subordination Language
Annex N -- Windsor Voting Trust Agreement between Lloyd R. Abrams
and Max Munn as Voting Trustees, Interiors, Inc. and
Bentley International, Inc.
Annex O -- Bentley Voting Trust Agreement between Lloyd R. Abrams
as Voting Trustee, Interiors, Inc. and Bentley
International, Inc.
Annex P -- Interiors Voting Trust Agreement between Max Munn as
Voting Trustee, Interiors, Inc. and Bentley
International, Inc.
10.7 Bonus Agreement between the Registrant and Pauline Raschella dated
October 26, 1998 attached to Form 10-QSB of the Registrant dated
September 30, 1998 as Exhibit 10.12 is incorporated herein by this
reference.
10.8 Stock Purchase Agreement between Sandra L. James and the Registrant
dated November 12, 1998 attached to Form 10-KSB of the Registrant dated
December 31, 1998 as Exhibit 10.10 is incorporated by this reference.
10.9 Escrow Agreement between Sandra L. James and the Registrant dated
November 12, 1998 attached to Form 10-KSB of the Registrant dated
December 31, 1998 as Exhibit 10.11 is incorporated by this reference.
<PAGE>
10.10 Ratification dated as of September 9, 1999 by Residential Mortgage
Credit Reporting, Inc. and Bentley International, Inc. with reference
to the Asset Purchase Agreement by and between Factual Data Corp. and
Residential Mortgage Credit Reporting, Inc. incorporated hereto as
Exhibit 2.4 is incorporated herein by this reference from Exhibit 10.1
to Form 8-K of the Registrant dated effective September 9, 1999.
10.11 Promissory Note made by Factual Data Corp. in favor of Residential
Mortgage Credit Reporting, Inc. dated as of September 8, 1999 is
incorporated herein by this reference from Exhibit 10.2 to Form
8-K of the Registrant dated effective September 9, 1999.
10.12 Security Agreement by and between Factual Data Corp. and Residential
Mortgage Credit Reporting, Inc., dated as of September 3, 1999 is
incorporated herein by this reference from Exhibit 10.3 to Form 8-K of
the Registrant dated effective September 9, 1999.
10.13 Non-Compete and Confidentiality Agreement by and between Factual Data
Corp. and Residential Mortgage Credit Reporting, Inc., dated as of
September 3, 1999 is incorporated herein by this reference from Exhibit
10.4 to Form 8-K of the Registrant dated effective September 9, 1999.
10.14 Bill of Sale by and between Factual Data Corp. and Residential Mortgage
Credit Reporting, Inc., dated as of September 3, 1999 is incorporated
herein by this reference from Exhibit 10.5 to Form 8-K of the
Registrant dated effective September 9, 1999.
10.15 Assignment of Lease by and between Factual Data Corp. and Residential
Mortgage Credit Reporting, Inc., dated as of August 24, 1999 is
incorporated herein by this reference from Exhibit 10.6 to Form 8-K of
the Registrant dated effective September 9, 1999.
13.1 Portions of Form 10-QSB of the Registrant dated June 30, 1998
referenced in the text are incorporated herein by this reference.
13.2 Portions of Form 10-QSB of the Registrant dated September 30, 1998
referenced in the text are incorporated herein by this reference.
27. Financial Data Schedule
(b) Reports on Form 8-K.
On September 24, 1999, the Registrant filed a Form 8-K Current Report
effective September 9, 1999 reporting the sale of its mortgage credit reporting
subsidiary. As part of this report, pro forma financial statements were filed.
On October 26, 1999, the Registrant filed a Form 8-K Current Report effective
October 12, 1999 reporting the decision of the Board of Directors to file
Articles of Dissolution with the Secretary of State of Missouri.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BENTLEY INTERNATIONAL, INC.
(Registrant)
By /s/ Lloyd R. Abrams
Lloyd R. Abrams, President,
Chief Executive Officer and
Chief Financial Officer
November 22, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,886,134
<SECURITIES> 0
<RECEIVABLES> 6,392
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,000,459
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,178,559
<CURRENT-LIABILITIES> 104,507
<BONDS> 0
0
0
<COMMON> 554,991
<OTHER-SE> 2,656,578
<TOTAL-LIABILITY-AND-EQUITY> 6,178,559
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,227
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,227
<DISCONTINUED> (626,654)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (605,423)
<EPS-BASIC> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
BY-LAWS OF BENTLEY INTERNATIONAL, INC. AS AMENDED AND RESTATED
Effective As Of: June 7, 1999
ARTICLE I - OFFICES
The principal office of the Corporation in the State of Missouri shall be
located at 9719 Conway Road, St. Louis, Missouri 63124. The Corporation may have
such other office(s), either within or without the State of Missouri, as the
Board of Directors may designate or as the business of the Corporation may
require from time to time.
The registered office of the Corporation required by The General and
Business Corporation Law of Missouri to be maintained in the State of Missouri
may be, but need not be, identical with its principal office in the State of
Missouri, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II - SHAREHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the shareholders shall
be held on the last Tuesday in June of each year, beginning with the year 1998,
at the hour of 10:00 A.M., or at such other date and hour as shall be determined
by the Board of Directors and stated in the notice of the meeting, for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the State of Missouri, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as conveniently may
be arranged.
Section 2.02 Special Meetings. A special meeting of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Chief Executive Officer or by the Board of Directors at any time in their
sole discretion.
Section 2.03 Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Missouri, as the place of meeting
for any annual meeting of the shareholders or for any special meeting of the
shareholders called by the Board of Directors, except that a meeting called
expressly for the purpose of removal of a director shall be held at the
registered office or principal business office of the Corporation in the State
of Missouri or in the city or county of the State of Missouri or in the city or
county of the State of Missouri in which the principal business office of the
Corporation is located. A waiver of notice signed by all shareholders entitled
<PAGE>
to vote at a meeting may designate any place, either within or without the State
of Missouri, as the place for the holding of such meeting unless such meeting is
called expressly for the purpose of removal of one or more directors, in which
event such meeting shall be held at the registered office or principal business
office of the Corporation in the State of Missouri or in the city or county of
the State of Missouri in which the principal business office of the Corporation
is located. If no designation is made, the place of meeting shall be the
registered office of the Corporation in the State of Missouri.
Section 2.04 Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall, unless otherwise allowed or prescribed
by statute, be delivered not less than ten nor more than fifty days before the
date of the meeting, either personally or by mail, by or at the direction of the
Chief Executive Officer, or the Secretary, or the persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the records
of the Corporation, with postage thereon prepaid.
Section 2.05 Meetings, How Convened. Every meeting, for whatever purpose,
of the shareholders of the Corporation shall be convened by the Chief Executive
Officer, Secretary or other officer, or any of the persons calling the meeting
by notice given as herein provided.
Section 2.06 Closing Transfer Books; Record Date. The Board of Directors
shall have power to close the transfer books of the Corporation for a period not
exceeding seventy days preceding the date of any meeting of shareholders, or the
date of payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares shall go into effect;
provided, however, that in lieu of closing the stock transfer books; the Board
of Directors may fix in advance a date, not exceeding seventy days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of shares shall go into effect, as a record date for
the determination of the shareholders entitled to notice of, and to vote at, the
meeting and any adjournment thereof, or to receive payment of the dividend, or
to receive the allotment of rights, or to exercise the rights in respect of the
change, conversion or exchange of shares. In such case, only the shareholders
who are shareholders of record on the date of closing the transfer books, or on
the record date so fixed, shall be entitled to notice of, and to vote at, the
meeting and any adjournment thereof, or to receive payment of the dividend, or
to receive the allotment of rights, or to exercise the rights, as the case may
be, notwithstanding any transfer of shares on the books of the Corporation after
the date of closing of the transfer books or the record date fixed as aforesaid.
If the Board of Directors does not close the transfer books or set a record
date, only the shareholders who are shareholders of record at the close of
business on the twentieth day preceding the date of the meeting shall be
<PAGE>
entitled to notice of, and to vote at, the meeting, and any adjournment of the
meeting; except that, if prior to the meeting written waivers of notice of the
meeting are signed and delivered to the Corporation by all of the shareholders
of record at the time the meeting is convened, only the shareholders who are
shareholders of record at the time the meeting is convened shall be entitled to
vote at the meeting, and any adjournment of the meeting.
Section 2.07 Voting Lists. The officer or agent having charge of the
transfer book for shares of the Corporation shall make, at least ten days before
each meeting of the shareholders, a complete list of the shareholders entitled
to vote at such meeting, arranged in alphabetical order, with the address and
the number of shares held by each, which list, for a period of ten days prior to
such meeting 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 subject to the inspection
of any shareholder during the whole time of the meeting. The original share
ledger or transfer books, or a duplicate thereof kept in the State of Missouri,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders.
Section 2.08 Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders. If less than a quorum is
present, a majority of the shares so represented may adjourn the meeting until a
specified date, not longer than ninety days after such adjournment, and no
notice need be given of such adjournment to shareholders not present at the
meeting. Every decision of a majority of such quorum shall be valid as a
corporate act unless a different vote is required by law, the Articles of
Incorporation or the By-Laws of the Corporation. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.09 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by the
shareholder's duly authorized attorney in fact. Such proxy shall be filed with
the Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy. A duly executed proxy shall be irrevocable only
if it states that it is irrevocable and if, and only so long as, it is coupled
with an interest sufficient in law to support an irrevocable power of attorney.
The interest with which it is coupled need not be an interest in the shares
themselves. If any instrument of proxy designates two or more persons to act as
proxy, in the absence of any provisions in the proxy to the contrary, the
persons designated may represent and vote the shares in accordance with the vote
or consent of the majority of the persons named as proxies. If only one such
proxy is present, the proxy may vote all of the shares, and all the shares
standing in the name of the principal or principals for whom such proxy acts
shall be deemed represented for the purpose of obtaining a quorum. The foregoing
provisions shall apply to the voting of shares by proxies for any two or more
personal representatives, trustees or other fiduciaries, unless an instrument or
order of court appointing them otherwise directs.
<PAGE>
Section 2.10 Voting of Shares. Subject to the provisions of Section 2.13,
each outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of the shareholders.
Section 2.11 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
by-laws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares standing in the name of a deceased person may be voted by his or her
personal representative, either in person or by proxy. Shares standing in the
name of a conservator or trustee may be voted by such fiduciary, either in
person or by proxy, but no conservator or trustee shall be entitled as a
fiduciary, either in person or by proxy, but no conservator or trustee shall be
entitled as a fiduciary to vote shares held by him or her without a transfer of
such shares into his or her name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his or her name if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 2.12 Shareholder Action Without a Meeting. Any action required to
be taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if consents in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consents shall have the same force and effect as a unanimous vote of the
shareholders at a meeting duly held. The Secretary of the Corporation shall file
such consents with the minutes of the meetings of the shareholders.
Section 2.13 Cumulative Voting Rights Denied. In all elections for
directors, each shareholder entitled to vote shall have the right to cast only
as many votes as shall equal the number of voting shares held by him in the
Corporation. There shall be no right to cumulative voting in the election of
directors.
Section 2.14 Shareholders' Right to Examine Books and Records. This
Corporation shall keep correct and complete books and records of account,
including the amount of its assets and liabilities, minutes of the proceedings
of its shareholders and Board of Directors, and the names and places of
residence of its officers; and it shall keep at its registered office or
principal place of business in this state, or at the office of its transfer
agent in this state, if any, books and records in which shall be recorded the
number of shares subscribed, the names of the owners of the shares, the numbers
owned by them respectively, the amount of shares paid, and by whom, and the
transfer of such shares with the date of transfer. Each shareholder may, during
normal business hours, have access to the books of the Corporation, to examine
the same. The Board of Directors may, from time to time, further prescribe
regulations with respect to any such examination.
<PAGE>
Section 2.15 Shares of Other Corporations. Shares of another corporation
owned by or standing in the name of the Corporation may be voted by such person
or person as may be designated by the Board of Directors and in the absence of
any such designation, the Chief Executive Officer shall have the power to vote
such shares.
Section 2.16 Notice of Shareholder Nominees. Only persons who are nominated
in accordance with the procedures set forth in this Section 2.16 shall be
eligible for election as Directors of the Corporation. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of shareholders (a) by or at the direction of the Board of Directors or
(b) by any shareholder of the Corporation entitled to vote for the election of
Directors at such meeting who complies with the procedures set forth in this
Section 2.16. All nominations by shareholders shall be made pursuant to timely
notice in proper written form to the Secretary of the Corporation. To be timely,
a shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than thirty days nor
more than sixty days prior to the meeting; provided, however, that in the event
that less than forty days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. To be in proper written form, such
shareholder's notice shall set forth in writing (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a Director, all
information relating to such person that is required to be disclosed in
solicitations or proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, including, without limitations, such person's written consent to
being named in the proxy statement as a nominee and to serving as a Director if
elected; and (b) as to the shareholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such shareholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such shareholder. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. In the event
that a shareholder seeks to nominate one or more directors, the Secretary shall
appoint two inspectors, who shall not be affiliated with the Corporation, to
determine whether a shareholder has complied with this Section 2.16. If the
inspectors shall determine that a shareholder has not complied with this Section
2.16, the inspectors shall direct the chairman of the meeting to declare to the
meeting that the nomination was not made in accordance with the procedures
prescribed by the By-Laws of the Corporation, and the chairman shall so declare
to the meeting and the defective nomination shall be disregarded.
<PAGE>
Section 2.17 Procedures for Submission of Shareholder Proposals at Annual
Meeting. At any annual meeting of the shareholders of the Corporation, only such
business shall be conducted as shall have been brought before the meeting (i) by
or at the direction of the Board of Directors or (ii) by any shareholder of the
Corporation who complies with the procedures set forth in this Section 2.17. For
business properly to be brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than thirty days nor more than sixty days prior to the
meeting; provided, however, that in the event that less than forty days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be received not later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. To be in proper written form, a shareholder's notice to the Secretary
shall set forth in writing as to each matter the shareholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business, (iii) the class
and number of shares of the Corporation which are beneficially owned by the
shareholder, and (iv) any material interest of the shareholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at an annual meeting, except in accordance with the procedures set
forth in this Section 2.17. The chairman of a meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section
2.17, and, if he or she should so determine, shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
ARTICLE III - BOARD OF DIRECTORS
Section 3.01 General Powers. The property and business of the Corporation
shall be controlled and managed by its Board of Directors.
Section 3.02 Number, Term and Qualifications. The number of directors to
constitute the Board of Directors shall be not less than three (3) nor more than
eleven (11); provided, however, that such number may be fixed, from time to
time, at not less than three (3) nor more than eleven (11) by a resolution of
the Board of Directors. Each director shall hold office until his or her
successor shall have been elected and qualified. The directors need not be
residents of the State of Missouri or shareholders of the Corporation.
<PAGE>
Section 3.03 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this By-Law immediately after, and at
the same place as, the annual meeting of the shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Missouri, for the holding of additional regular meetings
without other notice than such resolution.
Section 3.04 Special Meetings. A special meeting of the Board of Directors
may be called by, or at the request of, the Chief Executive Officer or any
director. The person or persons authorized to call such special meeting of the
Board of Directors may fix any place, either within or without the State of
Missouri, as the place for holding such special meeting.
Section 3.05 Notice. Notice of any special meeting shall be delivered at
least two days prior thereto by written notice delivered personally or left at
or mailed to each director at his or her business or residence address, or by
telegram or telefax. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, so addressed, with postage thereon prepaid.
If notice be given by telegram or telefax, such notice shall be deemed to be
delivered when the text of the telegram or telefax is delivered to the telegraph
or telefax company. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting 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 Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 3.06 Quorum; Participation by Telephone. A majority of the full
Board of Directors shall constitute a quorum for the transaction of business,
but if less than a majority are present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice. Members of the Board of Directors may participate in a meeting of the
Board of Directors, whether regular or special, by means of conference telephone
or similar communications equipment whereby all persons participating in the
meeting can hear each other, and participation in a meeting in this manner shall
constitute presence in person at the meeting.
Section 3.07 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a different number is required by statute, the
Articles of Incorporation or these By-Laws.
<PAGE>
Section 3.08 Action Without a Meeting. Any action that may be taken at a
meeting of the Board of Directors or of a committee of directors may be taken
without a meeting if consents in writing, setting forth the action so taken, are
signed by all of the members of the Board of Directors of the committee, as the
case may be. Such written consents shall be filed by the Secretary with the
minutes of the proceedings of the Board of Directors or of the committee, as the
case may be, and shall have the same force and effect as a unanimous vote at a
meeting duly held.
Section 3.09 Resignations. Any director may resign at any time by
delivering written notice to the Board of Directors, the Chief Executive Officer
or the Secretary of the Corporation. Any written notice delivered in person to
the Chief Executive Officer or the Secretary shall be effective upon delivery,
unless otherwise provided therein. Written notice may be delivered by certified
or registered mail, with postage thereon prepaid and a return receipt requested.
Such resignation shall take effect on the date of the receipt of such notice
which date of receipt shall be deemed to be the date indicated upon the
registered or certified mail return receipt, or at any later time specified
therein. Unless otherwise specified, acceptance of such resignation shall not be
necessary to make it effective.
Section 3.10 Removal by Shareholders. At a meeting called expressly for
that purpose, the entire Board of Directors, or any individual director or
directors, may be removed with or without cause upon the affirmative vote of the
holders of a majority of the shares then entitled to vote at a meeting of
shareholders called for an election of directors; provided, however, that if
less than the entire Board of Directors is to be so removed without cause, no
individual director may be so removed if the votes cast against such director's
removal would be sufficient to elect such director. If there are classes of
directors, no one director may be removed if the votes cast against such
director's removal would be sufficient to elect the director at an election of
the class of directors of which the director is a part.
Section 3.11 Vacancies. In the case of the death, incapacity or resignation
of one or more of the directors, or in the case of a newly created directorship
resulting from any increase in the number of directors to constitute the Board
of Directors, a majority of the directors then in office, although less than a
quorum, or the sole remaining director, may fill the vacancy or vacancies until
the next election of directors by the shareholders.
Section 3.12 Compensation. By resolution of the Board of Directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as director or a
fixed sum for attendance at each meeting of the Board of Directors or both. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
<PAGE>
Section 3.13 Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any matter is
taken shall be presumed to have assented to the action taken unless the director
dissents or abstains at such meeting, and the fact of such dissent or abstention
(a) is entered in the minutes of the meeting, or (b) shall be filed by the
director in writing with the person acting as secretary of the meeting before
the adjournment thereof, or (c) shall have been recorded by the director and
forwarded by registered mail to the Secretary of the Corporation promptly after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 3.14 Committees. The Board of Directors, by resolution adopted by a
majority of the Board, may designate two or more directors to constitute (a) an
executive committee, which committee shall have and exercise all of the
authority of the Board of Directors in the management of the Corporation, or (b)
any other committee which shall have the name, purpose, power and authority
delegated to it by such resolution.
ARTICLE IV - OFFICERS
Section 4.01 Number. The officers of the Corporation shall be a Chief
Executive Officer, a President, one or more Vice Presidents (the number and
descriptive title thereof to be determined by the Board of Directors), a
Secretary, and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed necessary
may be elected by the Board of Directors or appointed by the Chief Executive
Officer, with the approval of the Board. Any two or more offices may be held by
the same person.
Section 4.02 Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after the
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be arranged. Each officer shall hold office until his or her
successor shall have been duly elected and shall have qualified or until his or
her death or until he or she shall resign or shall have been removed in the
manner hereinafter provided.
Section 4.03 Removal. Any officer, agent, or other employee elected or
appointed by the Board of Directors may be removed by the Board of Directors,
with or without cause, whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
<PAGE>
Section 4.04 Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the Chief Executive Officer or the
Secretary of the Corporation. Any written notice delivered in person to the
Chief Executive Officer or the Secretary shall be effective upon delivery unless
otherwise provided therein. Written notice may be delivered by certified or
registered mail, with postage thereon prepaid and a return receipt requested.
Such resignation shall take effect on the date of the receipt of such notice
which date of receipt shall be deemed to be the date indicated upon the
registered or certified mail return receipt, or at any later time specified
therein. Unless otherwise specified herein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 4.05 Vacancies. A vacancy in any office because of death,
incapacity, resignation, removal, disqualification or otherwise, may be filled
by the Board of Directors for the unexpired portion of the term.
Section 4.06 Chairman of the Board of Directors. The Board of Directors may
appoint a Chairman of the Board of Directors, who shall be a director but need
not be a shareholder of the Corporation. The Chairman shall preside at all
meetings of the shareholders and the Board of Directors and in his absence, the
Chief Executive Officer shall so preside. The Chairman of the Board of Directors
shall perform such other duties as from time to time may be assigned to the
Chairman of the Board of Directors by the Board of Directors.
Section 4.07 Chief Executive Officer. The Chief Executive Officer shall be
the principal executive officer of the Corporation and, subject to the control
of the Board of Directors, shall in general supervise and control all of the
business and affairs of the Corporation. The Chief Executive Officer may vote in
person or by proxy shares in other corporations standing in the name of this
Corporation. The Chief Executive Officer may sign, with the Secretary or any
other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed. The Chief Executive Officer shall in
general perform all duties incident to the office of the Chief Executive Officer
and such other duties as may be prescribed by the Board of Directors from time
to time.
Section 4.08 President. The President shall be the chief operating officer
of the Corporation and shall in general manage all of the business and affairs
of the Corporation, subject to the control of the Chief Executive Officer and
the Board of Directors. The President may sign, with the Secretary or any other
proper officer of the Corporation thereunto authorized by the Board of
Directors, any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
<PAGE>
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-Laws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed. The President
shall in general perform all duties incident to the office of President and such
other duties as may be prescribed by the Chief Executive Officer or the Board of
Directors from time to time.
Section 4.09 Vice President(s). In the absence of the President, whether
due to resignation, incapacity or any other cause, or in the event of the
President's death, inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at thetime of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of President, and
when so acting, shall have all powers of and be subject to all the restrictions
upon the President. The Vice President shall exercise such powers only so long
as the President remains absent or incapacitated, or until the Board of
Directors elects a new President. Any Vice President shall perform such other
duties as from time to time may be assigned to him or her by the Chief Executive
Officer or President or by the Board of Directors.
Section 4.10 Secretary. The Secretary shall (a) keep the minutes of the
proceedings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the Chief Executive Officer,
or any other proper officer of the Corporation thereunto authorized by the Board
of Directors, certificates for shares of the Corporation, the issuance of which
shall have been authorized by resolution of the Board of Directors; (f) shall
have general charge of the stock transfer books of the Corporation; and (g) in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to the Secretary by the Chief
Executive Officer, the President or by the Board of Directors.
Section 4.11 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the Corporation; (b) receive
and give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these By-Laws; and (c) in general perform
all of the duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to the Treasurer by the Chief Executive
Officer, the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of the
Treasurer's duties in such sum and with surety or sureties as the Board of
Directors shall determine.
<PAGE>
Section 4.12 Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that the officer is also a director
of the Corporation and participated in determining and voting upon the salary.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.01 Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
Section 5.02 Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 5.03 Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 5.04 Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. The shares of the Corporation shall be represented by certificates
signed by the Chief Executive Officer and by the Secretary of the Corporation
and sealed with the seal of the Corporation or a facsimile thereof. Any
signatures on the certificates may be facsimile. All certificates for shares
shall be consecutively numbered or otherwise identified. The name and address of
the person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in the case of a lost, destroyed or mutilated certificate a new one may be
issued therefor upon such terms as the Board of Directors may prescribe.
<PAGE>
Section 6.02 Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his or her legal representative, or by his or her
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the books
of the Corporation shall be deemed by the Corporation to be the owner thereof
for all purposes.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of January
and end on the thirty-first day of December in each year.
ARTICLE VIII - DIVIDENDS
The Board of Directors may, from time to time, declare and the Corporation
may pay dividends on its outstanding shares in the manner, and upon the terms
and conditions provided by law and the Articles of Incorporation of the
Corporation.
ARTICLE IX - CORPORATE SEAL
The Board of Directors shall provide a corporate seal in the form of a
circle with the name of the Corporation inscribed thereon.
ARTICLE X - WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the Corporation under the provisions of these By-Laws or of the Articles of
Incorporation or of The General and Business Corporation Law of Missouri, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
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<PAGE>
ARTICLE XI - AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws adopted
by action of a majority of the directors at any regular or special meeting of
the directors.
Adopted on June 7, 1999.
/s/ Lloyd R. Abrams
President and Chief Executive Officer
ATTEST:
/s/ Ramakant Agarwal
Vice President, Chief Financial Officer and
Secretary
